1. Pedro Elcano, Et Al., V. Reginal Hill Et Al.

(1977)
Laws Applicable: ART. 2177,Article 397,article 1093,Article 2180 of the Civil Code
Lessons Applicable: Quasi-delict (Tort and Damages)

FACTS:

 Reginald Hill, a minor, married but living with his father, Atty. Marvin Hill with whom
he was living and getting subsistence killed Agapito Elcano
 CFI Civil Case: dismissed on the ground that he was acquitted on the ground that
his act was not criminal, because of "lack of intent to kill, coupled with mistake
 Spouses Elcano appealed
ISSUES:
1. W/N the civil action should be barred by the acquittal of criminal action - NO
2. W/N the Civil Code can be applied to Atty. Marvin Hill even though Reginald is
already married -YES
HELD: order appealed from is reversed

1. NO.
 separate individuality of a cuasi-delito or culpa aquiliana, under the Civil Code has
been fully and clearly recognized, even with regard to a negligent act for which the
wrongdoer could have been prosecuted and convicted in a criminal case and for
which, after such a conviction, he could have been sued for this civil liability arising
from his crime.
 If we were to hold that articles 1902 to 1910 of the Civil Code refer only to fault or
negligence not punished by law, accordingly to the literal import of article 1093 of
the Civil Code, the legal institution of culpa aquiliana would have very little scope
and application in actual life
 to find the accused guilty in a criminal case, proof of guilt beyond reasonable doubt
is required, while in a civil case, preponderance of evidence is sufficient to make the
defendant pay in damages. . Otherwise. there would be many instances of
unvindicated civil wrongs. "Ubi jus Idemnified remedium."
 ART. 2177. Responsibility for fault or negligence under the preceding article is
entirely separate and distinct from the civil liability arising from negligence under
the Penal Code. But the plaintiff cannot recover damages twice for the same act or
omission of the defendant.
 in reiteration of Garcia, that culpa aquiliana includes voluntary and negligent acts
which may be punishable by law
 It results, therefore, that the acquittal of Reginal Hill in the criminal case has not
extinguished his liability for quasi-delict, hence that acquittal is not a bar to the
instant action against him.
2. YES
 While it is true that parental authority is terminated upon emancipation of the child
(Article 327, Civil Code), and under Article 397, emancipation takes place "by the
marriage of the minor (child)", it is, however, also clear that pursuant to Article
399, emancipation by marriage of the minor is not really full or absolute. Thus
"(E)mancipation by marriage or by voluntary concession shall terminate parental
authority over the child's person. It shall enable the minor to administer his
property as though he were of age, but he cannot borrow money or alienate or
encumber real property without the consent of his father or mother, or guardian. He
 can sue and be sued in court only with the assistance of his father, mother or
guardian."

 Article 2180, "(T)he obligation imposed by article 2176 is demandable not only for
one's own acts or omissions, but also for those of persons for whom one is
responsible
 the marriage of a minor child does not relieve the parents of the duty to see to it
that the child, while still a minor, does not give answerable for the borrowings of
money and alienation or encumbering of real property which cannot be done by
their minor married child without their consent
 Reginald is now of age, as a matter of equity, the liability of Atty. Hill has become
milling, subsidiary to that of his son.

2. Rafael Reyes Trucking vs Pp. GR 145391

Facts:

In the early morning of June 20, 1989, the White Truck driven by Dunca left Tuguegarao, Cagayan
bound to San Fernando, Pampanga loaded with 2,000 cases of empty beer “Grande” bottles. Seated at
the front right seat beside him was Ferdinand Domingo, his truck helper. At around 4:00 o’clock that
same morning while the truck was descending at a slight downgrade along the national road at
Tagaran, Cauayan, Isabela, it approached a damaged portion of the road covering the full width of the
truck’s right lane going south and about six meters in length. These made the surface of the road
uneven because the potholes were about five to six inches deep. The left lane parallel to this damaged
portion is smooth. As narrated by Ferdinand Domingo, before approaching the potholes, he and
Dunca saw the Nissan with its headlights on coming from the opposite direction. They used to evade
this damaged road by taking the left lance but at that particular moment, because of the incoming
vehicle, they had to run over it. This caused the truck to bounce wildly. Dunca lost control of the
wheels and the truck swerved to the left invading the lane of the Nissan. As a result, Dunca’s vehicle
rammed the incoming Nissan dragging it to the left shoulder of the road and climbed a ridge above
said shoulder where it finally stopped. The Nissan was severely damaged and its two passengers,
namely, Feliciano Balcita and Francisco Dy, Jr. died instantly. On October 10, 1989, Provincial
Prosecutor Durian filed with the RTC an amended information charging Dunca with reckless
imprudence resulting in double homicide and damage to property. On November 29, 1989, the
offended parties filed with the RTC a complaint against petitioner Rafael Reyes Trucking Corporation,
as employer of driver Dunca, based on quasi delict. Respondents opted to pursue the criminal action
but did not withdraw the civil case quasi ex delicto they filed against petitioner. On December 15,
1989, respondents withdrew the reservation to file a separate civil action against the accused and
manifested that they would prosecute the civil aspect ex delicto in the criminal action. However, they
did not withdraw the separate civil action based on quasi delict against petitioner as employer arising
from the same act or omission of the accused driver. The RTC held that the driver was guilty.
Respondents moved for amendment of the dispositive portion of the joint decision so as to hold
petitioner subsidiarily liable for the damages awarded to the private respondents in the event of
insolvency of the accused, which the lower court granted.

Issues:
(1) Whether or not petitioner as owner of the truck involved in the accident may be held subsidiarily
liable for the damages awarded to the offended parties in the criminal action against the truck driver
despite the filing of a separate civil action by the offended parties against the employer of the truck
driver; and

(2) Whether or not the Court may award damages to the offended parties in the criminal case despite
the filing of a civil action against the employer of the truck driver.

Held:

(1) No. In negligence cases, the aggrieved party has the choice between (1) an action to enforce civil
liability arising from crime under Article 100 of the Revised Penal Code; and (2) a separate action for
quasi delict under Article 2176 of the Civil Code of the Philippines. Once the choice is made, the
injured party can not avail himself of any other remedy because he may not recover damages twice
for the same negligent act or omission of the accused. This is the rule against double recovery.In other
words, “the same act or omission can create two kinds of liability on the part of the offender, that is,
civil liability ex delicto, and civil liability quasi delicto” either of which “may be enforced against the
culprit, subject to the caveat under Article 2177 of the Civil Code that the offended party can not
recover damages under both types of liability.” In the instant case, the offended parties elected to file
a separate civil action for damages against petitioner as employer of the accused, based on quasi
delict, under Article 2176 of the Civil Code of the Philippines. Petitioner, as employer of the accused
who has been adjudged guilty in the criminal case for reckless imprudence, cannot be held subsidiarily
liable because of the filing of the separate civil action based on quasi delict against it. In view of the
reservation to file, and the subsequent filing of the civil action for recovery of civil liability, the same
was not instituted with the criminal action. Such separate civil action was for recovery of damages
under Article 2176 of the Civil Code, arising from the same act or omission of the accused.

(2) No. The award of damages in the criminal case was improper because the civil action for the
recovery of civil liability was waived in the criminal action by the filing of a separate civil action
against the employer. The only issue brought before the trial court in the criminal action is whether
accused Dunca is guilty of reckless imprudence resulting in homicide and damage to property. The
action for recovery of civil liability is not included therein, but is covered by the separate civil action
filed against the petitioner as employer of the accused truck-driver. The policy against double
recovery requires that only one action be maintained for the same act or omission whether the action
is brought against the employee or against his employer. The injured party must choose which of the
available causes of action for damages he will bring.

3. Casapunan vs Laroya GR 145391

Facts:
Respondent filed a criminal action against petitioners for Reckless Imprudence Resulting
to Damage to Property. While the criminal case is pending, the Petitioners filed with the
MCTC a civil case for Quasi-delict. Respondent filed a motion to dismiss the said civil
action against him on the ground of forum-shopping considering the pendency of the
criminal case. The MCTC granted the motion. Petitioners filed a motion for
reconsideration which was denied by the MCTC. They appeal to the RTC, with was also
denied. Hence this case.

Issue:
whether an accused in a pending criminal case for reckless imprudence can validly file,
simultaneously and independently, a separate civil action for quasi-delict against the
private complainant in the criminal case.

Held:
Yes, Under Section 1 of the present Rule 111, the independent civil action in Articles 32,
33, 34 and 2176 of the Civil Code is not deemed instituted with the criminal action but
may be filed separately by the offended party even without reservation. The
commencement of the criminal action does not suspend the prosecution of the
independent civil action under these articles of the Civil Code. The suspension in Section
2 of the present Rule 111 refers only to the civil action arising from the crime, if such civil
action is reserved or filed before the commencement of the criminal action.

Thus, the offended party can file two separate suits for the same act or omission. The first
a criminal case where the civil action to recover civil liability ex-delicto is deemed
instituted, and the other a civil case for quasi-delict – without violating the rule on non-
forum shopping. The two cases can proceed simultaneously and independently of each
other. The commencement or prosecution of the criminal action will not suspend the civil
action for quasi-delict. The only limitation is that the offended party cannot recover
damages twice for the same act or omission of the defendant. In most cases, the offended
party will have no reason to file a second civil action since he cannot recover damages
twice for the same act or omission of the accused. In some instances, the accused may be
insolvent, necessitating the filing of another case against his employer or guardians.

4. Sps Santos vs Pizardo GR 151452

CRIMINAL SECTION 3, RULE 111

PROCEDURE
TITLE: G.R. No. 151452
Date: July 29, 2005
SPOUSES SANTOS vs. PIZARDO Ponente: TINGA, J.:
SPS. ANTONIO C. SANTOS and ESPERANZA
C. SANTOS, NORA BARNALO, BELINDA HON. NORMANDIE B. PIZARDO, and VIRON
LUMACTAD, MARIENELA DY, NIKKA TRANSPORTATION COMPANY, INC.,
SANTOS and LEONARDO FERRER, petitioners respondents
FACTS:
Case timeline:
Dionisio M. Sibayan (Sibayan) was charged with Reckless Imprudence Resulting to Multiple Homicide
and Multiple Physical Injuries in connection with a vehicle collision between a southbound Viron Transit
bus driven by Sibayan and a northbound Lite Ace Van, which claimed the lives of the vans driver and three
(3) of its passengers, including a two-month old baby, and caused physical injuries to five (5) of the vans
passengers.

After trial, Sibayan was convicted and sentenced to suffer the penalty of imprisonment for two (2) years, four
(4) months and one (1) day to four (4) years and two (2) months. However, as there was a reservation to
file a separate civil action, no pronouncement of civil liability was made by the municipal circuit trial
court in its decision promulgated on December 17, 1998.

On October 20, 2000, petitioners filed a complaint for damages against Sibayan, Viron Transit and its
President/Chairman, Virgilio Q. Rondaris, with the Regional Trial Court of Quezon City, pursuant to their
reservation to file a separate civil action.

The trial court dismissed the complaint on the principal ground that the cause of action had already prescribed
(4 years for action based on quasi-delict.

In this instant case, Petitioners insist that the liability sought to be enforced in the complaint arose ex
delicto and is not based on quasi delict.
ISSUE/S:
Whether or not the action has prescribed
RATIO:
NO.

A reading of the complaint reveals that the allegations therein are consistent with petitioner’s claim that
the action was brought to recover civil liability arising from crime. Although there are allegations of
negligence on the part of Sibayan and Viron Transit, such does not necessarily mean that petitioners were
pursuing a cause of action based on quasi delict, considering that at the time of the filing of the complaint, the
cause of action ex quasi delicto had already prescribed. Besides, in cases of negligence, the offended party
has the choice between an action to enforce civil liability arising from crime under the Revised Penal Code
and an action for quasi delict under the Civil Code.

At the time of the filing of the complaint for damages in this case, the cause of action ex quasi delicto had
already prescribed. Nonetheless, petitioners can pursue the remaining avenue opened for them by their
reservation, i.e., the surviving cause of action ex delicto. This is so because the prescription of the action ex
quasi delicto does not operate as a bar to an action to enforce the civil liability arising from crime
especially as the latter action had been expressly reserved.

Petitioners expressly made a reservation of their right to file a separate civil action as a result of the crime
committed by Sibayan. On account of this reservation, the municipal circuit trial court, in its decision
convicting Sibayan, did not make any pronouncement as to the latter’s civil liability.

We held that the dismissal of the action based on culpa aquiliana is not a bar to the enforcement of the
subsidiary liability of the employer. Once there is a conviction for a felony, final in character, the employer
 becomes subsidiarily liable if the commission of the crime was in the discharge of the duties of the employees.
This is so because Article 103 of the Revised Penal Code operates with controlling force to obviate the
possibility of the aggrieved party being deprived of indemnity even after the rendition of a final judgment
convicting the employee.

Seen in this light, the trial court should not have dismissed the complaint on the ground of prescription,
but instead allowed the complaint for damages ex delicto to be prosecuted on the merits, considering
petitioners’ allegations in their complaint, opposition to the motion to dismiss and motion for reconsideration
of the order of dismissal, insisting that the action was to recover civil liability arising from crime.
RULING:
WHEREFORE, judgment is hereby rendered SETTING ASIDE the resolutions of the Court of Appeals dated
September 10, 2001 and January 9, 2002, respectively dismissing the present action and denying petitioners
motion for reconsideration, as well as the orders of the lower court dated February 26, 2001 and July 16, 2001.
Let the case be REMANDED to the trial court for further proceedings.
NOTES:

5. Manliclic vs Caulanan GR 150157

FACTS:
1. The vehicles involved in this case are: (1) Philippine Rabbit Bus owned by petitioner PRBLI and
driven by petitioner Mauricio Manliclic; and (2) owner-type jeep owned by respondent Modesto
Calaunan and driven by Marcelo Mendoza
2. At approximately Kilometer 40 of the North Luzon Expressway in Barangay Lalangan, Plaridel,
Bulacan, the two vehicles collided.
- The front right side of the Philippine Rabbit Bus hit the rear left side of the jeep causing the
latter to move to the shoulder on the right and then fall on a ditch with water resulting to further
extensive damage.
- Respondent suffered minor injuries while his driver was unhurt.
3. By reason of such collision, a criminal case was filed charging petitioner Manliclic with Reckless
Imprudence Resulting in Damage to Property with Physical Injuries.
4. Subsequently on 2 December 1991, respondent filed a complaint for damages against petitioners
Manliclic and PRBLI
5. The criminal case was tried ahead of the civil case.
6. When the civil case was heard, counsel for respondent prayed that the transcripts of stenographic
notes (TSNs) of the testimonies in the criminal case be received in evidence in the civil case in as
much as these witnesses are not available to testify in the civil case.
7. The versions of the parties are summarized by the trial court as follows:

Respondent’s version:
- According to the respondent and his driver, the jeep was cruising at the speed of 60 to 70
kilometers per hour on the slow lane of the expressway when the Philippine Rabbit Bus overtook
the jeep and in the process of overtaking the jeep, the Philippine Rabbit Bus hit the rear of the
jeep on the left side.
- At the time the Philippine Rabbit Bus hit the jeep, it was about to overtake the jeep. In other
words, the Philippine Rabbit Bus was still at the back of the jeep when the jeep was hit.
- Fernando Ramos corroborated the testimony of and Marcelo Mendoza. He said that he was on
another jeep following the Philippine Rabbit Bus and the jeep of plaintiff when the incident took
place. He testified that the jeep of plaintiff swerved to the right because it was bumped by the
Philippine Rabbit bus from behind.

Petitioner’s version:
 - The petitioner explained that when the Philippine Rabbit bus was about to go to the left lane to
overtake the jeep, the latter jeep swerved to the left because it was to overtake another jeep
in front of it.
- Petitioner PRBLI maintained that it observed and exercised the diligence of a good father of a
family in the selection and supervision of its employee
8. RTC ruled in favor of the respondent. CA found no reversible error and affirmed the RTC’s decision.

ISSUES:
1. Whether the TSNs from the criminal case may be admitted in evidence for the civil case.
2. Whether the petitioner, Manliclic, may be held liable for the collision and be found negligent
notwithstanding the declaration of the CA in the criminal case that there was an absence of
negligence on his part.
3. Whether the petitioner, PRBLI, exercised due diligence and supervision of its employee.

HELD: The petitioner, Manliclic, is civilly liable for the damages for his negligence or reckless imprudence
based on quasi-delict. The PRBLI is held solidarily liable for the damages caused by the petitioner
Manliclic’s negligence.

1. Admissibility of the TSNs

Petitioner’s contention:
- The TSNs should not be admitted to evidence for failure to comply with the requisites of Sec.
47, Rule 130 of the ROC
- The petitioner, PRBLI, had no opportunity to cross examine the witnesses because the criminal
case was filed exclusively against Manliclic.
- Admission of the TSNs will deprive the petitioner of due process.
Court:
- The testimonies are still admissible on the ground that the petitioner failed to object on their
admissibility.
- Failure to object to the inclusion of the evidence is a waiver on the provision of the law.
- In addition, the petitioner even offered in evidence the TSN containing the testimony of Ganiban.
- The court disagrees that it would deprive the petitioner of due process. For the failure of the
petitioner to object at the proper time, it waived its right to object for the non compliance with
the ROC.

2. Civil liability arising from crime v. Quasi-delict/Culpa Acquiliana

Petitioner:
- The version of the petitioner deserves more credit as the petitioner was already acquitted by
the CA of the charge of Reckless imprudence resulting in damage to property with physical
injuries.
Court:
- From the complaint, it can be gathered that the civil case for damages was one arising from or
based on quasi-delict: Petitioner Manliclic was sued for his negligence or reckless imprudence in
causing the collision, while petitioner PRBLI was sued for its failure to exercise the diligence of
a good father in the selection and supervision of its employees
- it appears that petitioner Manliclic was acquitted not on reasonable doubt, but on the ground
that he is not the author of the act complained of which is based on Section 2(b) of Rule 111 of
the Rules of Criminal Procedure which reads:

(b) Extinction of the penal action does not carry with it extinction of the civil, unless the extinction
proceeds from a declaration in a final judgment that the fact from which the civil might arise did not
exist.

- In spite of said ruling, petitioner Manliclic can still be held liable for the mishap. The afore-quoted
section applies only to a civil action arising from crime or ex delicto and not to a civil action
arising from quasi-delict or culpa aquiliana.
- The extinction of civil liability referred to in the quoted provision, refers exclusively to civil
liability founded on Article 100 of the Revised Penal Code, whereas the civil liability for the same
 act considered as a quasi-delict only and not as a crime is not extinguished even by a declaration
in the criminal case that the criminal act charged has not happened or has not been committed
by the accused.

In sum, the court distinguished civil liability arising from a crime and that arising from quasi-delict:

CIVIL LIABILITY ARISING FROM A CRIME

(a) if an accused is acquitted based on reasonable doubt on his guilt, his civil liability arising from
the crime may be proved by preponderance of evidence only.
(b) if an accused is acquitted on the basis that he was not the author of the act or omission
complained of (or that there is declaration in a final judgment that the fact from which the civil
might arise did not exist), said acquittal closes the door to civil liability based on the crime or
ex delicto.

CIVIL LIABILITY ARISING FROM QUASI-DELICT

- A quasi-delict or culpa aquiliana is a separate legal institution under the Civil Code with a
substantivity all its own, and individuality that is entirely apart and independent from a delict or
crime.
- The same negligence causing damages may produce civil liability arising from a crime under the
Penal Code, or create an action for quasi-delicts or culpa extra-contractual under the Civil
Code. The acquittal of the accused, even if based on a finding that he is not guilty, does
not carry with it the extinction of the civil liability based on quasi delict.
- civil liability arising from quasi-delict or culpa aquiliana, same will not be extinguished by an
acquittal, whether it be on ground of reasonable doubt or that accused was not the author of
the act or omission complained of (or that there is declaration in a final judgment that the fact
from which the civil liability might arise did not exist).
- An acquittal or conviction in the criminal case is entirely irrelevant in the civil case based on
quasi-delict or culpa aquiliana.

- The petitioners urge the court to give more credence to their version of the story however, as
they constitute a question of fact, it may not be raised as a subject for a petition for review.
Findings of the trial court and appellate court are binding on the Supreme Court.
- The testimony of the petitioner about the jeep of the respondent overtaking another vehicle in
the criminal case was not consistent with what he gave to the investigator which is evidently a
product of an after-thought
- If one would believe the testimony of the defendant, Mauricio Manliclic, and his conductor, Oscar
Buan, that the Philippine Rabbit Bus was already somewhat parallel to the jeep when the collision
took place, the point of collision on the jeep should have been somewhat on the left side thereof
rather than on its rear. Furthermore, the jeep should have fallen on the road itself rather than
having been forced off the road.

3. PRBLI’s liability
- Under Article 2180 of the New Civil Code, when an injury is caused by the negligence of the
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 selection or both.
- The liability of the employer under Article 2180 is direct and immediate; it is not conditioned
upon prior recourse against the negligent employee and a prior showing of the insolvency of
such employee. Therefore, it is incumbent upon the private respondents to prove that they
exercised the diligence of a good father of a family in the selection and supervision of their
employee.

Petitioner’s contention:
- PRBLI maintains that it had shown that it exercised the required diligence in the selection and
supervision of its employees
- In the matter of selection, it showed the screening process that petitioner Manliclic underwent
before he became a regular driver.
 - As to the exercise of due diligence in the supervision of its employees, it argues that presence
of ready investigators is sufficient proof that it exercised the required due diligence in the
supervision of its employees
Court:
- In the selection of prospective employees, employers are required to examine them as to their
qualifications, experience and service records. In the supervision of employees, the employer
must formulate standard operating procedures, monitor their implementation and impose
disciplinary measures for the breach thereof.
- As the negligence of the employee gives rise to the presumption of negligence on the part of
the employer, the latter has the burden of proving that it has been diligent not only in the
selection of employees but also in the actual supervision of their work.
- The trial court found that petitioner PRBLI exercised the diligence of a good father of
a family in the selection but not in the supervision of its employees
- it seems that the Philippine Rabbit Bus Lines has a very good procedure of recruiting its driver
as well as in the maintenance of its vehicles. There is no evidence though that it is as good in
the supervision of its personnel.
o no evidence introduced that there are rules promulgated by the bus company regarding the
safe operation of its vehicle and in the way its driver should manage and operate the vehicles
o no showing that somebody in the bus company has been employed to oversee how its driver
should behave while operating their vehicles
o The presence of ready investigators after the occurrence of the accident is not enough. Same
does not comply with the guidelines set forth with regard to the supervision.
o Regular supervision of employees, that is, prior to any accident, should have been shown
and established.
o the lack of supervision can further be seen by the fact that there is only one set of manual
containing the rules and regulations for all the drivers
- For failure to adduce proof that it exercised the diligence of a good father of a family
in the selection and supervision of its employees, petitioner PRBLI is held solidarily
responsible for the damages caused by petitioner Manliclic’s negligence.

6. Franco vs IAC GR 71137

FACTS:
The instant petition deals mainly with the nature of an employer's liability for his
employee's negligent act.
At about 7:30 in the evening of October 18, 1974, Macario Yuro swerved the
northbound Franco Bus with Plate No. XY320-PUB he was driving to the left to avoid
hitting a truck with a trailer parked facing north along the cemented pavement of the
MacArthur Highway at Barrio Talaga, Capas Tarlac, thereby taking the lane of an
incoming Isuzu Mini Bus bearing Plate No. YL-735 being driven by one Magdaleno Lugue
and making a collision between the two (2) vehicles an unavoidable and disastrous
eventuality.
Dragged fifteen (15) meters from the point of impact (midway the length of the
parked truck with trailer), the mini bus landed right side down facing south in the canal
of the highway, a total wreck. The Franco Bus was also damaged but not as severely.
The collision resulted in the deaths of the two (2) drivers, Macario Yuro and Magdaleno
Lugue, and two (2) passengers of the mini bus, Romeo Bue and Fernando Chuay.

Consequently, Antonio Reyes, the registered owner of the Isuzu Mini Bus, Mrs.
Susan Chuay, the wife of victim Fernando Chuay, and Mrs. Lolita Lugue, the wife of
driver-victim Magdaleno Lugue, filed an action for damages through reckless
imprudence against Mr. & Mrs. Federico Franco, the owners and operators of the Franco
Transportation Company

ISSUE:

Whether the action for recovery of damages instituted by herein private respondents
was predicated upon crime or quasi-delict.
yes under Articles 2176 and 2180 of the Civil Code

RULING:

Distinction should be made between the subsidiary liability of the employer under
the Revised Penal Code and the employer's primary liability under the Civil Code which
is quasi-delictual or tortious in character. The first type of liability is governed by Articles
102 and 103 of the Revised Penal Code which provide as follows:
Art. 102. Subsidiary civil liability of innkeepers, tavern-keepers and
proprietors of establishments. — In default of the persons criminally
liable, innkeepers, tavern-keepers, and any other persons or corporations
shall be civilly liable for crimes committed in their establishments, in all
cases where a violation of municipal ordinances or some general or special
police regulations shall have been committed by them or their employees.

Innkeepers are also subsidiarily liable for the restitution of goods

taken by robbery or theft within their houses from guests lodging therein,
or for the payment of the value thereof, provided that such guests shall
have notified in advance the innkeeper himself, or the person representing
him, of the deposits of such goods within the inn; and shall furthermore
have followed the directions which such innkeeper or his representative
may have given them with respect to the care and vigilance over such
goods. No liability shall attach in case of robbery with violence against or
intimidation of persons unless committed by the innkeeper's employees.
Art. 103. Subsidiary civil liability of other persons. — The
subsidiary liability established in the next preceding article shall also
apply to employers, teachers, persons, and corporations engaged in any
kind of industry for felonies committed by the servants, pupils, workmen,
apprentices, or employees in the discharge of their duties;
while the second kind is governed by the following provisions of the Civil Code:
Art. 2176. Whoever by act or omission causes damage to another, there
being fault or negligence, is obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual relation between the parties is
called a quasi-delict and is governed by the provisions of this Chapter.
 Art. 2177. Responsibility for fault or negligence under the preceding
article is entirely separate and distinct from the civil liability arising from
negligence under the Penal Code. But the plaintiff cannot recover damages twice
for the same act or omission of the defendant.

Art. 2180. The obligations imposed by article 2176 is demandable not only
for one's own acts or omissions, but also for those of persons for whom one is
responsible.
xxx xxx xxx
Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even though
the former are not engaged in any business or industry,
xxx xxx xxx

The responsibility treated of in this article shall cease when the persons
herein mentioned prove that they observed all the diligence of a good father of a
family to prevent damage.

Under Article 103 of the Revised Penal Code, liability originates from a
delict committed by the employee who is primarily liable therefor and upon whose
primary liability his employer's subsidiary liability is to be based. Before the
employer's subsidiary liability may be proceeded against, it is imperative that there
should be a criminal action whereby the employee's criminal negligence or delict and
corresponding liability therefor are proved.

In the case at bar, no criminal action was instituted because the person who
should stand as the accused and the party supposed to be primarily liable for the
damages suffered by private respondents as a consequence of the vehicular mishap
died. Thus, petitioners' subsidiary liability has no leg to stand on considering that
their liability is merely secondary to their employee's primary liability.
On the other hand, under Articles 2176 and 2180 of the Civil Code, liability
is based on culpa aquiliana which holds the employer primarily liable for tortious
acts of its employees subject, however, to the defense that the former exercised
all the diligence of a good father of a family in the selection and supervision of his
employees.

Having thus established that Civil Case No. 2154 is a civil action to impose the
primary liability of the employer as a result of the tortious act of its alleged reckless
driver, we confront ourselves with the plausibility of defendants-petitioners' defense that
they observed due diligence of a good father of a family in the selection and supervision
of their employees. On this point, the appellate court has unequivocally spoken in
affirmation of the lower court's findings, to wit:

“Anyway, a perusal of the record shows that the appellants were not able
to establish the defense of a good father of a family in the supervision of
their bus driver. “
Consequently, therefore, we find petitioners liable for the damages claimed pursuant
to their primary liability under the Civil Code.
7. Philippine School vs CA
FACTS: Carlitos Bautista was a third year student at the Philippine School of Business Administration.
Assailants, who were not members of the schools academic community, while in the premises of
PSBA, stabbed Bautista to death. This incident prompted his parents to file a suit against PSBA and
its corporate officers for damages due to their alleged negligence, recklessness and lack of security
precautions, means and methods before, during and after the attack on the victim.

The defendants filed a motion to dismiss, claiming that the compliant states no cause of action against
them based on quasi-delicts, as the said rule does not cover academic institutions. The trial court
denied the motion to dismiss. Their motion for reconsideration was likewise dismissed, and was
affirmed by the appellate court. Hence, the case was forwarded to the Supreme Court.

ISSUE: Whether or not PSBA is liable for the death of the student.

RULING: Because the circumstances of the present case evince a contractual relation between the
PSBA and Carlitos Bautista, the rules on quasi-delict do not really govern. A perusal of Article
2176 shows that obligations arising from quasi-delicts or tort, also known as extra-contractual
obligations, arise only between parties not otherwise bound by contract, whether express or implied.
However, this impression has not prevented this Court from determining the existence of a tort even
when there obtains a contract.

Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule in in loco parentis.
Article 2180 provides that the damage should have been caused or inflicted by pupils or students of
the educational institution sought to be held liable for the acts of its pupils or students while in its
custody. However, this material situation does not exist in the present case for, as earlier indicated,
the assailants of Carlitos were not students of the PSBA, for whose acts the school could be made
liable. But it does not necessarily follow that PSBA is absolved form liability.

When an academic institution accepts students for enrollment, there is established a contract
between them, resulting in bilateral obligations which both parties is bound to comply with.
For its part, the school undertakes to provide the student with an education that would presumably
suffice to equip him with the necessary tools and skills to pursue higher education or a profession.
This includes ensuring the safety of the students while in the school premises. On the other hand, the
student covenants to abide by the school's academic requirements and observe its rules and
regulations.

In the circumstances obtaining in the case at bar, however, there is, as yet, no finding that the contract
between the school and Bautista had been breached thru the former's negligence in providing proper
security measures. This would be for the trial court to determine. And, even if there be a finding of
negligence, the same could give rise generally to a breach of contractual obligation only. Using the
test of Cangco, supra, the negligence of the school would not be relevant absent a contract. In fact,
that negligence becomes material only because of the contractual relation between PSBA and
Bautista. In other words, a contractual relation is a condition sine qua nonto the school's liability. The
negligence of the school cannot exist independently of the contract, unless the negligence occurs
under the circumstances set out in Article 21 of the Civil Code.
EXCEPTIONS:
7.1 Singson vs BPI
FACTS:
Singson was one of the defendants in a civil case, in which judgment had been rendered sentencing
him and his co-defendants therein Lobregat and Villa-Abrille & Co., to pay a sum of money to the
plaintiff therein. Said judgment became final and executory as only against Ville-Abrille for its failure
to file an appeal. A writ of garnishment was subsequently served upon BPI — in which the Singsons
had a current account — insofar as Villa-Abrille’s credits against the Bank were concerned.
Upon receipt of the said Writ of Garnishment, a clerk of the bank, upon reading the name of the
Singson in the title of the Writ of Garnishment as a party defendants, without further reading the body
and informing himself that said garnishment was merely intended for the deposits of defendant Villa-
Abrille & Co., et al, prepared a letter informing Singson of the garnishment of his deposits by the
plaintiff in that case.
Subsequently, two checks issued by the plaintiff Julian C. Singson, one in favor of B. M. Glass Service
and another in favor of the Lega Corporation, were dishonored by the bank. B. M. Glass Service then
wrote to Singson that the check was not honored by BPI because his account therein had already
been garnished and that they are now constrained to close his credit account with them.
Singson wrote to BPI, claiming that his name was not included in the Writ of Execution and Notice of
Garnishment, which was served upon the bank. The defendants lost no time to rectify the mistake
that had been inadvertently committed.
Thus this action for damages.
ISSUE:
WON the existence of a contract between the parties bars a plaintiff’s claim for damages based on
torts?
HELD:
NO. The existence of a contract between the parties does not bar the commission of a tort by the one
against the order and the consequent recovery of damages therefore. Indeed, this view has been, in
effect, reiterated in a comparatively recent case. Thus, in Air France vs. Carrascoso, involving an
airplane passenger who, despite his first-class ticket, had been illegally ousted from his first-class
accommodation and compelled to take a seat in the tourist compartment, was held entitled to recover
damages from the air-carrier, upon the ground of tort on the latter’s part, for, although the relation
between a passenger and a carrier is “contractual both in origin and nature … the act that breaks the
contract may also be a tort”.
In view, however, of the facts obtaining in the case at bar, and considering, particularly, the
circumstance, that the wrong done to the plaintiff was remedied as soon as the President of the bank
realized the mistake he and his subordinate employee had committed, the Court finds that an award
of nominal damages — the amount of which need not be proven — in the sum of P1,000, in addition
to attorney’s fees in the sum of P500, would suffice to vindicate plaintiff’s rights.
7.2 Air France vs Carrascoso
AIR FRANCE
vs.
RAFAEL CARRASCOSO and the HONORABLE COURT OF APPEALS

G.R. No. L-21438 September 28, 1966

Facts:
 Rafael Carrascoso, a civil engineer, was a member of a group of 48 Filipino pilgrims that left Manila
for Lourdes on March 30, 1958.

On March 28, 1958, Air France, through its authorized agent, Philippine Air Lines, Inc., issued to
Carascoso a "first class" round trip airplane ticket from Manila to Rome. From Manila to Bangkok, he travelled
in "first class", but at Bangkok, the Manager of Air France forced him to vacate the "first class" seat that he
was occupying because there was a "white man”, who the Manager alleged, had a "better right" to the
seat. When asked to vacate his "first class" seat, a commotion ensued, many of the Filipino passengers got
nervous in the tourist class; when they found out that Mr. Carrascoso was having a hot discussion with the
white man, they came all across to Mr. Carrascoso and pacified Mr. Carrascoso to give his seat to the white
man"; and respondent reluctantly gave his "first class" seat in the plane.

Because of the incident, respondent filed an action for damages for breach of contract.

Respondent contended that he paid to and received from petitioner a first class ticket. But petitioner asserts
the following:
1. That the said ticket did not represent the true and complete intent and agreement of the parties;
2. That said respondent knew that he did not have confirmed reservations for first class on any specific flight,
although he had tourist class protection; and
3. That the issuance of a first class ticket was no guarantee that he would have a first class ride, but that such
would depend upon the availability of first class seats.

CFI/ RTC ruling:

-Petitioner tried to prove by the testimony of its witnesses Luis Zaldariaga and Rafael Altonaga that although
respondent paid for, and was issued a "first class" airplane ticket, the ticket was subject to confirmation in
Hongkong. The court cannot give credit to the testimony of said witnesses. Oral evidence cannot prevail
over written evidences presented by the plaintiff which clearly show that the respondent was issued, and
paid for, a first class ticket without any reservation whatever. It cannot be believe that after such
confirmation, petitioner had a verbal understanding with respondent that the "first class" ticket issued to him
by petitioner would be subject to confirmation in Hongkong.

-CFI ruled in favor of Carrascoso. It sentenced petitioner to pay respondent P25,000.00 by way of moral
damages; P10,000.00 as exemplary damages; P393.20 representing the difference in fare between first class
and tourist class for the portion of the trip Bangkok-Rome plus P3,000.00 for attorneys' fees; and the costs of
suit

CA ruling:

- CA slightly reduced the amount of refund on Carrascoso's plane ticket from P393.20 to P383.10, and voted
to affirm the appealed decision "in all other respects", with costs against petitioner.

Issues:
1. Whether or not Carrascoso was entitled to the first class seat

2. Whether or not he is entitled to damages

SC Ruling:

1. Yes. If airline companies would have the policy that a first-class-ticket holder is not entitled to a first class
seat, notwithstanding the fact that seat availability in specific flights is therein confirmed, then an air
 passenger is placed in the hollow of the hands of an airline. There is no security for the passengers. It will
always be an easy matter for an airline aided by its employees, to strike out the very stipulations in the ticket,
and say that there was a verbal agreement to the contrary. It is a rule that, a written document speaks a
uniform language. There must be adherence to the ticket issued by the airline company. Since Carrascoso
was given a “first class” airplane ticket, he is entitled to such.

2.
Yes.
-First, That there was a contract to furnish Carrascoso a first class passage covering, among others, the
Bangkok-Teheran leg;
Second, That said contract was breached when petitioner failed to furnish first class transportation at
Bangkok; and Third, that there was bad faith when petitioner's employee compelled Carrascoso to leave his
first class accommodation "after he was already, seated" and to take a seat in the tourist class, by reason of
which he suffered inconvenience, embarrassments and humiliations, thereby causing him mental anguish,
serious anxiety, wounded feelings and social humiliation, resulting in moral damages.

- A contract to transport passengers is quite different in kind and degree from any other contractual
obligation because of the relation which an air carrier sustains with the public. The contract of air
carriage, therefore, generates a relation attended with a public duty. Neglect or malfeasance of
the carrier's employees, could give ground for an action for damages. Petitioner's contract with
Carrascoso is one attended with public duty. The stress of Carrascoso's action is placed upon his
wrongful expulsion. This is a violation of public duty by the petitioner air carrier — a case of quasi-
delict. Damages are proper.

- Article 21 of the Civil Code provides that, “any person who willfully causes loss or injury to another in
a manner that is contrary to morals, good customs or public policy shall compensate the latter for
the damage.”

Exemplary damages are also well awarded since the action of the respondent is based on a
contract. In addition, the plaintiff’s act of ejecting the respondent in his first class seat is an act which
was done in a wanton, fraudulent, reckless, oppressive, or malevolent manner.

-SC affirmed the decision of CA.

7.3 Regino vs Pangasinan Colleges

8. Manila Railroad vs La Compania

Facts:

Two locomotive boilers owned by The Manila Railroad Company arrived at Manila via the Steamship Alicante owned by Compañia
Trasatlantica de Barcelona. The equipment of the ship for discharging heavy cargo was not sufficiently strong to handle these
boilers, so the Steamship Company had to procure assistance from The Atlantic, Gulf and Pacific Company (hereafter called the
Atlantic Company). The service to be performed by the Atlantic Company consisted in bringing its floating crane alongside
the Alicante, lifting the boilers out of the ship's hold, and transferring them to a barge which would be placed ready to receive
them.

While the boiler was being hoisted, it was not properly done as the rivet near the head of the boiler was caught under the edge of
the hatch. The weight on the crane was thus increased by a strain estimated at fifteen tons with the result that the cable of the
sling parted and the boiler fell to the bottom of the ship's hold. (natagak ang boiler unya nakaduha pa jud xa natagak)
The boiler was badly damaged that it had to be reshipped to England where it was rebuilt, and afterwards was returned to Manila.
The Railroad Company's damage by reason of the cost of repairs, expenses, and loss of the use of the boiler proved to be
P22,343.29; and as to the amount of the damage so resulting there is practically no dispute. To recover these damages the present
action was instituted by the Railroad Company against the Steamship Company who in turn caused the Atlantic Company to be
brought in as a codefendant, and insisted that whatever liability existed should be fixed upon the Atlantic Company as an
independent contractor who had undertaken to discharge the boilers and had become responsible for such damage as had been
done.

The judge of the Court of First Instance gave judgment in favor of the plaintiff against the Atlantic Company, but absolved the
Steamship Company from the complaint.

Issue:

(1) Is the Steamship Company liable to the plaintiff by reason of having delivered the boiler in question in a damaged condition?
(2) Is the Atlantic Company liable to be made to respond to the steamship company for the amount the latter may be required to
pay to the plaintiff for the damage done ? (3) Is the Atlantic Company directly liable to the plaintiff, as the trial court held?

Ruling:

The accident is to be attributed to the failure of Leyden (foreman) to exercise the degree of care which an ordinarily competent
and prudent person would have exhibited under the circumstances which then confronted him. This conclusion of fact cannot be
refuted; and, indeed, no attempt is here made by the appellant to reverse this finding of the trial court.

It will be observed that a contractual relation existed between the Railroad Company and the Steamship Company; and the duties
of the latter with respect to the carrying and delivery of the boilers are to be discovered by considering the terms and legal effect
of that contract. A contractual relation also existed between the Steamship Company and the Atlantic Company; and
the duties owing by the latter to the former with respect to the lifting and the transferring of the boilers are likewise to be discovered
by considering the terms and legal effect of the contract between these parties. On the other hand, no contractual relation
existed directly between the Railroad Company and the Atlantic Company.

Under the contract for transportation from England to Manila, the Steamship Company is liable to the plaintiff for the injury done
to the boiler while it was being discharged from the ship under articles 1103 and 1104 of the Civil Code, for the consequences of
the omission of the care necessary to the proper performance of its obligation. The contract to transport and deliver at the port of
Manila a locomotive boiler, which was received by it in proper condition, is not complied with by delivery at the port of destination
of a mass of iron the utility of which had been destroyed.

The Steamship Company cannot escape liability by reason of the fact that it employed a competent independent contractor to
discharge the boilers..

Defenses of Atlantic
Atlantic contends that by the terms of the engagement in accordance with which the Atlantic Company agreed to render the service,
all risk incident to the discharge of the boilers was assumed by the Steamship Company; and secondly, that the Atlantic Company
should be absolved under the last paragraph of article 1903 of the Civil Code, inasmuch as it had used due care in the selection of
the employee whose negligent act caused the damage in question.

At the hearing, the president of the Atlantic company said that the agreement was that their company would not assume
responsibility for any damage.

The Atlantic Company offered in evidence a number of letters which had been written by it at different times, extending over a
period of years, in response to inquiries made by other firms and persons in Manila concerning the terms upon which the Atlantic
Company would make heavy lifts. The company recognized its duty to exercise due supervisory care; and the exemption from
liability, whatever may have been its precise words, had reference to disasters which might result from some inherent hidden defect
in the lifting apparatus or other unforeseen occurrence not directly attributable to negligence of the company in the lifting
operations. Neither party could have supposed for a moment that it was intended to absolve the Atlantic Company from its duty to
use due care in the work.

The court said that if the exemption should be understood in the sense which counsel for the Atlantic Company now insists it should
bear, that is, as an absolute exemption from all responsibility for negligence, it is evident that the agreement was a most inequitable
and unfair one, and hence it is one that the Steamship Company can not be lightly assumed to have made. Understood in that
sense it is the equivalent of licensing the Atlantic Company to perform its tasks in any manner and fashion that it might please,
and to hold it harmless from the consequences.

There may have been in the minds of the officials of the Atlantic Company an idea that the promise to use due care in the lifting
operations was not accompanied by a legal obligation, such promise being intended merely for its moral effect as an assurance to
the steamship company that the latter might rely upon the competence and diligence of the employees of the Atlantic Company to
accomplish the work in a proper way. The contract can not be permitted to operate in this one-sided manner. The two features of
the engagement, namely, the promise to use due care and the exemption from liability for damage should be so construed as to
give some legal effect to both. The result is, as already indicated, that the Atlantic Company was bound by its undertaking to use
due care and that the exemption was intended to cover accidents due to hidden defects in the apparatus or other unforeseeable
occurrences not having their origin in the immediate personal negligence of the party in charge of the operations.

W/N Atlantic should be absolved

We now proceed to consider the contention that the Atlantic Company should be absolved from liability to the Steamship Company
under the last paragraph of article 1903 of the Civil Code, which declares that the liability there referred to 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. Even when
Atlantic used proper care in the selection of Leyden, the obligation of the Atlantic Company was created by contract, and
article 1903 is not applicable to negligence arising in the course of the performance of a contractual obligation.
Article 1903 is exclusively concerned with cases where the negligence arises in the absence of agreement.

In discussing the liability of the Steamship Company to the plaintiff Railroad Company we have already shown that a party is
bound to the full performance of his contractual engagements under articles 1101 et seq. of the Civil Code, and other
special provisions of the Code relative to contractual obligations; and if he falls short of complete performance by reason of his
own negligence or that of any person to whom he may commit the work, he is liable for the damages resulting therefrom.. It is
desirable, however, in this connection, to bring out somewhat more fully the distinction between negligence in the performance of
a contractual obligation (culpa contractual) and negligence considered as an independent source of obligation between parties not
previously bound (culpa aquiliana).

Justice Tracey, the author of the opinion from which we have quoted, proceeds to observe that Manresa, in commenting on articles
1102 and 1104, has described these two species of negligence as contractual and extra-contractual, the latter being the culpa
aquiliana of the Roman law. "This terminology is unreservedly accepted by Sanchez Roman (Derecho Civil, fourth section, chapter
XI, article II, No. 12), and the principle stated is supported by 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 principle that negligence in the performance of a contract is not governed by article 1903 of the Civil Code but rather by article
1104 of the same Code was directly applied by this court in the case of Baer Senior & Co.'s Successors vs. Compañia Maritima (6
Phil. Rep., 215); and the same idea has been impliedly if not expressly recognized in other cases (N. T. Hashim & Co. vs. Rocha &
Co., 18 Phil. Rep., 315; Tan Chiong Sian vs. Inchausti & Co., 22 Phil. Rep., 152).

What has been said suffices in our opinion to demonstrate that the Atlantic Company is liable to the Steamship Company
for the damages brought upon the latter by the failure of the Atlantic Company to use due care in discharging the
boiler, regardless of the fact that the damage was caused by the negligence of an employee who was qualified for
the work and who had been chosen by the Atlantic Company with due care.

Can the Atlantic Company be held directly liable to the Railroad Company?
Having regard then to the bare fact that the Atlantic Company undertook to remove the boiler from the ship's hold and for this
purpose took the property into its power and control, there arose a duty to the owner to use due care in the performance of that
service and to avoid damaging the property in the course of such operation. This duty was obviously in existence before the
negligent act was done which resulted in damage, and said negligent act may, if we still ignore the existence of the express
contract, be considered as an act done in violation of this duty.

The duty thus to use due care is an implied obligation, of a quasi contractual nature, since it is created by implication
of law in the absence of express agreement. The conception of liability with which we are here confronted is somewhat similar
to that which is revealed in the case of the depositary, or commodatary, whose legal duty with respect to the property committed
to their care is defined by law even in the absence of express contract; and it can not be doubted that a person who takes
possession of the property of another for the purpose of moving or conveying it from one place to another, or for the purpose of
performing any other service in connection therewith (locatio operis faciendi), owes to the owner a positive duty to refrain from
damaging it, to the same extent as if an agreement for the performance of such service had been expressly made with the owner.
The obligation here is really a species of contract le, and it has its source and explanation in the vital fact that the active party has
taken upon himself to do something with or to the property and has taken it into his power and control for the purpose of performing
such service. (Compare art. 1889, Civil Code.)

In the passage which we have already quoted from the decision in the Rakes case this Court recognized the fact that the violation
of a quasi contractual duty is subject to articles 1101, 1103, and 1104 of the Civil Code and not within the purview of article 1903.
Manresa also, in the paragraph reproduced above, is of the opinion that negligence, considered as a substantive and independent
source of liability, does not include cases where the parties are previously bound by any other obligation. Again, it is instructive in
this connection to refer to the contents of article 1103 of the Civil Code, where it is declared that the liability proceeding from
negligence is demandable in the fulfillment of all kinds of obligations. These words evidently comprehend both forms of positive
obligations, whether arising from express contract or from implied contract (quasi contract).

In this connection it is instructive to recall the celebrated case of Coggs vs. Bernard (2 Ld. Raym, 909), decided in the court of the
King's Bench of England in the year 1703. The action was brought by the owner of certain casks of brandy to recover damages
from a person who had undertaken to transport them from one place to another. It was alleged that in so doing the defendant so
negligently and improvidently put them down that one of the casks was staved and the brandy lost. The complaint did not allege
that the defendant was a common carrier or that he was to be paid for his services. It was therefore considered that the complaint
did not state facts sufficient to support an action for breach of any express contract. This made it necessary for the court to go
back to fundamental principles and to place liability on the ground of a violation of the legal duty incident to the mere fact of
carriage. Said Powell, J.: "An action indeed will not lie for not doing the thing, for want of a sufficient consideration; but yet if the
bailee will take the goods into his custody, he shall be answerable for them; for the taking of the goods into his custody is his own
act." So Gould, J.: " . . . any man that undertakes to carry goods is liable to an action, be he a common carrier or whatever he is,
if through his neglect they are lost or come to any damage: . . .." Behind these expressions was an unbroken line of ancient English
precedents holding persons liable for damage inflicted by reason of a misfeasance in carrying out an undertaking. The principle
determined by the court in the case cited is expressed in the syllabus in these words: "If a man undertakes to carry goods safely
and securely, he is responsible for any damage they may sustain in the carriage through his neglect, though he was not a common
carrier and was to have nothing for the carriage." Though not stated in so many words, this decision recognizes that from the mere
fact that a person takes the property of another into his possession and control there arises an obligation in the nature of an
assumpsit that he will use due care with respect thereto. This must be considered a principle of universal jurisprudence, for it is
consonant with justice and common sense and as we have already seen harmonizes with the doctrine above deduced from the
provisions of the Civil Code.

The conclusion must therefore be that if there had been no contract of any sort between the Atlantic Company and the Steamship
Company, an action could have been maintained by the Railroad Company, as owner, against the Atlantic Company to recover the
damages sustained by the former. Such damages would have been demandable under article 1103 of the Civil Code and the action
would not have been subject to the qualification expressed in the last paragraph of article 1903.

The circumstance that a contract was made between the Atlantic Company and the Steamship Company introduces, however, an
important, and in our opinion, controlling factor into this branch of the case. It cannot be denied that the Steamship Company had
possession of this boiler in the capacity of carrier and that, as such, it was authorized to make a contract with the Atlantic Company
to discharge the same from the ship. Indeed, it appears in evidence that even before the contract of affreightment was made the
Railroad Company was informed that it would be necessary for the Steamship Company to procure the services of some contractor
in the port of Manila to effect the discharge, as the ship's tackle was inadequate to handle heavy cargo. It is therefore to be
assumed that the Railroad Company had in fact assented to the employment of a contractor to perform this service.

Now, it cannot be admitted that a person who contracts to do a service like that rendered by the Atlantic Company in this case
incurs a double responsibility upon entering upon performance, namely, a responsibility to the party with whom he contracted, and
another entirely different responsibility to the owner, based on an implied contract. The two liabilities can not in our opinion coexist.
It is a general rule that an implied contract never arises where an express contract has been made.

If double responsibility existed in such a case as this, it would result that a person who had limited his liability by express stipulation
might find himself liable to the owner without regard to the limitation which he had seen fit to impose by contract. There appears
to be no possibility of reconciling the conflict that would be developed in attempting to give effect to those inconsistent liabilities.
The contract which was in fact made, in our opinion, determines not only the character and extent of the liability of the Atlantic
Company but also the person or entity by whom the obligation is exigible. It is of course quite clear that if the Atlantic Company
had refused to carry out its agreement to discharge the cargo, the plaintiff could not have enforced specific performance and could
not have recovered damages for non-performance. (Art. 1257, Civil Code; Donaldson, Sim & Co. vs. Smith, Bell & Co., 2 Phil. Rep.,
766; Uy Tam and Uy Yet vs. Leonard, 30 Phil. Rep., 471.) In view of the preceding discussion it is equally obvious that, for lack of
privity with the contract, the Railroad Company can have no right of action to recover damages from the Atlantic Company for the
wrongful act which constituted the violation of said contract. The rights of the plaintiff can only be made effective through
the Compañia Trasatlantica de Barcelona with whom the contract of affreightment was made.

The judgment entered in the Court of First Instance must, therefore, be reversed not only with respect to the judgment entered in
favor of the plaintiff directly against the Atlantic Company but also with respect to the absolution of the Steamship Company and
the further failure of the court to enter judgment in favor of the latter against the Atlantic Company. The Compañia Trasatlantica
de Barcelona should be and is hereby adjudged to pay to the Manila Railroad Company the sum of twenty two thousand three
hundred forty three pesos and twenty nine centavos (P22,343.29), with interest from May 11, 1914, until paid; and when this
judgment is satisfied, the Compañia Trasatlantica de Barcelona is declared to be entitled to recover the same amount from the
Atlantic Gulf & Pacific Company, against whom judgment is to this end hereby rendered in favor of the Compañia Trasatlantica de
Barcelona. No express adjudication of costs of either instance will be made. So ordered.
||| (Manila Railroad Co. v. La Compa, G.R. No. 11318, [October 26, 1918], 38 PHIL 875-901)

9. Calalas vs CA GR 122039

Facts:
At 10 o'clock in the morning of August 23, 1989, private respondent Eliza Jujeurche G.
Sunga, then a college freshman majoring in Physical Education at the Siliman University,
took a passenger jeepney owned and operated by petitioner Vicente Calalas. As the
jeepney was filled to... capacity of about 24 passengers, Sunga was given by the conductor
an "extension seat," a wooden stool at the back of the door at the rear end of the vehicle.
On the way to Poblacion Sibulan, Negros Occidental, the jeepney stopped to let a
passenger off. As she was seated at the rear of the vehicle, Sunga gave way to the
outgoing passenger. Just as she was doing so, an Isuzu truck driven by Iglecerio Verena
and owned by Francisco
Salva bumped the left rear portion of the jeepney. As a result, Sunga was injured.
On October 9, 1989, Sunga filed a complaint for damages against Calalas, alleging violation
of the contract of carriage by the former in failing to exercise the diligence required of him
as a common carrier. Calalas, on the other hand, filed a third-party complaint against
Francisco Salva, the owner of the Isuzu truck.
The lower court rendered judgment against Salva as third-party defendant and absolved
Calalas of liability, holding that it was the driver of the Isuzu truck who was responsible for
the accident. It took cognizance of another case (Civil Case No. 3490), filed by Calalas
against
Salva and Verena, for quasi-delict, in which Branch 37 of the same court held Salva and his
driver Verena jointly liable to Calalas for the damage to his jeepney.
On appeal to the Court of Appeals, the ruling of the lower court was reversed on the ground
that Sunga's cause of action was based on a contract of carriage, not quasi-delict, and that
the common carrier failed to exercise the diligence required under the Civil Code. The...
appellate court dismissed the third-party complaint against Salva and adjudged Calalas
liable for damages to Sunga.
Issues:
the issue in this case is whether... petitioner is liable on his contract of carriage.
Ruling:
Petitioner contends that the ruling in Civil Case No. 3490 that the negligence of Verena was
the proximate cause of the accident negates his liability and that to rule otherwise would be
to make the common carrier an insurer of the safety of its passengers.
He contends that the bumping of the jeepney by the truck owned by Salva was a caso
fortuito. Petitioner further assails the award of moral damages to Sunga on the ground that
it is not supported by evidence.
The first, quasi-delict, also known as culpa aquiliana or culpa extra contractual, has as its
source the negligence of the tortfeasor. The second, breach of contract or culpa contractual,
is premised... upon the negligence in the performance of a contractual obligation.
Consequently, in quasi-delict, the negligence or fault should be clearly established because
it is the basis of the action, whereas in breach of contract, the action can be prosecuted
merely by proving the existence of the contract and the fact that the obligor, in this case
the... common carrier, failed to transport his passenger safely to his destination.[
There is, thus, no basis for the contention that the ruling in Civil Case No. 3490, finding
Salva and his driver Verena liable for the damage to petitioner's jeepney, should be binding
on Sunga. It is immaterial that the proximate cause of the collision between the jeepney
and... the truck was the negligence of the truck driver.
In the case at bar, upon the happening of the accident, the presumption of negligence at
once arose, and it became the duty of petitioner to prove that he had to observe
extraordinary diligence in the care of his passengers.
Now, did the driver of jeepney carry Sunga "safely as far as human care and foresight could
provide, using the utmost diligence of very cautious persons, with due regard for all the
circumstances" as required by Art. 1755? We do not think so. Several factors militate
against... petitioner's contention.
First, as found by the Court of Appeals, the jeepney was not properly parked, its rear portion
being exposed about two meters from the broad shoulders of the highway, and facing the
middle of the highway in a diagonal angle. This is a violation of the R.A. No. 4136, as
amended,... or the Land Transportation and Traffic Code,... Second, it is undisputed that
petitioner's driver took in more passengers than the allowed seating capacity of the jeepney,
a violation of §32(a) of the same law. It provides:
Exceeding registered capacity. - No person operating any motor vehicle shall allow more
passengers or more freight or cargo in his vehicle than its registered capacity.
The fact that Sunga was seated in an "extension seat" placed her in a peril greater than that
to which the other passengers were exposed. Therefore, not only was petitioner unable to
overcome the presumption of negligence imposed on him for the injury sustained by Sunga,
but... also, the evidence shows he was actually negligent in transporting passengers.
Principles:
In case of death or injuries to passengers, Art. 1756 of the Civil Code provides that common
carriers are presumed to have been at fault or to have acted negligently unless they... prove
that they observed extraordinary diligence as defined in Arts. 1733 and 1755 of the Code.
This provision necessarily shifts to the common carrier the burden of proof.
The doctrine of proximate cause is applicable only in actions for quasi-delict, not in actions
involving breach of contract. The doctrine is a device for imputing liability to a person where
there is no relation between him and... another party. In such a case, the obligation is
created by law itself. But, where there is a pre-existing contractual relation between the
parties, it is the parties themselves who create the obligation, and the function of the law is
merely to regulate the relation thus... created.

10. Construction Devt vs Estrella GR 147791

FACTS: Respondents Rebecca G. Estrella and her granddaughter, Rachel E. Fletcher, boarded in
San Pablo City, a BLTB bus bound for Pasay City. However, they never reached their destination
because their bus was rammed from behind by a tractor-truck of CDCP in the South Expressway.
The strong impact pushed forward their seats and pinned their knees to the seats in front of them.
They were injured due to the collision.
Thereafter, respondents filed a Complaint5 for damages against CDCP, BLTB, EspiridionPayunan,
Jr. and Wilfredo Datinguinoo. They alleged (1) that Payunan, Jr. and Datinguinoo, who were the
drivers of CDCP and BLTB buses, respectively, were negligent and did not obey traffic laws; (2) that
BLTB and CDCP did not exercise the diligence of a good father of a family in the selection and
supervision of their employees; (3) that BLTB allowed its bus to operate knowing that it lacked
proper maintenance thus exposing its passengers to grave danger; (4) that they suffered actual
damages amounting to P250,000.00 for Estrella and P300,000.00 for Fletcher; (5) that they suffered
physical discomfort, serious anxiety, fright and mental anguish, besmirched reputation and wounded
feelings, moral shock, and lifelong social humiliation; (6) that defendants failed to act with justice,
give respondents their due, observe honesty and good faith which entitles them to claim for
exemplary damage; and (7) that they are entitled to a reasonable amount of attorney's fees and
litigation expenses.

Trial court rendered a decision finding CDCP and BLTB and their employees liable for damages
jointly and severally to pay for actual damages, moral and exemplary damages and attorney’s fees.

The trial court held that BLTB, as a common carrier, was bound to observe extraordinary diligence in
the vigilance over the safety of its passengers. Thus, where a passenger dies or is injured, the
carrier is presumed to have been at fault or has acted negligently. BLTB's inability to carry
respondents to their destination gave rise to an action for breach of contract of carriage while its
failure to rebut the presumption of negligence made it liable to respondents for the breach.9

Regarding CDCP, the trial court found that the tractor-truck it owned bumped the BLTB bus from
behind. Evidence showed that CDCP's driver was reckless and driving very fast at the time of the
incident. The gross negligence of its driver raised the presumption that CDCP was negligent either in
the selection or in the supervision of its employees which it failed to rebut thus making it and its
driver liable to respondents.

CDCP appealed the decision contending that liability for actual damages and attorney's fees is
based on culpa contractual, thus, only BLTB should be held liable. Respondents, on the other hand,
argue that petitioner is also at fault, hence, it was properly joined as a party. There may be an action
arising out of one incident where questions of fact are common to all. Thus, the cause of action
based on culpa aquiliana in the civil suit they filed against it was valid.

ISSUE: 1) whether BLTB and its driver Wilfredo Datinguinoo are solely liable for the damages
sustained by respondents; (2) whether the damages, attorney's fees and legal interest awarded by
the CA are excessive and unfounded.

RULING: (1) CDCP is solidarily liable with BLTB for damages.The case filed by respondents against
petitioner is an action for culpa aquiliana or quasi-delict under Article 2176 of the Civil Code.13 In this
regard, Article 2180 provides that the obligation imposed by Article 2176 is demandable for the acts
or omissions of those persons for whom one is responsible. Consequently, an action based on
quasi-delict may be instituted against the employer for an employee's act or omission. The liability
for the negligent conduct of the subordinate is direct and primary, but is subject to the defense of
due diligence in the selection and supervision of the employee.14 In the instant case, the trial court
found that petitioner failed to prove that it exercised the diligence of a good father of a family in the
selection and supervision of Payunan, Jr.

The trial court and the Court of Appeals found petitioner solidarily liable with BLTB for the actual
damages suffered by respondents because of the injuries they sustained. It was established that
Payunan, Jr. was driving recklessly because of the skid marks as shown in the sketch of the police
investigator.
It is well-settled in Fabre, Jr. v. Court of Appeals,15 that the owner of the other vehicle which collided
with a common carrier is solidarily liable to the injured passenger of the same. The same rule of
liability was applied in situations where the negligence of the driver of the bus on which plaintiff was
riding concurred with the negligence of a third party who was the driver of another vehicle, thus
causing an accident. As in the case of BLTB, private respondents in this case and her co-plaintiffs
did not stake out their claim against the carrier and the driver exclusively on one theory, much less
on that of breach of contract alone.After all, it was permitted for them to allege alternative
causes of action and join as many parties as may be liable on such causes of action so long
as private respondent and her co-plaintiffs do not recover twice for the same injury. xxThe
difficulty in the contention of the appellants is that they fail to recognize that the basis of the present
action is tort. They fail to recognize the universal doctrine that each joint tort feasor is not only
individually liable for the tort in which he participates, but is also jointly liable with his tort feasors. x
xx

(2) Moral damages may be recovered in quasi-delicts causing physical injuries.21 The award
of moral damages in favor of Fletcher and Estrella in the amount of P80,000.00 must be reduced
since prevailing jurisprudence fixed the same at P50,000.00.22 While moral damages are not
intended to enrich the plaintiff at the expense of the defendant, the award should nonetheless be
commensurate to the suffering inflicted.23

The Court of Appeals correctly awarded respondents exemplary damages in the amount of
P20,000.00 each. Exemplary damages may be awarded in addition to moral and compensatory
damages.24 Article 2231 of the Civil Code also states that in quasi-delicts, exemplary damages may
be granted if the defendant acted with gross negligence.25 In this case, petitioner's driver was driving
recklessly at the time its truck rammed the BLTB bus. Petitioner, who has direct and primary liability
for the negligent conduct of its subordinates, was also found negligent in the selection and
supervision of its employees. In Del Rosario v. Court of Appeals,26 we held, thus:

ART. 2229 of the Civil Code also provides that such damages may be imposed, by way of
example or correction for the public good. While exemplary damages cannot be recovered
as a matter of right, they need not be proved, although plaintiff must show that he is entitled
to moral, temperate or compensatory damages before the court may consider the question of
whether or not exemplary damages should be awarded. Exemplary Damages are imposed
not to enrich one party or impoverish another but to serve as a deterrent against or as a
negative incentive to curb socially deleterious actions.

12. Joseph vs Bautista

13 Smith vs Borja GR 143008

14. PBC vs CA GR 97626

FACTS:

Rommel's Marketing Corporation (RMC) engaged in the business of selling appliances, filed a complaint to
recover from PBC, 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.
From May 5, 1975 to July 16, 1976, RMC’s President 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 the account 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 Lipana 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.

The (secretary) Irene Yabut's modus operandi was to 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.

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 the bank the return of its money, but as its
demand went unheeded, it filed a collection suit before the RTC.

RTC: found that the bank was negligent; PBC and (PBC Teller) Azucena Mabayad jointly and severally liable

CA: affirmed but deleted the awards of exemplary damages and attorney's fees

ISSUES:

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?

CONTENTIONS:

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.
HELD:

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.

First Element

In the case at bench, there is no dispute as to the damage suffered by RMC in the amount of
P304,979.74.

Second Element

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,
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, xxx.

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.

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.

Third Element

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

Doctrine of Last Clear Chance

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 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.

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.

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.

Contributory Negligence by RMC

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 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.

15. Taylor vs Manila Elec. Road