Torts Cases Second Batch

TORTS & DAMAGES 2ND BATCH CASES
G.R. No. 77679 September 30, 1987

VICENTE VERGARA, petitioner,
vs.
THE COURT OF APPEALS and AMADEO AZARCON, respondents.
RESOLUTION
PADILLA, J.:
An action for damages based on quasi-delict (Art. 2176 of the Civil Code) was filed by private
respondent against petitioner. The action arose from a vehicular accident that occurred on 5
August 1979 in Gapan, Nueva Ecija, when Martin Belmonte, while driving a cargo truck belonging
to petitioner, rammed "head-on" the store-residence of the private respondent, causing damages
thereto which were inventoried and assessed at P53,024.22.
In his answer to the complaint, the petitioner alleged principally: "that his driver Martin Belmonte
operated said cargo truck in a very diligent (and) careful manner; that the steering wheel refused
to respond to his effort and as a result of a blown-out tire and despite application of his brakes, the
said cargo truck hit the store-residence of plaintiff (private respondent) and that the said accident
was an act of God for which he cannot be held liable." 1
Petitioner also filed a third party complaint against Travellers Insurance and Surety Corporation,
alleging that said cargo truck involved in the vehicular accident, belonging to the petitioner, was
insured by the third party defendant insurance company. Petitioner asked that the latter be
ordered to pay him whatever amount he may be ordered by the court to pay to the private
respondent.
The trial court rendered judgment in favor of private respondent. Upon appeal to the Court of
Appeals, the latter court affirmed in toto the decision of the trial court, which ordered Petitioner to
pay, jointly and severally with Travellers Insurance and Surety Corporation, to the private,
respondent the following: (a) P53,024.22 as actual damages; (b) P10,000.00 as moral damages; (c)
P10,000.00 as exemplary damages; and (d) the sum of P5,000.00 for attorney's fees and the costs.
On the third party complaint, the insurance company was sentenced to pay to the petitioner the
following: (a) P50,000.00 for third party liability under its comprehensive accident insurance policy;
and (b) P3,000.00 for and as attorney's fees.
or omission, of which defendant, or some person for whose acts he must respond, was guilty; and
(3) the connection of cause and effect between such negligence and the damages.
It is undisputed that private respondent suffered damages as a result of an act or omission of
petitioner. The issue of whether or not this act or omission can be considered as a "negligent" act
or omission was passed upon by the trial court. The findings of said court, affirmed by the
respondent court, which we are not prepared to now disturb, show that the fact of occurrence of
the "vehicular accident" was sufficiently established by the policy report and the testimony of
Patrolman Masiclat. And the fact of negligence may be deduced from the surrounding
circumstances thereof. According to the police report, "the cargo truck was travelling on the right
side of the road going to Manila and then it crossed to the center line and went to the left side of
the highway; it then bumped a tricycle; and then another bicycle; and then said cargo truck
rammed the store warehouse of the plaintiff." 2
According to the driver of the cargo truck, he applied the brakes but the latter did not work due to
mechanical defect. Contrary to the claim of the petitioner, a mishap caused by defective brakes
can not be consideration as fortuitous in character. Certainly, the defects were curable and the
accident preventable.
Furthermore, the petitioner failed to adduce any evidence to overcome the disputable presumption
of negligence on his part in the selection and supervision of his driver.
Based on the foregoing finding by the respondent Court that there was negligence on the part of
the petitioner, the petitioner's contention that the respondent court erred in awarding private
respondent actual, moral and exemplary damages as well as attorney's fees and costs, is
untenable.
ACCORDINGLY, the petition is DENIED.
SO ORDERED.
G.R. No. 118889 March 23, 1998
FGU INSURANCE CORPORATION, petitioner,
vs.
COURT OF APPEALS, FILCAR TRANSPORT, INC., and FORTUNE INSURANCE
CORPORATION, respondents.
Hence, this petition for review on certiorari.

Petitioner's contention that the respondent court erred in finding him guilty of fault or negligence is
not tenable. It was established by competent evidence that the requisites of a quasi-delict are
present in the case at bar. These requisites are: (1) damages to the plaintiff; (2) negligence, by act
BELLOSILLO, J.:
For damages suffered by a third party, may an action based on quasi-delict prosper against a renta-car company and, consequently, its insurer for fault or negligence of the car lessee in driving the
rented vehicle?
This was a two-car collision at dawn. At around 3 o'clock of 21 April 1987, two (2) vehicles, both
Mitsubishi Colt Lancers, cruising northward along Epifanio de los Santos Avenue, Mandaluyong
City, figured in a traffic accident. The car bearing Plate No. PDG 435 owned by Lydia F. Soriano was
being driven at the outer lane of the highway by Benjamin Jacildone, while the other car, with Plate
No. PCT 792, owned by respondent FILCAR Transport, Inc. (FILCAR), and driven by Peter DahlJensen as lessee, was at the center lane, left of the other vehicle. Upon approaching the corner of
Pioneer Street, the car owned by FILCAR swerved to the right hitting the left side of the car of
Soriano. At that time Dahl-Jensen, a Danish tourist, did not possess a Philippine driver's license. 1
As a consequence, petitioner FGU Insurance Corporation, in view of its insurance contract with
Soriano, paid the latter P25,382.20. By way of subrogation, 2 it sued Dahl-Jensen and respondent
FILCAR as well as respondent Fortune Insurance Corporation (FORTUNE) as insurer of FILCAR
for quasi-delict before the Regional Trial Court of Makati City.
Unfortunately, summons was not served on Dahl-Jensen since he was no longer staying at his
given address; in fact, upon motion of petitioner, he was dropped from the complaint.
On 30 July 1991 the trial court dismissed the case for failure of petitioner to substantiate its claim
of subrogation. 3
On 31 January 1995 respondent Court of Appeals affirmed the ruling of the trial court although
based on another ground, i.e., only the fault or negligence of Dahl-Jensen was sufficiently proved
but not that of respondent FILCAR. 4In other words, petitioner failed to establish its cause of action
for sum of money based on quasi-delict.
In this appeal, petitioner insists that respondents are liable on the strength of the ruling in MYCAgro-Industrial Corporation v. Vda. de Caldo 5 that the registered owner of a vehicle is liable for
damages suffered by third persons although the vehicle is leased to another.
We find no reversible error committed by respondent court in upholding the dismissal of
petitioner's complaint. The pertinent provision is Art. 2176 of the Civil Code which states:
"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 . . . . "
To sustain a claim based thereon, the following requisites must concur: (a) damage suffered by the
plaintiff; (b) fault or negligence of the defendant; and, (c) connection of cause and effect between
the fault or negligence of the defendant and the damage incurred by the plaintiff. 6
We agree with respondent court that petitioner failed to prove the existence of the second
requisite, i.e., fault or negligence of defendant FILCAR, because only the fault or negligence of
Dahl-Jensen was sufficiently established, not that of FILCAR. It should be noted that the damage
caused on the vehicle of Soriano was brought about by the circumstance that Dahl-Jensen swerved
to the right while the vehicle that he was driving was at the center lane. It is plain that the
negligence was solely attributable to Dahl-Jensen thus making the damage suffered by the other
vehicle his personal liability. Respondent FILCAR did not have any participation therein.
Article 2180 of the same Code which deals also with quasi-delict provides:
The obligation imposed by article 2176 is demandable not only for one's own acts
or omissions, but also for those of persons for whom one is responsible.
The father and, in case of his death or incapacity, the mother, are responsible for
the damages caused by the minor children who live in their company.
Guardians are liable for damages caused by the minors or incapacitated persons
who are under their authority and live in their company.
The owners and managers of an establishment or enterprise are likewise
responsible for damages caused by their employees in the service of the branches
in which the latter are employed or on the occasion of their functions.
Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even though the
former are not engaged in any business or industry.
The State is responsible in like manner when it acts through a special agent; but
not when the damage has been caused by the official to whom the task done
properly pertains, in which case what is provided in article 2176 shall be
applicable.
Lastly, teachers or heads of establishments of arts and trades shall be liable for
damages caused by their pupils and students or apprentices, so long as they
remain in their custody.
The responsibility treated of in this article shall cease when the persons herein
mentioned prove that they observed all the diligence of a good father of a family to
prevent damage.
The liability imposed by Art. 2180 arises by virtue of a presumption juris tantum of negligence on
the part of the persons made responsible thereunder, derived from their failure to exercise due
care and vigilance over the acts of subordinates to prevent them from causing damage. 7 Yet, as
correctly observed by respondent court, Art. 2180 is hardly applicable because none of the
circumstances mentioned therein obtains in the case under consideration. Respondent FILCAR
being engaged in a rent-a-car business was only the owner of the car leased to Dahl-Jensen. As
such, there was novinculum juris between them as employer and employee. Respondent FILCAR
cannot in any way be responsible for the negligent act of Dahl-Jensen, the former not being an
employer of the latter.
is liable for the acts of the driver employed by its former lessee who has become the owner of that
vehicle by virtue of an unregistered Deed of Sale.
Statement of the Case
We now correlate par. 5 of Art. 2180 with Art. 2184 of the same Code which provides: "In motor
vehicle mishap, the owner is solidarily liable with his driver, if the former, who was in the vehicle,
could have by the use of due diligence, prevented the misfortune . . . . If the owner was not in the
motor vehicle, the provisions of article 2180 are applicable." Obviously, this provision of Art. 2184
is neither applicable because of the absence of master-driver relationship between respondent
FILCAR and Dahl-Jensen. Clearly, petitioner has no cause of action against respondent FILCAR on
the basis of quasi-delict; logically, its claim against respondent FORTUNE can neither prosper.
Petitioner's insistence on MYC-Agro-Industrial Corporation is rooted in a misapprehension of our
ruling therein. In that case, the negligent and reckless operation of the truck owned by petitioner
corporation caused injuries to several persons and damage to property. Intending to exculpate
itself from liability, the corporation raised the defense that at the time of the collision it had no
more control over the vehicle as it was leased to another; and, that the driver was not its
employee but of the lessee. The trial court was not persuaded as it found that the true nature of
the alleged lease contract was nothing more than a disguise effected by the corporation to relieve
itself of the burdens and responsibilities of an employer. We upheld this finding and affirmed the
declaration of joint and several liability of the corporation with its driver.
Before us is a Petition for Review under Rule 45 of the Rules of Court, assailing the May 12,
2000 Decision[1] of the Court of Appeals [2] (CA) in CA-GR CV No. 55474. The decretal portion of the
Decision reads as follows:
WHEREFORE, premises considered, the instant appeal is hereby DISMISSED for lack of merit. The
assailed decision, dated May 5, 1997, of the Regional Trial Court of Manila, Branch 14, in Civil Case
No. 95-73522, is hereby AFFIRMED with MODIFICATION that the award of attorneys fees
is DELETED.[3]
On the other hand, in Civil Case No. 95-73522, the Regional Trial Court (RTC) of Manila (Branch
14) had earlier disposed in this wise:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant
Equitable Leasing Corporation ordering said defendant to pay to the plaintiffs the following:
A. TO MYRNA TAMAYO
WHEREFORE, the petition is DENIED. The decision of respondent Court of Appeals dated 31 January
1995 sustaining the dismissal of petitioner's complaint by the trial court is AFFIRMED. Costs
against petitioner.
SO ORDERED.
(G.R. No. 143360. September 5, 2002]
EQUITABLE LEASING CORPORATION, petitioner, vs. LUCITA SUYOM, MARISSA ENANO,
MYRNA TAMAYO and FELIX OLEDAN, respondents.
DECISION
PANGANIBAN, J.:
In an action based on quasi delict, the registered owner of a motor vehicle is solidarily liable
for the injuries and damages caused by the negligence of the driver, in spite of the fact that the
vehicle may have already been the subject of an unregistered Deed of Sale in favor of another
person. Unless registered with the Land Transportation Office, the sale -- while valid and binding
between the parties -- does not affect third parties, especially the victims of accidents involving
the said transport equipment. Thus, in the present case, petitioner, which is the registered owner,
1. the sum of P50,000.00 for the death of Reniel Tamayo;

2. P50,000.00 as moral damages; and
3. P56,000.00 for the damage to the store and its contents, and funeral expenses.
B. TO FELIX OLEDAN
1. the sum of P50,000.00 for the death of Felmarie Oledan;
2. P50,000.00 as moral damages; and
3. P30,000.00 for medical expenses, and funeral expenses.
C. TO MARISSA ENANO
1. P7,000.00 as actual damages
D. TO LUCITA SUYOM
1. The sum of P5,000.00 for the medical treatment of her two sons.
The sum of P120,000.00 as and for attorneys fees.[4]
The CA likewise upheld respondents claim for moral damages against petitioner because the
appellate court considered Tutor, the driver of the tractor, to be an agent of the registered
owner/operator.[15]
Hence, this Petition.[16]
The Facts
On July 17, 1994, a Fuso Road Tractor driven by Raul Tutor rammed into the house cum store
of Myrna Tamayo located at Pier 18, Vitas, Tondo, Manila. A portion of the house was
destroyed. Pinned to death under the engine of the tractor were Respondent Myrna Tamayos son,
Reniel Tamayo, and Respondent Felix Oledans daughter, Felmarie Oledan. Injured were
Respondent Oledan himself, Respondent Marissa Enano, and two sons of Respondent Lucita
Suyom.
Tutor was charged with and later convicted of reckless imprudence resulting in multiple
homicide and multiple physical injuries in Criminal Case No. 296094-SA, Metropolitan Trial Court of
Manila, Branch 12.[5]
Upon verification with the Land Transportation Office, respondents were furnished a copy of
Official Receipt No. 62204139[6] and Certificate of Registration No. 08262797,[7] showing that the
registered owner of the tractor was Equitable Leasing Corporation/leased to Edwin Lim. On April
15, 1995, respondents filed against Raul Tutor, Ecatine Corporation (Ecatine) and Equitable
Leasing Corporation (Equitable) a Complaint [8] for damages docketed as Civil Case No. 95-73522
in the RTC of Manila, Branch 14.
Issues
In its Memorandum, petitioner raises the following issues for the Courts consideration:
I
Whether or not the Court of Appeals and the trial court gravely erred when they decided and held
that petitioner [was] liable for damages suffered by private respondents in an action based on
quasi delict for the negligent acts of a driver who [was] not the employee of the petitioner.
II
Whether or not the Court of Appeals and the trial court gravely erred when they awarded moral
damages to private respondents despite their failure to prove that the injuries they suffered were
brought by petitioners wrongful act.[17]
This Courts Ruling
The trial court, upon motion of plaintiffs counsel, issued an Order dropping Raul Tutor, Ecatine
and Edwin Lim from the Complaint, because they could not be located and served with
summonses.[9] On the other hand, in its Answer with Counterclaim, [10] petitioner alleged that the
vehicle had already been sold to Ecatine and that the former was no longer in possession and
control thereof at the time of the incident. It also claimed that Tutor was an employee, not of
Equitable, but of Ecatine.
After trial on the merits, the RTC rendered its Decision ordering petitioner to pay actual and
moral damages and attorneys fees to respondents. It held that since the Deed of Sale between
petitioner and Ecatine had not been registered with the Land Transportation Office (LTO), the legal
owner was still Equitable. [11] Thus, petitioner was liable to respondents.[12]
Ruling of the Court of Appeals
Sustaining the RTC, the CA held that petitioner was still to be legally deemed the
owner/operator of the tractor, even if that vehicle had been the subject of a Deed of Sale in favor
of Ecatine on December 9, 1992. The reason cited by the CA was that the Certificate of
Registration on file with the LTO still remained in petitioners name. [13] In order that a transfer of
ownership of a motor vehicle can bind third persons, it must be duly recorded in the LTO. [14]
The Petition has no merit.

First Issue:
Liability for Wrongful Acts
Petitioner contends that it should not be held liable for the damages sustained by respondents
and that arose from the negligence of the driver of the Fuso Road Tractor, which it had already sold
to Ecatine at the time of the accident. Not having employed Raul Tutor, the driver of the vehicle, it
could not have controlled or supervised him.[18]
We are not persuaded. In negligence cases, the aggrieved party may sue the negligent party
under (1) Article 100[19] of the Revised Penal Code, for civil liability ex delicto; or (2) under Article
2176[20] of the Civil Code, for civil liability ex quasi delicto.[21]
Furthermore, under Article 103 of the Revised Penal Code, employers may be held subsidiarily
liable for felonies committed by their employees in the discharge of the latters duties. [22] This
liability attaches when the employees who are convicted of crimes committed in the performance
of their work are found to be insolvent and are thus unable to satisfy the civil liability adjudged. [23]
On the other hand, under Article 2176 in relation to Article 2180 [24] of the Civil Code, an action
predicated on quasi delict may be instituted against the employer for an employees act or
omission. The liability for the negligent conduct of the subordinate is direct andprimary, but is
subject to the defense of due diligence in the selection and supervision of the employee. [25] The
enforcement of the judgment against the employer for an action based on Article 2176 does not
require the employee to be insolvent, since the liability of the former is solidary -- the latter being
statutorily considered a joint tortfeasor. [26] To sustain a claim based on quasi delict, the following
requisites must be proven: (a) damage suffered by the plaintiff, (b) fault or negligence of the
defendant, and (c) connection of cause and effect between the fault or negligence of the
defendant and the damage incurred by the plaintiff.[27]
x x x. The main aim of motor vehicle registration is to identify the owner so that if any accident
happens, or that any damage or injury is caused by the vehicle on the public highways,
responsibility therefor can be fixed on a definite individual, the registered owner. Instances are
numerous where vehicles running on public highways caused accidents or injuries to pedestrians
or other vehicles without positive identification of the owner or drivers, or with very scant means of
identification. It is to forestall these circumstances, so inconvenient or prejudicial to the public,
that the motor vehicle registration is primarily ordained, in the interest of the determination of
persons responsible for damages or injuries caused on public highways. [44]
Further, petitioners insistence on FGU Insurance Corp. v. Court of Appeals is misplaced.
First, in FGU Insurance, the registered vehicle owner, which was engaged in a rent-a-car
business, rented out the car. In this case, the registered owner of the truck, which is engaged in
the business of financing motor vehicle acquisitions, has actually sold the truck to Ecatine, which in
turn employed Tutor. Second, in FGU Insurance, the registered owner of the vehicle was not held
responsible for the negligent acts of the person who rented one of its cars, because Article 2180 of
the Civil Code was not applicable. We held that no vinculum juris as employer and employee
existed between the owner and the driver. [46] In this case, the registered owner of the tractor is
considered under the law to be the employer of the driver, while the actual operator is deemed to
be its agent.[47] Thus, Equitable, the registered owner of the tractor, is -- for purposes of the law on
quasi delict -- the employer of Raul Tutor, the driver of the tractor. Ecatine, Tutors actual
employer, is deemed as merely an agent of Equitable. [48]
[45]
These two causes of action (ex delicto or ex quasi delicto) may be availed of, subject to the
caveat[28] that the offended party cannot recover damages twice for the same act or omission or
under both causes.[29] Since these two civil liabilities are distinct and independent of each other,
the failure to recover in one will not necessarily preclude recovery in the other. [30]
In the instant case, respondents -- having failed to recover anything in the criminal case -elected to file a separate civil action for damages, based on quasi delict under Article 2176 of the
Civil Code.[31] The evidence is clear that the deaths and the injuries suffered by respondents and
their kins were due to the fault of the driver of the Fuso tractor.
Dated June 4, 1991, the Lease Agreement [32] between petitioner and Edwin Lim
stipulated that it is the intention of the parties to enter into a FINANCE LEASE
AGREEMENT.[33] Under such scheme, ownership of the subject tractor was to be registered in the
name of petitioner, until the value of the vehicle has been fully paid by Edwin Lim. [34] Further, in
the Lease Schedule,[35] the monthly rental for the tractor was stipulated, and the term of the
Lease was scheduled to expire on December 4, 1992. After a few months, Lim completed the
payments to cover the full price of the tractor. [36] Thus, on December 9, 1992, a Deed of
Sale[37] over the tractor was executed by petitioner in favor of Ecatine represented by Edwin
Lim. However, the Deed was not registered with the LTO.
We hold petitioner liable for the deaths and the injuries complained of, because it was the
registered owner of the tractor at the time of the accident on July 17, 1994. [38] The Court has
consistently ruled that, regardless of sales made of a motor vehicle, the registered owner is the
lawful operator insofar as the public and third persons are concerned; consequently, it is directly
and primarily responsible for the consequences of its operation. [39] In contemplation of law, the
owner/operator of record is the employer of the driver, the actual operator and employer being
considered as merely its agent.[40] The same principle applies even if the registered owner of any
vehicle does not use it for public service.[41]
Since Equitable remained the registered owner of the tractor, it could not escape primary
liability for the deaths and the injuries arising from the negligence of the driver. [42]
The finance-lease agreement between Equitable on the one hand and Lim or Ecatine on the
other has already been superseded by the sale. In any event, it does not bind third persons. The
rationale for this rule has been aptly explained in Erezo v. Jepte,[43] which we quote hereunder:
True, the LTO Certificate of Registration, dated 5/31/91, qualifies the name of the registered
owner as EQUITABLE LEASING CORPORATION/Leased to Edwin Lim. But the lease agreement
between Equitable and Lim has been overtaken by the Deed of Sale on December 9, 1992,
between petitioner and Ecatine. While this Deed does not affect respondents in this quasi
delict suit, it definitely binds petitioner because, unlike them, it is a party to it.
We must stress that the failure of Equitable and/or Ecatine to register the sale with the LTO
should not prejudice respondents, who have the legal right to rely on the legal principle that the
registered vehicle owner is liable for the damages caused by the negligence of the
driver. Petitioner cannot hide behind its allegation that Tutor was the employee of Ecatine. This
will effectively prevent respondents from recovering their losses on the basis of the inaction or
fault of petitioner in failing to register the sale. The non-registration is the fault of petitioner, which
should thus face the legal consequences thereof.
Second Issue:
Moral Damages
Petitioner further claims that it is not liable for moral damages, because respondents failed to
establish or show the causal connection or relation between the factual basis of their claim and
their wrongful act or omission, if any. [49]
Moral damages are not punitive in nature, but are designed to compensate [50] and alleviate in
some way the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation,
wounded feelings, moral shock, social humiliation, and similar injury unjustly caused a person.
[51]
Although incapable of pecuniary computation, moral damages must nevertheless be somehow
proportional to and in approximation of the suffering inflicted. [52] This is so because moral damages
are in the category of an award designed to compensate the claimant for actual injury suffered, not
to impose a penalty on the wrongdoer.[53]
Viewed as an action for quasi delict, the present case falls squarely within the purview of
Article 2219 (2),[54] which provides for the payment of moral damages in cases of quasi delict.
[55]
Having established the liability of petitioner as the registered owner of the vehicle,
[56]
respondents have satisfactorily shown the existence of the factual basis for the award [57] and its
causal connection to the acts of Raul Tutor, who is deemed as petitioners employee. [58] Indeed, the
damages and injuries suffered by respondents were the proximate result of petitioners tortious act
or omission.[59]
Further, no proof of pecuniary loss is necessary in order that moral damages may be awarded,
the amount of indemnity being left to the discretion of the court. [60] The evidence gives no ground
for doubt that such discretion was properly and judiciously exercised by the trial court. [61] The
award is in fact consistent with the rule that moral damages are not intended to enrich the injured
party, but to alleviate the moral suffering undergone by that party by reason of the defendants
culpable action.[62]
WHEREFORE, the Petition is DENIED and the assailed Decision AFFIRMED. Costs against
petitioner.
SO ORDERED.
G.R. No. L-33171 May 31, 1979
PORFIRIO
P.
CINCO, petitioner-appellant,
vs.
HON. MATEO CANONOY, Presiding Judge of the Third Branch of the Court of First
Instance of Cebu, HON. LORENZO B. BARRIA City Judge of Mandaue City, Second Branch
ROMEO HILOT, VALERIANA PEPITO and CARLOS PEPITO, respondents-appellees.
Eriberto Seno for appellant.
Jose M. Mesina for appellees.
This is a Petition for Review on certiorari of the Decision of the Court of First Instance of Cebu
rendered on November 5, 1970.
The background facts to the controversy may be set forth as follows:
Petitioner herein filed, on February 25, 1970, a Complaint in the City Court of Mandaue City, Cebu,
Branch II, for the recovery of damages on account of a vehicular accident involving his automobile
and a jeepney driven by Romeo Hilot and operated by Valeriana Pepito and Carlos Pepito, the last
three being the private respondents in this suit. Subsequent thereto, a criminal case was filed
against the driver, Romeo Hilot, arising from the same accident. At the pre-trial in the civil case,
counsel for private respondents moved to suspend the civil action pending the final determination
of the criminal suit, invoking Rule 111, Section 3 (b) of the Rules of Court, which provides:
(b) After a criminal action has been commenced. no civil action arising from the
same offense can be prosecuted, and the same shall be suspended, in whatever
stage it may be found, until final judgment in the criminal proceeding has been
rendered;
The City Court of Mandaue City in an Order dated August 11, 1970, ordered the suspension of the
civil case. Petitioner's Motion for Reconsideration thereof, having been denied on August 25,
1970, 1 petitioner elevated the matter on certiorari to the Court of First Instance of Cebu,
respondent Judge presiding, on September 11, 1970, alleging that the City Judge had acted with
grave abuse of discretion in suspending the civil action for being contrary to law and
jurisprudence. 2
On November 5, 1970, respondent Judge dismissed the Petition for certiorari on the ground that
there was no grave abuse of discretion on the part of the City Court in suspending the civil action
inasmuch as damage to property is not one of the instances when an independent civil action is
proper; that petitioner has another plain, speedy, and adequate remedy under the law, which is to
submit his claim for damages in the criminal case; that the resolution of the City Court is
interlocutory and, therefore, certiorari is improper; and that the Petition is defective inasmuch as
what petitioner actually desires is a Writ of mandamus (Annex "R"). Petitioner's Motion for
Reconsideration was denied by respondent Judge in an Order dated November 14,1970 (Annex "S"
and Annex "U").
Hence, this Petition for Review before this Tribunal, to which we gave due course on February 25,
1971. 3
Petitioner makes these:
ASSIGNMENTS OF ERROR
MELENCIO-HERRERA, J.:
1. THE TRIAL COURT, RESPONDENT JUDGE MATEO CANONOY, ERRED IN HOLDING

THAT THE TRIAL OF THE CIVIL CASE NO. 189 FILED IN THE CITY COURT OF
MANDAUE SHOULD BE SUSPENDED UNTIL AFTER A FINAL JUDGMENT IS RENDERED

IN THE CRIMINAL CASE.
2. THAT THE COURT ERRED IN HOLDING THAT IN ORDER TO AVOID DELAY THE
OFFENDED PARTY MAY SUBMIT HIS CLAIM FOR DAMAGES IN THE CRIMINAL CASE.
3. THAT THE COURT ERRED IN HOLDING THAT THE PETITION FOR certiorari IS NOT
PROPER, BECAUSE THE RESOLUTION IN QUESTION IS INTERLOCUTORY.
4. THAT THE COURT ERRED IN HOLDING THAT THE PETITION IS DEFECTIVE.
all of which can be synthesized into one decisive issue: whether or not there can be an
independent civil action for damage to property during the pendency of the criminal action.
From the Complaint filed by petitioner before the City Court of Mandaue City, Cebu, it is evident
that the nature and character of his action was quasi-delictual predicated principally on Articles
2176 and 2180 of the Civil Code, which provide:
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 caned a quasidelict and is governed by the provisions of this Chapter. (1902a)
Art. 2180. The obligation imposed by article 2176 is demandable not only for one's
own acts or omissions but also for those of persons for whom one is responsible.
xxx xxx xxx
Employers shall be liable for the damages cause by their employees and household
helpers acting within the scope of their assigned tasks, even though the former are
not engaged in any business or industry.
xxx xxx xxx
The responsibility treated of in this article shall cease when the persons herein
mentioned prove that they observed all the diligence of a good father of a family to
prevent damage. (1903a)
Thus, plaintiff made the essential averments that it was the fault or negligence of the driver,
Romeo Hilot, in the operation of the jeepney owned by the Pepitos which caused the collision
between his automobile and said jeepney; that damages were sustained by petitioner because of
the collision; that there was a direct causal connection between the damages he suffered and the
fault and negligence of private respondents.
Similarly, in the Answer, private respondents contended, among others, that defendant, Valeriana
Pepito, observed due diligence in the selection and supervision of her employees, particularly of
her co-defendant Romeo Hilot, a defense peculiar to actions based on quasi-delict. 5
Liability being predicated on quasi-delict the civil case may proceed as a separate and
independent civil action, as specifically provided for in Article 2177 of the Civil Code.
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. (n)
The crucial distinction between criminal negligence and quasi-delict, which is
readily discernible from the foregoing codal provision, has been expounded
in Barredo vs. Garcia, et al., 73 Phil. 607, 620-621,6 thus:
Firstly, the Revised Penal Code in article 365 punishes not only reckless but also
simple imprudence. if we were to hold that articles 1902 to 1910 of the Civil Code
refer only to fault or negligence not punished by law, according to the literal import
of article 1093 of the Civil Code, the legal institution ofculpa aquiliana would have
very little scope and application in actual life. Death or injury to persons and
damage to property through any degree of negligence even the slightest would
have to be indemnified only through the principle of civil hability arising from
crime. In such a state of affairs, what sphere would remain for quasidelito or culpa
aquiliana We are loath to impute to the lawmaker any intention to bring about a
situation so absurd and anomalous. Nor are we, in the interpretation of the laws,
disposed to uphold the letter that killeth rather than the spirit that giveth life. We
will not use the literal meaning of the law to smother and render almost lifeless a
principle of such ancient origin and such full-grown development as culpa aquiliana
or quasi-delito, which is conserved and made enduring in articles 1902 to 11910 of
the Spanish Civil Code.
Secondly, 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. There are numerous cases of
criminal negligence which cannot be shown beyond reasonable doubt, but can be
proved by a preponderance of evidence. In such cases, the defendant can and
should be made responsible in a civil action under articles 1902 to 1910 of the Civil
Code, otherwise, there would be many instances of unvindicated civil wrongs. Ubi
jus ibi remedium.
Thirdly, to hold that there is only one way to make defendants liability effective,
and that is, to sue the driver and exhaust his (the latter's) property first, would be
tantamount to compelling the plaintiff to follow a devious and cumbersome
method of obtaining a reliel True, there is such a remedy under our laws, but there
is also a more expeditious way, which is based on the primary and direct
responsibility of the defendant under article 1903 of the Civil Code. Our view of the
law is more likely to facilitate remedy for civil wrongs because the procedure
indicated by the defendant is wasteful and productive of delay, it being a matter of
common knowledge that professional drivers of taxis and similar public
conveyances usually do not have sufficient means with which to pay damages.
Why, then, should the plaintiff be required in all cases to go through this roundabout, unnecessary, and probably useless procedure? In construing the laws,
courts have endeavored to shorten and facilitate the pathways of right and justice.
At this juncture, it should be said that the primary and direct responsibility of
employers and their presumed negligence are principles calculated to protect
society. Workmen and employees should be carefully chosen and supervised in
order to avoid injury to the public. It is the masters or employers who principally
reap the profits resulting from the services of these servants and employees. It is
but right that they should guarantee the latter's careful conduct for the personnel
and patrimonial safety of others. As Theilhard has said, "they should reproach
themselves, at least, some for their weakness, others for their poor selection and
all for their negligence." And according to Manresa, "It is much more equitable and
just that such responsibility should fail upon the principal or director who could
have chosen a careful and prudent employee, and not upon the such employee
because of his confidence in the principal or director." (Vol. 12, p. 622, 2nd Ed.)
Many jurists also base this primary responsibility of the employer on the principle
of representation of the principal by the agent. Thus, Oyuelos says in the work
already cited (Vol. 7, p. 747) that before third persons the employer and employee
vienen a ser como una sola personalidad, por refundicion de la del dependiente en
la de quien la emplea y utihza (become as one personality by the merging of the
person of the employee in that of him who employs and utilizes him.) All these
observations acquire a peculiar force and significance when it comes to motor
accidents, and there is need of stressing and accentuating the responsibility of
owners of motor vehicles.
and additional remedy, and for the further reason that an independent civil action,
not depending on the issues, stations and results of a criminal prosecution, and
entirely directed by the party wronged or his counsel is more likely to secure
adequate and efficacious redress. (Garcia vs. Florida 52 SCRA 420, 424-425, Aug.
31, 1973). (Emphasis supplied)
The separate and independent civil action for a quasi-delict is also clearly recognized in section 2,
Rule 111 of the Rules of Court, reading:
Sec. 2. Independent civil action. In the cases provided for in Articles 31, 32, 33,
34 and 2177 of the Civil Code of the Philippines, Are independent civil action
entirely separate and distinct from the c action, may be brought by the injured
party during the pendency of the criminal case, provided the right is reserved as
required in the preceding section. Such civil action shag proceed independently of
the criminal prosecution, and shall require only a preponderance of evidence.
Significant to note is the fact that the foregoing section categorically lists cases provided for
in Article 2177 of the Civil Code, supra, as allowing of an "independent civil action."
Tested by the hereinabove-quoted legal tenets, it has to be held that the City Court, in surrounding
the civil action, erred in placing reliance on section 3 (b) of Rule 111 of the Rules of
Court, supra which refers to "other civil actions arising from cases not included in the section just
cited" (i.e., Section 2, Rule 111 above quoted), in which case 6 once the criminal action has being
commenced, no civil action arising from the same offense can be prosecuted and the same shall
be suspended in whatever stage it may be found, until final judgment in the criminal proceeding
has been rendered." Stated otherwise, the civil action referred to in Secs. 3(a) and 3(b) of Rule 111
of the Rules of Court, which should be suspended after the criminal action has been instituted is
that arising from the criminal offense not the civil action based on quasi-delict
Article 31 of the Civil Code then clearly assumes relevance when it provides:
Fourthly, because of the broad sweep of the provisions of both the Penal Code and
the Civil Code on this subject, which has given rise to overlapping or concurrence
of spheres already discussed, and for lack of understanding of the character and
efficacy of the action for culpaaquiliana there has grown up a common practice to
seek damages only by virtue of the Civil responsibility arising from crime,
forgetting that there is another remedy, which is by invoking articles 1902-1910 of
the Civil Code. Although this habitual method is allowed by our laws, it has
nevertheless rendered practically useless and nugatory the more expeditious and
effective remedy based on culpa aquiliana or culpa extra-contractual. In the
present case, we are asked to help perpetuate this usual course. But we believe it
is high time we pointed out to the harm done by such practice and to restore the
principle of responsibility for fault or negligence under articles 1902 et seq. of the
Civil Code to its full rigor. It is high time we cause the stream of quasi-delict or
culpa aquiliana to flow on its own natural channel, so that its waters may no longer
be diverted into that of a crime under the Penal Code. This will, it is believed, make
for the bet ter safeguarding of private rights because it re-establishes an ancient
Art. 31. When the civil action is based on an obligation not arising from the act or
omission complained of as a felony, such civil action may proceed independently of
the criminal proceedings and regardless of the result of the latter.
For obviously, the jural concept of a quasi-delict is that of an independent source of obligation "not
arising from the act or omission complained of as a felony." Article 1157 of the Civil Code bolsters
this conclusion when it specifically recognizes that:
Art. 1157. Obligations arise from:
(1) Law;
(2) Contracts;
(3) Quasi-contracts;
Remulla, Estrella & Associates for petitioners
(4) Acts or omissions punished by law; and
Exequil C. Masangkay for respondents.
(5) Quasi-delicts. (1089a)

(Emphasis supplied)
It bears emphasizing that petitioner's cause of action is based on quasi-delict. The concept of
quasidelica as enunciated in Article 2176 of the Civil Code (supra), is so broad that it includes not
only injuries to persons but also damage to property. 7 It makes no distinction between "damage to
persons" on the one hand and "damage to property" on the other. Indeed, the word "damage" is
used in two concepts: the "harm" done and "reparation" for the harm done. And with respect to
harm it is plain that it includes both injuries to person and property since "harm" is not limited to
personal but also to property injuries. In fact, examples of quasi-delict in the law itself include
damage to property. An instance is Article 2191(2) of the Civil Code which holds proprietors
responsible for damages caused by excessive smoke which may be harmful to persons or
property."
In the light of the foregoing disquisition, we are constrained to hold that respondent Judge gravely
abused his discretion in upholding the Decision of the City Court of Mandaue City, Cebu,
suspending the civil action based on aquasi-delict until after the criminal case is finally terminated.
Having arrived at this conclusion, a discussion of the other errors assigned becomes unnecessary.
WHEREFORE, granting the Writ of certiorari prayed for, the Decision of the Court of First Instance of
Cebu sought to be reviewed is hereby set aside, and the City Court of Mandaue City, Cebu, Branch
11, is hereby ordered to proceed with the hearing of Civil Case No. 189 of that Court.
Without pronouncement as to costs.
SO ORDERED.
G.R. No. L-46179 January 31, 1978

CANDIDA VIRATA, TOMAS VIRATA, MANOLITO VIRATA, EDERLINDA VIRATA, NAPOLEON
VIRATA, ARACELY VIRATA, ZENAIDA VIRATA, LUZMINDA VIRATA, PACITA VIRATA, and
EVANGELINA
VIRATA,petitioners,
vs.
VICTORIO OCHOA, MAXIMO BORILLA and THE COURT OF FIRST INSTANCE OF CAVITE, 7th
JUDICIAL DISTRICT, BRANCH V, stationed at BACOOR, CAVITE, respondents.
FERNANDEZ, J.:
This is an appeal by certiorari, from the order of the Court of First Instance of Cavite, Branch V, in
Civil Case No. B-134 granting the motion of the defendants to dismiss the complaint on the ground
that there is another action pending between the same parties for the same cause. 1
The record shows that on September 24, 1975 one Arsenio Virata died as a result of having been
bumped while walking along Taft Avenue, Pasay City by a passenger jeepney driven by Maximo
Borilla and registered in the name Of Victoria Ochoa; that Borilla is the employer of Ochoa; that for
the death of Arsenio Virata, a action for homicide through reckless imprudence was instituted on
September 25, 1975 against Maximo Borilla in the Court of First Instance of Rizal at Pasay City,
docketed as C Case No. 3162-P of said court; that at the hearing of the said criminal case on
December 12, 1975, Atty. Julio Francisco, the private prosecutor, made a reservation to file a
separate civil action for damages against the driver on his criminal liability; that on February 19,
1976 Atty. Julio Francisco filed a motion in said c case to withdraw the reservation to file a separate
civil action; that thereafter, the private prosecutor actively participated in the trial and presented
evidence on the damages; that on June 29, 1976 the heirs of Arsenio Virata again reserved their
right to institute a separate civil action; that on July 19, 1977 the heirs of Arsenio Virata,
petitioners herein, commenced Civil No. B-134 in the Court of First Instance of Cavite at Bacoor,
Branch V, for damages based on quasi-delict against the driver Maximo Borilla and the registered
owner of the jeepney, Victorio Ochoa; that on August 13, 1976 the defendants, private
respondents filed a motion to dismiss on the ground that there is another action, Criminal Case No.
3162-P, pending between the same parties for the same cause; that on September 8, 1976 the
Court of First Instance of Rizal at Pasay City a decision in Criminal Case No. 3612-P acquitting the
accused Maximo Borilla on the ground that he caused an injury by name accident; and that on
January 31, 1977, the Court of First Instance of Cavite at Bacoor granted the motion to Civil Case
No. B-134 for damages. 2
The principal issue is weather or not the of the Arsenio Virata, can prosecute an action for the
damages based on quasi-delict against Maximo Borilla and Victoria Ochoa, driver and owner,
respectively on the passenger jeepney that bumped Arsenio Virata.
It is settled that in negligence cases the aggrieved parties may choose between an action under
the Revised Penal Code or of quasi-delict under Article 2176 of the Civil Code of the Philippines.
What is prohibited by Article 2177 of the Civil Code of the Philippines is to recover twice for the
same negligent act.
The Supreme Court has held that:
10
According to the Code Commission: 'The foregoing provision (Article 2177) though
at first sight startling, is not so novel or extraordinary when we consider the exact
nature of criminal and civil negligence. The former is a violation of the criminal law,
while the latter is a 'culpa aquiliana' or quasi-delict, of ancient origin, having
always had its own foundation and individuality, separate from criminal
negligence. Such distinction between criminal negligence and 'culpa extracontractual' or quasi-delito has been sustained by decision of the Supreme Court of
Spain and maintained as clear, sound and perfectly tenable by Maura, an
outstanding Spanish jurist. Therefore, under the proposed Article 2177, acquittal
from an accusation of criminal negligence, whether on reasonable doubt or not,
shall not be a bar to a subsequent civil action, not for civil liability arising from
criminal negligence, but for damages due to a quasi-delict or 'culpa aquiliana'. But
said article forestalls a double recovery. (Report of the Code Commission, p. 162.)
omission punishable by law. Under Article 1157 of the Civil Code of the Philippines, quasi-delict and
an act or omission punishable by law are two different sources of obligation.
Although, again, this Article 2177 does seem to literally refer to only acts of
negligence, the same argument of Justice Bocobo about construction that upholds
'the spirit that given life' rather than that which is literal that killeth the intent of
the lawmaker should be observed in applying the same. And considering that the
preliminary chapter on human relations of the new Civil Code definitely establishes
the separability and independence of liability in a civil action for acts criminal in
character (under Articles 29 to 32) from the civil responsibility arising from crime
fixed by Article 100 of the Penal Code, and, in a sense, the Rules of Court, under
Sections 2 and 3(c), Rule 111, contemplate also the same separability, it is 'more
congruent' with the spirit of law, equity and justice, and more in harmony with
modern progress', to borrow the felicitous language in Rakes vs. Atlantic Gulf and
Pacific Co., 7 Phil. to 359, to hod as We do hold, that Article 2176, where it refers to
'fault covers not only acts 'not punishable by law' but also criminal in character,
whether intentional and voluntary or consequently, a separate civil action lies
against the in a criminal act, whether or not he is criminally prosecuted and found
guilty and acquitted, provided that the offended party is not allowed, if he is
actually charged also criminally, to recover damages on both scores, and would be
entitled in such eventuality only to the bigger award of the, two assuming the
awards made in the two cases vary. In other words the extinction of civil liability
refereed to in Par. (c) of Section 13, Rule 111, 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. Brief stated, We hold, in
reitration of Garcia, that culpa aquilina includes voluntary and negligent acts which
may be punishable by law. 3
G.R. No. 80194 March 21, 1989
The petitioners are not seeking to recover twice for the same negligent act. Before Criminal Case
No. 3162-P was decided, they manifested in said criminal case that they were filing a separate civil
action for damages against the owner and driver of the passenger jeepney based on quasidelict. The acquittal of the driver, Maximo Borilla, of the crime charged in Criminal Case No. 3162-P
is not a bar to the prosecution of Civil Case No. B-134 for damages based on quasi-delict The
source of the obligation sought to be enforced in Civil Case No. B-134 is quasi-delict, not an act or
Moreover, for the petitioners to prevail in the action for damages, Civil Case No. B-134, they have
only to establish their cause of action by preponderance of the evidence.
WHEREFORE, the order of dismissal appealed from is hereby set aside and Civil Case No. B-134 is
reinstated and remanded to the lower court for further proceedings, with costs against the private
respondents.
SO ORDERED.
EDGAR
vs.
COURT OF APPEALS and JOSE KUAN SING, respondents.
JARANTILLA, petitioner,
Corazon Miraflores and Vicente P. Billena for petitioner.

Manuel S. Gemarino for private respondent.
REGALADO, J.:
The records show that private respondent Jose Kuan Sing was "side-swiped by a vehicle in the
evening of July 7, 1971 in lznart Street, Iloilo City" 1 The respondent Court of Appeals concurred in
the findings of the court a quo that the said vehicle which figured in the mishap, a Volkswagen
(Beetle type) car, was then driven by petitioner Edgar Jarantilla along said street toward the
direction of the provincial capitol, and that private respondent sustained physical injuries as a
consequence. 2
Petitioner was accordingly charged before the then City Court of Iloilo for serious physical injuries
thru reckless imprudence in Criminal Case No. 47207 thereof. 3 Private respondent, as the
complaining witness therein, did not reserve his right to institute a separate civil action and he
intervened in the prosecution of said criminal case through a private prosecutor. 4 Petitioner was
acquitted in said criminal case "on reasonable doubt".5
On October 30, 1974, private respondent filed a complaint against the petitioner in the former
Court of First Instance of Iloilo, Branch IV, 6 docketed therein as Civil Case No. 9976, and which
civil action involved the same subject matter and act complained of in Criminal Case No.
47027. 7 In his answer filed therein, the petitioner alleged as special and affirmative detenses that
the private respondent had no cause of action and, additionally, that the latter's cause of action, if
any, is barred by the prior judgment in Criminal Case No. 47207 inasmuch as when said criminal
case was instituted the civil liability was also deemed instituted since therein plaintiff failed to
reserve the civil aspect and actively participated in the criminal case. 8
Thereafter, acting on a motion to dismiss of therein defendant, the trial court issued on April 3,
1975 an order of denial, with the suggestion that "(t)o enrich our jurisprudence, it is suggested
that the defendant brings (sic) this ruling to the Supreme Court by certiorari or other appropriate
remedy, to review the ruling of the court". 9
On June 17, 1975, petitioner filed in this Court a petition for certiorari, prohibition and mandamus,
which was docketed as G.R. No. L-40992, 10 assailing the aforesaid order of the trial court. Said
petition was dismissed for lack of merit in the Court's resolution of July 23, 1975, and a motion for
reconsideration thereof was denied for the same reason in a resolution of October 28, 1975. 11
After trial, the court below rendered judgment on May 23, 1977 in favor of the herein private
respondent and ordering herein petitioner to pay the former the sum of P 6,920.00 for
hospitalization, medicines and so forth, P2,000.00 for other actual expenses, P25,000.00 for moral
damages, P5,000.00 for attorney's fees, and costs. 12
On July 29, 1987, the respondent Court of Appeals 13 affirmed the decision of the lower court
except as to the award for moral damages which it reduced from P25,000.00 to P18,000.00. A
motion for reconsideration was denied by respondent court on September 18, 1987. 14
The main issue for resolution by Us in the present recourse is whether the private respondent, who
was the complainant in the criminal action for physical injuries thru reckless imprudence and who
participated in the prosecution thereof without reserving the civil action arising from the act or
omission complained of, can file a separate action for civil liability arising from the same act or
omission where the herein petitioner was acquitted in the criminal action on reasonable doubt and
no civil liability was adjudicated or awarded in the judgment of acquittal.
Prefatorily, We note that petitioner raises a collateral issue by faulting the respondent court for
refusing to resolve an assignment of error in his appeal therein, said respondent court holding that
the main issue had been passed upon by this Court in G.R. No. L-40992 hereinbefore mentioned. It
is petitioner's position that the aforesaid two resolutions of the Court in said case, the first
dismissing the petition and the second denying the motion for reconsideration, do not constitute
the "law of the case' which would control the subsequent proceed ings in this controversy.
1. We incline favorably to petitioner's submission on this score.
The "doctrine of the law of the case" has no application at the aforesaid posture of the proceedings
when the two resolutions were handed down. While it may be true that G.R. No. L-40992 may have
involved some of the issues which were thereafter submitted for resolution on the merits by the
two lower courts, the proceedings involved there was one for certiorari, prohibition and mandamus
11
assailing an interlocutory order of the court a quo, specifically, its order denying therein
defendants motion to dismiss. This Court, without rendering a specific opinion or explanation as to
the legal and factual bases on which its two resolutions were predicated, simply dismissed the
special civil action on that incident for lack of merit. It may very well be that such resolution was
premised on the fact that the Court, at that stage and on the basis of the facts then presented, did
not consider that the denial order of the court a quo was tainted with grave abuse of
discretion. 15 To repeat, no rationale for such resolutions having been expounded on the merits of
that action, no law of the case may be said to have been laid down in G.R. No. L-40992 to justify
the respondent court's refusal to consider petitioner's claim that his former acquittal barred the
separate action.
'Law of the case' has been defined as the opinion delivered on a former appeal.
More specifically, it means that whatever is once irrevocably established, as
the controlling legal rule of decision between the same parties in the same case
continues to be the law of the case, whether correct on general principles or not,
so long as the facts on which such decision was predicated continue to be the facts
of the case before the court (21 C.J.S. 330). (Emphasis supplied). 16
It need not be stated that the Supreme Court being the court of last resort, is the
final arbiter of all legal questions properly brought before it and that its decision in
any given case constitutes the law of that particular case . . . (Emphasis
supplied). 17
It is a rule of general application that the decision of an appellate court in a case is
the law of the case on the points presented throughout all the subsequent
proceedings in the case in both the trial and the appellate courts, and no question
necessarily involved and decided on that appeal will be considered on a second
appeal or writ of error in the same case, provided the facts and issues are
substantially the same as those on which the first question rested and, according
to some authorities, provided the decision is on the merits . . . 18
2. With the foregoing ancillary issue out of the way, We now consider the principal plaint of
petitioner.
Apropos to such resolution is the settled rule that the same act or omission (in this case, the
negligent sideswiping of private respondent) can create two kinds of liability on the part of the
offender, that is, civil liability ex delicto and civil liability ex quasi delicto. Since the same
negligence can give rise either to a delict or crime or to a quasi-delict or tort, either of these two
types of civil liability may be enforced against the culprit, subject to the caveat under Article 2177
of the Civil Code that the offended party cannot recover damages under both types of liability. 19
We also note the reminder of petitioner that in Roa vs. De la Cruz, et al., 20 it was held that where
the offended party elected to claim damages arising from the offense charged in the criminal case
through her intervention as a private prosecutor, the final judgment rendered therein constituted a
bar to the subsequent civil action based upon the same cause. It is meet, however, not to lose
sight of the fact that the criminal action involved therein was for serious oral defamation which,
while within the contemplation of an independent civil action under Article 33 of the Civil Code,
constitutes only a penal omen and cannot otherwise be considered as a quasi-delict or culpa
aquiliana under Articles 2176 and 2177 of the Civil Code. And while petitioner draws attention to
the supposed reiteration of the Roa doctrine in the later case of Azucena vs. Potenciano, et
al., 21 this time involving damage to property through negligence as to make out a case of quasidelict under Articles 2176 and 2180 of the Civil Code, such secondary reliance is misplaced since
the therein plaintiff Azucena did not intervene in the criminal action against defendant Potenciano.
The citation of Roa in the later case of Azucena was, therefore, clearly obiter and affords no
comfort to petitioner.
These are aside from the fact that there have been doctrinal, and even statutory, 22 changes on
the matter of civil actions arising from criminal offenses and quasi-delicts. We will reserve our
discussion on the statutory aspects for another case and time and, for the nonce, We will consider
the doctrinal developments on this issue.
In the case under consideration, private respondent participated and intervened in the prosecution
of the criminal suit against petitioner. Under the present jurisprudential milieu, where the trial
court acquits the accused on reasonable doubt, it could very well make a pronounce ment on the
civil liability of the accused 23 and the complainant could file a petition for mandamus to compel
the trial court to include such civil liability in the judgment of acquittal. 24
Private respondent, as already stated, filed a separate civil aciton after such acquittal. This is
allowed under Article 29 of the Civil Code. We have ruled in the relatively recent case of Lontoc vs.
MD Transit & Taxi Co., Inc., et al. 25that:
In view of the fact that the defendant-appellee de la Cruz was acquitted on the
ground that 'his guilt was not proven beyond reasonable doubt' the plaintiffappellant has the right to institute a separate civil action to recover damages from
the defendants-appellants (See Mendoza vs. Arrieta, 91 SCRA 113). The wellsettled doctrine is that a person, while not criminally liable may still be civilly
liable. 'The judgment of acquittal extinguishes the civil liability of the accused only
when it includes a declaration that the facts from which the civil liability might
arise did not exist'. (Padilla vs. Court of Appeals, 129 SCRA 558 cited in People vs.
Rogelio Ligon y Tria, et al., G.R. No. 74041, July 29, 1987; Filomeno Urbano vs.
Intermediate Appellate Court, G.R. No. 72964, January 7, 1988). The ruling is based
on Article 29 of the Civil Code which provides:
When the accused in a criminal prosecution is acquitted on the
ground that his guilt has not been proved beyond reasonable
doubt, a civil action for damages for the same act or omission may
be instituted. Such action requires only a preponderance of
evidence ... 26
Another consideration in favor of private respondent is the doctrine that the failure of the court to
make any pronouncement, favorable or unfavorable, as to the civil liability of the accused amounts
to a reservation of the right to have the civil liability litigated and determined in a separate action.
12
The rules nowhere provide that if the court fails to determine the civil liability it becomes no longer
enforceable. 27
Furthermore, in the present case the civil liability sought to be recovered through the application of
Article 29 is no longer that based on or arising from the criminal offense. There is persuasive logic
in the view that, under such circumstances, the acquittal of the accused foreclosed the civil liability
based on Article 100 of the Revised Penal Code which presupposes the existence of criminal
liability or requires a conviction of the offense charged. Divested of its penal element by such
acquittal, the causative act or omission becomes in effect a quasi-delict, hence only a civil action
based thereon may be instituted or prosecuted thereafter, which action can be proved by mere
preponderance of evidence. 28 Complementary to such considerations, Article 29 enunciates the
rule, as already stated, that a civil action for damages is not precluded by an acquittal on
reasonable doubt for the same criminal act or omission.
The allegations of the complaint filed by the private respondent supports and is constitutive of a
case for a quasi-delict committed by the petitioner, thus:
3. That in the evening of July 7, 197l at about 7:00 o'clock, the
plaintiff crossed Iznart Street from his restaurant situated at 220
lznart St., Iloilo City, Philippines, on his way to a meeting of the
Cantonese Club at Aldeguer Street, Iloilo City and while he was
standing on the middle of the street as there were vehicles coming
from the Provincial Building towards Plazoleta Gay, Iloilo City, he
was bumped and sideswiped by Volkswagen car with plate No. B2508 W which was on its way from Plazoleta Gay towards the
Provincial Capitol, Iloilo City, which car was being driven by the
defendant in a reckless and negligent manner, at an excessive rate
of speed and in violation of the provisions of the Revised Motor
Vehicle (sic) as amended, in relation to the Land Transportation and
Traffic Code as well as in violation of existing city ordinances, and
by reason of his inexcusable lack of precaution and failure to act
with due negligence and by failing to take into consideration (sic)
his degree of intelligence, the atmospheric conditions of the place
as well as the width, traffic, visibility and other conditions of lznart
Street; 29
Since this action is based on a quasi-delict, the failure of the respondent to reserve his right to file
a separate civil case and his intervention in the criminal case did not bar him from filing such
separate civil action for damages. 30The Court has also heretofore ruled in Elcano vs. Hill 31 that
... a separate civil action lies against the offender in a criminal act whether or not
he is criminally prosecuted and found guilty or acquitted, provided that the
offended party is not allowed, if he is also actually charged criminally, to recover
damages on both scores; and would be entitled in such eventuality only to the
bigger award of the two, assuming the awards made in the two cases vary. In other
13
words, the extinction of civil liability referred to in Par. (c) of Sec. 3 Rule 111, 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 . . .
the plaintiff was riding on his pony over said bridge. Before he had gotten half way across, the
defendant approached from the opposite direction in an automobile, going at the rate of about ten
or twelve miles per hour. As the defendant neared the bridge he saw a horseman on it and blew his
horn to give warning of his approach. He continued his course and after he had taken the bridge he
gave two more successive blasts, as it appeared to him that the man on horseback before him was
not observing the rule of the road.
The aforecited case of Lontoc vs. MD Transit & Taxi Co., Inc., et al. involved virtually the same
factual situation. The Court, in arriving at the conclusion hereinbefore quoted, expressly declared
that the failure of the therein plaintiff to reserve his right to file a separate civil case is not fatal;
that his intervention in the criminal case did not bar him from filing a separate civil action for
damages, especially considering that the accused therein was acquitted because his guilt was not
proved beyond reasonable doubt; that the two cases were anchored on two different causes of
action, the criminal case being on a violation of Article 365 of the Revised Penal Code while the
subsequent complaint for damages was based on a quasi-delict; and that in the judgment in the
criminal case the aspect of civil liability was not passed upon and resolved. Consequently, said civil
case may proceed as authorized by Article 29 of the Civil Code.
The plaintiff, it appears, saw the automobile coming and heard the warning signals. However,
being perturbed by the novelty of the apparition or the rapidity of the approach, he pulled the
pony closely up against the railing on the right side of the bridge instead of going to the left. He
says that the reason he did this was that he thought he did not have sufficient time to get over to
the other side. The bridge is shown to have a length of about 75 meters and a width of 4.80
meters. As the automobile approached, the defendant guided it toward his left, that being the
proper side of the road for the machine. In so doing the defendant assumed that the horseman
would move to the other side. The pony had not as yet exhibited fright, and the rider had made no
sign for the automobile to stop. Seeing that the pony was apparently quiet, the defendant, instead
of veering to the right while yet some distance away or slowing down, continued to approach
directly toward the horse without diminution of speed. When he had gotten quite near, there being
then no possibility of the horse getting across to the other side, the defendant quickly turned his
car sufficiently to the right to escape hitting the horse alongside of the railing where it as then
standing; but in so doing the automobile passed in such close proximity to the animal that it
became frightened and turned its body across the bridge with its head toward the railing. In so
doing, it as struck on the hock of the left hind leg by the flange of the car and the limb was broken.
The horse fell and its rider was thrown off with some violence. From the evidence adduced in the
case we believe that when the accident occurred the free space where the pony stood between the
automobile and the railing of the bridge was probably less than one and one half meters. As a
result of its injuries the horse died. The plaintiff received contusions which caused temporary
unconsciousness and required medical attention for several days.
Our initial adverse observation on a portion of the decision of respondent court aside, We hold that
on the issues decisive of this case it did not err in sustaining the decision a quo.
WHEREFORE, the writ prayed for is hereby DENIED and the decision of the respondent Court of
Appeals is AFFIRMED, without costs.
SO ORDERED.
G.R. No. L-12219
March 15, 1918
AMADO
vs.
FRANK SMITH, JR., defendant-appellee.
Alejo
Mabanag
G. E. Campbell for appellee.
PICART, plaintiff-appellant,
for
appellant.
STREET, J.:
In this action the plaintiff, Amado Picart, seeks to recover of the defendant, Frank Smith, jr., the
sum of P31,000, as damages alleged to have been caused by an automobile driven by the
defendant. From a judgment of the Court of First Instance of the Province of La Union absolving the
defendant from liability the plaintiff has appealed.
The occurrence which gave rise to the institution of this action took place on December 12, 1912,
on the Carlatan Bridge, at San Fernando, La Union. It appears that upon the occasion in question
The question presented for decision is whether or not the defendant in maneuvering his car in the
manner above described was guilty of negligence such as gives rise to a civil obligation to repair
the damage done; and we are of the opinion that he is so liable. As the defendant started across
the bridge, he had the right to assume that the horse and the rider would pass over to the proper
side; but as he moved toward the center of the bridge it was demonstrated to his eyes that this
would not be done; and he must in a moment have perceived that it was too late for the horse to
cross with safety in front of the moving vehicle. In the nature of things this change of situation
occurred while the automobile was yet some distance away; and from this moment it was not
longer within the power of the plaintiff to escape being run down by going to a place of greater
safety. The control of the situation had then passed entirely to the defendant; and it was his duty
either to bring his car to an immediate stop or, seeing that there were no other persons on the
bridge, to take the other side and pass sufficiently far away from the horse to avoid the danger of
collision. Instead of doing this, the defendant ran straight on until he was almost upon the horse.
He was, we think, deceived into doing this by the fact that the horse had not yet exhibited fright.
But in view of the known nature of horses, there was an appreciable risk that, if the animal in
question was unacquainted with automobiles, he might get exited and jump under the conditions
which here confronted him. When the defendant exposed the horse and rider to this danger he
was, in our opinion, negligent in the eye of the law.
The test by which to determine the existence of negligence in a particular case may be stated as
follows: Did the defendant in doing the alleged negligent act use that person would have used in
the same situation? If not, then he is guilty of negligence. The law here in effect adopts the
standard supposed to be supplied by the imaginary conduct of the discreet paterfamilias of the
Roman law. The existence of negligence in a given case is not determined by reference to the
personal judgment of the actor in the situation before him. The law considers what would be
reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and
determines liability by that.
The question as to what would constitute the conduct of a prudent man in a given situation must
of course be always determined in the light of human experience and in view of the facts involved
in the particular case. Abstract speculations cannot here be of much value but this much can be
profitably said: Reasonable men govern their conduct by the circumstances which are before them
or known to them. They are not, and are not supposed to be, omniscient of the future. Hence they
can be expected to take care only when there is something before them to suggest or warn of
danger. Could a prudent man, in the case under consideration, foresee harm as a result of the
course actually pursued? If so, it was the duty of the actor to take precautions to guard against
that harm. Reasonable foresight of harm, followed by ignoring of the suggestion born of this
prevision, is always necessary before negligence can be held to exist. Stated in these terms, the
proper criterion for determining the existence of negligence in a given case is this: Conduct is said
to be negligent when a prudent man in the position of the tortfeasor would have foreseen that an
effect harmful to another was sufficiently probable to warrant his foregoing conduct or guarding
against its consequences.
Applying this test to the conduct of the defendant in the present case we think that negligence is
clearly established. A prudent man, placed in the position of the defendant, would in our opinion,
have recognized that the course which he was pursuing was fraught with risk, and would therefore
have foreseen harm to the horse and the rider as reasonable consequence of that course. Under
these circumstances the law imposed on the defendant the duty to guard against the threatened
harm.
It goes without saying that the plaintiff himself was not free from fault, for he was guilty of
antecedent negligence in planting himself on the wrong side of the road. But as we have already
stated, the defendant was also negligent; and in such case the problem always is to discover which
agent is immediately and directly responsible. It will be noted that the negligent acts of the two
parties were not contemporaneous, since the negligence of the defendant succeeded the
negligence of the plaintiff by an appreciable interval. Under these circumstances the law is that the
person who has the last fair chance to avoid the impending harm and fails to do so is chargeable
with the consequences, without reference to the prior negligence of the other party.
The decision in the case of Rkes vs. Atlantic, Gulf and Pacific Co. (7 Phil. Rep., 359) should perhaps
be mentioned in this connection. This Court there held that while contributory negligence on the
part of the person injured did not constitute a bar to recovery, it could be received in evidence to
reduce the damages which would otherwise have been assessed wholly against the other party.
The defendant company had there employed the plaintiff, as a laborer, to assist in transporting
iron rails from a barge in Manila harbor to the company's yards located not far away. The rails were
14
conveyed upon cars which were hauled along a narrow track. At certain spot near the water's edge
the track gave way by reason of the combined effect of the weight of the car and the insecurity of
the road bed. The car was in consequence upset; the rails slid off; and the plaintiff's leg was
caught and broken. It appeared in evidence that the accident was due to the effects of the typhoon
which had dislodged one of the supports of the track. The court found that the defendant company
was negligent in having failed to repair the bed of the track and also that the plaintiff was, at the
moment of the accident, guilty of contributory negligence in walking at the side of the car instead
of being in front or behind. It was held that while the defendant was liable to the plaintiff by reason
of its negligence in having failed to keep the track in proper repair nevertheless the amount of the
damages should be reduced on account of the contributory negligence in the plaintiff. As will be
seen the defendant's negligence in that case consisted in an omission only. The liability of the
company arose from its responsibility for the dangerous condition of its track. In a case like the one
now before us, where the defendant was actually present and operating the automobile which
caused the damage, we do not feel constrained to attempt to weigh the negligence of the
respective parties in order to apportion the damage according to the degree of their relative fault.
It is enough to say that the negligence of the defendant was in this case the immediate and
determining cause of the accident and that the antecedent negligence of the plaintiff was a more
remote factor in the case.
A point of minor importance in the case is indicated in the special defense pleaded in the
defendant's answer, to the effect that the subject matter of the action had been previously
adjudicated in the court of a justice of the peace. In this connection it appears that soon after the
accident in question occurred, the plaintiff caused criminal proceedings to be instituted before a
justice of the peace charging the defendant with the infliction of serious injuries (lesiones graves).
At the preliminary investigation the defendant was discharged by the magistrate and the
proceedings were dismissed. Conceding that the acquittal of the defendant at the trial upon the
merits in a criminal prosecution for the offense mentioned would be res adjudicata upon the
question of his civil liability arising from negligence -- a point upon which it is unnecessary to
express an opinion -- the action of the justice of the peace in dismissing the criminal proceeding
upon the preliminary hearing can have no effect. (See U. S. vs. Banzuela and Banzuela, 31 Phil.
Rep., 564.)
From what has been said it results that the judgment of the lower court must be reversed, and
judgment is her rendered that the plaintiff recover of the defendant the sum of two hundred pesos
(P200), with costs of other instances. The sum here awarded is estimated to include the value of
the horse, medical expenses of the plaintiff, the loss or damage occasioned to articles of his
apparel, and lawful interest on the whole to the date of this recovery. The other damages claimed
by the plaintiff are remote or otherwise of such character as not to be recoverable. So ordered.
Arellano,
C.J.,
Torres,
Johnson, J., reserves his vote.
Carson,
G.R. No. 84281 May 27, 1994
Araullo,
Avancea,
and
Fisher,
JJ., concur.
CITYTRUST
BANKING
CORPORATION, petitioner,
vs.
THE INTERMEDIATE APPELLATE COURT and EMME HERRERO, respondents.
15
adjudged to pay the defendant reasonable attorney's fee in the amount of FIVE
THOUSAND PESOS (P5,000.00) plus cost of suit.
Private respondent went to the Court of Appeals, which found the appeal meritorious. Hence, it
rendered judgment, on 15 July 1988, reversing the trial court's decision. The appellate court ruled:
Agcaoili and Associates for petitioner.

David B. Agoncillo for private respondent.
WHEREFORE, the judgment appealed from is REVERSED and a new one entered
thereby ordering defendant to pay plaintiff nominal damages of P2,000.00,
temperate and moderate damages of P5,000.00, and attorney's fees of P4,000.00.
Humberto B. Basco, collaborating counsel for private respondent.
The counterclaim of defendant is dismissed for lack of merit, with costs against
him.
VITUG, J.:
Petitioner Citytrust Banking Corporation is now before us in this petition for review on certiorari.
This case emanated from a complaint filed by private respondent Emme Herrero for damages
against petitioner Citytrust Banking Corporation. In her complaint, private respondent averred that
she, a businesswoman, made regular deposits, starting September of 1979, with petitioner
Citytrust Banking Corporation at its Burgos branch in Calamba, Laguna. On 15 May 1980, she
deposited with petitioner the amount of Thirty One Thousand Five Hundred Pesos (P31,500.00), in
cash, in order to amply cover six (6) postdated checks she issued, viz:
Check No. Amount
007383
007384
007387
007387
007492
007400 4,716.00
P1,507.00
1,262.00
4,299.00
2,204.00
6,281.00
When presented for encashment upon maturity, all the checks were dishonored due to
"insufficient funds." The last check No. 007400, however, was personally redeemed by
private respondent in cash before it could be redeposited.
Petitioner, in its answer, asserted that it was due to private respondent's fault that her checks were
dishonored. It averred that instead of stating her correct account number, i.e., 29000823, in her
deposit slip, she inaccurately wrote 2900823.
The
Regional
Trial
Court
(Branch
XXXIV)
of
27 February 1984, dismissed the complaint for lack of merit; thus:
Calamba,
Laguna,
on
WHEREFORE, judgment is hereby rendered in favor of the defendant and against

the plaintiff, DISMISSING the complaint for lack of merit, plaintiff is hereby
Petitioner bank concedes that it is its obligation to honor checks issued by private respondent
which are sufficiently funded, but, it contends, private respondent has also the duty to use her
account in accordance with the rules of petitioner bank to which she has contractually acceded.
Among such rules, contained in its "brochures" governing current account deposits, is the following
printed provision:
In making a deposit . . . kindly insure accuracy in filing said deposit slip forms as
we hold ourselves free of any liability for loss due to an incorrect account number
indicated in the deposit slip although the name of the depositor is correctly written.
Exactly the same issue was addressed by the appellate court, which, after its deliberations, made
the following findings and conclusions: 1
We cannot uphold the position of defendant. For, even if it be true that there was
error on the part of the plaintiff in omitting a "zero" in her account number, yet, it
is a fact that her name, "Emme E. Herrero", is clearly written on said deposit slip
(Exh. "B"). This is controlling in determining in whose account the deposit is made
or should be posted. This is so because it is not likely to commit an error in one's
name than merely relying on numbers which are difficult to remember, especially a
number with eight (8) digits as the account numbers of defendant's depositors. We
view the use of numbers as simply for the convenience of the bank but was never
intended to disregard the real name of its depositors. The bank is engaged in
business impressed with public interest, and it is its duty to protect in return its
many clients and depositors who transact business with it. It should not be a
matter of the bank alone receiving deposits, lending out money and collecting
interests. It is also its obligation to see to it that all funds invested with it are
properly accounted for and duly posted in its ledgers.
In the case before Us, We are not persuaded that defendant bank was not free
from blame for the fiasco. In the first place, the teller should not have accepted
plaintiff's deposit without correcting the account number on the deposit slip which,
obviously, was erroneous because, as pointed out by defendant, it contained only
seven (7) digits instead of eight (8). Second, the complete name of plaintiff
depositor appears in bold letters on the deposit slip (Exh. "B"). There could be no
mistaking in her name, and that the deposit was made in her name, "Emma E.
Herrero." In fact, defendant's teller should not have fed her deposit slip to the
computer knowing that her account number written thereon was wrong as it
contained only seven (7) digits. As it happened, according to defendant, plaintiff's
deposit had to be consigned to the suspense accounts pending verification. This,
indeed, could have been avoided at the first instance had the teller of defendant
bank performed her duties efficiently and well. For then she could have readily
detected that the account number in the name of "Emma E. Herrero" was
erroneous and would be rejected by the computer. That is, or should be, part of the
training and standard operating procedure of the bank's employees. On the other
hand, the depositors are not concerned with banking procedure. That is the
responsibility of the bank and its employees. Depositors are only concerned with
the facility of depositing their money, earning interest thereon, if any, and
withdrawing therefrom, particularly businessmen, like plaintiff, who are supposed
to be always "on-the-go". Plaintiff's account is a "current account" which should
immediately be posted. After all, it does not earn interest. At least, the forbearance
should be commensurated with prompt, efficient and satisfactory service.
therefor. To post a deposit in somebody else's name despite the

name of the depositor clearly written on the deposit slip is indeed
sheer negligence which could have easily been avoided if
defendant bank exercised due diligence and circumspection in the
acceptance and posting of plaintiff's deposit.
We subscribe to the above disquisitions of the appellate court. In Simex International (Manila),
Inc. vs. Court of Appeals, 183 SCRA 360, reiterated in Bank of Philippine Islands vs. Intermediate
Appellate Court, 206 SCRA 408, we similarly said, in cautioning depository banks on their fiduciary
responsibility, that
In every case, the depositor expects the bank to treat his account with 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 of as he
sees fit, confident that the bank will deliver it as and to whomever he directs. A
blunder on the part of the bank, such as the dishonor of a check without good
reason, can cause the depositor not a little embarrassment if not also financial loss
and perhaps even civil and criminal litigation.
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.
Bank clients are supposed to rely on the services extended by the bank, including
the assurance that their deposits will be duly credited them as soon as they are
made. For, any delay in crediting their account can be embarrassing to them as in
the case of plaintiff.
We agree with plaintiff that
. . . even in computerized systems of accounts, ways and means
are available whereby deposits with erroneous account numbers
are properly credited depositor's correct account numbers. They
add that failure on the part of the defendant to do so is negligence
for which they are liable. As proof thereof plaintiff alludes to five
particular incidents where plaintiff admittedly wrongly indicated
her
account
number
in
her
deposit
slips
(Exhs. "J", "L", "N", "O" and "P"), but were nevertheless properly
credited her deposit (pp. 4-5, Decision).
We have already ruled in Mundin v. Far East Bank & Trust Co., AC-G.R. CV No.
03639, prom. Nov. 2, 1985, quoting the court a quo in an almost identical set of
facts, that
Having accepted a deposit in the course of its business
transactions, it behooved upon defendant bank to see to it and
without recklessness that the depositor was accurately credited
16
We agree with petitioner, however, that it is wrong to award, along with nominal damages,
temperate or moderate damages. The two awards are incompatible and cannot be granted
concurrently. Nominal damages are given in order that a right of the plaintiff, which has been
violated or invaded by the defendant, may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him (Art. 2221, New Civil Code; Manila Banking
Corp. vs. Intermediate Appellate Court, 131 SCRA 271). Temperate or moderate damages, which
are more than nominal but less than compensatory damages, on the other hand, may be
recovered when the court finds that some pecuniary loss has been suffered but its amount cannot,
from the nature of the case, be proved with reasonable certainty (Art. 2224, New Civil Code).
In the instant case, we also find need for vindicating the wrong done on private respondent, and
we accordingly agree with the Court of Appeals in granting to her nominal damages but not in
similarly awarding temperate or moderate damages.
WHEREFORE, the appealed decision is MODIFIED by deleting the award of temperate or moderate
damages. In all other respects, the appellate court's decision is AFFIRMED. No costs in this
instance.
SO ORDERED.
G.R. No. 112576 October 26, 1994

(CA-GR CV No. 26571)
METROPOLITAN
BANK
AND
TRUST
COMPANY, petitioner,
vs.
THE HON. COURT OF APPEALS, RURAL BANK OF PADRE GARCIA, INC. and ISABEL R.
KATIGBAK,respondents.
Makalintal, Barot, Torres & Ibarra for petitioner.
17
After the second dishonor of the two (2) checks, Dr. Felipe Roque, a member of the Board of
Directors of Philippine Banking Corporation, allegedly went to the Office of Antonio Katigbak, an
officer of RBPG, chiding him for the bouncing checks. In order to appease the doctor, RBPG paid Dr.
Roque P50,000.00 in cash to replace the aforesaid checks.
On
April
13,
1982,
Isabel
Katigbak
who
was
in
Hongkong
on
a
business-vacation trip together with her sons Alfredo and Antonio, both of whom were also officers
of RBPG, received overseas phone calls from Mrs. Maris Katigbak-San Juan at her residence in San
Lorenzo Village, Makati, informing Isabel Katigbak that a certain Mr. Rizal Dungo, Assistant Cashier
of MBTC insisted on talking to her (Mrs. San Juan), berating her about the checks which bounced,
saying "Nag-issue kayo ng tseke, wala namang pondo," even if it was explained to Mr. Dungo that
Mrs. San Juan was not in any way connected with RBPG.
Fornier, Lava & Fornier for private respondents.
ROMERO, J.:
This petition for certiorari seeks to annul the decision of respondent Court of Appeals dated
October 29, 1992 in CA GR CV No. 26571 affirming the decision of the Regional Trial Court of
Lipa, Batangas Branch XIII for damages, and the Resolution dated November 11, 1993 denying
petitioner's motion for reconsideration of the aforesaid decision.
The case emanated from a dispute between the Rural Bank of Padre Garcia, Inc. (RBPG) and
Metropolitan Bank and Trust Company (MBTC) relative to a credit memorandum dated April 5, 1982
from the Central Bank in the amount of P304,000.00 in favor of RBPG.
The records show that Isabel Katigbak is the president and director of RBPG, owning 65% of the
shares thereof. Metropolitan Bank and Trust Company (MBTC) is the rural bank's depository bank,
where Katigbak maintains current accounts with MBTC's main office in Makati as well as its Lipa
City branch.
On April 6, 1982, MBTC received from the Central Bank a credit memo dated April 5, 1982 that its
demand deposit account was credited with P304,000.00 for the account of RBPG, representing
loans granted by the Central Bank to RBPG. On the basis of said credit memo, Isabel Katigbak
issued several checks against its account with MBTC in the total amount of P300,000.00, two (2) of
which (Metrobank Check Nos. 0069 and 0070) were payable to Dr. Felipe C. Roque and Mrs. Eliza
Roque for P25,000.00 each. Said checks issued to Dr. and Mrs. Roque were deposited by the
Roques with the Philippine Banking Corporation, Novaliches Branch in Quezon City. When these
checks were forwarded to MBTC on April 12, 1982 for payment (six (6) days from receipt of the
Credit Memo), the checks were returned by MBTC with the annotations "DAIF TNC" (Drawn
Against Insufficient Funds Try Next Clearing) so they were redeposited on April 14, 1982. These
were however again dishonored and returned unpaid for the following reason: "DAIF TNC NO
ADVICE FROM CB."
Mrs. Katigbak testified that she informed Mrs. San Juan to request defendant MBTC to check and
verify the records regarding the aforementioned Central Bank credit memo for P304,000.00 in
favor of RBPG as she was certain that the checks were sufficiently covered by the CB credit memo
as early as April 6, 1994, but the following day, Mrs. San Juan received another insulting call from
Mr. Dungo ("Bakit kayo nag-issue ng tseke na wala namang pondo,Three Hundred Thousand
na.") 1 When Mrs. San Juan explained to him the need to verify the records regarding the Central
Bank memo, he merely brushed it aside, telling her sarcastically that he was very sure that no
such credit memo existed. Mrs. San Juan was constrained to place another long distance call to
Mrs. Katigbak in Hongkong that evening. Tense and angered, the Katigbaks had to cut short their
Hongkong stay with their respective families and flew back to Manila, catching the first available
flight on April 15, 1982.
Immediately
upon
arrival,
Mrs.
Katigbak
called
up
MBTC,
through
a
Mr. Cochico, for a re-examination of the records of MBTC regarding the Central Bank credit memo
dated April 5, 1982 for P304,000.00. Mr. Dungo, to whom Cochico handed over the phone,
allegedly arrogantly said: "Bakit kayo magagalit, wala naman kayong pondo?" These remarks
allegedly so shocked Mrs. Katigbak that her blood pressure rose to a dangerous level and she had
to undergo medical treatment at the Makati Medical Center for two (2) days.
Metrobank not only dishonored the checks issued by RBPG, the latter was issued four (4) debit
memos representing service and penalty charges for the returned checks.
RBPG and Isabel Katigbak filed Civil Case No. V-329 in the RTC of Lipa, Batangas Branch XIII
against the Metropolitan Bank and Trust Company for damages on April 26, 1983.
The ultimate facts as alleged by the defendant MBTC in its answer are as follows: that on April 6,
1982, its messenger, Elizer Gonzales, received from the Central Bank several credit advices on
rural bank accounts, which included that of plaintiff RBPG in the amount of P304,000.00; that due
to the inadvertence of said messenger, the credit advice issued in favor of plaintiff RBPG was not
delivered to the department in charge of processing the same; consequently, when MBTC received
from the clearing department the checks in question, the stated balance in RBPG's account was
only P5,498.58 which excluded the unprocessed credit advice of P304,000.00 resulting in the
dishonor of the aforementioned checks; that as regards the P304,000.00 which was
18
a re-discounting loan from the Central Bank, the same was credited only on April 15, 1982 after the
Central Bank finally confirmed that a credit advice was indeed issued in favor of RBPG; that after
the confirmation, MBTC credited the amount of the credit advice to plaintiff RBPG's account and
thru its officers, allegedly conveyed personally on two occasions its apologies to plaintiffs to show
that the bank and its officers acted with no deliberate intent on their part to cause injury or
damage to plaintiffs, explaining the circumstances that gave rise to the bouncing checks situation.
Metrobank's negligence arising from their messenger's misrouting of the credit advice resulting in
the return of the checks in question, despite daily reporting of credit memos and a corresponding
daily radio message confirmation, (as shown by Exhibit "I," the Investigation Report of the bank's
Mr. Valentino Elevado) and Mr. Dungo's improper handling of clients led to the messenger's
dismissal from service and Mr. Dungo's transfer from Metro Manila to Mindoro.
questioning the deletion of the award of temperate damages and the reduction of the award of
moral damages and attorney's fees. The motion was denied.
The threshold issue was whether or not, under the facts and circumstances of the case, plaintiff
may be allowed to recover actual, moral and exemplary damages, including attorney's fees,
litigation expenses and the costs of the suit. On August 25, 1989, the RTC of Lipa City rendered a
decision 2 in favor of plaintiffs and against the defendant MBTC, ordering the latter to:
The petition is devoid of merit.
1. pay plaintiff Isabel Katigbak P50,000.00 as temperate damages;

2. pay P500,000.00 as moral damages, considering that RBPG's credit standing
and business reputation were damaged by the wrongful acts of defendant's
employees, coupled with the rude treatment received by Isabel Katigbak at the
hands of Mr. Dungo, all of which impelled her to seek medical treatment;
3. pay P100,000.00 as attorney's fees and litigation expenses; and.
4. pay the costs of suit.
The lower court did not award actual damages in the amount of P50,000.00 representing the
amount of the two (2) checks payable to Dr. Felipe C. Roque and Mrs. Elisa Roque for P25,000
each, as it found no showing that Mr. Antonio Katigbak who allegedly paid the amount was actually
reimbursed by plaintiff RBPG. Moreover, the court held that no actual damages could have been
suffered by plaintiff RBPG because on April 15, 1982, the Central Bank credit advice in the amount
of P304,000 which included the two (2) checks issued to the Roque spouses in the sum of
P50,000.00 were already credited to the account of RBPG and the service, as well as penalty
charges, were all reversed.
MBTC appealed from the decision to the Court of Appeals in CA GR CV No. 26571, alleging that
the trial court erred in awarding temperate and moral damages, as well as attorney's fees, plus
costs and expenses of litigation without factual or legal basis therefor.
On October 29, 1992, the Court of Appeals rendered a decision 3 affirming that of the trial court,
except for the deletion of the award of temperate damages, the reduction of moral damages from
P500,000.00 to P50,000.00 in favor of RBPG and P100,000.00 for Isabel Katigbak and P50,000.00,
as attorney's fees. Plaintiffs-appellees filed a motion for reconsideration of the decision,
MBTC filed this petition, presenting the following issues for resolution:
1. whether or not private respondents RBPG and Isabel Rodriguez are legally
entitled to moral damages and attorney's fees, and
2. assuming that they are so entitled, whether or not the amounts awarded are
excessive and unconscionable.
The case at bench was instituted to seek damages caused by the dishonor through negligence of
respondent bank's checks which were actually sufficiently funded, and the insults from petitioner
bank's officer directed against private respondent Isabel R. Katigbak. The presence of malice and
the evidence of besmirched reputation or loss of credit and business standing, as well as a
reappraisal of its probative value, involves factual matters which, having been already thoroughly
discussed and analyzed in the courts below, are no longer reviewable here. While this rule admits
of exceptions, this case does not fall under any of these.
There is no merit in petitioner's argument that it should not be considered negligent, much less be
held liable for damages on account of the inadvertence of its bank employee as Article 1173 of the
Civil Code only requires it to exercise the diligence of a good pater familias.
As borne out by the records, the dishonoring of the respondent's checks committed through
negligence by the petitioner bank on April 6, 1982 was rectified only on April 15, 1992 or nine (9)
days after receipt of the credit memo. Clearly, petitioner bank was remiss in its duty and obligation
to treat private respondent's account with the highest degree of care, considering the fiduciary
nature of their relationship. The bank is under obligation to treat the accounts of its depositors with
meticulous care, whether such account consists only of a few hundred pesos or of millions. It must
bear the blame for failing to discover the mistake of its employee despite the established
procedure requiring bank papers to pass through bank personnel whose duty it is to check and
countercheck them for possible errors. 4 Responsibility arising from negligence in the performance
of every kind of obligation is demandable. 5 While the bank's negligence may not have been
attended with malice and bad faith, nevertheless, it caused serious anxiety, embarrassment and
humiliation to private respondents for which they are entitled to recover reasonable moral
damages. 6
As the records bear out, insult was added to injury by petitioner bank's issuance of debit
memoranda representing service and penalty charges for the returned checks, not to mention the
insulting remarks from its Assistant Cashier.
In the case of Leopoldo Araneta v. Bank of America, 7 we held that:
The financial credit of a businessman is a prized and valuable asset, it being a

significant part of the foundation of his business. Any adverse reflection thereon
constitutes some financial loss to him. As stated in the case of Atlanta National
Bank vs. Davis, 96 Ga 334, 23 SE 190, citing 2 Morse Banks, Sec. 458, "it can
hardly be possible that a customer's check can be wrongfully refused payment
without some impeachment of his credit, which must in fact be an actual injury,
though he cannot, from the nature of the case, furnish independent, distinct proof
thereof".
It was established that when Mrs. Katigbak learned that her checks were not being honored and Mr.
Dungo repeatedly made the insulting phone calls, her wounded feelings and the mental anguish
suffered by her caused her blood pressure to rise beyond normal limits, necessitating medical
attendance for two (2) days at a hospital.
The damage to private respondents' reputation and social standing entitles them to moral
damages. Moral damages include physical suffering, mental anguish, fright, serious anxiety,
besmirched reputation, wounded feelings, moral shock, social humiliation and similar
injury. 8 Temperate or moderate damages which are more than nominal but less than
compensatory damages, may be recovered when the court finds that some pecuniary loss has
been suffered but its amount cannot, from the nature of the case, be proved with
certainty. 9 Temperate damages may be allowed in cases where from the nature of the case,
definite proof of pecuniary loss cannot be adduced, although the court is convinced that there has
been such loss. The appellate court, however, justified its deletion when MBTC reasoned out that
the amount of P50,000.00 is not part of the relief prayed for in the complaint, aside from the fact
that the amount allegedly suffered by Mrs. Katigbak is susceptible of proof. 10
Moral and temperate damages which are not susceptible of pecuniary estimation are not awarded
to penalize the petitioner but to compensate the respondents for injuries suffered as a result of the
former's fault and negligence, taking into account the latter's credit and social standing in the
banking community, particularly since this is the very first time such humiliation has befallen
private respondents. The amount of such losses need not be established with exactitude, precisely
due to their nature. 11
The carelessness of petitioner bank, aggravated by the lack of promptness in repairing the error
and the arrogant attitude of the bank officer handling the matter, justifies the grant of moral
damages, which are clearly not excessive and unconscionable.
Moreover, considering the nature and extent of the services rendered by private respondent's
counsel, both in the trial and appellate courts, the Court deems it just and equitable that attorney's
fees in the amount of P50,000.00 be awarded.
WHEREFORE, the decision of respondent Court of Appeals is AFFIRMED in all respects.
SO ORDERED.
G.R. No. 148582
19
January 16, 2002
FAR
EAST
BANK
vs.
ESTRELLA O. QUERIMIT, respondent.
AND
TRUST
COMPANY, petitioner,
MENDOZA, J.:
This is a petition for review on certiorari seeking review of the decision, dated March 6, 2001, and
resolution, dated June 19, 2001, of the Court of Appeals 1 in CA-G.R. CV No. 67147, entitled "Estrella
O. Querimit v. Far East Bank and Trust Company," which affirmed with modification the decision of
the Regional Trial Court, Branch 38, Manila,2ordering petitioner Far East Bank and Trust Co. (FEBTC)
to allow respondent Estrella O. Querimit to withdraw her time deposit with the FEBTC.
The facts are as follows:
Respondent Estrella O. Querimit worked as internal auditor of the Philippine Savings Bank (PSB) for
19 years, from 1963 to 1992.3 On November 24, 1986, she opened a dollar savings account in
petitioner's Harrison Plaza branch,4for which she was issued four (4) Certificates of Deposit (Nos.
79028, 79029, 79030, and 79031), each certificate representing the amount of $15,000.00, or a
total amount of $60,000.00. The certificates were to mature in 60 days, on January 23, 1987, and
were payable to bearer at 4.5% interest per annum. The certificates bore the word "accrued,"
which meant that if they were not presented for encashment or pre-terminated prior to maturity,
the money deposited with accrued interest would be "rolled over" by the bank and annual interest
would accumulate automatically.5 The petitioner bank's manager assured respondent that her
deposit would be renewed and earn interest upon maturity even without the surrender of the
certificates if these were not indorsed and withdrawn. 6Respondent kept her dollars in the bank so
that they would earn interest and so that she could use the fund after she retired. 7
In 1989, respondent accompanied her husband Dominador Querimit to the United States for
medical treatment. She used her savings in the Bank of the Philippine Islands (BPI) to pay for the
trip and for her husband's medical expenses. 8 In January 1993, her husband died and Estrella
returned to the Philippines. She went to petitioner FEBTC to withdraw her deposit but, to her
dismay, she was told that her husband had withdrawn the money in deposit. 9 Through counsel,
respondent sent a demand letter to petitioner FEBTC. In another letter, respondent reiterated her
request for updating and payment of the certificates of deposit, including interest earned. 10 As
petitioner FEBTC refused respondent's demands, the latter filed a complaint, joining in the action
Edgardo F. Blanco, Branch Manager of FEBTC Harrison Plaza Branch, and Octavio Espiritu, FEBTC
President.11
Petitioner FEBTC alleged that it had given respondent's late husband Dominador an
"accommodation" to allow him to withdraw Estrella's deposit. 12 Petitioner presented certified true
copies of documents showing that payment had been made, to wit:
1. Four FEBTC Harrison Plaza Branch Dollar Demand Drafts Nos. 886694903, 886694904,
886694905 and 886694906 for US$15,110.96 each, allegedly issued by petitioner to respondent's
husband Dominador after payment on the certificates of deposit; 13
2. A letter of Alicia de Bustos, branch cashier of FEBTC at Harrison Plaza, dated January 23, 1987,
which was sent to Citibank, N.A., Citibank Center, Paseo de Roxas, Makati, Metro Manila, informing
the latter that FEBTC had issued the four drafts and requesting Citibank New York to debit from
petitioner's account $60,443.84, the aggregate value of the four drafts; 14
20
deposit until now remain unindorsed, undelivered and unwithdrawn by [her]." 19 But the Court of
Appeals held that the individual defendants, Edgardo F. Blanco, FEBTC-Harrison Plaza Branch
Manager, and Octavio Espiritu, FEBTC President, could not be held solidarily liable with the FEBTC
because the latter has a personality separate from its officers and stockholders. 20
Hence this appeal.
As stated by the Court of Appeals, the main issue in this case is whether the subject certificates of
deposit have already been paid by petitioner.21 Petitioner contends that-
3. "Citicorp Remittance Service: Daily Summary and Payment Report" dated January 23, 1987; 15
4. Debit Ticket dated January 23, 1987, showing the debit of US$60,443.84 or its equivalent at the
time ofP1,240,912.04 from the FEBTC Harrison Plaza Branch; 16 and
I. Petitioner is not liable to respondent for the value of the four (4) Certificates of Deposit,
including the interest thereon as well as moral and exemplary damages, attorney's and
appearance fees.
5. An Interbranch Transaction Ticket Register or Credit Ticket dated January 23, 1987 showing that
US$60,443.84 or P1,240,912.04 was credited to petitioner's International Operation Division
(IOD).17
II. The aggregate value - both principal and interest earned at maturity - of the four (4)
certificates of deposit was already paid to or withdrawn at maturity by the late Dominador
Querimit who was the respondent's deceased husband.
On May 6, 2000, the trial court rendered judgment for respondent. The dispositive portion of the
decision stated:
III. Respondent is guilty of laches since the four (4) certificates of deposit were all issued on
24 November 1986 but she attempted to withdraw their aggregate value on 29 July 1996
only on or after the lapse of more than nine (9) years and eight (8) months.
WHEREFORE, judgment is hereby rendered in favor of plaintiff [Estrella O. Querimit] and

against defendants [FEBTC et al.]:
1. ORDERING defendants to allow plaintiff to withdraw her U.S.$ Time Deposit of
$60,000.00 plus accrued interests;
2. ORDERING defendants to pay moral damages in the amount of P50,000.00;
3. ORDERING defendants to pay exemplary damages in the amount of P50,000.00;
4. ORDERING defendants to pay attorney's
plus P10,000.00 per appearance of counsel; and
fees
in the amount
of P100,000.00
5. ORDERING defendants to pay the costs of the suit.

SO ORDERED.18
On May 15, 2000, petitioner appealed to the Court of Appeals which, on March 6, 2001, affirmed
through its Fourteenth Division the decision of the trial court, with the modification that FEBTC was
declared solely liable for the amounts adjudged in the decision of the trial court. The appeals court
stated that petitioner FEBTC failed to prove that the certificates of deposit had been paid out of its
funds, since "the evidence by the [respondent] stands unrebutted that the subject certificates of
IV. Respondent is not liable to petitioner for attorney's fees. 22

After reviewing the records, we find the petition to be without merit.
First. Petitioner bank failed to prove that it had already paid Estrella Querimit, the bearer and
lawful holder of the subject certificates of deposit. The finding of the trial court on this point, as
affirmed by the Court of Appeals, is that petitioner did not pay either respondent Estrella or her
husband the amounts evidenced by the subject certificates of deposit. This Court is not a trier of
facts and generally does not weigh anew the evidence already passed upon by the Court of
Appeals.23 The finding of respondent court which shows that the subject certificates of deposit are
still in the possession of Estrella Querimit and have not been indorsed or delivered to petitioner
FEBTC is substantiated by the record and should therefore stand. 24
A certificate of deposit is defined as a written acknowledgment by a bank or banker of the receipt
of a sum of money on deposit which the bank or banker promises to pay to the depositor, to the
order of the depositor, or to some other person or his order, whereby the relation of debtor and
creditor between the bank and the depositor is created. The principles governing other types of
bank deposits are applicable to certificates of deposit, 25 as are the rules governing promissory
notes when they contain an unconditional promise to pay a sum certain of money absolutely. 26 The
principle that payment, in order to discharge a debt, must be made to someone authorized to
receive it is applicable to the payment of certificates of deposit. Thus, a bank will be protected in
making payment to the holder of a certificate indorsed by the payee, unless it has notice of the
invalidity of the indorsement or the holder's want of title. 27 A bank acts at its peril when it pays
21
deposits evidenced by a certificate of deposit, without its production and surrender after proper
indorsement.28 As a rule, one who pleads payment has the burden of proving it. Even where the
plaintiff must allege non-payment, the general rule is that the burden rests on the defendant to
prove payment, rather than on the plaintiff to prove payment. The debtor has the burden of
showing with legal certainty that the obligation has been discharged by payment. 29
In this case, it would be unjust to allow the doctrine of laches to defeat the right of respondent to
recover her savings which she deposited with the petitioner. She did not withdraw her deposit even
after the maturity date of the certificates of deposit precisely because she wanted to set it aside
for her retirement. She relied on the bank's assurance, as reflected on the face of the instruments
themselves, that interest would "accrue" or accumulate annually even after their maturity. 38
In this case, the certificates of deposit were clearly marked payable to "bearer," which means, to
"[t]he person in possession of an instrument, document of title or security payable to bearer or
indorsed in blank."30 Petitioner should not have paid respondent's husband or any third party
without requiring the surrender of the certificates of deposit.
Third. Respondent is entitled to moral damages because of the mental anguish and humiliation she
suffered as a result of the wrongful refusal of the FEBTC to pay her even after she had delivered
the certificates of deposit.39 In addition, petitioner FEBTC should pay respondent exemplary
damages, which the trial court imposed by way of example or correction for the public
good.40 Finally, respondent is entitled to attorney's fees since petitioner's act or omission
compelled her to incur expenses to protect her interest, making such award just and
equitable.41 However, we find the award of attorney's fees to be excessive and accordingly reduce
it to P20,000.00.42
Petitioner claims that it did not demand the surrender of the subject certificates of deposit since
respondent's husband, Dominador Querimit, was one of the bank's senior managers. But even long
after respondent's husband had allegedly been paid respondent's deposit and before his
retirement from service, the FEBTC never required him to deliver the certificates of deposit in
question.31 Moreover, the accommodation given to respondent's husband was made in violation of
the bank's policies and procedures.32
Petitioner FEBTC thus failed to exercise that degree of diligence required by the nature of its
business.33 Because the business of banks is impressed with public interest, the degree of diligence
required of banks is more than that of a good father of the family or of an ordinary business firm.
The fiduciary nature of their relationship with their depositors requires them to treat the accounts
of their clients with the highest degree of care. 34 A bank is under obligation to treat the accounts of
its depositors with meticulous care whether such accounts consist only of a few hundred pesos or
of millions of pesos. Responsibility arising from negligence in the performance of every kind of
obligation is demandable. 35 Petitioner failed to prove payment of the subject certificates of deposit
issued to the respondent and, therefore, remains liable for the value of the dollar deposits
indicated thereon with accrued interest.
WHEREFORE, premises considered, the present petition is hereby DENIED and the Decision in CAG.R. CV No. 67147 AFFIRMED, with the modification that the award of attorney's fees is reduced
to P20,000.00.
SO ORDERED.
G.R. No. 118492
August 15, 2001
GREGORIO
H.
REYES
and
CONSUELO
PUYAT-REYES, petitioners,
vs.
THE HON. COURT OF APPEALS and FAR EAST BANK AND TRUST COMPANY, respondents.
DE LEON, JR., J.:
Second. The equitable principle of laches is not sufficient to defeat the rights of respondent over
the subject certificates of deposit.
Laches is the failure or neglect, for an unreasonable length of time, to do that which, by exercising
due diligence, could or should have been done earlier. It is negligence or omission to assert a right
within a reasonable time, warranting a presumption that the party entitled to assert it either has
abandoned it or declined to assert it.36
Before us is a petition for review of the Decision 1 dated July 22, 1994 and Resolution 2 dated
December 29, 1994 of the Court of Appeals 3 affirming with modification the Decision 4 dated
November 12, 1992 of the Regional Trial Court of Makati, Metro Manila, Branch 64, which dismissed
the complaint for damages of petitioners spouses Gregorio H. Reyes and Consuelo Puyat-Reyes
against respondent Far East Bank and Trust Company.
The undisputed facts of the case are as follows:
There is no absolute rule as to what constitutes laches or staleness of demand; each case is to be
determined according to its particular circumstances. The question of laches is addressed to the
sound discretion of the court and, being an equitable doctrine, its application is controlled by
equitable considerations. It cannot be used to defeat justice or perpetrate fraud and injustice.
Courts will not be guided or bound strictly by the statute of limitations or the doctrine of laches
when to do so, manifest wrong or injustice would result. 37
In view of the 20th Asian Racing Conference then scheduled to be held in September, 1988 in
Sydney, Australia, the Philippine Racing Club, Inc. (PRCI, for brevity) sent four (4) delegates to the
said conference. Petitioner Gregorio H. Reyes, as vice-president for finance, racing manager,
treasurer, and director of PRCI, sent Godofredo Reyes, the club's chief cashier, to the respondent
bank to apply for a foreign exchange demand draft in Australian dollars.
Godofredo went to respondent bank's Buendia Branch in Makati City to apply for a demand draft in
the amount One Thousand Six Hundred Ten Australian Dollars (AU$1,610.00) payable to the order
of the 20th Asian Racing Conference Secretariat of Sydney, Australia. He was attended to by
respondent bank's assistant cashier, Mr. Yasis, who at first denied the application for the reason
that respondent bank did not have an Australian dollar account in any bank in Sydney. Godofredo
asked if there could be a way for respondent bank to accommodate PRCI's urgent need to remit
Australian dollars to Sydney. Yasis of respondent bank then informed Godofredo of a roundabout
way of effecting the requested remittance to Sydney thus: the respondent bank would draw a
demand draft against Westpac Bank in Sydney, Australia (Westpac-Sydney for brevity) and have
the latter reimburse itself from the U.S. dollar account of the respondent in Westpac Bank in New
York, U.S.A. (Westpac-New York for brevity). This arrangement has been customarily resorted to
since the 1960's and the procedure has proven to be problem-free. PRCI and the petitioner
Gregorio H. Reyes, acting through Godofredo, agreed to this arrangement or approach in order to
effect the urgent transfer of Australian dollars payable to the Secretariat of the 20 th Asian Racing
Conference.
On July 28, 1988, the respondent bank approved the said application of PRCI and issued Foreign
Exchange Demand Draft (FXDD) No. 209968 in the sum applied for, that is, One Thousand Six
Hundred Ten Australian Dollars (AU$ 1,610.00), payable to the order of the 20 th Asian Racing
Conference Secretariat of Sydney, Australia, and addressed to Westpac-Sydney as the drawee
bank.1wphi1.nt
On August 10, 1988, upon due presentment of the foreign exchange demand draft, denominated
as FXDD No. 209968, the same was dishonored, with the notice of dishonor stating the following:
"xxx No account held with Westpac." Meanwhile, on August 16, 1988, Wespac-New York sent a
cable to respondent bank informing the latter that its dollar account in the sum of One Thousand
Six Hundred Ten Australian Dollars (AU$ 1,610.00) was debited. On August 19, 1988, in response to
PRCI's complaint about the dishonor of the said foreign exchange demand draft, respondent bank
informed Westpac-Sydney of the issuance of the said demand draft FXDD No. 209968, drawn
against the Wespac-Sydney and informing the latter to be reimbursed from the respondent bank's
dollar account in Westpac-New York. The respondent bank on the same day likewise informed
Wespac-New York requesting the latter to honor the reimbursement claim of Wespac-Sydney. On
September 14, 1988, upon its second presentment for payment, FXDD No. 209968 was again
dishonored by Westpac-Sydney for the same reason, that is, that the respondent bank has no
deposit dollar account with the drawee Wespac-Sydney.
On September 17, 1988 and September 18, 1988, respectively, petitioners spouses Gregorio H.
Reyes and Consuelo Puyat-Reyes left for Australia to attend the said racing conference. When
petitioner Gregorio H. Reyes arrived in Sydney in the morning of September 18, 1988, he went
directly to the lobby of Hotel Regent Sydney to register as a conference delegate. At the
registration desk, in the presence of other delegates from various member of the conference
secretariat that he could not register because the foreign exchange demand draft for his
registration fee had been dishonored for the second time. A discussion ensued in the presence and
within the hearing of many delegates who were also registering. Feeling terribly embarrassed and
humiliated, petitioner Gregorio H. Reyes asked the lady member of the conference secretariat that
he be shown the subject foreign exchange demand draft that had been dishonored as well as the
covering letter after which he promised that he would pay the registration fees in cash. In the
22
meantime he demanded that he be given his name plate and conference kit. The lady member of
the conference secretariat relented and gave him his name plate and conference kit. It was only
two (2) days later, or on September 20, 1988, that he was given the dishonored demand draft and
a covering letter. It was then that he actually paid in cash the registration fees as he had earlier
promised.
Meanwhile, on September 19, 1988, petitioner Consuelo Puyat-Reyes arrived in Sydney. She too
was embarassed and humiliated at the registration desk of the conference secretariat when she
was told in the presence and within the hearing of other delegates that she could not be registered
due to the dishonor of the subject foreign exchange demand draft. She felt herself trembling and
unable to look at the people around her. Fortunately, she saw her husband, coming toward her. He
saved the situation for her by telling the secretariat member that he had already arranged for the
payment of the registration fee in cash once he was shown the dishonored demand draft. Only
then was petitioner Puyat-Reyes given her name plate and conference kit.
At the time the incident took place, petitioner Consuelo Puyat-Reyes was a member of the House
of Representatives representing the lone Congressional District of Makati, Metro Manila. She has
been an officer of the Manila Banking Corporation and was cited by Archbishop Jaime Cardinal Sin
as the top lady banker of the year in connection with her conferment of the Pro-Ecclesia et
Pontifice Award. She has also been awarded a plaque of appreciation from the Philippine
Tuberculosis Society for her extraordinary service as the Society's campaign chairman for the ninth
(9th) consecutive year.
On November 23, 1988, the petitioners filed in the Regional Trial Court of Makati, Metro Manila, a
complaint for damages, docketed as Civil Case No. 88-2468, against the respondent bank due to
the dishonor of the said foreign exchange demand draft issued by the respondent bank. The
petitioners claim that as a result of the dishonor of the said demand draft, they were exposed to
unnecessary shock, social humiliation, and deep mental anguish in a foreign country, and in the
presence of an international audience.
On November 12, 1992, the trial court rendered judgment in favor of the defendant (respondent
bank) and against the plaintiffs (herein petitioners), the dispositive portion of which states:
WHEREFORE, judgment is hereby rendered in favor of the defendant, dismissing plaintiff's
complaint, and ordering plaintiffs to pay to defendant, on its counterclaim, the amount of
P50,000.00, as reasonable attorney's fees. Costs against the plaintiff.
SO ORDERED.5
The petitioners appealed the decision of the trial court to the Court of Appeals. On July 22, 1994,
the appellate court affirmed the decision of the trial court but in effect deleted the award of
attorney's fees to the defendant (herein respondent bank) and the pronouncement as to the costs.
The decretal portion of the decision of the appellate court states:
WHEREFORE, the judgment appealed from, insofar as it dismissed plaintiff's complaint, is

hereby AFFIRMED, but is hereby REVERSED and SET ASIDE in all other respect. No special
pronouncement as to costs.
23
THE HONORABLE COURT OF APPEALS ERRED IN FINDING PRIVATE RESPONDENT NOT

NEGLIGENT BY ERRONEOUSLY APPLYING THE STANDARD OF DILIGENCE OF AN "ORDINARY
PRUDENT PERSON" WHEN IN TRUTH A HIGHER DEGREE OF DILIGENCE IS IMPOSED BY LAW
UPON THE BANKS.
SO ORDERED.6
II
According to the appellate court, there is no basis to hold the respondent bank liable for damages
for the reason that it exerted every effort for the subject foreign exchange demand draft to be
honored. The appellate court found and declared that:
xxx
xxx
THE HONORABLE COURT OF APPEALS ERRED IN ABSOLVING PRIVATE RESPONDENT FROM

LIABILITY BY OVERLOOKING THE FACT THAT THE DISHONOR OF THE DEMAND DRAFT WAS A
BREACH OF PRIVATE RESPONDENT'S WARRANTY AS THE DRAWER THEREOF.
xxx
III
Thus, the Bank had every reason to believe that the transaction finally went through
smoothly, considering that its New York account had been debited and that there was no
miscommunication between it and Westpac-New York. SWIFT is a world wide association
used by almost all banks and is known to be the most reliable mode of communication in
the international banking business. Besides, the above procedure, with the Bank as drawer
and Westpac-Sydney as drawee, and with Westpac-New York as the reimbursement Bank
had been in place since 1960s and there was no reason for the Bank to suspect that this
particular demand draft would not be honored by Westpac-Sydney.
From the evidence, it appears that the root cause of the miscommunications of the Bank's
SWIFT message is the erroneous decoding on the part of Westpac-Sydney of the Bank's
SWIFT message as an MT799 format. However, a closer look at the Bank's Exhs. "6" and
"7" would show that despite what appears to be an asterick written over the figure before
"99", the figure can still be distinctly seen as a number "1" and not number "7", to the
effect that Westpac-Sydney was responsible for the dishonor and not the Bank.
Moreover, it is not said asterisk that caused the misleading on the part of the WestpacSydney of the numbers "1" to "7", since Exhs. "6" and "7" are just documentary copies of
the cable message sent to Wespac-Sydney. Hence, if there was mistake committed by
Westpac-Sydney in decoding the cable message which caused the Bank's message to be
sent to the wrong department, the mistake was Westpac's, not the Bank's. The Bank had
done what an ordinary prudent person is required to do in the particular situation, although
appellants expect the Bank to have done more. The Bank having done everything
necessary or usual in the ordinary course of banking transaction, it cannot be held liable
for any embarrassment and corresponding damage that appellants may have incurred. 7
xxx
xxx
xxx
Hence, this petition, anchored on the following assignment of errors:

I
THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT AS SHOWN

OVERWHELMINGLY BY THE EVIDENCE, THE DISHONOR OF THE DEMAND DRAFT AS DUE TO
PRIVATE RESPONDENT'S NEGLIGENCE AND NOT THE DRAWEE BANK. 8
The petitioners contend that due to the fiduciary nature of the relationship between the
respondent bank and its clients, the respondent should have exercised a higher degree of diligence
than that expected of an ordinary prudent person in the handling of its affairs as in the case at bar.
The appellate court, according to petitioners, erred in applying the standard of diligence of an
ordinary prudent person only. Petitioners also claim that the respondent bank violate Section 61 of
the Negotiable Instruments Law9 which provides the warranty of a drawer that "xxx on due
presentment, the instrument will be accepted or paid, or both, according to its tenor xxx." Thus,
the petitioners argue that respondent bank should be held liable for damages for violation of this
warranty. The petitioners pray this Court to re-examine the facts to cite certain instances of
negligence.
It is our view and we hold that there is no reversible error in the decision of the appellate court.
Section 1 of Rule 45 of the Revised Rules of Court provides that "(T)he petition (for review) shall
raise only questions of law which must be distinctly set forth." Thus, we have ruled that factual
findings of the Court of Appeals are conclusive on the parties and not reviewable by this Court
and they carry even more weight when the Court of Appeals affirms the factual findings of the trial
court.10
The courts a quo found that respondent bank did not misrepresent that it was maintaining a
deposit account with Westpac-Sydney. Respondent bank's assistant cashier explained to Godofredo
Reyes, representing PRCI and petitioner Gregorio H. Reyes, how the transfer of Australian dollars
would be effected through Westpac-New York where the respondent bank has a dollar account to
Westpac-Sydney where the subject foreign exchange demand draft (FXDD No. 209968) could be
encashed by the payee, the 20th Asian Racing Conference Secretariat. PRCI and its Vice-President
for finance, petitioner Gregorio H. Reyes, through their said representative, agreed to that
arrangement or procedure. In other words, the petitioners are estopped from denying the said
arrangement or procedure. Similar arrangements have been a long standing practice in banking to
facilitate international commercial transactions. In fact, the SWIFT cable message sent by
respondent bank to the drawee bank, Westpac-Sydney, stated that it may claim reimbursement
from its New York branch, Westpac-New York, where respondent bank has a deposit dollar account.
The facts as found by the courts a quo show that respondent bank did not cause an erroneous
transmittal of its SWIFT cable message to Westpac-Sydney. It was the erroneous decoding of the
cable message on the part of Westpac-Sydney that caused the dishonor of the subject foreign
exchange demand draft. An employee of Westpac-Sydney in Sydney, Australia mistakenly read the
printed figures in the SWIFT cable message of respondent bank as "MT799" instead of as "MT199".
As a result, Westpac-Sydney construed the said cable message as a format for a letter of credit,
and not for a demand draft. The appellate court correct found that "the figure before '99' can still
be distinctly seen as a number '1' and not number '7'." Indeed, the line of a "7" is in a slanting
position while the line of a "1" is in a horizontal position. Thus, the number "1" in "MT199" cannot
be construed as "7".11
The evidence also shows that the respondent bank exercised that degree of diligence expected of
an ordinary prudent person under the circumstances obtaining. Prior to the first dishonor of the
subject foreign exchange demand draft, the respondent bank advised Westpac-New York to honor
the reimbursement claim of Westpac-Sydney and to debit the dollar account 12 of respondent bank
with the former. As soon as the demand draft was dishonored, the respondent bank, thinking that
the problem was with the reimbursement and without any idea that it was due to
miscommunication, re-confirmed the authority of Westpac-New York to debit its dollar account for
the purpose of reimbursing Westpac-Sydney.13 Respondent bank also sent two (2) more cable
messages to Westpac-New York inquiring why the demand draft was not honored. 14
With these established facts, we now determine the degree of diligence that banks are required to
exert in their commercial dealings. In Philippine Bank of Commerce v. Court of Appeals 15 upholding
a long standing doctrine, we ruled that the degree of diligence required of banks, is more than that
of a good father of a family where the fiduciary nature of their relationship with their depositors is
concerned. In other words banks are duty bound to treat the deposit accounts of their depositors
with the highest degree of care. But the said ruling applies only to cases where banks act under
their fiduciary capacity, that is, as depositary of the deposits of their depositors. But the same
higher degree of diligence is not expected to be exerted by banks in commercial transactions that
do not involve their fiduciary relationship with their depositors.
Considering the foregoing, the respondent bank was not required to exert more than the diligence
of a good father of a family in regard to the sale and issuance of the subject foreign exchange
demand draft. The case at bar does not involve the handling of petitioners' deposit, if any, with the
respondent bank. Instead, the relationship involved was that of a buyer and seller, that is, between
the respondent bank as the seller of the subject foreign exchange demand draft, and PRCI as the
buyer of the same, with the 20 th Asian Racing conference Secretariat in Sydney, Australia as the
payee thereof. As earlier mentioned, the said foreign exchange demand draft was intended for the
payment of the registration fees of the petitioners as delegates of the PRCI to the 20 th Asian Racing
Conference in Sydney.
The evidence shows that the respondent bank did everything within its power to prevent the
dishonor of the subject foreign exchange demand draft. The erroneous reading of its cable
24
message to Westpac-Sydney by an employee of the latter could not have been foreseen by the
respondent bank. Being unaware that its employee erroneously read the said cable message,
Westpac-Sydney merely stated that the respondent bank has no deposit account with it to cover
for the amount of One Thousand Six Hundred Ten Australian Dollar (AU $1610.00) indicated in the
foreign exchange demand draft. Thus, the respondent bank had the impression that Westpac-New
York had not yet made available the amount for reimbursement to Westpac-Sydney despite the
fact that respondent bank has a sufficient deposit dollar account with Westpac-New York. That was
the reason why the respondent bank had to re-confirm and repeatedly notify Westpac-New York to
debit its (respondent bank's) deposit dollar account with it and to transfer or credit the
corresponding amount to Westpac-Sydney to cover the amount of the said demand draft.
In view of all the foregoing, and considering that the dishonor of the subject foreign exchange
demand draft is not attributable to any fault of the respondent bank, whereas the petitioners
appeared to be under estoppel as earlier mentioned, it is no longer necessary to discuss the
alleged application of Section 61 of the Negotiable Instruments Law to the case at bar. In any
event, it was established that the respondent bank acted in good faith and that it did not cause the
embarrassment of the petitioners in Sydney, Australia. Hence, the Court of Appeals did not commit
any reversable error in its challenged decision.
WHEREFORE, the petition is hereby DENIED, and the assailed decision of the Court of Appeals
is AFFIRMED. Costs against the petitioners.
SO ORDERED.1wphi1.nt
[G.R. No. 125134. January 22, 1999]
XERXES ADZUARA y DOTIMAS, petitioner, vs. COURT OF APPEALS and PEOPLE of the
PHILIPPINES,respondents.
DECISION
BELLOSILLO, J.:
XERXES ADZUARA Y DOTIMAS was found guilty by the trial court of reckless imprudence
resulting in damage to property with less serious physical injuries. His conviction was affirmed by
the Court of Appeals. Through this petition for review on certiorari he seeks the reversal of his
conviction.
On 17 December 1990, at half past 1:00 o'clock in the morning, petitioner Xerxes Adzuara y
Dotimas, then a law student, and his friends Rene Gonzalo and Richard Jose were cruising in a 4door Colt Galant sedan with plate number NMT 718 along the stretch of Quezon Avenue coming
from the direction of EDSA towards Delta Circle at approximately 40 kilometers per hour. [1] Upon
reaching the intersection of 4th West Street their car collided with a 1975 4-door Toyota Corona
sedan with plate number PMD 711 owned and driven by Gregorio Martinez. Martinez had just
attended a Loved Flock meeting with his daughter Sahlee [2] and was coming from the eastern
portion of Quezon Avenue near Delta Circle. He was then executing a U-turn at the speed of 5 kph
at the north-west portion of Quezon Avenue going to Manila when the accident occurred.
The collision flung the Corona twenty (20) meters southward from the point of impact causing
it to land atop the center island of Quezon Avenue. The Galant skittered southward on Quezon
Avenue's western half leaving its left rear about four (4) meters past the Corona's right front
side. The principal points of contact between the two (2) cars were the Galant's left front side and
the Corona's right front door including its right front fender.
Both petitioner and Martinez claimed that their lanes had green traffic lights [3] although the
investigating policeman Marcelo Sabido declared that the traffic light was blinking red and orange
when he arrived at the scene of the accident an hour later.[4]
Sahlee Martinez, who was seated on the Corona's right front seat, sustained physical injuries
which required confinement and medical attendance at the National Orthopaedic Hospital for five
(5) days. As a result she missed classes at St. Paul's College for two (2) weeks.[5] Petitioner and his
friends were treated at the Capitol Medical Center for their injuries.
On 12 July 1991 petitioner was charged before the Regional Trial Court of Quezon City [6] with
reckless imprudence resulting in damage to property with less serious physical injuries under Art.
365 of the Revised Penal Code. He pleaded not guilty to the charge. [7]
On 11 December 1991, before the presentation of evidence, private complainant Martinez
manifested his intention to institute a separate civil action for damages against petitioner. [8]
The Regional Trial Court of Quezon City, Branch 95, convicted petitioner Xerxes Adzuara after
trial and sentenced him to suffer imprisonment of two (2) months and fifteen (15) days of arresto
mayor and to pay a fine of P50,000.00, with subsidiary imprisonment in case of insolvency. [9]
The Court of Appeals affirmed the decision of the trial court but deleted the fine
of P50,000.00.[10] On 23 May 1996[11] the appellate court denied petitioner's motion for
reconsideration hence, this petition for review on certiorari under Rule 45 of the Rules
of Court charging that (a) petitioner's post-collision conduct does not constitute sufficient basis to
convict where there are no factual circumstances warranting a finding of negligence, and (b) the
medical certificate by itself and unsubstantiated by the doctor's testimony creates doubt as to the
existence of the injuries complained of.
We find no merit in the petition. A perusal of the decision of the trial court shows that there
are factual circumstances warranting a finding of negligence on the part of petitioner. Thus Having carefully examined the evidence adduced, the Court finds that the defense version cannot
prevail against the prosecution version satisfactorily demonstrating that the subject accident
occurred because of Xerxes' reckless imprudence consisting in his paying no heed to the red light
and making V-1 (Galant car) proceed at a fast clip as it approached and entered the
intersection. Gregorio's basic claim, substantially corroborated by Sahlee's testimony - in sum to
the effect that when he made V-2 (Corona car) proceed to turn left, the left-turn arrow was lighted
25
green or go for V-2 and it was red light or stop for V-1 - is the same basic version he gave in his
written question-and-answer statement to the police investigator on 13 December 1990; certainly,
the clear consistency of Gregorio's posture respecting such crucial, nay decisive, material
circumstance attending the subject accident underscores the veracity of the prosecution version,
even as it tends to indicate the scant measure of faith and credence that can be safely reposed on
the defense version x x x x (emphasis ours).[12]
This is further elaborated upon by the Court of Appeals in its decision Gregorio testified that when the arrow of the traffic light turned green, he turned left at the speed
of five kilometers per hour (TSN, August 11,1992, pp.11-12). While he was already at the middle
of the western half of Quezon Avenue, his car was smashed by appellant's vehicle (id.,p.13). This
was corroborated by the testimony of Sahlee Martinez (TSN, August 12,1992, pp. 3-4). Their
declarations were confirmed by physical evidence: the resulting damage on Gregorio's car as
shown by exhibits A, A-1 and A-2. The dent on the main frame of Gregorio's car (Exh. A) attests to
the strong impact caused by appellant's car. Such impact proves that appellant must have been
running at high speed.
At the time of the collision, the trial court found that the arrow for left turn was green and the
traffic light facing appellant was red. Given these facts, appellant should have stopped his car as
Gregorio had the right of way. There could be no debate on this legal proposition.
Appellant testified that he was driving slow(ly), about 40 kilometers per hour (TSN, August
31,1992, p. 13). This is refuted by the fact that the colliding vehicles were thrown 20 meters away
from the point of impact (TSN, August 11,1992, p. 14); in fact, Gregorio's car rested on top of the
center island of Quezon Avenue, while appellant's car stopped at the middle of the lane of Quezon
Avenue facing towards the general direction of Quiapo (id., pp. 13-14; emphasis supplied).[13]
Despite these findings, petitioner, maintaining that his conviction in the courts below was
based merely on his post-collision conduct, asks us to discard the findings of fact of the trial court
and evaluate anew the probative value of the evidence. In this regard, we reiterate our ruling
in People v. Bernal[14] x x x x It has thus become a persistent monotony for the Court to hold, since more often than
not the challenge relates to the credibility of witnesses, that it is bound by the prevailing doctrine,
founded on a host of jurisprudential rulings, to the effect that the matter is best determined at the
trial court level where testimonies are "first hand given, received, assessed and evaluated" (People
v. Miranda, 235 SCRA 202). The findings of the trial court on the credulity of testimony are
generally not disturbed on appeal since "significant focus is held to lie on the deportment of, as
well as the peculiar manner in which the declaration is made by, the witness in open court"
(People v. Dado, 244 SCRA 655) which an appellate court would be unable to fully appreciate, in
the same way that a trial court can, from the mere reading of the transcript of stenographic
notes. It is only when strong justifications exist that an appellate court could deny respect to the
trial court's findings when, quite repeatedly said, it is shown that the trial court has clearly
overlooked, misunderstood or misapplied some facts or circumstances of weight or substance
which could affect the results of the case (People v. Flores, 243 SCRA 374; People v. Timple, 237
SCRA 52).
In the instant case, nothing on record shows that the facts were not properly evaluated by the
court a quo. As such, we find no reason to disturb their findings. It bears to stress that the
appreciation of petitioner's post-collision behavior serves only as a means to emphasize the finding
of negligence which is readily established by the admission of petitioner and his friend Renato that
they saw the car of Martinez making a U-turn but could not avoid the collision by the mere
application of the brakes.[15] Negligence is the want of care required by the circumstances. It is a
relative or comparative, not an absolute, term and its application depends upon the situation of
the parties and the degree of care and vigilance which the circumstances reasonably require. [16]
What degree of care and vigilance then did the circumstances require? At half past 1:00
o'clock in the morning along an almost deserted avenue, ordinary care and vigilance would
suffice. This may consist of keeping a watchful eye on the road ahead and observing the traffic
rules on speed, right of way and traffic light. The claim of petitioner that Martinez made a swift Uturn which caused the collision is not credible since a U-turn is done at a much slower speed to
avoid skidding and overturning, compared to running straight ahead. Nonetheless, no evidence
was presented showing skid marks caused by the car driven by Martinez if only to demonstrate
that he was driving at a fast clip in negotiating the U-turn. On the other hand, the speed at which
petitioner drove his car appears to be the prime cause for his inability to stop his car and avoid the
collision. His assertion that he drove at the speed of 40 kph. is belied by Martinez who testified
that when he looked at the opposite lane for any oncoming cars, he saw none; then a few seconds
later, he was hit by Adzuara's car. [17] The extent of the damage on the car of Martinez and the
position of the cars after the impact further confirm the finding that petitioner went beyond the
speed limit required by law and by the circumstances. [18]
It is a rule that a motorist crossing a thru-stop street has the right of way over the one making
a U-turn. But if the person making a U-turn has already negotiated half of the turn and is almost
on the other side so that he is already visible to the person on the thru-street, the latter must give
way to the former. Petitioner was on the thru-street and had already seen the Martinez car. [19] He
should have stopped to allow Martinez to complete the U-turn having, as it were, the last clear
chance to avoid the accident which he ignored. In fact, he never stopped. Rather, he claimed that
on the assumption that he was negligent, the other party was also guilty of contributory
negligence since his car had no lights on. [20] The negligence of Martinez however has not been
satisfactorily shown.
Petitioner insists that the traffic light facing him at the intersection was green which only
indicated that he had the right of way. But the findings of the court a quo on the matter
countervail this stance, hence, we see no reason to disturb them.
To weaken the evidence of the prosecution, petitioner assails the testimony of Martinez as
being replete with inconsistencies. The records however reveal that these inconsistencies refer
only to minor points which indicate veracity rather than prevarication by the witness. They tend to
bolster the probative value of the testimony in question as they erase any suspicion of being
rehearsed.[21]
Finally, petitioner claims that the medical certificate presented by the prosecution was
uncorroborated by actual testimony of the physician who accomplished the same and as such has
26
no probative value insofar as the physical injuries suffered by Sahlee are concerned. Regretfully,
we cannot agree. The fact of the injury resulting from the collision may be proved in other ways
such as the testimony of the injured person. In the case at bar, Sahlee Martinez testified that her
injuries as described in the medical certificate were caused by the vehicular accident of 17
December 1990.[22] This declaration was corroborated by Gregorio. [23] This, no less, is convincing
proof.
WHEREFORE, the petition is DENIED. The decision of the Court of Appeals of 22 November
1995 finding petitioner XERXES ADZUARA Y DOTIMAS guilty beyond reasonable doubt of the crime
charged and sentencing him to suffer an imprisonment of two (2) months and fifteen (15) days
of arresto mayor medium is AFFIRMED. Costs against petitioner.
SO ORDERED.
[G. R. No. 116332. January 25, 2000]
BAYNE ADJUSTERS AND SURVEYORS, INC., petitioner, vs. COURT OF APPEALS and
INSURANCE COMPANY OF NORTH AMERICA, respondents.
DECISION
GONZAGA-REYES, J.:
This petition for review on certiorari seeks a re-examination of the conclusions reached both by the
trial court and of the appellate court from the evidence on record finding petitioner Bayne
Adjusters and Surveyors Inc., liable for damages in the amount of P811,609.53 for the alkyl
benzene lost due to spillage while the said liquid cargo was being pumped into the shore storage
tanks of the consignee Colgate Palmolive Philippines, Inc., under the supervision of herein
petitioner.
In May 1987 Colgate Palmolive Philippine, Inc., imported alkyl benzene from Japan valued at
US$255,802.88. The said liquid cargo was insured with herein private respondent Insurance
Company of North America against all risk for its full value. Herein petitioner Bayne Adjusters and
Surveyors Inc., was contracted by the consignee to supervise the proper handling and discharge of
the cargo from the chemical tanker to a receiving barge until the cargo is pumped into the
consignees shore tank. When the cargo arrived in Manila petitioners surveyor supervised the
transfer of the cargo from the chemical tanker to the receiving barge. Pumping operation from the
barge to the consignees shore tank commenced at 2020 hours of June 27, 1987. Pumping of the
liquid cargo from the barge to the consignees tank was interrupted several times due to
mechanical problems with the pump. When the pump broke down once again at about 1300 hours
of June 29, 1987, the petitioners surveyor left the premises without leaving any instruction with
the barge foreman what to do in the event that the pump becomes operational again. No other
surveyor was left in the premises and the assigned surveyor did not seal the valves leading to the
tank to avoid unsupervised pumping of the cargo. Later that day, the consignee asked the
petitioner to send a surveyor to conduct tank sounding. Petitioner sent Amado Fontillas, a cargo
surveyor, not a liquid bulk surveyor, to the premises and it was agreed that pumping operation
would resume the following day at 1030 hours. Fontillas tried to inform both the barge men and
the assigned surveyor of the scheduled resumption of pumping operation but he could not find
them so he left the premises. When the barge men arrived in the early evening , they found the
valves of the tank open and resumed pumping operation in the absence of any instruction from the
surveyor to the contrary. The following morning it was found that an undetermined amount of alkyl
benzene was lost due to overflow. The consignee filed a claim with the private respondent
insurance corporation for the value of the lost liquid cargo. A conference attended by
representatives of the petitioner, the consignee and of the Claimsmen Adjustment Corporation,
represented by marine surveyor, was held to determine the amount of alkyl benzene lost in the
overflow and the net amount payable by the insurance. A compromise quantity of 67.649MT of
alkyl benzene was agreed to have been lost in the overflow and respondent insurance corporation
agreed to pay the consignee the net amount of P811,609.53. Private respondent instituted this
action for collection of sum of money as subrogee of the consignee after failure to extrajudicially
settle the matter with Bayne Adjusters.
Both the trial court and the appellate court found the petitioners failure to comply with the
Standard Operating Procedure for Handling Liquid Bulk Cargo when pumping operation is
suspended as the proximate cause of the loss. It is not denied by the petitioners surveyor that he
did not close the valve of the tank when the pumping operations were suspended due to pump
break down, as required by standard procedure. This enabled the barge men, in the absence of any
instruction to the contrary, to resume pumping operations without supervision and consequently,
caused the overflow of the liquid cargo from the tank.
27
and his conclusion that the petitioners surveyors are at fault is based on his experience as a
marine cargo surveyor for eight years. The expert witness found that the petitioners surveyors
failed to perform what is required of them under the standard operating procedure for marine
surveyors[1] when pumping operation is suspended, i.e, to seal all cargo manhole covers including
the barge and shore manifolds. Their negligence to do so paved the way for the barge operators to
resume pumping operations without expert supervision which should have been provided by the
petitioners surveyors. Further, petitioners own report admits that it is bound to the consignee
under a superintendent contract of survey which includes the supervision in the discharge of cargo
to prevent loss.
A Reply was filed by the petitioner stating that it is not seeking a review of the facts in evidence
but a review of the conclusions reached by the trial and the appellate court based on the facts in
evidence and adopts the arguments raised in the main petition.
Private respondent filed Rejoinder stressing that a re-examination of the factual findings of the
lower courts is not in order as none of the exceptions to the rule was shown by the petitioner to be
obtaining in this case. The supposed mistake committed by the respondents expert witness was
sufficiently explained in court and that by itself is not sufficient to overthrow the said witness
credibility nor the weight accorded to it by the lower courts.
We find no reversible error committed by the appellate court.
Petitioner denies the finding of negligence. It is contended that negligence in this case cannot be
presumed and no sufficient evidence was presented by the plaintiff that the loss suffered by the
consignee is due to the negligence of the petitioner. The petitioner argues that it is not bound to
guard the cargo at all times and its only duty is to supervise the transfer of the liquid cargo from
the chemical tanker to the barge and from the barge to the shore tank of the consignee. The
petitioner cites the private respondents own witness who stated in court that the operator of the
barge pump continued pumping into the consignees shore tank without authorization from the
petitioners surveyor and that the overflow was caused by this unauthorized pumping operation.
Petitioner also raised in issue that both the trial and the appellate court gave undue weight to the
testimony of the private respondents supposed expert witness who admitted in court that he made
a mistake in his affidavit that the petitioner is liable under a protective survey contract when in
fact the agreement between the petitioner and the consignee is that of a superintendent survey.
The petitioner argues that following the statement of the private respondents witness that the
agreement between the consignee and the petitioner is that of a protective survey agreement, the
standard operating procedure for handling liquid bulk cargo should not be the criterion for the
evaluation of the alleged negligence of the petitioner.
The negligence of the obligor in the performance of the obligation renders him liable for damages
for the resulting loss suffered by the obligee. Fault or negligence of the obligor consists in his
failure to exercise due care and prudence in the performance of the obligation as the nature of the
obligation so demands.[2] The factual findings and conclusions of the trial and appellate court when
supported by substantial evidence are entitled to great respect and will not be disturbed on appeal
except on very strong and cogent grounds.[3]
The private respondent filed comment to the petition stating that the petition is asking this Court
to review the findings of facts and findings as to the credibility of witnesses made by both the trial
and appellate court which under settled jurisprudence is conclusive upon the Supreme Court and
in the absence of a showing that any of the exceptions to this rule is applicable the petition should
be dismissed. On the merits, the private respondent prays for the affirmance in toto of the findings
of the trial and appellate courts. The testimony of the expert witness presented by the private
respondent is not based on hearsay evidence but from his personal investigation of the incident
Based on the undisputed facts, we find that the lower courts did not err in holding the petitioner
liable for the loss incurred by the consignee for its failure to exercise due diligence as required by
the circumstances which in this case is governed by the Surveyors Standard Operating Procedure
in Handling Liquid Bulk Survey when pumping operation is suspended. We note that the existence
and binding effect of the standard procedure in marine survey of liquid cargo under Exh Q is not
denied by the petitioner. Paragraph 2.2 of the Surveyors Standard Operating Procedure when
pumping operation is suspended states:
Both parties agree that the petitioner is bound to supervise the proper discharge of the liquid
cargo from the chemical tanker to the receiving barge and from the latter to the consignees shore
tank. Petitioner does not deny that when pumping operations were suspended due to mechanical
problems with the barge pump, that the assigned surveyor left the premises without closing the
valves and the manifold, and worse failed to instruct the barge foreman to resume discharge of the
cargo only at a specified time when the petitioners surveyor will again be present. Thus, when the
pump became operational again and the tank was left open by the petitioners surveyors the barge
pump operators, without instruction to the contrary, assumed that they may resume discharge of
the cargo. It was during the unsupervised discharge of the cargo that the spillage occurred.
2.2.1 If consignee desires to temporarily suspend the pumping operation, take final
reading of the shore tanks.
28
2.2.2 Seal all cargo compartment manhole covers and sounding pipe covers of the
barge.
pronouncements of this Court that findings of the trial court on the credibility of witnesses is
respected on appeal.[5] The testimony of the claims adjuster whether taken as expert opinion or not
was properly given weight and credence by the lower courts as it is undisputed that the claims
adjuster investigated the spillage of the liquid cargo with the consent of the petitioner, the private
respondent and the consignee.[6]
2.2.3 Seal the barge manifold and shore manifold.
WHEREFORE, the petition is dismissed for lack of merit.
2.2.4 The surveyor should take sounding of the remaining quantity left on barge
prior to closing/sealing of its covers to counter check the quantity partially
received by the shore tanks.
SO ORDERED.
It is clear that under the standard procedure the surveyor is required to seal all cargo compartment
manhole covers and the barge and manifold covers to avoid unsupervised discharge of the liquid
cargo and to avert loss or contamination thereof. Although the cessation of the pumping
operations in this case was not voluntarily requested by the consignee, but was due to mechanical
problems with the pump, there is greater reason to comply with the above quoted standard
procedure. The recurring pump break down should have warned the petitioners assigned surveyor
of the need to exercise extreme caution and closer supervision to safeguard the proper discharge
of the cargo as the pump break down hindered normal pumping operations. Instead the
petitioners assigned surveyor disregarded the standard procedure and left the pump site without
leaving any instruction or directive with the barge pump operators; this paved the way for the
barge pump operators discharge of the cargo without expert supervision. The petitioners failure
to closely supervise the discharge of the cargo in accordance with accepted guidelines is the
proximate cause of the loss. We find no cogent reason to overturn the legal conclusion reached by
the lower courts that the petitioner is negligent in the performance of its duty as a marine
superintendent surveyor under the Standard Operating Procedure in handling liquid cargo and held
the petitioner liable for damages for the loss of the cargo.
The petitioner relies on the erroneous statement made by the private respondents claims adjuster
in his affidavit[4] that the parties are bound under a protective survey agreement to evade liability
under the standard operating procedure and argues that the said standard procedure is not
applicable to contracts of protective survey. We note that the adjusters error was immediately
rectified in court during the witness testimony wherein he stated that the contract between the
parties herein is for superintendent survey and that protective survey applies only to solid cargo, a
fact not disputed by the petitioner. The petitioner is estopped from denying the existence of a
superintendent survey agreement with the consignee since the final report it submitted to the
consignee is entitled "Superintendence of discharge and Landed Weight Certificate" wherein
petitioner stated that its surveyors superintended the discharge of the cargo from the tanker until
the cargo was pumped into the consignees shore tank. Moreover, the applicability of the standard
procedure required of the petitioner in this case cannot be seriously questioned as it is specifically
entitled Standard Operating Procedure in Handling Liquid Bulk Survey and the cargo subject of this
litigation is liquid alkyl benzene.
The other arguments raised by the petitioner regarding the credibility of the claims adjuster
presented by the private respondent lose potency when examined under the overwhelming
G.R. No. 150487
July 10, 2003
GERARDO
F.
SAMSON
vs.
BANK OF THE PHILIPPINE ISLANDS, respondent.
JR., petitioner,
PANGANIBAN, J.:
Gross negligence of a bank in the handling of its client's deposit amounts to bad faith that calls for
an award of moral damages. Credit is very important to businessmen, and its loss or impairment
needs to be recognized and compensated.
The Case
Before us is a Petition for Review 1 under Rule 45 of the Rules of Court, seeking to set aside the
March 30, 2001 Decision2 and the October 22, 2001 Resolution 3 of the Court of Appeals (CA) in
CA-GR CV No. 54599. The dispositive portion of the assailed Decision reads as follows:
"WHEREFORE, foregoing premises considered, the Decision appealed from is AFFIRMED
WITH A MODIFICATION that the award of moral damages is reduced to P50,000.00." 4
The assailed Resolution denied the Motions for Reconsideration filed by the parties.
The Facts
The CA summarized the antecedents of the case as follows:
"Gerardo F. Samson, Jr. filed an action for damages against the Bank of the Philippine
Islands.
"In his complaint, [petitioner] avers, inter alia that he is a client/depositor of [respondent]
with Savings Account No. 3085-0125-75 through the [respondent's] Express Teller
System[,] a 24-hour banking service; that on August 20, 1990, [petitioner] deposited to his
BPI account a Prudential Bank Check No. 209116 in the amount of Three Thousand Five
Hundred Pesos (P3,500.00); that as of said date, [petitioner's] account balance was Three
Hundred Sixty-Seven and 38/100 Pesos (P367.38); that on August 24, 1990, [petitioner]
instructed his daughter to withdraw P2,000.00 from the said account; that the withdrawal
was declined twice as the Express Teller transaction record showed 'Sorry, Insufficient
Funds'; that because of such eventuality, [petitioner] suffered embarrassment as he could
not then and there produce the required cash with which to fulfill his commitment and
monetary obligation towards a creditor who had waited at his residence; that on
September 12, 1990, [petitioner] deposited to his aforesaid account through the Express
Teller, the amount of Five Thousand Five Hundred Pesos (P5,500.00); that he discovered
that his available total balance as of said date was only Three Hundred Forty-Two and
38/100 Pesos (P342.38) without his earlier check deposit of Three Thousand Five Hundred
Pesos (P3,500.00) on August 20, 1990 but with a Twenty-Five Peso (P25.00) penalty/service
charge; that [petitioner] complained to [respondent] about the discrepancy; that
[respondent] confirmed the P3,500.00 check deposit but could not account the same; that
investigation only ensued after [petitioner] informed [respondent] that his P3,500.00
Prudential Bank check was encashed by [respondent's] security guard named Nonilon E.
Rondina; that per such investigation, it was discovered that one of the deposit envelopes
was missing; that [respondent] did nothing to look for the missing check deposit or to
inform [petitioner] about it; that despite [respondent's] knowledge of the irregularity and
suspicious discrepancy in its records as early as of August 20, 1990, it did not even bother
to conduct its own inquiry into said irregularity; that worse, despite being at fault,
[respondent's] Manager, Nerissa M. Cayanga, displayed arrogance, indifference and
discourtesy towards [petitioner].
"In its Answer, [respondent] Bank denied all the material allegations in the [C]omplaint and
alleged among others, that the [C]omplaint fails to state a cause of action; that [petitioner]
has violated the provisions of the covering contract of deposit which provides that
representatives are not allowed to contract business on the account on behalf of the
depositor; that [petitioner's] claim has been paid, waived and extinguished; that
[petitioner] by his inaction in reporting the loss of his check deposit, is estopped from
claiming damages from defendant.
"After trial on the merits, the trial court rendered [a Decision in favor of petitioner]." 5
The CA affirmed the ruling of the trial court, but modified the amount of damages. It held that
since the banking business was affected with public interest, Bank of the Philippine Islands (BPI)
was required to exercise a high degree of care with respect to the accounts of its clients. Thus, the
bank was rendered liable by its negligence resulting in damage to its depositor.
Since it was undisputed that BPI had lost the check of petitioner, the appellate court reviewed the
evidence and held that respondent bank was grossly negligent in its failure to observe the required
degree of care. This gross negligence on the part of BPI amounted to bad faith that entitled
petitioner to moral damages. The moral damages of P200,000 awarded by the trial court was,
29
however, found to be excessive. It was therefore reduced to P50,000, because petitioner claimed
only P3,500, which had already been credited back to his account.
Hence, this Petition.6
Issues:
In his Memorandum, petitioner submits the following issues for the Court's consideration:
"I
Whether the reduction of the award of moral damages to Php50,000.00, a mere one-fourth of the
moral damages awarded by the trial court, was proper.
"II
Assuming that Respondent BPI is not precluded from raising this defense in this appeal, whether
petitioner was negligent in demanding the return of his deposit, which was lost through the bank's
gross negligence and inaction."7
In sum, the main issue in this case is whether the CA erred in reducing the award of moral
damages from P200,000 to only P50,000.
The Court's Ruling
The Petition is partly meritorious.
Sole
Amount of Moral Damages
Issue:
Moral damages are meant to compensate the claimant for any physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation
and similar injuries unjustly caused. 8 Although incapable of pecuniary estimation, the amount must
somehow be proportional to and in approximation of the suffering inflicted. 9 Moral damages are not
punitive in nature10 and were never intended to enrich the claimant at the expense of the
defendant.11
There is no hard-and-fast rule in determining what would be a fair and reasonable amount of moral
damages, since each case must be governed by its own peculiar facts. 12 Trial courts are given
discretion in determining the amount, with the limitation that it "should not be palpably and
scandalously excessive."13 Indeed, it must be commensurate to the loss or injury suffered. 14
30
In the present case, petitioner bases his claim on the failure of respondent to credit the sum of
P3,500 to his account due to its gross negligence. As a result of such failure, he was unable to fulfill
his obligation to a valued creditor, resulting in the severance of his credit line. He further alleges
that he suffered humiliation and besmirched reputation. 15 According to him, his suffering was
exacerbated by his subjection to indifference, discourtesy and arrogance from respondents'
officers.
SO ORDERED.
Moral damages are awarded to achieve a "spiritual status quo," thus:
UNITED COCONUT PLANTERS BANK, petitioner, vs. TEOFILO C. RAMOS, respondent.
"Moral damages are awarded to enable the injured party to obtain means, diversions or
amusements that will serve to alleviate the moral suffering he/she has undergone, by
reason of the defendant's culpable action. Its award is aimed at restoration, as much as
possible, of the spiritual status quo ante; thus, it must be proportionate to the suffering
inflicted. Since each case must be governed by its own peculiar circumstances, there is no
hard and fast rule in determining the proper amount. . . .."16
The social standing of the aggrieved party is essential to the determination of the proper amount
of the award. Otherwise, the goal of enabling him to obtain means, diversions, or amusements to
restore him to the status quo ante would not be achieved.
We believe that the award should be increased to P100,000, considering (1) that petitioner was a
businessman and was the highest lay person in the United Methodist Church; (2) that he was
regarded by respondent and its officers with arrogance and a condescending manner; and (3) that
respondent successfully postponed compensating him for more than a decade. This amount is
more than the P50,000 granted by the CA, but not as much as the P200,000 granted by the RTC.
That petitioner reported the missing check deposit to respondent only after three weeks did not
constitute contributory negligence. The injury resulted from the denial of his withdrawal due to
insufficient funds, an injury he suffered before learning that his check deposit had been lost.
Respondent, not he, immediately knew that a deposit envelop was missing, yet it did nothing to
solve the problem. His alleged delay in reporting the matter did not at all contribute to his injury.
Though the amount of P3,500 was already credited back to his account, this step was made only
after his persistent prompting. Prior to this development, he suffered damages that could no longer
be reversed by the belated restoration of the amount lost. It is for this suffering that moral
damages are due.
In Prudential Bank v. CA,17 Philippine National Bank v. CA 18 and Metropolitan Bank v. Wong,19 the
Court consistently awarded moral damages of P100,000 in consideration of the reputation and the
social standing of the claimant, as well as the rulings in similar cases involving the negligence of
banks with regard to the accounts of their depositors.
WHEREFORE, the Petition is partly GRANTED and the assailed Decision MODIFIED. The award of
moral damages is increased to P100,000. No pronouncement as to costs.
[G.R. No. 147800. November 11, 2003]
DECISION
CALLEJO, SR., J.:
Before us is a petition for review on certiorari of the March 30, 2001 Decision [1] of the Court of
Appeals in CA-G.R. CV No. 56737 which affirmed the Decision [2] of the Regional Trial Court (RTC) of
Makati City, Branch 148, in Civil Case No. 94-1822.
The Antecedents
On December 22, 1983, the petitioner United Coconut Planters Bank (UCPB) granted a loan
of P2,800,000 to Zamboanga Development Corporation (ZDC) with Venicio Ramos and the Spouses
Teofilo Ramos, Sr. and Amelita Ramos as sureties. Teofilo Ramos, Sr. was the Executive Officer of
the Iglesia ni Cristo. In March 1984, the petitioner granted an additional loan to ZDC, again with
Venicio Ramos and the Spouses Teofilo Ramos and Amelita Ramos as sureties. [3] However, the ZDC
failed to pay its account to the petitioner despite demands. The latter filed a complaint with the
RTC of Makati against the ZDC, Venicio Ramos and the Spouses Teofilo Ramos, Sr. for the collection
of the corporations account. The case was docketed as Civil Case No. 16453. On February 15,
1989, the RTC of Makati, Branch 134, rendered judgment in favor of the petitioner and against the
defendants. The decretal portion of the decision reads:
1.
To pay plaintiff the sum of THREE MILLION ONE HUNDRED FIFTY THOUSAND
PESOS (P3,150,000.00) plus interest, penalties and other charges;
2.
To pay plaintiff the sum of P20,000.00 for attorneys fees; and
3.
To pay the cost of suit.[4]
The decision became final and executory. On motion of the petitioner, the court issued
on December 18, 1990 a writ of execution for the enforcement of its decision ordering Deputy
Sheriff Pioquinto P. Villapaa to levy and attach all the real and personal properties belonging to
the aforesaid defendants to satisfy the judgment. [5] In the writ of execution, the name of one of the
defendants was correctly stated as Teofilo Ramos, Sr.
To help the Sheriff implement the writ, Atty. Cesar Bordalba, the head of the Litigation and
Enforcement Division (LED) of the petitioner, requested Eduardo C. Reniva, an appraiser of the
petitioners Credit and Appraisal Investigation Department (CAID) on July 17, 1992 to ascertain if
the defendants had any leviable real and personal property. The lawyer furnished Reniva with a
copy of Tax Declaration B-023-07600-R covering a property in Quezon City.[6] In the course of his
investigation, Reniva found that the property was a residential lot, identified as Lot 12, Block 5,
Ocampo Avenue, Don Jose Subdivision, Quezon City, with an area of 400 square meters, covered
by TCT No. 275167 (PR-13108) under the name of Teofilo C. Ramos, President and Chairman of the
Board of Directors of the Ramdustrial Corporation, married to Rebecca F. Ramos. [7] The property
was covered by Tax Declaration No. B-023-07600-R under the names of the said spouses. Reniva
went to the property to inspect it and to verify the identity of the owner thereof. He saw workers
on the property constructing a bungalow.[8] However, he failed to talk to the owner of the
property. Per information gathered from the neighborhood, Reniva confirmed that the Spouses
Teofilo C. Ramos and Rebecca Ramos owned the property.
On July 22, 1992, Reniva submitted a report on his appraisal of the property. He stated
therein that the fair market value of the property as of August 1, 1992 was P900,000 and that the
owner thereof was Teofilo C. Ramos, married to Rebecca Ramos. When appraised by the petitioner
of the said report, the Sheriff prepared a notice of levy in Civil Case No. 16453 stating, inter alia,
that the defendants were Teofilo Ramos, Sr. and his wife Amelita Ramos and caused the annotation
thereof by the Register of Deeds on the said title.[9]
Meanwhile, in August of 1993, Ramdustrial Corporation applied for a loan with the UCPB, a
sister company of the petitioner, using the property covered by TCT No. 275167 (PR-13108) as
collateral therefor. The Ramdustrial Corporation intended to use the proceeds of the loan as
additional capital as it needed to participate in a bidding project of San Miguel Corporation. [10] In a
meeting called for by the UCPB, the respondent was informed that upon verification, a notice of
levy was annotated in TCT No. 275167 in favor of the petitioner as plaintiff in Civil Case No. 16453,
entitled United Coconut Planters Bank v. Zamboanga Realty Development Corporation, Venicio A.
Ramos and Teofilo Ramos, Sr., because of which the bank had to hold in abeyance any action on its
loan application.
The respondent was shocked by the information. He was not a party in the said case; neither
was he aware that his property had been levied by the sheriff in the said case. His blood
temperature rose so much that immediately after the meeting, he proceeded to his doctor, Dr.
Gatchalian, at the St. Lukes Medical Center, who gave the respondent the usual treatment and
medication for cardio-vascular and hypertension problems.[11]
Upon advise from his lawyer, Atty. Carmelito Montano, the respondent executed an affidavit of
denial[12] declaring that he and Teofilo Ramos, Sr., one of the judgment debtors in Civil Case No.
16453, were not one and the same person. On September 30, 1993, the respondent, through
counsel, Atty. Carmelito A. Montano, wrote Sheriff Villapaa, informing him that a notice of levy
was annotated on the title of the residential lot of the respondent, covered by TCT No. 275167 (PR13108); and that such annotation was irregular and unlawful considering that the respondent was
not Teofilo Ramos, Sr. of Iglesia ni Cristo, the defendant in Civil Case No. 16453. He demanded
that Sheriff Villapaa cause the cancellation of the said annotation within five days from notice
31
thereof, otherwise the respondent would take the appropriate civil, criminal or administrative
action against him. Appended thereto was the respondents affidavit of denial. For his part, Sheriff
Villapaa furnished the petitioner with a copy of the said letter.
In a conversation over the phone with Atty. Carmelito Montano, Atty. Cesar Bordalba, the head
of the petitioners LED, suggested that the respondent file the appropriate pleading in Civil Case
No. 16453 to prove his claim that Atty. Montanos client, Teofilo C. Ramos, was not defendant
Teofilo Ramos, Sr., the defendant in Civil Case No. 16453.
On October 21, 1993, the respondent was informed by the UCPB that Ramdustrial
Corporations credit line application forP2,000,000 had been approved.[13] Subsequently,
on October 22, 1993, the respondent, in his capacity as President and Chairman of the Board of
Directors of Ramdustrial Corporation, and Rebecca F. Ramos executed a promissory note for the
said amount payable to the UCPB in installments for a period of 180 days. [14] Simultaneously, the
respondent and his wife Rebecca F. Ramos acted as sureties to the loan of Ramdustrial
Corporation.[15] However, the respondent was concerned because when the proceeds of the loan
were released, the bidding period for the San Miguel Corporation project had already elapsed. [16] As
business did not go well, Ramdustrial Corporation found it difficult to pay the loan. It thus applied
for an additional loan with the UCPB which was, however, denied. The corporation then applied for
a loan with the Planters Development Bank (PDB), the proceeds of which would be used to pay its
account to the UCPB. The respondent offered to use his property covered by TCT No. 275167 as
collateral for its loan. PDB agreed to pay off the outstanding loan obligation of Ramdustrial
Corporation with UCPB, on the condition that the mortgage with the latter would be
released. UCPB agreed. Pending negotiations with UCPB, the respondent discovered that the
notice of levy annotated on TCT No. 275167 (PR-13108) at the instance of the petitioner had not
yet been cancelled.[17] When apprised thereof, PDB withheld the release of the loan pending the
cancellation of the notice of levy. The account of Ramdustrial Corporation with UCPB thus
remained outstanding. The monthly amortization on its loan from UCPB became due and remained
unpaid. When the respondent went to the petitioner for the cancellation of the notice of levy
annotated on his title, the petitioners counsel suggested to the respondent that he file a motion to
cancel the levy on execution to enable the court to resolve the issue. The petitioner assured the
respondent that the motion would not be opposed. Rather than wait for the petitioner to act, the
respondent, through counsel, filed the said motion on April 8, 1994. As promised, the petitioner
did not oppose the motion. The court granted the motion and issued an order on April 12,
1994 ordering the Register of Deeds to cancel the levy. The Register of Deeds of Quezon City
complied and cancelled the notice of levy.[18]
Despite the cancellation of the notice of levy, the respondent filed, on May 26, 1994, a
complaint for damages against the petitioner and Sheriff Villapaa before the RTC of Makati City,
raffled to Branch 148 and docketed as Civil Case No. 94-1822. Therein, the respondent (as
plaintiff) alleged that he was the owner of a parcel of land covered by TCT No. 275167; that Teofilo
Ramos, Sr., one of the judgment debtors of UCPB in Civil Case No. 16453, was only his namesake;
that without any legal basis, the petitioner and Sheriff Villapaa caused the annotation of a notice
to levy on the TCT of his aforesaid property which caused the disapproval of his loan from UCPB
and, thus made him lose an opportunity to participate in the bidding of a considerable project; that
by reason of such wrongful annotation of notice of levy, he suffered sleepless nights, moral shock,
mental anguish and almost a heart attack due to high blood pressure. He thus prayed:
WHEREFORE, premises considered, it is most respectfully prayed of the Honorable Regional Trial
Court that after due hearing, judgment be rendered in his favor by ordering defendants jointly and
severally, to pay as follows:
2.
32
pay attorneys fees and litigation expenses in an amount of not less than PESOS:
TWO HUNDRED THOUSAND P200,000.00;
Other reliefs and remedies deemed just and equitable under the premises are also prayed for. [20]
1.
P3,000,000.00 as moral damages;
2.
300,000.00 as exemplary damages;
3.
200,000.00 as actual damages;
4.
200,000.00 as attorneys fees;
5.
Cost of suit.[19]
In its answer, the petitioner, while admitting that it made a mistake in causing the annotation
of notice of levy on the TCT of the respondent, denied that it was motivated by malice and bad
faith. The petitioner alleged that after ascertaining that it indeed made a mistake, it proposed that
the respondent file a motion to cancel levy with a promise that it would not oppose the said
motion. However, the respondent dilly-dallied and failed to file the said motion; forthwith, if any
damages were sustained by the respondent, it was because it took him quite a long time to file the
motion. The petitioner should not thus be made to suffer for the consequences of the respondents
delay.
The petitioner further asserted that it had no knowledge that there were two persons bearing
the same name Teofilo Ramos; it was only when Sheriff Villapaa notified the petitioner that a
certain Teofilo C. Ramos who appeared to be the registered owner of TCT No. 275167 that it
learned for the first time the notice of levy on the respondents property; forthwith, the petitioner
held in abeyance the sale of the levied property at public auction; barred by the failure of the
respondent to file a third-party claim in Civil Case No. 16453, the petitioner could not cause the
removal of the levy; in lieu thereof, it suggested to the respondent the filing of a motion to cancel
levy and that the petitioner will not oppose such motion; surprisingly, it was only on April 12, 1994
that the respondent filed such motion; the petitioner was thus surprised that the respondent filed
an action for damages against it for his failure to secure a timely loan from the UCPB and PDB. The
petitioner thus prayed:
WHEREFORE, in view of the foregoing premises, it is respectfully prayed of this Honorable Court
that judgment be rendered in favor of defendant UCPB, dismissing the complaint in toto and
ordering the plaintiff to:
1.
pay moral damages in the amount of PESOS: THREE MILLION P3,000,000.00 and
exemplary
damages
in
the
amount
of
PESOS:
FIVE
HUNDRED
THOUSAND P500,000.00;
In the meantime, in 1995, PDB released the proceeds of the loan of Ramdustrial Corporation
which the latter remitted to UCPB.
On March 4, 1997, the RTC rendered a decision in favor of the respondent. The complaint
against Sheriff Villapaa was dismissed on the ground that he was merely performing his
duties. The decretal part of the decision is herein quoted:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and
against the defendant UCPB, and the latter is hereby ordered to pay the following:
(1)
(4)
P800,000.00 as moral damages;

(2)
P100,000.00 as exemplary damages;
(3)
P100,000.00 as attorneys fees;
Cost of suit.[21]
The trial court found that contrary to the contention of the petitioner, it acted with caution in
looking for leviable properties of the judgment debtors/defendants in Civil Case No. 16453, it
proceeded with haste as it did not take into consideration that the defendant Teofilo Ramos was
married to Amelita Ramos and had a Sr. in his name, while the respondent was married to
Rebecca Ramos and had C for his middle initial. The investigation conducted by CAID appraiser
Eduardo C. Reniva did not conclusively ascertain if the respondent and Teofilo Ramos, Sr. were one
and the same person.
The trial court further stated that while it was Ramdustrial Corporation which applied for a
loan with UCPB and PDB, the respondent, as Chairman of Ramdustrial Corporation, with his wife
Rebecca Ramos, signed in the promissory note and acted as sureties on the said
obligations. Moreover, the property which was levied was the respondents only property where he
and his family resided. Thus, the thought of losing it for reasons not of his own doing gave rise to
his entitlement to moral damages.
The trial court further ruled that the mere fact that the petitioner did not file an opposition to
the respondents motion to cancel levy did not negate its negligence and bad faith. However, the
court considered the cancellation of annotation of levy as a mitigating factor on the damages
caused to the respondent. For failure to show that he suffered actual damages, the court a
quo dismissed the respondents claim therefor.
Dissatisfied, the petitioner interposed an appeal to the Court of Appeals (CA). On March 30,
2001, the CA rendered a decision affirming, in toto, the decision of the trial court, the decretal
portion of which is herein quoted:
WHEREFORE, based on the foregoing premises, the assailed decision is hereby AFFIRMED. [22]
The CA ruled that the petitioner was negligent in causing the annotation of notice of levy on
the title of the petitioner for its failure to determine with certainty whether the defendant Teofilo
Ramos, Sr. in Civil Case No. 16453 was the registered owner of the property covered by TCT No.
275167, and to inform the sheriff that the registered owners of the property were the respondent
and his wife Rebecca Ramos, and thereafter request for the cancellation of the motion of levy on
the property.
Disappointed, the petitioner filed this instant petition assigning the following errors:
IN AFFIRMING THE TRIAL COURTS ORDER, THE COURT OF APPEALS COMMITTED MANIFESTLY
MISTAKEN INFERENCES AND EGREGIOUS MISAPPREHENSION OF FACTS AND GRAVE ERRORS OF
LAW, CONSIDERING THAT:
A.
ON THE EVIDENCE, THE BORROWER OF THE LOAN, WHICH RESPONDENT

RAMOS
CLAIMED
HE
TRIED
TO
OBTAIN,
WAS
RAMDUSTRIAL
CORPORATION. HENCE, ANY DAMAGE RESULTING FROM THE ANNOTATION
WAS SUFFERED BY THE CORPORATION AND NOT BY RESPONDENT RAMOS.
B.
THE DELAY IN THE CANCELLATION OF

RESPONDENT RAMOSS (SIC) OWN DOING.
C.
ANNOTATION
WAS
AS A MATTER OF LAW, MORAL DAMAGES CANNOT BE AWARDED ON A

FINDING OF MERE NEGLIGENCE.
C.
IN ANY EVENT, THE AWARD OF MORAL DAMAGES TO RESPONDENT RAMOS

WAS UNREASONABLE AND OPPRESSIVE.
III
THE AWARD OF EXEMPLARY DAMAGES AND ATTORNEYS FEES IS CONTRARY TO LAW SINCE THE
AWARD OF MORAL DAMAGES WAS IMPROPER IN THE FIRST PLACE.[23]
UCPB prayed that:
In his comment, the respondent alleged that the CA did not err in affirming, in toto, the
decision of the trial court. He prayed that the petition be denied due course.
The issues posed for our resolution are the following: (a) whether or not the petitioner acted
negligently in causing the annotation of levy on the title of the respondent; (b) if so, whether or not
the respondent was the real party-in-interest as plaintiff to file an action for damages against the
petitioner considering that the loan applicant with UCPB and PDB was RAMDUSTRIAL
CORPORATION; (c) if so, whether or not the respondent is entitled to moral damages, exemplary
damages and attorneys fees.
OF
THE LOAN APPLICATIONS WITH UNITED COCONUT SAVINGS BANK AND

PLANTERS DEVELOPMENT BANK WERE GRANTED PRIOR TO THE
CANCELLATION OF THE ANNOTATION ON THE TITLE OF THE SUBJECT
PROPERTY.
II
THE COURT OF APPEALS DECISION AFFIRMING THE TRIAL COURTS AWARD OF MORAL DAMAGES
TO RESPONDENT RAMOS IN THE AMOUNT OF P800,000 ON A FINDING OF NEGLIGENCE IS
CONTRARY TO LAW AND EVIDENCE.
A.
B.
WHEREFORE, petitioner UNITED COCONUT PLANTERS BANK respectfully prays that this Honorable
Court render judgment reversing and setting aside the Court of Appeals Decision dated 30 March
2001, and ordering the dismissal of respondent Ramos Complaint dated 05 May 1994.[24]
THE
33
UCPB WAS NOT NEGLIGENT WHEN IT CAUSED THE LEVY ON THE SUBJECT
PROPERTY.
On the first issue, we rule that the petitioner acted negligently when it caused the annotation
of the notice of levy in TCT No. 275167.
It bears stressing that the petitioner is a banking corporation, a financial institution with power
to issue its promissory notes intended to circulate as money (known as bank notes); or to receive
the money of others on general deposit, to form a joint fund that shall be used by the institution
for its own benefit, for one or more of the purposes of making temporary loans and discounts, of
dealing in notes, foreign and domestic bills of exchange, coin bullion, credits, and the remission of
money; or with both these powers, and with the privileges, in addition to these basic powers, of
receiving special deposits, and making collection for the holders of negotiable paper, if the
institution sees fit to engage in such business. [25] In funding these businesses, the bank invests the
money that it holds in trust of its depositors. For this reason, we have held that the business of a
bank is one affected with public interest, for which reason the bank should guard against loss due
to negligence or bad faith.[26] In approving the loan of an applicant, the bank concerns itself with
proper informations regarding its debtors. The petitioner, as a bank and a financial institution
engaged in the grant of loans, is expected to ascertain and verify the identities of the persons it
transacts business with.[27] In this case, the petitioner knew that the sureties to the loan granted to
ZDC and the defendants in Civil Case No. 94-1822 were the Spouses Teofilo Ramos, Sr. and Amelita
Ramos. The names of the Spouses Teofilo Ramos, Sr. and Amelita Ramos were specified in the writ
of execution issued by the trial court.
The petitioner, with Atty. Bordalba as the Chief of LED and handling lawyer of Civil Case No.
16453, in coordination with the sheriff, caused the annotation of notice of levy in the respondents
title despite its knowledge that the property was owned by the respondent and his wife Rebecca
Ramos, who were not privies to the loan availment of ZDC nor parties-defendants in Civil Case No.
16453. Even when the respondent informed the petitioner, through counsel, that the property
levied by the sheriff was owned by the respondent, the petitioner failed to have the annotation
cancelled by the Register of Deeds.
In determining whether or not the petitioner acted negligently, the constant test is: Did the
defendant in doing the 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.[28] Considering the testimonial and documentary evidence on record, we are
convinced that the petitioner failed to act with the reasonable care and caution which an ordinarily
prudent person would have used in the same situation.
The petitioner has access to more facilities in confirming the identity of their judgment
debtors. It should have acted more cautiously, especially since some uncertainty had been
reported by the appraiser whom the petitioner had tasked to make verifications. It appears that the
petitioner treated the uncertainty raised by appraiser Eduardo C. Reniva as a flimsy matter. It
placed more importance on the information regarding the marketability and market value of the
property, utterly disregarding the identity of the registered owner thereof.
It should not be amiss to note that the judgment debtors name was Teofilo Ramos, Sr. We
note, as the Supreme Court of Washington in 1909 had, that a legal name consists of one given
name and one surname or family name, and a mistake in a middle name is not regarded as of
consequence. However, since the use of initials, instead of a given name, before a surname, has
become a practice, the necessity that these initials be all given and correctly given in court
proceedings has become of importance in every case, and in many, absolutely essential to a
correct designation of the person intended. [29] A middle name is very important or even decisive in
a case in which the issue is as between two persons who have the same first name and surname,
did the act complained of, or is injured or sued or the like. [30]
In this case, the name of the judgment debtor in Civil Case No. 16453 was Teofilo Ramos, Sr.,
as appearing in the judgment of the court and in the writ of execution issued by the trial
court. The name of the owner of the property covered by TCT No. 275167 was Teofilo C. Ramos. It
behooved the petitioner to ascertain whether the defendant Teofilo Ramos, Sr. in Civil Case No.
16453 was the same person who appeared as the owner of the property covered by the said
title. If the petitioner had done so, it would have surely discovered that the respondent was not
the surety and the judgment debtor in Civil Case No. 16453. The petitioner failed to do so, and
merely assumed that the respondent and the judgment debtor Teofilo Ramos, Sr. were one and the
same person.
34
In sum, we find that the petitioner acted negligently in causing the annotation of notice of
levy in the title of the herein respondent, and that its negligence was the proximate cause of the
damages sustained by the respondent.
On the second issue, the petitioner insists that the respondent is not the real party-in-interest
to file the action for damages, as he was not the one who applied for a loan from UCPB and PDB
but Ramdustrial Corporation, of which he was merely the President and Chairman of the Board of
Directors.
We do not agree. The respondent very clearly stated in his complaint that as a result of the
unlawful levy by the petitioner of his property, he suffered sleepless nights, moral shock, and
almost a heart attack due to high blood pressure. [31]
It must be underscored that the registered owner of the property which was unlawfully levied
by the petitioner is the respondent. As owner of the property, the respondent has the right to
enjoy, encumber and dispose of his property without other limitations than those established by
law. The owner also has a right of action against the holder and possessor of the thing in order to
recover it.[32]Necessarily, upon the annotation of the notice of levy on the TCT, his right to use,
encumber and dispose of his property was diminished, if not negated. He could no longer
mortgage the same or use it as collateral for a loan.
Arising from his right of ownership over the said property is a cause of action against persons
or parties who have disturbed his rights as an owner. [33] As an owner, he is one who would be
benefited or injured by the judgment, or who is entitled to the avails of the suit [34] for an action for
damages against one who disturbed his right of ownership.
Hence, regardless of the fact that the respondent was not the loan applicant with the UCPB
and PDB, as the registered owner of the property whose ownership had been unlawfully disturbed
and limited by the unlawful annotation of notice of levy on his TCT, the respondent had the legal
standing to file the said action for damages. In both instances, the respondents property was
used as collateral of the loans applied for by Ramdustrial Corporation. Moreover, the respondent,
together with his wife, was a surety of the aforesaid loans.
While it is true that the loss of business opportunities cannot be used as a reason for an action
for damages arising from loss of business opportunities caused by the negligent act of the
petitioner, the respondent, as a registered owner whose right of ownership had been disturbed and
limited, clearly has the legal personality and cause of action to file an action for damages. Not
even the respondents failure to have the annotation cancelled immediately after he came to know
of the said wrongful levy negates his cause of action.
On the third issue, for the award of moral damages to be granted, the following must exist: (1)
there must be an injury clearly sustained by the claimant, whether physical, mental or
psychological; (2) there must be a culpable act or omission factually established; (3) the wrongful
act or omission of the defendant is the proximate cause of the injury sustained by the claimant;
and (4) the award for damages is predicated on any of the cases stated in Article 2219 of the Civil
Code.[35]
In the case at bar, although the respondent was not the loan applicant and the business
opportunities lost were those of Ramdustrial Corporation, all four requisites were established. First,
the respondent sustained injuries in that his physical health and cardio-vascular ailment were
aggravated; his fear that his one and only property would be foreclosed, hounded him endlessly;
and his reputation as mortgagor had been tarnished. Second, the annotation of notice of levy on
the TCT of the private respondent was wrongful, arising as it did from the petitioners negligent act
of allowing the levy without verifying the identity of its judgment debtor. Third, such wrongful levy
was the proximate cause of the respondents misery. Fourth, the award for damages is predicated
on Article 2219 of the Civil Code, particularly, number 10 thereof. [36]
Although the respondent was able to establish the petitioners negligence, we cannot,
however, allow the award for exemplary damages, absent the private respondents failure to show
that the petitioner acted with malice and bad faith. It is a requisite in the grant of exemplary
damages that the act of the offender must be accompanied by bad faith or done in a wanton,
fraudulent or malevolent manner.[37]
Attorneys fees may be awarded when a party is compelled to litigate or to incur expenses to
protect his interest by reason of an unjustified act of the other party. In this case, the respondent
was compelled to engage the services of counsel and to incur expenses of litigation in order to
protect his interest to the subject property against the petitioners unlawful levy. The award is
reasonable in view of the time it has taken this case to be resolved. [38]
35
FAR EAST BANK & TRUST CO., petitioner, vs. ARTURO L. MARQUEZ, respondent.
DECISION
PANGANIBAN, J.:
Under PD 957, the mortgage of a subdivision lot or a condominium unit is void, if executed by
a property developer without the prior written approval of the Housing and Land Use Regulatory
Board (HLURB). That an encumbrance has been constituted over an entire property, of which the
subject lot or unit is merely a part, does not affect the invalidity of the lien over the specific portion
at issue.
The Case
Before us is a Petition for Review 1 under Rule 45 of the Rules of Court, assailing the April 27,
2001 Decision2 of the Court of Appeals (CA) in CA-GR SP No. 56813. The decretal portion of the
Decision reads as follows:
WHEREFORE, the petition for review is DENIED, for lack of merit. 3
The Facts
In sum, we rule that the petitioner acted negligently in levying the property of the respondent
despite doubts as to the identity of the respondent vis--vis its judgment debtor. By reason of such
negligent act, a wrongful levy was made, causing physical, mental and psychological injuries on
the person of the respondent. Such injuries entitle the respondent to an award of moral damages
in the amount of P800,000. No exemplary damages can be awarded because the petitioners
negligent act was not tainted with malice and bad faith. By reason of such wrongful levy, the
respondent had to hire the services of counsel to cause the cancellation of the annotation; hence,
the award of attorneys fees.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 56737 is AFFIRMED
WITH MODIFICATION. The award for exemplary damages is deleted. No costs.
SO ORDERED.
[G.R. No. 147964. January 20, 2004]
The undisputed facts of the case are summarized in the CA Decision as follows:
1. On 13 March 1989, respondent [Arturo] Marquez entered into a Contract to Sell with
Transamerican Sales and Exposition (TSE), through the latters Owner/General Manager Engr.
Jesus Garcia, involving a 52.5 sq. m. lot in Diliman, Quezon City with a three-storey townhouse unit
denominated as Unit No. 10 to be constructed thereon for a total consideration of P800,000.00.
The parcel of land in question is a portion of that property covered by TCT No. 156254 (now TCT
No. 383697).
2. On 22 May 1989, TSE obtained a loan from petitioner FEBTC in the amount of P7,650,000.00
and mortgaged the property covered by TCT No. 156254.
3. For failure of TSE to pay its obligation, petitioner FEBTC extrajudicially foreclosed the real estate
mortgage and became the highest bidder (P15.7 million) in the auction sale conducted for the
purpose.
4. Respondent had already paid a total of P600,000.00 when he stopped payment because the
construction of his townhouse unit slackened. He discovered later on that this was due to the
foreclosure.
36
9. The Office of the President dismissed the appeal and affirmed the Decision dated 18 July 1994
x x x.4 (Citations omitted)
Petitioner then elevated the case to the CA through a Petition for review under Rule 43.
"5. Consequently, [respondent] instituted a case with the Office of Appeals, Adjudication and Legal
Affairs (OAALA) of the Housing and Land Use Regulatory Board (HLURB) on 29 January
1991 entitled Arturo Marquez vs. Transamerican Sales, et al docketed as HLRB Case No. REM012991-4712 to compel TSE to complete the construction of the townhouse and to prevent the
enforceability of the extra-judicial foreclosure made by petitioner FEBTC and to have the mortgage
between TSE and petitioner FEBTC declared invalid, said mortgage having been entered into by the
parties in violation of section 18 of P.D. 957.
6. The OAALA ruled in favor of the respondent via a Decision dated 11 November 1991, the
decretal portion of which reads as follows:
WHEREFORE, premises considered, judgment is hereby rendered as follows:
1. Declaring the mortgage executed by and between x x x Engr. Jesus Garcia/Transamerican Sales
and Exposition and Far East Bank and Trust Company to be unenforceable against [respondent];
2. Ordering the x x x Far East Bank and Trust Company to compute and/or determine the loan
value of the [respondent] who was not able to complete or make full payment and accept payment
and/or receive the amortization from the [respondent] and upon full payment to deliver the title
corresponding to Unit No. 10 of that Townhouse Project located at No. 10 Panay Ave., Quezon City;
3. Ordering the Register of Deeds of Quezon City to cancel the annotations of the mortgage
indebtedness between x x x Engr. Jesus Garcia and Far East Bank and Trust Company;
4. Ordering, likewise, the Register of Deeds of Quezon City to cancel the annotation of the
Certificate of Sale in favor of the Far East Bank and Trust Company on Transfer Certificate of Title
No. 156254 to which the lot subject of this case is a part thereof, without prejudice to its right to
require x x x Engr. Jesus Garcia/Transamerican Sales and Exposition to constitute new collateral in
lieu of said title sufficient in value to cover the mortgage obligation.
xxx
xxx
xx x
7. Petitioner FEBTC interposed a Petition for Review from the decision issued by the OAALA with
the Board of Commissioners of the HLURB, docketed as HLRB Case No. REM-A-1126, which in a
Decision dated 18 July 1994 affirmed in toto the OAALA decision.
8. Hence, petitioner FEBTC appealed the Decision dated 18 July 1994 to the Office of the President
xxx.
xxx
xxx
xx x

The CA found that petitioner had known that a subdivision was forthcoming inasmuch as the
loan was obtained by TSE to partially finance the construction of a 20-unit townhouse project, as
stated in the Whereas clause in the mortgage contract. 5 Thus, the CA ruled that petitioner
should not have merely relied on the representation of TSE that it had obtained the approval and
authorization of the proper government agencies but should have required the submission of said
documents.6
Further, the appellate court found that the Certification against forum shopping attached to
the Petition before it had not been made under oath, in violation of the Rules of Court.
Hence, this Petition.7
The Issues
Petitioner raises the following issues for our consideration:
Whether or not the mortgage contract violated Section 18 of P.D. 957, hence, void insofar as third
persons are concerned.
Assuming arguendo that the mortgage contract violated Section 18 of P.D. 957, whether or not the
remedy granted and imposed by the HLURB, as sustained by the Office of the President and the
Court of Appeals, is proper.
Whether or not the inadvertent failure of the notary public to affix his signature on the
Certification against forum shopping executed by petitioner FEBTC in connection with the Petition
for Review it filed with the Court of Appeals provided a sufficient basis for the dismissal of the
appeal.8
The Court's Ruling

The Petition is partly meritorious.
First Issue:
Violation of Section 18 of PD 957
Section 18 of PD 9579 provides as follows:
SEC. 18. Mortgages. - No mortgage on any unit or lot shall be made by the owner or developer
without prior written approval of the Authority. Such approval shall not be granted unless it is
shown that the proceeds of the mortgage loan shall be used for the development of the
condominium or subdivision project and effective measures have been provided to ensure such
utilization. The loan value of each lot or unit covered by the mortgage shall be determined and the
buyer thereof, if any, shall be notified before the release of the loan. The buyer may, at his option,
pay his installment for the lot or unit directly to the mortgagee who shall apply the payments to
the corresponding mortgage indebtedness secured by the particular lot or unit being paid for, with
a view to enabling said buyer to obtain title over the lot or unit promptly after full payment
thereof.
Petitioner contends that the above-quoted provision does not apply to this case, because the
land mortgaged to it was one whole parcel, not of a subdivision lot, but of an unsubdivided one.
It insists that the written approval of the National Housing Authority (now the Housing and Land
Use Regulatory Board) was not a requirement for the constitution of a mortgage on the property.
We are not persuaded. It is undisputed that the subject 52.5-square-meter lot with a threestorey town house unit denominated as Unit No. 10 (the lot) is part of the property mortgaged to
petitioner and is covered by TCT No. 156254. The lot was technically described and segregated in a
Contact to Sell that had been entered into before the mortgage loan was contracted. The fact that
the lot had no separate TCT did not make it less of a "subdivision lot" entitled to the protection of
PD 957.
That the subject of the mortgage loan was the entire land, not the individual subdivided lots,
does not take the loan beyond the coverage of Section 18 of PD 957. Undeniably, the lot was also
mortgaged when the entire parcel of land, of which it was a part, was encumbered.
Petitioner also contends that Section 18 of PD 957 is merely a directory provision,
noncompliance with which does not render the mortgage transaction void.
In determining whether a law is mandatory, it is necessary to ascertain the legislative intent,
as stated by Sen. Arturo M. Tolentino, an authority on civil law:
There is no well-defined rule by which a mandatory or prohibitory law may, in all circumstances,
be distinguished from one which is directory, suppletory, or permissive. In the determination of this
question, the prime object is to ascertain the legislative intention. Generally speaking, those
provisions which are mere matter of form, or which are not material, do not affect any substantial
right, and do not relate to the essence of the thing to be done, so that compliance is a matter of
convenience rather that substance, are considered to be directory. On the other hand, statutory
provisions which relate to matters of substance, affect substantial rights and are the very essence
of the thing required to be done, are regarded as mandatory. 10
37
In Philippine National Bank v. Office of the President, 11 we had occasion to mull over the intent
of PD 957 thus:
x x x [T]he unmistakable intent of the law [is] to protect innocent lot buyers from scheming
subdivision developers. As between these small lot buyers and the gigantic financial institutions
which the developers deal with, it is obvious that the law -- as an instrument of social justice -must favor the weak. Indeed, the petitioner Bank had at its disposal vast resources with which it
could adequately protect its loan activities, and therefore is presumed to have conducted the usual
due diligence checking and ascertaining (whether thru ocular inspection or other modes of
investigation) the actual status, condition, utilization and occupancy of the property offered as
collateral, x x x On the other hand, private respondents obviously were powerless to discover the
attempt of the land developer to hypothecate the property being sold to them. It was precisely in
order to deal with this kind of situation that P.D. 957 was enacted, its very essence and intendment
being to provide a protective mantle over helpless citizens who may fall prey to the razzmatazz of
what P.D. 957 termed unscrupulous subdivision and condominium sellers. 12
Concededly, PD 957 aims to protect innocent lot buyers. Section 18 of the decree directly
addresses the problem of fraud committed against buyers when the lot they have contracted to
purchase, and which they have religiously paid for, is mortgaged without their knowledge. The
avowed purpose of PD 957 compels the reading of Section 18 as prohibitory -- acts committed
contrary to it are void. 13 Such construal ensures the attainment of the purpose of the law: to
protect lot buyers, so that they do not end up still homeless despite having fully paid for their
home lots with their hard-earned cash.
Petitioner argues that it is an innocent mortgagee whose lien must be respected and
protected, since the title offered as security was clean of any encumbrance or lien. We do not
agree.
x xx. As a general rule, where there is nothing on the certificate of title to indicate any cloud or
vice in the ownership of the property, or any encumbrance thereon, the purchaser is not required
to explore further than what the Torrens Title upon its face indicates in quest for any hidden defect
or inchoate right that may subsequently defeat his right thereto. This rule, however, admits of an
exception as where the purchaser or mortgagee has knowledge of a defect or lack of title in the
vendor, or that he was aware of sufficient facts to induce a reasonably prudent man to inquire into
the status of the property in litigation.14
Petitioner bank should have considered that it was dealing with a town house project that was
already in progress. A reasonable person should have been aware that, to finance the project,
sources of funds could have been used other than the loan, which was intended to serve the
purpose only partially. Hence, there was need to verify whether any part of the property was
already the subject of any other contract involving buyers or potential buyers. In granting the loan,
petitioner bank should not have been content merely with a clean title, considering the presence of
circumstances indicating the need for a thorough investigation of the existence of buyers like
respondent. Having been wanting in care and prudence, the latter cannot be deemed to be an
innocent mortgagee.
38
Petitioner cannot claim to be a mortgagee in good faith. Indeed it was negligent, as found by
the Office of the President and by the CA. Petitioner should not have relied only on the
representation of the mortgagor that the latter had secured all requisite permits and licenses from
the government agencies concerned. The former should have required the submission of certified
true copies of those documents and verified their authenticity through its own independent effort.
We find no cogent reason to alter the ruling of the CA regarding the Certification against
forum shopping that did not bear the notary public's signature. It is worth emphasizing that despite
petitioner's noncompliance with the technical requirements regarding the Certification, the CA still
ruled on the merits of the case. 18 In fact, there is no more need to pass upon this issue inasmuch
as, on the merits, we have already turned down petitioners plea against respondent.
Having been negligent in finding out what respondents rights were over the lot, petitioner
must be deemed to possess constructive knowledge of those rights. 15
WHEREFORE, the Petition is PARTLY GRANTED. The Decision of the HLURB is AFFIRMED, but
it shall be applicable only to the 52.5-square-meter lot with a three-storey town house unit
denominated as Unit No. 10. No costs.
SO ORDERED
Second Issue:
Remedy Granted
To retain possession of the lot, petitioner claims that its rights as the buyer in the foreclosure
sale are superior to those of respondent.
We are not persuaded. Aside from being a buyer of the lot, petitioner was also the mortgagee,
which, as previously discussed, was presumed to know the rights of respondent over that lot. The
conversion of the status of the former from mortgagee to buyer-owner will not lessen the
importance of such knowledge. Neither will the conversion set aside the consequences of its
negligence as a mortgagee.
The lot was mortgaged in violation of Section 18 of PD 957. Respondent, who was the buyer of
the property, was not notified of the mortgage before the release of the loan proceeds by
petitioner. Acts executed against the provisions of mandatory or prohibitory laws shall be
void.16 Hence, the mortgage over the lot is null and void insofar as private respondent is
concerned.17
The remedy granted by the HLURB and sustained by the Office of the President is proper only
insofar as it refers to the lot of respondent. In short, the mortgage contract is void as against him.
Since there is no law stating the specifics of what should be done under the circumstances, that
which is in accord with equity should be ordered. The remedy granted by the HLURB in the first and
the second paragraphs of the dispositive portion of its Decision insofar as it referred to
respondent's lot is in accord with equity.
The HLURB, however, went overboard in its disposition in paragraphs 3 and 4, which pertained
not only to the lot but to the entire parcel of land mortgaged. Such ruling was improper. The
subject of this litigation is limited only to the lot that respondent is buying, not to the entire parcel
of land. He has no personality or standing to bring suit on the whole property, as he has actionable
interest over the subject lot only.
Third Issue:
Certification Against Forum Shopping
G.R. No. L-29889 May 31, 1979

VICTORINO
CUSI
and
PILAR
vs.
PHILIPPINE NATIONAL RAILWAYS, defendant-appellant.
POBRE, plaintiffs-appellees,
Leopoldo M. Abellera for appellant.

Francisco V. Marasigan for appellees.
GUERRERO, J.:
Direct appeal from the decision of the Court of First Instance of Rizal ordering defendant-appellant
to indemnify the plaintiffs- appellees in the total amount of Two Hundred Thirty-Nine Thousand and
Six Hundred Forty-Eight Pesos, and Seventy-Two Centavos (P239,648.72) for injuries received in a
collision caused by the gross negligence of defendant-appellant, plus Ten Thousand Pesos
(P10,000.00) as attorney's fees and expenses of litigation.
Upon the amended and supplemental complaints for damages filed by plaintiffs-appellees, the
spouses Victorino Cusi and Pilar Pobre before the Court of First Instance of Rizal against the Manila
Railroad Company, now the Philippine National Railways and duly answered by the latter and after
due hearing. the following facts appear as undisputed: On the night of October 5, 1963, plaintiffsappellees attended a birthday party inside the United Housing Subdivision in Paranaque, Rizal.
After the party which broke up at about 11 o'clock that evening, the plaintiffs-appellees proceeded
home in their Vauxhall car with Victorino Cusi at the wheel. Upon reaching the railroad tracks,
finding that the level crossing bar was raised and seeing that there was no flashing red light, and
hearing no whistle from any coming train, Cusi merely slack ened his speed and proceeded to
cross the tracks. At the same time, a train bound for Lucena traversed the crossing, resulting in a
collision between the two. The impact threw the plaintiffs-appellees out of their car which was
smashed. One Benjamin Franco, who came from the same party and was driving a vehicle right
behind them, rushed to their aid and brought them. to San Juan de Dios Hospital for emergency
treatment. Later, the plaintiffs-appellees were transferred to the Philippine General Hospital. A
week later, Mrs. Cusi transferred to the Manila Doctors Hospital where Dr. Manuel Rivera, head of
the Orthopedic and Fracture Service of the Philippine General Hospital performed on her a second
operation and continued to treat her until her discharge from the hospital on November 2, 1963.
Thereafter, Dr. Rivera treated her as an out-patient until the end of February, 1964 although by
that time the fractured bones had not yet healed. Mrs. Cusi was also operated on by Dr. Francisco
Aguilar, Director of the National Orthopedic Hospital, in May, 1964 and in August, 1965, after
another operation in her upper body from the chest to the abdomen, she was placed in cast for
some three (3) months and her right arm immobilized by reason of the past
As enumerated in the Medical Certificate (Exh. "J"), Mrs. Cusi suffered the following:
39
The defense is centered on the proposition that the gross negligence of Victorino Cusi was the
proximate cause of the collision; that had he made a full stop before traversing the crossing as
required by section 56(a) of Act 3992 (Motor Vehicle Law), he could have seen and heard the
approach of the train, and thus, there would have been no collision.
After a protracted trial, the lower court rendered the decision now subject of the appeal.
Defendant-appellant seeks the reversal of said decision; but should we affirm the same, that the
award be reduced to a reasonable amount.
As the action is predicated on negligence, the New Civil Code 1 making clear that "whoever by act
or omission causes damage to another, there being fault or negligence, is obliged to pay for the
damage done the crucial question posed in the petition at bar is the existence of negligence on the
part of defendant-appellant as found by the lower court.
(1) Fracture open middle third humerus right

(2) Fracture mandible right paramedian
(3) Fracture fibula left distal
(4) Concussion, cerebral
(5) Abrasions, multiple (face, head, lumbosacral and extremities)
(6) Lacerations (2) right temporal
1. The question of negligence being one of fact, the lower court's finding of negligence on the part
of the defendant-appellant deserves serious consideration by the Court. It commands great respect
and weight, the reason being that the trial judge, having the advantage of hearing the parties
testify and of observing their demeanor on the witness stand, is better situated to make
conclusions of facts. Thus, it has been the standing practice of appellate courts to accord lower
court's judgments the presumption of correctness. And unless it can be shown that error or errors,
substantial in character, be shown in the conclusion arrived at, or that there was abuse in judicial
scrutiny, We are bound by their judgments. On this ground alone We can rest the affirmance of the
judgment appealed from. 2
2. Nor is the result different even if no such presumption were indulged in, that is, even if We were
to resolve whether or not there exist compelling reasons for an ultimate reversal.
(7) Contusions with hematoma left forehead and parieto occipital right.
For these injuries, she underwent a total of four surgical opera. petitions in a period of two years.
As a result of the fracture on her right arm, there was a shortening of about 1 cm. of that arm. She
lost the flexibility of her wrist, elbow and shoulder. Up to the time she took the witness stand in
August, 1966, she still had an intermedullary nail in the bone of her right arm Likewise, Victorino
Cusi suffered brain injuries which affected his speech, memory, sense of hearing and neck
movement. For a long period, he also felt pain all over his body.
Victorino Cusi claimed that prior to the accident he was a successful businessman the Special
Assistant to the Dolor Lopez Enterprises, the managing partner of Cusi and Rivera Partnership, the
manager of his ricemill, and with substantial investments in other business enterprises. As a result
of his injuries, he was unable to properly attend to his various business undertakings. On the other
hand, his wife, Pilar, was a skilled music and piano teacher. After the accident, she lost the
dexterity of her fingers forcing her to quit her profession. She also bore ugly scars on several parts
of her body, and she suffered anxiety of a possible miscarriage being then five (5) months
pregnant at the time of the accident.
The judicial pronouncement below that the gross negligence of defendant-appellant was the
proximate cause of the collision has been thoroughly reviewed by this Court and we fully affirm the
same.
Negligence has been defined by Judge Cooley in his work on Torts 3d ed sec. 1324 3 as "the failure
to observe for the protection of the interests of another person that degree of care, precaution,
and vigilance which the circumstances justly demand, whereby such other person suffers injury."
By such a test, it can readily be seen that there is no hard and fast rule whereby such degree of
care and vigilance is measured, it is dependent upon the circumstances in which a person finds
himself so situated. All that the law requires is that it is always incumbent upon a person to use
that care and diligence expected of reasonable men under similar circumstances.
These are the circumstances attendant to the collision. Undisputably, the warning devices installed
at the railroad crossing were manually operated; there were only 2 shifts of guards provided for the
operation thereof one, the 7:00 A.M. to 3:00 P. M. shift, and the other, the 3:00 P.M. to 11:00 P.M.
shift. On the night of the accident, the train for Lucena was on an unscheduled trip after 11:00 P.M.
During that precise hour, the warning devices were not operating for no one attended to them.
Also, as observed by the lower court, the locomotive driver did not blow his whistle, thus: "... he
simply sped on without taking an extra precaution of blowing his whistle from a distance of 50 to
10 meters from the crossing. That the train was running at full speed is attested to by the fact that
notwithstanding the application of the emergency brakes, the train did not stop until it reached a
distance of around 100 meters."
These facts assessed together show the inadequacy, nay, the absence, of precautions taken by the
defendant-appellant to warn the travelling public of the impending danger. It is clear to Us that as
the signal devices were wholly manually-operated, there was an urgent need for a flagman or
guard to man the crossing at all times. As it was, the crossing was left unattended to after eleven
o'clock every night and on the night of the accident. We cannot in all reason justify or condone the
act of the defendant-appellant allowing the subject locomotive to travel through the unattended
crossing with inoperative signal devices, but without sending any of its employees to operate said
signal devices so as to warn oncoming motorists of the approach of one of its locomotives. It is not
surprising therefore that the in operation of the warning devices created a situation which was
misunderstood by the riding public to mean safe passage. Jurisprudence recognizes that if warning
devices are installed in railroad crossings, the travelling public has the right to rely on such
warning devices to put them on their guard and take the necessary precautions before crossing the
tracks. A need, therefore, exists for the railroad company to use reasonable care to keep such
devices in good condition and in working order, or to give notice that they are not operating, since
if such a signal is misunderstood it is a menace. 4 Thus, it has been held that if a railroad company
maintains a signalling device at a crossing to give warning of the approach of a train, the failure of
the device to operate is generally held to be evidence of negligence, which maybe considered with
all the circumstances of the case in determining whether the railroad company was negligent as a
matter of fact. 5
The set of circumstances surrounding the collision subject of this case is very much similar to that
of Lilius v. Manila Railroad Company, 59 Phil. 758 (1934), where this Court upheld the lower court's
finding of negligence on the part of defendant locomotive company upon the following facts
... on the part of the defendant company, for not having had on that occasion any
semaphore at the crossing at Dayap to serve as a warning to passersby of its
existence in order that they might take the necessary precautions before crossing
the railroad; and, on the part of its employees the flagman and switchman, for
not having remained at his post at the crossing in question to warn passersby of
the approaching train; the station master, for failure to send the said flagman and
switchman to his post on time; and the engineer, for not having taken the
necessary precautions to avoid an accident, in view of the absence of said flagman
and switchman, by slackening his speed and continuously ringing the bell and
blowing the whistle before arriving at the crossing.
40
driver of any vehicle to fail to stop within twenty meters but not less than two and
one-half meters from such through street or railroad crossing.
The defense presupposes that the failure of plaintiffs-appellees to stop before proceeding to
traverse the crossing constitutes contributory negligence, thereby precluding them from
recovering indemnity for their injuries and damages.
The candor of defendant-appellant in interposing such a defense is doubtful. As seemingly
observed by the lower court, the defense, through inadvertence or deliberateness, did not pursue
further the excepting clause of the same section thus to go on:
Provided, however, that the driver of a passenger automobile or motorcycle
may instead of coming to a full stop, slow down to not more than ten kilometers
per hour whenever it is apparent that no hazard exists.
After a thorough perusal of the facts attendant to the case, this Court is in fun accord with the
lower court. Plaintiff-appellee Victorino Cusi had exercised all the necessary precautions required of
him as to avoid injury to -himself and to others. We find no need for him to have made a full stop;
relying on his faculties of sight and hearing, Victorino Cusi had no reason to anticipate the
impending danger. The record shows that the spouses Cusi previously knew of the existence of the
railroad crossing, having stopped at the guardhouse to ask for directions before proceeding to the
party. At the crossing, they found the level bar raised, no warning lights flashing nor warning bells
ringing, nor whistle from an oncoming train. They safely traversed the crossing. On their return
home, the situation at the crossing did not in the least change, except for the absence of the guard
or flagman. Hence, on the same impression that the crossing was safe for passage as before,
plaintiff-appellee Victorino Cusi merely slackened his speed and proceeded to cross the tracks,
driving at the proper rate of speed for going over railroad crossings. Had defendant-appellant been
successful in establishing that its locomotive driver blew his whistle to warn motorists of his
approach to compensate for the absence of the warning signals, and that Victorino Cusi, instead of
stopping or slackening his speed, proceeded with reckless speed and regardless of possible or
threatened danger, then We would have been put in doubt as to the degree of prudence exercised
by him and would have, in all probability, declared him negligent. 6 But as the contrary was
established, we remain convinced that Victorino Cusi had not, through his own negligence,
contributed to the accident so as to deny him damages from the defendant-appellant.
The only question that now remains to be resolved is the reasonableness of the amount awarded
as damages to the plaintiffs- appellees.
The following actual expenses and losses are fully substantiated:
Defendant-appellant rests its defense mainly on Section 56(a) of the Motor Vehicle Law. Thus:
Section 56(a) Traversing through streets and railroad crossing, etc, All
vehicles moving on the public highways shall be brought to a full stop before
traversing any 'through street' or railroad crossing. Whenever any such 'through
street' or crossing is so designated and signposted, it shall be unlawful for the
(a) Hospital bills of Mrs. Cusi from October, 1963 to May, 1964 in the amount of
Thirteen Thousand Five Hundred Fifty Pesos and Five Centavos (P13,550.05);
(b) Another hospital bill of Mrs. Cusi in 1965 in the amount of Three Thousand and
One Pesos and Ninety Centavos (P3,001.90);
(c) Doctor's fees for two surgical operations performed on Mrs. Cusi by one Dr.
Manuel Rivera in the amount of One Thousand and Five Hundred Pesos (Pl,500.00);
SO
41
ORDERED.
(d) Loss of Victorino's wrist watch valued at Two Hundred and Fifty Pesos (P250.00);
(e) Loss of Pilar's half of her pair of demand earrings(l-carrats) valued at Two
Thousand Seven Hundred and Fifty Pesos (P2,750,00);
G.R. No. L-44264 September 19, 1988
(f) Repair of the damaged Vauxhall car in the amount of Two Thousand Eight
Hundred and Ninety Four Pesos and Seventy- Seven Centavos (P2,894.77).
HEDY
GAN
y
YU, petitioner,
vs.
THE HONORABLE COURT OF APPEALS and the PEOPLE OF THE PHILIPPINES, respondents.
The total award of actual damages in the amount of Twenty Three Thousand Nine Hundred FortySix Pesos and Seventy-Two Centavos (P23,946.72) is, therefore, correct.
The lower court awarded Twenty-One Thousand Six Hundred Pesos (P21,600.00) to Mrs. Cusi for
loss of income for the three years that she was under constant medical treatment, and Fourteen
Thousand Pesos (P14,000.00) for impairment of her earning capacity; and Forty Thousand Pesos (P
40,000.00) to Mr. Cusi for loss of income for the eight months that he was disabled and impairment
of his earning capacity. We find the award reasonable. The records show that Mrs. Cusi, previously
a skilled piano teacher averaging a monthly income of Six Hundred Pesos (P600.00), cannot now
teach nor play the piano since the accident which resulted in the loss of the dexterity of her
fingers; likewise, Mr. Cusi cannot now vigorously attend to his businesses which previously netted
him a monthly average income of Five Thousand Pesos (P5,000.00).
As regards the award of Twenty Thousand Pesos (P20,000.00) for profits which Victorino Cusi failed
to realize from a certain real estate transaction with the Dolor Lopez Enterprises, we affirm the
same as the defendant-appellant has failed to present an iota of evidence to overcome plaintiffsappellees' evidence credited by the lower court as to the certainty of the materialization of the
stated transaction.
The award of Seventy Thousand Pesos (P70,000.00) to Mrs. Cusi and Fifty Thousand Pesos
(P50,000.00) to Victorino Cusi as moral damages is not excessive. In their own respective fields of
endeavor, both were successful. Now they have to bear throughout their whole lifetime the
humiliation wrought by their physical deformities which no doubt affected, and will continue to do
so, their social lives, their financial undertakings, and even their mental attitudes.
Likewise, the amount of Ten Thousand Pesos (P10,000.00) given as attorney's fees and expenses of
litigation is not unreasonable. The total amount of damages awarded by the trial court should bear
legal interest at 6% from the rendition of the j judgment, which was on March 26, 1968.
WHEREFORE, the judgment of the lower court is hereby AFFIRMED with the modification that the
total amount of damages shall bear legal interest at six per cent (6%) from the rendition of the
decision dated March 26, 1968.
Pacis, Baluyot, Reyes & De Leon for petitioner.

The Solicitor General for respondents.
FERNAN, C.J.:
Petitioner Hedy Gan was convicted of the crime of Homicide thru Reckless Imprudence in Criminal
Case No. 10201 of the then Court of First Instance of Manila, Branch XXII presided by Judge
Federico C. Alikpala. She was sentenced to an indeterminate penalty of four (4) months and one
(1) day of arresto mayor as minimum and two (2) years, four (4) months and one (1) day of prision
correccional as maximum and was made to indemnify the heirs of the victim the sum of
P12,000.00 without any subsidiary imprisonment in case of insolvency and to pay the costs. On
appeal, the trial court's decision was modified and petitioner was convicted only of Homicide thru
Simple Imprudence. Still unsatisfied with the decision of the Court of Appeals, 1 petitioner has
come to this Court for a complete reversal of the judgment below.
The facts of the case as found by the appellate court are as follows:
In the morning of July 4, 1972 at about 8:00 o'clock, the accused Hedy Gan was
driving a Toyota car along North Bay Boulevard, Tondo, Manila. While in front of
house no. 694 of North Bay Boulevard, there were two vehicles, a truck and a
jeepney parked on one side of the road, one following the other about two to three
meters from each other. As the car driven by the accused approached the place
where the two vehicles were parked, there was a vehicle coming from the opposite
direction, followed by another which tried to overtake and bypass the one in front
of it and thereby encroached the lane of the car driven by the accused. To avoid a
head-on collision with the oncoming vehicle, the defendant swerved to the right
and as a consequence, the front bumper of the Toyota Crown Sedan hit an old man
who was about to cross the boulevard from south to north, pinning him against the
rear of the parked jeepney. The force of the impact caused the parked jeepney to
move forward hitting the rear of the parts truck ahead of it. The pedestrian was
injured, the Toyota Sedan was damaged on its front, the jeep suffered damages on
its rear and front paints, and the truck sustained scratches at the wooden portion
of its rear. The body of the old man who was later Identified as Isidoro Casino was
immediately brought to the Jose Reyes Memorial Hospital but was (pronounced)
dead on arrival. 2
The Court of Appeals erred in convicting the petitioner of the crime of Homicide
thru Simple Imprudence.
III
The Court of Appeals erred in adjudging the petitioner liable to indemnify the
deceased in the sum of P12,000.00. 4
An information for Homicide thru Reckless Imprudence was filed against petitioner in view of the
above incident. She entered a plea of not guilty upon arraignment and the case was set for trial.
Meanwhile, petitioner sought and was granted a re-investigation by the City Fiscal, as a result of
which the trial fiscal moved for the dismissal of the case against petitioner during the resumption
of hearing on September 7, 1972. The grounds cited therefor were lack of interest on the part of
the complaining witness to prosecute the case as evidenced by an affidavit of desistance
submitted to the trial court and lack of eyewitness to sustain the charge.
The motion to dismiss filed by the fiscal was never resolved. The Court instead ordered the
prosecution to present its evidence. After the prosecution rested its case, the petitioner filed a
motion to dismiss the case on the ground of insufficiency of evidence.
42
We reverse.
The test for determining whether or not a person is negligent in doing an act whereby injury or
damage results to the person or property of another is this: Would a prudent man in the position of
the person to whom negligence is attributed foresee harm to the person injured as a reasonable
consequence of the course about to be pursued? If so, the law imposes the duty oil the doer to
take precaution against its mischievous results and the failure to do so constitutes negligence. 5
On December 22, 1972, the trial court rendered judgment finding petitioner guilty beyond
reasonable doubt of the of- offense charged.
A corollary rule is what is known in the law as the emergency rule. "Under that rule, one who
suddenly finds himself in a place of danger, and is required to act without time to consider the best
means that may be adopted to avoid the impending danger, is not guilty of negligence, if he fails
to adopt what subsequently and upon reflection may appear to have been a better method, unless
the emergency in which he finds himself is brought about by his own negligence." 6
Petitioner appealed to the Court of Appeals in CA-G.R. No. 14472-CR. On May 3, 1976, the Court of
Appeals rendered a decision, the dispositive portion of which reads as follows:
Applying the above test to the case at bar, we find the petitioner not guilty of the crime of Simple
Imprudence resulting in Homicide.
Wherefore, as modified, the accused Hedy Gan is guilty beyond reasonable doubt
of the crime of homicide thru simple imprudence and, pursuant to paragraph 2,
Article 365 of the Revised Penal Code, she is hereby sentenced to the
indeterminate penalty of three (3) months and eleven (11) days ofarresto
mayor and to indemnify the heirs of Isidoro Casino in the sum of Twelve Thousand
Pesos (Pl2,000.00) without, however, any subsidiary imprisonment in case of
insolvency, and to pay the costs. 3
Petitioner now appeals to this Court on the following assignments of errors:
I
The Court of Appeals erred in holding that when the petitioner saw a car travelling
directly towards her, she should have stepped on the brakes immediately or in
swerving her vehicle to the right should have also stepped on the brakes or
lessened her speed, to avoid the death of a pedestrian.
II
The appellate court in finding the petitioner guilty said:

The accused should have stepped on the brakes when she saw the car going in the
opposite direction followed by another which overtook the first by passing towards
its left. She should not only have swerved the car she was driving to the right but
should have also tried to stop or lessen her speed so that she would not bump into
the pedestrian who was crossing at the time but also the jeepney which was then
parked along the street. 7
The course of action suggested by the appellate court would seem reasonable were it not for the
fact that such suggestion did not take into account the amount of time afforded petitioner to react
to the situation she was in. For it is undeniable that the suggested course of action presupposes
sufficient time for appellant to analyze the situation confronting her and to ponder on which of the
different courses of action would result in the least possible harm to herself and to others.
Due to the lack of eyewitnesses, no evidence was presented by the prosecution with respect to the
relative distances of petitioner to the parked jeepney and the oncoming overtaking vehicle that
would tend to prove that petitioner did have sufficient time to reflect on the consequences of her
instant decision to swerve her car to the light without stepping on her brakes. In fact, the evidence
presented by the prosecution on this point is the petitioner's statement to the police 8 stating::
And masasabi ko lang ho umiwas ho ako sa isang sasakyan na biglang nagovertake
sa sasakyan na aking kasalubong kung kaya ay aking kinabig sa kanan ang akin
kotse subalit siya naman biglangpagtawid ng tao o victim at hindi ko na ho
naiwasan at ako ay wala ng magawa . Iyan ho ang buong pangyayari nang
nasabing aksidente. 9 (Emphasis supplied)
The prosecution having presented this exhibit as its own evidence, we cannot but deem its
veracity to have been admitted by it. Thus, under the circumstances narrated by petitioner, we
find that the appellate court is asking too much from a mere mortal like the petitioner who in the
blink of an eye had to exercise her best judgment to extricate herself from a difficult and
dangerous situation caused by the driver of the overtaking vehicle. Petitioner certainly could not
be expected to act with all the coolness of a person under normal conditions. 10 The danger
confronting petitioner was real and imminent, threatening her very existence. She had no
opportunity for rational thinking but only enough time to heed the very powerfull instinct of selfpreservation.
Also, the respondent court itself pronounced that the petitioner was driving her car within the legal
limits. We therefore rule that the "emergency rule" enunciated above applies with full force to the
case at bar and consequently absolve petitioner from any criminal negligence in connection with
the incident under consideration.
We further set aside the award of damages to the heirs of the victim, who by executing a release of
the claim due them, had effectively and clearly waived their right thereto.
WHEREFORE, judgment is hereby rendered acquitting petitioner HEDY GAN y YU of the crime of
Homicide thru Simple Imprudence. She is no longer liable for the P12,000.00 civil indemnity
awarded by the appellate court to the heirs of the victim.
SO ORDERED.
G.R. No. 115024
February 7, 1996
MA.
LOURDES
VALENZUELA, petitioner,
vs.
COURT OF APPEALS, RICHARD LI and ALEXANDER COMMERCIAL, INC., respondents.
RICHARD
vs.
COURT OF APPEALS and LOURDES VALENZUELA, respondents.
43
LI, petitioner,
DECISION
KAPUNAN, J.:
These two petitions for review on certiorari under Rule 45 of the Revised Rules of Court stem from
an action to recover damages by petitioner Lourdes Valenzuela in the Regional Trial Court of
Quezon City for injuries sustained by her in a vehicular accident in the early morning of June 24,
1990. The facts found by the trial court are succinctly summarized by the Court of Appeals below:
This is an action to recover damages based on quasi-delict, for serious physical injuries
sustained in a vehicular accident.
Plaintiff's version of the accident is as follows: At around 2:00 in the morning of June 24,
1990, plaintiff Ma. Lourdes Valenzuela was driving a blue Mitsubishi lancer with Plate No.
FFU 542 from her restaurant at Marcos highway to her home at Palanza Street, Araneta
Avenue. She was travelling along Aurora Blvd. with a companion, Cecilia Ramon, heading
towards the direction of Manila. Before reaching A. Lake Street, she noticed something
wrong with her tires; she stopped at a lighted place where there were people, to verify
whether she had a flat tire and to solicit help if needed. Having been told by the people
present that her rear right tire was flat and that she cannot reach her home in that car's
condition, she parked along the sidewalk, about 1-1/2 feet away, put on her emergency
lights, alighted from the car, and went to the rear to open the trunk. She was standing at
the left side of the rear of her car pointing to the tools to a man who will help her fix the
tire when she was suddenly bumped by a 1987 Mitsubishi Lancer driven by defendant
Richard Li and registered in the name of defendant Alexander Commercial, Inc. Because of
the impact plaintiff was thrown against the windshield of the car of the defendant, which
was destroyed, and then fell to the ground. She was pulled out from under defendant's car.
Plaintiff's left leg was severed up to the middle of her thigh, with only some skin and sucle
connected to the rest of the body. She was brought to the UERM Medical Memorial Center
where she was found to have a "traumatic amputation, leg, left up to distal thigh (above
knee)". She was confined in the hospital for twenty (20) days and was eventually fitted
with an artificial leg. The expenses for the hospital confinement (P120,000.00) and the cost
of the artificial leg (P27,000.00) were paid by defendants from the car insurance.
In her complaint, plaintiff prayed for moral damages in the amount of P1 million,
exemplary damages in the amount of P100,000.00 and other medical and related
expenses amounting to a total of P180,000.00, including loss of expected earnings.
x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x-x
G.R. No. 117944
February 7, 1996
Defendant Richard Li denied that he was negligent. He was on his way home, travelling at
55 kph; considering that it was raining, visibility was affected and the road was wet. Traffic
was light. He testified that he was driving along the inner portion of the right lane of Aurora
Blvd. towards the direction of Araneta Avenue, when he was suddenly confronted, in the
vicinity of A. Lake Street, San Juan, with a car coming from the opposite direction,
travelling at 80 kph, with "full bright lights". Temporarily blinded, he instinctively swerved
to the right to avoid colliding with the oncoming vehicle, and bumped plaintiff's car, which
he did not see because it was midnight blue in color, with no parking lights or early
warning device, and the area was poorly lighted. He alleged in his defense that the left
rear portion of plaintiff's car was protruding as it was then "at a standstill diagonally" on
the outer portion of the right lane towards Araneta Avenue (par. 18, Answer). He confirmed
the testimony of plaintiff's witness that after being bumped the car of the plaintiff swerved
to the right and hit another car parked on the sidewalk. Defendants counterclaimed for
damages, alleging that plaintiff was reckless or negligent, as she was not a licensed driver.
The police investigator, Pfc. Felic Ramos, who prepared the vehicular accident report and
the sketch of the three cars involved in the accident, testified that the plaintiff's car was
"near the sidewalk"; this witness did not remember whether the hazard lights of plaintiff's
car were on, and did not notice if there was an early warning device; there was a street
light at the corner of Aurora Blvd. and F. Roman, about 100 meters away. It was not mostly
dark, i.e. "things can be seen" (p. 16, tsn, Oct. 28, 1991).
A witness for the plaintiff, Rogelio Rodriguez, testified that after plaintiff alighted from her
car and opened the trunk compartment, defendant's car came approaching very fast ten
meters from the scene; the car was "zigzagging". The rear left side of plaintiff's car was
bumped by the front right portion of defendant's car; as a consequence, the plaintiff's car
swerved to the right and hit the parked car on the sidewalk. Plaintiff was thrown to the
windshield of defendant's car, which was destroyed, and landed under the car. He stated
that defendant was under the influence of liquor as he could "smell it very well" (pp. 43,
79, tsn, June 17, 1991).
After trial, the lower court sustained the plaintiff's submissions and found defendant Richard Li
guilty of gross negligence and liable for damages under Article 2176 of the Civil Code. The trial
court likewise held Alexander Commercial, Inc., Li's employer, jointly and severally liable for
damages pursuant to Article 2180. It ordered the defendants to jointly and severally pay the
following amounts:
1. P41,840.00, as actual damages, representing the miscellaneous expenses of the plaintiff
as a result of her severed left leg;
2. The sums of (a) P37,500.00, for the unrealized profits because of the stoppage of
plaintiff's Bistro La Conga restaurant three (3) weeks after the accident on June 24, 1990;
(b) P20,000.00, a month, as unrealized profits of the plaintiff in her Bistro La Conga
restaurant, from August, 1990 until the date of this judgment and (c) P30,000.00, a month
for unrealized profits in plaintiff's two (2) beauty salons from July, 1990 until the date of
this decision;
3. P1,000,000.00, in moral damages;
44
4. P50,000.00, as exemplary damages;

5. P60,000.00, as reasonable attorney's fees; and
6. Costs.
As a result of the trial court's decision, defendants filed an Omnibus Motion for New Trial and for
Reconsideration, citing testimony in Criminal Case O.C. No. 804367 (People vs. Richard Li), tending
to show that the point of impact, as depicted by the pieces of glass/debris from the parties' cars,
appeared to be at the center of the right lane of Aurora Blvd. The trial court denied the motion.
Defendants forthwith filed an appeal with the respondent Court of Appeals. In a Decision rendered
March 30, 1994, the Court of Appeals found that there was "ample basis from the evidence of
record for the trial court's finding that the plaintiff's car was properly parked at the right, beside
the sidewalk when it was bumped by defendant's car." 1 Dismissing the defendants' argument that
the plaintiff's car was improperly parked, almost at the center of the road, the respondent court
noted that evidence which was supposed to prove that the car was at or near center of the right
lane was never presented during the trial of the case. 2 The respondent court furthermore observed
that:
Defendant Li's testimony that he was driving at a safe speed of 55 km./hour is self serving;
it was not corroborated. It was in fact contradicted by eyewitness Rodriguez who stated
that he was outside his beerhouse located at Aurora Boulevard after A. Lake Street, at or
about 2:00 a.m. of June 24, 1990 when his attention was caught by a beautiful lady
(referring to the plaintiff) alighting from her car and opening the trunk compartment; he
noticed the car of Richard Li "approaching very fast ten (10) meters away from the scene";
defendant's car was zigzagging", although there were no holes and hazards on the street,
and "bumped the leg of the plaintiff" who was thrown against the windshield of defendant's
care, causing its destruction. He came to the rescue of the plaintiff, who was pulled out
from under defendant's car and was able to say "hurting words" to Richard Li because he
noticed that the latter was under the influence of liquor, because he "could smell it very
well" (p. 36, et. seq., tsn, June 17, 1991). He knew that plaintiff owned a beerhouse in Sta.
Mesa in the 1970's, but did not know either plaintiff or defendant Li before the accident.
In agreeing with the trial court that the defendant Li was liable for the injuries sustained by the
plaintiff, the Court of Appeals, in its decision, however, absolved the Li's employer, Alexander
Commercial, Inc. from any liability towards petitioner Lourdes Valenzuela and reduced the amount
of moral damages to P500,000.00. Finding justification for exemplary damages, the respondent
court allowed an award of P50,000.00 for the same, in addition to costs, attorney's fees and the
other damages. The Court of Appeals, likewise, dismissed the defendants' counterclaims. 3
Consequently, both parties assail the respondent court's decision by filing two separate petitions
before this Court. Richard Li, in G.R. No. 117944, contends that he should not be held liable for
damages because the proximate cause of the accident was Ma. Lourdes Valenzuela's own
negligence. Alternatively, he argues that in the event that this Court finds him negligent, such
negligence ought to be mitigated by the contributory negligence of Valenzuela.
On the other hand, in G.R. No. 115024, Ma. Lourdes Valenzuela assails the respondent court's
decision insofar as it absolves Alexander Commercial, Inc. from liability as the owner of the car
driven by Richard Li and insofar as it reduces the amount of the actual and moral damages
awarded by the trial court.4
45
business is registered in the name of his mother, but he explained that he owns the
establishment (p. 5, tsn, June 20, 1991). Moreover, the testimony that the streetlights on
his side of Aurora Boulevard were on the night the accident transpired (p. 8) is not
necessarily contradictory to the testimony of Pfc. Ramos that there was a streetlight at the
corner of Aurora Boulevard and F. Roman Street (p. 45, tsn, Oct. 20, 1991).
As the issues are intimately related, both petitions are hereby consolidated.
It is plainly evident that the petition for review in G.R. No. 117944 raises no substantial questions
of law. What it, in effect, attempts to have this Court review are factual findings of the trial court,
as sustained by the Court of Appeals finding Richard Li grossly negligent in driving the Mitsubishi
Lancer provided by his company in the early morning hours of June 24, 1990. This we will not do.
As a general rule, findings of fact of the Court of Appeals are binding and conclusive upon us, and
this Court will not normally disturb such factual findings unless the findings of fact of the said court
are palpably unsupported by the evidence on record or unless the judgment itself is based on a
misapprehension of facts.5
In the first place, Valenzuela's version of the incident was fully corroborated by an uninterested
witness, Rogelio Rodriguez, the owner-operator of an establishment located just across the scene
of the accident. On trial, he testified that he observed a car being driven at a "very fast" speed,
racing towards the general direction of Araneta Avenue. 6 Rodriguez further added that he was
standing in front of his establishment, just ten to twenty feet away from the scene of the accident,
when he saw the car hit Valenzuela, hurtling her against the windshield of the defendant's
Mitsubishi Lancer, from where she eventually fell under the defendant's car. Spontaneously
reacting to the incident, he crossed the street, noting that a man reeking with the smell of liquor
had alighted from the offending vehicle in order to survey the incident. 7 Equally important,
Rodriguez declared that he observed Valenzuela's car parked parallel and very near the
sidewalk,8 contrary to Li's allegation that Valenzuela's car was close to the center of the right lane.
We agree that as between Li's "self-serving" asseverations and the observations of a witness who
did not even know the accident victim personally and who immediately gave a statement of the
incident similar to his testimony to the investigator immediately after the incident, the latter's
testimony deserves greater weight. As the court emphasized:
The issue is one of credibility and from Our own examination of the transcript, We are not
prepared to set aside the trial court's reliance on the testimony of Rodriguez negating
defendant's assertion that he was driving at a safe speed. While Rodriguez drives only a
motorcycle, his perception of speed is not necessarily impaired. He was subjected to crossexamination and no attempt was made to question .his competence or the accuracy of his
statement that defendant was driving "very fast". This was the same statement he gave to
the police investigator after the incident, as told to a newspaper report (Exh. "P"). We see
no compelling basis for disregarding his testimony.
The alleged inconsistencies in Rodriguez' testimony are not borne out by an examination of
the testimony. Rodriguez testified that the scene of the accident was across the street
where his beerhouse is located about ten to twenty feet away (pp. 35-36, tsn, June 17,
1991). He did not state that the accident transpired immediately in front of his
establishment. The ownership of the Lambingan se Kambingan is not material; the
With respect to the weather condition, Rodriguez testified that there was only a drizzle, not
a heavy rain and the rain has stopped and he was outside his establishment at the time
the accident transpired (pp. 64-65, tsn, June 17, 1991). This was consistent with plaintiff's
testimony that it was no longer raining when she left Bistro La Conga (pp. 10-11, tsn, April
29, 1991). It was defendant Li who stated that it was raining all the way in an attempt to
explain why he was travelling at only 50-55 kph. (p. 11, tsn, Oct. 14, 1991). As to the
testimony of Pfc. Ramos that it was raining, he arrived at the scene only in response to a
telephone call after the accident had transpired (pp. 9-10, tsn, Oct. 28, 1991). We find no
substantial inconsistencies in Rodriguez's testimony that would impair the essential
integrity of his testimony or reflect on his honesty. We are compelled to affirm the trial
court's acceptance of the testimony of said eyewitness.
Against the unassailable testimony of witness Rodriguez we note that Li's testimony was peppered
with so many inconsistencies leading us to conclude that his version of the accident was merely
adroitly crafted to provide a version, obviously self-serving, which would exculpate him from any
and all liability in the incident. Against Valenzuela's corroborated claims, his allegations were
neither backed up by other witnesses nor by the circumstances proven in the course of trial. He
claimed that he was driving merely at a speed of 55 kph. when "out of nowhere he saw a dark
maroon lancer right in front of him, which was (the) plaintiff's car". He alleged that upon seeing
this sudden "apparition" he put on his brakes to no avail as the road was slippery. 9
One will have to suspend disbelief in order to give credence to Li's disingenuous and patently selfserving asseverations. The average motorist alert to road conditions will have no difficulty applying
the brakes to a car traveling at the speed claimed by Li. Given a light rainfall, the visibility of the
street, and the road conditions on a principal metropolitan thoroughfare like Aurora Boulevard, Li
would have had ample time to react to the changing conditions of the road if he were alert - as
every driver should be - to those conditions. Driving exacts a more than usual toll on the senses.
Physiological "fight or flight" 10 mechanisms are at work, provided such mechanisms were not
dulled by drugs, alcohol, exhaustion, drowsiness, etc. 11 Li's failure to react in a manner which
would have avoided the accident could therefore have been only due to either or both of the two
factors: 1) that he was driving at a "very fast" speed as testified by Rodriguez; and 2) that he was
under the influence of alcohol. 12 Either factor working independently would have diminished his
responsiveness to road conditions, since normally he would have slowed down prior to reaching
Valenzuela's car, rather than be in a situation forcing him to suddenly apply his brakes. As the trial
court noted (quoted with approval by respondent court):
Secondly, as narrated by defendant Richard Li to the San Juan Police immediately after the
incident, he said that while driving along Aurora Blvd., out of nowhere he saw a dark
maroon lancer right in front of him which was plaintiff's car, indicating, again, thereby that,
indeed, he was driving very fast, oblivious of his surroundings and the road ahead of him,
because if he was not, then he could not have missed noticing at a still far distance the
parked car of the plaintiff at the right side near the sidewalk which had its emergency
lights on, thereby avoiding forcefully bumping at the plaintiff who was then standing at the
left rear edge of her car.
Since, according to him, in his narration to the San Juan Police, he put on his brakes when
he saw the plaintiff's car in front of him, but that it failed as the road was wet and slippery,
this goes to show again, that, contrary to his claim, he was, indeed, running very fast. For,
were it otherwise, he could have easily completely stopped his car, thereby avoiding the
bumping of the plaintiff, notwithstanding that the road was wet and slippery. Verily, since,
if, indeed, he was running slow, as he claimed, at only about 55 kilometers per hour, then,
inspite of the wet and slippery road, he could have avoided hitting the plaintiff by the mere
expedient or applying his brakes at the proper time and distance.
It could not be true, therefore, as he now claims during his testimony, which is contrary to
what he told the police immediately after the accident and is, therefore, more believable,
that he did not actually step on his brakes but simply swerved a little to the right when he
saw the on-coming car with glaring headlights, from the opposite direction, in order to
avoid it.
For, had this been what he did, he would not have bumped the car of the plaintiff which
was properly parked at the right beside the sidewalk. And, it was not even necessary for
him to swerve a little to the right in order to safely avoid a collision with the on-coming car,
considering that Aurora Blvd. is a double lane avenue separated at the center by a dotted
white paint, and there is plenty of space for both cars, since her car was running at the
right lane going towards Manila on the on-coming car was also on its right lane going to
Cubao.13
Having come to the conclusion that Li was negligent in driving his company-issued Mitsubishi
Lancer, the next question for us to determine is whether or not Valenzuela was likewise guilty of
contributory negligence in parking her car alongside Aurora Boulevard, which entire area Li points
out, is a no parking zone.
We agree with the respondent court that Valenzuela was not guilty of contributory negligence.
Contributory negligence is conduct on the part of the injured party, contributing as a legal cause to
the harm he has suffered, which falls below the standard to which he is required to conform for his
own protection.14 Based on the foregoing definition, the standard or act to which, according to
petitioner Li, Valenzuela ought to have conformed for her own protection was not to park at all at
any point of Aurora Boulevard, a no parking zone. We cannot agree.
Courts have traditionally been compelled to recognize that an actor who is confronted with an
emergency is not to be held up to the standard of conduct normally applied to an individual who is
in no such situation. The law takes stock of impulses of humanity when placed in threatening or
46
dangerous situations and does not require the same standard of thoughtful and reflective care
from persons confronted by unusual and oftentimes threatening conditions. 15
Under the "emergency rule" adopted by this Court in Gan vs. Court of Appeals,16 an individual who
suddenly finds himself in a situation of danger and is required to act without much time to consider
the best means that may be adopted to avoid the impending danger, is not guilty of negligence if
he fails to undertake what subsequently and upon reflection may appear to be a better solution,
unless the emergency was brought by his own negligence. 17
Applying this principle to a case in which the victims in a vehicular accident swerved to the wrong
lane to avoid hitting two children suddenly darting into the street, we held, in Mc Kee
vs. Intermediate Appellate Court,18 that the driver therein, Jose Koh, "adopted the best means
possible in the given situation" to avoid hitting the children. Using the "emergency rule" the Court
concluded that Koh, in spite of the fact that he was in the wrong lane when the collision with an
oncoming truck occurred, was not guilty of negligence.19
While the emergency rule applies to those cases in which reflective thought, or the opportunity to
adequately weigh a threatening situation is absent, the conduct which is required of an individual
in such cases is dictated not exclusively by the suddenness of the event which absolutely negates
thoroughful care, but by the over-all nature of the circumstances. A woman driving a vehicle
suddenly crippled by a flat tire on a rainy night will not be faulted for stopping at a point which is
both convenient for her to do so and which is not a hazard to other motorists. She is not expected
to run the entire boulevard in search for a parking zone or turn on a dark street or alley where she
would likely find no one to help her. It would be hazardous for her not to stop and assess the
emergency (simply because the entire length of Aurora Boulevard is a no-parking zone) because
the hobbling vehicle would be both a threat to her safety and to other motorists. In the instant
case, Valenzuela, upon reaching that portion of Aurora Boulevard close to A. Lake St., noticed that
she had a flat tire. To avoid putting herself and other motorists in danger, she did what was best
under the situation. As narrated by respondent court: "She stopped at a lighted place where there
were people, to verify whether she had a flat tire and to solicit help if needed. Having been told by
the people present that her rear right tire was flat and that she cannot reach her home she parked
along the sidewalk, about 1 1/2 feet away, behind a Toyota Corona Car." 20 In fact, respondent court
noted, Pfc. Felix Ramos, the investigator on the scene of the accident confirmed that Valenzuela's
car was parked very close to the sidewalk. 21 The sketch which he prepared after the incident
showed Valenzuela's car partly straddling the sidewalk, clear and at a convenient distance from
motorists passing the right lane of Aurora Boulevard. This fact was itself corroborated by the
testimony of witness Rodriguez.22
Under the circumstances described, Valenzuela did exercise the standard reasonably dictated by
the emergency and could not be considered to have contributed to the unfortunate circumstances
which eventually led to the amputation of one of her lower extremities. The emergency which led
her to park her car on a sidewalk in Aurora Boulevard was not of her own making, and it was
evident that she had taken all reasonable precautions.
Obviously in the case at bench, the only negligence ascribable was the negligence of Li on the
night of the accident. "Negligence, as it is commonly understood is conduct which creates an
undue risk of harm to others." 23 It is the failure to observe that degree of care, precaution, and
vigilance which the circumstances justly demand, whereby such other person suffers injury. 24 We
stressed, in Corliss vs. Manila Railroad Company,25 that negligence is the want of care required by
the circumstances.
The circumstances established by the evidence adduced in the court below plainly demonstrate
that Li was grossly negligent in driving his Mitsubishi Lancer. It bears emphasis that he was driving
at a fast speed at about 2:00 A.M. after a heavy downpour had settled into a drizzle rendering the
street slippery. There is ample testimonial evidence on record to show that he was under the
influence of liquor. Under these conditions, his chances of effectively dealing with changing
conditions on the road were significantly lessened. As Presser and Keaton emphasize:
[U]nder present day traffic conditions, any driver of an automobile must be prepared for
the sudden appearance of obstacles and persons on the highway, and of other vehicles at
intersections, such as one who sees a child on the curb may be required to anticipate its
sudden dash into the street, and his failure to act properly when they appear may be found
to amount to negligence.26
Li's obvious unpreparedness to cope with the situation confronting him on the night of the accident
was clearly of his own making.
We now come to the question of the liability of Alexander Commercial, Inc. Li's employer. In
denying liability on the part of Alexander Commercial, the respondent court held that:
There is no evidence, not even defendant Li's testimony, that the visit was in connection
with official matters. His functions as assistant manager sometimes required him to
perform work outside the office as he has to visit buyers and company clients, but he
admitted that on the night of the accident he came from BF Homes Paranaque he did not
have "business from the company" (pp. 25-26, ten, Sept. 23, 1991). The use of the
company car was partly required by the nature of his work, but the privilege of using it for
non-official business is a "benefit", apparently referring to the fringe benefits attaching to
his position.
Under the civil law, an employer is liable for the negligence of his employees in the
discharge of their respective duties, the basis of which liability is not respondeat superior,
but the relationship of pater familias, which theory bases the liability of the master
ultimately on his own negligence and not on that of his servant (Cuison v. Norton and
Harrison Co., 55 Phil. 18). Before an employer may be held liable for the negligence of his
employee, the act or omission which caused damage must have occurred while an
employee was in the actual performance of his assigned tasks or duties (Francis High
School vs. Court of Appeals, 194 SCRA 341). In defining an employer's liability for the acts
done within the scope of the employee's assigned tasks, the Supreme Court has held that
this includes any act done by an employee, in furtherance of the interests of the employer
or for the account of the employer at the time of the infliction of the injury or damage
(Filamer Christian Institute vs. Intermediate Appellate Court, 212 SCRA 637). An employer
is expected to impose upon its employees the necessary discipline called for in the
47
performance of any act "indispensable to the business and beneficial to their employer" (at
p. 645).
In light of the foregoing, We are unable to sustain the trial court's finding that since
defendant Li was authorized by the company to use the company car "either officially or
socially or even bring it home", he can be considered as using the company car in the
service of his employer or on the occasion of his functions. Driving the company car was
not among his functions as assistant manager; using it for non-official purposes would
appear to be a fringe benefit, one of the perks attached to his position. But to impose
liability upon the employer under Article 2180 of the Civil Code, earlier quoted, there must
be a showing that the damage was caused by their employees in the service of the
employer or on the occasion of their functions. There is no evidence that Richard Li was at
the time of the accident performing any act in furtherance of the company's business or its
interests, or at least for its benefit. The imposition of solidary liability against defendant
Alexander Commercial Corporation must therefore fail.27
We agree with the respondent court that the relationship in question is not based on the principle
of respondeat superior, which holds the master liable for acts of the servant, but that of pater
familias, in which the liability ultimately falls upon the employer, for his failure to exercise the
diligence of a good father of the family in the selection and supervision of his employees. It is up to
this point, however, that our agreement with the respondent court ends. Utilizing the bonus pater
familias standard expressed in Article 2180 of the Civil Code, 28 we are of the opinion that Li's
employer, Alexander Commercial, Inc. is jointly and solidarily liable for the damage caused by the
accident of June 24, 1990.
First, the case of St. Francis High School vs. Court of Appeals29 upon which respondent court has
placed undue reliance, dealt with the subject of a school and its teacher's supervision of students
during an extracurricular activity. These cases now fall under the provision on special parental
authority found in Art. 218 of the Family Code which generally encompasses all authorized school
activities, whether inside or outside school premises.
Second, the employer's primary liability under the concept of pater familias embodied by Art 2180
(in relation to Art. 2176) of the Civil Code is quasi-delictual or tortious in character. His liability is
relieved on a showing that he exercised the diligence of a good father of the family in the selection
and supervision of its employees. Once evidence is introduced showing that the employer
exercised the required amount of care in selecting its employees, half of the employer's burden is
overcome. The question of diligent supervision, however, depends on the circumstances of
employment.
Ordinarily, evidence demonstrating that the employer has exercised diligent supervision of its
employee during the performance of the latter's assigned tasks would be enough to relieve him of
the liability imposed by Article 2180 in relation to Article 2176 of the Civil Code. The employer is
not expected to exercise supervision over either the employee's private activities or during the
performance of tasks either unsanctioned by the former or unrelated to the employee's tasks. The
case at bench presents a situation of a different character, involving a practice utilized by large
companies with either their employees of managerial rank or their representatives.
It is customary for large companies to provide certain classes of their employees with courtesy
vehicles. These company cars are either wholly owned and maintained by the company itself or
are subject to various plans through which employees eventually acquire their vehicles after a
given period of service, or after paying a token amount. Many companies provide liberal "car
plans" to enable their managerial or other employees of rank to purchase cars, which, given the
cost of vehicles these days, they would not otherwise be able to purchase on their own.
Under the first example, the company actually owns and maintains the car up to the point of
turnover of ownership to the employee; in the second example, the car is really owned and
maintained by the employee himself. In furnishing vehicles to such employees, are companies
totally absolved of responsibility when an accident involving a company-issued car occurs during
private use after normal office hours?
Most pharmaceutical companies, for instance, which provide cars under the first plan, require
rigorous tests of road worthiness from their agents prior to turning over the car (subject of
company maintenance) to their representatives. In other words, like a good father of a family, they
entrust the company vehicle only after they are satisfied that the employee to whom the car has
been given full use of the said company car for company or private purposes will not be a threat or
menace to himself, the company or to others. When a company gives full use and enjoyment of a
company car to its employee, it in effect guarantees that it is, like every good father, satisfied that
its employee will use the privilege reasonably and responsively.
In the ordinary course of business, not all company employees are given the privilege of using a
company-issued car. For large companies other than those cited in the example of the preceding
paragraph, the privilege serves important business purposes either related to the image of success
an entity intends to present to its clients and to the public in general, or - for practical and
utilitarian reasons - to enable its managerial and other employees of rank or its sales agents to
reach clients conveniently. In most cases, providing a company car serves both purposes. Since
important business transactions and decisions may occur at all hours in all sorts of situations and
under all kinds of guises, the provision for the unlimited use of a company car
therefore principally serves the business and goodwill of a company and only incidentally the
private purposes of the individual who actually uses the car, the managerial employee or company
sales agent. As such, in providing for a company car for business use and/or for the purpose of
furthering the company's image, a company owes a responsibility to the public to see to it that the
managerial or other employees to whom it entrusts virtually unlimited use of a company issued car
are able to use the company issue capably and responsibly.
In the instant case, Li was an Assistant Manager of Alexander Commercial, Inc. In his testimony
before the trial court, he admitted that his functions as Assistant Manager did not require him to
scrupulously keep normal office hours as he was required quite often to perform work outside the
office, visiting prospective buyers and contacting and meeting with company clients. 30 These
meetings, clearly, were not strictly confined to routine hours because, as a managerial employee
tasked with the job of representing his company with its clients, meetings with clients were both
social as well as work-related functions. The service car assigned to Li by Alexander Commercial,
Inc. therefore enabled both Li - as well as the corporation - to put up the front of a highly
48
successful entity, increasing the latter's goodwill before its clientele. It also facilitated meeting
between Li and its clients by providing the former with a convenient mode of travel.
Moreover, Li's claim that he happened to be on the road on the night of the accident because he
was coming from a social visit with an officemate in Paranaque was a bare allegation which was
never corroborated in the court below. It was obviously self-serving. Assuming he really came from
his officemate's place, the same could give rise to speculation that he and his officemate had just
been from a work-related function, or they were together to discuss sales and other work related
strategies.
In fine, Alexander Commercial, inc. has not demonstrated, to our satisfaction, that it exercised the
care and diligence of a good father of the family in entrusting its company car to Li. No allegations
were made as to whether or not the company took the steps necessary to determine or ascertain
the driving proficiency and history of Li, to whom it gave full and unlimited use of a company
car.31 Not having been able to overcome the burden of demonstrating that it should be absolved of
liability for entrusting its company car to Li, said company, based on the principle of bonus pater
familias, ought to be jointly and severally liable with the former for the injuries sustained by Ma.
Lourdes Valenzuela during the accident.
Finally, we find no reason to overturn the amount of damages awarded by the respondent court,
except as to the amount of moral damages. In the case of moral damages, while the said damages
are not intended to enrich the plaintiff at the expense of a defendant, the award should
nonetheless be commensurate to the suffering inflicted. In the instant case we are of the opinion
that the reduction in moral damages from an amount of P1,000,000.00 to P800,000,00 by the
Court of Appeals was not justified considering the nature of the resulting damage and the
predictable sequelae of the injury.
As a result of the accident, Ma. Lourdes Valenzuela underwent a traumatic amputation of her left
lower extremity at the distal left thigh just above the knee. Because of this, Valenzuela will forever
be deprived of the full ambulatory functions of her left extremity, even with the use of state of the
art prosthetic technology. Well beyond the period of hospitalization (which was paid for by Li), she
will be required to undergo adjustments in her prosthetic devise due to the shrinkage of the stump
from the process of healing.
These adjustments entail costs, prosthetic replacements and months of physical and occupational
rehabilitation and therapy. During her lifetime, the prosthetic devise will have to be replaced and
re-adjusted to changes in the size of her lower limb effected by the biological changes of middleage, menopause and aging. Assuming she reaches menopause, for example, the prosthetic will
have to be adjusted to respond to the changes in bone resulting from a precipitate decrease in
calcium levels observed in the bones of all post-menopausal women. In other words, the damage
done to her would not only be permanent and lasting, it would also be permanently changing and
adjusting to the physiologic changes which her body would normally undergo through the years.
The replacements, changes, and adjustments will require corresponding adjustive physical and
occupational therapy. All of these adjustments, it has been documented, are painful.
The foregoing discussion does not even scratch the surface of the nature of the resulting damage
because it would be highly speculative to estimate the amount of psychological pain, damage and
injury which goes with the sudden severing of a vital portion of the human body. A prosthetic
device, however technologically advanced, will only allow a reasonable amount of functional
restoration of the motor functions of the lower limb. The sensory functions are forever lost. The
resultant anxiety, sleeplessness, psychological injury, mental and physical pain are inestimable.
As the amount of moral damages are subject to this Court's discretion, we are of the opinion that
the amount of P1,000,000.00 granted by the trial court is in greater accord with the extent and
nature of the injury - physical and psychological - suffered by Valenzuela as a result of Li's grossly
negligent driving of his Mitsubishi Lancer in the early morning hours of the accident.
WHEREFORE, PREMISES CONSIDERED, the decision of the Court of Appeals is modified with the
effect of REINSTATING the judgment of the Regional Trial Court.
SO ORDERED.
SECOND DIVISION
G.R. No. 125536
March 16, 2000
PRUDENTIAL
BANK, petitioner,
vs.
COURT OF APPEALS and LETICIA TUPASI-VALENZULA joined by husband Francisco
Valenzuela,respondents.
QUISUMBING, J.:
This appeal by certiorari under Rule 45 of the Rules of Court seeks to annul and set aside the
Decision dated January 31, 1996, and the Resolution dated July 2, 1997, of the Court of Appeals in
CA G.R. CV No. 35532, which reversed the judgment of the Regional Trial Court of Valenzuela,
Metro Manila, Branch 171, in Civil Case No. 2913-V-88, dismissing the private respondent's
complaint for damages.1
In setting aside the trial court's decision, the Court of Appeals disposed as follows:
WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE and, another
rendered ordering the appellee bank to pay appellant the sum of P100,000.00 by way of
moral damages; P50,000.00 by way of exemplary damages, P50,000.00 for and as
attorney's fees; and to pay the costs.
SO ORDERED.2
49
The facts of the case on record are as follows:

Private respondent Leticia Tupasi-Valenzuela opened Savings Account No. 5744 and Current
Account No. 01016-3 in the Valenzuela Branch of petitioner Prudential Bank, with automatic
transfer of funds from the savings account to the current account.
On June 1, 1988, herein private respondent deposited in her savings account Check No. 666B
(104561 of even date) the amount of P35,271.60, drawn against the Philippine Commercial
International Bank (PCIB). Taking into account that deposit and a series of withdrawals, private
respondent as of June 21, 1988 had a balance of P35,993.48 in her savings account and P776.93 in
her current account, or total deposits of P36,770.41, with petitioner.
Thereafter, private respondent issued Prudential Bank Check No. 983395 in the amount of
P11,500.00 post-dated June 20, 1988, in favor of one Belen Legaspi. It was issued to Legaspi as
payment for jewelry which private respondent had purchased. Legaspi, who was in jewelry trade,
endorsed the check to one Philip Lhuillier, a businessman also in the jewelry business. When
Lhuillier deposited the check in his account with the PCIB, Pasay Branch, it was dishonored for
being drawn against insufficient funds. Lhuillier's secretary informed the secretary of Legaspi of
the dishonor. The latter told the former to redeposit the check, Legaspi's secretary tried to contact
private respondent but to no avail.
Upon her return from the province, private respondent was surprised to learn of the dishonor of the
check. She went to the Valenzuela Branch of Prudential Bank on July 4, 1988, to inquire why her
check was dishonored. She approached one Albert Angeles Reyes, the officer in charge of current
account, and requested him for the ledger of her current account. Private respondent discovered a
debit of P300.00 penalty for the dishonor of her Prudential Check No. 983395. She asked why her
check was dishonored when there were sufficient funds in her account as reflected in her
passbook. Reyes told her that there was no need to review the passbook because the bank ledger
was the best proof that she did not have sufficient funds. Then, he abruptly faced his typewriter
and started typing.
Later, it was found out that the check in the amount of P35,271.60 deposited by private
respondent on June 1, 1988, was credited in her savings account only on June 24, 1988, or after a
period of 23 days. Thus the P11,500.00 check was redeposited by Lhuillier on June 24, 1988, and
properly cleared on June 27, 1988.
Because of this incident, the bank tried to mollify private respondent by explaining to Legaspi and
Lhuillier that the bank was at fault. Since this was not the first incident private respondent had
experienced with the bank, private respondent was unmoved by the bank's apologies and she
commenced the present suit for damages before the RTC of Valenzuela.
After trial, the court rendered a decision on August 30, 1991, dismissing the complaint of private
respondent, as well as the counterclaim filed by the defendant, now petitioner.
50
Undeterred, private respondent appealed to the Court of Appeals. On January 31, 1996, respondent
appellate court rendered a decision in her favor, setting aside the trial court's decision and
ordering herein petitioner to pay private respondent the sum of P100,000.00 by way of moral
damages; P50,000.00 exemplary damages; P50,000.00 for and as attorney's fees; and to pay the
costs.3
"claim" damages because the petitioner's manager and other employees had profusely apologized
to private respondent for the error. They offered to make restitution and apology to the payee of
the check, Legaspi, as well as the alleged endorsee, Lhuillier. Regrettably, it was private
respondent who declined the offer and allegedly said, that there was nothing more to it, and that
the matter had been put to rest.5
Petitioner filed a timely motion for reconsideration but it was denied. Hence, this petition, raising
the following issues:
Admittedly, as found by both the respondent appellate court and the trial court, petitioner bank
had committed a mistake.1wphi1.nt It misposted private respondent's check deposit to another
account and delayed the posting of the same to the proper account of the private respondent. The
mistake resulted to the dishonor of the private respondent's check. The trial court found "that the
misposting of plaintiff's check deposit to another account and the delayed posting of the same to
the account of the plaintiff is a clear proof of lack of supervision on the part of the defendant
bank."6 Similarly, the appellate court also found that "while it may be true that the bank's
negligence in dishonoring the properly funded check of appellant might not have been attended
with malice and bad faith, as appellee [bank] submits, nevertheless, it is the result of lack of due
care and caution expected of an employee of a firm engaged in so sensitive and accurately
demanding task as banking."7
I. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS ACTED WITH GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION IN DEVIATING FROM ESTABLISHED
JURISPRUDENCE IN REVERSING THE DISMISSAL JUDGMENT OF THE TRIAL COURT AND
INSTEAD AWARDED MORAL DAMAGES, EXEMPLARY DAMAGES AND ATTORNEY'S FEES.
II. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS ACTED IN GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION WHERE, EVEN IN THE ABSENCE OF
EVIDENCE AS FOUND BY THE TRIAL COURT, AWARDED MORAL DAMAGES IN THE AMOUNT
OF P100,000.00.
III. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS ACTED IN GRAVE ABUSE OF
DISCRETION AMOUNTING TO LACK OF JURISDICTION, WHERE, EVEN IN THE ABSENCE OF
EVIDENCE AS FOUND BY THE TRIAL COURT, AWARDED P50,000.00 BY WAY OF EXEMPLARY
DAMAGES.
IV. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS ACTED WITH GRAVE ABUSE
OF DISCRETION WHERE EVEN IN THE ABSENCE OF EVIDENCE, AWARDED ATTORNEY'S
FEES.
Simply stated, the issue is whether the respondent court erred and gravely abused its discretion in
awarding moral and exemplary damages and attorney's fees to be paid by petitioner to private
respondent.
Petitioner claims that generally the factual findings of the lower courts are final and binding upon
this Court. However, there are exceptions to this rule. One is where the trial court and the Court of
Appeals had arrived at diverse factual findings. 4 Petitioner faults the respondent court from
deviating from the basic rule that finding of facts by the trial court is entitled to great weight,
because the trial court had the opportunity to observe the deportment of witness and the
evaluation of evidence presented during the trial. Petitioner contends that the appellate court
gravely abused its discretion when it awarded damages to the plaintiff, even in the face of lack of
evidence to prove such damages, as found by the trial court.
Firstly, petitioner questions the award of moral damages. It claims that private respondent did not
suffer any damage upon the dishonor of the check. Petitioner avers it acted in good faith. It was an
honest mistake on its part, according to petitioner, when misposting of private respondent's
deposit on June 1, 1988, happened. Further, petitioner contends that private respondent may not
In Simex International (Manila), Inc. vs. Court of Appeals, 183 SCRA 360, 367 (1990), and Bank of
Philippine Islands vs. IAC, et al., 206 SCRA 408, 412-413 (1992), this Court had occasion to stress
the fiduciary nature of the relationship between a bank and its depositors and the extent of
diligence expected of the former in handling the accounts entrusted to its care, thus:
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 of as he sees fit, confident that the bank will deliver it as
and to whomever he directs. A blunder on the part of bank, such as the dishonor of a check
without good reason, can cause the depositor not a little embarrassment if not also
financial loss and perhaps even civil and criminal litigation.
The paint 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 recent case of Philippine National Bank vs. Court of Appeals,8 we held that "a bank is under
obligation to treat the accounts of its depositors with meticulous care whether such account
consists only of a few hundred pesos or of millions of pesos. Responsibility arising from negligence
in the performance of every kind of obligation is demandable. While petitioner's negligence in this
case may not have been attended with malice and bad faith, nevertheless, it caused serious
anxiety, embarrassment and humiliation". Hence we ruled that the offended party in said case was
entitled to recover reasonable moral damages.
Even if malice or bad faith was not sufficiently proved in the instant case, the fact remains that
petitioner has committed a serious mistake. It dishonored the check issued by the private
respondent who turned out to have sufficient funds with petitioner. The bank's negligence was the
result of lack of due care and caution required of managers and employees of a firm engaged in so
sensitive and demanding business as banking. Accordingly, the award of moral damages by the
respondent Court of Appeals could not be said to be in error nor in grave abuse of its discretion.
There is no hard-and-fast rule in the determination of what would be a fair amount of moral
damages since each case must be governed by its own peculiar facts. The yardstick should be that
it is not palpably and scandalously excessive. In our view, the award of P100,000.00 is reasonable,
considering the reputation and social standing of private respondent Leticia T. Valenzuela. 9
The law allows the grant of exemplary damages by way of example for the public good. 10 The
public relies on the banks' sworn profession of diligence and meticulousness in giving
irreproachable service. The level of meticulousness must be maintained at all times by the banking
sector. Hence, the Court of Appeals did not err in awarding exemplary damages. In our view,
however, the reduced amount of P20,000.00 is more appropriate.
The award of attorney's fees is also proper when exemplary damages are awarded and since
private respondent was compelled to engage the services of a lawyer and incurred expenses to
protect her interest. 11 The standards in fixing attorney's fees are: (1) the amount and the
character of the services rendered; (2) labor, time and trouble involved; (3) the nature and
importance of the litigation and business in which the services were rendered; (4) the responsibility
imposed; (5) the amount of money and the value of the property affected by the controversy or
involved in the employment; (6) the skill and the experience called for in the performance of the
services; (7) the professional character and the social standing of the attorney; (8) the results
secured, it being a recognized rule that an attorney may properly charge a much larger fee when it
is contingent than when it is not. 12 In this case, all the aforementioned weighed, and considering
that the amount involved in the controversy is only P36,770.41, the total deposit of private
respondent which was misposted by the bank, we find the award of respondent court of
P50,000.00 for attorney's fees, excessive and reduce the same to P30,000.00.
WHEREFORE, the assailed DECISION of the Court of Appeals is hereby AFFIRMED, with
MODIFICATION. The petitioner is ordered to pay P100,000.00 by way of moral damages in favor of
private respondent Leticia T. Valenzuela. It is further ordered to pay her exemplary damages in the
amount of P20,000.00 and P30,000.00, attorney's fees.
51
KAPUNAN, J.:
In her petition filed before this Court, Ester Asuncion prays that the Decision, dated November 29,
1996, and the Resolution, dated February 20,1997, of the public respondent National Labor
Relations Commission, Second Division, in NLRC CA. 011188 which reversed the Decision of the
Labor Arbiter, dated May 15, 1996 be set aside.
The antecedents of this case are as follows:
On August 16, 1993, petitioner Ester M. Asuncion was employed as an accountant/bookkeeper by
the respondent Mabini Medical Clinic. Sometime in May 1994, certain officials of the NCR-Industrial
Relations Division of the Department of Labor and Employment conducted a routine inspection of
the premises of the respondent company and discovered upon the disclosure of the petitioner of
(documents) violations of the labor standards law such as the non-coverage from the SSS of the
employees. Consequently, respondent Company was made to correct these violations.
On August 9, 1994, the private respondent, Medical Director Wilfrido Juco, issued a memorandum
to petitioner charging her with the following offenses:
1. Chronic Absentism (sic) You have incurred since Aug. 1993 up to the present 35
absences and 23 half-days.
2. Habitual tardiness You have late (sic) for 108 times. As shown on the record book.
3. Loitering and wasting of company time on several occasions and witnessed by several
employees.
4. Getting salary of an absent employee without acknowledging or signing for it.
5. Disobedience and insubordination - continued refusal to sign memos given to you. 1
Petitioner was required to explain within two (2) days why she should not be terminated based on
the above charges.
Costs against petitioner.

SO ORDERED.
G.R. No. 129329
July 31, 2001
ESTER
M.
ASUNCION, petitioner,
vs.
NATIONAL LABOR RELATIONS COMMISSION, Second Division, MABINI MEDICAL CLINIC
and DR. WILFRIDO JUCO, respondents.
Three days later, in the morning of August 12, 1994, petitioner submitted her response to the
memorandum. On the same day, respondent Dr. Juco, through a letter dated August 12, 1994,
dismissed the petitioner on the ground of disobedience of lawful orders and for her failure to
submit her reply within the two-day period.
This prompted petitioner to file a case for illegal termination before the NLRC.
In a Decision, dated May 15, 1996, Labor Arbiter Manuel Caday rendered judgment declaring that
the petitioner was illegally dismissed. The Labor Arbiter found that the private respondents were
unable to prove the allegation of chronic absenteeism as it failed to present in evidence the time
cards, logbooks or record book which complainant signed recording her time in reporting for work.
These documents, according to the Labor Arbiter, were in the possession of the private
respondents. In fact, the record book was mentioned in the notice of termination. Hence, the nonpresentation of these documents gives rise to the presumption that these documents were
intentionally suppressed since they would be adverse to private respondents claim. Moreover, the
Labor Arbiter ruled that the petitioners absences were with the conformity of the private
respondents as both parties had agreed beforehand that petitioner would not report to work on
Saturdays. The handwritten listing of the days when complainant was absent from work or late in
reporting for work and even the computerized print-out, do not suffice to prove that petitioners
absences were unauthorized as they could easily be manufactured. 2 Accordingly, the dispositive
portion of the decision states, to wit:
WHEREFORE, Premises Considered, judgment is hereby rendered declaring the dismissal of
the complainant as illegal and ordering the respondent company to immediately reinstate
her to her former position without loss of seniority rights and to pay the complainants
backwages and other benefits, as follows:
1) P73,500.00 representing backwages as of the date of this decision until she is
actually reinstated in the service;
2) P20,000.00 by way of moral damages and another P20,000.00 representing
exemplary damages; and
3) 10% of the recoverable award in this case representing attorneys fees.
SO ORDERED.3
On appeal, public respondent NLRC rendered the assailed decision which set aside the Labor
Arbiters ruling. Insofar as finding the private respondents as having failed to present evidence
relative to petitioners absences and tardiness, the NLRC agrees with the Labor Arbiter. However,
the NLRC ruled that petitioner had admitted the tardiness and absences though offering
justifications for the infractions. The decretal portion of the assailed decision reads:
WHEREFORE, premises considered, the appealed decision is hereby VACATED and SET
ASIDE and a NEW ONE entered dismissing the complaint for illegal dismissal for lack of
merit.
However, respondents Mabini Medical Clinic and Dr. Wilfrido Juco are jointly and solidarily
ordered to pay complainant Ester Asuncion the equivalent of her three (3) months salary
for and as a penalty for respondents non-observance of complainants right to due
process.
SO ORDERED.4
52
Petitioner filed a motion for reconsideration which the public respondent denied in its Resolution,
dated February 19, 1997. Hence, petitioner through a petition for certiorari under Rule 65 of the
Rules of Court seeks recourse to this Court and raises the following issue:
THE PUBLIC RESPONDENT ERRED IN FINDING THAT THE PETITIONER WAS DISMISSED BY
THE PRIVATE RESPONDENT FOR A JUST OR AUTHORIZED CAUSE.
The petition is impressed with merit.
Although, it is a legal tenet that factual findings of administrative bodies are entitled to great
weight and respect, we are constrained to take a second look at the facts before us because of the
diversity in the opinions of the Labor Arbiter and the NLRC. 5 A disharmony between the factual
findings of the Labor Arbiter and those of the NLRC opens the door to a review thereof by this
Court.6
It bears stressing that a workers employment is property in the constitutional sense. He cannot be
deprived of his work without due process. In order for the dismissal to be valid, not only must it be
based on just cause supported by clear and convincing evidence, 7 the employee must also be
given an opportunity to be heard and defend himself. 8 It is the employer who has the burden of
proving that the dismissal was with just or authorized cause. 9 The failure of the employer to
discharge this burden means that the dismissal is not justified and that the employee is entitled to
reinstatement and backwages.10
In the case at bar, there is a paucity of evidence to establish the charges of absenteeism and
tardiness. We note that the employer company submitted mere handwritten listing and computer
print-outs. The handwritten listing was not signed by the one who made the same. As regards the
print-outs, while the listing was computer generated, the entries of time and other annotations
were again handwritten and unsigned.11
We find that the handwritten listing and unsigned computer print-outs were unauthenticated and,
hence, unreliable. Mere self-serving evidence of which the listing and print-outs are of that nature
should be rejected as evidence without any rational probative value even in administrative
proceedings. For this reason, we find the findings of the Labor Arbiter to be correct. On this point,
the Labor Arbiter ruled, to wit:
x x x In the instant case, while the Notice of Termination served on the complainant clearly
mentions the record book upon which her tardiness (and absences) was based, the
respondent (company) failed to establish (through) any of these documents and the
handwritten listing, notwithstanding, of (sic) the days when complainant was absent from
work or late in reporting for work and even the computerized print-outs, do not suffice to
prove the complainants absences were unauthorized as they could easily be
manufactured. x x x12
In IBM Philippines, Inc. v. NLRC,13 this Court clarified that the liberality of procedure in
administrative actions is not absolute and does not justify the total disregard of certain
fundamental rules of evidence. Such that evidence without any rational probative value may not
be made the basis of order or decision of administrative bodies. The Courts ratiocination in that
case is relevant to the propriety of rejecting the unsigned handwritten listings and computer printouts submitted by private respondents which we quote, to wit:
However, the liberality of procedure in administrative actions is subject to limitations
imposed by basic requirements of due process. As this Court said in Ang Tibay v. CIR, the
provision for flexibility in administrative procedure "does not go so far as to justify orders
without a basis in evidence having rational probative value." More specifically, as held
in Uichico v. NLRC:
"It is true that administrative and quasi-judicial bodies like the NLRC are not bound
by the technical rules of procedure in the adjudication of cases. However, this
procedural rule should not be construed as a license to disregard certain
fundamental evidentiary rules. While the rules of evidence prevailing in the courts
of law or equity are not controlling in proceedings before the NLRC, the evidence
presented before it must at least have a modicum of admissibility for it to be given
some probative value. The Statement of Profit and Losses submitted by Crispa, Inc.
to prove its alleged losses, without the accompanying signature of a certified
public accountant or audited by an independent auditor, are nothing but selfserving documents which ought to be treated as a mere scrap of paper devoid of
any probative value."
The computer print-outs, which constitute the only evidence of petitioners, afford no
assurance of their authenticity because they are unsigned. The decisions of this Court,
while adhering to a liberal view in the conduct of proceedings before administrative
agencies, have nonetheless consistently required some proof of authenticity or reliability
as condition for the admission of documents.
In Jarcia Machine Shop and Auto Supply, Inc. v. NLRC,14 this Court held as incompetent unsigned
daily time records presented to prove that the employee was neglectful of his duties:
Indeed, the DTRs annexed to the present petition would tend to establish private
respondents neglectful attitude towards his work duties as shown by repeated and
habitual absences and tardiness and propensity for working undertime for the year 1992.
But the problem with these DTRs is that they are neither originals nor certified true copies.
They are plain photocopies of the originals, if the latter do exist. More importantly, they are
not even signed by private respondent nor by any of the employers representatives. x x x.
In the case at bar, both the handwritten listing and computer print-outs being unsigned, the
authenticity thereof is highly suspect and devoid of any rational probative value especially in the
light of the existence of the official record book of the petitioners alleged absences and tardiness
in the possession of the employer company.
53
Ironically, in the memorandum charging petitioner and notice of termination, private respondents
referred to the record book as its basis for petitioners alleged absenteeism and tardiness.
Interestingly, however, the record book was never presented in evidence. Private respondents had
possession thereof and the opportunity to present the same. Being the basis of the charges against
the petitioner, it is without doubt the best evidence available to substantiate the allegations. The
purpose of the rule requiring the production of the best evidence is the prevention of fraud,
because if a party is in possession of such evidence and withholds it, and seeks to substitute
inferior evidence in its place, the presumption naturally arises that the better evidence is withheld
for fraudulent purposes which its production would expose and defeat. 15 Thus, private respondents
unexplained and unjustified non-presentation of the record book, which is the best evidence in its
possession and control of the charges against the petitioner, casts serious doubts on the factual
basis of the charges of absenteeism and tardiness.
We find that private respondents failed to present a single piece of credible evidence to serve as
the basis for their charges against petitioner and consequently, failed to fulfill their burden of
proving the facts which constitute the just cause for the dismissal of the petitioner. However, the
NLRC ruled that despite such absence of evidence, there was an admission on the part of
petitioner in her Letter dated August 11, 1994 wherein she wrote:
I am quite surprised why I have incurred 35 absences since August 1993 up to the present.
I can only surmise that Saturdays were not included in my work week at your clinic. If you
will please recall, per agreement with you, my work days at your clinic is from Monday to
Friday without Saturday work. As to my other supposed absences, I believe that said
absences were authorized and therefore cannot be considered as absences which need not
be explained (sic). It is also extremely difficult to understand why it is only now that I am
charged to explain alleged absences incurred way back August 1993. 16
In reversing the decision of the Labor Arbiter, public respondent NLRC relied upon the supposed
admission of the petitioner of her habitual absenteeism and chronic tardiness.
We do not subscribe to the findings of the NLRC that the above quoted letter of petitioner
amounted to an admission of her alleged absences. As explained by petitioner, her alleged
absences were incurred on Saturdays. According to petitioner, these should not be considered as
absences as there was an arrangement between her and the private respondents that she would
not be required to work on Saturdays. Private respondents have failed to deny the existence of this
arrangement. Hence, the decision of the NLRC that private respondent had sufficient grounds to
terminate petitioner as she admitted the charges of habitual absences has no leg to stand on.
Neither have the private respondents shown by competent evidence that the petitioner was given
any warning or reprimanded for her alleged absences and tardiness. Private respondents claimed
that they sent several notices to the petitioner warning her of her absences, however, petitioner
refused to receive the same. On this point, the Labor Arbiter succinctly observed:
The record is bereft of any showing that complainant was ever warned of her absences
prior to her dismissal on August 9, 1994. The alleged notices of her absences from August
17, until September 30, 1993, from October until November 27, 1993, from December 1,
1993 up to February 26, 1994 and the notice dated 31 May 1994 reminding complainant of
her five (5) days absences, four (4) half-days and tardiness for 582 minutes (Annex "1" to
"1-D" attached to respondent' Rejoinder), fail to show that the notices were received by the
complainant. The allegation of the respondents that the complainant refused to received
(sic) the same is self-serving and merits scant consideration. xxx 17
The Court, likewise, takes note of the fact that the two-day period given to petitioner to explain
and answer the charges against her was most unreasonable, considering that she was charged
with several offenses and infractions (35 absences, 23 half-days and 108 tardiness), some of which
were allegedly committed almost a year before, not to mention the fact that the charges leveled
against her lacked particularity.
Apart from chronic absenteeism and habitual tardiness, petitioner was also made to answer for
loitering and wasting of company time, getting salary of an absent employee without
acknowledging or signing for it and disobedience and insubordination. 18 Thus, the Labor Arbiter
found that actually petitioner tried to submit her explanation on August 11, 1994 or within the twoday period given her, but private respondents prevented her from doing so by instructing their
staff not to accept complainants explanation, which was the reason why her explanation was
submitted a day later.19
The law mandates that every opportunity and assistance must be accorded to the employee by the
management to enable him to prepare adequately for his defense. 20 In Ruffy v. NLRC,21 the Court
held that what would qualify as sufficient or "ample opportunity," as required by law, would be
"every kind of assistance that management must accord to the employee to enable him to prepare
adequately for his defense." In the case at bar, private respondents cannot be gainsaid to have
given petitioner the ample opportunity to answer the charges leveled against her.
From the foregoing, there are serious doubts in the evidence on record as to the factual basis of
the charges against petitioner. These doubts shall be resolved in her favor in line with the policy
under the Labor Code to afford protection to labor and construe doubts in favor of labor. 22 The
consistent rule is that if doubts exist between the evidence presented by the employer and the
employee, the scales of justice must be tilted in favor of the latter. The employer must
affirmatively show rationally adequate evidence that the dismissal was for a justifiable cause. 23 Not
having satisfied its burden of proof, we conclude that the employer dismissed the petitioner
without any just cause. Hence, the termination is illegal.
Having found that the petitioner has been illegally terminated, she is necessarily entitled to
reinstatement to her former previous position without loss of seniority and the payment of
backwages.24
WHEREFORE, the Decision of the National Labor Relations Commission, dated November 29, 1996
and the Resolution, dated February 20, 1997 are hereby REVERSED and SET ASIDE, and the
Decision of the Labor Arbiter, dated May 15, 1996 REINSTATED.
SO ORDERED.
54
[G.R. No. 126074. February 24, 1998]

RIDJO TAPE & CHEMICAL CORP. and RIDJO PAPER CORPORATION, petitioners, vs. HON.
COURT OF APPEALS, MANILA ELECTRIC CO., HON. PRESIDING JUDGE, Branch
104-REGIONAL TRIAL COURT OF QUEZON CITY, respondents.
ROMERO, J.:
Before us is a petition to review the decision [1] of the Court of Appeals which reversed that of
the Regional Trial Court of Quezon City, Branch 104 in Civil Case Nos. Q-92-13845 and Q-92-13879
ordering petitioners to pay private respondent Manila Electric Co. (MERALCO) the amount of
P415,317.66 and P89,710.58 plus the costs of suit. This petition involves the two cases filed by
petitioners which were eventually consolidated.
Civil Case No. Q-92-13845:
On November 16, 1990, petitioners applied for and was granted electric service by
MERALCO. Ten months later, however, or on September 4, 1991, petitioners received a letter from
MERALCO demanding payment of P415,317.66, allegedly representing unregistered electric
consumption for the period November 7, 1990, to February 13, 1991. MERALCO justified its
demand on the ground that the unregistered electric consumption was due to the defects of the
electric meter located in the premises of petitioners.
Since petitioners refused to pay the amount, MERALCO notified them that in the event the
overdue account remained unpaid, it would be forced to disconnect their electricity. Alarmed by
this development, petitioners, instead of settling the amount, filed on October 29, 1992 a case
before Branch 98 of the Quezon City RTC for the issuance of a writ of preliminary injunction and/or
temporary restraining order to forestall any planned disconnection by MERALCO.
On November 19, 1992, the trial court granted the prayer for preliminary injunction.
Civil Case No. 13879:
On July 30, 1992, petitioners received another demand letter from MERALCO, this time
requiring them to pay the amount of P89,710.58 representing the unregistered electric
consumption for the period July 15, 1991 to April 13, 1992, the deficiency again due to the
defective meter installed in petitioners compound.
MERALCOs demand having remained unheeded, petitioners were advised that their electric
service would be disconnected without further notice. Hence, on November 5, 1992, petitioners
filed a case before Branch 104 of the Quezon City RTC, seeking to enjoin MERALCO from
implementing the suspension of electric service.
Thereafter, on November 9, 1992, petitioners filed a motion for the consolidation of the two
cases, which was granted, resulting in the joint trial of said cases before Branch 104 of the Quezon
City RTC.
On November 27, 1992, the trial court issued the corresponding preliminary injunction.
After due trial, the lower court rendered a decision, the dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in this case in favor of the plaintiff(s) and against the
defendants:
1.
Making the Injunction permanent, enjoining the defendants in both cases, and all their
subordinates, legal representatives, electric meter readers and technicians from committing acts
of dispossession/disruption of electric power on the subject premises located at the compound of
Ridjo Tape and Chemical Corporation and Ridjo Paper Corporation located at 64 and 68 Judge Juan
Luna St., San Francisco del Monte, Quezon City.
2.
55
meters. The word month as used herein and in the rate schedule is hereby defined to be the
elapsed time between two succeeding meter readings approximately thirty (30) days apart. In the
event of the stoppage or the failure by any meter to register the full amount of energy consumed,
the Customer shall be billed for such period on an estimated consumption based upon his use of
energy in a similar period of like use. (Underscoring supplied)
In disclaiming any liability, petitioners assert that the phrase stoppage or failure by any
meter to register the full amount of energy consumed can only refer to tampering on the part of
the customer and not mechanical failure or defects. [4] MERALCO, on the other hand, argues that to
follow the interpretation advanced by petitioners would constitute an unjust enrichment in favor of
its customers.[5]
Evidently, the Service Contract between petitioners and MERALCO partakes of the nature of a
contract of adhesion as it was prepared solely by the latter, the only participation of the former
being that they affixed or adhered their signature thereto, [6] thus, leaving no room for negotiation
and depriving petitioners of the opportunity to bargain on equal footing. [7] Nevertheless, these
types of contracts have been declared to be binding as ordinary contracts because the party
adhering thereto is free to reject it in its entirety. [8]
Ordering defendants to pay the cost of suit.
Defendants counterclaim on (the) two cases are (sic) denied for lack of merit.
MERALCO appealed to the Court of Appeals which, on January 22, 1996, reversed the trial
courts finding, to wit:
WHEREFORE, the appealed judgment is REVERSED; and appellees Ridjo Tape and Chemical
Corporation and Ridjo Paper Corporation are hereby ordered to pay subject differential billings of
P415,317.66 and P89,710.58, respectively. Costs against the appellees.[2]
Aggrieved, petitioners filed a motion for reconsideration, which was denied by the Court of
Appeals in a resolution dated August 14, 1996.[3] Hence, this petition.
From the pleadings filed by the parties, it can be deduced that the only issue to be resolved is
whether petitioners, despite the absence of evidence of tampering, are liable to pay for the
unregistered electrical service.
For a better understanding of the two cases, the terms and conditions of the Service
Agreement regarding payments are reproduced:
Being an ordinary contract, therefore, the principle that contracting parties can make
stipulations in their contract provided they are not contrary to law, morals, good customs, public
order or public policy, stands strong and true. [9] To be sure, contracts are respected as laws
between the contracting parties, and they may establish such stipulations, clauses, terms and
conditions as they may want to include. [10] Since both parties offered conflicting interpretations of
the stipulation, however, then judicial determination of the parties intention is mandated. [11] In this
regard, it must be stressed that in construing a written contract, the reason behind and the
circumstances surrounding its execution are of paramount importance to place the interpreter in
the situation occupied by the parties concerned at the time the writing was executed. [12]
With these pronouncement as parameters, and considering the circumstances of the parties,
we are constrained to uphold MERALCOs interpretation.
At this juncture, we hasten to point out that the production and distribution of electricity is a
highly technical business undertaking, [13]and in conducting its operation, it is only logical for public
utilities, such as MERALCO, to employ mechanical devices and equipment for the orderly pursuit of
its business.
PAYMENTS
It is to be expected that the parties were consciously aware that these devices or equipment
are susceptible to defects and mechanical failure. Hence, we are not prepared to believe that
petitioners were ignorant of the fact that stoppages in electric meters can also result from inherent
defects or flaws and not only from tampering or intentional mishandling.
Bills will be rendered by the Company to the Customer monthly in accordance with the applicable
rate schedule. Said Bills are payable to collectors or at the main or branch offices of the Company
or at its authorized banks within ten (10) days after the regular reading date of the electric
Clearly, therefore, the rationale of the provision in the Service Agreement was primarily to
cover situations similar to the instant case, for there are instances when electric meters do fail to
record the quantity of the current used for whatever reason. [14] It is precisely this kind of
predicament that MERALCO seeks to protect itself from so as to avert business losses or
reverses. It must be borne in mind that construction of the terms of a contract which would
amount to impairment or loss of right is not favored; conservation and preservation, not waiver,
abandonment or forfeiture of a right, is the rule. [15] Since MERALCO supplied electricity to
petitioners for a fee, no intent to donate the same can be gleaned from the terms of the
Agreement. Hence, the stipulation must be upheld.
Corollarily, it must be underscored that MERALCO has the imperative duty to make a
reasonable and proper inspection of its apparatus and equipment to ensure that they do not
malfunction,[16] and the due diligence to discover and repair defects therein. Failure to perform
such duties constitutes negligence.[17]
A review of the records, however, discloses that the unpaid charges covered the periods from
November 7, 1990 to February 13, 1991 for Civil Case No. Q-92-13045 and from July 15, 1991 to
April 13, 1992 for Civil Case No. 13879, approximately three months and nine months,
respectively. On such basis, we take judicial notice that during those periods, personnel
representing MERALCO inspected and examined the electric meters of petitioners regularly for the
purpose of determining the monthly dues payable. So, why were these defects not detected and
reported on time?
It has been held that notice of a defect need not be direct and express; it is enough that the
same had existed for such a length of time that it is reasonable to presume that it had been
detected,[18] and the presence of a conspicuous defect which has existed for a considerable length
of time will create a presumption of constructive notice thereof. [19] Hence, MERALCOs failure to
discover the defect, if any, considering the length of time, amounts to inexcusable
negligence. Furthermore, we need not belabor the point that as a public utility, MERALCO has the
obligation to discharge its functions with utmost care and diligence.
Accordingly, we are left with no recourse but to conclude that this is a case of negligence on
the part of MERALCO for which it must bear the consequences. Its failure to make the necessary
repairs and replacement of the defective electric meter installed within the premises of petitioners
was obviously the proximate cause of the instant dispute between the parties.
Indeed, if an unusual electric consumption was not reflected in the statements of account
of petitioners, MERALCO, considering its technical knowledge and vast experience in providing
electric service, could have easily verified any possible error in the meter reading. In the absence
of such a mistake, the electric meters themselves should be inspected for possible defects or
breakdowns and forthwith repaired and, if necessary, replaced. Furthermore, if MERALCO
discovered that contraptions or illegal devices were installed which would alter the result of the
meter reading, then it should have filed the appropriate criminal complaint against petitioners
under Presidential Decree No. 401.[20]
meter are allowed to continue indefinitely until suddenly the public utilities concerned demand
payment for the unrecorded electricity utilized when, in the first place, they should have remedied
the situation immediately. If we turn a blind eye on MERALCOs omission, it may encourage
negligence on the part of public utilities, to the detriment of the consuming public.
In view of the foregoing discussion, the liability of petitioners for consumed but unrecorded
electricity must be limited by reason of MERALCOs negligence. Hence, an equitable solution
would be for petitioners to pay only the estimated consumption on a three-month average before
the period in controversy. To hold otherwise would unjustly enrich petitioners who would be
allowed to utilize additional electricity, albeit unrecorded, at no extra cost.
To summarize, it is worth emphasizing that it is not our intention to impede or diminish the
business viability of MERALCO, or any public utility company for that matter. On the contrary, we
would like to stress that, being a public utility vested with vital public interest, MERALCO is
impressed with certain obligations towards its customers and any omission on its part to perform
such duties would be prejudicial to its interest. For in the final analysis, the bottom line is that
those who do not exercise such prudence in the discharge of their duties shall be made to bear the
consequences of such oversight.
WHEREFORE, in view of the foregoing, the decision of the Court of Appeals in CA-G.R. CV No.
44010 is hereby MODIFIED. Petitioners are ordered to pay MERALCO the amount P168,342.75,
representing its average electric consumption three months prior to the period in controversy.
[21]
No costs.
SO ORDERED.
[G.R. No. 120027. April 21, 1999]
EDNA A. RAYNERA, for herself and on behalf of the minors RIANNA and REIANNE
RAYNERA, petitioners, vs. FREDDIE HICETA and JIMMY ORPILLA, respondents.
DECISION
PARDO, J.:
[1]
The rationale behind this ruling is that public utilities should be put on notice, as a deterrent,
that if they completely disregard their duty of keeping their electric meters in serviceable
condition, they run the risk of forfeiting, by reason of their negligence, amounts originally due from
their customers. Certainly, we cannot sanction a situation wherein the defects in the electric
56
The case is a petition for review on certiorari of the decision of the Court of Appeals,
reversing that of the Regional Trial Court, Branch 45, Manila. [2]
The rule is well-settled that factual findings of the Court of Appeals are generally considered
final and may not be reviewed on appeal. However, this principle admits of certain exceptions,
among which is when the findings of the appellate court are contrary to those of the trial court, a
re-examination of the facts and evidence may be undertaken. [3] This case falls under the cited
exception.
The antecedent facts are as follows:
Petitioner Edna A. Raynera was the widow of Reynaldo Raynera and the mother and legal
guardian of the minors Rianna and Reianne, both surnamed Raynera. Respondents Freddie Hiceta
and Jimmy Orpilla were the owner and driver, respectively, of an Isuzu truck-trailer, with plate No.
NXC 848, involved in the accident.
On March 23, 1989, at about 2:00 in the morning, Reynaldo Raynera was on his way
home. He was riding a motorcycle traveling on the southbound lane of East Service Road, Cupang,
Muntinlupa. The Isuzu truck was travelling ahead of him at 20 to 30 kilometers per hour.[4] The
truck was loaded with two (2) metal sheets extended on both sides, two (2) feet on the left and
three (3) feet on the right. There were two (2) pairs of red lights, about 35 watts each, on both
sides of the metal plates.[5] The asphalt road was not well lighted.
At some point on the road, Reynaldo Raynera crashed his motorcycle into the left rear portion
of the truck trailer, which was without tail lights. Due to the collision, Reynaldo sustained head
injuries and truck helper Geraldino D. Lucelo [6] rushed him to the Paraaque Medical Center. Upon
arrival at the hospital, the attending physician, Dr. Marivic Aguirre, [7] pronounced Reynaldo Raynera
dead on arrival.
At the time of his death, Reynaldo was manager of the Engineering Department, Kawasaki
Motors (Phils.) Corporation. He was 32 years old, had a life expectancy of sixty five (65) years,
and an annual net earnings of not less than seventy three thousand five hundred ( P73,500.00)
pesos,[8] with a potential increase in annual net earnings of not less than ten percent (10%) of his
salary.[9]
On
May
12,
1989,
the
heirs
of
the
deceased
demanded [10] from
respondents payment of damages arising from the death of Reynaldo Raynera as a result of the
vehicular accident. The respondents refused to pay the claims.
On September 13, 1989, petitioners filed with the Regional Trial Court, Manila [11] a
complaint[12] for damages against respondents owner and driver of the Isuzu truck.
In their complaint against respondents, petitioners sought recovery of damages for the death
of Reynaldo Raynera caused by the negligent operation of the truck-trailer at nighttime on the
highway, without tail lights.
In their answer filed on April 4, 1990, respondents alleged that the truck was travelling slowly
on the service road, not parked improperly at a dark portion of the road, with no tail lights, license
plate and early warning device.
At the trial, petitioners presented Virgilio Santos. He testified that at about 1:00 and 2:00 in
the morning of March 23, 1989, he and his wife went to Alabang market, on board a tricycle. They
passed by the service road going south, and saw a parked truck trailer, with its hood open and
without tail lights. They would have bumped the truck but the tricycle driver was quick in
avoiding a collision. The place was dark, and the truck had no early warning device to alert
passing motorists.[13]
57
On the other hand, respondents presented truck helper Geraldino Lucelo. [14] He testified that
at the time the incident happened, the truck was slowly traveling at approximately 20 to 30
kilometers per hour. Another employee of respondents, auto-mechanic Rogoberto Reyes,
[15]
testified that at about 3:00 in the afternoon of March 22, 1989, with the help of Lucelo, he
installed two (2) pairs of red lights, about 30 to 40 watts each, on both sides of the steel plates.
[16]
On his part, traffic investigation officer Cpl. Virgilio del Monte [17]admitted that these lights were
visible at a distance of 100 meters.
On
December
19,
1991,
the
trial
court
rendered
decision
in
favor
of
petitioners. It found respondents Freddie Hiceta and Jimmy Orpilla negligent in view of these
circumstances: (1) the truck trailer had no license plate and tail lights; (2) there were only two
pairs of red lights, 50 watts [18] each, on both sides of the steel plates; and (3) the truck trailer was
improperly parked in a dark area.
The trial court held that respondents negligence was the immediate and proximate cause of
Reynaldo Rayneras death, for which they are jointly and severally liable to pay damages to
petitioners. The trial court also held that the victim was himself negligent, although this was
insufficient to overcome respondents negligence. The trial court applied the doctrine of
contributory negligence[19]and reduced the responsibility of respondents by 20% on account of the
victims own negligence.
The dispositive portion of the lower courts decision reads as follows:
All things considered, the Court is of the opinion that it is fair and reasonable to fix the living and
other expenses of the deceased the sum of P54,000.00 a year or about P4,500.00 a month
(P150.00 p/d) and that, consequently, the loss or damage sustained by the plaintiffs may be
estimated at P1,674,000.00 for the 31 years of Reynaldo Rayneras life expectancy.
Taking into account the cooperative negligence of the deceased Reynaldo Raynera, the Court
believes that the demand of substantial justice are satisfied by allocating the damages on 80-20
ratio. Thus, P1,337,200.00 shall be paid by the defendants with interest thereon, at the legal rate,
from date of decision, as damages for the loss of earnings. To this sum, the following shall be
added:
(a) P33,412.00, actually spent for funeral services, interment and memorial lot;
(b) P20,000.00 as attorneys fees;
(c) cost of suit.
SO ORDERED.[20]
On January 10, 1992, respondents Hiceta and Orpilla appealed to the Court of Appeals. [21]
After due proceedings, on April 28, 1995, the Court of Appeals rendered decision setting aside
the appealed decision. The appellate court held that Reynaldo Rayneras bumping into the left
rear portion of the truck was the proximate cause of his death, [22]and consequently, absolved
respondents from liability.
Hence, this petition for review on certiorari.
In this petition, the heirs of Reynaldo Raynera contend that the appellate court erred
in: (1) overturning the trial courts finding that respondents negligent operation of the Isuzu truck
was the proximate cause of the victims death; (2) applying the doctrine of last clear chance; (3)
setting aside the trial courts award of actual and compensatory damages.
The issues presented are (a) whether respondents were negligent, and if so, (b) whether such
negligence was the proximate cause of the death of Reynaldo Raynera.
Petitioners maintain that the proximate cause of Reynaldo Rayneras death was respondents
negligence in operating the truck trailer on the highway without tail lights and license plate.
The Court finds no reason to disturb the factual findings of the Court of Appeals.
Negligence is the omission to do something which a reasonable man, guided by those
considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of
something, which a prudent and reasonable man would not do. [23]
Proximate cause is 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.[24]
During the trial, it was established that the truck had no tail lights. The photographs taken of
the scene of the accident showed that there were no tail lights or license plates installed on the
Isuzu truck. Instead, what were installed were two (2) pairs of lights on top of the steel plates, and
one (1) pair of lights in front of the truck. With regard to the rear of the truck, the photos taken
and the sketch in the spot report proved that there were no tail lights.
Despite the absence of tail lights and license plate, respondents truck was visible in the
highway. It was traveling at a moderate speed, approximately 20 to 30 kilometers per hour. It
used the service road, instead of the highway, because the cargo they were hauling posed a
danger to passing motorists. In compliance with the Land Transportation Traffic Code (Republic Act
No. 4136)[25]respondents installed 2 pairs of lights on top of the steel plates, as the vehicles cargo
load extended beyond the bed or body thereof.
58
Virgilio Santos testimony strengthened respondents defense that it was the victim who was
reckless and negligent in driving his motorcycle at high speed. The tricycle where Santos was on
board was not much different from the victims motorcycle that figured in the accident. Although
Santos claimed the tricycle almost bumped into the improperly parked truck, the tricycle driver
was able to avoid hitting the truck.
It has been said that drivers of vehicles who bump the rear of another vehicle are presumed
to be the cause of the accident, unless contradicted by other evidence. [29] The rationale behind
the presumption is that the driver of the rear vehicle has full control of the situation as he is in a
position to observe the vehicle in front of him.
We agree with the Court of Appeals that the responsibility to avoid the collision with the front
vehicle lies with the driver of the rear vehicle.
Consequently, no other person was to blame but the victim himself since he was the one who
bumped his motorcycle into the rear of the Isuzu truck. He had the last clear chance of avoiding
the accident.
WHEREFORE, we DENY the petition for review on certiorari and AFFIRM the decision of the
Court of Appeals in CA-G. R. CV No. 35895, dismissing the amended complaint in Civil Case No. 8950355, Regional Trial Court, Branch 45, Manila.
No costs.
SO ORDERED.
[G.R. No. 127246. April 21, 1999]

SPOUSES LUIS M. ERMITAO and MANUELITA C. ERMITAO, petitioners, vs. THE COURT
OF APPEALS AND BPI EXPRESS CARD CORP., respondents.
DECISION
QUISUMBING, J.:
We find that the direct cause of the accident was the negligence of the victim. Traveling
behind the truck, he had the responsibility of avoiding bumping the vehicle in front of him. He was
in control of the situation. His motorcycle was equipped with headlights to enable him to see what
was in front of him. He was traversing the service road where the prescribed speed limit was less
than that in the highway.
This petition for review under Rule 45, of the Rules of Court, seeks to set aside the decision of
the Court of Appeals in C.A.-G.R. CV No. 47888 reversing the trial courts [1] judgment in Civil Case
No. 61357, as well as the resolution of the Court of Appeals denying petitioners motion for
reconsideration.
Traffic investigator Cpl. Virgilio del Monte testified that two pairs of 50-watts bulbs were on top
of the steel plates,[26] which were visible from a distance of 100 meters. [27] Virgilio Santos admitted
that from the tricycle where he was on board, he saw the truck and its cargo of iron plates from a
distance of ten (10) meters. [28] In light of these circumstances, an accident could have been easily
avoided, unless the victim had been driving too fast and did not exercise due care and prudence
demanded of him under the circumstances.
In dispute is the validity of the stipulation embodied in the standard application form for credit
cards furnished by private respondent. The stipulation makes the cardholder liable for purchases
made through his lost or stolen credit card until (a) notice of such loss or theft has been given to
private respondent and (b) the latter has communicated such loss or theft to its memberestablishments.
The facts, as found by the trial court, are not disputed.

Petitioner Luis Ermitao applied for a credit card from private respondent BPI Express Card
Corp. (BECC) on October 8, 1986 with his wife, Manuelita, as extension cardholder. The spouses
were given credit cards with a credit limit of P10,000.00. They often exceeded this credit limit
without protest from BECC.
On August 29, 1989, Manuelitas bag was snatched from her as she was shopping at the
Greenbelt Mall in Makati, Metro Manila. Among the items inside the bag was her BECC credit
card. That same night she informed, by telephone, BECC of the loss. The call was received by
BECC offices through a certain Gina Banzon. This was followed by a letter dated August 30,
1989. She also surrendered Luis credit card and requested for replacement cards. In her letter,
Manuelita stated that she shall not be responsible for any and all charges incurred [through the
use of the lost card] after August 29, 1989.[2]
However, when Luis received his monthly billing statement from BECC dated September 20,
1989, the charges included amounts for purchases made on August 30, 1989 through Manuelitas
lost
card. Two
purchases
were
made,
one
amounting
to P2,350.05
and
the
other, P607.50. Manuelita received a billing statement dated October 20, 1989 which required her
to immediately pay the total amount of P3,197.70 covering the same (unauthorized)
purchases. Manuelita again wrote BECC disclaiming responsibility for those charges, which were
made after she had served BECC with notice of the loss of her card.
Despite the spouses refusal to pay and the fact that they repeatedly exceeded their monthly
credit limit, BECC sent them a notice dated December 29, 1989 stating that their cards had been
renewed until March 1991. Notwithstanding this, however, BECC continued to include in the
spouses billing statements those purchases made through Manuelitas lost card. Luis protested
this billing in his letter dated June 20, 1990.
However, BECC, in a letter dated July 13, 1990, pointed out to Luis the following stipulation in
their contract:
In the event the card is lost or stolen, the cardholder agrees to immediately report its loss or
theft in writing to BECC ... purchases made/incurred arising from the use of the lost/stolen card
shall be for the exclusive account of the cardholder and the cardholder continues to be liable for
the purchases made through the use of the lost/stolen BPI Express Card until after such notice has
been given to BECC and the latter has communicated such loss/theft to its member
establishments.[3]
Pursuant to this stipulation, BECC held Luis liable for the amount of P3,197.70 incurred
through the use of his wifes lost card, exclusive of interest and penalty charges.
In his reply dated July 18, 1990, Luis stressed that the contract BECC was referring to was a
contract of adhesion and warned that if BECC insisted on charging him and his wife for the
unauthorized purchases, they will sue BECC for damages.

continued to bill the spouses for said purchases. [4]
59
This warning notwithstanding, BECC
On April 10, 1991, Luis used his credit card to purchase gasoline at a Caltex station. The
latter, however, dishonored his card. In reply to Luis demand for an explanation, BECC wrote that
it transferred the balance of his old credit card to his new one, including the unauthorized
charges. Consequently, his outstanding balance exceeded his credit limit of P10,000.00. He was
informed that his credit card had not been cancelled but, since he exceeded his credit limit, he
could not avail of his credit privileges.
Once more, Luis pointed out that notice of the lost card was given to BECC before the
purchases were made.
Subsequently, BECC cancelled the spouses credit cards and advised them to settle the
account immediately or risk being sued for collection of said account.
Constrained, petitioners sued BECC for damages. The trial court ruled in their favor, stating
that there was a waiver on the part of BECC in enforcing the spouses liability, as indicated by the
following circumstances:
(1) Its failure to inform the spouses that the unauthorized charges on the lost card would
be carried over to their replacement cards; and
(2) Its act of unqualifiedly replacing the lost card and Luis card which were both
surrendered by the spouses, even after the spouses unequivocally denied liability for
the unauthorized purchases.
The trial court further noted that the suspension of the spouses credit cards was based upon
the lame excuse that the credit limit had been exceeded, despite the fact that BECC allowed the
spouses previously to exceed their credit limit, even for almost two years after the loss of
Manuelitas card. Moreover, the credit limit was exceeded only after BECC added the unauthorized
purchases to the liability of the spouses. BECC continued to send the spouses separate billing
statements that included the unauthorized purchases, with interest and penalty charges.
The trial court opined that the only purpose for the suspension of the spouses credit
privileges was to compel them to pay for the unauthorized purchases. The trial court ruled that
the latter portion of the condition in the parties contract, which states that liability for purchases
made after a card is lost or stolen shall be for the account of the cardholder until after notice of the
loss or theft has been given to BECC and after the latter has informed its member
establishments, is void for being contrary to public policy and for being dependent upon the sole
will of the debtor.[5]
Moreover, the trial court observed that the contract between BECC and the Ermitaos was a
contract of adhesion, whose terms must be construed strictly against BECC, the party that
prepared it.
The dispositive portion of the trial courts decision reads:

WHEREFORE, and IN VIEW OF THE ALL THE FOREGOING CONSIDERATIONS, judgment is hereby
rendered in favor of the plaintiffs, Spouses Luis M. Ermitao and Manuelita C. Ermitao and against
defendant BPI Express Card Corporation:
1. Ordering the said defendant to pay the plaintiffs the sum of P100,000.00 as moral damages.
2. Ordering said defendant to pay the plaintiffs the sum of P50,000.00 as exemplary damages.
3. Ordering said defendant to pay the plaintiffs the sum equivalent to twenty per cent (20%) of the
amounts abovementioned as and for attorneys fees and expenses of litigation; and
4. Ordering the said defendant to pay the costs of suit.
SO ORDERED.
But, on appeal this decision was reversed. The Court of Appeals stated that the spouses
should be bound by the contract, even though it was one of adhesion. It also said that Luis, being
a lawyer, had all the tools to drive a hard bargain had he wanted to. [6] It cited the case of Serra v.
Court of Appeals[7] wherein this Court ruled that contracts of adhesion are as binding as ordinary
contracts. The petitioner in Serra was a CPA-lawyer, a highly educated man ... who should have
been more cautious in (his) transactions... [8]The Court of Appeals therefore disposed of the appeal
as follows:
THE FOREGOING CONSIDERED, the contested decision is REVERSED. Plaintiffs/appellees are
hereby directed to pay the defendant/appellant the amount of P3,197.70 with 3% interest per
month and an additional 3% penalty equivalent to the amount due every month until full
payment. Without cost.
SO ORDERED.[9]
Hence, this recourse by petitioners, in which they claim that the Court of Appeals gravely
erred in:
(i) Ruling that petitioners should be bound by the stipulations contained in the credit card
application -- a document wholly prepared by private respondent itself -- taking into consideration
the professional credentials of petitioner Luis M. Ermitao;
(ii) Relying on the case of Serra v. Court of Appeals, 229 SCRA 60, because unlike that case,
petitioners have no chance at all to contest the stipulations appearing in the credit card application
that was drafted entirely by private respondent, thus, a clear contract of adhesion;
60
(iii) Ruling that private respondent is not estopped by its subsequent acts after having been
notified of the loss/theft of the credit card issued to petitioners; and
(iv) Holding that the onerous and unconscionable condition in the credit card application that the
cardholder continues to be liable for purchases made on lost or stolen credit cards not only after
such notice has been given to appellant but also after the latter has communicated such loss/ theft
to its member establishments without any specific time or period -- is valid.[10]
At the outset, we note that the contract between the parties in this case is indeed a contract
of adhesion, so-called because its terms are prepared by only one party while the other party
merely affixes his signature signifying his adhesion thereto. [11] Such contracts are not void in
themselves.[12] They are as binding as ordinary contracts. Parties who enter into such contracts are
free to reject the stipulations entirely. This Court, however, will not hesitate to rule out blind
adherence to such contracts if they prove to be too one-sided under the attendant facts and
circumstances.[13]
The resolution of this petition, in our view, hinges on the validity and fairness of the stipulation
on notice required by private respondent in case of loss or theft of a BECC-issued credit
card. Because of the peculiar nature of contracts of adhesion, the validity thereof must be
determined in light of the circumstances under which the stipulation is intended to apply. [14]
The stipulation in question reads:
In the event the card is lost or stolen, the cardholder agrees to immediately report its loss or theft
in writing to BECC ... purchases made/incurred arising from the use of the lost/stolen card shall be
for the exclusive account of the cardholder and the cardholder continues to be liable for the
purchases made through the use of the lost/stolen BPI Express Card until after such notice has
been given to BECC and the latter has communicated such loss/theft to its member
establishments.
For the cardholder to be absolved from liability for unauthorized purchases made through his
lost or stolen card, two steps must be followed: (1) the cardholder must give written notice to
BECC, and (2) BECC must notify its member establishments of such loss or theft, which, naturally,
it may only do upon receipt of a notice from the cardholder. Both the cardholder and BECC, then,
have a responsibility to perform, in order to free the cardholder from any liability arising from the
use of a lost or stolen card.
In this case, the cardholder, Manuelita, has complied with what was required of her under the
contract with BECC. She immediately notified BECC of the loss of her card on the same day it was
lost and, the following day, she sent a written notice of the loss to BECC. That she gave such
notices to BECC is admitted by BECC in the letter sent to Luis by Roberto L. Maniquiz, head of
BECCs Collection Department. [15]
Having thus performed her part of the notification procedure, it was reasonable for Manuelita
-- and Luis, for that matter -- to expect that BECC would perform its part of the procedure, which is
to forthwith notify its member-establishments. It is not unreasonable to assume that BECC would
do this immediately, precisely to avoid any unauthorized charges.
Clearly, what happened in this case was that BECC failed to notify promptly the establishment
in which the unauthorized purchases were made with the use of Manuelitas lost card. Thus,
Manuelita was being liable for those purchases, even if there is no showing that Manuelita herself
had signed for said purchases, and after notice by her concerning her cards loss was already given
to BECC.
BECC asserts that the period that elapsed from the time of the loss of the card to the time of
its unauthorized use was too short such that it would be next to impossible for respondent to
notify all its member-establishments regarding the fact of the loss. [16]Nothing, however, prevents
said member-establishments from observing verification procedures including ascertaining the
genuine signature and proper identification of the purported purchaser using the credit card.
61
On the matter of the damages petitioners are seeking, we must delete the award of
exemplary damages, absent any clear showing that BECC acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner, as required by Article 2232 of the Civil Code. We likewise
reduce the amount of moral damages to P50,000.00, considering the circumstances of the parties
to the case.
WHEREFORE, the decision of the Court of Appeals in CA-G.R. CV No. 47888 is hereby
REVERSED and the decision of the Regional Trial Court, Branch 157, Pasig City in Civil Case No.
61375 is REINSTATED, with the MODIFICATION that the award of exemplary damages in the amount
of P50,000.00 is hereby deleted; and the amount of moral damages is reduced to P50,000.00; but
private respondent is further ordered to pay P25,000 as attorneys fees and litigation expenses.
Costs against private respondents.
SO ORDERED.
BECC states that, between two persons who are negligent, the one who made the wrong
possible should bear the loss. We take this to be an admission that negligence had occurred. In
effect, BECC is saying that the company, and the member-establishments or the petitioners could
be negligent. However, according to BECC, petitioners should be the ones to bear the loss since it
was they who made possible the commission of a wrong. This conclusion, however, is self-serving
and obviously untenable.
From one perspective, it was not petitioners who made possible the commission of the wrong.
It could be BECC for its failure to immediately notify its member-establishments, who appear
lacking in care or instruction by BECC in proper procedures, regarding signatures and the
identification of card users at the point of actual purchase of goods or services. For how else could
an unauthorized person succeed to use Manuelitas lost card?
The cardholder was no longer in control of the procedure after it has notified BECC of the
cards loss or theft. It was already BECCs responsibility to inform its member-establishments of
the loss or theft of the card at the soonest possible time. We note that BECC is not a neophyte
financial institution, unaware of the intricacies and risks of providing credit privileges to a large
number of people. It should have anticipated an occurrence such as the one in this case and
devised effective ways and means to prevent it, or otherwise insure itself against such risk.
Prompt notice by the cardholder to the credit card company of the loss or theft of his card
should be enough to relieve the former of any liability occasioned by the unauthorized use of his
lost or stolen card. The questioned stipulation in this case, which still requires the cardholder to
wait until the credit card company has notified all its member-establishments, puts the cardholder
at the mercy of the credit card company which may delay indefinitely the notification of its
members to minimize if not to eliminate the possibility of incurring any loss from unauthorized
purchases. Or, as in this case, the credit card company may for some reason fail to promptly notify
its members through absolutely no fault of the cardholder. To require the cardholder to still pay for
unauthorized purchases after he has given prompt notice of the loss or theft of his card to the
credit card company would simply be unfair and unjust. The Court cannot give its assent to such a
stipulation which could clearly run against public policy. [17]
G.R. No. 131086
December 14, 2001
BPI
EXPRESS
vs.
EDDIE C. OLALIA, respondent.
CARD
CORPORATION,
petitioner,
QUISUMBING, J.:
This petition for review seeks to annul the decision 1 of the Court of Appeals in CA-G.R. CV No.
49618, reversing the order2 of the Regional Trial Court, Branch 145, of Makati City which held Eddie
C. Olalia liable to BPI Express Card Corporation (BECC) in the amount of P136,290.97. The CA
found only the amount of P13,883.27 to be due and owing to BECC. Petitioners motion for
reconsideration was denied through a resolution,3 also before us on review.
The factual antecedents of this case are as follows:
Petitioner operates a credit card system under the name of BPI Express Card Corporation (BECC)
through which it extends credit accommodations to its cardholders for the purchase of goods and
other services from member establishments of petitioner to be reimbursed later on by the
cardholder upon proper billing.
Respondent Eddie C. Olalia applied4 for and was granted membership and credit accommodation
with BECC. BECC Card No. 020100-3-00-0281667 was issued in his name with a credit limit of
P5,000.
In January 1991, Olalias card expired and a renewal card was issued. BECC also issued Card No.
020100-2-01-0281667 in the name of Cristina G. Olalia, respondents ex-wife. This second card
was an extension of Olalias credit card. BECC alleges that the extension card was delivered and
received by Olalia at the same time as the renewal card. However, Olalia denies ever having
applied for, much less receiving, the extension card.
As evidenced by charge slips presented and identified in court, it was found that the extension
card in the name of Cristina G. Olalia was used for purchases made from March to April 1991,
particularly in the province of Iloilo and the City of Bacolod. Total unpaid charges from the use of
this card amounted to P101,844.54.1wphi1.nt
BECC sent a demand letter to Olalia, to which the latter denied liability saying that said purchases
were not made under his own credit card and that he did not apply for nor receive the extension
card in the name of his wife. He has likewise not used or allowed anybody in his family to receive
or use the extension card. Moreover, his wife, from whom he was already divorced, left for the
States in 1986 and has since resided there. In addition, neither he nor Cristina was in Bacolod or
Iloilo at the time the questioned purchases were made. She was dropped as defendant by the trial
court, in an Order dated September 29, 1995.5
A case for collection was filed by BECC before the RTC but Olalia only admits responsibility for the
amount of P13,883.27, representing purchases made under his own credit card. After trial on the
merits, a decision was rendered as follows:
WHEREFORE, judgment is rendered ordering defendant Eddie C. Olalia to pay plaintiff the
sum of Thirteen Thousand Eight Hundred Eighty-Three Pesos and Twenty-seven Centavos
(P13,883.27), Philippine Currency with interest thereon at the legal rate from June 18,
1991, until fully paid; and to pay the costs.
SO ORDERED.6
From the aforesaid decision, a Motion for Reconsideration was filed, alleging that Olalia should also
be held liable for the purchases arising from the use of the extension card since he allegedly
received the same, as evidenced by his signature appearing in the Renewal Card
Acknowledgement Receipt7 and by the express provision of paragraph 2 of the terms and
conditions governing the use and issuance of a BPI Express Card, making the cardholder and his
extension jointly and severally liable for all purchases and availments made through the use of the
card.
On April 28, 1995, the Motion for Reconsideration was granted and an Order was issued, stating:
Defendant Eddie C. Olalia has not filed any reaction paper up to the present relative to
plaintiffs MOTION FOR RECONSIDERATION dated December 20, 1994.
Finding the allegations in said motion to be meritorious, the same is hereby granted.
WHEREFORE, the dispositive portion of the decision dated November 25, 1994, is
reconsidered and accordingly amended/corrected to read as follows:
62
WHEREFORE, judgment is rendered ordering defendant Eddie C. Olalia to pay

plaintiff the sum of One Hundred Thirty Six Thousand Two Hundred Ninety Pesos
and Ninety-seven Centavos (P136,290.97) Philippine Currency, as of October 27,
1991.
SO ORDERED.8
Olalia appealed to the Court of Appeals and was there sustained in a decision dated November 28,
1996. The CA ruled as follows:
THE FOREGOING CONSIDERED, the contested Decision, while affirmed, is hereby modified
by limiting appellants liability only to P13,883.27, but with interest at 3% per month in
addition to penalty fee of 3% of the amount due every month, until full payment. 9
BECC filed a Motion for Reconsideration but the CA denied the same through a Resolution dated
October 17, 1997.
Hence, this petition wherein BECC contends, as its lone assignment of error, 10 that the Court of
Appeals erred in limiting the liability of respondent to only P13,883.27 exclusive of interest and
penalty fee notwithstanding receipt and availment of the extension card.
More precisely, the issues are: 1) Whether or not an extension card in the name of Cristina G.
Olalia was validly issued and in fact received by respondent Eddie C. Olalia; and 2) Whether or not
Eddie C. Olalia can be held liable for the purchases made using the extension card.
We discuss the issues jointly.
Under stipulation No. 10 of the terms and conditions governing the issuance and use of the BPI
Express Credit Card, the following is stated:
10. EXTENSIONS/SUPPLEMENTARY CARDS Extension of the CARD issued to the Cardholder
may be given to the latters spouse or children upon payment of the necessary fee thereof,
and the submission of an application for the purpose; and the use of such CARD, as well as
the extensions, thereof, shall be governed by this Agreement, and secured by the Surety
Undertaking hereto. Any reference to the CARD issued to the Cardholder hereafter shall
also apply to extensions and/or renewals. Should a CARD be issued to the spouse/children
of a Cardholder upon the Cardholders request, the Cardholder shall be responsible for all
charges including all fees, interest and other charges made through the CARD. In the event
of separation, legal or otherwise, the Cardholder shall continue to be responsible for all
such charges to be made through the extension CARD unless Cardholder request in writing
that the privileges of such extension Cardholder under this Agreement be terminated,
provided all charges incurred shall have been fully paid and satisfied. (Emphasis ours) 11
From the foregoing stipulation, it is clear that there are two requirements before an
extension/supplementary card is issued. They are: 1) payment of the necessary fee, and 2)
submission of an application for the purpose. None of these requirements were shown to have
been complied with by Olalia. Both the trial and appellate courts have found that in Olalias
applications for the original as well as the renewal card, he never applied for an extension card in
the name of his wife. BECC also failed to show any receipt for any fee given in payment for the
purpose of securing an extension card.
BECC supports its allegation that Eddie C. Olalia received the extension card in the name of his
wife, by presenting the Renewal Card Acknowledgement Receipt wherein Olalia affixed his
signature. Such will not suffice to prove to this Court that the requirements for the issuance of the
extension card have been complied with, especially in the face of respondents firm denial.
We have previously held that contracts of this nature are contracts of adhesion, so-called because
their terms are prepared by only one party while the other merely affixes his signature signifying
his adhesion thereto.12 As such, their terms are construed strictly against the party who drafted
it.13 In this case, it was BECC who made the foregoing stipulation, thus, they are now tasked to
show vigilance for its compliance.
BECC failed to explain who a card was issued without accomplishment of the requirements.
Moreover, BECC did not even secure the specimen signature of the purported extension
cardholder, such that it cannot now counter Eddie C. Olalias contention that the signatures
appearing on the charge slips of the questioned transactions were not that of his former wife,
Cristina G. Olalia.
63
We note too that respondent Eddie C. Olalia did not indicate nor declare that he had a spouse
when he applied for a credit card with BECC. In fact, at the time the extension card was issued and
allegedly received by respondent, Cristina had long left the Philippines.
BECCs negligence absolves respondent Olalia from liability.
In sum, we agree with the Court of Appeals that respondent Olalia should not be held liable for the
purchases made under the so-called extension card irregularly issued by petitioner and used for
purchases made by an unauthorized party for whose actions the respondent could not be legally
made answerable. This being the case, respondent Olalia could only be held liable for P13,883.27
representing purchases made under his own credit card, exclusive of interest and penalty thereon,
if any.1wphi1.nt
WHEREFORE, the instant petition is DENIED, and the decision of the Court of Appeals is
hereby AFFIRMED.
SO ORDERED.

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TORTS & DAMAGES 2ND BATCH CASES

G.R. No. 77679 September 30, 1987

Hence, this petition for review on certiorari.

TORTS & DAMAGES 2ND BATCH CASES

TORTS & DAMAGES 2ND BATCH CASES

1. the sum of P50,000.00 for the death of Reniel Tamayo;

TORTS & DAMAGES 2ND BATCH CASES

The Petition has no merit.

TORTS & DAMAGES 2ND BATCH CASES

TORTS & DAMAGES 2ND BATCH CASES

1. THE TRIAL COURT, RESPONDENT JUDGE MATEO CANONOY, ERRED IN HOLDING

TORTS & DAMAGES 2ND BATCH CASES

MANDAUE SHOULD BE SUSPENDED UNTIL AFTER A FINAL JUDGMENT IS RENDERED

TORTS & DAMAGES 2ND BATCH CASES

TORTS & DAMAGES 2ND BATCH CASES

Remulla, Estrella & Associates for petitioners

(4) Acts or omissions punished by law; and

Exequil C. Masangkay for respondents.

(5) Quasi-delicts. (1089a)

G.R. No. L-46179 January 31, 1978

TORTS & DAMAGES 2ND BATCH CASES

G.R. No. 80194 March 21, 1989

Corazon Miraflores and Vicente P. Billena for petitioner.

TORTS & DAMAGES 2ND BATCH CASES

TORTS & DAMAGES 2ND BATCH CASES

TORTS & DAMAGES 2ND BATCH CASES

March 15, 1918

TORTS & DAMAGES 2ND BATCH CASES

G.R. No. 84281 May 27, 1994

TORTS & DAMAGES 2ND BATCH CASES

Agcaoili and Associates for petitioner.

Humberto B. Basco, collaborating counsel for private respondent.

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

TORTS & DAMAGES 2ND BATCH CASES

therefor. To post a deposit in somebody else's name despite the

TORTS & DAMAGES 2ND BATCH CASES

G.R. No. 112576 October 26, 1994

Fornier, Lava & Fornier for private respondents.

TORTS & DAMAGES 2ND BATCH CASES

The petition is devoid of merit.

1. pay plaintiff Isabel Katigbak P50,000.00 as temperate damages;

TORTS & DAMAGES 2ND BATCH CASES

The financial credit of a businessman is a prized and valuable asset, it being a

G.R. No. 148582

January 16, 2002

TORTS & DAMAGES 2ND BATCH CASES

WHEREFORE, judgment is hereby rendered in favor of plaintiff [Estrella O. Querimit] and

5. ORDERING defendants to pay the costs of the suit.

IV. Respondent is not liable to petitioner for attorney's fees. 22

TORTS & DAMAGES 2ND BATCH CASES

August 15, 2001

TORTS & DAMAGES 2ND BATCH CASES

TORTS & DAMAGES 2ND BATCH CASES

WHEREFORE, the judgment appealed from, insofar as it dismissed plaintiff's complaint, is

THE HONORABLE COURT OF APPEALS ERRED IN FINDING PRIVATE RESPONDENT NOT

THE HONORABLE COURT OF APPEALS ERRED IN ABSOLVING PRIVATE RESPONDENT FROM

Hence, this petition, anchored on the following assignment of errors:

THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING THAT AS SHOWN

TORTS & DAMAGES 2ND BATCH CASES