vicarious liability

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1 Contents CIVIL CODE PROVISIONS ............................................................................................................................................................................. 2 FAMILY CODE PROVISIONS ........................................................................................................................................................................ 2 LIABILITY OF PARENTS AND GUARDIANS ......................................................................................................................................... 3 EXCONDE VS CAPUNO............................................................................................................................................................................. 3 CUADRA VS MONFORT ........................................................................................................................................................................... 5 TAMARGO VS CA ........................................................................................................................................................................................ 6 LIBI VS IAC..................................................................................................................................................................................................11 LIABILITY OF OWNERS, MANAGERS AND EMPLOYERS .............................................................................................................20 PHIL. RABBIT BUS LINES VS. PHIL. AMERICAN FORWARDERS ........................................................................................20 UNIVERSITY OF THE EAST VS JADER ............................................................................................................................................22 CHAPMAN VS UNDERWOOD ..............................................................................................................................................................26 FONTANILLA VS MALIAMAN .............................................................................................................................................................28 FRANCO VS IAC ........................................................................................................................................................................................32 CASTILEX VS VASQUEZ.........................................................................................................................................................................37 VALENZUELA VS CA ...............................................................................................................................................................................41 NPC VS CA ...................................................................................................................................................................................................51 PILIPINAS SHELL VS CA .......................................................................................................................................................................55 CARTICIANO VS NUVAL .......................................................................................................................................................................59 JOSE VS ABRAHAM .................................................................................................................................................................................65 VIRON TRANSPORTATION VS DE LOS SANTOS ........................................................................................................................71 PESTANO VS SUMAYANG ....................................................................................................................................................................75 RAFAEL REYES TRUCKING CORP. VS DY ......................................................................................................................................79 STEINMETZ VS VALDEZ .......................................................................................................................................................................85 PHIL. RABBIT VS. PEOPLE ...................................................................................................................................................................86 SANTOS VS PIZARDO .............................................................................................................................................................................94 SPS. HERNANDEZ VS SPS. DOLOR ...................................................................................................................................................98 CEREZO VS TUAZON ........................................................................................................................................................................... 103 PROF. SVCS., INC. VS SPS. AGANA ................................................................................................................................................. 113 LIABILITY OF SCHOOLS, TEACHERS AND ADMINISTRATORS.............................................................................................. 123 ST. FRANCIS HIGH SCHOOL VS CA ................................................................................................................................................ 124 AMADORA VS CA .................................................................................................................................................................................. 136 YLARDE VS AQUINO ............................................................................................................................................................................ 142 PASCO VS CFI.......................................................................................................................................................................................... 146 PSBA VS CA .............................................................................................................................................................................................. 148 LIABILITY OF THE STATE ...................................................................................................................................................................... 152 CITY OF MANILA VS IAC .................................................................................................................................................................... 152 GENSON VS ADARLE ........................................................................................................................................................................... 156 MUN. OF SAN FERNANDO LA UNION VS FIRME .................................................................................................................... 159 PNR VS IAC .............................................................................................................................................................................................. 163 PROVISIONS APPLICABLE IN MOTOR VEHICLE MISHAP ........................................................................................................ 171 ST. MARY’S ACADEMY VS CARPITANOS .................................................................................................................................... 171 FEB LEASING & FINANCE CORP. VS SPS. BAYLON ................................................................................................................ 175 RELIEFS .......................................................................................................................................................................................................... 179

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Page 1: Vicarious Liability

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Contents

CIVIL CODE PROVISIONS ............................................................................................................................................................................. 2

FAMILY CODE PROVISIONS ........................................................................................................................................................................ 2

LIABILITY OF PARENTS AND GUARDIANS ......................................................................................................................................... 3

EXCONDE VS CAPUNO............................................................................................................................................................................. 3

CUADRA VS MONFORT ........................................................................................................................................................................... 5

TAMARGO VS CA ........................................................................................................................................................................................ 6

LIBI VS IAC .................................................................................................................................................................................................. 11

LIABILITY OF OWNERS, MANAGERS AND EMPLOYERS ............................................................................................................. 20

PHIL. RABBIT BUS LINES VS. PHIL. AMERICAN FORWARDERS ........................................................................................ 20

UNIVERSITY OF THE EAST VS JADER ............................................................................................................................................ 22

CHAPMAN VS UNDERWOOD .............................................................................................................................................................. 26

FONTANILLA VS MALIAMAN ............................................................................................................................................................. 28

FRANCO VS IAC ........................................................................................................................................................................................ 32

CASTILEX VS VASQUEZ......................................................................................................................................................................... 37

VALENZUELA VS CA ............................................................................................................................................................................... 41

NPC VS CA ................................................................................................................................................................................................... 51

PILIPINAS SHELL VS CA ....................................................................................................................................................................... 55

CARTICIANO VS NUVAL ....................................................................................................................................................................... 59

JOSE VS ABRAHAM ................................................................................................................................................................................. 65

VIRON TRANSPORTATION VS DE LOS SANTOS ........................................................................................................................ 71

PESTANO VS SUMAYANG .................................................................................................................................................................... 75

RAFAEL REYES TRUCKING CORP. VS DY ...................................................................................................................................... 79

STEINMETZ VS VALDEZ ....................................................................................................................................................................... 85

PHIL. RABBIT VS. PEOPLE ................................................................................................................................................................... 86

SANTOS VS PIZARDO ............................................................................................................................................................................. 94

SPS. HERNANDEZ VS SPS. DOLOR ................................................................................................................................................... 98

CEREZO VS TUAZON ........................................................................................................................................................................... 103

PROF. SVCS., INC. VS SPS. AGANA ................................................................................................................................................. 113

LIABILITY OF SCHOOLS, TEACHERS AND ADMINISTRATORS.............................................................................................. 123

ST. FRANCIS HIGH SCHOOL VS CA ................................................................................................................................................ 124

AMADORA VS CA .................................................................................................................................................................................. 136

YLARDE VS AQUINO ............................................................................................................................................................................ 142

PASCO VS CFI .......................................................................................................................................................................................... 146

PSBA VS CA .............................................................................................................................................................................................. 148

LIABILITY OF THE STATE ...................................................................................................................................................................... 152

CITY OF MANILA VS IAC .................................................................................................................................................................... 152

GENSON VS ADARLE ........................................................................................................................................................................... 156

MUN. OF SAN FERNANDO LA UNION VS FIRME .................................................................................................................... 159

PNR VS IAC .............................................................................................................................................................................................. 163

PROVISIONS APPLICABLE IN MOTOR VEHICLE MISHAP ........................................................................................................ 171

ST. MARY’S ACADEMY VS CARPITANOS .................................................................................................................................... 171

FEB LEASING & FINANCE CORP. VS SPS. BAYLON ................................................................................................................ 175

RELIEFS .......................................................................................................................................................................................................... 179

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VICARIOUS LIABILITY

CIVIL CODE PROVISIONS Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. (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. 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. (1903a)

FAMILY CODE PROVISIONS Art. 21. When either or both of the contracting parties are citizens of a foreign country, it shall be necessary for them before a marriage license can be obtained, to submit a certificate of legal capacity to contract marriage, issued by their respective diplomatic or consular officials. Stateless persons or refugees from other countries shall, in lieu of the certificate of legal capacity herein required, submit an affidavit stating the circumstances showing such capacity to contract marriage. (66a) Art. 211. The father and the mother shall jointly exercise parental authority over the persons of their common children. In case of disagreement, the father's decision shall prevail, unless there is a judicial order to the contrary. Children shall always observe respect and reverence towards their parents and are obliged to obey them as long as the children are under parental authority. Art. 214. In case of death, absence or unsuitability of the parents, substitute parental authority shall be exercised by the surviving grandparent. In case several survive, the one designated by the court, taking into account the same consideration mentioned in the preceding article, shall exercise the authority. Art. 216. In default of parents or a judicially appointed guardian, the following person shall exercise substitute parental authority over the child in the order indicated: (1) The surviving grandparent, as provided in Art. 214; (2) The oldest brother or sister, over twenty-one years of age, unless unfit or disqualified; and

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(3) The child's actual custodian, over twenty-one years of age, unless unfit or disqualified. Whenever the appointment or a judicial guardian over the property of the child becomes necessary, the same order of preference shall be observed. Art. 221. Parents and other persons exercising parental authority shall be civilly liable for the injuries and damages caused by the acts or omissions of their unemancipated children living in their company and under their parental authority subject to the appropriate defenses provided by law. Art. 236. Emancipation for any cause shall terminate parental authority over the person and property of the child who shall then be qualified and responsible for all acts of civil life.

LIABILITY OF PARENTS AND GUARDIANS

EXCONDE VS CAPUNO Dante Capuno was a 15 year old boy who was a pupil of Balintawak Elementary School. In March 1949, he attended a boy scout parade for Dr. Jose Rizal. While they were inside a jeep, he took control of the wheels which he later lost control of causing the jeep to go turtle thereby killing two other students, Isidoro Caperina and one other. Isidoro’s mother, Sabina Exconde, sued Dante Capuno for the death of her son. Pending the criminal action, the mother reserved her right to file a separate civil action which she subsequently filed against Dante and his dad, Delfin Capuno. ISSUE: Whether or not Delfin Capuno, as the father of Dante is liable for damages. HELD: Yes. The civil liability which the law imposes upon the father, and, in case of his death or incapacity, the mother, for any damages that may be caused by the minor children who live with them, is obvious. This is necessary consequence of the parental authority they exercise over them which imposes upon the parents the “duty of supporting them, keeping them in their company, educating them and instructing them in proportion to their means”, while, on the other hand, gives them the “right to correct and punish them in moderation”. The only way by which they can relieve themselves of this liability is if they prove that they exercised all the diligence of a good father of a family to prevent the damage which Delfin failed to prove. On the other hand, the school is not liable. It is true that under the law, “teachers or directors of arts and trades are liable for any damages caused by their pupils or apprentices while they are under their custody”, but this provision only applies to an institution of arts and trades and not to any academic educational institution. JUSTICE J.B.L. REYES Dissenting: Delfin Capuno should be relieved from liability. There is no sound reason for limiting the liability to teachers of arts and trades and not to academic ones. What substantial difference is there between them in so far as, concerns the proper supervision and vigilance over their pupils? It cannot be seriously contended that an academic teacher is exempt from the duty of watching do not commit a tort to the detriment of third persons, so long as they are in a position to exercise authority and supervision over the pupil. EN BANC G.R. No. L-10134 June 29, 1957 SABINA EXCONDE, Plaintiff-Appellant, vs. DELFIN CAPUNO and DANTE CAPUNO, Defendants-Appellees. D E C I S I O N BAUTISTA ANGELO, J.: Dante Capuno, son of Delfin Capuno, was accused of double homicide through reckless imprudence for the death of Isidoro Caperina and Amado Ticzon on March 31, 1949 in the Court of First Instance of Laguna (Criminal Case No. 15001). During the trial, Sabina Exconde, as mother of the deceased Isidoro Caperina, reserved her right to bring a separate civil action for damages against the accused. After trial, Dante Capuno was found guilty of the crime charged and, on appeal, the Court of Appeals affirmed the decision. Dante Capuno was only (15) years old when he committed the crime. In line with her reservation, Sabina Exconde filed the present action against Delfin Capuno and his son Dante Capuno asking for damages in the aggregate amount of P2,959.00 for the death of her son Isidoro Caperina. Defendants set up the defense that if any one should be held liable for the death of Isidoro Caperina, he is Dante Capuno and not his father Delfin because at the time of the accident, the former was not under the control, supervision and custody, of the latter. This defense was sustained

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by the lower court and, as a consequence it only convicted Dante Capuno to pay the damages claimed in the complaint. From decision, plaintiff appealed to the Court of Appeals but the case was certified to us on the ground that the appeal only involves questions of law. It appears that Dante Capuno was a member of the Boy Scouts Organization and a student of the Balintawak Elementary School situated in a barrio in the City of San Pablo and on March 31, 1949 he attended a parade in honor of Dr. Jose Rizal in said city upon instruction of the city school’s supervisor. From the school Dante, with other students, boarded a jeep and when the same started to run, he took hold of the wheel and drove it while the driver sat on his left side. They have not gone far when the jeep turned turtle and two of its passengers, Amado Ticzon and Isidore Caperina, died as a consequence. It further appears that Delfin Capuno, father of Dante, was not with his son at the time of the accident, nor did he know that his son was going to attend a parade. He only came to know it when his son told him after the accident that he attended the parade upon instruction of his teacher. The only issue involved in this appeal is whether defendant Delfin Capuno can be held civilly liable, jointly and severally with his son Dante, for damages resulting from the death of Isidoro Caperina caused by the negligent act of minor Dante Capuno. The case comes under Article 1903 of the Spanish Civil Code, paragraph 1 and 5, which provides: ART. 1903. The obligation imposed by the next preceding articles is enforceable not only for personal acts and omissions, but also for those of persons for whom another is responsible. The father, and, in case of his death or incapacity, the mother, are liable for any damages caused by the minor children who live with them. x x x x x x x x x Finally, teachers or directors of arts and trades are liable for any damages caused by their pupils or apprentices while they are under their custody. Plaintiff contends that defendant Delfin Capuno is liable for the damages in question jointly and severally with his son Dante because at the time the latter committed the negligent act which resulted in the death of the victim, he was a minor and was then living with his father, and inasmuch as these facts are not disputed, the civil liability of the father is evident. And so, plaintiff contends, the lower court erred in relieving the father from liability. We find merit in this claim. It is true that under the law above quoted, “teachers or directors of arts and trades are liable for any damages caused by their pupils or apprentices while they are under their custody”, but this provision only applies to an institution of arts and trades and not to any academic educational institution (Padilla, Civil Law, 1953, Ed., Vol. IV, p. 841; See 12 Manresa, 4th Ed., p. 557). Here Dante Capuno was then a student of the Balintawak Elementary School and as part of his extra-curricular activity, he attended the parade in honor of Dr. Jose Rizal upon instruction of the city school’s supervisor. And it was in connection with that parade that Dante boarded a jeep with some companions and while driving it, the accident occurred. In the circumstances, it is clear that neither the head of that school, nor the city school’s supervisor, could be held liable for the negligent act of Dante because he was not then a student of an institute of arts and trades as provided by law. The civil liability which the law imposes upon the father, and, in case of his death or incapacity, the mother, for any damages that may be caused by the minor children who live with them, is obvious. This is necessary consequence of the parental authority they exercise over them which imposes upon the parents the “duty of supporting them, keeping them in their company, educating them and instructing them in proportion to their means”, while, on the other hand, gives them the “right to correct and punish them in moderation” (Articles 154 and 155, Spanish Civil Code). The only way by which they can relieve themselves of this liability is if they prove that they exercised all the diligence of a good father of a family to prevent the damage (Article 1903, last paragraph, Spanish Civil Code). This defendants failed to prove. WHEREFORE, the decision appealed from is modified in the sense that defendants Delfin Capuno and Dante Capuno shall pay to plaintiff, jointly and severally, the sum of P2,959.00 as damages, and the costs of action. Bengzon, Montemayor, Labrador and Endencia, JJ., concur. Paras, C.J., concurs in the result. REYES, J.B.L., J., dissenting: After mature consideration I believe we should affirm the judgment relieving the father of liability. I can see no sound reason for limiting Art. 1903 of the old Civil Code to teachers of arts and trades and not to academic ones. What substantial difference is there between them in so far as, concerns the proper supervision and vigilance over their pupils? It cannot be seriously contended that an academic teacher is exempt from the duty of watching do not commit a tort to the detriment of third persons, so long as they are in a position to exercise authority and supervision over the pupil. In my opinion, in the phrase “teachers or heads of establishments of arts and trades” used in Art. 1903 of

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the old Civil Code, the words “arts and trades” does not qualify “teachers” but only “heads of establishments”. The phrase is only an updated version of the equivalent terms “preceptors y artesanos” used in the Italian and French Civil Codes. If, as conceded by all commentators, the basis of the presumption of negligence of Art. 1903 in some culpa in vigilando that the parents, teachers, etc. are supposed to have incurred in the exercise of their authority, it would seem clear that where the parent places the child under the effective authority of the teacher, the latter, and not the parent, should be the one answerable for the torts committed while under his custody, for the very reason that the parent is not supposed to interfere with the discipline of the school nor with the authority and supervision of the teacher while the child is under instruction. And if there is no authority, there can be no responsibility. In the case before us, there is no question that the pupil, Dante Capuno, was instructed by the City School Supervisor to attend the Rizal parade. His father could not properly refuse to allow the child to attend, in defiance of the school authorities. The father had every reason to assume that in ordering a minor to attend a parade with other children, the school authorities would provide adequate supervision over them. If a teacher or scout master was present, then he should be the one responsible for allowing the minor to drive the jeep without being qualified to do so. On the other hand, if no teacher or master was at hand to watch over the pupils, the school authorities are the ones answerable for that negligence, and not the father. At any rate, I submit that the father should not be held liable for a tort that he was in no way able to prevent, and which he had every right to assume the school authorities would avoid. Having proved that he trusted his child to the custody of school authorities that were competent to exercise vigilance over him, the father has rebutted the presumption of Art. 1903 and the burden of proof shifted to the claimant to show actual negligence on the part of the parent in order to render him liable. Padilla and Reyes, A., JJ., concur.

CUADRA VS MONFORT Maria Teresa Cuadra and Maria Teresa Monfort were both classmates in Mabini Elementary School Bacolod City. In July 1962, their teacher assigned the class to weed the school premises. While they were doing so, MT Monfort found a headband and she jokingly shouted it as an earthworm and thereafter tossed it MT Cuadra who was hit in her eye. MT Cuadra’s eye got infected. She was brought to the hospital; her eyes were attempted to be surgically repaired but she nevertheless got blind in her right eye. MT Cuadra’s parents sued Alfonso Monfort (MT Monfort’s dad) based on Article 2180 of the Civil Code. The lower court ruled that Monfort should pay for actual damages (cost of hospitalization), moral damages and attorney’s fees. ISSUE: Whether or not Monfort is liable under Article 2180. HELD: No. Article 2180 provides that the father, in case of his incapacity or death, the mother, is responsible for the damages caused by the minor children who live in their company. The basis of this vicarious, although primary, liability is fault or negligence, which is presumed from that which accompanied the causative act or omission. The presumption is merelyprima facie and may therefore be rebutted. This is the clear and logical inference that may be drawn from the last paragraph of Article 2180, which states “that 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.” In the case at bar there is nothing from which it may be inferred that Alfonso Monfort could have prevented the damage by the observance of due care, or that he was in any way remiss in the exercise of his parental authority in failing to foresee such damage, or the act which caused it. On the contrary, his child was at school, where it was his duty to send her and where she was, as he had the right to expect her to be, under the care and supervision of the teacher. And as far as the act which caused the injury was concerned, it was an innocent prank not unusual among children at play and which no parent, however careful, would have any special reason to anticipate much less guard against. Nor did it reveal any mischievous propensity, or indeed any trait in the child’s character which would reflect unfavorably on her upbringing and for which the blame could be attributed to her parents. JUSTICE BARREDO Dissenting; MT Monfort is already 13 years old and should have known that by jokingly saying “aloud that she had found an earthworm and, evidently to frighten the Cuadra girl, tossed the object at her,” it was likely that something would happen to her friend, as in fact, she was hurt. There is nothing in the record that would indicate that Alfonso had properly advised his daughter to behave properly and not to play dangerous jokes on her classmate and playmates, he can be liable under Article 2180 of the Civil Code. There is nothing in the record to show that he had done anything at all to even try to minimize the damage caused upon by his child.

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Maria Teresa Cuadra and Maria Teresa Monfort were both classmates in Mabini Elementary School Bacolod City. In July 1962, their teacher assigned the class to weed the school premises. While they were doing so, MT Monfort found a headband and she jokingly shouted it as an earthworm and thereafter tossed it MT Cuadra who was hit in her eye. MT Cuadra’s eye got infected. She was brought to the hospital; her eyes were attempted to be surgically repaired but she nevertheless got blind in her right eye. MT Cuadra’s parents sued Alfonso Monfort (MT Monfort’s dad) based on Article 2180 of the Civil Code. The lower court ruled that Monfort should pay for actual damages (cost of hospitalization), moral damages and attorney’s fees. ISSUE: Whether or not Monfort is liable under Article 2180. HELD: No. Article 2180 provides that the father, in case of his incapacity or death, the mother, is responsible for the damages caused by the minor children who live in their company. The basis of this vicarious, although primary, liability is fault or negligence, which is presumed from that which accompanied the causative act or omission. The presumption is merelyprima facie and may therefore be rebutted. This is the clear and logical inference that may be drawn from the last paragraph of Article 2180, which states “that 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.” In the case at bar there is nothing from which it may be inferred that Alfonso Monfort could have prevented the damage by the observance of due care, or that he was in any way remiss in the exercise of his parental authority in failing to foresee such damage, or the act which caused it. On the contrary, his child was at school, where it was his duty to send her and where she was, as he had the right to expect her to be, under the care and supervision of the teacher. And as far as the act which caused the injury was concerned, it was an innocent prank not unusual among children at play and which no parent, however careful, would have any special reason to anticipate much less guard against. Nor did it reveal any mischievous propensity, or indeed any trait in the child’s character which would reflect unfavorably on her upbringing and for which the blame could be attributed to her parents. JUSTICE BARREDO Dissenting; MT Monfort is already 13 years old and should have known that by jokingly saying “aloud that she had found an earthworm and, evidently to frighten the Cuadra girl, tossed the object at her,” it was likely that something would happen to her friend, as in fact, she was hurt. There is nothing in the record that would indicate that Alfonso had properly advised his daughter to behave properly and not to play dangerous jokes on her classmate and playmates, he can be liable under Article 2180 of the Civil Code. There is nothing in the record to show that he had done anything at all to even try to minimize the damage caused upon by his child.

TAMARGO VS CA FACTS: In October 1982, Adelberto Bundoc, minor, 10 years of age, shot Jennifer Tamargo with an air rifle causing injuries that resulted in her death. The petitioners, natural parents of Tamargo, filed a complaint for damages against the natural parents of Adelberto with whom he was living the time of the tragic incident. In December 1981, the spouses Rapisura filed a petition to adopt Adelberto Bundoc. Such petition was granted on November 1982 after the tragic incident. ISSUE: WON parental authority concerned may be given retroactive effect so as to make adopting parents the indispensable parties in a damage case filed against the adopted child where actual custody was lodged with the biological parents. HELD: Parental liability is a natural or logical consequence of duties and responsibilities of parents, their parental authority which includes instructing, controlling and disciplining the child. In the case at bar, during the shooting incident, parental authority over Adelberto was still lodged with the natural parents. It follows that they are the indispensable parties to the suit for damages. “Parents and guardians are responsible for the damage caused by the child under their parental authority in accordance with the civil code”. SC did not consider that retroactive effect may be given to the decree of adoption so as to impose a liability upon the adopting parents accruing at the time when they had no actual or physical custody

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over the adopted child. Retroactivity may be essential if it permits accrual of some benefit or advantage in favor of the adopted child. Under Article 35 of the Child and Youth Welfare Code, parental authority is provisionally vested in the adopting parents during the period of trial custody however in this case, trial custody period either had not yet begin nor had been completed at the time of the shooting incident. Hence, actual custody was then with the natural parents of Adelberto. Petition for review was hereby granted. FULL TEXT THIRD DIVISION G.R. No. 85044 June 3, 1992 MACARIO TAMARGO, CELSO TAMARGO and AURELIA TAMARGO, petitioners, vs. HON. COURT OF APPEALS, THE HON. ARISTON L. RUBIO, RTC Judge, Branch 20, Vigan, Ilocos Sur; VICTOR BUNDOC; and CLARA BUNDOC, respondents. FELICIANO, J.: On 20 October 1982, Adelberto Bundoc, then a minor of 10 years of age, shot Jennifer Tamargo with an air rifle causing injuries which resulted in her death. Accordingly, a civil complaint for damages was filed with the Regional Trial Court, Branch 20, Vigan, Ilocos Sur, docketed as Civil Case No. 3457-V, by petitioner Macario Tamargo, Jennifer's adopting parent, and petitioner spouses Celso and Aurelia Tamargo, Jennifer's natural parents against respondent spouses Victor and Clara Bundoc, Adelberto's natural parents with whom he was living at the time of the tragic incident. In addition to this case for damages, a criminal information or Homicide through Reckless Imprudence was filed [Criminal Case No. 1722-V] against Adelberto Bundoc. Adelberto, however, was acquitted and exempted from criminal liability on the ground that he bad acted without discernment. Prior to the incident, or on 10 December 1981, the spouses Sabas and Felisa Rapisura had filed a petition to adopt the minor Adelberto Bundoc in Special Proceedings No. 0373-T before the then Court of First Instance of Ilocos Sur. This petition for adoption was grunted on, 18 November 1982, that is, after Adelberto had shot and killed Jennifer. In their Answer, respondent spouses Bundoc, Adelberto's natural parents, reciting the result of the foregoing petition for adoption, claimed that not they, but rather the adopting parents, namely the spouses Sabas and Felisa Rapisura, were indispensable parties to the action since parental authority had shifted to the adopting parents from the moment the successful petition for adoption was filed. Petitioners in their Reply contended that since Adelberto Bundoc was then actually living with his natural parents, parental authority had not ceased nor been relinquished by the mere filing and granting of a petition for adoption. The trial court on 3 December 1987 dismissed petitioners' complaint, ruling that respondent natural parents of Adelberto indeed were not indispensable parties to the action. Petitioners received a copy of the trial court's Decision on 7 December 1987. Within the 15-day reglementary period, or on 14 December 1987, petitioners filed a motion for reconsideration followed by a supplemental motion for reconsideration on 15 January 1988. It appearing, however, that the motions failed to comply with Sections 4 and 5 of Rule 15 of the Revised Rules of Court — that notice of the motion shall be given to all parties concerned at least three (3) days before the hearing of said motion; and that said notice shall state the time and place of hearing — both motions were denied by the trial court in an Order dated 18 April 1988. On 28 April 1988, petitioners filed a notice of appeal. In its Order dated 6 June 1988, the trial court dismissed the notice at appeal, this time ruling that the notice had been filed beyond the 15-day reglementary period ending 22 December 1987.

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Petitioners went to the Court of Appeals on a petition for mandamus and certiorari questioning the trial court's Decision dated 3 December 1987 and the Orders dated 18 April 1988 and 6 June 1988, The Court of Appeals dismissed the petition, ruling that petitioners had lost their right to appeal. In the present Petition for Review, petitioners once again contend that respondent spouses Bundoc are the indispensable parties to the action for damages caused by the acts of their minor child, Adelberto Bundoc. Resolution of this Petition hinges on the following issues: (1) whether or not petitioners, notwithstanding loss of their right to appeal, may still file the instant Petition; conversely, whether the Court may still take cognizance of the case even through petitioners' appeal had been filed out of time; and (2) whether or not the effects of adoption, insofar as parental authority is concerned may be given retroactive effect so as to make the adopting parents the indispensable parties in a damage case filed against their adopted child, for acts committed by the latter, when actual custody was yet lodged with the biological parents. 1. It will be recalled that, petitioners' motion (and supplemental motion) for reconsideration filed before the trial court, not having complied with the requirements of Section 13, Rule 41, and Section 4, Rule 15, of the Revised Rules of Court, were considered pro forma and hence did not interrupt and suspend the reglementary period to appeal: the trial court held that the motions, not having contained a notice of time and place of hearing, had become useless pieces of paper which did not interrupt the reglementary period. 1 As in fact repeatedly held by this Court, what is mandatory is the service of the motion on the opposing counsel indicating the time and place of hearing. 2 In view, however, of the nature of the issue raised in the instant. Petition, and in order that substantial justice may be served, the Court, invoking its right to suspend the application of technical rules to prevent manifest injustice, elects to treat the notice of appeal as having been seasonably filed before the trial court, and the motion (and supplemental motion) for reconsideration filed by petitioner in the trial court as having interrupted the reglementary period for appeal. As the Court held in Gregorio v. Court of Appeals: 3 Dismissal of appeal; purely on technical grounds is frowned upon where the policy of the courts is to encourage hearings of appeal on their merits. The rules of procedure ought not be applied in a very rigid technical sense, rules of procedure are used only to help secure not override, substantial justice. if d technical and rigid enforcement of the rules is made their aim would be defeated. 4 2. It is not disputed that Adelberto Bundoc's voluntary act of shooting Jennifer Tamargo with an air rifle gave rise to a cause of action on quasi-delict against him. As Article 2176 of the Civil Code provides: 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 . . . Upon the other hand, the law imposes civil liability upon the father and, in case of his death or incapacity, the mother, for any damages that may be caused by a minor child who lives with them. Article 2180 of the Civil Code reads: 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. xxx xxx xxx The responsibility treated of in this Article shall cease when the person herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage. (Emphasis supplied) This principle of parental liability is a species of what is frequently designated as vicarious liability, or the doctrine of "imputed negligence" under Anglo-American tort law, where a person is not only liable for torts committed by himself, but also for torts committed by others with whom he has a certain relationship and for whom he is responsible. Thus, parental liability is made a natural or

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logical consequence of the duties and responsibilities of parents — their parental authority — which includes the instructing, controlling and disciplining of the child. 5 The basis for the doctrine of vicarious liability was explained by the Court in Cangco v. Manila Railroad Co. 6 in the following terms: With respect to extra-contractual obligation arising from negligence, whether of act or omission, it is competent for the legislature to elect — and our Legislature has so elected — to limit such liability to cases in which the person upon whom such an obligation is imposed is morally culpable or, on the contrary, for reasons of public policy. to extend that liability, without regard to the lack of moral culpability, so as to include responsibility for the negligence of those persons whose acts or omissions are imputable, by a legal fiction, to others who are in a position to exercise an absolute or limited control over them. The legislature which adopted our Civil Code has elected to limit extra-contractual liability — with certain well-defined exceptions — to cases in which moral culpability can be directly imputed to the persons to be charged. This moral responsibility may consist in having failed to exercise due care in one's own acts, or in having failed to exercise due care in the selection and control of one's agent or servants, or in the control of persons who, by reasons of their status, occupy a position of dependency with respect to the person made liable for their conduct. 7 (Emphasis Supplied) The civil liability imposed upon parents for the torts of their minor children living with them, may be seen to be based upon the parental authority vested by the Civil Code upon such parents. The civil law assumes that when an unemancipated child living with its parents commits a tortious acts, the parents were negligent in the performance of their legal and natural duty closely to supervise the child who is in their custody and control. Parental liability is, in other words, anchored upon parental authority coupled with presumed parental dereliction in the discharge of the duties accompanying such authority. The parental dereliction is, of course, only presumed and the presumption can be overtuned under Article 2180 of the Civil Code by proof that the parents had exercised all the diligence of a good father of a family to prevent the damage. In the instant case, the shooting of Jennifer by Adelberto with an air rifle occured when parental authority was still lodged in respondent Bundoc spouses, the natural parents of the minor Adelberto. It would thus follow that the natural parents who had then actual custody of the minor Adelberto, are the indispensable parties to the suit for damages. The natural parents of Adelberto, however, stoutly maintain that because a decree of adoption was issued by the adoption court in favor of the Rapisura spouses, parental authority was vested in the latter as adopting parents as of the time of the filing of the petition for adoption that is, before Adelberto had shot Jennifer which an air rifle. The Bundoc spouses contend that they were therefore free of any parental responsibility for Adelberto's allegedly tortious conduct. Respondent Bundoc spouses rely on Article 36 of the Child and Youth Welfare Code 8 which reads as follows: Art. 36. Decree of Adoption. — If, after considering the report of the Department of Social Welfare or duly licensed child placement agency and the evidence submitted before it, the court is satisfied that the petitioner is qualified to maintain, care for, and educate the child, that the trial custody period has been completed, and that the best interests of the child will be promoted by the adoption, a decree of adoption shall be entered, which shall be effective he date the original petition was filed. The decree shall state the name by which the child is thenceforth to be known. (Emphasis supplied) The Bundoc spouses further argue that the above Article 36 should be read in relation to Article 39 of the same Code: Art. 39. Effect of Adoption. — The adoption shall: xxx xxx xxx (2) Dissolve the authority vested in the natural parents, except where the adopter is the spouse of the surviving natural parent; xxx xxx xxx

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(Emphasis supplied) and urge that their Parental authority must be deemed to have been dissolved as of the time the Petition for adoption was filed. The Court is not persuaded. As earlier noted, under the Civil Code, the basis of parental liability for the torts of a minor child is the relationship existing between the parents and the minor child living with them and over whom, the law presumes, the parents exercise supervision and control. Article 58 of the Child and Youth Welfare Code, re-enacted this rule: Article 58 Torts — Parents and guardians are responsible for the damage caused by the child under their parental authority in accordance with the civil Code. (Emphasis supplied) Article 221 of the Family Code of the Philippines 9 has similarly insisted upon the requisite that the child, doer of the tortious act, shall have beer in the actual custody of the parents sought to be held liable for the ensuing damage: Art. 221. Parents and other persons exercising parental authority shall be civilly liable for the injuries and damages caused by the acts or omissions of their unemancipated children living in their company and under their parental authority subject to the appropriate defenses provided by law. (Emphasis supplied) We do not believe that parental authority is properly regarded as having been retroactively transferred to and vested in the adopting parents, the Rapisura spouses, at the time the air rifle shooting happened. We do not consider that retroactive effect may be giver to the decree of adoption so as to impose a liability upon the adopting parents accruing at a time when adopting parents had no actual or physically custody over the adopted child. Retroactive affect may perhaps be given to the granting of the petition for adoption where such is essential to permit the accrual of some benefit or advantage in favor of the adopted child. In the instant case, however, to hold that parental authority had been retroactively lodged in the Rapisura spouses so as to burden them with liability for a tortious act that they could not have foreseen and which they could not have prevented (since they were at the time in the United States and had no physical custody over the child Adelberto) would be unfair and unconscionable. Such a result, moreover, would be inconsistent with the philosophical and policy basis underlying the doctrine of vicarious liability. Put a little differently, no presumption of parental dereliction on the part of the adopting parents, the Rapisura spouses, could have arisen since Adelberto was not in fact subject to their control at the time the tort was committed. Article 35 of the Child and Youth Welfare Code fortifies the conclusion reached above. Article 35 provides as follows: Art. 35. Trial Custody. — No petition for adoption shall be finally granted unless and until the adopting parents are given by the courts a supervised trial custody period of at least six months to assess their adjustment and emotional readiness for the legal union. During the period of trial custody, parental authority shall be vested in the adopting parents. (Emphasis supplied) Under the above Article 35, parental authority is provisionally vested in the adopting parents during the period of trial custody, i.e., before the issuance of a decree of adoption, precisely because the adopting parents are given actual custody of the child during such trial period. In the instant case, the trial custody period either had not yet begun or bad already been completed at the time of the air rifle shooting; in any case, actual custody of Adelberto was then with his natural parents, not the adopting parents. Accordingly, we conclude that respondent Bundoc spouses, Adelberto's natural parents, were indispensable parties to the suit for damages brought by petitioners, and that the dismissal by the trial court of petitioners' complaint, the indispensable parties being already before the court, constituted grave abuse of discretion amounting to lack or excess of jurisdiction. WHEREFORE, premises considered, the Petition for Review is hereby GRANTED DUE COURSE and the Decision of the Court of Appeals dated 6 September 1988, in C.A.-G.R. No. SP-15016 is hereby REVERSED and SET ASIDE. Petitioners' complaint filed before the trial court is hereby REINSTATED

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and this case is REMANDED to that court for further proceedings consistent with this Decision. Costs against respondent Bundoc spouses. This Decision is immediately executory. SO ORDERED. Gutierrez, Jr., Bidin, Davide, Jr. and Romero, concur.

LIBI VS IAC Civil Law – Torts and Damages – Vicarious Liability of Parents – Murder-Suicide of Minor Lovers Since about 1976, minors Julie Ann Gotiong and Wendell Libi were lovers. In December 1978, Julie Ann decided to break up with Wendell because the latter has violent tendencies. Julie Ann refused to give Wendell his second chance. On January 14, 1979, both minors were found dead inside Julie Ann’s house. Both were only 18 years of age (age of majority that time was 21). Apparently, Wendell used his father’s gun to kill Julie Ann and then later he committed suicide. The parents of Julie Ann (Felipe and Shirley Gotiong) then filed a civil case for recovery of damages based on Article 2180 of the Civil Code against the parents of Wendell (Cresencio and Amelia Libi). ISSUE: Whether or not the parents of Wendell are civilly liable? HELD: Yes. It was determined from the evidence adduced that the Libis had been negligent in safekeeping their gun. Wendell gained access to the gun in 1978 and the Libis did not know that their son had possession of said gun. They only found out about it when the shooting happened. Further, they were not even aware that their son is a drug informant of the local Constabulary (police force at that time). Clearly, the parents were negligent and were not acting with the diligence required by law (that of a good father of a family) in making sure that their minor children shall not cause damages against other persons. What is the nature of their liability? In this case, the Supreme Court also clarified that the nature of the liability of parents in cases like this is not merely subsidiary. Their liability is primary. This is whether or not what the damage caused by their minor child arose from quasi-delict or from a criminal act. This is also the reason why parents can avoid liability if they will be able to show that they have acted with the diligence required by law because if their liability is merely subsidiary, they can never pose the defense of diligence of a good father of a family. FULL TEXT EN BANC [G.R. No. 70890. September 18, 1992.] CRESENCIO LIBI * and AMELIA YAP LIBI, Petitioners, v. HON. INTERMEDIATE APPELLATE COURT, FELIPE GOTIONG and SHIRLEY GOTIONG, Respondents. Alex Y. Tan, for Petitioners. Mario D. Ortiz and Danilo V. Ortiz for Private Respondents. SYLLABUS 1. CIVIL LAW; QUASI DELICT; LIABILITY OF PARENTS FOR CIVIL LIABILITY ARISING FROM CRIMINAL OFFENSES COMMITTED BY THEIR MINOR CHILDREN; RULE. — The parents are and should be held primarily liable for the civil liability arising from criminal offenses committed by their minor children under their legal authority or control, or who live in their company, unless it is proven that the former acted with the diligence of a good father of a family to prevent such damages. That primary liability is premised on the provisions of Article 101 of the Revised Penal Code with respect to damages ex delicto caused by their children 9 years of age or under, or over 9 but under 15 years of age who acted without discernment; and, with regard to their children over 9 but under 15 years of age who acted with discernment, or 15 years or over but under 21 years of age, such primary liability shall be imposed pursuant to Article 2180 of the Civil Code. Under said Article 2180, the enforcement of such liability shall be effected against the father and, in case of his death or incapacity, the mother. This was amplified by the Child and Youth Welfare Code which provides that the same shall devolve upon the father and, in case of his death or incapacity, upon the mother or, in case of

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her death or incapacity, upon the guardian, but the liability may also be voluntarily assumed by a relative or family friend of the youthful offender. However, under the Family Code, this civil liability is now, without such alternative qualification, the responsibility of the parents and those who exercise parental authority over the minor offender. For civil liability arising from quasi-delicts committed by minors, the same rules shall apply in accordance with Articles 2180 and 2182 of the Civil Code, as so modified. D E C I S I O N REGALADO, J.: One of the ironic verities of life, it has been said, is that sorrow is sometimes a touchstone of love. A tragic illustration is provided by the instant case, wherein two lovers died while still in the prime of their years, a bitter episode for those whose lives they have touched. While we cannot expect to award complete assuagement to their families through seemingly prosaic legal verbiage, this disposition should at least terminate the acrimony and rancor of an extended judicial contest resulting from the unfortunate occurrence. In this final denouement of the judicial recourse the stages whereof were alternately initiated by the parties, petitioners are now before us seeking the reversal of the judgment of respondent court promulgated on January 2, 1985 in AC-G.R. CV No. 69060 with the following decretal portion:jgc:chanrobles.com.ph "WHEREFORE, the decision of the lower court dismissing plaintiff’s complaint is hereby reversed; and instead, judgment is hereby rendered sentencing defendants, jointly and solidarily, to pay to plaintiffs the following amounts:chanrobles.com : virtual law library 1. Moral damages, P30,000.000; 2. Exemplary damages, P10,000.00; 3. Attorney’s fees, P20,000.00, and costs. However, denial of defendants-appellees’ counterclaims is affirmed." 1 Synthesized from the findings of the lower courts, it appears that respondent spouses are the legitimate parents of Julie Ann Gotiong who, at the time of the deplorable incident which took place and from which she died on January 14, 1979, was an 18-year old first year commerce student of the University of San Carlos, Cebu City; while petitioners are the parents of Wendell Libi, then a minor between 18 and 19 years of age living with his aforesaid parents, and who also died in the same event on the same date. For more than two (2) years before their deaths, Julie Ann Gotiong and Wendell Libi were sweethearts until December, 1978 when Julie Ann broke up her relationship with Wendell after she supposedly found him to be sadistic and irresponsible. During the first and second weeks of January, 1979, Wendell kept pestering Julie Ann with demands for reconciliation but the latter persisted in her refusal, prompting the former to resort to threats against her. In order to avoid him, Julie Ann stayed in the house of her best friend, Malou Alfonso, at the corner of Maria Cristina and Juana Osmeña Streets, Cebu City, from January 7 to 13, 1978. On January 14, 1979, Julie Ann and Wendell died, each from a single gunshot wound inflicted with the same firearm, a Smith and Wesson revolver licensed in the name of petitioner Cresencio Libi, which was recovered from the scene of the crime inside the residence of private respondents at the corner of General Maxilom and D. Jakosalem streets of the same city. Due to the absence of an eyewitness account of the circumstances surrounding the death of both minors, their parents, who are the contending parties herein, posited their respective theories drawn

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from their interpretation of circumstantial evidence, available reports, documents and evidence of physical facts. Private respondents, bereaved over the death of their daughter, submitted that Wendell caused her death by shooting her with the aforesaid firearm and, thereafter, turning the gun on himself to commit suicide. On the other hand, Petitioners, puzzled and likewise distressed over the death of their son, rejected the imputation and contended that an unknown third party, whom Wendell may have displeased or antagonized by reason of his work as a narcotics informer of the Constabulary Anti-Narcotics Unit (CANU), must have caused Wendell’s death and then shot Julie Ann to eliminate any witness and thereby avoid identification.chanrobles.com:cralaw:red As a result of the tragedy, the parents of Julie Ann filed Civil Case No. R-17774 in the then Court of First Instance of Cebu against the parents of Wendell to recover damages arising from the latter’s vicarious liability under Article 2180 of the Civil Code. After trial, the court below rendered judgment on October 20, 1980 as follows:jgc:chanrobles.com.ph "WHEREFORE, premises duly considered, judgment is hereby rendered dismissing plaintiffs’ complaint for insufficiency of the evidence. Defendants’ counterclaim is likewise denied for lack of sufficient merit." 2 On appeal to respondent court, said judgment of the lower court dismissing the complaint of therein plaintiffs-appellants was set aside and another judgment was rendered against defendants-appellees who, as petitioners in the present appeal by certiorari, now submit for resolution the following issues in this case:chanrob1es virtual 1aw library 1. Whether or not respondent court correctly reversed the trial court in accordance with established decisional laws; and 2. Whether or not Article 2180 of the Civil Code was correctly interpreted by respondent court to make petitioners liable for vicarious liability. 3 In the proceedings before the trial court, Dr. Jesus P. Cerna, Police Medico-Legal Officer of Cebu, submitted his findings and opinions on some postulates for determining whether or not the gunshot wound was inflicted on Wendell Libi by his own suicidal act. However, undue emphasis was placed by the lower court on the absence of gunpowder or tattooing around the wound at the point of entry of the bullet. It should be emphasized, however, that this is not the only circumstance to be taken into account in the determination of whether it was suicide or not. It is true that said witness declared that he found no evidence of contact or close-contact of an explosive discharge in the entrance wound. However, as pointed out by private respondents, the body of deceased Wendell Libi must have been washed at the funeral parlor, considering the hasty interment thereof a little after eight (8) hours from the occurrence wherein he died. Dr. Cerna himself could not categorically state that the body of Wendell Libi was left untouched at the funeral parlor before he was able to conduct his autopsy. It will also be noted that Dr. Cerna was negligent in not conducting a paraffin test on Wendell Libi, hence possible evidence of gunpowder residue on Wendell’s hands was forever lost when Wendell was hastily buried.cralawnad More specifically, Dr. Cerna testified that he conducted an autopsy on the body of Wendell Libi about eight (8) hours after the incident or, to be exact, eight (8) hours and twenty (20) minutes based on the record of death; that when he arrived at the Cosmopolitan Funeral Homes, the body of the deceased was already on the autopsy table and in the stage of rigor mortis; and that said body was not washed, but it was dried. 4 However, on redirect examination, he admitted that during the 8-hour interval, he never saw the body nor did he see whether said body was wiped or washed in the area of the wound on the head which he examined because the deceased was inside the morgue. 5 In fact, on cross-examination, he had earlier admitted that as far as the entrance of the wound, the trajectory of the bullet and the exit of the wound are concerned, it is possible that Wendell Libi shot himself. 6 He further testified that the muzzle of the gun was not pressed on the head of the victim and that he found no burning or singeing of the hair or extensive laceration on the gunshot wound of entrance which are general characteristics of contact or near-contact fire. On direct examination, Dr. Cerna nonetheless made these clarification:jgc:chanrobles.com.ph

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"Q Is it not a fact that there are certain guns which are so made that there would be no black residue or tattooing that could result from these guns because they are what we call clean? A Yes, sir. I know that there are what we call smokeless powder. ATTY. ORTIZ:chanrob1es virtual 1aw library Q Yes. So, in cases, therefore, of guns where the powder is smokeless, those indications that you said may not rule out the possibility that the gun was closer than 24 inches, is that correct? A If the . . . assuming that the gun used was .. the bullet used was a smokeless powder. Q At any rate, doctor, from . . . disregarding those other matters that you have noticed, the singeing, etc., from the trajectory, based on the trajectory of the bullet as shown in your own sketch, is it not a fact that the gun could have been fired by the person himself, the victim himself, Wendell Libi, because it shows a point of entry a little above the right ear and point of exit a little above that, to be very fair and on your oath? A As far as the point of entrance is concerned and as far as the trajectory of the bullet is concerned and as far as the angle or the manner of fire is concerned, it could have been fired by the victim." 7 As shown by the evidence, there were only two used bullets 8 found at the scene of the crime, each of which were the bullets that hit Julie Ann Gotiong and Wendell Libi, respectively. Also, the sketch prepared by the Medico-Legal Division of the National Bureau of Investigation, 9 shows that there is only one gunshot wound of entrance located at the right temple of Wendell Libi. The necropsy report prepared by Dr. Cerna states:chanrob1es virtual 1aw library x x x "Gunshot wound, ENTRANCE, ovaloid, 0.5 x 0.4 cm., with contusion collar widest inferiorly by 0.2 cm., edges inverted, oriented upward, located at the head, temporal region, right, 2.8 cms. behind and 5.5 cms. above right external auditory meatus, directed slightly forward, upward and to the left, involving skin and soft tissues, making a punch-in fracture on the temporal bone, right, penetrating cranial cavity, lacerating extensively along its course the brain tissues, fracturing parietal bone, left, and finally making an EXIT wound, irregular, 2.0 x 1.8 cms., edges (e)verted, parietal region, left, 2.0 cms. behind and 12.9 cms. above left external auditory meatus.chanrobles virtualawlibrary chanrobles.com:chanrobles.com.ph x x x "Evidence of contact or close-contact fire, such as burning around the gunshot wound of entrance, gunpowder tatooing (sic), smudging, singeing of hair, extensive laceration or bursting of the gunshot wound of entrance, or separation of the skin from the underlying tissue, are absent." 10 On cross-examination, Dr. Cerna demonstrated his theory which was made of record, thus:jgc:chanrobles.com.ph "Q Now, will you please use yourself as Wendell Libi, and following the entrance of the wound, the trajectory of the bullet and the exit of the wound, and measuring yourself 24 inches, will you please indicate to the Honorable Court how would it have been possible for Wendell Libi to kill himself? Will you please indicate the 24 inches? WITNESS:chanrob1es virtual 1aw library A Actually, sir, the 24 inches is approximately one arm’s length. ATTY. SENINING:chanrob1es virtual 1aw library

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I would like to make of record that the witness has demonstrated by extending his right arm almost straight towards his head." 11 Private respondents assail the fact that the trial court gave credence to the testimonies of defendants’ witnesses Lydia Ang and James Enrique Tan, the first being a resident of an apartment across the street from the Gotiongs and the second, a resident of the house adjacent to the Gotiong residence, who declared having seen a "shadow" of a person at the gate of the Gotiong house after hearing shots therefrom. On cross-examination, Lydia Ang testified that the apartment where she was staying faces the gas station; that it is the second apartment; that from her window she can see directly the gate of the Gotiongs and, that there is a firewall between her apartment and the gas station. 12 After seeing a man jump from the gate of the Gotiongs to the rooftop of the Tans, she called the police station but the telephone lines were busy. Later on, she talked with James Enrique Tan and told him that she saw a man leap from the gate towards his rooftop. 13 However, James Enrique Tan testified that he saw a "shadow" on top of the gate of the Gotiongs, but denied having talked with anyone regarding what he saw. He explained that he lives in a duplex house with a garden in front of it; that his house is next to Felipe Gotiong’s house; and he further gave the following answers to these questions:chanrobles.com : virtual law library "ATTY. ORTIZ: (TO WITNESS). Q What is the height of the wall of the Gotiong’s in relation to your house? WITNESS:chanrob1es virtual 1aw library A It is about 8 feet. ATTY. ORTIZ: (TO WITNESS) Q And where were you looking from? WITNESS:chanrob1es virtual 1aw library A From upstairs in my living room. ATTY. ORTIZ (TO WITNESS) Q From Your living room window, is that correct? WITNESS:chanrob1es virtual 1aw library A Yes, but not very clear because the wall is high." 14 Analyzing the foregoing testimonies, we agree with respondent court that the same do not inspire credence as to the reliability and accuracy of the witnesses’ observations, since the visual perceptions of both were obstructed by high walls in their respective houses in relation to the house of herein private respondents. On the other hand, witness Manolo Alfonso, testifying on rebuttal, attested without contradiction that he and his sister, Malou Alfonso, were waiting for Julie Ann Gotiong when they heard her scream; that when Manolo climbed the fence to see what was going on inside the Gotiong house, he heard the first shot; and, not more than five (5) seconds later, he heard another shot. Consequently, he went down from the fence and drove to the police station to report the incident. 15 Manolo’s direct and candid testimony establishes and explains the fact that it was he whom Lydia Ang and James Enrique Tan saw as the "shadow" of a man at the gate of the Gotiong house. We have perforce to reject petitioners’ effete and unsubstantiated pretension that it was another man who shot Wendell and Julie Ann. It is significant that the Libi family did not even point to or present any suspect in the crime nor did they file any case against any alleged "John Doe." Nor can we sustain the trial court’s dubious theory that Wendell Libi did not die by his own hand because of the

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overwhelming evidence — testimonial, documentary and pictorial — the confluence of which point to Wendell as the assailant of Julie Ann, his motive being revenge for her rejection of his persistent pleas for a reconciliation.chanrobles.com:cralaw:red Petitioners’ defense that they had exercised the due diligence of a good father of a family, hence they should not be civilly liable for the crime committed by their minor son, is not borne out by the evidence on record either. Petitioner Amelita Yap Libi, mother of Wendell, testified that her husband, Cresencio Libi, owns a gun which he kept in a safety deposit box inside a drawer in their bedroom. Each of these petitioners holds a key to the safety deposit box and Amelita’s key is always in her bag, all of which facts were known to Wendell. They have never seen their son Wendell taking or using the gun. She admitted, however, that on that fateful night the gun was no longer in the safety deposit box. 16 We, accordingly, cannot but entertain serious doubts that petitioner spouses had really been exercising the diligence of a good father of a family by safely locking the fatal gun away. Wendell could not have gotten hold thereof unless one of the keys to the safety deposit box was negligently left lying around or he had free access to the bag of his mother where the other key was. The diligence of a good father of a family required by law in a parent and child relationship consists, to a large extent, of the instruction and supervision of the child. Petitioners were gravely remiss in their duties as parents in not diligently supervising the activities of their son, despite his minority and immaturity, so much so that it was only at the time of Wendell’s death that they allegedly discovered that he was a CANU agent and that Cresencio’s gun was missing from the safety deposit box. Both parents were sadly wanting in their duty and responsibility in monitoring and knowing the activities of their children who, for all they know, may be engaged in dangerous work such as being drug informers, 17 or even drug users. Neither was a plausible explanation given for the photograph of Wendell, with a handwritten dedication to Julie Ann at the back thereof, 18 holding upright what clearly appears as a revolver and on how or why he was in possession of that firearm. In setting aside the judgment of the court a quo and holding petitioners civilly liable, as explained at the start of this opinion, respondent court waved aside the protestations of diligence on the part of petitioners and had this to say:jgc:chanrobles.com.ph ". . . It is still the duty of parents to know the activity of their children who may be engaged in this dangerous activity involving the menace of drugs. Had the defendants-appellees been diligent in supervising the activities of their son, Wendell, and in keeping said gun from his reach, they could have prevented Wendell from killing Julie Ann Gotiong. Therefore, appellants are liable under Article 2180 of the Civil Code which provides:chanrob1es virtual 1aw library ‘The father, and in case of his death or incapacity, the mother, are responsible for the damages caused by their minor children who live in their company.’ "Having been grossly negligent in preventing Wendell Libi from having access to said gun which was allegedly kept in a safety deposit box, defendants-appellees are subsidiarily liable for the natural consequence of the criminal act of said minor who was living in their company. This vicarious liability of herein defendants-appellees has been reiterated by the Supreme Court in many cases, prominent of which is the case of Fuellas v. Cadano, et. al. (L-14409, Oct. 31, 1961, 3 SCRA 361-367), which held that:chanrob1es virtual 1aw library ‘The subsidiary liability of parents for damages caused by their minor children imposed by Article 2180 of the New Civil Code covers obligations arising from both quasi-delicts and criminal offenses.’ ‘The subsidiary liability of parent’s arising from the criminal acts of their minor children who acted with discernment is determined under the provisions of Article 2180, N.C.C. and under Article 101 of the Revised Penal Code, because to hold that the former only covers obligations which arise from quasi-delicts and not obligations which arise from criminal offenses, would result in the absurdity that while for an act where mere negligence intervenes the father or mother may stand subsidiarily liable for the damages caused by his or her son, no liability would attach if the damage is caused with criminal intent.’ (3 SCRA 361-362).

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". . . In the instant case, minor son of herein defendants-appellees, Wendell Libi somehow got hold of the key to the drawer where said gun was kept under lock without defendant-spouses ever knowing that said gun had been missing from that safety box since 1978 when Wendell Libi had) a picture taken wherein he proudly displayed said gun and dedicated this picture to his sweetheart, Julie Ann Gotiong; also since then, Wendell Libi was said to have kept said gun in his car, in keeping up with his supposed role of a CANU agent . . ." chanrobles lawlibrary : rednad x x x "Based on the foregoing discussions of the assigned errors, this Court holds that the lower court was not correct in dismissing herein plaintiffs-appellants’ complaint because as preponderantly shown by evidence, defendants-appellees utterly failed to exercise all the diligence of a good father of the family in preventing their minor son from committing this crime by means of the gun of defendants-appellees which was freely accessible to Wendell Libi for they have not regularly checked whether said gun was still under lock, but learned that it was missing from the safety deposit box only after the crime had been committed." (Emphases ours.) 19 We agree with the conclusion of respondent court that petitioners should be held liable for the civil liability based on what appears from all indications was a crime committed by their minor son. We take this opportunity, however, to digress and discuss its ratiocination therefor on jurisprudential dicta which we feel require clarification. In imposing sanctions for the so-called vicarious liability of petitioners, respondent court cites Fuellas v. Cadano, Et. Al. 20 which supposedly holds that" (t)he subsidiary liability of parents for damages caused by their minor children imposed by Article 2180 of the New Civil Code covers obligations arising from both quasi-delicts and criminal offenses," followed by an extended quotation ostensibly from the same case explaining why under Article 2180 of the Civil Code and Article 101 of the Revised Penal Code parents should assume subsidiary liability for damages caused by their minor children. The quoted passages are set out two paragraphs back, with pertinent underscoring for purposes of the discussion hereunder.chanrobles law library Now, we do not have any objection to the doctrinal rule holding, the parents liable, but the categorization of their liability as being subsidiary, and not primary, in nature requires a hard second look considering previous decisions of this court on the matter which warrant comparative analyses. Our concern stems from our readings that if the liability of the parents for crimes or quasi-delicts of their minor children is subsidiary, then the parents can neither invoke nor be absolved of civil liability on the defense that they acted with the diligence of a good father of a family to prevent damages. On the other hand, if such liability imputed to the parents is considered direct and primary, that diligence would constitute a valid and substantial defense. We believe that the civil liability of parents for quasi-delicts of their minor children, as contemplated in Article 2180 of the Civil Code, is primary and not subsidiary. In fact, if we apply Article 2194 of said code which provides for solidary liability of joint tortfeasors, the persons responsible for the act or omission, in this case the minor and the father and, in case of his death of incapacity, the mother, are solidarily liable. Accordingly, such parental liability is primary and not subsidiary, hence the last paragraph of Article 2180 provides that" (t)he 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 damages."cralaw virtua1aw library We are also persuaded that the liability of the parents for felonies committed by their minor children is likewise primary, not subsidiary. Article 101 of the Revised Penal Code provides:jgc:chanrobles.com.ph "ARTICLE 101. Rules regarding civil liability in certain cases. — x x x First. In cases of subdivisions . . . 2, and 3 of Article 12, the civil liability for acts committed by . . . a person under nine years of age, or by one over nine but under fifteen years of age, who has acted without discernment, shall devolve upon those having such person under their legal authority or

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control, unless it appears that there was no fault or negligence on their part." (Emphasis supplied.) 21 Accordingly, just like the rule in Article 2180 of the Civil Code, under the foregoing provision the civil liability of the parents for crimes committed by their minor children is likewise direct and primary, and also subject to the defense of lack of fault or negligence on their part, that is, the exercise of the diligence of a good father of a family. That in both quasi-delicts and crimes the parents primarily respond for such damages is buttressed by the corresponding provisions in both codes that the minor transgressor shall be answerable or shall respond with his own property only in the absence or in case of insolvency of the former. Thus, for civil liability ex quasi delicto of minors, Article 2182 of the Civil Code states that" (i)f the minor causing damage has no parents or guardian, the minor . . . shall be answerable with his own property in an action against him where a guardian ad litem shall be appointed." For civil liability ex delicto of minors, an equivalent provision is found in the third paragraph of Article 101 of the Revised Penal Code, to wit:jgc:chanrobles.com.ph "Should there be no person having such . . . minor under his authority, legal guardianship or control, or if such person be insolvent, said . . . minor shall respond with (his) own property, excepting property exempt from execution, in accordance with civil law."cralaw virtua1aw library The civil liability of parents for felonies committed by their minor children contemplated in the aforesaid rule in Article 101 of the Revised Penal Code in relation to Article 2180 of the Civil Code has, aside from the aforecited case of Fuellas, been the subject of a number of cases adjudicated by this Court, viz.: Exconde v. Capuno, Et Al., 22 Araneta v. Arreglado, 23 Salen, Et. Al. v. Balce, 24 Paleyan, etc., Et. Al. v. Bangkili, Et Al., 25 and Elcano, et al, v. Hill, Et. Al. 26 Parenthetically, the aforesaid cases were basically on the issue of the civil liability of parents for crimes committed by their minor children over 9 but under 15 years of age, who acted with discernment, and also of minors 15 years of aye or over, since these situations are not covered by Article 101, Revised Penal Code. In both instances, this Court held that the issue of parental civil liability should be resolved in accordance with the provisions of Article 2180 of the Civil Code for the reasons well expressed in Salen and adopted in the cases hereinbefore enumerated that to hold that the civil liability under Article 2180 would apply only to quasi-delicts and not to criminal offenses would result in the absurdity that in an act involving mere negligence the parents would be liable but not where the damage is caused with criminal intent. In said cases, however, there are unfortunate variances resulting in a regrettable inconsistency in the Court’s determination of whether the liability of the parents, in cases involving either crimes or quasi-delicts of their minor children, is primary or subsidiary. In Exconde, where the 15-year old minor was convicted of double homicide through reckless imprudence, in a separate civil action arising from the crime the minor and his father were held jointly and severally liable for failure of the latter to prove the diligence of a good father of a family. The same liability in solidum and, therefore, primary liability was imposed in a separate civil action in Araneta on the parents and their 14-year old son who was found guilty of frustrated homicide, but on the authority of Article 2194 of the Civil Code providing for solidary responsibility of two or more persons who are liable for a quasi-delict. However, in Salen, the father was declared subsidiarily liable for damages arising from the conviction of his son, who was over 15 but less than 18 years of age, by applying Article 2180 but, this time, disregarding Article 2194 of the Civil Code. In the present case, as already explained, the petitioners herein were also held liable but supposedly in line with Fuellas which purportedly declared the parents subsidiarily liable for the civil liability for serious physical injuries committed by their 13-year old son. On the other hand, in Paleyan, the mother and her 19-year old son were adjudged solidarily liable for damages arising from his conviction for homicide by the application of Article 2180 of the Civil Code since this is likewise not covered by Article 101 of the Revised Penal Code. Finally, in Elcano, although the son was acquitted in a homicide charge due to "lack of intent, coupled with mistake," it was ruled that while under Article 2180 of the Civil Code there should be solidary liability for damages, since the son, "although married, was living with his father and getting subsistence from him at the time of the occurrence," but "is now of age, as a matter of equity" the father was only held subsidiarily liable.

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It bears stressing, however, that the Revised Penal Code provides for subsidiary liability only for persons causing damages under the compulsion of irresistible force or under the impulse of an uncontrollable fear; 27 innkeepers, tavernkeepers and proprietors of establishments; 28 employers, teachers, persons and corporations engaged in industry; 29 and principals, accomplices and accessories for the unpaid civil liability of their co-accused in the other classes. 30 Also, coming back to respondent court’s reliance on Fuellas in its decision in the present case, it is not exactly accurate to say that Fuellas provided for subsidiary liability of the parents therein. A careful scrutiny shows that what respondent court quoted verbatim in its decision now on appeal in the present case, and which it attributed to Fuellas, was the syllabus on the law report of said case which spoke of "subsidiary" liability. However, such categorization does not specifically appear in the text of the decision in Fuellas. In fact, after reviewing therein the cases of Exconde, Araneta and Salen and the discussions in said cases of Article 101 of the Revised Penal Code in relation to Article 2180 of the Civil Code, this Court concluded its decision in this wise:jgc:chanrobles.com.ph "Moreover, the case at bar was decided by the Court of Appeals on the basis of evidence submitted therein by both parties, independent of the criminal case. And responsibility for fault or negligence under Article 2176 upon which the present action was instituted, is entirely separate and distinct from the civil liability arising from fault or negligence under the Penal Code (Art. 2177), and having in mind the reasons behind the law as heretofore stated, any discussion as to the minor’s criminal responsibility is of no moment."cralaw virtua1aw library Under the foregoing considerations, therefore, we hereby rule that the parents are and should be held primarily liable for the civil liability arising from criminal offenses committed by their minor children under their legal authority or control, or who live in their company, unless it is proven that the former acted with the diligence of a good father of a family to prevent such damages. That primary liability is premised on the provisions of Article 101 of the Revised Penal Code with respect to damages ex delicto caused by their children 9 years of age or under, or over 9 but under 15 years of age who acted without discernment; and, with regard to their children over 9 but under 15 years of age who acted with discernment, or 15 years or over but under 21 years of age, such primary liability shall be imposed pursuant to Article 2180 of the Civil Code. 31 Under said Article 2180, the enforcement of such liability shall be effected against the father and, in case of his death or incapacity, the mother. This was amplified by the Child and Youth Welfare Code which provides that the same shall devolve upon the father and, in case of his death or incapacity, upon the mother or, in case of her death or incapacity, upon the guardian, but the liability may also be voluntarily assumed by a relative or family friend of the youthful offender. 32 However, under the Family Code, this civil liability is now, without such alternative qualification, the responsibility of the parents and those who exercise parental authority over the minor offender. 33 For civil liability arising from quasi-delicts committed by minors, the same rules shall apply in accordance with Articles 2180 and 2182 of the Civil Code, as so modified. In the case at bar, whether the death of the hapless Julie Ann Gotiong was caused by a felony or a quasi-delict committed by Wendell Libi, respondent court did not err in holding petitioners liable for damages arising therefrom. Subject to the preceding modifications of the premises relied upon by it therefor and on the bases of the legal imperatives herein explained, we conjoin in its findings that said petitioners failed to duly exercise the requisite diligentissimi patris familias to prevent such damages. ACCORDINGLY, the instant Petition is DENIED and the assailed judgment of respondent Court of Appeals is hereby AFFIRMED, with costs against petitioners. SO ORDERED. Narvasa, C.J., Gutierrez, Jr., Cruz, Padilla, Bidin, Griño-Aquino, Medialdea, Romero, Nocon and Bellosillo, Jr., JJ., concur. Feliciano, J., is on leave. Davide, Jr., J., took no part. I used to be counsel of one of the parties. Melo and Campos, Jr., JJ., took no part.

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LIABILITY OF OWNERS, MANAGERS AND EMPLOYERS

PHIL. RABBIT BUS LINES VS. PHIL. AMERICAN FORWARDERS FACTS Pineda recklessly drove a freight truck [owned by Phil-American Forwarders] along the national highway at Pampanga, and the truck bumped the PRBL bus driven by Pangalangan. As a result, Pangalangan suffered injuries and the bus was damaged and could not be used for 79 days, thus depriving PRBL of earnings amounting to P8,665.51. Balingit was the manager of Phil-American Forwarders. PRBL and Pangalangan filed a complaint for damages against Phil-American Forwarders, Balingit, and Pineda. Defendants said Balingit was not Pineda's employer. Balingit moved that the complaint against him be dismissed on the ground that PRBL and Pangalangan had no cause of action against him. CFI dismissed the complaint against Balingit, on the ground that he is not the manager of an establishment as contemplated in NCC 2180. ISSUE AND HOLDING WON the terms "employers" and "owners and managers of an establishment or enterprise" embrace the manager of a corporation owning a truck, the reckless operation of which allegedly resulted in the vehicular accident from which the damage arose. NO. RATIO Those terms do not include the manager of a corporation. It may be gathered from the context of NCC 2180 that the term "manager" ("director" in the Spanish version) is used in the sense of "employer". Hence, no tortious or quasi-delictual liability can be imposed on Balingit as manager of Phil-American Forwarders, in connection with the vehicular accident in question, because he himself may be regarded as an employee or dependiente of Phil-American Forwarders. CFI AFFIRMED FULL TEXT SECOND DIVISION G.R. No. L-25142 March 25, 1975 PHILIPPINE RABBIT BUS LINES, INC. and FELIX PANGALANGAN, plaintiffs-appellants, vs. PHIL-AMERICAN FORWARDERS, INC., ARCHIMEDES J. BALINGIT and FERNANDO PINEDA, defendants-appellees. Angel A. Sison for plaintiffs-appellants. Fidel Zosimo U. Canilao for defendants-appellees. AQUINO, J.:ñé+.£ªwph!1 Philippine Rabbit Bus Lines, Inc. and Felix Pangalangan appealed on pure questions of law from the order of the Court of First Instance of Tarlac, dismissing their complaint against Archimedes J. Balingit. The dismissal was based on the ground that Balingit as the manager of Phil-American Forwarders, Inc., which together with Fernando Pineda and Balingit, was sued for damages in an action based on quasi-delict or culpa aquiliana, is not the manager of an establishment contemplated in article 2180 of the Civil Code (Civil Case No. 3865). In the complaint for damages filed by the bus company and Pangalangan against Phil-American Forwarders, Inc., Balingit and Pineda, it was alleged that on November 24, 1962, Pineda drove recklessly a freight truck, owned by Phil-American Forwarders, Inc., along the national highway at

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Sto. Tomas, Pampanga. The truck bumped the bus driven by Pangalangan, which was owned by Philippine Rabbit Bus Lines, Inc. As a result of the bumping, Pangalangan suffered injuries and the bus was damaged and could not be used for seventy-nine days, thus depriving the company of earnings amounting to P8,665.51. Balingit was the manager of Phil-American Forwarders, Inc. Among the defenses interposed by the defendants in their answer was that Balingit was not Pineda's employer. Balingit moved that the complaint against him be dismissed on the ground that the bus company and the bus driver had no cause of action against him. As already stated, the lower court dismissed the action as to Balingit. The bus company and its driver appealed. The Civil Code provides:têñ.£îhqw⣠ART. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. ART. 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 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. 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) The novel and unprecedented legal issue in this appeal is whether the terms "employers" and "owners and managers of an establishment or enterprise" (dueños o directores de un establicimiento o empresa) used in article 2180 of the Civil Code, formerly article 1903 of the old Code, embrace the manager of a corporation owning a truck, the reckless operation of which allegedly resulted in the vehicular accident from which the damage arose. We are of the opinion that those terms do not include the manager of a corporation. It may be gathered from the context of article 2180 that the term "manager" ("director" in the Spanish version) is used in the sense of "employer". Hence, under the allegations of the complaint, no tortious or quasi-delictual liability can be fastened on Balingit as manager of Phil-American Forwarders, Inc., in connection with the vehicular accident already mentioned because he himself may be regarded as an employee or dependiente of his employer, Phil-American Forwarders, Inc. Thus, it was held "que es dependiente, a los efectos de la responsabilidad subsidiaria establecida en el num 3.0 del (art.) 1903, el director de un periodico explotado por una sociedad, porque cualquiera que sea su jerarquia y aunque Ileve la direccion de determinadas convicciones politicas no por eso deja de estar subordinado a la superior autoridad de la Empresa" (Decision of Spanish Supreme Court dated December 6, 1912 cited in 12 Manresa, Codigo Civil Español 5th Ed. 662; 1913 Enciclopedia Juridica Española 992). The bus company and its driver, in their appellants' brief, injected a new factual issue which was not alleged in their complaint. They argue that Phil- American Forwarders, Inc. is merely a business

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conduit of Balingit because out of its capital stock with a par value of P41,200, Balingit and his wife had subscribed P40,000 and they paid P10,000 on their subscription, while the other incorporators, namely, Rodolfo Limjuco, Ponciano Caparas and Rafael Suntay paid P250.25 and P25, respectively. That argument implies that the veil of corporate fiction should be pierced and that Phil-American Forwarders, Inc. and Balingit and his wife should be treated as one and the same civil personality. We cannot countenance that argument in this appeal. It was not raised in the lower court. The case has to be decided on the basis of the pleadings filed in the trial court where it was assumed that Phil-American Forwarders, Inc. has a personality separate and distinct from that of the Balingit spouses. The legal issue, which the plaintiffs-appellants can ventilate in this appeal, is one which was raised in the lower court and which is within the issues framed by the parties (Sec. 18, Rule 46, Rules of Court). When a party deliberately adopts a certain theory and the case is decided upon that theory in the court below, he will not be permitted to change his theory on appeal because, to permit him to do so, could be unfair to the adverse party (2 Moran's Comments on the Rules of Court, 1970 Ed. p. 505). WHEREFORE, the lower court's order of dismissal is affirmed. Costs against the plaintiffs-appellants. SO ORDERED. Fernando (Chairman), Barredo, Antonio and Fernandez, JJ., concur.1äwphï1.ñët

UNIVERSITY OF THE EAST VS JADER Article 19 of the Civil Code Petitioner was enrolled in the defendant’s College of Law. He failed to take the regular examination in Practice Court 1 for which he was given an incomplete grade. He enrolled for the second semester as a fourth year student, and filed an application for the removal of the incomplete grade which was approved by the Dean. In the meantime, the faculty members and the Dean met to deliberate who among the fourth year students should be allowed to graduate. The plaintiff’s name appeared on the tentative list, he also attended the investiture ceremonies to which he tendered blowout afterwards. He thereafter prepared himself for the bar examination and took review classes. However, he was not able to take the bar examination because his academic requirements is not complete. Consequently, respondent sued petitioner for damages alleging that he suffered moral shock besmirched reputation, wounded feelings, sleepless nights, when he was not able to take the 1988 bar examinations arising from the latter’s negligence. He prayed for an award of moral damages, unrealized income, attorney’s fees and cost of suit. ISSUE: Whether or not an educational institution be held liable for damages for misleading a student into believing that the latter had satisfied all the requirements for graduation when such is not the case. HELD: The Supreme Court held that UE is liable for damages. It is the contractual obligation of the school to timely inform and furnish sufficient notice and information to each and every student as to where he or she had already complied with the entire requirement for the conferment of a degree or whether they should be included among those who will graduate. The school cannot be said to have acted in good faith. Absence of good faith must be sufficiently established for a successful prosecution by the aggrieved party in suit for abuse of right under Article 19 of the Civil Code. FULL TEXT FIRST DIVISION G.R. No. 132344 February 17, 2000 UNIVERSITY OF THE EAST, petitioner, vs. ROMEO A. JADER, respondent. YNARES-SANTIAGO, J.:

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May an educational institution be held liable for damages for misleading a student into believing that the latter had satisfied all the requirements for graduation when such is not the case? This is the issue in the instant petition for review premised on the following undisputed facts as summarized by the trial court and adopted by the Court of Appeals (CA),1 to wit: Plaintiff was enrolled in the defendants' College of Law from 1984 up to 1988. In the first semester of his last year (School year 1987-1988), he failed to take the regular final examination in Practice Court I for which he was given an incomplete grade (Exhibits "2", also Exhibit "H"). He enrolled for the second semester as fourth year law student (Exhibit "A") and on February 1, 1988 he filed an application for the removal of the incomplete grade given him by Professor Carlos Ortega (Exhibits "H-2", also Exhibit "2") which was approved by Dean Celedonio Tiongson after payment of the required fee. He took the examination on March 28, 1988. On May 30, 1988, Professor Carlos Ortega submitted his grade. It was a grade of five (5). (Exhibits "H-4", also Exhibits "2-L", "2-N").1âwphi1.nêt In the meantime, the Dean and the Faculty Members of the College of Law met to deliberate on who among the fourth year students should be allowed to graduate. The plaintiff's name appeared in the Tentative List of Candidates for graduation for the Degree of Bachelor of Laws (LL.B) as of Second Semester (1987-1988) with the following annotation: JADER ROMEO A. Def. Conflict of Laws — x-1-87-88, Practice Court I Inc., 1-87-88 C-1 to submit transcript with S.O. (Exhibits "3", "3-C-1", "3-C-2"). The 35th Investitures & Commencement Ceremonies for the candidates of Bachelor of Laws was scheduled on the 16th of April 1988 at 3:00 o'clock in the afternoon, and in the invitation for that occasion the name of the plaintiff appeared as one of the candidates. (Exhibits "B", "B-6", "B-6-A"). At the foot of the list of the names of the candidates there appeared however the following annotation: This is a tentative list Degrees will be conferred upon these candidates who satisfactorily complete requirements as stated in the University Bulletin and as approved of the Department of Education, Culture and Sports (Exhibit "B-7-A"). The plaintiff attended the investiture ceremonies at F. dela Cruz Quadrangle, U.E., Recto Campus, during the program of which he went up the stage when his name was called, escorted by her (sic) mother and his eldest brother who assisted in placing the Hood, and his Tassel was turned from left to right, and he was thereafter handed by Dean Celedonio a rolled white sheet of paper symbolical of the Law Diploma. His relatives took pictures of the occasion (Exhibits "C" to "C-6", "D-3" to "D-11"). He tendered a blow-out that evening which was attended by neighbors, friends and relatives who wished him good luck in the forthcoming bar examination. There were pictures taken too during the blow-out (Exhibits "D" to "D-1"). He thereafter prepared himself for the bar examination. He took a leave of absence without pay from his job from April 20, 1988 to September 30, 1988 (Exhibit "G") and enrolled at the pre-bar review class in Far Eastern University. (Exhibits "F" to "F-2"). Having learned of the deficiency he dropped his review class and was not able to take the bar examination.2 Consequently, respondent sued petitioner for damages alleging that he suffered moral shock, mental anguish, serious anxiety, besmirched reputation, wounded feelings and sleepless nights when he was not able to take the 1988 bar examinations arising from the latter's negligence. He prayed for an award of moral and exemplary damages, unrealized income, attorney's fees, and costs of suit. In its answer with counterclaim, petitioner denied liability arguing mainly that it never led respondent to believe that he completed the requirements for a Bachelor of Laws degree when his name was included in the tentative list of graduating students. After trial, the lower court rendered judgment as follows: WHEREFORE, in view of the foregoing judgment is hereby rendered in favor of the plaintiff and against the defendant ordering the latter to pay plaintiff the sum of THIRTY FIVE THOUSAND FOUR HUNDRED SEVENTY PESOS (P35,470.00) with legal rate of interest from the filing of the complaint

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until fully paid, the amount of FIVE THOUSAND PESOS (P5,000.00) as attorney's fees and the cost of suit. Defendant's counterclaim is, for lack of merit, hereby dismissed. SO ORDERED.3 which on appeal by both parties was affirmed by the Court of Appeals (CA) with modification. The dispositive portion of the CA decision reads: WHEREFORE, in the light of the foregoing, the lower Court's Decision is hereby AFFIRMED with the MODIFICATION that defendant-appellee, in addition to the sum adjudged by the lower court in favor of plaintiff-appellant, is also ORDERED to pay plaintiff-appellant the amount of FIFTY THOUSAND (P50,000.00) PESOS for moral damages. Costs against defendant-appellee. SO ORDERED.4 Upon the denial of its motion for reconsideration, petitioner UE elevated the case to this Court on a petition for review under Rule 45 of the Rules of Court, arguing that it has no liability to respondent Romeo A. Jader, considering that the proximate and immediate cause of the alleged damages incurred by the latter arose out of his own negligence in not verifying from the professor concerned the result of his removal exam. The petition lacks merit. When a student is enrolled in any educational or learning institution, a contract of education is entered into between said institution and the student. The professors, teachers or instructors hired by the school are considered merely as agents and administrators tasked to perform the school's commitment under the contract. Since the contracting parties are the school and the student, the latter is not duty-bound to deal with the former's agents, such as the professors with respect to the status or result of his grades, although nothing prevents either professors or students from sharing with each other such information. The Court takes judicial notice of the traditional practice in educational institutions wherein the professor directly furnishes his/her students their grades. It is the contractual obligation of the school to timely inform and furnish sufficient notice and information to each and every student as to whether he or she had already complied with all the requirements for the conferment of a degree or whether they would be included among those who will graduate. Although commencement exercises are but a formal ceremony, it nonetheless is not an ordinary occasion, since such ceremony is the educational institution's way of announcing to the whole world that the students included in the list of those who will be conferred a degree during the baccalaureate ceremony have satisfied all the requirements for such degree. Prior or subsequent to the ceremony, the school has the obligation to promptly inform the student of any problem involving the latter's grades and performance and also most importantly, of the procedures for remedying the same. Petitioner, in belatedly informing respondent of the result of the removal examination, particularly at a time when he had already commenced preparing for the bar exams, cannot be said to have acted in good faith. Absence of good faith must be sufficiently established for a successful prosecution by the aggrieved party in a suit for abuse of right under Article 19 of the Civil Code. Good faith connotes an honest intention to abstain from taking undue advantage of another, even though the forms and technicalities of the law, together with the absence of all information or belief of facts, would render the transaction unconscientious.5 It is the school that has access to those information and it is only the school that can compel its professors to act and comply with its rules, regulations and policies with respect to the computation and the prompt submission of grades. Students do not exercise control, much less influence, over the way an educational institution should run its affairs, particularly in disciplining its professors and teachers and ensuring their compliance with the school's rules and orders. Being the party that hired them, it is the school that exercises general supervision and exclusive control over the professors with respect to the submission of reports involving the students' standing. Exclusive control means that no other person or entity had any control over the instrumentality which caused the damage or injury.6 The college dean is the senior officer responsible for the operation of an academic program, enforcement of rules and regulations, and the supervision of faculty and student services.7 He must

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see to it that his own professors and teachers, regardless of their status or position outside of the university, must comply with the rules set by the latter. The negligent act of a professor who fails to observe the rules of the school, for instance by not promptly submitting a student's grade, is not only imputable to the professor but is an act of the school, being his employer. Considering further, that the institution of learning involved herein is a university which is engaged in legal education, it should have practiced what it inculcates in its students, more specifically the principle of good dealings enshrined in Articles 19 and 20 of the Civil Code which states: Art. 19. Every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith. Art. 20. Every person who, contrary to law, wilfully or negligently causes damage to another, shall indemnify the latter for the same. Art. 19 was intended to expand the concept of torts by granting adequate legal remedy for the untold number of moral wrongs which is impossible for human foresight to provide specifically in statutory law.8 In civilized society, men must be able to assume that others will do them no intended injury — that others will commit no internal aggressions upon them; that their fellowmen, when they act affirmatively will do so with due care which the ordinary understanding and moral sense of the community exacts and that those with whom they deal in the general course of society will act in good faith. The ultimate thing in the theory of liability is justifiable reliance under conditions of civilized society.9 Schools and professors cannot just take students for granted and be indifferent to them, for without the latter, the former are useless. Educational institutions are duty-bound to inform the students of their academic status and not wait for the latter to inquire from the former. The conscious indifference of a person to the rights or welfare of the person/persons who may be affected by his act or omission can support a claim for damages.10 Want of care to the conscious disregard of civil obligations coupled with a conscious knowledge of the cause naturally calculated to produce them would make the erring party liable.11 Petitioner ought to have known that time was of the essence in the performance of its obligation to inform respondent of his grade. It cannot feign ignorance that respondent will not prepare himself for the bar exams since that is precisely the immediate concern after graduation of an LL.B. graduate. It failed to act seasonably. Petitioner cannot just give out its student's grades at any time because a student has to comply with certain deadlines set by the Supreme Court on the submission of requirements for taking the bar. Petitioner's liability arose from its failure to promptly inform respondent of the result of an examination and in misleading the latter into believing that he had satisfied all requirements for the course. Worth quoting is the following disquisition of the respondent court: It is apparent from the testimony of Dean Tiongson that defendant-appellee University had been informed during the deliberation that the professor in Practice Court I gave plaintiff-appellant a failing grade. Yet, defendant-appellee still did not inform plaintiff-appellant of his failure to complete the requirements for the degree nor did they remove his name from the tentative list of candidates for graduation. Worse, defendant-appellee university, despite the knowledge that plaintiff-appellant failed in Practice Court I, again included plaintiff-appellant's name in the "tentative list of candidates for graduation which was prepared after the deliberation and which became the basis for the commencement rites program. Dean Tiongson reasons out that plaintiff-appellant's name was allowed to remain in the tentative list of candidates for graduation in the hope that the latter would still be able to remedy the situation in the remaining few days before graduation day. Dean Tiongson, however, did not explain how plaintiff appellant Jader could have done something to complete his deficiency if defendant-appellee university did not exert any effort to inform plaintiff-appellant of his failing grade in Practice Court I.12 Petitioner cannot pass on its blame to the professors to justify its own negligence that led to the delayed relay of information to respondent. When one of two innocent parties must suffer, he through whose agency the loss occurred must bear it.13 The modern tendency is to grant indemnity for damages in cases where there is abuse of right, even when the act is not illicit.14 If mere fault or negligence in one's acts can make him liable for damages for injury caused thereby, with more reason should abuse or bad faith make him liable. A person should be protected only when he acts in the

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legitimate exercise of his right, that is, when he acts with prudence and in good faith, but not when he acts with negligence or abuse.15 However, while petitioner was guilty of negligence and thus liable to respondent for the latter's actual damages, we hold that respondent should not have been awarded moral damages. We do not agree with the Court of Appeals' findings that respondent suffered shock, trauma and pain when he was informed that he could not graduate and will not be allowed to take the bar examinations. At the very least, it behooved on respondent to verify for himself whether he has completed all necessary requirements to be eligible for the bar examinations. As a senior law student, respondent should have been responsible enough to ensure that all his affairs, specifically those pertaining to his academic achievement, are in order. Given these considerations, we fail to see how respondent could have suffered untold embarrassment in attending the graduation rites, enrolling in the bar review classes and not being able to take the bar exams. If respondent was indeed humiliated by his failure to take the bar, he brought this upon himself by not verifying if he has satisfied all the requirements including his school records, before preparing himself for the bar examination. Certainly, taking the bar examinations does not only entail a mental preparation on the subjects thereof; there are also prerequisites of documentation and submission of requirements which the prospective examinee must meet. WHEREFORE, the assailed decision of the Court of Appeals is AFFIRMED with MODIFICATION. Petitioner is ORDERED to PAY respondent the sum of Thirty-five Thousand Four Hundred Seventy Pesos (P35,470.00), with legal interest of 6% per annum computed from the date of filing of the complaint until fully paid; the amount of Five Thousand Pesos (P5,000.00) as attorney's fees; and the costs of the suit. The award of moral damages is DELEIED.1âwphi1.nêt SO ORDERED. Davide, Jr., C.J., Kapunan and Pardo, JJ., concur. Puno, J., took no part.

CHAPMAN VS UNDERWOOD 27 Phil 374 – Civil Law - Torts and Damages – Liability of owners of motor vehicles The facts of the case took place in the 1910’s. J.H. Chapman visited a friend in Santa Ana and while he was about to ride a vehicle to take him home he was struck by a car owned by James Underwood and driven by his chauffeur. Chapman was on the correct lane. Underwood was riding in the car when the incident happened. Apparently, the chauffeur, coming from the opposite direction and was driving straight ahead and when the automobile about to be boarded by Chapman was in front of him, he [the chauffeur] instead of swerving left he suddenly swerved right to the direction of Chapman thereby hitting and running over him. ISSUE: Whether or not Underwood is liable for the negligent act of his chauffeur. HELD: No. The general rule is that an owner who sits in his automobile, or other vehicle, and permits his driver to continue in a violation of the law by the performance of negligent acts, after he has had a reasonable opportunity to observe them and to direct that the driver cease therefrom, becomes himself responsible for such acts. On the other hand, if the driver, by a sudden act of negligence, and without the owner having a reasonable opportunity to prevent the acts or its continuance, injures a person or violates the criminal law, the owner of the automobile, although present therein at the time the act was committed, is not responsible, either civilly or criminally, therefor. The act complained of must be continued in the presence of the owner for such a length a time that the owner, by his acquiescence, makes his driver’s act his own. In the case at bar, it was not shown that there was a sufficient period for Underwood to dissuade the chauffeur from the negligent act as the swerving of the vehicle by the chauffeur was sudden. FULL TEXT EN BANC G.R. No. L-9010 March 28, 1914 J. H. CHAPMAN, plaintiff-appellant, vs. JAMES M. UNDERWOOD, defendant-appellee. Wolfson & Wolfson for appellant.

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Bruce, Lawrence, Ross & Block for appellee. D E C I S I O N MORELAND, J.: At the time the accident occurred, which is the basis of this action, there was a single-track street-car line running along Calle Herran, with occasional switches to allow cars to meet and pass each other. One of these switches was located at the scene of the accident. The plaintiff had been visiting his friend, a man by the name of Creveling, in front of whose house the accident happened. He desired to board a certain “San Marcelino” car coming from Santa Ana and bound for Manila. Being told by Creveling that the car was approaching, he immediately, and somewhat hurriedly, passed from the gate into the street for the purpose of signaling and boarding the car. The car was a closed one, the entrance being from the front or the rear flatform. Plaintiff attempted to board the front platform but, seeing that he could not reached it without extra exertion, stopped beside the car, facing toward the rear platform, and waited for it to come abreast of him in order to board. While in this position he was struck from behind and run over by the defendant’s automobile. The defendant entered Calle Herran at Calle Peñafrancia in his automobile driven by his chauffeur, a competent driver. A street car bound from Manila to Santa Ana being immediately in front of him, he followed along behind it. Just before reaching the scene of the accident the street car which was following took the switch — that is, went off the main line to the left upon the switch lying alongside of the main track. Thereupon the defendant no longer followed that the street car nor went to the left, but either kept straight ahead on the main street-car track or a bit to the right. The car which the plaintiff intended to board was on the main line and bound in an opposite direction to that in which the defendant was going. When the front of the “San Marcelino” car, the one the plaintiff attempted to board, was almost in front of the defendant’s automobile, defendant’s driver suddenly went to the right and struck and ran over the plaintiff, as above described. The judgment of the trial court was for defendant. A careful examination of the record leads us to the conclusion that the defendant’s driver was guilty of negligence in running upon and over the plaintiff. He was passing an oncoming car upon the wrong side. The plaintiff, in common out to board the car, was not obliged, for his own protection, to observe whether a car was coming upon him from his left hand. He had only to guard against those coming from the right. He knew that, according to the law of the road, no automobile or other vehicle coming from his left should pass upon his side of the car. He needed only to watch for cars coming from his right, as they were the only ones under the law permitted to pass upon that side of the street car. The defendant, however, is not responsible for the negligence of his driver, under the facts and circumstances of this case. As we have said in the case of Johnson vs. David (5 Phil. Rep., 663), the driver does not fall within the list of persons in article 1903 of the Civil Code for whose acts the defendant would be responsible. Although in the David case the owner of the vehicle was not present at the time the alleged negligent acts were committed by the driver, the same rule applies where the owner is present, unless the negligent act of the driver are continued for such a length of time as to give the owner a reasonable opportunity to observe them and to direct his driver to desist therefrom. An owner who sits in his automobile, or other vehicle, and permits his driver to continue in a violation of the law by the performance of negligent acts, after he has had a reasonable opportunity to observe them and to direct that the driver cease therefrom, becomes himself responsible for such acts. The owner of an automobile who permits his chauffeur to drive up to Escolta, for example, at a speed of 60 miles an hour, without any effort to stop him, although he has had a reasonable opportunity to do so, becomes himself responsible, both criminally and civilly, for the results produced by the acts of his chauffeur. On the other hand, if the driver, by a sudden act of negligence, and without the owner having a reasonable opportunity to prevent the acts or its continuance, injures a person or violates the criminal law, the owner of the automobile, although present therein at the time the act was committed, is not responsible, either civilly or criminally, therefor. The act complained of must be continued in the presence of the owner for such a length a time that the owner, by his acquiescence, makes his driver’s act his own. In the case before us it does not appear from the record that, from the time the automobile took the wrong side of the road to the commission of the injury, sufficient time intervened to give the defendant an opportunity to correct the act of his driver. Instead, it appears with fair clearness that the interval between the turning out to meet and pass the street car and the happening of the accident was so small as not to be sufficient to charge defendant with the negligence of the driver. Whether or not the owner of an automobile driven by a competent driver, would be responsible, whether present or not, for the negligent acts of his driver when the automobile was a part of a

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business enterprise, and was being driven at the time of the accident in furtherance of the owner’s business, we do not now decide. The judgment appealed from is affirmed, with costs against the appellant. Arellano, C.J., Carson and Araullo, JJ., concur. Trent, J., concurs in the result.

FONTANILLA VS MALIAMAN FACTS: National Irrigation Administration (NIA), a government agency, was held liable for damages resulting to the death of the son of herein petitioner spouses caused by the fault and/or negligence of the driver of the said agency. NIA maintains that it is not liable for the act of its driver because the former does not perform primarily proprietorship functions but governmental functions. ISSUE: Whether or not NIA may be held liable for damages caused by its driver. HELD: Yes. NIA is a government agency with a corporate personality separate and distinct from the government, because its community services are only incidental functions to the principal aim which is irrigation of lands, thus, making it an agency with proprietary functions governed by Corporation Law and is liable for actions of their employees. FULL TEXT SECOND DIVISION G.R. No. L-55963 December 1, 1989 SPOUSES JOSE FONTANILLA AND VIRGINIA FONTANILLA, petitioners, vs. HONORABLE INOCENCIO D. MALIAMAN and NATIONAL IRRIGATION ADMINISTRATION, respondents. G.R. No. L-61045 December 1, 1989 NATIONAL IRRIGATION ADMINISTRATION, appellant, vs. SPOUSES JOSE FONTANILLA and VIRGINIA FONTANILLA, appellees. Cecilio V. Suarez, Jr. for Spouses Fontanilla. Felicisimo C. Villaflor for NIA. PARAS, J.: In G.R. No. L-55963, the petition for review on certiorari seeks the affirmance of the decision dated March 20, 1980 of the then Court of First Instance of Nueva Ecija, Branch VIII, at San Jose City and its modification with respect to the denial of petitioner's claim for moral and exemplary damages and attorneys fees. In G.R. No. 61045, respondent National Irrigation Administration seeks the reversal of the aforesaid decision of the lower court. The original appeal of this case before the Court of Appeals was certified to this Court and in the resolution of July 7, 1982, it was docketed with the aforecited number. And in the resolution of April 3, this case was consolidated with G.R. No. 55963. It appears that on August 21, 1976 at about 6:30 P.M., a pickup owned and operated by respondent National Irrigation Administration, a government agency bearing Plate No. IN-651, then driven officially by Hugo Garcia, an employee of said agency as its regular driver, bumped a bicycle ridden by Francisco Fontanilla, son of herein petitioners, and Restituto Deligo, at Maasin, San Jose City along

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the Maharlika Highway. As a result of the impact, Francisco Fontanilla and Restituto Deligo were injured and brought to the San Jose City Emergency Hospital for treatment. Fontanilla was later transferred to the Cabanatuan Provincial Hospital where he died. Garcia was then a regular driver of respondent National Irrigation Administration who, at the time of the accident, was a licensed professional driver and who qualified for employment as such regular driver of respondent after having passed the written and oral examinations on traffic rules and maintenance of vehicles given by National Irrigation Administration authorities. The within petition is thus an off-shot of the action (Civil Case No. SJC-56) instituted by petitioners-spouses on April 17, 1978 against respondent NIA before the then Court of First Instance of Nueva Ecija, Branch VIII at San Jose City, for damages in connection with the death of their son resulting from the aforestated accident. After trial, the trial court rendered judgment on March 20, 1980 which directed respondent National Irrigation Administration to pay damages (death benefits) and actual expenses to petitioners. The dispositive portion of the decision reads thus: . . . . . Judgment is here rendered ordering the defendant National Irrigation Administration to pay to the heirs of the deceased P12,000.00 for the death of Francisco Fontanilla; P3,389.00 which the parents of the deceased had spent for the hospitalization and burial of the deceased Francisco Fontanilla; and to pay the costs. (Brief for the petitioners spouses Fontanilla, p. 4; Rollo, p. 132) Respondent National Irrigation Administration filed on April 21, 1980, its motion for reconsideration of the aforesaid decision which respondent trial court denied in its Order of June 13, 1980. Respondent National Irrigation Administration thus appealed said decision to the Court of Appeals (C.A.-G.R. No. 67237- R) where it filed its brief for appellant in support of its position. Instead of filing the required brief in the aforecited Court of Appeals case, petitioners filed the instant petition with this Court. The sole issue for the resolution of the Court is: Whether or not the award of moral damages, exemplary damages and attorney's fees is legally proper in a complaint for damages based on quasi-delict which resulted in the death of the son of herein petitioners. Petitioners allege: 1. The award of moral damages is specifically allowable. under paragraph 3 of Article 2206 of the New Civil Code which provides that the spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased. Should moral damages be granted, the award should be made to each of petitioners-spouses individually and in varying amounts depending upon proof of mental and depth of intensity of the same, which should not be less than P50,000.00 for each of them. 2. The decision of the trial court had made an impression that respondent National Irrigation Administration acted with gross negligence because of the accident and the subsequent failure of the National Irrigation Administration personnel including the driver to stop in order to give assistance to the, victims. Thus, by reason of the gross negligence of respondent, petitioners become entitled to exemplary damages under Arts. 2231 and 2229 of the New Civil Code. 3. Petitioners are entitled to an award of attorney's fees, the amount of which (20%) had been sufficiently established in the hearing of May 23, 1979. 4. This petition has been filed only for the purpose of reviewing the findings of the lower court upon which the disallowance of moral damages, exemplary damages and attorney's fees was based and not for the purpose of disturbing the other findings of fact and conclusions of law. The Solicitor General, taking up the cudgels for public respondent National Irrigation Administration, contends thus:

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1. The filing of the instant petition is rot proper in view of the appeal taken by respondent National Irrigation Administration to the Court of Appeals against the judgment sought to be reviewed. The focal issue raised in respondent's appeal to the Court of Appeals involves the question as to whether or not the driver of the vehicle that bumped the victims was negligent in his operation of said vehicle. It thus becomes necessary that before petitioners' claim for moral and exemplary damages could be resolved, there should first be a finding of negligence on the part of respondent's employee-driver. In this regard, the Solicitor General alleges that the trial court decision does not categorically contain such finding. 2. The filing of the "Appearance and Urgent Motion For Leave to File Plaintiff-Appellee's Brief" dated December 28, 1981 by petitioners in the appeal (CA-G.R. No. 67237-R; and G. R. No.61045) of the respondent National Irrigation Administration before the Court of Appeals, is an explicit admission of said petitioners that the herein petition, is not proper. Inconsistent procedures are manifest because while petitioners question the findings of fact in the Court of Appeals, they present only the questions of law before this Court which posture confirms their admission of the facts. 3. The fact that the parties failed to agree on whether or not negligence caused the vehicular accident involves a question of fact which petitioners should have brought to the Court of Appeals within the reglementary period. Hence, the decision of the trial court has become final as to the petitioners and for this reason alone, the petition should be dismissed. 4. Respondent Judge acted within his jurisdiction, sound discretion and in conformity with the law. 5. Respondents do not assail petitioners' claim to moral and exemplary damages by reason of the shock and subsequent illness they suffered because of the death of their son. Respondent National Irrigation Administration, however, avers that it cannot be held liable for the damages because it is an agency of the State performing governmental functions and driver Hugo Garcia was a regular driver of the vehicle, not a special agent who was performing a job or act foreign to his usual duties. Hence, the liability for the tortious act should. not be borne by respondent government agency but by driver Garcia who should answer for the consequences of his act. 6. Even as the trial court touched on the failure or laxity of respondent National Irrigation Administration in exercising due diligence in the selection and supervision of its employee, the matter of due diligence is not an issue in this case since driver Garcia was not its special agent but a regular driver of the vehicle. The sole legal question on whether or not petitioners may be entitled to an award of moral and exemplary damages and attorney's fees can very well be answered with the application of Arts. 2176 and 2180 of theNew Civil Code. Art. 2176 thus provides: Whoever by act omission causes damage to another, there being fault or negligence, is obliged to pay for damage done. Such fault or negligence, if there is no pre-existing cotractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter Paragraphs 5 and 6 of Art. 21 80 read as follows: Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even the 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 Art. 2176 shall be applicable. The liability of the State has two aspects. namely: 1. Its public or governmental aspects where it is liable for the tortious acts of special agents only.

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2. Its private or business aspects (as when it engages in private enterprises) where it becomes liable as an ordinary employer. (p. 961, Civil Code of the Philippines; Annotated, Paras; 1986 Ed. ). In this jurisdiction, the State assumes a limited liability for the damage caused by the tortious acts or conduct of its special agent. Under the aforequoted paragrah 6 of Art. 2180, the State has voluntarily assumed liability for acts done through special agents. The State's agent, if a public official, must not only be specially commissioned to do a particular task but that such task must be foreign to said official's usual governmental functions. If the State's agent is not a public official, and is commissioned to perform non-governmental functions, then the State assumes the role of an ordinary employer and will be held liable as such for its agent's tort. Where the government commissions a private individual for a special governmental task, it is acting through a special agent within the meaning of the provision. (Torts and Damages, Sangco, p. 347, 1984 Ed.) Certain functions and activities, which can be performed only by the government, are more or less generally agreed to be "governmental" in character, and so the State is immune from tort liability. On the other hand, a service which might as well be provided by a private corporation, and particularly when it collects revenues from it, the function is considered a "proprietary" one, as to which there may be liability for the torts of agents within the scope of their employment. The National Irrigation Administration is an agency of the government exercising proprietary functions, by express provision of Rep. Act No. 3601. Section 1 of said Act provides: Section 1. Name and domicile.-A body corporate is hereby created which shall be known as the National Irrigation Administration, hereinafter called the NIA for short, which shall be organized immediately after the approval of this Act. It shall have its principal seat of business in the City of Manila and shall have representatives in all provinces for the proper conduct of its business. Section 2 of said law spells out some of the NIA's proprietary functions. Thus- Sec. 2. Powers and objectives.-The NIA shall have the following powers and objectives: (a) x x x x x x x x x x x x x x x x x x (b) x x x x x x x x x x x x x x x x x x (c) To collect from the users of each irrigation system constructed by it such fees as may be necessary to finance the continuous operation of the system and reimburse within a certain period not less than twenty-five years cost of construction thereof; and (d) To do all such other tthings and to transact all such business as are directly or indirectly necessary, incidental or conducive to the attainment of the above objectives. Indubitably, the NIA is a government corporation with juridical personality and not a mere agency of the government. Since it is a corporate body performing non-governmental functions, it now becomes liable for the damage caused by the accident resulting from the tortious act of its driver-employee. In this particular case, the NIA assumes the responsibility of an ordinary employer and as such, it becomes answerable for damages. This assumption of liability, however, is predicated upon the existence of negligence on the part of respondent NIA. The negligence referred to here is the negligence of supervision. At this juncture, the matter of due diligence on the part of respondent NIA becomes a crucial issue in determining its liability since it has been established that respondent is a government agency performing proprietary functions and as such, it assumes the posture of an ordinary employer which, under Par. 5 of Art. 2180, is responsible for the damages caused by its employees provided that it has failed to observe or exercise due diligence in the selection and supervision of the driver.

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It will be noted from the assailed decision of the trial court that "as a result of the impact, Francisco Fontanilla was thrown to a distance 50 meters away from the point of impact while Restituto Deligo was thrown a little bit further away. The impact took place almost at the edge of the cemented portion of the road." (Emphasis supplied,) [page 26, Rollo] The lower court further declared that "a speeding vehicle coming in contact with a person causes force and impact upon the vehicle that anyone in the vehicle cannot fail to notice. As a matter of fact, the impact was so strong as shown by the fact that the vehicle suffered dents on the right side of the radiator guard, the hood, the fender and a crack on the radiator as shown by the investigation report (Exhibit "E"). (Emphasis supplied) [page 29, Rollo] It should be emphasized that the accident happened along the Maharlika National Road within the city limits of San Jose City, an urban area. Considering the fact that the victim was thrown 50 meters away from the point of impact, there is a strong indication that driver Garcia was driving at a high speed. This is confirmed by the fact that the pick-up suffered substantial and heavy damage as above-described and the fact that the NIA group was then "in a hurry to reach the campsite as early as possible", as shown by their not stopping to find out what they bumped as would have been their normal and initial reaction. Evidently, there was negligence in the supervision of the driver for the reason that they were travelling at a high speed within the city limits and yet the supervisor of the group, Ely Salonga, failed to caution and make the driver observe the proper and allowed speed limit within the city. Under the situation, such negligence is further aggravated by their desire to reach their destination without even checking whether or not the vehicle suffered damage from the object it bumped, thus showing imprudence and reckelessness on the part of both the driver and the supervisor in the group. Significantly, this Court has ruled that even if the employer can prove the diligence in the selection and supervision (the latter aspect has not been established herein) of the employee, still if he ratifies the wrongful acts, or take no step to avert further damage, the employer would still be liable. (Maxion vs. Manila Railroad Co., 44 Phil. 597). Thus, too, in the case of Vda. de Bonifacio vs. B.L.T. Bus Co. (L-26810, August 31, 1970, 34 SCRA 618), this Court held that a driver should be especially watchful in anticipation of others who may be using the highway, and his failure to keep a proper look out for reasons and objects in the line to be traversed constitutes negligence. Considering the foregoing, respondent NIA is hereby directed to pay herein petitioners-spouses the amounts of P12,000.00 for the death of Francisco Fontanilla; P3,389.00 for hospitalization and burial expenses of the aforenamed deceased; P30,000.00 as moral damages; P8,000.00 as exemplary damages and attorney's fees of 20% of the total award. SO ORDERED. Padilla, Sarmiento and Regalado, JJ., concur. Melencio- Herrera (Chairperson,), J., is on leave.

FRANCO VS IAC THIRD DIVISION G.R. No. 71137 October 5, 1989 SPOUSES FEDERICO FRANCO and FELICISIMA R. FRANCO, petitioners, vs. INTERMEDIATE APPELLATE COURT, ANTONIO REYES, MRS. SUSAN CHUAY and LOLITA LUGUE respondents. FERNAN, C.J.:

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The instant petition for review of a decision of the Court of Appeals deals mainly with the nature of an employer's liability for his employee's negligent act. At about 7:30 in the evening of October 18, 1974, Macario Yuro swerved the northbound Franco Bus with Plate No. XY320-PUB he was driving to the left to avoid hitting a truck with a trailer parked facing north along the cemented pavement of the MacArthur Highway at Barrio Talaga, Capas Tarlac, thereby taking the lane of an incoming Isuzu Mini Bus bearing Plate No. YL-735 being driven by one Magdaleno Lugue and making a collision between the two (2) vehicles an unavoidable and disastrous eventuality. Dragged fifteen (15) meters from the point of impact (midway the length of the parked truck with trailer), the mini bus landed right side down facing south in the canal of the highway, a total wreck. The Franco Bus was also damaged but not as severely. The collision resulted in the deaths of the two (2) drivers, Macario Yuro and Magdaleno Lugue, and two (2) passengers of the mini bus, Romeo Bue and Fernando Chuay. Consequently, Antonio Reyes, the registered owner of the Isuzu Mini Bus, Mrs. Susan Chuay, the wife of victim Fernando Chuay, and Mrs. Lolita Lugue, the wife of driver-victim Magdaleno Lugue, filed an action for damages through reckless imprudence before the Court of First Instance of Pampanga in Angeles City, Branch IV, docketed as Civil Case No. 2154 against Mr. & Mrs. Federico Franco, the owners and operators of the Franco Transportation Company. The complaint alleged that: (a) the recklessness and imprudence of the Franco Bus driver caused the collision which resulted in his own death and that of the mini bus driver and two (2) other passengers thereof; (b) that as a consequence of the vehicular mishap, the Isuzu Mini Bus became a total wreck resulting in actual damages amounting to P50,000.00 and the loss of an average net income of P120.00 daily or P3,600.00 monthly multiplied by a minimum of one more year of serviceability of said mini bus or P40,200.00; and, (c) that in view of the death of the three (3) passengers aforementioned, the heirs of each should be awarded a minimum of P12,000.00 and the expected average income of P6,000.00 each of the driver and one of the passengers and P12,000.00 of the Chinese businessman passenger. In answer to the complaint, defendants set up, among others, the affirmative defense that as owners and operators of the Franco Transportation Company, they exercised due diligence in the selection and supervision of all their employees, including the deceased driver Macario Yuro. Said defense was, however, rejected by the trial court in its decision 1 dated May 17, 1978, for the reason that the act of the Franco Bus driver was a negligent act punishable by law resulting in a civil obligation arising from Article 103 of the Revised Penal Code and not from Article 2180 of the Civil Code. It said: "This is a case of criminal negligence out of which civil liability arises, and not a case of civil negligence and the defense of having acted like a good father of a family or having trained or selected the drivers of his truck is no defense to avoid civil liability." 2 On this premise, the trial court ruled as follows: WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs, Antonio Reyes, Lolita Lugue, and Susan Chuay, and against the defendants Mr. and Mrs. Federico Franco, ordering the latter: (1) To pay Antonio Reyes, actual and compensatory damages in the amount of P90,000.00 for the Isuzu Mini Bus; (2) To pay Lolita Lugue, the widow of Magdaleno Lugue, actual and compensatory damages in the total sum of P18,000.00; (3) To pay Susan Chuay, the widow of Fernando Chuay, actual and compensatory damages in the total sum of P24,000.00; and (4) To pay attorney's fee in the amount of P5.000.00; All with legal interests from the filing of this suit on November 11, 1974 until paid; and the costs of this suit.

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SO ORDERED. 3 On appeal by herein petitioners as defendants-appellants, respondent appellate court, agreeing with the lower court, held that defendants-appellants' driver who died instantly in the vehicular collision, was guilty of reckless or criminal imprudence punishable by law in driving appellants' bus; that the civil obligation of the appellants arises from Article 103 of the Revised Penal Code resulting in the subsidiary liability of the appellants under the said provisions, 4 that the case subject of appeal is one involving culpable negligence out of which civil liability arises and is not one of civil negligence; 5 and that there is nothing in Articles 102 and 103 of the Revised Penal Code which requires a prior judgment of conviction of the erring vehicle driver and his obligation to pay his civil liability before the said provisions can be applied. 6 Respondent appellate court increased the award of damages granted by the lower court as follows: WHEREFORE, the decision appealed from is hereby modified as follows: 1. To pay Susan Chuay, widow of Fernando Chuay, the sum of P30,000.00 for the latter's death and P112,000.00 for loss of earning capacity; 2. To pay Lolita Lugue, widow of Magdaleno Lugue, the sum of P30,000.00 for the latter's death and P62,000.00 for loss of earning capacity. The rest of the judgment appealed from is affirmed. Costs against defendants-appellants. SO ORDERED. 7 On April 1, 1985, petitioners filed a motion for reconsideration of the aforesaid respondent appellate court's decision dated January 2, 1985 but the same was denied on May 13, 1985. Hence, the instant petition raising two (2) legal questions: first, whether the action for recovery of damages instituted by herein private respondents was predicated upon crime or quasi-delict; and second, whether respondent appellate court in an appeal filed by the defeated parties, herein petitioners, may properly increase the award of damages in favor of the private respondents Chuay and Lugue, prevailing parties in the lower court, who did not appeal said court's decision. Petitioners contend that the allegations in paragraph 9 of the Amended Complaint 8 of herein private respondents as plaintiffs in Civil Case No. 2154 unequivocally claim that the former as the employers of Macario Yuro, the driver of the Franco Bus who caused the vehicular mishap, are jointly and severally liable to the latter for the damages suffered by them which thus makes Civil Case No. 2154 an action predicated upon a quasi-delict under the Civil Code subject to the defense that the employer exercised all the diligence of a good father of a family in the selection and supervision of their employees. We find merit in this contention. Distinction should be made between the subsidiary liability of the employer under the Revised Penal Code and the employer's primary liability under the Civil Code which is quasi-delictual or tortious in character. The first type of liability is governed by Articles 102 and 103 of the Revised Penal Code which provide as follows: Art. 102. Subsidiary civil liability of innkeepers, tavern-keepers and proprietors of establishments. — In default of the persons criminally liable, innkeepers, tavern-keepers, and any other persons or corporations shall be civilly liable for crimes committed in their establishments, in all cases where a violation of municipal ordinances or some general or special police regulations shall have been committed by them or their employees. Innkeepers are also subsidiarily liable for the restitution of goods taken by robbery or theft within their houses from guests lodging therein, or for the payment of the value thereof, provided that such guests shall have notified in advance the innkeeper himself, or the person representing him, of the deposits of such goods within the inn; and shall furthermore have followed the directions which such innkeeper or his representative may have given them with respect to the care and vigilance over such goods. No liability shall attach in case of robbery with violence against or intimidation of persons unless committed by the innkeeper's employees.

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Art. 103. Subsidiary civil liability of other persons. — The subsidiary liability established in the next preceding article shall also apply to employers, teachers, persons, and corporations engaged in any kind of industry for felonies committed by the servants, pupils, workmen, apprentices, or employees in the discharge of their duties; while the second kind is governed by the following provisions of the Civil Code: Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties is called a quasi-delict and is governed by the provisions of this Chapter. Art. 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the civil liability arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the same act or omission of the defendant. Art. 2180. The obligations imposed by article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one is responsible. xxx xxx xxx Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry, xxx xxx xxx The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage. Under Article 103 of the Revised Penal Code, liability originates from a delict committed by the employee who is primarily liable therefor and upon whose primary liability his employer's subsidiary liability is to be based. Before the employer's subsidiary liability may be proceeded against, it is imperative that there should be a criminal action whereby the employee's criminal negligence or delict and corresponding liability therefor are proved. If no criminal action was instituted, the employer's liability would not be predicated under Article 103. 9 In the case at bar, no criminal action was instituted because the person who should stand as the accused and the party supposed to be primarily liable for the damages suffered by private respondents as a consequence of the vehicular mishap died. Thus, petitioners' subsidiary liability has no leg to stand on considering that their liability is merely secondary to their employee's primary liability. Logically therefore, recourse under this remedy is not possible. On the other hand, under Articles 2176 and 2180 of the Civil Code, liability is based on culpa aquiliana which holds the employer primarily liable for tortious acts of its employees subject, however, to the defense that the former exercised all the diligence of a good father of a family in the selection and supervision of his employees. Respondent appellate court relies on the case of Arambulo, supra, where it was held that the defense of observance of due diligence of a good father of a family in the selection and supervision of employees is not applicable to the subsidiary liability provided in Article 20 of the Penal Code (now Article 103 of the Revised Penal Code). By such reliance, it would seem that respondent appellate court seeks to enforce the subsidiary civil liability of the employer without a criminal conviction of the party primarily liable therefor. This is not only erroneous and absurd but is also fraught with dangerous consequences. It is erroneous because the conviction of the employee primarily liable is a condition sine qua non for the employer's subsidiary liability 10 and, at the same time, absurd because we will be faced with a situation where the employer is held subsidiarily liable even without a primary liability being previously established. It is likewise dangerous because, in effect, the employer's subsidiary liability would partake of a solidary obligation resulting in the law's amendment without legislative sanction.

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The Court in the aforecited M.D. Transit case went further to say that there can be no automatic subsidiary liability of defendant employer under Article 103 of the Revised Penal Code where his employee has not been previously criminally convicted. Having thus established that Civil Case No. 2154 is a civil action to impose the primary liability of the employer as a result of the tortious act of its alleged reckless driver, we confront ourselves with the plausibility of defendants-petitioners' defense that they observed due diligence of a good father of a family in the selection and supervision of their employees. On this point, the appellate court has unequivocally spoken in affirmation of the lower court's findings, to wit: Anyway, a perusal of the record shows that the appellants were not able to establish the defense of a good father of a family in the supervision of their bus driver. The evidence presented by the appellants in this regard is purely self-serving. No independent evidence was presented as to the alleged supervision of appellants' bus drivers, especially with regard to driving habits and reaction to actual traffic conditions. The appellants in fact admitted that the only kind of supervision given the drivers referred to the running time between the terminal points of the line (t.s.n., September 16, 1976, p. 21). Moreover, the appellants who ran a fleet of 12 buses plying the Manila-Laoag line, have only two inspectors whose duties were only ticket inspection. There is no evidence that they are really safety inspectors. 11 Basically, the Court finds that these determinations are factual in nature. As a painstaking review of the evidence presented in the case at bar fails to disclose any evidence or circumstance of note sufficient to overrule said factual findings and conclusions, the Court is inclined to likewise reject petitioners' affirmative defense of due diligence. The wisdom of this stance is made more apparent by the fact that the appellate court's conclusions are based on the findings of the lower court which is in a better position to evaluate the testimonies of the witnesses during trial. As a rule, this Court respects the factual findings of the appellate and trial courts and accord them a certain measure of finality. 12 Consequently, therefore, we find petitioners liable for the damages claimed pursuant to their primary liability under the Civil Code. On the second legal issue raised in the instant petition, we agree with petitioners' contention that the Intermediate Appellate Court (later Court of Appeals) is without jurisdiction to increase the amount of damages awarded to private respondents Chuay and Lugue, neither of whom appealed the decision of the lower court. While an appellee who is not also an appellant may assign error in his brief if his purpose is to maintain the judgment on other grounds, he cannot ask for modification or reversal of the judgment or affirmative relief unless he has also appealed. 13 For failure of plaintiffs-appellees, herein private respondents, to appeal the lower court's judgment, the amount of actual damages cannot exceed that awarded by it. 14 Furthermore, the records 15 show that plaintiffs-private respondents limited their claim for actual and compensatory damages to the supposed average income for a period of one (1) year of P6,000.00 for the driver Magdaleno Lugue and P12,000.00 for the Chinese businessman Fernando Chuay. We feel that our award should not exceed the said amounts . 16 However, the increase in awards for indemnity arising from death to P30,000.00 each remains, the same having been made in accordance with prevailing jurisprudence decreeing such increase in view of the depreciated Philippine currency. 17 WHEREFORE, the decision of the Court of Appeals is hereby modified decreasing the award to private respondents of actual and compensatory damages for loss of average income for the period of one year to P6,000.00 for the deceased Magdaleno Lugue and P12,000.00 for the deceased Fernando Chuay. The rest of the judgment appealed from is hereby affirmed. Costs against the private respondents. This decision is immediately executory. SO ORDERED. Feliciano, Bidin and Cortes, JJ., concur. Gutierrez, Jr., J., is on leave

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CASTILEX VS VASQUEZ FIRST DIVISION G.R. No. 132266 December 21, 1999 CASTILEX INDUSTRIAL CORPORATION, petitioner, vs. VICENTE VASQUEZ, JR. and LUISA SO VASQUEZ, and CEBU DOCTORS' HOSPITAL, INC., respondents. DAVIDE, JR., C.J.: The pivotal issue in this petition is whether an employer may be held vicariously liable for the death resulting from the negligent operation by a managerial employee of a company-issued vehicle. The antecedents, as succinctly summarized by the Court of Appeals, are as follows: On 28 August 1988, at around 1:30 to 2:00 in the morning, Romeo So Vasquez, was driving a Honda motorcycle around Fuente Osmeña Rotunda. He was traveling counter-clockwise, (the normal flow of traffic in a rotunda) but without any protective helmet or goggles. He was also only carrying a Student's Permit to Drive at the time. Upon the other hand, Benjamin Abad [was a] manager of Appellant Castilex Industrial Corporation, registered owner [of] a Toyota Hi-Lux Pick-up with plate no. GBW-794. On the same date and time, Abad drove the said company car out of a parking lot but instead of going around the Osmeña rotunda he made a short cut against [the] flow of the traffic in proceeding to his route to General Maxilom St. or to Belvic St. In the process, the motorcycle of Vasquez and the pick-up of Abad collided with each other causing severe injuries to the former. Abad stopped his vehicle and brought Vasquez to the Southern Islands Hospital and later to the Cebu Doctor's Hospital. On September 5, 1988, Vasquez died at the Cebu Doctor's Hospital. It was there that Abad signed an acknowledgment of Responsible Party (Exhibit K) wherein he agreed to pay whatever hospital bills, professional fees and other incidental charges Vasquez may incur. After the police authorities had conducted the investigation of the accident, a Criminal Case was filed against Abad but which was subsequently dismissed for failure to prosecute. So, the present action for damages was commenced by Vicente Vasquez, Jr. and Luisa So Vasquez, parents of the deceased Romeo So Vasquez, against Jose Benjamin Abad and Castilex Industrial Corporation. In the same action, Cebu Doctor's Hospital intervened to collect unpaid balance for the medical expense given to Romeo So Vasquez. 1 The trial court ruled in favor of private respondents Vicente and Luisa Vasquez and ordered Jose Benjamin Abad (hereafter ABAD) and petitioner Castilex Industrial Corporation (hereafter CASTILEX) to pay jointly and solidarily (1) Spouses Vasquez, the amounts of P8,000.00 for burial expenses; P50,000.00 as moral damages; P10,000.00 as attorney's fees; and P778,752.00 for loss of earning capacity; and (2) Cebu Doctor's Hospital, the sum of P50,927.83 for unpaid medical and hospital bills at 3% monthly interest from 27 July 1989 until fully paid, plus the costs of litigation. 2 CASTILEX and ABAD separately appealed the decision. In its decision 3 of 21 May 1997, the Court of Appeals affirmed the ruling of the trial court holding ABAD and CASTILEX liable but held that the liability of the latter is "only vicarious and not solidary" with the former. It reduced the award of damages representing loss of earning capacity from P778,752.00 to P214,156.80; and the interest on the hospital and medical bills, from 3% per month to 12% per annum from 5 September 1988 until fully paid. Upon CASTILEX's motion for reconsideration, the Court of Appeals modified its decision by (1) reducing the award of moral damages from P50,000 to P30,000 in view of the deceased's

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contributory negligence; (b) deleting the award of attorney's fees for lack of evidence; and (c) reducing the interest on hospital and medical bills to 6% per annum from 5 September 1988 until fully paid. 4 Hence, CASTILEX filed the instant petition contending that the Court of Appeals erred in (1) applying to the case the fifth paragraph of Article 2180 of the Civil Code, instead of the fourth paragraph thereof; (2) that as a managerial employee, ABAD was deemed to have been always acting within the scope of his assigned task even outside office hours because he was using a vehicle issued to him by petitioner; and (3) ruling that petitioner had the burden to prove that the employee was not acting within the scope of his assigned task. Jose Benjamin ABAD merely adopted the statement of facts of petitioner which holds fast on the theory of negligence on the part of the deceased. On the other hand, respondents Spouses Vasquez argue that their son's death was caused by the negligence of petitioner's employee who was driving a vehicle issued by petitioner and who was on his way home from overtime work for petitioner; and that petitioner is thus liable for the resulting injury and subsequent death of their son on the basis of the fifth paragraph of Article 2180. Even if the fourth paragraph of Article 2180 were applied, petitioner cannot escape liability therefor. They moreover argue that the Court of Appeals erred in reducing the amount of compensatory damages when the award made by the trial court was borne both by evidence adduced during the trial regarding deceased's wages and by jurisprudence on life expectancy. Moreover, they point out that the petition is procedurally not acceptable on the following grounds: (1) lack of an explanation for serving the petition upon the Court of Appeals by registered mail, as required under Section 11, Rule 13 of the Rules of Civil Procedure; and (2) lack of a statement of the dates of the expiration of the original reglementary period and of the filing of the motion for extension of time to file a petition for review. For its part, respondent Cebu Doctor's Hospital maintains that petitioner CASTILEX is indeed vicariously liable for the injuries and subsequent death of Romeo Vasquez caused by ABAD, who was on his way home from taking snacks after doing overtime work for petitioner. Although the incident occurred when ABAD was not working anymore "the inescapable fact remains that said employee would not have been situated at such time and place had he not been required by petitioner to do overtime work." Moreover, since petitioner adopted the evidence adduced by ABAD, it cannot, as the latter's employer, inveigle itself from the ambit of liability, and is thus estopped by the records of the case, which it failed to refute. We shall first address the issue raised by the private respondents regarding some alleged procedural lapses in the petition. Private respondent's contention of petitioner's violation of Section 11 of Rule 13 and Section 4 of Rule 45 of the 1997 Rules of Civil Procedure holds no water. Sec. 11 of Rule 13 provides: Sec. 11. Priorities in modes of services and filing. — Whenever practicable, the service and filing of pleadings and other papers shall be done personally. Except with respect to papers emanating from the court, a resort to other modes must be accompanied by a written explanation why the service or filing was not done personally. A violation of this Rule may be cause to consider the paper as not filed. The explanation why service of a copy of the petition upon the Court of Appeals was done by registered mail is found on Page 28 of the petition. Thus, there has been compliance with the aforequoted provision. As regards the allegation of violation of the material data rule under Section 4 of Rule 45, the same is unfounded. The material dates required to be stated in the petition are the following: (1) the date of receipt of the judgment or final order or resolution subject of the petition; (2) the date of filing of a motion for new trial or reconsideration, if any; and (3) the date of receipt of the notice of the denial of the motion. Contrary to private respondent's claim, the petition need not indicate the dates of the expiration of the original reglementary period and the filing of a motion for extension of time to file the petition. At any rate, aside from the material dates required under Section 4 of Rule 45, petitioner

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CASTILEX also stated in the first page of the petition the date it filed the motion for extension of time to file the petition. Now on the merits of the case. The negligence of ABAD is not an issue at this instance. Petitioner CASTILEX presumes said negligence but claims that it is not vicariously liable for the injuries and subsequent death caused by ABAD. Petitioner contends that the fifth paragraph of Article 2180 of the Civil Code should only apply to instances where the employer is not engaged in business or industry. Since it is engaged in the business of manufacturing and selling furniture it is therefore not covered by said provision. Instead, the fourth paragraph should apply. Petitioner's interpretation of the fifth paragraph is not accurate. The phrase "even though the former are not engaged in any business or industry" found in the fifth paragraph should be interpreted to mean that it is not necessary for the employer to be engaged in any business or industry to be liable for the negligence of his employee who is acting within the scope of his assigned task. 5 A distinction must be made between the two provisions to determine what is applicable. Both provisions apply to employers: the fourth paragraph, to owners and managers of an establishment or enterprise; and the fifth paragraph, to employers in general, whether or not engaged in any business or industry. The fourth paragraph covers negligent acts of employees committed either in the service of the branches or on the occasion of their functions, while the fifth paragraph encompasses negligent acts of employees acting within the scope of their assigned task. The latter is an expansion of the former in both employer coverage and acts included. Negligent acts of employees, whether or not the employer is engaged in a business or industry, are covered so long as they were acting within the scope of their assigned task, even though committed neither in the service of the branches nor on the occasion of their functions. For, admittedly, employees oftentimes wear different hats. They perform functions which are beyond their office, title or designation but which, nevertheless, are still within the call of duty. This court has applied the fifth paragraph to cases where the employer was engaged in a business or industry such as truck operators 6 and banks. 7 The Court of Appeals cannot, therefore, be faulted in applying the said paragraph of Article 2180 of the Civil Code to this case. Under the fifth paragraph of Article 2180, whether or not engaged in any business or industry, an employer is liable for the torts committed by employees within the scope of his assigned tasks. But it is necessary to establish the employer-employee relationship; once this is done, the plaintiff must show, to hold the employer liable, that the employee was acting within the scope of his assigned task when the tort complained of was committed. It is only then that the employer may find it necessary to interpose the defense of due diligence in the selection and supervision of the employee. 8 It is undisputed that ABAD was a Production Manager of petitioner CASTILEX at the time of the tort occurrence. As to whether he was acting within the scope of his assigned task is a question of fact, which the court a quo and the Court of Appeals resolved in the affirmative. Well-entrenched in our jurisprudence is the rule that the factual findings of the Court of Appeals are entitled to great respect, and even finality at times. This rule is, however, subject to exceptions such as when the conclusion is grounded on speculations, surmises, or conjectures. 9 Such exception obtain in the present case to warrant review by this Court of the finding of the Court of Appeals that since ABAD was driving petitioner's vehicle he was acting within the scope of his duties as a manager. Before we pass upon the issue of whether ABAD was performing acts within the range of his employment, we shall first take up the other reason invoked by the Court of Appeals in holding petitioner CASTILEX vicariously liable for ABAD's negligence, i.e., that the petitioner did not present evidence that ABAD was not acting within the scope of his assigned tasks at the time of the motor vehicle mishap. Contrary to the ruling of the Court of Appeals, it was not incumbent upon the petitioner to prove the same. It was enough for petitioner CASTILEX to deny that ABAD was acting within the scope of his duties; petitioner was not under obligation to prove this negative averment. Ei incumbit probatio qui dicit, non qui negat (He who asserts, not he who denies, must prove). The

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Court has consistently applied the ancient rule that if the plaintiff, upon whom rests the burden of proving his cause of action, fails to show in a satisfactory manner facts which he bases his claim, the defendant is under no obligation to prove his exception or defense. 10 Now on the issue of whether the private respondents have sufficiently established that ABAD was acting within the scope of his assigned tasks. ABAD, who was presented as a hostile witness, testified that at the time of the incident, he was driving a company-issued vehicle, registered under the name of petitioner. He was then leaving the restaurant where he had some snacks and had a chat with his friends after having done overtime work for the petitioner. No absolutely hard and fast rule can be stated which will furnish the complete answer to the problem of whether at a given moment, an employee is engaged in his employer's business in the operation of a motor vehicle, so as to fix liability upon the employer because of the employee's action or inaction; but rather, the result varies with each state of facts. 11 In Filamer Christian Institute v. Intermediate Appellant Court, 12 this Court had the occasion to hold that acts done within the scope of the employee's assigned tasks 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 damages." The court a quo and the Court of Appeals were one in holding that the driving by a manager of a company-issued vehicle is within the scope of his assigned tasks regardless of the time and circumstances. We do not agree. The mere fact that ABAD was using a service vehicle at the time of the injurious incident is not of itself sufficient to charge petitioner with liability for the negligent operation of said vehicle unless it appears that he was operating the vehicle within the course or scope of his employment. The following are principles in American Jurisprudence on the employer's liability for the injuries inflicted by the negligence of an employee in the use of an employer's motor vehicle: I. Operation of Employer's Motor Vehicle in Going to or from Meals It has been held that an employee who uses his employer's vehicle in going from his work to a place where he intends to eat or in returning to work from a meal is not ordinarily acting within the scope of his employment in the absence of evidence of some special business benefit to the employer. Evidence that by using the employer's vehicle to go to and from meals, an employee is enabled to reduce his time-off and so devote more time to the performance of his duties supports the finding that an employee is acting within the scope of his employment while so driving the vehicle. 13 II. Operation of Employer's Vehicle in Going to or from Work In the same vein, traveling to and from the place of work is ordinarily a personal problem or concern of the employee, and not a part of his services to his employer. Hence, in the absence of some special benefit to the employer other than the mere performance of the services available at the place where he is needed, the employee is not acting within the scope of his employment even though he uses his employer's motor vehicle. 14 The employer may, however, be liable where he derives some special benefit from having the employee drive home in the employer's vehicle as when the employer benefits from having the employee at work earlier and, presumably, spending more time at his actual duties. Where the employee's duties require him to circulate in a general area with no fixed place or hours of work, or to go to and from his home to various outside places of work, and his employer furnishes him with a vehicle to use in his work, the courts have frequently applied what has been called the "special

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errand" or "roving commission" rule, under which it can be found that the employee continues in the service of his employer until he actually reaches home. However, even if the employee be deemed to be acting within the scope of his employment in going to or from work in his employer's vehicle, the employer is not liable for his negligence where at the time of the accident, the employee has left the direct route to his work or back home and is pursuing a personal errand of his own. III. Use of Employer's Vehicle Outside Regular Working Hours An employer who loans his motor vehicle to an employee for the latter's personal use outside of regular working hours is generally not liable for the employee's negligent operation of the vehicle during the period of permissive use, even where the employer contemplates that a regularly assigned motor vehicle will be used by the employee for personal as well as business purposes and there is some incidental benefit to the employer. Even where the employee's personal purpose in using the vehicle has been accomplished and he has started the return trip to his house where the vehicle is normally kept, it has been held that he has not resumed his employment, and the employer is not liable for the employee's negligent operation of the vehicle during the return trip. 15 The foregoing principles and jurisprudence are applicable in our jurisdiction albeit based on the doctrine of respondent superior, not on the principle of bonus pater familias as in ours. Whether the fault or negligence of the employee is conclusive on his employer as in American law or jurisprudence, or merely gives rise to the presumption juris tantum of negligence on the part of the employer as in ours, it is indispensable that the employee was acting in his employer's business or within the scope of his assigned task. 16 In the case at bar, it is undisputed that ABAD did some overtime work at the petitioner's office, which was located in Cabangcalan, Mandaue City. Thereafter, he went to Goldie's Restaurant in Fuente Osmeña, Cebu City, which is about seven kilometers away from petitioner's place of business. 17 A witness for the private respondents, a sidewalk vendor, testified that Fuente Osmeña is a "lively place" even at dawn because Goldie's Restaurant and Back Street were still open and people were drinking thereat. Moreover, prostitutes, pimps, and drug addicts littered the place. 18 At the Goldie's Restaurant, ABAD took some snacks and had a chat with friends. It was when ABAD was leaving the restaurant that the incident in question occurred. That same witness for the private respondents testified that at the time of the vehicular accident, ABAD was with a woman in his car, who then shouted: "Daddy, Daddy!" 19 This woman could not have been ABAD's daughter, for ABAD was only 29 years old at the time. To the mind of this Court, ABAD was engaged in affairs of his own or was carrying out a personal purpose not in line with his duties at the time he figured in a vehicular accident. It was then about 2:00 a.m. of 28 August 1988, way beyond the normal working hours. ABAD's working day had ended; his overtime work had already been completed. His being at a place which, as petitioner put it, was known as a "haven for prostitutes, pimps, and drug pushers and addicts," had no connection to petitioner's business; neither had it any relation to his duties as a manager. Rather, using his service vehicle even for personal purposes was a form of a fringe benefit or one of the perks attached to his position. Since there is paucity of evidence that ABAD was acting within the scope of the functions entrusted to him, petitioner CASTILEX had no duty to show that it exercised the diligence of a good father of a family in providing ABAD with a service vehicle. Thus, justice and equity require that petitioner be relieved of vicarious liability for the consequences of the negligence of ABAD in driving its vehicle. 20 WHEREFORE, the petition is GRANTED, and the appealed decision and resolution of the Court of Appeals is AFFIRMED with the modification that petitioner Castilex Industrial Corporation be absolved of any liability for the damages caused by its employee, Jose Benjamin Abad. SO ORDERED. Puno, Kapunan, Pardo and Ynares-Santiago, JJ., concur.

VALENZUELA VS CA

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FACTS Arturo Valenzuela [Valenzuela] is a general agent of Philippine American General Insurance Company [Philamgen] since 1965. As such, he was authorized to solicit and sell in behalf of Philamgen all kinds of non-life insurance, and in consideration of services rendered was entitled to receive the full agent's commission of 32.5% from Philamgen. From 1973 to 1975, Valenzuela solicited marine insurance from Delta Motors. However, Valenzuela did not receive his full commission. In 1977, Philamgen started to become interested in and expressed its intent to share in the commission due Valenzuela on a 50-50 basis, but he refused. In 1978, Philamgen and its President [Aragon] insisted on the sharing of the commission with Valenzuela, but he firmly reiterated his objection to the proposals. Because of the refusal of Valenzuela, Philamgen and its officers took drastic action. They reversed the commission due him by not crediting in his account the commission earned from the Delta Motors insurance, placed agency transactions on a cash and carry basis, threatened the cancellation of policies issued by his agency, and started to leak out news that Valenzuela has a substantial account with Philamgen. This resulted in the decline of his business as insurance agent. Philamgen terminated the General Agency Agreement of Valenzuela in December 1978. Valenzuela filed a complaint against Philamgen, and the RTC ruled in his favor, as his termination was found to be unjustified. However, the CA ruled in favor of Philamgen, as CA ordered Valenzuela to pay Philamgen the amount corresponding to the unpaid and uncollected premiums. ISSUE & HOLDING WON Valenzuela should be held liable for unpaid and uncollected premiums. NO. RATIO Under Section 77 of the Insurance Code, the remedy for the non-payment of premiums is to put an end to and render the insurance policy not binding. Philippine Phoenix Surety and Insurance v. Woodworks (1979) The non-payment of premium does not merely suspend but puts an end to an insurance contract since the time of the payment is peculiarly of the essence of the contract. An insurer cannot treat a contract as valid for the purpose of collecting premiums and invalid for the purpose of indemnity. (Citing Insurance Law and Practice by John Alan Appleman) The foregoing findings are buttressed by Section 776 of the Insurance Code (PD 612), which now provides that no contract of insurance by an insurance company is valid and binding unless and until the premium thereof has been paid, notwithstanding any agreement to the contrary Arce v. The Capital Insurance and Surety Unless premium is paid, an insurance contract does not take effect. Delgado (Capital Insurance & Surety Co., Inc. v. Delgado) was decided in the light of the Insurance Act before Sec. 72 was amended by the underscored portion. Prior to the Amendment, an insurance contract was effective even if the premium had not been paid so that an insurer was obligated to pay indemnity in case of loss and correlatively he had also the right to sue for payment of the premium. But the amendment to Sec. 72 has radically changed the legal regime in that unless the premium is paid there is no insurance. Since the premiums have not been paid, the policies issued have lapsed. The insurance coverage did not go into effect or did not continue and the obligation of Philamgen as insurer ceased. Hence, for Philamgen which had no more liability under the lapsed and inexistent policies to demand, much less sue Valenzuela for the unpaid premiums would be the height of injustice and unfair dealing. In this instance, with the lapsing of the policies through the nonpayment of premiums by the insured there were no more insurance contracts to speak of. RTC DECISION REINSTATED FULL TEXT FIRST DIVISON G.R. No. 115024 February 7, 1996 MA. LOURDES VALENZUELA, petitioner, vs.

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COURT OF APPEALS, RICHARD LI and ALEXANDER COMMERCIAL, INC., respondents. 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 RICHARD LI, petitioner, vs. COURT OF APPEALS and LOURDES VALENZUELA, respondents. D E C I S I O N 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. 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.

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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; 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.

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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 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 cross-examination 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 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

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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). 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 self-serving 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.

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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 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

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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 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.

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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

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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 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 middle-age, 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.

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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. Padilla, Bellosillo and Hermosisima, Jr., JJ., concur. Separate Opinions VITUG, J., concurring: Pursuant to Article 21801 of the Civil Code that acknowledges responsibility under a relationship of patria potestas, a person may be held accountable not only for his own direct culpable act or negligence but also for those of others albeit predicated on his own supposed failure to exercise due care in his supervisory authority and functions. In the case of an employer, that vicarious liability attaches only when the tortious conduct of the employee relates to, or is in the course of, his employment. The question to ask should be whether, at the time of the damage or injury, the employee is engaged in the affairs or concerns of the employer or, independently, in that of his own. While an employer incurs no liability when an employee's conduct, act or omission is beyond the range of employment,2 a minor deviation from the assigned task of an employee, however, does not affect the liability of an employer.3

NPC VS CA THIRD DIVISION G.R. No. 119121 August 14, 1998 NATIONAL POWER CORPORATION, petitioner, vs. COURT OF APPEALS, Fifteenth Division and PHESCO INCORPORATED, respondents. ROMERO, J.: On July 22, 1979, a convoy of four (4) dump trucks owned by the National Power Corporation (NPC) left Marawi city bound for Iligan city. Unfortunately, enroute to its destination, one of the trucks with plate no RFT-9-6-673 driven by a certain Gavino Ilumba figured in a head-on-collision with a Toyota Tamaraw. The incident resulted in the death of three (3) persons riding in the Toyota Tamaraw, as well as physical injuries to seventeen other passengers. On June 10, 1980, the heirs of the victims filed a complaint for damages against National Power Corporation (NPC) and PHESCO Incorporated (PHESCO) before the then Court of First Instance of Lanao del Norte, Marawi City. When defendant PHESCO filed its answer to the complaint it contended that it was not the owner of the dump truck which collided with the Toyota Tamaraw but NPC. Moreover, it asserted that it was merely a contractor of NPC with the main duty of supplying workers

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and technicians for the latter's projects. On the other hand, NPC denied any liability and countered that the driver of the dump truck was the employee of PHESCO. After trial on the merits, the trial court rendered a decision dated July 25, 1988 absolving NPC of any liability. The dispositive portion reads: Consequently, in view of the foregoing consideration, judgment is hereby rendered ordering PHESCO, Inc. and Gavino Ilumba upon receipt hereof: 1. To pay jointly and severally the plaintiffs thru the Dansalan College the sum of P954,154.55 representing the actual or compensatory damages incurred by the plaintiffs; and 2. To pay the sum of P50,000.00 representing Attorney's fees. SO ORDERED. Dissatisfied, PHESCO appealed to the Court of Appeals, which on November 10, 1994 reversed the trial court's judgment. We quote the pertinent portion of the decision: A "labor only" contractor is considered merely as an agent of the employer (Deferia vs. National Labor Relations Commission, 194 SCRA 525). A finding that a contractor is a "labor only" contractor is equivalent to a finding that there is an employer-employee relationship between the owner of the project and the employees of the "labor only" contractor (Industrial Timer Corporation vs. National Labor Relations Commission, 202 SCRA 465). So, even if Phesco hired driver Gavino Ilumba, as Phesco is admittedly a "labor only" contractor of Napocor the statute itself establishes an employer-employee relationship between the employer (Napocor) and the employee (driver Ilumba) of the labor only contractor (Phesco). (Ecal vs. National Labor Relations Commission, 195 SCRA 224). Consequently, we hold Phesco not liable for the tort of driver Gavino Ilumba, as there was no employment relationship between Phesco and driver Gavino Ilumba. Under Article 2180 of the Civil Code, to hold the employer liable for torts committed by his employees within the scope of their assigned task, there must exist an employer-employee relationship. (Martin vs. Court of Appeals, 205 SCRA 591). WHEREFORE, we REVERSE the appealed decision. In lieu thereof, the Court renders judgment sentencing defendant National Power Corporation to pay plaintiffs the sum of P174,889.20 plus P20,000.00 as attorney's fees and costs. SO ORDERED. Chagrined by the sudden turnaround, NPC filed a motion for reconsideration of said decision which was, however, denied on February 9, 1995. 1 Hence, this petition. The principal query to be resolved is, as between NPC and PHESCO, who is the employer of Ilumba, driver of the dumptruck which figured in the accident and which should, therefore, would be liable for damages to the victims. Specifically, NPC assigns the sole error that: THE COURT OF APPEALS DECISION FINDING THAT PETITIONER NPC AS THE EMPLOYER OF THE DRIVER GAVINO ILUMBA, AND CONSEQUENTLY SENTENCING IT TO PAY THE ACTUAL AND COMPENSATORY DAMAGES SUSTAINED BY COMPLAINTS, IS NOT IN ACCORD WITH THE LAW OR WITH THE APPLICABLE RULINGS OF THIS HONORABLE COURT. 2 As earlier stated, NPC denies that the driver of the dump truck was its employee. It alleges that it did not have the power of selection and dismissal nor the power of control over Ilumba. 3 PHESCO, meanwhile, argues that it merely acted as a "recruiter" of the necessary workers for and in behalf of NPC. 4 Before we decide who is the employer of Ilumba, it is evidently necessary to ascertain the contractual relationship between NPC and PHESCO. Was the relationship one of employer and job (independent) contractor or one of employer and "labor only" contractor?

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Job (independent) contracting is present if the following conditions are met: (a) the contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except to the result thereof; and (b) the contractor has substantial capital or investments in the form of tools, equipment, machineries, work premises and other materials which are necessary in the conduct of his business. 5 Absent these requisites, what exists is a "labor only" contract under which the person acting as contractor is considered merely as an agent or intermediary of the principal who is responsible to the workers in the same manner and to the same extent as if they had been directly employed by him. 6 Taking into consideration the above distinction and the provisions of the "Memorandum of Understanding" entered into by PHESCO and NPC, we are convinced that PHESCO was engaged in "labor only" contracting. It must be noted that under the Memorandum, NPC had mandate to approve the "critical path network and rate of expenditure to be undertaken by PHESCO. 7 Likewise, the manning schedule and pay scale of the workers hired by PHESCO were subject to confirmation by NPC. 8 Then too, it cannot be ignored that if PHESCO enters into any sub-contract or lease, again NPC's concurrence is needed. 9 Another consideration is that even in the procurement of tools and equipment that will be used by PHESCO, NPC's favorable recommendation is still necessary before these tools and equipment can be purchased. 10 Notably, it is NPC that will provide the money or funding that will be used by PHESCO to undertake the project. 11 Furthermore, it must be emphasized that the project being undertaken by PHESCO, i.e., construction of power energy facilities, is related to NPC's principal business of power generation. In sum, NPC's control over PHESCO in matters concerning the performance of the latter's work is evident. It is enough that NPC has the right to wield such power to be considered as the employer. 12 Under this factual milieu, there is no doubt that PHESCO was engaged in "labor-only" contracting vis-à-vis NPC and as such, it is considered merely an agent of the latter. In labor-only contracting, an employer-employee relationship between the principal employer and the employees of the "labor-only" contractor is created. Accordingly, the principal employer is responsible to the employees of the "labor-only" contractor as if such employees had been directly employed by the principal employer. 13 Since PHESCO is only a "labor-only" contractor, the workers it supplied to NPC, including the driver of the ill-fated truck, should be considered as employees of NPC. 14 After all, it is axiomatic that any person (the principal employer) who enters into an agreement with a job contractor, either for the performance of a specified work or for the supply of manpower, assumes responsibility over the employees of the latter. 15 However, NPC maintains that even assuming that a "labor only" contract exists between it and PHESCO, its liability will not extend to third persons who are injured due to the tortious acts of the employee of the "labor-only" contractor. 16 Stated otherwise, its liability shall only be limited to violations of the Labor Code and not quasi-delicts. To bolster its position, NPC cites Section 9(b), Rule VII, Book III of the Omnibus Rules Implementing the Labor Code which reads: (b) Labor only contracting as defined herein is hereby prohibited and the person acting as contractor shall be considered merely as an agent or intermediary of the employer who shall be responsible to the workers in the same manner and extent as if the latter were directly employed by him. In other words, NPC posits the theory that its liability is limited only to compliance with the substantive labor provisions on working conditions, rest periods, and wages and shall not extend to liabilities suffered by third parties, viz.: Consequently, the responsibilities of the employer contemplated in a "labor only" contract, should, consistent with the terms expressed in the rule, be restricted "to the workers." The same can not be expanded to cover liabilities for damages to third persons resulting from the employees' tortious acts under Article 2180 of the Civil Code. 17

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The reliance is misplaced. It bears stressing that the action was premised on the recovery of damages as a result of quasi-delict against both NPC and PHESCO, hence, it is the Civil Code and not the Labor Code which is the applicable law in resolving this case. To be sure, the pronouncement of this Court in Filamer Christian Institute v. IAC, 18 is most instructive: The present case does not deal with a labor dispute on conditions of employment between an alleged employee and an alleged employer. It invokes a claim brought by one for damages for injury caused by the patently negligent acts of a person, against both doer-employee and his employer. Hence, the reliance on the implementing rule on labor to disregard the primary liability of an employer under Article 2180 of the Civil Code is misplaced. An implementing rule on labor cannot be used by an employer as a shield to avoid liability under the substantive provisions of the Civil Code. Corollarily from the above doctrine, the ruling in Cuison v. Norton & Harrison Co., 19 finds applicability in the instant case, viz.: It is well to repeat that under the civil law an employer is only liable for the negligence of his employees in the discharge of their respective duties. The defense of independent contractor would be a valid one in the Philippines just as it would be in the United States. Here Ora was a contractor, but it does not necessarily follow that he was an independent contractor. The reason for this distinction is that the employer retained the power of directing and controlling the work. The chauffeur and the two persons on the truck were the employees of Ora, the contractor, but Ora, the contractor, was an employee of Norton & Harrison Co., charged with the duty of directing the loading and transportation of the lumber. And it was the negligence in loading the lumber and the use of minors on the truck which caused the death of the unfortunate boy. On the facts and the law, Ora was not an independent contractor, but was the servant of the defendant, and for his negligence defendant was responsible. Given the above considerations, it is apparent that Article 2180 of the Civil Code and not the Labor Code will determine the liability of NPC in a civil suit for damages instituted by an injured person for any negligent act of the employees of the "labor only" contractor. This is consistent with the ruling that a finding that a contractor was a "labor-only" contractor is equivalent to a finding that an employer-employee relationship existed between the owner (principal contractor) and the "labor-only" contractor, including the latter's workers. 20 With respect to the liability of NPC as the direct employer, Article 2180 of the Civil Code explicitly provides: 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. In this regard, NPC's liability is direct, primary and solidary with PHESCO and the driver. 21 Of course, NPC, if the judgment for damages is satisfied by it, shall have recourse against PHESCO and the driver who committed the negligence which gave rise to the action. 22 Finally, NPC, even if it truly believed that it was not the employer of the driver, could still have disclaimed any liability had it raised the defense of due diligence in the selection or supervision of PHESCO and Ilumba. 23 However, for some reason or another, NPC did not invoke said defense. Hence, by opting not to present any evidence that it exercised due diligence in the supervision of the activities of PHESCO and Ilumba, NPC has foreclosed its right to interpose the same on appeal in conformity with the rule that points of law, theories, issues of facts and arguments not raised in the proceedings below cannot be ventilated for the first time on appeal. 24 Consequently, its liability stands. WHEREFORE, in view of the foregoing, the assailed decision of the Court of Appeals dated November 10, 1994 and its accompanying resolution dated February 9, 1995 are AFFIRMED without prejudice to the right of NPC to demand from PHESCO and Ilumba reimbursement of the damages it would be adjudged to pay to complainants. No costs.

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SO ORDERED. Narvasa, C.J., Kapunan and Purisima, JJ., concur.

PILIPINAS SHELL VS CA SECOND DIVISION G.R. No. 104658. April 7, 1993. PILIPINAS SHELL PETROLEUM CORPORATION, petitioner, vs. THE HONORABLE COURT OF APPEALS and CLARITA T. CAMACHO, respondents. Angara, Abello, Concepcion, Regala & Cruz for petitioner. Yolanda Quisumbing-Javellana & Associates for private respondent. SYLLABUS 1. LABOR LAWS AND SOCIAL LEGISLATION; EMPLOYER-EMPLOYEE RELATIONSHIP; FACTORS CONSIDERED IN DETERMINING EXISTENCE THEREOF; CASE AT BAR. — It is firmly settled that the existence or non-existence of the employer-employee relationship is commonly to be determined by examination of certain factors or aspects of that relationship. These include: (a) the manner of selection and engagement of the putative employee; (b) the mode of payment of wages; (c) the presence or absence of a power to control the putative employee's conduct, although the latter is the most important element . . . As aptly held by the trial court, petitioner did not exercise control and supervision over Feliciano with regard to the manner in which he conducted the hydro-pressure test. All that petitioner did, through its Field Engineer, Roberto Mitra, was relay to Feliciano the request of private respondent for a hydro-pressure test, to determine any possible leakages in the storage tanks in her gasoline station. The mere hiring of Feliciano by petitioner for that particular task is not the form of control and supervision contemplated by law which may be the basis for establishing an employer-employee relationship between petitioner and Feliciano. The fact that there was no such control is further amplified by the absence of any shell representative in the job site at the time when the test was conducted. Roberto Mitra was never there. Only Feliciano and his men were. True, it was petitioner who sent Feliciano to private respondent's gasoline station to conduct the hydro-pressure test as per the request of private respondent herself. But this single act did not automatically make Feliciano an employee of petitioner. As discussed earlier, more than mere hiring is required. It must further be established that petitioner is the one who is paying Feliciano's salary on a regular basis; that it has the power to dismiss said employee, and more importantly, that petitioner has control and supervision over the work of Feliciano. The last requisite was sorely missing in the instant case. 2. ID.; JOB CONTRACTING; REQUISITES; HALLMARKS OF INDEPENDENT CONTRACTOR. — Section 8 of Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides: "Sec. 8. Job contracting. — There is job contracting permissible under the Code if the following conditions are met: (1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business." Feliciano is independently maintaining a business under a duly registered business name, "JFS Repair and Maintenance Service," and is duly registered with the Bureau of Domestic Trade. He does not enjoy a fixed salary but instead charges a lump sum consideration for every piece of work he accomplishes. If he is not able to finish his work, he does not get paid, as what happened in this case. Further, Feliciano utilizes his own tools and equipment and has a complement of workers. Neither is he required to work on a regular basis. Instead, he merely awaits calls from clients such as petitioner whenever repairs and maintenance services are requested. Moreover, Feliciano does not exclusively service petitioner because he can accept other business but not from other oil companies. All these are the hallmarks of an independent contractor.

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3. CIVIL LAW; QUASI-DELICTS; INDEPENDENT CONTRACTOR RESPONSIBLE FOR HIS OWN ACTS AND OMISSIONS. — Being an independent contractor, Feliciano is responsible for his own acts and omissions. As he alone was in control over the manner of how he was to undertake the hydro-pressure test, he alone must bear the consequences of his negligence, if any, in the conduct of the same. D E C I S I O N CAMPOS, JR., J p: Was the hydro-pressure test of the underground storage tank in private respondent Clarita T. Camacho's gasoline station conducted by an independent contractor or not? A negative answer will make petitioner Pilipinas Shell Petroleum Corporation (Shell, for brevity) liable for the said independent contractor's acts or omissions; otherwise, no. This is the issue that this Court is called upon to resolve in this case. The facts are as follows: Private respondent Clarita T. Camacho (private respondent for short) was the operator of a gasoline station in Naguilian Road, Baguio City, wherein she sells petitioner Shell's petroleum products. Sometime in April 1983, private respondent requested petitioner to conduct a hydro-pressure test on the underground storage tanks of the said station in order to determine whether or not the sales losses she was incurring for the past several months were due to leakages therein. Petitioner acceded to the said request and on April 27, 1983, one Jesus "Jessie" Feliciano together with other workers, came to private respondent's station with a Job Order from petitioner to perform the hydro-pressure test. On the same day, Feliciano and his men drained the underground storage tank which was to be tested of its remaining gasoline. After which, they filled the tank with water through a water hose from the deposit tank of private respondent. Then, after requesting one of private respondent's gasoline boys to shut off the water when the tank was filled, Feliciano and his men left. At around 2:00 a.m. the following day, private respondent saw that the water had reached the lip of the pipe of the underground storage tank and so, she shut off the water faucet. At around 5:30 a.m., private respondent's husband opened the station and started selling gasoline. But at about 6:00 a.m., the customers who had bought gasoline returned to the station complaining that their vehicles stalled because there was water in the gasoline that they bought. On account of this, private respondent was constrained to replace the gasoline sold to the said customers. However, a certain Eduardo Villanueva, one of the customers, filed a complaint with the police against private respondent for selling the adulterated gasoline. In addition, he caused the incident to be published in two local newspapers. Feliciano, who arrived later that morning, did not know what caused the water pollution of the gasoline in the adjacent storage tank. So he called up Nick Manalo, Superintendent of Shell's Poro Point Installation at San Fernando, La Union, and referred the matter to the latter. Manalo went up to Baguio in the afternoon to investigate. Thereafter, he and Feliciano again filled with water the underground storage tank undergoing hydro-pressure test whereat they noticed that the water was transferring to the other tanks from whence came the gasoline being sold. Manalo asked permission from Shell's Manila Office to excavate the underground pipes of the station. Upon being granted permission to do so, Feliciano and his men began excavating the driveway of private respondent's station in order to expose the underground pipeline. The task was continued by one Daniel "Danny" Pascua who replaced Feliciano, Pascua removed the corroded pipeline and installed new independent vent pipe for each storage tank. Meanwhile, petitioner undertook to settle the criminal complaint filed by Villanueva. Subsequently, Villanueva filed an Affidavit of Desistance, 1 declaring, inter alia — "THAT, after careful evaluation of the surrounding circumstances, especially the explanation of the representatives of SHELL Phils., that the gasoline tanks of Mrs. Camacho were subject to Hydro test, in such a way that water was used for the said test, I believe that she may not have had anything to do with the filling of water in the tank of my car;

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xxx xxx xxx THAT, said representatives of SHELL Phils. have interceded for and in behalf of Mrs. Camacho and have fully satisfied my claim against her. THAT, in view of all the foregoing I do not intend to prosecute the case and I am therefore asking for the dismissal of the case against Mrs. Camacho." Thereafter, private respondent demanded from petitioner the payment of damages in the amount of P10,000.00. Petitioner, instead, offered private respondent additional credit line and other beneficial terms, which offer was, however, rejected. cdrep Subsequently, or on October 12, 1983, private respondent filed before the trial court a complaint for damages against petitioner due to the latter's alleged negligence in the conduct of the hydro-pressure test in her gasoline station. For its part, petitioner denied liability because, according to it, the hydro-pressure test on the underground storage tanks was conducted by an independent contractor. The trial court dismissed private respondent's complaint for damages for the reason that: "The hydro-pressure test which brought about the incident was conducted by Jesus Feliciano, who was neither an employee nor agent nor representative of the defendant. Jesus Feliciano is responsible for his own acts and omissions. He alone was in control of the manner of how he is to undertake the hydro-pressure test. Considering that the conduct of said hydro-pressure test was under the sole and exclusive control and supervision of Jesus Feliciano, the overflow with water causing the same to sip into the adjoining tank cannot be attributed to the fault or negligence of defendant. 2 From the adverse decision of the trial court, private respondent appealed to the Court of Appeals which court reversed the decision of the trial court. Thus, "PREMISES CONSIDERED, the decision being appealed from is hereby SET ASIDE and, in lieu thereof, another rendered ordering defendant to pay plaintiff: 1. P100,000.00 as moral damages; 2. P2,639.25 and P15,000.00 representing the actual losses suffered by plaintiff as a result of the water pollution of the gasoline. No costs. SO ORDERED." 3 Petitioner moved to have the above decision reconsidered but the same was denied in a Resolution dated March 9, 1992. Hence, this recourse. As stated at the very outset, the pivotal issue in this case is whether or not petitioner should be held accountable for the damage to private respondent due to the hydro-pressure test conducted by Jesus Feliciano. It is a well-entrenched rule that an employer-employee relationship must exist before an employer may be held liable for the negligence of his employee. It is likewise firmly settled that the existence or non-existence of the employer-employee relationship is commonly to be determined by examination of certain factors or aspects of that relationship. These include: (a) the manner of selection and engagement of the putative employee; (b) the mode of payment of wages; (c) the presence or absence of a power to control the putative employee's conduct, 4 although the latter is the most important element. 5

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In this case, respondent Court of Appeals held petitioner liable for the damage caused to private respondent as a result of the hydro-pressure test conducted by Jesus Feliciano due to the following circumstances: 6 1. Feliciano was hired by petitioner; 2. He received his instructions from the Field Engineer of petitioner, Mr. Roberto Mitra; 3. While he was at private respondent's service station, he also received instructions from Nick Manalo, petitioner's Poro Point Depot Superintendent; 4. Instructions from petitioner's Manila Office were also relayed to him while he was at .the job site at Baguio City; 5. His work was under the constant supervision of petitioner's engineer; 6. Before he could complete the work, he was instructed by Mr. Manalo, petitioner's Superintendent, to discontinue the same and it was turned over to Daniel Pascua, who was likewise hired by petitioner. Based on the foregoing, respondent Court of Appeals concluded that Feliciano was not an independent contractor but was under the control and supervision of petitioner in the performance of the hydro-pressure test, hence, it held petitioner liable for the former's acts and omissions. We are not in accord with the above finding of respondent Court of Appeals. As aptly held by the trial court, petitioner did not exercise control and supervision over Feliciano with regard to the manner in which he conducted the hydro-pressure test. All that petitioner did, through its Field Engineer, Roberto Mitra, was relay to Feliciano the request of private respondent for a hydro-pressure test, to determine any possible leakages in the storage tanks in her gasoline station. The mere hiring of Feliciano by petitioner for that particular task is not the form of control and supervision contemplated by may be the basis for establishing an employer-employee relationship between petitioner and Feliciano. The fact that there was no such control is further amplified by the absence of any Shell representative in the job site time when the test was conducted. Roberto Mitra was never there. Only Feliciano and his men were. True, it was petitioner who sent Feliciano to private respondent's gasoline station in conduct the hydro-pressure test as per the request of private respondent herself. But this single act did not automatically make Feliciano an employee of petitioner. As discussed earlier, more than mere hiring is required. It must further be established that petitioner is the one who is paying Felicia's salary on a regular basis; that it has the power to dismiss said employee, and more importantly, that petitioner has control and supervision over the work of Feliciano. The last requisite was sorely missing in the instant case. A careful perusal of the records will lead to the conclusion that Feliciano is an independent contractor. Section 8 of Rule VIII, Book III of the Omnibus Rules Implementing the Labor Code provides: "Sec. 8. Job contracting. — There is job contracting permissible under the Code if the following conditions are met: (1) The contractor carries on an independent business and undertakes the contract work on his own account under his own responsibility according to his own manner and method, free from the control and direction of his employer or principal in all matters connected with the performance of the work except as to the results thereof; and (2) The contractor has substantial capital or investment in the form of tools, equipment, machineries, work premises, and other materials which are necessary in the conduct of his business." Feliciano is independently maintaining a business under a duly registered business name, "JFS Repair and Maintenance Service," and is duly registered with the Bureau of Domestic Trade. 7 He does not enjoy a fixed salary but instead charges a lump sum consideration for every piece of work he

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accomplishes. 8 If he is not able to finish his work, he does not get paid, as what happened in this case. 9 Further, Feliciano utilizes his own tools and equipment and has a complement of workers. Neither is he required to work on a regular basis. Instead, he merely awaits calls from clients such as petitioner whenever repairs and maintenance services are requested. Moreover, Feliciano does not exclusively service petitioner because he can accept other business but not from other oil companies. 10 All these are the hallmarks of an independent contractor. Being an independent contractor, Feliciano is responsible for his own acts and omissions. As he alone was in control over the manner of how he was to undertake the hydro-pressure test, he alone must bear the consequences of his negligence, if any, in the conduct of the same. Anent the issue of damages, the same has been rendered moot by the failure of private respondent to establish an employer-employee relationship between petitioner and Feliciano. Absent said relationship, petitioner cannot be held liable for the acts and omissions of the independent contractor, Feliciano. WHEREFORE, premises considered, the appealed decision of respondent Court of Appeals is hereby SET ASIDE and the decision of the trial court REINSTATED. Without pronouncement as to costs. SO ORDERED. Narvasa, C .J ., Padilla, Regalado and Nocon, JJ ., concur.

CARTICIANO VS NUVAL FACTS: Plaintiff Zacarias Carticiano was on his way home to Imus, Cavite. He was driving his father’s Ford Laser car. On the same date and time, defendant Nuval’s owner-type Jeep, then driven by defendant Darwin was traveling on the opposite direction going to Parañaque. When the two cars were about to pass one another, Darwin veered his vehicle to his left going to the center island of the highway an occupied the lane which plaintiff Zacarias was traversing. Zacarias’ Ford Laser collided head-on with Nuval’s Jeep. Darwin immediately fled from the scene. Zacarias suffered multiple fracture. He underwent a leg operation and physical therapy. Nuval offered P100,000.00 as compensation for the injuries caused. Plaintiffs refused to accept it. Plaintiffs filed a criminal suit against Darwin and a civil suit against defendants for damages. Trial court ruled infavor of plaintiffs. CA reversed the decision. ISSUE: W/N employer Nuval can be held liable. RULING: Petition granted. RATIO: Article 2180 of the Civil Code provides that employers shall be liable for damages caused by their employees acting within the scope of their assigned tasks. The facts established in the case at bar show that Darwin was acting within the scope of the authority given him when the collision occurred. That he had been hired only to bring respondent’s children to and from school must be rejected. True, this may have been one of his assigned tasks, but no convincing proof was presented showing that it was his only task. His authority was to drive Nuval’s vehicle. Once a driver is proven negligent in causing damages, the law presumes the vehicle owner equally negligent and imposes upon the latter the burden of proving proper selection of employee as a defense. Respondent failed to show that he had satisfactorily discharged this burden. FULL TEXT THIRD DIVISION G.R. No. 138054 September 28, 2000 ROSENDO C. CARTICIANO and ZACARIAS A. CARTICIANO, petitioners, vs. MARIO NUVAL, respondent.

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D E C I S I O N PANGANIBAN, J.: To hold an employer liable for the negligent acts of the employee, it is enough to prove that the latter was hired to drive the former’s motor vehicle. It is not necessary to show, in addition, that the employer’s children were aboard the jeep when the accident happened. Once the driver is shown to be negligent, the burden of proof to free the employer from liability shifts to the latter. Statement of the Case Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Court, assailing the November 10, 1999 Decision2 of the Court of Appeals (CA)3 in CA-GR CV No. 52316, which disposed as follows: "WHEREFORE, [the] foregoing considered, the appealed decision is hereby AFFIRMED insofar as defendant Darwin is concerned and REVERSED and SET-ASIDE as it pertains to defendant-appellant Nuval. Defendant-appellant Nuval is hereby absolved of any civil liability and the complaint against him is hereby DISMISSED."4 On the other hand, the trial court5 ruled in this wise: "ACCORDINGLY, judgment is hereby rendered in favor of plaintiffs and against defendants, ordering the latter to pay the former jointly and severally the following: 1) The amount of P160,715.19 as actual damage for the medical treatment so far of plaintiff Zacarias Carticiano; 2) The amount of P100,000.00 to compensate the income and opportunities plaintiff Zacarias lost as a result of the incident; 3) The amount of P173,788.00 for the damages sustained by the Ford Laser; 4) The amount of P200,000.00 as moral damages; 5) The amount of P100,000.00 as exemplary damages; 6) The amount of P100,000.00 as attorney’s fees and expenses of litigation. With costs. SO ORDERED." The Facts The facts are summarized succinctly by the Court of Appeals as follows: "On September 3, 1992 at about 9:30 in the evening, plaintiff Zacarias Carticiano was on his way home to Imus, Cavite. Plaintiff Zacarias was driving his father’s (plaintiff Rosendo Carticiano) Ford Laser car, traversing the coastal roads of Longos, Bacoor, Cavite. "On the same date and time, defendant Nuval’s owner-type Jeep, then driven by defendant Darwin was traveling on the opposite direction going to Parañaque. "When the two cars were about to pass one another, defendant Darwin veered his vehicle to his left going to the center island of the highway and occupied the lane which plaintiff Zacarias was traversing. "As a result thereof, plaintiff Zacarias’ Ford Laser collided head-on with defendant Nuval’s Jeep. Defendant Darwin immediately fled from the scene.

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"Plaintiff Zacarias was taken out [of] the car by residents of the area and was brought to the hospital by Eduard Tangan, a Narcom agent who happened to pass by the place. Plaintiff Zacarias suffered multiple fracture on his left leg and other injuries in his body. Plaintiff Zacarias underwent a leg operation and physical therapy to repair the damaged leg. "Defendant Nuval offered P100,000.00 as compensation for the injuries caused. Plaintiffs refused to accept the amount. "On this account, plaintiffs filed a criminal suit against defendant Darwin. Plaintiffs also filed this present civil suit against defendants for damages. "Plaintiffs alleged that the proximate cause of the accident is defendant’s Darwin recklessness in driving defendant Nuval’s jeep; that on account of said recklessness of defendant Darwin, plaintiff suffered damages; that defendant Darwin was an employee of defendant Nuval at the time of accident; that defendant Nuval did not exercise due diligence in the supervision of his employee; that defendants should he held liable for damages. "Defendant Nuval on the other hand insisted that he cannot be held answerable for the acts of defendant Darwin; that defendant Darwin was not an employee of defendant Nuval at the time of the accident; that defendant Darwin was hired only as casual and has worked with defendant Nuval’s company only for five days; that at the time of the accident, defendant Darwin was no longer connected with defendant Nuval’s company; that defendant Darwin was not authorized to drive the vehicle of defendant Nuval; that defendant Nuval tried to locate defendant Darwin but the latter could no longer be found; that defendant Nuval cannot be held liable for damages. "Defendant Darwin [h]as failed to file his answer within the reglementary period. Consequently, he was declared in default. Trial of the case proceeded."6 Ruling of the Court of Appeals The Court of Appeals explained that in order to hold an employer liable for the negligent acts of an employee under Article 2180 of the Civil Code, it must be shown that the employee was "acting within the scope of his assigned task when the tort complained of was committed."7 The employer in this case, Respondent Mario Nuval, cannot be held liable for the tort committed by Darwin. First, appellants did not present evidence showing that the driver was indeed an employee of respondent at the time the accident occurred. And second, even assuming arguendo that Darwin was in fact an employee of Nuval, it was not shown that the former was acting within the scope of his assigned task when the incident happened. Thus, the requisites for holding an employer liable for the tort committed by an employee were not satisfied. Hence, this appeal.8 Issues Petitioners present the following issues: "A. Whether or not Defendant Darwin was in fact an employee of Defendant Nuval; "B. Whether or not Defendant Nuval was negligent in the selection and supervision of his employees; "C. Whether or not Defendant Nuval was grossly negligent in the safekeeping of the key to his owner-type jeep and of said vehicle itself; "D. Whether or not respondent must be held liable for the damages and injuries suffered by appellees; [and] "E. Whether or not findings of facts of the Court of Appeals are subject to exceptions."9 For brevity, Item A will be taken up as the first issue; while B, C, D and E will be discussed together as the second issue, since they all directly pertain to respondent’s vicarious liability.

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The Court’s Ruling The Petition is meritorious. First Issue: No Proof That Employment Was Terminated Respondent maintains that on the date10 the accident happened, Darwin was no longer his employee because the latter’s services had already been terminated. Nuval adds that Darwin was hired for a period of only four to six days. To substantiate this claim, the former presented payroll and employment records showing that the latter was no longer his employee. We disagree. The only proof proferred by Respondent Nuval to show that Darwin was no longer his employee was the payroll in which the latter’s name was not included. However, as revealed by the testimonies of the witnesses presented during trial, respondent had other employees working for him who were not listed in the payroll either. The trial court explained as follows: "It surfaced that the payroll and daily time records presented by defendant Nuval [were] not reliable proofs of the names and number of employees that defendant Nuval had at the time of the incident in view of the testimonies of witnesses for defendant Nuval tending to show that there were more employees of defendant Nuval who were not in the payroll."11 The rather easy access which Darwin had to the keys to the vehicle of Nuval further weakened the latter’s cause. First, nobody questioned the fact that the former had freely entered respondent’s house where the keys to the vehicle were kept. The theory of Nuval that Darwin must have stolen the keys as well as the vehicle is rather farfetched and not supported by any proof whatsoever. It is obviously an afterthought concocted to present some semblance of a defense. Second, both respondent and his employees who testified did not act as if the vehicle had been stolen. He had not reported the alleged theft of his vehicle. Neither did he search nor ask his employees to search for the supposedly stolen vehicle. In fact, he testified that his employees had told him that the keys and the vehicle had merely "probably" been stolen by Darwin. "Atty. Bobadilia: Did you ask among your employees who gave the key to Darwin? Mario Nuval: I asked them, sir. Atty. Bobadilla: What was the reply of your employees? M. Nuval: According to my employees he stole the key of the jeepney at home. Atty. Abas: I disagree with the interpretation of the interpreter because the answer of the witness is ‘ninanak yata." Interpreter: I agree, your Honor. Court: So, what is the correct interpretation? A: According to my employees perhaps the key was stolen, or perhaps Darwin stole the key to the jeep."12 From the totality of the evidence, we are convinced that Darwin was Nuval’s driver at the time of the accident. Second to Fourth Issues: Employer’s Liability The CA agreed with the theory of respondent that he could not be held liable for the negligent acts of his employee because Darwin was not acting within the scope of his assigned tasks when the damage occurred. Respondent adds that he observed the diligence of a good father of a family and was not negligent in safeguarding the keys to the said vehicle.

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Article 2180 of the Civil Code provides that employers shall be liable for damages caused by their employees acting within the scope of their assigned tasks. The said provision is reproduced below: "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. "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."13 (Italics supplied) The facts established in the case at bar show that Darwin was acting within the scope of the authority given him when the collision occurred. That he had been hired only to bring respondent’s children to and from school must be rejected. True, this may have been one of his assigned tasks, but no convincing proof was presented showing that it was his only task. His authority was to drive Nuval’s vehicle. Third parties are not bound by the allegation that the driver was authorized to operate the jeep only when the employer’s children were on board the vehicle. Giving credence to this outlandish theory would enable employers to escape their legal liabilities with impunity. Such loophole is easy to concoct and is simply unacceptable. The claim of respondent that he had exercised the diligence of a good father of a family is not borne out by the evidence. Neither is it supported by logic. His main defense that at the time of the accident Darwin was no longer his employee, having been merely hired for a few days, is inconsistent with his other argument of due diligence in the selection of an employee. Once a driver is proven negligent in causing damages, the law presumes the vehicle owner equally negligent and imposes upon the latter the burden of proving proper selection of employee as a defense.14 Respondent failed to show that he had satisfactorily discharged this burden. No Proof of Contributory Negligence Respondent Nuval’s accusation that Petitioner Zacarias Carticiano is guilty of contributory negligence by failing to stop his car or to evade the oncoming jeep is untenable. Both the trial and the appellate courts found that the accident was caused by the fact that Darwin’s jeep suddenly veered towards Zacarias’ lane when the vehicles were about to pass each other, thus making it difficult if not impossible for petitioner to avoid the head-on collission. Nuval utterly failed to present sufficient evidence to show that Zacarias could have evaded the jeep.1âwphi1 Given the distance between the vehicles and the speed at which they were travelling, the former was not able to demonstrate convincingly that the latter could have minimized the damage complained of. Review of Factual Findings

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Generally, the factual findings of lower courts are accorded great respect by this Court. However, the above rule is subject to certain exceptions, one of which is when the two lower court’s findings oppose each other.15 In the present case, there is a clear conflict between the findings of the trial court and those of the CA. Such conflict hinges on whether it was sufficiently proven that the employment of Darwin had indeed been terminated by respondent, and whether the former was acting within the scope of his assigned tasks at the time the collision occurred. The resolution of both of these pivotal factual issues is determinative of respondent’s vicarious liability for the injuries caused by Darwin. It is thus necessary for this Court to pore over the evidence adduced, as it did already. Damages Article 2199 of the Civil Code allows the aggrieved party to recover the pecuniary loss that he has suffered. "ART. 2199. Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages." Based on the above, Petitioner Zacarias is entitled to indemnification for actual damages caused by the negligence of Darwin, for which the latter’s employer, Respondent Nuval, is solidarily liable. And as found by the trial court, petitioner is entitled to P160,715.19 for his medical treatment, as testified to by Dr. Eduardo Arandia. In the same vein, both petitioners are also entitled to P173,788, which represents the costs incurred for the repair of the damaged vehicle.16 The Civil Code allows indemnification for lost profit or income,17 but petitioners failed to adduce sufficient proof of such loss. However, moral damages are in order, based on Articles 2217 and 2219 of the Civil Code which respectively provide: "ART. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant’s wrongful act or omission. "ART. 2219. Moral damages may be recovered in the following and analogous cases: x x x x x x x x x "(2) Quasi-delicts causing physical injuries x x x" As a direct result of the collision, petitioner suffered physically. It is also true that he experienced and will continue to experience social humiliation and ridicule for having his left leg shorter than the right which causes him to limp when walking. For the above, we agree with the trial court that Petitioner Zacarias is entitled to an award of moral damages. Exemplary damages and attorney’s fees are likewise authorized by the following provisions of the Civil Code: "ART. 2229. Exemplary or corrective damages are imposed, by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages." "ART. 2234. While the amount of the exemplary damages need not be proved, the plaintiff must show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded. In case liquidated damages have been agreed upon, although no proof of loss is necessary in order that such liquidated damages may be recovered, nevertheless, before the court may consider the question of granting exemplary in

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addition to the liquidated damages, the plaintiff must show that he would be entitled to moral, temperate or compensatory damages were it not for the stipulation for liquidated damages." "ART. 2208. In the absence of stipulation, attorney’s fees and expenses of litigation, other than judicial costs, cannot be recovered, except: (1) When exemplary damages are awarded x x x."18 As held by the trial court, respondent’s refusal to answer adequately for the damages forced petitioners to litigate and incur expenses. And to serve as an example for the public good, exemplary damages are affirmed, since Petitioner Zacarias has already shown that he is entitled to compensatory and moral damages in accordance with Article 2234 of the Civil Code. WHEREFORE, the Petition is hereby GRANTED. The assailed Decision is REVERSED and SET ASIDE and the trial court’s Decision REINSTATED, except that the award of P100,000 for lost "income or opportunities" is DELETED. SO ORDERED. Melo, (Chairman), Vitug, Purisima, and Gonzaga-Reyes, JJ., concur.

JOSE VS ABRAHAM SECOND DIVISION [G.R. Nos. 118441-42. January 18, 2000] ARMANDO JOSE y PAZ and MANILA CENTRAL BUS LINES (MCL), represented by its General Manager MR. DANILO T. DE DIOS, petitioners vs. COURT OF APPEALS, ROMMEL ABRAHAM, represented by his father FELIXBERTO ABRAHAM, JOSE MACARUBO and MERCEDES MACARUBO, respondents. D E C I S I O N MENDOZA, J.: rny This is a petition for review on certiorari of the decision[1] of the Court of Appeals, reversing the decision of the Regional Trial Court, Branch 172, Valenzuela, Metro Manila and ordering petitioners to pay damages for injuries to persons and damage to property as a result of a vehicular accident. The facts are as follows: Petitioner Manila Central Bus Lines Corporation (MCL) is the operator-lessee of a public utility bus (hereafter referred to as Bus 203) with plate number NVR-III-TB-PIL and body number 203. Bus 203 is owned by the Metro Manila Transit Corporation and is insured with the Government Service Insurance System. On February 22, 1985, at around six o’clock in the morning, Bus 203, then driven by petitioner Armando Jose, collided with a red Ford Escort driven by John Macarubo on MacArthur Highway, in Marulas, Valenzuela, Metro Manila. Bus 203 was bound for Muntinlupa, Rizal, while the Ford Escort was headed towards Malanday, Valenzuela on the opposite lane. As a result of the collision, the left side of the Ford Escort’s hood was severely damaged while its driver, John Macarubo, and its lone passenger, private respondent Rommel Abraham, were seriously injured. The driver and conductress of Bus 203 rushed Macarubo and Abraham to the nearby Fatima Hospital where Macarubo lapsed into a coma. Despite surgery, Macarubo failed to recover and died five days later. Abraham survived, but he became blind on the left eye which had to be removed. In addition, he sustained a fracture on the forehead and multiple lacerations on the face, which caused him to be hospitalized for a week. On March 26, 1985, Rommel Abraham, represented by his father, Felixberto, instituted Civil Case No. 2206-V-85 for damages against petitioners MCL and Armando Jose in the Regional Trial Court, Branch 172, Valenzuela.

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On July 17, 1986, the spouses Jose and Mercedes Macarubo, parents of the deceased John Macarubo, filed their own suit for damages in the same trial court, where it was docketed as Civil Case No. 2428-V-86, against MCL alone. On the other hand, MCL filed a third-party complaint against Juanita Macarubo, registered owner of the Ford Escort on the theory that John Macarubo was negligent and that he was the "authorized driver" of Juanita Macarubo. The latter, in turn, filed a counterclaim for damages against MCL for the damage to her car. Civil Case No. 2206-V-85 and Civil Case No. 2428-V-86 were consolidated and later tried jointly. The facts, as found by the trial court, are as follows: Esmsc In Civil Case No. 2206-V-85, the Court heard the testimonies that during the night previous to the accident of February 22, 1985 at 6:15 a.m., Rommel Abraham and John Macarubo were at a party. There was therefore, no sleep for them, notwithstanding testimony to the contrary and the service of drinks cannot be totally discounted. After the party at 11 p.m., while both Rommel and John were enroute home to Valenzuela from La Loma, the car encountered mechanical trouble and had to be repaired as its cross-joint was detached. The defect of a cross-joint is not minor and repair thereof would as testified to by Rommel lasted up to early dawn and the car started to run only after five o’clock in the morning. With lack of sleep, the strains of a party still on their bodies, and the attention to the repair coupled with the wait until the car was ready to run, are potentials in a driver for possible accident. The accident happened at 6:15 a.m. when the physical and mental condition of the driver John Macarubo was as expected not too fit for the driving as he could not anymore control the car. The desire to be home quick for the much needed sleep could have prompted him to overtake the preceding vehicle. Indeed the pictures taken of the two vehicles (Exh. 1,2 and 3) will clearly show that the MCL bus was at its proper lane and not in an overtaking position while the car driven by John Macarubo was positioned in a diagonal manner and crossed the line of the MCL, which is an indication of an overtaking act. If it were the bus that was overtaking at the time, the car would have been thrown farther away from the point of the impact. The court is convinced of the close supervision and control of MCL over their drivers, and its exercise of due diligence in seeing to it that no recklessness is committed by its employees, drivers especially, from the unrebutted testimonies of Cesar Cainglet. The Court noted the respective damages of the two vehicles especially the point of the impact. From these damages as shown by the picture, it can be clearly deduced which vehicle did the bumping. It was the car driven by John Macarubo that hit the MCL which was on its right and correct lane.[2] Based on the foregoing facts, the trial court rendered judgment on September 28, 1989, dismissing both civil cases against MCL and ruling favorably on its third-party complaint against Juanita Macarubo, ordering the latter to pay MCL P54,232.12 as actual damages, P24,000.00 for lost income, and P10,000.00 as attorney’s fees. Rommel Abraham, the Macarubo spouses, and third-party defendant Juanita Macarubo then appealed to the Court of Appeals which, on December 21, 1994, rendered a decision reversing the decision of the trial court. It held (1) that the trial court erred in disregarding Rommel Abraham’s uncontroverted testimony that the collision was due to the fault of the driver of Bus 203; (2) that the trial court erred in relying on photographs (Exhs. 1-3) which had been taken an hour after the collision as within that span of time, the positions of the vehicles could have been changed; (3) that the photographs do not show that the Ford Escort was overtaking another vehicle when the accident happened and that John Macarubo, its driver, was negligent; and (4) that MCL failed to make a satisfactory showing that it exercised due diligence in the selection and supervision of its driver Armando Jose. The dispositive portion of the decision reads: Jksm WHEREFORE, the appealed decision is hereby REVERSED and the defendants-appellees MCL and Armando Jose are adjudged to pay jointly and severally: 1. Rommel Abraham, represented by his father Felixberto Abraham: (a) P37,576.47 as actual damages; (b) P50,000.00 as compensatory damages;

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(c) P15,000.00 as moral damages; (d) P5,000.00 as exemplary damages; and (e) P10,000.00 as attorney’s fees. 2. The heirs of John Macarubo: (a) P50,000.00 as indemnity for his death; (b) P50,000.00 as moral damages; (c) P10,000.00 as exemplary damages; and (d) P10,000.00 as attorney’s fees. Costs against the appellees. SO ORDERED. Hence, this petition for review on certiorari. Petitioners MCL and Armando Jose raise four issues which boil down to the question whether it was the driver of Bus 203 or that of the Ford Escort who was at fault for the collision of the two vehicles. It is well-settled that a question of fact is to be determined by the evidence offered to support the particular contention.[3] In the proceedings below, petitioners relied mainly on photographs, identified in evidence as Exhibits 1 to 3, showing the position of the two vehicles after the collision. On the other hand, private respondents offered the testimony of Rommel Abraham to the effect that the collision took place because Bus 203 invaded their lane.[4] The trial court was justified in relying on the photographs rather than on Rommel Abraham’s testimony which was obviously biased and unsupported by any other evidence. Physical evidence is a mute but an eloquent manifestation of truth, and it ranks high in our hierarchy of trustworthy evidence.[5] In criminal cases such as murder or rape where the accused stands to lose his liberty if found guilty, this Court has, in many occasions, relied principally upon physical evidence in ascertaining the truth. In People v. Vasquez,[6] where the physical evidence on record ran counter to the testimonial evidence of the prosecution witnesses, we ruled that the physical evidence should prevail.[7] Esm In this case, the positions of the two vehicles, as shown in the photographs (Exhs. 1 to 3) taken by MCL line inspector Jesus Custodio about an hour and fifteen minutes after the collision, disputes Abraham’s self-serving testimony that the two vehicles collided because Bus 203 invaded the lane of the Ford Escort and clearly shows that the case is exactly the opposite of what he claimed happened. Contrary to Abraham’s testimony, the photographs show quite clearly that Bus 203 was in its proper lane and that it was the Ford Escort which usurped a portion of the opposite lane. The three photographs show the Ford Escort positioned diagonally on the highway, with its two front wheels occupying Bus 203’s lane. As shown by the photograph marked Exhibit 3, the portion of MacArthur Highway where the collision took place is marked by a groove which serves as the center line separating the right from the left lanes. The photograph shows that the left side of Bus 203 is about a few feet from the center line and that the bus is positioned parallel thereto. This negates the claim that Bus 203 was overtaking another vehicle and, in so doing, encroached on the opposite lane occupied by the Ford Escort. Indeed, Bus 203 could not have been overtaking another vehicle when the collision happened. It was filled with passengers,[8] and it was considerably heavier and larger than the Ford Escort. If it was overtaking another vehicle, it necessarily had to accelerate. The acceleration of its speed and its heavy load would have greatly increased its momentum so that the impact of the collision would have thrown the smaller and lighter Ford Escort to a considerable distance from the point of impact. Exhibit 1, however, shows that the Ford Escort’s smashed hood was only about one or two meters from Bus 203’s damaged left front. If there had been a great impact, such as would be the case if Bus 203 had been running at a high speed, the two vehicles should have ended up far from each other. In discrediting the physical evidence, the appellate court made the following observations: We cannot believe that it was the car which overtook another vehicle and proceeded to the lane occupied by the bus. There was a traffic jam on the "bus lane" while traffic was light on the "car lane."

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Indeed, we find it inconceivable that the car, occupying the lane without any traffic, would overtake and traverse a heavy traffic lane.[9] (Underscoring supplied.) This is correct. However, the fact remains that when the Ford Escort finally came to a stop, it encroached on the opposite lane occupied by Bus 203. Significantly, Rommel Abraham testified that on February 21, 1985, the night before the accident, he and John Macarubo went to a friend’s house in La Loma where they stayed until 11 p.m.[10] Abraham’s explanation as to why they did not reach Valenzuela until six o’clock in the morning of the next day when the accident happened indicates that the Ford Escort careened and slammed against Bus 203 because of a mechanical defect. Abraham told the court:[11] Esmmis ATTY. RESPICIO: Q: I am sorry, Your honor. After leaving Arnel’s place where did you go? ROMMEL ABRAHAM A: We proceeded in going home, sir. Q: You were on your way home? A: Yes, sir. Q: What time did you . . . I will reform the question. You met the accident at about 6:00 o’clock the next day, 6:00 o’clock in the morning the next day, did it take you long to reach BBB? A: Our car had a mechanical trouble somewhere at 2nd Avenue, sir. Q: What kind of trouble? A: The cross-joint were detached, sir. Q: Are you familiar with cars? A: A little, sir. COURT: Q: What time was that when you have this cross-joint problem? A: About 12:00 o’clock perhaps, sir. Q: What happened to the cross joint? A: It was cut, ma’am. Q: You were able to repair that cross-joint 12:00 o’clock and you were able to run and reached this place of accident at 6:00 o’clock? A: No, we we’re not able to get spare parts, ma’am. Q: Why were you able to reach this place at 6:00 o’clock? A: We went home and look for the spare parts in their house, ma’am. Q: House of Macarubo? A: Yes, ma’am. Q: So you were able to repair the car?

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A: Yes, ma’am. Q: What time were you able to repair the car? A: Around 5:00 o’clock in the morning, sir. Q: You were able to replace the cross-joint or what? A: Ginawaan ng paraan, ma’am. Q: How? A: The cross-joint were welded in order to enable us to go home, ma’am. Q: No spare parts was replaced? Msesm A: No, ma’am. Thus, as Rommel Abraham himself admitted, the Ford Escort’s rear cross-joint was cut/detached. This mechanism controls the movement of the rear tires. Since trouble in the cross-joint affects a car’s maneuverability, the matter should have been treated as a serious mechanical problem. In this case, when asked if they were able to repair the cross-joint, Abraham said "Ginawaan ng paraan, ma’am," by simply welding them just so they could reach home. His testimony indicates that the rear cross-joint was hastily repaired and that, at most, the kind of repairs made thereon were merely temporary; just enough to enable Abraham and Macarubo to reach home. Given such fact, the likelihood is that while the Ford Escort might not have been overtaking another vehicle, it actually strayed into the bus’ lane because of the defective cross-joint, causing its driver to lose control of the vehicle. The appellate court refused to give credence to the physical evidence on the ground that the photographs were taken an hour after the collision and that within such span of time the bus could have been moved because there was no showing that the driver left the scene of the accident. This is not correct. Constancia Gerolada, Bus 203’s conductress, testified that, immediately after the collision, she and bus driver, petitioner Armando Jose, took the injured driver and passenger of the Ford Escort to the Fatima Hospital.[12] This fact is not disputed by private respondents. Rommel Abraham mentioned in his appellant’s brief in the appellate court a sketch of the scene of the accident allegedly prepared by one Patrolman Kalale, which shows Bus 203 to be occupying the Ford Escort’s lane. However, the records of this case do not show that such a sketch was ever presented in evidence in the trial court or that Patrolman Kalale was ever presented as a witness to testify on the sketch allegedly prepared by him. Under Rule 132, §3 of the Rules on Evidence, courts cannot consider any evidence unless formally offered by a party. Finally, the appellate court also ruled that MCL failed to make a satisfactory showing that it exercised the diligence of a good father of a family in the selection and supervision of its bus driver, Armando Jose.[13] Under the circumstances of this case, we hold that proof of due diligence in the selection and supervision of employees is not required. The Civil Code provides in pertinent parts: Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this chapter. Art. 2180. The obligation imposed in Art. 2176 is demandable not only for one’s own acts or omissions, but also for those of persons for whom one is responsible. Esmso . . . .

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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 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. Thus, the responsibility of employers is premised upon the presumption of negligence of their employees. As held in Poblete v. Fabros:[14] [I]t is such a firmly established principle, as to have virtually formed part of the law itself, that the negligence of the employee gives rise to the presumption of negligence on the part of the employer. This is the presumed negligence in the selection and supervision of the employee. The theory of presumed negligence, in contrast with the American doctrine of respondent superior, where the negligence of the employee is conclusively presumed to be the negligence of the employer, is clearly deducible from the last paragraph of Article 2180 of the Civil Code which provides that the responsibility therein mentioned shall cease if the employers prove that they observed all the diligence of a good father of a family to prevent damages (12 Manresa, 657; Balica vs. Litonjua and Leynes, 30 Phil. 624; Cangco vs. Manila Railroad Co., 30 Phil. 768), as observed in the same cases just cited. Therefore, before the presumption of the employer’s negligence in the selection and supervision of its employees can arise, the negligence of the employee must first be established. While the allegations of negligence against the employee and that of an employer-employee relation in the complaint are enough to make out a case of quasi-delict under Art. 2180 of the Civil Code, the failure to prove the employee’s negligence during the trial is fatal to proving the employer’s vicarious liability. In this case, private respondents failed to prove their allegation of negligence against driver Armando Jose who, in fact, was acquitted in the case for criminal negligence arising from the same incident.[15] For the foregoing reasons, we hold that the appellate court erred in holding petitioners liable to private respondents. The next question then is whether, as the trial court held, private respondent Juanita Macarubo is liable to petitioners. Article 2180 of the Civil Code makes the persons specified therein responsible for the quasi-delicts of others. The burden is upon MCL to prove that Juanita Macarubo is one of those specified persons who are vicariously liable for the negligence of the deceased John Macarubo. Exsm In its third-party complaint, MCL alleged that Juanita Macarubo was the registered owner of the Ford Escort car and that John Macarubo was the "authorized driver" of the car.[16] Nowhere was it alleged that John Macarubo was the son, ward, employee or pupil of private respondent Juanita Macarubo so as to make the latter vicariously liable for the negligence of John Macarubo. The allegation that John Macarubo was "the authorized driver" of the Ford Escort is not equivalent to an allegation that he was an employee of Juanita Macarubo. That John Macarubo was the "authorized driver" of the car simply means that he drove the Ford Escort with the permission of Juanita Macarubo. Nor did MCL present any evidence to prove that Juanita Macarubo was the employer of John Macarubo or that she is in any way liable for John Macarubo’s negligence under Art. 2180 of the Civil Code. For failure to discharge its burden, MCL’s third-party complaint should be dismissed. WHEREFORE, the decision of the Court of Appeals is REVERSED and the complaints filed in Civil Cases Nos. 2206-V-85 and 24428-V-86 against Manila Central Bus Lines and Armando Jose, as well as the third-party complaint filed in Civil Case No. 2206-V-85 against Juanita Macarubo, are hereby DISMISSED. SO ORDERED. Bellosillo, (Chairman), Quisumbing, Buena, and De Leon, Jr., JJ., concur.2/3/00 9:17 AM

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VIRON TRANSPORTATION VS DE LOS SANTOS THIRD DIVISION [G.R. No. 138296. November 22, 2000] VIRON TRANSPORTATION CO., INC., petitioner, vs. ALBERTO DELOS SANTOS y NATIVIDAD and RUDY SAMIDAN, respondents. D E C I S I O N GONZAGA-REYES, J.: This is a petition for review on certiorari which seeks to reverse and set aside: (1) the decision of the Court of Appeals[1] promulgated on October 27, 1998 in CA-G.R. CV No. 54080 entitled “Viron Transportation Co., Inc. vs. Alberto delos Santos and Rudy Samidan” affirming the decision of the Regional Trial Court of Manila[2] in Civil Case No. 93-67283 and (2) the resolution of the Court of Appeals promulgated on April 14, 1999 denying the motion for reconsideration. The said civil case is an action to recover damages based on quasi-delict filed as a result of a vehicular accident in the afternoon of August 16, 1993 between a passenger bus owned by petitioner Viron Transportation Co., Inc. and a Forward Cargo Truck owned by private respondent Rudy Samidan. The conflicting versions of the accident were summarized by the trial court and adopted by the Court of Appeals in the assailed decision. The version of petitioner is as follows: “Plaintiff, a public utility transportation company, is the registered owner of Viron Transit Bus No. 1080, with Plate No. TB-AVC-332; while the defendant Rudy Samidan is the registered owner of the Forward Cargo Truck with Plate No. TDY-524 which, at the time of the vehicular accident in question, was driven and operated by the defendant Alberto delos Santos y Natividad. On August 16, 1993, at around 2:30 in the afternoon, the aforesaid bus was driven by plaintiff’s regular driver Wilfredo Villanueva along MacArthur Highway within the vicinity of Barangay Parsolingan, Gerona, Tarlac coming from the North en route to its destination in Manila. It was following the Forward Cargo Truck proceeding from the same direction then being driven, as aforesaid, by the defendant Alberto delos Santos. The cargo truck swerved to the right shoulder of the road and, while about to be overtaken by the bus, again swerved to the left to occupy its lane. It was at that instance that the collision occurred, the left front side of the truck collided with the right front side of the bus causing the two vehicles substantial damages.”[3] On the other hand, the version of private respondents is as follows: “Defendant Alberto delos Santos was the driver of defendant Rudy Samidan of the latter’s vehicle, a Forward Cargo Truck with Plate No. TDY-524, on that fateful day in question. At about 12:30 in the afternoon of August 16, 1993, he was driving said truck along the National Highway within the vicinity of Barangay Parsolingan, Gerona, Tarlac. The Viron bus with Body No. 1080 and Plate No., TB-AVC-332, driven by Wilfredo Villanueva y Gaudia, tried to overtake his truck, and he swerved to the right shoulder of the highway, but as soon as he occupied the right lane of the road, the cargo truck which he was driving was hit by the Viron bus on its left front side, as the bus swerved to his lane to avoid an incoming bus on its opposite direction. With the driver of another truck dealing likewise in vegetables, Dulnuan, the two of them and the driver of the Viron bus proceeded to report the incident to the Gerona Police Station. A Vehicular Traffic Report was prepared by the police (See Exhibit “D”), with a Sketch of the relative positions of the circumstances leading to the vehicular collision. x x x.”[4] After trial, the lower court dismissed petitioner’s complaint and sustained the private respondents’ counterclaim for damages. It ordered the petitioner to pay the following amounts: 1. P19,500.00, with interest thereon at 6% per annum from the date of complaint, as actual damages, until the same shall have been fully paid and satisfied; 2. P10,000.00 as additional compensatory damages for transportation and accommodations during the trial of this case;

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3. P10,000.00 for and as attorney’s fees; and 4. Costs of suit.”[5] Not satisfied therewith, petitioner appealed to the Court of Appeals which as mentioned at the outset affirmed in toto the decision of the lower court. Its motion for reconsideration having been denied, petitioner came to us claiming that the Court of Appeals gravely erred a) … IN FINDING THAT THE ACCIDENT WAS DUE TO THE FAULT OF THE PETITIONER’S DRIVER; b) … IN FINDING THE PETITIONER LIABLE FOR DAMAGES WHEN THE COUNTERCLAIM FAILED TO STATE A CAUSE OF ACTION FOR THERE IS NO AVERMENT WHATSOEVER THEREIN THAT SAID PETITIONER FAILED TO EXERCISE DUE DILIGENCE OF A GOOD FATHER OF A FAMILY IN THE SELECTION AND SUPERVISION OF ITS DRIVERS OR EMPLOYEES; c) … IN AWARDING COMPENSATORY OR ACTUAL DAMAGES AS WELL AS, TRAVELLING EXPENSES AND ATTORNEY’S FEES WHEN THE SAME WERE NOT SUBSTANTIATED OR BUTTRESSED BY THE EVIDENCE ON RECORD; d) … IN AFFIRMING THE DECISION OF THE COURT A QUO DENYING PETITIONER’S MOTION TO PRESENT REBUTTAL EVIDENCE.[6] We resolved to give due course to the petition and required the parties to submit their respective memoranda after due consideration of the allegations, issues and arguments adduced in the petition, the comment thereon by the private respondents, and the reply to the comment filed by the petitioner. The petitioner and private respondents filed their respective memoranda in due time. The first imputed error is without merit. Petitioner endeavors to have this Court review the factual findings of the trial court as sustained by the Court of Appeals finding the driver of the Viron passenger bus at fault as the collision resulted from the latter’s failed attempt to overtake the cargo truck. We are unable to sustain petitioner’s contention. The rule is settled that the findings of the trial court especially when affirmed by the Court of Appeals, are conclusive on this Court when supported by the evidence on record.[7] The Supreme Court will not assess and evaluate all over again the evidence, testimonial and documentary adduced by the parties to an appeal particularly where, such as here, the findings of both the trial court and the appellate court on the matter coincide.[8] Indeed, petitioner has failed to show compelling grounds for a reversal of the following findings and conclusions of the trial court and the Court of Appeals: “There is no doubt whatsoever, in the mind of the Court, on the basis of the documentary evidence (Exhibits “D”, “4” and “5”) and the testimonies of the witnesses, that the vehicular collision was due to the negligence of plaintiff’s regular driver, Wilfredo Villanueva y Gaudia, at that time. The cargo truck was on its proper lane at the time of the collision. In fact, the cargo truck even swerved to the right shoulder of the road to give much room for the Viron bus to pass. Notwithstanding the condition of the road and the in-coming Dagupan Bus from the opposite direction, the Viron bus nonetheless proceeded to overtake the cargo truck, bringing about the collision. The evidence is uniform as to that fact. Indeed, no witnesses for the plaintiff ever contradicted the obtrusive fact that it was while in the process of overtaking the cargo truck that the Viron bus collided with the former vehicle. It is here well to recall that the driver of an overtaking vehicle must see to it that the conditions are such that an attempt to pass is reasonably safe and prudent, and in passing must exercise reasonable care. In the absence of clear evidence of negligence on the part of the operator of the overtaken vehicle, the courts are inclined to put the blame for an accident occurring while a passage is being attempted on the driver of the overtaking vehicle (People vs. Bolason, (C.A.) 53 Off. Gaz. 4158). As already intimated elsewhere in this judgment, no evidence was presented by the plaintiff to even intimate at the negligence of the driver of the cargo truck.”[9] It is plain to see that the fault or negligence was attributable to the driver of the Viron passenger bus. Petitioner proceeds to attack, albeit feebly, the credibility of the two witnesses presented by private respondents, namely, Alberto delos Santos himself, who was then the driver of the Forward Cargo

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Truck and a certain Manuel Dulnuan, who was then travelling along the same highway coming from the opposite direction when the accident occurred. According to petitioner, the two witnesses contradicted each other when “witness Dulnuan testified that the petitioner’s passenger bus while attempting to overtake the respondents’ truck, noticed the Dagupan passenger bus coming from the opposite direction and to avoid hitting said passenger bus, the Viron Transit passenger bus swerved to the right, hitting in the process the front left side portion of the respondents’ truck;” while, “witness Alberto delos Santos testified that prior to the accident, he swerved his truck to the right shoulder of the road (western lane) and when he attempted to return to his lane, the accident happened.” Contrary to petitioner’s assertion, the testimonies of the two witnesses complement, if not corroborate each other. The Viron passenger bus collided with the cargo truck in a vain attempt to overtake the latter. At the sight of an oncoming bus in the opposite direction, the Viron passenger bus swerved to the right lane which was then occupied by the cargo truck resulting in the collision of the two vehicles. In reference to Alberto delos Santos’ testimony, the lower court pointed out that the said driver of the cargo truck was on its proper lane at the time of impact, and even swerved earlier toward the right shoulder of the road just to give room to the bus. In any event, it is doctrinally entrenched that the assessment of the trial judge as to the issue of credibility binds the appellate court because he is in a better position to decide the issue, having heard the witnesses and observed their deportment and manner of testifying during the trial, except when the trial court has plainly overlooked certain facts of substance and value, that, if considered, might affect the result of the case, or where the assessment is clearly shown to be arbitrary.[10] Petitioner has not shown this case to fall under the exception. The second imputed error is without merit either. Petitioner contends that private respondents’ counterclaim failed to state a cause of action for there is no averment therein that petitioner failed to exercise the diligence of a good father of a family in the selection and supervision of its drivers or employees. It is to be noted that petitioner Viron Transportation Co., Inc., as the registered owner of the bus involved in the subject vehicular accident originally brought the action for damages against private respondents. Private respondents as defendants in the court a quo denied any liability and filed instead a counterclaim for damages claiming that it was the driver of the bus who was at fault in the operation of the bus. We find that the counterclaim of private respondents alleges the ultimate facts constituting their cause of action. It is not necessary to state that petitioner was negligent in the supervision or selection of its employees, as its negligence is presumed by operation of law. The liability of the employer was explained in a case thus: “As employers of the bus driver, the petitioner is, under Article 2180 of the Civil Code, directly and primary liable for the resulting damages. The presumption that they are negligent flows from the negligence of their employee. That presumption, however, is only juris tantum, not juris et de jure. Their only possible defense is that they exercised all the diligence of a good father of a family to prevent the damage. Article 2180 reads as follows: “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. x x x Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks, even though the former are not engaged in any business or industry. x x x 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 diligence of a good father referred to means the diligence in the selection and supervision of employees.[11] In fine, when the employee causes damage due to his own negligence while performing his own duties, there arises the juris tantum presumption that the employer is negligent, rebuttable only by proof of observance of the diligence of a good father of a family.[12] Petitioner, through its witnesses, namely, Danilo Azardon, a shop supervisor and Fernando Mallare, an administrative officer, failed to

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rebut such legal presumption of negligence in the selection and supervision of employees, thus, petitioner as the employer is responsible for damages, the basis of the liability being the relationship of pater familias or on the employer’s own negligence.[13] Hence, with the allegations and subsequent proof of negligence against the bus driver of petitioner, the lower courts correctly adjudged petitioner liable for damages. Be that as it may, it is too late in the day for petitioner to raise failure to state a cause of action as an issue. Rule 9, Section 2 of the Rules of Court provides as a general rule that “defenses and objections not pleaded either in a motion to dismiss or in the answer are deemed waived.” An exception is made where there is a “failure to state a cause of action which may be alleged in a later pleading, if one is permitted, or by motion for judgment on the pleadings, or at the trial on the merits; x x x.” Applying said rule, petitioner is now barred from raising said issue, which it did only for the first time in the Court of Appeals and subsequently before this Court. Petitioner did not raise the said issue in a later pleading, i.e. answer to the counterclaim, or at any time during the trial. The fourth imputed error is likewise without merit. The Court of Appeals committed no error in declaring the case submitted for decision even without the testimony of petitioner’s rebuttal witness. Petitioner has only itself to blame for its failure to present its rebuttal witness as the Court of Appeals explained thus: “Appellant’s claim that the court a quo erred in not allowing it to present rebuttal evidence, thus depriving it of its day in court is without merit. A review of the records would show that appellant was given ample opportunity to present its rebuttal evidence but failed to so do. It was appellant itself which sought the postponements and cancellations of the hearings, after its motion for the presentation of rebuttal evidence had been granted.”[14] There is, however, merit in the third imputed error. We find that with respect to the award of damages, an oversight was committed by the Court of Appeals. The Court of Appeals justified the award of actual damages as follows: “In the case at bench, the award of actual damages cannot be said to be devoid of factual and legal basis. Appellees were able to prove that damage had been suffered by the cargo truck, the amount of which is shown in Exhibit 3, the estimate of repair expenses. Moreover, the picture of the damaged cargo truck (Exh. 1), more or less, supports the amount of damage reflected in the repair estimate (Exh. 3). As to the award of attorney’s fees, the Court finds the same just and reasonable. The award of attorney’s fees is proper where the acts and omissions of a party have compelled the other party to litigate or incur expenses to protect his rights and such may be recovered when deemed by the court as just and equitable, as in the case at bar. x x x.”[15] Actual damages, to be recoverable, must not only be capable of proof, but must actually be proved with a reasonable degree of certainty. Courts cannot simply rely on speculation, conjecture or guesswork in determining the fact and amount of damages.[16] To justify an award of actual damages, there must be competent proof of the actual amount of loss, credence can be given only to claims which are duly supported by receipts.[17] Considering that the actual damages suffered by private respondents were based only on a job estimate and a photo showing the damage to the truck, there is absence of competent proof on the specific amounts of actual damages suffered. Neither were the transportation and accommodation expenses during the trial supported by competent proof, the lower court having relied merely on the unsubstantiated allegations of private respondents. Nonetheless, in the absence of competent proof on the actual damages suffered, a party is entitled to temperate damages. Article 2224 of the Civil Code provides that: “Art. 2224. Temperate or moderate damages, which are more than nominal but less than compensatory damages, may be recovered when the court finds that some pecuniary loss has been suffered but its amount can not, from the nature of the case, be proved with certainty.”

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There is no doubt that the damage sustained by private respondents' cargo truck was due to the fault or negligence of petitioner's bus driver. The Court deems the amount of P10,000.00 to be reasonable given the circumstances.[18] With respect to the award of attorney’s fees, there is likewise neither factual nor legal basis therefor. This case does not fall under any of the instances found in Article 2208 of the Civil Code[19] for the proper award of attorney’s fees. The futility of petitioner’s resort to judicial action without more could not be taken against it. It cannot be said that petitioner filed a clearly unfounded civil action against the private respondents. A resort to judicial processes and a subsequent defeat therein are not per se evidence of a clearly unfounded suit, this is in line with the policy that no penalty should be placed on the right to litigate.[20] WHEREFORE, the challenged decision of the Court of Appeals promulgated on October 27, 1998 in CA-G.R. CV No. 54080 affirming that of the Regional Trial Court of Manila, Branch 55, is hereby modified insofar as it awarded actual damages to private respondents Alberto delos Santos y Natividad and Rudy Samidan in the amount of P19,500.00 and an additional P10,000.00 as expenses for transportation and accommodation during the trial for lack of evidentiary bases therefor. Considering the fact, however, that the cargo truck sustained damages due to the negligence or fault of petitioner, the award of P10,000.00 in favor of private respondents as and for temperate damages is in order. The award of P10,000.00 as attorney’s fees is DELETED for reasons above-stated. SO ORDERED. Melo, (Chairman), Vitug, and Panganiban, JJ., concur.

PESTANO VS SUMAYANG [G.R. No. 139875. December 4, 2000] GREGORIO PESTAÑO and METRO CEBU AUTOBUS CORPORATION, petitioners, vs. Spouses TEOTIMO SUMAYANG and PAZ C. SUMAYANG, respondents. D E C I S I O N PANGANIBAN, J.: Factual findings of the Court of Appeals, affirming those of the trial judge, are binding on this Court. In quasi-delicts, such findings are crucial because negligence is largely a matter of evidence. In computing an award for lost earning capacity, the life expectancy of the deceased, not that of the heir, is used as basis. The Case Before us is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, assailing the April 21, 1999 Decision and the August 6, 1999 Resolution of the Court of Appeals[1] (CA) in CA-GR CV No. 30289. The questioned Decision disposed as follows: “WHEREFORE, premises considered, the instant appeal is hereby DENIED. The assailed Decision of the lower court is hereby AFFIRMED with the aforesaid modification regarding the award of death penalty.” The Resolution of August 6, 1999 denied reconsideration.[2] The Facts The events leading to this Petition were summarized by the Court of Appeals as follows: “It appears from the records that at around 2:00 o’clock [o]n the afternoon of August 9, 1986, Ananias Sumayang was riding a motorcycle along the national highway in Ilihan, Tabagon, Cebu. Riding with him was his friend Manuel Romagos. As they came upon a junction where the highway connected with the road leading to Tabagon, they were hit by a passenger bus driven by [Petitioner] Gregorio Pestaño and owned by [Petitioner] Metro Cebu Autobus Corporation (Metro Cebu, for brevity), which had tried to overtake them, sending the motorcycle and its passengers hurtling upon the pavement.

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Both Ananias Sumayang and Manuel Romagos were rushed to the hospital in Sogod, where Sumayang was pronounced dead on arrival. Romagos was transferred to the Cebu Doctors’ Hospital, but he succumbed to his injuries the day after. “Apart from the institution of criminal charges against Gregorio Pestaño, [Respondents] Teotimo and Paz Sumayang, as heirs of Ananias Sumayang, filed this civil action for damages against Gregorio Pestaño, as driver of the passenger bus that rammed the deceased’s motorcycle, Metro Cebu, as owner and operator of the said bus, and Perla Compania de Seguros, as insurer of Metro Cebu. The case was docketed as Civil Case No. CEB-6108. “On November 9, 1987, upon motion of [Petitioner] Pestaño, Judge Pedro C. Son ordered the consolidation of the said case with Criminal Case No. 10624, pending in Branch 16 of the same Court, involving the criminal prosecution of Gregorio Pestaño for [d]ouble [h]omicide thru [r]eckless [i]mprudence. Joint trial of the two cases thereafter ensued, where the following assertions were made: ‘[Respondents] rely mainly on the testimonies of Ignacio Neis, Pat. Aquilino Dinoy and Teotimo Sumayang, father of the deceased. Neis declared that he saw the incident while he was sitting on a bench beside the highway; that both vehicles c[a]me from the North; that as the motorcycle approached the junction to Tab[a]gon, the driver Ananias Sumayang signalled with his left arm to indicate that he was taking the Tab[a]gon Road; that the motorcycle did turn left but as it did so, it was bumped by an overspeeding bus; that the force of the impact threw Ananias Sumayang and his companion Manuel Romagos about 14 meters away. The motorcycle, Neis continued, was badly damaged as it was dragged by the bus. ‘On the other hand, Pat. Dinoy testified that he was in the nearby house of Ruben Tiu [when] he heard the sound or noise caused by the collision; that he immediately went to the scene where he found Ananias Sumayang and Manuel Romagos lying on the road bleeding and badly injured; that he requested the driver of a PU vehicle to take them to a hospital; that he took note of the various distances which he included in his sketch (Exh. J) that the probable point of impact was at the left lane of the highway and right at the junction to Tab[a]gon (Exh J-11); that he based his conclusion on the ‘scratches’ caused by the motorcycle’s footrest on the asphalt pavement; that he described the damage caused to the motorcycle in his sketch (Exh J); that on the part of the bus, the right end of its front bumper was bent and the right portion of the radiator grill was dented. Pat. Dinoy acknowledged that he met at the scene Ignacio Neis who informed him that he saw the incident. ‘On the contrary, Pestaño blamed Sumayang for the accident. He testified that when he first blew the horn the motorcycle which was about 15 or 20 meters ahead went to the right side of the highway that he again blew the horn and accelerated in order to overtake the motorcycle; that when he was just one meter behind, the motorcycle suddenly turned left towards the Tab[a]gon [R]oad and was bumped by his bus; that he was able to apply his break only after the impact. Pestaño’s testimony was corroborated by Ireneo Casilia who declared that he was one of the passengers of the bus; that the motorcycle suddenly turned left towards Tab[a]gon [R]oad without giving any signal to indicate its maneuver; that the bus was going at 40 kph when the accident occurred. ‘To substantiate its defense of bonos pater familias [petitioner] [c]orporation recalled to the witness box Gregorio Pestaño who explained how his driving experience and ability were tested by the company before he was hired. He further declared that the management gave regular lectures to drivers and conductors touching on various topics like speeding, parking, loading and treatment of passengers, and that before he took to the road at 2:30 AM of that day he checked together with the mechanic the tires, brake, signal lights as well as the tools to be brought along. He did the same thing before commencing his return trip from Hagnaya, San Remegio later in the day. ‘The corporation also presented its maintenance supervisor, Agustin Pugeda, Jr., and its manager, Alfonso Corominas, Jr. who corroborated Pestaño’s testimony that his driving ability was thoroughly tested, and that all drivers underwent periodic lecture on various aspects of safety driving including pertinent traffic regulations. They also confirmed the thorough checkup of every vehicle before it would depart and that the performance of the drivers was being monitored by several inspectors posted at random places along the route.’

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“In judgment, the lower court found [petitioners] liable to the [respondents], in the amounts of P30,000.00 for death indemnity, P829,079 for loss of earning capacity of the deceased Ananias Sumayang, and P36,000.00 for necessary interment expenses. The liability of defendant Perla Compania de Seguros, Inc., however, was limited only to the amount stipulated in the insurance policy, which [was] P12,000 for death indemnity and P4,500.00 for burial expenses. “In so ruling, the lower court found [Petitioner] Pestaño to have been negligent in driving the passenger bus that hit the deceased. It was shown that Pestaño negligently attempted to overtake the motorcycle at a dangerous speed as they were coming upon a junction in the road, and as the motorcycle was about to turn left towards Tabagon. The court likewise found Metro Cebu directly and primarily liable, along with Pestaño, the latter’s employer under Article 2180 of the Civil Code, as [Petitioner] Metro Cebu failed to present evidence to prove that it had observed x x x [the] diligence of a good father of a family to prevent damage. Nor has Metro Cebu proven that it had exercised due diligence in the supervision of its employees and in the maintenance of vehicles.”[3] Ruling of the Court of Appeals The CA affirmed respondent’s liability for the accident and for Sumayang’s death. Pestaño was negligent when he tried to overtake the victim’s motorcycle at the Tabagon junction. As a professional driver operating a public transport vehicle, he should have taken extra precaution to avoid accidents, knowing that it was perilous to overtake at a junction, where adjoining roads had brought about merging and diverging traffic. The appellate court opined that Metro Cebu had shown laxity in the conduct of its operations and in the supervision of its employees. By allowing the bus to ply its route despite the defective speedometer, said petitioner showed its indifference towards the proper maintenance of its vehicles. Having failed to observe the extraordinary diligence required of public transportation companies, it was held vicariously liable to the victims of the vehicular accident. In accordance with prevailing jurisprudence, the CA raised to P50,000 the granted indemnity for the death of the victim. It also affirmed the award of loss of earning capacity based on his life expectancy. Such liability was assessed, not as a pension for the claiming heirs, but as a penalty and an indemnity for the driver’s negligent act. Hence, this Petition.[4] Issues Petitioners submit the following issues[5] for our consideration: “1. The Court of Appeals misapplied facts of weight and substance affecting the result of the case. “2. The Court of Appeals misapplied R.A. 4136 as regards the behavior of the deceased at the time of the accident. “3. The Court of Appeals erred in ruling that the award of damages representing income that deceased could have earned be considered a penalty. “4. The Court of Appeals, contrary to Article 2204, Civil Code, raised the award of P30,000.00 damages representing indemnity for death to P50,000.00. “5. The Court of Appeals used as basis for the loss of earning capacity, the life expectancy of the [d]eceased instead of that of the respondents which was shorter.”[6] In short, they raise these questions: whether the CA erred (1) in applying Section 45 of RA 4136 when it ruled that negligence in driving was the proximate cause of the accident; (2) in increasing the civil indemnity from P30,000 to P50,000; and (3) in using the life expectancy of the deceased instead of the life expectancies of respondents. The Court’s Ruling

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The Petition has no merit. First Issue: Negligence Petitioners contend that Pestaño was not under any obligation to slow down when he overtook the motorcycle, because the deceased had given way to him upon hearing the bus horn. Seeing that the left side of the road was clearly visible and free of oncoming traffic, Pestaño accelerated his speed to pass the motorcycle. Having given way to the bus, the motorcycle driver should have slowed down until he had been overtaken. They further contend that the motorcycle was not in the middle of the road nearest to the junction as found by the trial and the appellate courts, but was on the inner lane. This explains why the damage on the bus were all on the right side – the right end of the bumper and the right portion of the radiator grill were bent and dented. Hence, they insist that it was the victim who was negligent. We disagree. Petitioners are raising a question of fact based on Pestaño’s testimony contradicting that of Eyewitness Ignacio Neis and on the location of the dents on the bumper and the grill. Neis testified that as the two vehicles approached the junction, the victim raised his left arm to signal that he was turning left to Tabagon, but that the latter and his companion were thrown off the motorcycle after it was bumped by the overspeeding bus. These contentions have already been passed upon by the trial and the appellate courts. We find no cogent reason to reverse or modify their factual findings. The CA agreed with the trial court that the vehicular collision was caused by Pestaño’s negligence when he attempted to overtake the motorcycle. As a professional driver operating a public transport bus, he should have anticipated that overtaking at a junction was a perilous maneuver and should thus have exercised extreme caution. Factual findings of the CA affirming those of the trial court are conclusive and binding on this Court. Petitioners failed to demonstrate that this case falls under any of the recognized exceptions to this rule.[7] Indeed, the issue of negligence is basically factual and, in quasi-delicts, crucial in the award of damages. Petitioners aver that the CA was wrong in attributing the accident to a faulty speedometer and in implying that the accident could have been avoided had this instrument been properly functioning. This contention has no factual basis. Under Articles 2180 and 2176 of the Civil Code, owners and managers are responsible for damages caused by their employees. When an injury is caused by the negligence of a servant or an employee, the master or employer is presumed to be negligent either in the selection or in the supervision of that employee. This presumption may be overcome only by satisfactorily showing that the employer exercised the care and the diligence of a good father of a family in the selection and the supervision of its employee.[8] The CA said that allowing Pestaño to ply his route with a defective speedometer showed laxity on the part of Metro Cebu in the operation of its business and in the supervision of its employees. The negligence alluded to here is in its supervision over its driver, not in that which directly caused the accident. The fact that Pestaño was able to use a bus with a faulty speedometer shows that Metro Cebu was remiss in the supervision of its employees and in the proper care of its vehicles. It had thus failed to conduct its business with the diligence required by law. Second Issue: Life Indemnity Petitioners aver that the CA erred in increasing the award for life indemnity from P30,000 to P50,000, without specifying any aggravating circumstance to justify the increment as provided in the Civil Code.[9] This contention is untenable. The indemnity for death caused by a quasi-delict used to be pegged at P3,000, based on Article 2206 of the Civil Code. However, the amount has been gradually increased through the years because of the declining value of our currency. At present, prevailing jurisprudence fixes the amount at P50,000.[10]

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Third Issue: Loss of Earning Capacity Petitioners cite Villa Rey Transit, Inc. v. Court of Appeals,[11] which held: “The determination of the indemnity to be awarded to the heirs of a deceased person has therefore no fixed basis. x x x The life expectancy of the deceased or of the beneficiary, whichever is shorter, is an important factor. x x x.” They contend that the CA used the wrong basis for its computation of earning capacity. We disagree. The Court has consistently computed the loss of earning capacity based on the life expectancy of the deceased,[12] and not on that of the heir.[13] Even Villa Rey Transit did likewise. The award for loss of earning capacity is based on two factors: (1) the number of years on which the computation of damages is based and (2) the rate at which the loss sustained by the heirs is fixed.[14] The first factor refers to the life expectancy, which takes into consideration the nature of the victim’s work, lifestyle, age and state of health prior to the accident. The second refers to the victim’s earning capacity minus the necessary living expenses. Stated otherwise, the amount recoverable is that portion of the earnings of the deceased which the beneficiary would have received -- the net earnings of the deceased.[15] WHEREFORE, the Petition is DENIED and the assailed Decision and Resolution AFFIRMED. Cost against petitioners. SO ORDERED. Melo, (Chairman), Vitug, and Gonzaga-Reyes, JJ., concur.

RAFAEL REYES TRUCKING CORP. VS DY EN BANC [G.R. No. 129029. April 3, 2000] RAFAEL REYES TRUCKING CORPORATION, petitioner, vs. PEOPLE OF THE PHILIPPINES and ROSARIO P. DY (for herself and on behalf of the minors Maria Luisa, Francis Edward, Francis Mark and Francis Rafael, all surnamed Dy), respondents. D E C I S I O N PARDO, J.: The case is an appeal via certiorari from the amended decision[1] of the Court of Appeals[2] affirming the decision and supplemental decision of the trial court,[3] as follows: "IN VIEW OF THE FOREGOING, judgment is hereby rendered dismissing the appeals interposed by both accused and Reyes Trucking Corporation and affirming the Decision and Supplemental Decision dated June 6, 1992 and October 26, 1992 respectively. "SO ORDERED."[4] The facts are as follows: On October 10, 1989, Provincial Prosecutor Patricio T. Durian of Isabela filed with the Regional Trial Court, Isabela, Branch 19, Cauayan an amended information charging Romeo Dunca y de Tumol with reckless imprudence resulting in double homicide and damage to property, reading as follows: "That on or about the 20th day of June, 1989, in the Municipality of Cauayan, Province of Isabela, Philippines, and within the jurisdiction of this Honorable Court, the said accused being the driver and person-in-charge of a Trailer Truck Tractor bearing Plate No. N2A-867 registered in the name of Rafael Reyes Trucking Corporation, with a load of 2,000 cases of empty bottles of beer grande,

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willfully, unlawfully and feloniously drove and operated the same while along the National Highway of Barangay Tagaran, in said Municipality, in a negligent, careless and imprudent manner, without due regard to traffic laws, rules and ordinances and without taking the necessary precautions to prevent injuries to persons and damage to property, causing by such negligence, carelessness and imprudence the said trailer truck to hit and bump a Nissan Pick-up bearing Plate No. BBG-957 driven by Feliciano Balcita and Francisco Dy, Jr., @ Pacquing, due to irreversible shock, internal and external hemorrhage and multiple injuries, open wounds, abrasions, and further causing damages to the heirs of Feliciano Balcita in the amount of P100,000.00 and to the death of Francisco Dy, Jr.; @ Pacquing and damages to his Nissan Pick-Up bearing Plate No. BBG-957 in the total amount of P2,000,000.00. "CONTRARY TO LAW. "Cauayan, Isabela, October 10, 1989. "(Sgd.) FAUSTO C. CABANTAC "Third Assistant Provincial Prosecutor" Upon arraignment on October 23, 1989, the accused entered a plea of not guilty. On the same occasion, the offended parties (Rosario P. Dy and minor children and Angelina M. Balcita and minor son Paolo) made a reservation to file a separate civil action against the accused arising from the offense charged.[5] On November 29, 1989, the offended parties actually filed with the Regional Trial Court, Isabela, Branch 19, Cauayan a complaint against petitioner Rafael Reyes Trucking Corporation, as employer of driver Romeo Dunca y de Tumol, based on quasi delict. The petitioner settled the claim of the heirs of Feliciano Balcita (the driver of the other vehicle involved in the accident). The private respondents opted to pursue the criminal action but did not withdraw the civil case quasi ex delicto they filed against petitioner. On December 15, 1989, private respondents withdrew the reservation to file a separate civil action against the accused and manifested that they would prosecute the civil aspect ex delicto in the criminal action.[6] However, they did not withdraw the separate civil action based on quasi delict against petitioner as employer arising from the same act or omission of the accused driver.[7] Upon agreement of the parties, the trial court consolidated both criminal and civil cases and conducted a joint trial of the same. The facts, as found by the trial court, which appear to be undisputed, are as follows: "The defendant Rafael Reyes Trucking Corporation is a domestic corporation engaged in the business of transporting beer products for the San Miguel Corporation (SMC for short) from the latter’s San Fernando, Pampanga plant to its various sales outlets in Luzon. Among its fleets of vehicles for hire is the white truck trailer described above driven by Romeo Dunca y Tumol, a duly licensed driver. Aside from the Corporation’s memorandum to all its drivers and helpers to physically inspect their vehicles before each trip (Exh. 15, pars. 4 & 5), the SMC’s Traffic Investigator-Inspector certified the roadworthiness of this White Truck trailer prior to June 20, 1989 (Exh. 17). In addition to a professional driver’s license, it also conducts a rigid examination of all driver applicants before they are hired. "In the early morning of June 20, 1989, the White Truck driven by Dunca left Tuguegarao, Cagayan bound to San Fernando, Pampanga loaded with 2,000 cases of empty beer "Grande" bottles. Seated at the front right seat beside him was Ferdinand Domingo, his truck helper ("pahinante" in Pilipino). At around 4:00 o’clock that same morning while the truck was descending at a slight downgrade along the national road at Tagaran, Cauayan, Isabela, it approached a damaged portion of the road covering the full width of the truck’s right lane going south and about six meters in length. These made the surface of the road uneven because the potholes were about five to six inches deep. The left lane parallel to this damaged portion is smooth. As narrated by Ferdinand Domingo, before approaching the potholes, he and Dunca saw the Nissan with its headlights on coming from the opposite direction. They used to evade this damaged road by taking the left lance but at that particular moment, because of the incoming vehicle, they had to run over it. This caused the truck to bounce wildly. Dunca lost control of the wheels and the truck swerved to the left invading the lane of the Nissan. As a result, Dunca’s vehicle rammed the incoming Nissan dragging it to the left shoulder of the road and climbed a ridge above said shoulder where it finally stopped. (see Exh. A-5, p. 8, record). The Nissan was severely damaged (Exhs. A-7, A-8, A-9 and A-14, pp. 9-11, record), and its

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two passengers, namely: Feliciano Balcita and Francisco Dy, Jr. died instantly (Exh. A-19) from external and internal hemorrhage and multiple fractures (pp. 15 and 16, record). "For the funeral expenses of Francisco Dy, Jr. her widow spent P651,360.00 (Exh. I-3). At the time of his death he was 45 years old. He was the President and Chairman of the Board of the Dynamic Wood Products and Development Corporation (DWPC), a wood processing establishment, from which he was receiving an income of P10,000.00 a month (Exh. D). In the Articles of Incorporation of the DWPC, the spouses Francisco Dy, Jr. and Rosario Perez Dy appear to be stockholders of 10,000 shares each with par value of P100.00 per share out of its outstanding and subscribed capital stock of 60,000 shares valued at P6,000,000.00 (Exhs. K-1 & 10-B). Under its 1988 Income Tax Returns (Exh. J) the DWPC had a taxable net income of P78,499.30 (Exh. J). Francisco Dy, Jr. was a La Salle University graduate in Business Administration, past president of the Pasay Jaycees, National Treasurer and President of the Philippine Jaycees in 1971 and 1976, respectively, and World Vice-President of Jaycees International in 1979. He was also the recipient of numerous awards as a civic leader (Exh. C). His children were all studying in prestigious schools and spent about P180,000.00 for their education in 1988 alone (Exh. H-4). "As stated earlier, the plaintiffs’ procurement of a writ of attachment of the properties of the Corporation was declared illegal by the Court of Appeals. It was shown that on December 26, 1989, Deputy Sheriff Edgardo Zabat of the RTC at San Fernando, Pampanga, attached six units of Truck Tractors and trailers of the Corporation at its garage at San Fernando, Pampanga. These vehicles were kept under PC guard by the plaintiffs in said garage thus preventing the Corporation to operate them. However, on December 28, 1989, the Court of Appeals dissolved the writ (p. 30, record) and on December 29, 1989, said Sheriff reported to this Court that the attached vehicles were taken by the defendant’s representative, Melita Manapil (Exh. O, p. 31, record). The defendant’s general Manager declared that it lost P21,000.00 per day for the non-operation of the six units during their attachment (p. 31, t.s.n., Natividad C. Babaran, proceedings on December 10, 1990)."[8] On June 6, 1992, the trial court rendered a joint decision, the dispositive portion of which reads as follows: "WHEREFORE, in view of the foregoing considerations judgment is hereby rendered: "1. Finding the accused Romeo Dunca y de Tumol guilty beyond reasonable doubt of the crime of Double Homicide through Reckless Imprudence with violation of the Motor Vehicle Law (Rep. Act No. 4136), and appreciating in his favor the mitigating circumstance of voluntary surrender without any aggravating circumstance to offset the same, the Court hereby sentences him to suffer two (2) indeterminate penalties of four months and one day of arresto mayor as minimum to three years, six months and twenty days as maximum; to indemnify the Heirs of Francisco Dy. Jr. in the amount of P3,000,000.00 as compensatory damages, P1,000,000.00 as moral damages, and P1,030,000.00 as funeral expenses; "2. Ordering the plaintiff in Civil Case No. Br. 19-424 to pay the defendant therein actual damages in the amount of P84,000.00; and "3. Ordering the dismissal of the complaint in Civil Case No. Br. 19-424. "No pronouncement as to costs. "SO ORDERED. "Cauayan, Isabela, June 6, 1992. "(Sgd.) ARTEMIO R. ALIVIA "Regional Trial Judge"[9] On September 3, 1992, petitioner and the accused filed a notice of appeal from the joint decision.[10] On the other hand, private respondents moved for amendment of the dispositive portion of the joint decision so as to hold petitioner subsidiarily liable for the damages awarded to the private respondents in the event of insolvency of the accused.[11]

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On October 26, 1992, the trial court rendered a supplemental decision amending the dispositive portion by inserting an additional paragraph reading as follows: "2:A – Ordering the defendant Reyes Trucking Corporation subsidiarily liable for all the damages awarded to the heirs of Francisco Dy, Jr., in the event of insolvency of the accused but deducting therefrom the damages of P84,000.00 awarded to said defendant in the next preceding paragraph; and x x x"[12] On November 12, 1992, petitioner filed with the trial court a supplemental notice of appeal from the supplemental decision.[13] During the pendency of the appeal, the accused jumped bail and fled to a foreign country. By resolution dated December 29, 1994, the Court of Appeals dismissed the appeal of the accused in the criminal case.[14] On January 6, 1997, the Court of Appeals rendered an amended decision affirming that of the trial court, as set out in the opening paragraph of this decision.[15] On January 31, 1997, petitioner filed a motion for reconsideration of the amended decision.[16] On April 21, 1997, the Court of Appeals denied petitioner’s motion for reconsideration for lack of merit.[17] Hence, this petition for review.[18] On July 21, 1997, the Court required respondents to comment on the petition within ten (10) days from notice.[19] On January 27, 1998, the Solicitor General filed his comment.[20] On April 13, 1998, the Court granted leave to petitioner to file a reply and noted the reply it filed on March 11, 1998.[21] We now resolve to give due course to the petition and decide the case. Petitioner raises three (3) grounds for allowance of the petition, which, however, boil down to two (2) basic issues, namely: 1.....May petitioner as owner of the truck involved in the accident be held subsidiarily liable for the damages awarded to the offended parties in the criminal action against the truck driver despite the filing of a separate civil action by the offended parties against the employer of the truck driver? 2.....May the Court award damages to the offended parties in the criminal case despite the filing of a civil action against the employer of the truck driver; and in amounts exceeding that alleged in the information for reckless imprudence resulting in homicide and damage to property?[22] We grant the petition, resolving under the circumstances pro hac vice to remand the cases to the trial court for determination of the civil liability of petitioner as employer of the accused driver in the civil action quasi ex delicto re-opened for the purpose. In negligence cases, the aggrieved party has the choice between (1) an action to enforce civil liability arising from crime under Article 100 of the Revised Penal Code; and (2) a separate action for quasi delict under Article 2176 of the Civil Code of the Philippines. Once the choice is made, the injured party can not avail himself of any other remedy because he may not recover damages twice for the same negligent act or omission of the accused.[23] This is the rule against double recovery. In other words, "the same act or omission can create two kinds of liability on the part of the offender, that is, civil liability ex delicto, and civil liability quasi delicto" either of which "may be enforced against the culprit, subject to the caveat under Article 2177 of the Civil Code that the offended party can not recover damages under both types of liability."[24]

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In the instant case, the offended parties elected to file a separate civil action for damages against petitioner as employer of the accused, based on quasi delict, under Article 2176 of the Civil Code of the Philippines. Private respondents sued petitioner Rafael Reyes Trucking Corporation, as the employer of the accused, to be vicariously liable for the fault or negligence of the latter. Under the law, this vicarious liability of the employer is founded on at least two specific provisions of law. The first is expressed in Article 2176 in relation to Article 2180 of the Civil Code, which would allow an action predicated on quasi-delict to be instituted by the injured party against the employer for an act or omission of the employee and would necessitate only a preponderance of evidence to prevail. Here, the liability of the employer for the negligent conduct of the subordinate is direct and primary, subject to the defense of due diligence in the selection and supervision of the employee. The enforcement of the judgment against the employer in an action based on Article 2176 does not require the employee to be insolvent since the nature of the liability of the employer with that of the employee, the two being statutorily considered joint tortfeasors, is solidary.[25] The second, predicated on Article 103 of the Revised Penal Code, provides that an employer may be held subsidiarily civilly liable for a felony committed by his employee in the discharge of his duty. This liability attaches when the employee is convicted of a crime done in the performance of his work and is found to be insolvent that renders him unable to properly respond to the civil liability adjudged.[26] As regards the first issue, the answer is in the negative. Rafael Reyes Trucking Corporation, as employer of the accused who has been adjudged guilty in the criminal case for reckless imprudence, can not be held subsidiarily liable because of the filing of the separate civil action based on quasi delict against it. In view of the reservation to file, and the subsequent filing of the civil action for recovery of civil liability, the same was not instituted with the criminal action. Such separate civil action was for recovery of damages under Article 2176 of the Civil Code, arising from the same act or omission of the accused.[27] Pursuant to the provision of Rule 111, Section 1, paragraph 3 of the 1985 Rules of Criminal Procedure, when private respondents, as complainants in the criminal action, reserved the right to file the separate civil action, they waived other available civil actions predicated on the same act or omission of the accused-driver. Such civil action includes the recovery of indemnity under the Revised Penal Code, and damages under Articles 32, 33, and 34 of the Civil Code of the Philippines arising from the same act or omission of the accused.[28] The intention of private respondents to proceed primarily and directly against petitioner as employer of accused truck driver became clearer when they did not ask for the dismissal of the civil action against the latter based on quasi delict. Consequently, the Court of Appeals and the trial court erred in holding the accused civilly liable, and petitioner-employer of the accused subsidiarily liable for damages arising from crime (ex delicto) in the criminal action as the offended parties in fact filed a separate civil action against the employer based on quasi delict resulting in the waiver of the civil action ex delicto. It might be argued that private respondents as complainants in the criminal case withdrew the reservation to file a civil action against the driver (accused) and manifested that they would pursue the civil liability of the driver in the criminal action. However, the withdrawal is ineffective to reverse the effect of the reservation earlier made because private respondents did not withdraw the civil action against petitioner based on quasi delict. In such a case, the provision of Rule 111, Section 1, paragraph 3 of the 1985 Rules on Criminal Procedure is clear that the reservation to file or the filing of a separate civil action results in a waiver of other available civil actions arising from the same act or omission of the accused. Rule 111, Section 1, paragraph 2 enumerated what are the civil actions deemed waived upon such reservation or filing, and one of which is the civil indemnity under the Revised Penal Code. Rule 111, Section 1, paragraph 3 of the 1985 Rules on Criminal Procedure specifically provides: "A waiver of any of the civil actions extinguishes the others. The institution of, or the reservation of the right to file, any of said civil actions separately waives the others." The rationale behind this rule is the avoidance of multiple suits between the same litigants arising out of the same act or omission of the offender. The restrictive phraseology of the section under

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consideration is meant to cover all kinds of civil actions, regardless of their source in law, provided that the action has for its basis the same act or omission of the offender.[29] However, petitioner as defendant in the separate civil action for damages filed against it, based on quasi delict, may be held liable thereon. Thus, the trial court grievously erred in dismissing plaintiff’s civil complaint. And the Court of Appeals erred in affirming the trial court’s decision. Unfortunately private respondents did not appeal from such dismissal and could not be granted affirmative relief.[30] The Court, however, in exceptional cases has relaxed the rules "in order to promote their objectives and assist the parties in obtaining just, speedy, and inexpensive determination of every action or proceeding"[31] or exempted "a particular case from the operation of the rules."[32] Invoking this principle, we rule that the trial court erred in awarding civil damages in the criminal case and in dismissing the civil action. Apparently satisfied with such award, private respondent did not appeal from the dismissal of the civil case. However, petitioner did appeal. Hence, this case should be remanded to the trial court so that it may render decision in the civil case awarding damages as may be warranted by the evidence.[33] With regard to the second issue, the award of damages in the criminal case was improper because the civil action for the recovery of civil liability was waived in the criminal action by the filing of a separate civil action against the employer. As enunciated in Ramos vs. Gonong,[34] "civil indemnity is not part of the penalty for the crime committed." The only issue brought before the trial court in the criminal action is whether accused Romeo Dunca y de Tumol is guilty of reckless imprudence resulting in homicide and damage to property. The action for recovery of civil liability is not included therein, but is covered by the separate civil action filed against the petitioner as employer of the accused truck-driver. In this case, accused-driver jumped bail pending his appeal from his conviction. Thus, the judgment convicting the accused became final and executory, but only insofar as the penalty in the criminal action is concerned. The damages awarded in the criminal action was invalid because of its effective waiver. The pronouncement was void because the action for recovery of the civil liability arising from the crime has been waived in said criminal action. With respect to the issue that the award of damages in the criminal action exceeded the amount of damages alleged in the amended information, the issue is de minimis. At any rate, the trial court erred in awarding damages in the criminal case because by virtue of the reservation of the right to bring a separate civil action or the filing thereof, "there would be no possibility that the employer would be held liable because in such a case there would be no pronouncement as to the civil liability of the accused.[35] As a final note, we reiterate that "the policy against double recovery requires that only one action be maintained for the same act or omission whether the action is brought against the employee or against his employer.[36] The injured party must choose which of the available causes of action for damages he will bring.[37] Parenthetically, the trial court found the accused "guilty beyond reasonable doubt of the crime of Double Homicide Through Reckless Imprudence with violation of the Motor Vehicle Law (Rep. Act No. 4136)." There is no such nomenclature of an offense under the Revised Penal Code. Thus, the trial court was misled to sentence the accused "to suffer two (2) indeterminate penalties of four (4) months and one (1) day of arresto mayor, as minimum, to three (3) years, six (6) months and twenty (20) days of prision correccional, as maximum." This is erroneous because in reckless imprudence cases, the actual penalty for criminal negligence bears no relation to the individual willful crime or crimes committed, but is set in relation to a whole class, or series of crimes.[38] Unfortunately, we can no longer correct this judgment even if erroneous, as it is, because it has become final and executory. Under Article 365 of the Revised Penal Code, criminal negligence "is treated as a mere quasi offense, and dealt with separately from willful offenses. It is not a question of classification or terminology. In intentional crimes, the act itself is punished; in negligence or imprudence, what is principally

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penalized is the mental attitude or condition behind the act, the dangerous recklessness, lack of care or foresight, the imprudencia punible. Much of the confusion has arisen from the common use of such descriptive phrase as ‘homicide through reckless imprudence’, and the like; when the strict technical sense is, more accurately, ‘reckless imprudence resulting in homicide’; or ‘simple imprudence causing damages to property’."[39] There is need, therefore, to rectify the designation of the offense without disturbing the imposed penalty for the guidance of bench and bar in strict adherence to precedent. WHEREFORE, the Court GRANTS the petition and SETS ASIDE the amended decision and resolution of the Court of Appeals in CA-G. R. CR No. 14448, promulgated on January 6, 1997, and the joint decision of the Regional Trial Court, Isabela, Branch 19, Cauayan, in Criminal Case No. Br. 19-311 and Civil Case No. Br. 19-424, dated June 6, 1992. IN LIEU THEREOF, the Court renders judgment as follows: (1) In Criminal Case No. Br. 19-311, the Court declares the accused Romeo Dunca y de Tumol guilty beyond reasonable doubt of reckless imprudence resulting in homicide and damage to property, defined and penalized under Article 365, paragraph 2 of the Revised Penal Code, with violation of the automobile law (R. A. No. 4136, as amended), and sentences him to suffer two (2) indeterminate penalties of four (4) months and one (1) day of arresto mayor, as minimum, to three (3) years, six (6) months and twenty (20) days of prision correccional, as maximum,[40] without indemnity, and to pay the costs, and (2) In Civil Case No. Br. 19-424, the Court orders the case re-opened to determine the liability of the defendant Rafael Reyes Trucking Corporation to plaintiffs and that of plaintiffs on defendant’s counterclaim. No costs in this instance. SO ORDERED. Bellosillo, Melo, Kapunan, Buena, Gonzaga-Reyes, Ynares-Santiago, and De Leon, Jr., JJ., concur. Davide, Jr., C.J. see dissenting opinion. Puno, J., concur but pro hac vice. Vitug, J., see separate opinion. Mendoza, J., see dissenting opinion. Panganiban, J., in the result. Quisumbing. J., concur in separate opinion of J. Vitug. Purisima, J., join Justice Mendoza’s dissenting opinion.

STEINMETZ VS VALDEZ Private individuals not engaged in business or industry are not subsidiarily liable. EN BANC G.R. No. L-47655 April 28, 1941 H.H. STEINMETZ, demandante y apelante, vs. JOSE VALDEZ, demandado y apelado. Sres. Ezpeleta, Quijano y Liwag en representacion del apelante.

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D. Ignacio B. Alcuaz en representacion del apelado. HORRILLENO, J.: Por no suscitarse en este asunto sino una cuestion puramente de derecho, se ha elevado el mismo a esta Superioridad, en virtud de una resolucion del Tribunal de Apelaciones.chanroblesvirtualawlibrary chanrobles virtual law library Los hechos no discutidos y que aparecen en la sentencia apelada son, sustancialmente, como siguen:chanrobles virtual law library En la interseccion de las calles de Azcarraga y Lepanto de la Ciudad de Manila, el dia 27 de abril de 1938, mientras el demandante-apelante iba guiando su automovil a lo largo de la Calle Azcarraga choco contra el vehiculo del demandado-apelado, que a la sazon cruzaba la interseccion de dicha calle y la de Lepanto. En el momento de la colision, el automovil del apelado iba guiado por su chofer, Basilio Bayukan. De resultas de esta colision, este chofer fue querellado y condenado por el delito de danos a la propiedad. Como quiera que el mencionado chofer no pudo satisfacer la indemnizacion a que fue condenado a pagar, el demandante presento la demanda, objecto de apelacion, para tratar de cobrar del demandado-apelado dicha indemnizacion.chanroblesvirtualawlibrary chanrobles virtual law library En apoyo de su pretension, el apelante invoca lo dispuesto por el articulo 103 del Codigo Penal Revisado, que copiado dice asi: ART. 103. - Responsibilidad civil subsidiaria de otras personas. - La responsibilidad subsidiaria que se establece en el articulo anterior, sera tambien extensiva a los amos, maestros, personas y empresas dedicadas a cualquier genero de industria, por los delitos en que hubiesen incurrido sus criados, discipulos, oficiales, aprendices o dependientes en el desempeno de sus obligaciones o servicio. Las disposiciones de este mismo articulo son negativas de la alegacion del apelante. Esta admitido que el demandado-apelado es una persona particular, que no tiene ningun negocio o industria, y usa su automovil para fines privados. Es evidente, pues, que no cae dentro de la clasificacion hecha por el citado articulo 103 del Codigo Penal Revisado. Esta probado que, al tiempo del accidente, el apelado no se hallaba en su automovil, y es mas, ejercio toda diligencia en la seleccion de su chofer.chanroblesvirtualawlibrary chanrobles virtual law library El caso de autos es, pues, identico al de Rosalio Marquez, etc. contra Bernardo Castillo, R.G. No. 46237, cuya decision fue promulgada el dia 27 de septiembre de 1939. Por lo que procede aplicar en este caso la doctrina sentada en aquel.chanroblesvirtualawlibrary chanrobles virtual law library Confirmamos, por tanto, la sentencia apelada, en todas sus partes, con las costas en ambas instancias a cargo del apelante. Asi se ordena.chanroblesvirtualawlibrary chanrobles virtual law library Imperial, Diaz, y Laurel, MM., estan conformes. Moran, M., esta conforme con la parte dispositiva. Avanceña, Pres., no tomo parte.

PHIL. RABBIT VS. PEOPLE [G.R. No. 147703. April 14, 2004] PHILIPPINE RABBIT BUS LINES, INC., petitioner, vs. PEOPLE OF THE PHILIPPINES, respondent. D E C I S I O N PANGANIBAN, J.: When the accused-employee absconds or jumps bail, the judgment meted out becomes final and executory. The employer cannot defeat the finality of the judgment by filing a notice of appeal on its own behalf in the guise of asking for a review of its subsidiary civil liability. Both the primary civil

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liability of the accused-employee and the subsidiary civil liability of the employer are carried in one single decision that has become final and executory. The Case Before this Court is a Petition for Review[1] under Rule 45 of the Rules of Court, assailing the March 29, 2000[2] and the March 27, 2001[3] Resolutions of the Court of Appeals (CA) in CA-GR CV No. 59390. Petitioner’s appeal from the judgment of the Regional Trial Court (RTC) of San Fernando, La Union in Criminal Case No. 2535 was dismissed in the first Resolution as follows: “WHEREFORE, for all the foregoing, the motion to dismiss is GRANTED and the appeal is ordered DISMISSED.”[4] The second Resolution denied petitioner’s Motion for Reconsideration.[5] The Facts The facts of the case are summarized by the CA in this wise: “On July 27, 1994, accused [Napoleon Roman y Macadangdang] was found guilty and convicted of the crime of reckless imprudence resulting to triple homicide, multiple physical injuries and damage to property and was sentenced to suffer the penalty of four (4) years, nine (9) months and eleven (11) days to six (6) years, and to pay damages as follows: ‘a. to pay the heirs of JUSTINO TORRES the sum of P50,000.00 as indemnity for his death, plus the sum of P25,383.00, for funeral expenses, his unearned income for one year at P2,500.00 a month, P50,000.00 as indemnity for the support of Renato Torres, and the further sum of P300,000.00 as moral damages; ‘b. to the heirs of ESTRELLA VELERO, the sum of P50,000.00 as indemnity for her death, the sum of P237,323.75 for funeral expenses, her unearned income for three years at P45,000.00 per annum, and the further sum of P1,000,000.00 as moral damages and P200,000.00 as attorney’s fees[;] ‘c. to the heirs of LORNA ANCHETA, the sum of P50,000.00 as indemnity for her death, the sum of P22,838.00 as funeral expenses, the sum of P20,544.94 as medical expenses and her loss of income for 30 years at P1,000.00 per month, and the further sum of P100,000.00 for moral damages; ‘d. to MAUREEN BRENNAN, the sum of P229,654.00 as hospital expenses, doctor’s fees of P170,000.00 for the orthopedic surgeon, P22,500.00 for the [n]eurologist, an additional indemnity [of] at least P150,000.00 to cover future correction of deformity of her limbs, and moral damages in the amount of P1,000,000.00; ‘e. to ROSIE BALAJO, the sum of P3,561.46 as medical expenses, P2,000.00 as loss of income, and P25,000.00 as moral damages; ‘f. to TERESITA TAMONDONG, the sum of P19,800.47 as medical expenses, P800.00 for loss of income, and P25,000.00 as moral damages; ‘g. to JULIANA TABTAB, the amount of P580.81 as medical expenses, P4,600.00 as actual damages and her loss earnings of P1,400.00 as well as moral damages in the amount of P10,000.00; ‘h. to MIGUEL ARQUITOLA, the sum of P12,473.82 as hospital expenses, P14,530.00 as doctor’s fees, P1,000.00 for medicines and P50,000.00 as moral damages; ‘i. to CLARITA CABANBAN, the sum of P155.00 for medical expenses, P87.00 for medicines, P1,710.00 as actual damages and P5,000.00 as moral damages; ‘j. to MARIANO CABANBAN, the sum of P1,395.00 for hospital bills, P500.00 for medicine, P2,100.00 as actual damages, P1,200.00 for loss of income and P5,000.00 as moral damages;

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‘k. to La Union Electric Company as the registered owner of the Toyota Hi-Ace Van, the amount of P250,000.00 as actual damages for the cost of the totally wrecked vehicle; to the owner of the jeepney, the amount of P22,698.38 as actual damages;’ “The court further ruled that [petitioner], in the event of the insolvency of accused, shall be liable for the civil liabilities of the accused. Evidently, the judgment against accused had become final and executory. “Admittedly, accused had jumped bail and remained at-large. It is worth mention[ing] that Section 8, Rule 124 of the Rules of Court authorizes the dismissal of appeal when appellant jumps bail. Counsel for accused, also admittedly hired and provided by [petitioner], filed a notice of appeal which was denied by the trial court. We affirmed the denial of the notice of appeal filed in behalf of accused. “Simultaneously, on August 6, 1994, [petitioner] filed its notice of appeal from the judgment of the trial court. On April 29, 1997, the trial court gave due course to [petitioner’s] notice of appeal. On December 8, 1998, [petitioner] filed its brief. On December 9, 1998, the Office of the Solicitor General received [a] copy of [petitioner’s] brief. On January 8, 1999, the OSG moved to be excused from filing [respondents’] brief on the ground that the OSG’s authority to represent People is confined to criminal cases on appeal. The motion was however denied per Our resolution of May 31, 1999. On March 2, 1999, [respondent]/private prosecutor filed the instant motion to dismiss.”[6] (Citations omitted) Ruling of the Court of Appeals The CA ruled that the institution of a criminal case implied the institution also of the civil action arising from the offense. Thus, once determined in the criminal case against the accused-employee, the employer’s subsidiary civil liability as set forth in Article 103 of the Revised Penal Code becomes conclusive and enforceable. The appellate court further held that to allow an employer to dispute independently the civil liability fixed in the criminal case against the accused-employee would be to amend, nullify or defeat a final judgment. Since the notice of appeal filed by the accused had already been dismissed by the CA, then the judgment of conviction and the award of civil liability became final and executory. Included in the civil liability of the accused was the employer’s subsidiary liability. Hence, this Petition.[7] The Issues Petitioner states the issues of this case as follows: “A. Whether or not an employer, who dutifully participated in the defense of its accused-employee, may appeal the judgment of conviction independently of the accused. “B. Whether or not the doctrines of Alvarez v. Court of Appeals (158 SCRA 57) and Yusay v. Adil (164 SCRA 494) apply to the instant case.”[8] There is really only one issue. Item B above is merely an adjunct to Item A. The Court’s Ruling The Petition has no merit. Main Issue: Propriety of Appeal by the Employer Pointing out that it had seasonably filed a notice of appeal from the RTC Decision, petitioner contends that the judgment of conviction against the accused-employee has not attained finality. The former insists that its appeal stayed the finality, notwithstanding the fact that the latter had jumped bail. In effect, petitioner argues that its appeal takes the place of that of the accused-employee.

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We are not persuaded. Appeals in Criminal Cases Section 1 of Rule 122 of the 2000 Revised Rules of Criminal Procedure states thus: “Any party may appeal from a judgment or final order, unless the accused will be placed in double jeopardy.” Clearly, both the accused and the prosecution may appeal a criminal case, but the government may do so only if the accused would not thereby be placed in double jeopardy.[9] Furthermore, the prosecution cannot appeal on the ground that the accused should have been given a more severe penalty.[10] On the other hand, the offended parties may also appeal the judgment with respect to their right to civil liability. If the accused has the right to appeal the judgment of conviction, the offended parties should have the same right to appeal as much of the judgment as is prejudicial to them.[11] Appeal by the Accused Who Jumps Bail Well-established in our jurisdiction is the principle that the appellate court may, upon motion or motu proprio, dismiss an appeal during its pendency if the accused jumps bail. The second paragraph of Section 8 of Rule 124 of the 2000 Revised Rules of Criminal Procedure provides: “The Court of Appeals may also, upon motion of the appellee or motu proprio, dismiss the appeal if the appellant escapes from prison or confinement, jumps bail or flees to a foreign country during the pendency of the appeal.”[12] This rule is based on the rationale that appellants lose their standing in court when they abscond. Unless they surrender or submit to the court’s jurisdiction, they are deemed to have waived their right to seek judicial relief.[13] Moreover, this doctrine applies not only to the accused who jumps bail during the appeal, but also to one who does so during the trial. Justice Florenz D. Regalado succinctly explains the principle in this wise: “x x x. When, as in this case, the accused escaped after his arraignment and during the trial, but the trial in absentia proceeded resulting in the promulgation of a judgment against him and his counsel appealed, since he nonetheless remained at large his appeal must be dismissed by analogy with the aforesaid provision of this Rule [Rule 124, §8 of the Rules on Criminal Procedure]. x x x”[14] The accused cannot be accorded the right to appeal unless they voluntarily submit to the jurisdiction of the court or are otherwise arrested within 15 days from notice of the judgment against them.[15] While at large, they cannot seek relief from the court, as they are deemed to have waived the appeal.[16] Finality of a Decision in a Criminal Case As to when a judgment of conviction attains finality is explained in Section 7 of Rule 120 of the 2000 Rules of Criminal Procedure, which we quote: “A judgment of conviction may, upon motion of the accused, be modified or set aside before it becomes final or before appeal is perfected. Except where the death penalty is imposed, a judgment becomes final after the lapse of the period for perfecting an appeal, or when the sentence has been partially or totally satisfied or served, or when the accused has waived in writing his right to appeal, or has applied for probation.” In the case before us, the accused-employee has escaped and refused to surrender to the proper authorities; thus, he is deemed to have abandoned his appeal. Consequently, the judgment against him has become final and executory.[17]

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Liability of an Employer in a Finding of Guilt Article 102 of the Revised Penal Code states the subsidiary civil liabilities of innkeepers, as follows: “In default of the persons criminally liable, innkeepers, tavernkeepers, and any other persons or corporations shall be civilly liable for crimes committed in their establishments, in all cases where a violation of municipal ordinances or some general or special police regulation shall have been committed by them or their employees. “Innkeepers are also subsidiary liable for restitution of goods taken by robbery or theft within their houses from guests lodging therein, or for payment of the value thereof, provided that such guests shall have notified in advance the innkeeper himself, or the person representing him, of the deposit of such goods within the inn; and shall furthermore have followed the directions which such innkeeper or his representative may have given them with respect to the care and vigilance over such goods. No liability shall attach in case of robbery with violence against or intimidation of persons unless committed by the innkeeper’s employees.” Moreover, the foregoing subsidiary liability applies to employers, according to Article 103 which reads: “The subsidiary liability established in the next preceding article shall also apply to employers, teachers, persons, and corporations engaged in any kind of industry for felonies committed by their servants, pupils, workmen, apprentices, or employees in the discharge of their duties.” Having laid all these basic rules and principles, we now address the main issue raised by petitioner. Civil Liability Deemed Instituted in the Criminal Prosecution At the outset, we must explain that the 2000 Rules of Criminal Procedure has clarified what civil actions are deemed instituted in a criminal prosecution. Section 1 of Rule 111 of the current Rules of Criminal Procedure provides: “When a criminal action is instituted, the civil action for the recovery of civil liability arising from the offense charged shall be deemed instituted with the criminal action unless the offended party waives the civil action, reserves the right to institute it separately or institutes the civil action prior to the criminal action. “x x x x x x x x x” Only the civil liability of the accused arising from the crime charged is deemed impliedly instituted in a criminal action, that is, unless the offended party waives the civil action, reserves the right to institute it separately, or institutes it prior to the criminal action.[18] Hence, the subsidiary civil liability of the employer under Article 103 of the Revised Penal Code may be enforced by execution on the basis of the judgment of conviction meted out to the employee.[19] It is clear that the 2000 Rules deleted the requirement of reserving independent civil actions and allowed these to proceed separately from criminal actions. Thus, the civil actions referred to in Articles 32,[20] 33,[21]34[22] and 2176[23] of the Civil Code shall remain “separate, distinct and independent” of any criminal prosecution based on the same act. Here are some direct consequences of such revision and omission: 1. The right to bring the foregoing actions based on the Civil Code need not be reserved in the criminal prosecution, since they are not deemed included therein. 2. The institution or the waiver of the right to file a separate civil action arising from the crime charged does not extinguish the right to bring such action.

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3. The only limitation is that the offended party cannot recover more than once for the same act or omission.[24] What is deemed instituted in every criminal prosecution is the civil liability arising from the crime or delict per se (civil liability ex delicto), but not those liabilities arising from quasi-delicts, contracts or quasi-contracts. In fact, even if a civil action is filed separately, the ex delicto civil liability in the criminal prosecution remains, and the offended party may -- subject to the control of the prosecutor -- still intervene in the criminal action, in order to protect the remaining civil interest therein.[25] This discussion is completely in accord with the Revised Penal Code, which states that “[e]very person criminally liable for a felony is also civilly liable.”[26] Petitioner argues that, as an employer, it is considered a party to the criminal case and is conclusively bound by the outcome thereof. Consequently, petitioner must be accorded the right to pursue the case to its logical conclusion -- including the appeal. The argument has no merit. Undisputedly, petitioner is not a direct party to the criminal case, which was filed solely against Napoleon M. Roman, its employee. In its Memorandum, petitioner cited a comprehensive list of cases dealing with the subsidiary liability of employers. Thereafter, it noted that none can be applied to it, because “in all th[o]se cases, the accused’s employer did not interpose an appeal.”[27] Indeed, petitioner cannot cite any single case in which the employer appealed, precisely because an appeal in such circumstances is not possible. The cases dealing with the subsidiary liability of employers uniformly declare that, strictly speaking, they are not parties to the criminal cases instituted against their employees.[28] Although in substance and in effect, they have an interest therein, this fact should be viewed in the light of their subsidiary liability. While they may assist their employees to the extent of supplying the latter’s lawyers, as in the present case, the former cannot act independently on their own behalf, but can only defend the accused. Waiver of Constitutional Safeguard Against Double Jeopardy Petitioner’s appeal obviously aims to have the accused-employee absolved of his criminal responsibility and the judgment reviewed as a whole. These intentions are apparent from its Appellant’s Brief[29] filed with the CA and from its Petition[30] before us, both of which claim that the trial court’s finding of guilt “is not supported by competent evidence.”[31] An appeal from the sentence of the trial court implies a waiver of the constitutional safeguard against double jeopardy and throws the whole case open to a review by the appellate court. The latter is then called upon to render judgment as law and justice dictate, whether favorable or unfavorable to the appellant.[32] This is the risk involved when the accused decides to appeal a sentence of conviction.[33] Indeed, appellate courts have the power to reverse, affirm or modify the judgment of the lower court and to increase or reduce the penalty it imposed.[34] If the present appeal is given course, the whole case against the accused-employee becomes open to review. It thus follows that a penalty higher than that which has already been imposed by the trial court may be meted out to him. Petitioner’s appeal would thus violate his right against double jeopardy, since the judgment against him could become subject to modification without his consent. We are not in a position to second-guess the reason why the accused effectively waived his right to appeal by jumping bail. It is clear, though, that petitioner may not appeal without violating his right against double jeopardy. Effect of Absconding on the Appeal Process Moreover, within the meaning of the principles governing the prevailing criminal procedure, the accused impliedly withdrew his appeal by jumping bail and thereby made the judgment of the court below final.[35] Having been a fugitive from justice for a long period of time, he is deemed to have

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waived his right to appeal. Thus, his conviction is now final and executory. The Court in People v. Ang Gioc[36] ruled: “There are certain fundamental rights which cannot be waived even by the accused himself, but the right of appeal is not one of them. This right is granted solely for the benefit of the accused. He may avail of it or not, as he pleases. He may waive it either expressly or by implication. When the accused flees after the case has been submitted to the court for decision, he will be deemed to have waived his right to appeal from the judgment rendered against him. x x x.”[37] By fleeing, the herein accused exhibited contempt of the authority of the court and placed himself in a position to speculate on his chances for a reversal. In the process, he kept himself out of the reach of justice, but hoped to render the judgment nugatory at his option.[38] Such conduct is intolerable and does not invite leniency on the part of the appellate court.[39] Consequently, the judgment against an appellant who escapes and who refuses to surrender to the proper authorities becomes final and executory.[40] Thus far, we have clarified that petitioner has no right to appeal the criminal case against the accused-employee; that by jumping bail, he has waived his right to appeal; and that the judgment in the criminal case against him is now final. Subsidiary Liability Upon Finality of Judgment As a matter of law, the subsidiary liability of petitioner now accrues. Petitioner argues that the rulings of this Court in Miranda v. Malate Garage & Taxicab, Inc.,[41] Alvarez v. CA[42] and Yusay v. Adil[43] do not apply to the present case, because it has followed the Court’s directive to the employers in these cases to take part in the criminal cases against their employees. By participating in the defense of its employee, herein petitioner tries to shield itself from the undisputed rulings laid down in these leading cases. Such posturing is untenable. In dissecting these cases on subsidiary liability, petitioner lost track of the most basic tenet they have laid down -- that an employer’s liability in a finding of guilt against its accused-employee is subsidiary. Under Article 103 of the Revised Penal Code, employers are subsidiarily liable for the adjudicated civil liabilities of their employees in the event of the latter’s insolvency.[44] The provisions of the Revised Penal Code on subsidiary liability -- Articles 102 and 103 -- are deemed written into the judgments in the cases to which they are applicable.[45] Thus, in the dispositive portion of its decision, the trial court need not expressly pronounce the subsidiary liability of the employer. In the absence of any collusion between the accused-employee and the offended party, the judgment of conviction should bind the person who is subsidiarily liable.[46] In effect and implication, the stigma of a criminal conviction surpasses mere civil liability.[47] To allow employers to dispute the civil liability fixed in a criminal case would enable them to amend, nullify or defeat a final judgment rendered by a competent court.[48] By the same token, to allow them to appeal the final criminal conviction of their employees without the latter’s consent would also result in improperly amending, nullifying or defeating the judgment. The decision convicting an employee in a criminal case is binding and conclusive upon the employer not only with regard to the former’s civil liability, but also with regard to its amount. The liability of an employer cannot be separated from that of the employee.[49] Before the employers’ subsidiary liability is exacted, however, there must be adequate evidence establishing that (1) they are indeed the employers of the convicted employees; (2) that the former are engaged in some kind of industry; (3) that the crime was committed by the employees in the discharge of their duties; and (4) that the execution against the latter has not been satisfied due to insolvency.[50]

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The resolution of these issues need not be done in a separate civil action. But the determination must be based on the evidence that the offended party and the employer may fully and freely present. Such determination may be done in the same criminal action in which the employee’s liability, criminal and civil, has been pronounced;[51] and in a hearing set for that precise purpose, with due notice to the employer, as part of the proceedings for the execution of the judgment. Just because the present petitioner participated in the defense of its accused-employee does not mean that its liability has transformed its nature; its liability remains subsidiary. Neither will its participation erase its subsidiary liability. The fact remains that since the accused-employee’s conviction has attained finality, then the subsidiary liability of the employer ipso facto attaches. According to the argument of petitioner, fairness dictates that while the finality of conviction could be the proper sanction to be imposed upon the accused for jumping bail, the same sanction should not affect it. In effect, petitioner-employer splits this case into two: first, for itself; and second, for its accused-employee. The untenability of this argument is clearly evident. There is only one criminal case against the accused-employee. A finding of guilt has both criminal and civil aspects. It is the height of absurdity for this single case to be final as to the accused who jumped bail, but not as to an entity whose liability is dependent upon the conviction of the former. The subsidiary liability of petitioner is incidental to and dependent on the pecuniary civil liability of the accused-employee. Since the civil liability of the latter has become final and enforceable by reason of his flight, then the former’s subsidiary civil liability has also become immediately enforceable. Respondent is correct in arguing that the concept of subsidiary liability is highly contingent on the imposition of the primary civil liability. No Deprivation of Due Process As to the argument that petitioner was deprived of due process, we reiterate that what is sought to be enforced is the subsidiary civil liability incident to and dependent upon the employee’s criminal negligence. In other words, the employer becomes ipso facto subsidiarily liable upon the conviction of the employee and upon proof of the latter’s insolvency, in the same way that acquittal wipes out not only his primary civil liability, but also his employer’s subsidiary liability for his criminal negligence.[52] It should be stressed that the right to appeal is neither a natural right nor a part of due process.[53] It is merely a procedural remedy of statutory origin, a remedy that may be exercised only in the manner prescribed by the provisions of law authorizing such exercise.[54] Hence, the legal requirements must be strictly complied with.[55] It would be incorrect to consider the requirements of the rules on appeal as merely harmless and trivial technicalities that can be discarded.[56] Indeed, deviations from the rules cannot be tolerated.[57] In these times when court dockets are clogged with numerous litigations, such rules have to be followed by parties with greater fidelity, so as to facilitate the orderly disposition of those cases.[58] After a judgment has become final, vested rights are acquired by the winning party. If the proper losing party has the right to file an appeal within the prescribed period, then the former has the correlative right to enjoy the finality of the resolution of the case.[59] In fact, petitioner admits that by helping the accused-employee, it participated in the proceedings before the RTC; thus, it cannot be said that the employer was deprived of due process. It might have lost its right to appeal, but it was not denied its day in court.[60] In fact, it can be said that by jumping bail, the accused-employee, not the court, deprived petitioner of the right to appeal. All told, what is left to be done is to execute the RTC Decision against the accused. It should be clear that only after proof of his insolvency may the subsidiary liability of petitioner be enforced. It has been sufficiently proven that there exists an employer-employee relationship; that the employer is engaged in some kind of industry; and that the employee has been adjudged guilty of the wrongful

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act and found to have committed the offense in the discharge of his duties. The proof is clear from the admissions of petitioner that “[o]n 26 August 1990, while on its regular trip from Laoag to Manila, a passenger bus owned by petitioner, being then operated by petitioner’s driver, Napoleon Roman, figured in an accident in San Juan, La Union x x x.”[61] Neither does petitioner dispute that there was already a finding of guilt against the accused while he was in the discharge of his duties. WHEREFORE, the Petition is hereby DENIED, and the assailed Resolutions AFFIRMED. Costs against petitioner. SO ORDERED. Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio, and Azcuna, JJ., concur.

SANTOS VS PIZARDO [G.R. No. 151452. July 29, 2005] SPS. ANTONIO C. SANTOS and ESPERANZA C. SANTOS, NORA BARNALO, BELINDA LUMACTAD, MARIENELA DY, NIKKA SANTOS and LEONARDO FERRER, petitioners, vs. HON. NORMANDIE B. PIZARDO, as Presiding Judge, RTC of Quezon City, Branch 101, DIONISIO M SIBAYAN, and VIRON TRANSPORTATION COMPANY, INC., represented by VIRGILIO Q. RONDARIS, President/Chairman, respondents. D E C I S I O N TINGA, J.: In this Petition for Review on Certiorari[1] dated March 1, 2002, petitioners assail the Resolutions of the Court of Appeals dated September 10, 2001 and January 9, 2002, respectively dismissing their petition for certiorari and denying their motion for reconsideration, arising from the dismissal of their complaint to recover civil indemnity for the death and physical injuries of their kin. The following facts are matters of record. In an Information dated April 25, 1994, Dionisio M. Sibayan (Sibayan) was charged with Reckless Imprudence Resulting to Multiple Homicide and Multiple Physical Injuries in connection with a vehicle collision between a southbound Viron Transit bus driven by Sibayan and a northbound Lite Ace Van, which claimed the lives of the van’s driver and three (3) of its passengers, including a two-month old baby, and caused physical injuries to five (5) of the van’s passengers. After trial, Sibayan was convicted and sentenced to suffer the penalty of imprisonment for two (2) years, four (4) months and one (1) day to four (4) years and two (2) months. However, as there was a reservation to file a separate civil action, no pronouncement of civil liability was made by the municipal circuit trial court in its decision promulgated on December 17, 1998.[2] On October 20, 2000, petitioners filed a complaint for damages against Sibayan, Viron Transit and its President/Chairman, Virgilio Q. Rondaris, with the Regional Trial Court of Quezon City, pursuant to their reservation to file a separate civil action.[3] They cited therein the judgment convicting Sibayan. Viron Transit moved to dismiss the complaint on the grounds of improper service of summons, prescription and laches, and defective certification of non-forum shopping. It also sought the dropping of Virgilio Q. Rondaris as defendant in view of the separate personality of Viron Transit from its officers.[4] Petitioners opposed the motion to dismiss contending, among others, that the right to file a separate action in this case prescribes in ten (10) years reckoned from the finality of the judgment in the criminal action. As there was no appeal of the decision convicting Sibayan, the complaint which was filed barely two (2) years thence was clearly filed within the prescriptive period. The trial court dismissed the complaint on the principal ground that the cause of action had already prescribed. According to the trial court, actions based on quasi delict, as it construed petitioners’ cause of action to be, prescribe four (4) years from the accrual of the cause of action. Hence,

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notwithstanding the fact that petitioners reserved the right to file a separate civil action, the complaint ought to be dismissed on the ground of prescription.[5] Improper service of summons was likewise cited as a ground for dismissal of the complaint as summons was served through a certain Jessica Ubalde of the legal department without mentioning her designation or position. Petitioners filed a motion for reconsideration pointing out yet again that the complaint is not based on quasi delict but on the final judgment of conviction in the criminal case which prescribes ten (10) years from the finality of the judgment.[6] The trial court denied petitioners’ motion for reconsideration reiterating that petitioners’ cause of action was based on quasi delict and had prescribed under Article 1146 of the Civil Code because the complaint was filed more than four (4) years after the vehicular accident.[7] As regards the improper service of summons, the trial court reconsidered its ruling that the complaint ought to be dismissed on this ground. Petitioners filed a petition for certiorari with the Court of Appeals which dismissed the same for error in the choice or mode of appeal.[8] The appellate court also denied petitioners’ motion for reconsideration reasoning that even if the respondent trial court judge committed grave abuse of discretion in issuing the order of dismissal, certiorari is still not the permissible remedy as appeal was available to petitioners and they failed to allege that the petition was brought within the recognized exceptions for the allowance of certiorari in lieu of appeal.[9] In this petition, petitioners argue that a rigid application of the rule that certiorari cannot be a substitute for appeal will result in a judicial rejection of an existing obligation arising from the criminal liability of private respondents. Petitioners insist that the liability sought to be enforced in the complaint arose ex delicto and is not based on quasi delict. The trial court allegedly committed grave abuse of discretion when it insisted that the cause of action invoked by petitioners is based on quasi delict and concluded that the action had prescribed. Since the action is based on the criminal liability of private respondents, the cause of action accrued from the finality of the judgment of conviction. Assuming that their petition with the appellate court was procedurally flawed, petitioners implore the Court to exempt this case from the rigid operation of the rules as they allegedly have a legitimate grievance to vindicate, i.e., damages for the deaths and physical injuries caused by private respondents for which no civil liability had been adjudged by reason of their reservation of the right to file a separate civil action. In their Comment[10] dated June 13, 2002, private respondents insist that the dismissal of the complaint on the ground of prescription was in order. They point out that the averments in the complaint make out a cause of action for quasi delict under Articles 2176 and 2180 of the Civil Code. As such, the prescriptive period of four (4) years should be reckoned from the time the accident took place. Viron Transit also alleges that its subsidiary liability cannot be enforced since Sibayan was not ordered to pay damages in the criminal case. It is Viron Transit’s contention that the subsidiary liability of the employer contemplated in Article 103 of the Revised Penal Code presupposes a situation where the civil aspect of the case was instituted in the criminal case and no reservation to file a separate civil case was made. Private respondents likewise allege that the recourse to the Court of Appeals via certiorari was improper as petitioners should have appealed the adverse order of the trial court. Moreover, they point out several other procedural lapses allegedly committed by petitioners, such as lack of certification against forum-shopping; lack of duplicate original or certified true copy of the assailed order of the trial court; and non-indication of the full names and addresses of petitioners in the petition. Petitioners filed a Reply[11] dated September 14, 2002, while private respondents filed a Rejoinder[12] dated October 14, 2002, both in reiteration of their arguments. We grant the petition.

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Our Revised Penal Code provides that every person criminally liable for a felony is also civilly liable.[13] Such civil liability may consist of restitution, reparation of the damage caused and indemnification of consequential damages.[14] When a criminal action is instituted, the civil liability arising from the offense is impliedly instituted with the criminal action, subject to three notable exceptions: first, when the injured party expressly waives the right to recover damages from the accused; second, when the offended party reserves his right to have the civil damages determined in a separate action in order to take full control and direction of the prosecution of his cause; and third, when the injured party actually exercises the right to maintain a private suit against the offender by instituting a civil action prior to the filing of the criminal case. Notably, it was the 1985 Rules on Criminal Procedure, as amended in 1988, which governed the institution of the criminal action, as well as the reservation of the right to file a separate civil action. Section 1, Rule 111 thereof states: Section 1. Institution of criminal and civil actions.—When a criminal action is instituted, the civil action for the recovery of civil liability is impliedly instituted with the criminal action, unless the offended party waives the civil action, reserves his right to institute it separately, or institutes the civil action prior to the criminal action. Such civil action includes recovery of indemnity under the Revised Penal Code, and damages under Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines arising from the same act or omission of the accused. A waiver of any of the civil actions extinguishes the others. The institution of, or the reservation of the right to file, any of said civil actions separately waives the others. The reservation of the right to institute the separate civil actions shall be made before the prosecution starts to present its evidence and under circumstances affording the offended party a reasonable opportunity to make such reservation. In no case may the offended party recover damages twice for the same act or omission of the accused. When the offended party seeks to enforce civil liability against the accused by way of moral, nominal, temperate or exemplary damages, the filing fees for such action as provided in these Rules shall constitute a first lien on the judgment except in an award for actual damages. In cases wherein the amount of damages, other than actual, is alleged in the complaint or information, the corresponding filing fees shall be paid by the offended party upon filing thereof in court for trial. Petitioners expressly made a reservation of their right to file a separate civil action as a result of the crime committed by Sibayan. On account of this reservation, the municipal circuit trial court, in its decision convicting Sibayan, did not make any pronouncement as to the latter’s civil liability. Predicating their claim on the judgment of conviction and their reservation to file a separate civil action made in the criminal case, petitioners filed a complaint for damages against Sibayan, Viron Transit and its President/Chairman. Petitioners assert that by the institution of the complaint, they seek to recover private respondents’ civil liability arising from crime. Unfortunately, based on its misreading of the allegations in the complaint, the trial court dismissed the same, declaring that petitioners’ cause of action was based on quasi delict and should have been brought within four (4) years from the time the cause of action accrued, i.e., from the time of the accident. A reading of the complaint reveals that the allegations therein are consistent with petitioners’ claim that the action was brought to recover civil liability arising from crime. Although there are allegations of negligence on the part of Sibayan and Viron Transit, such does not necessarily mean that petitioners were pursuing a cause of action based on quasi delict, considering that at the time of the filing of the complaint, the cause of action ex quasi delicto had already prescribed. Besides, in cases of negligence, the offended party has the choice between an action to enforce civil liability arising from crime under the Revised Penal Code and an action for quasi delict under the Civil Code. An act or omission causing damage to another may give rise to two separate civil liabilities on the part of the offender, i.e., (1) civil liability ex delicto, under Article 100 of the Revised Penal Code; and

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(2) independent civil liabilities, such as those (a) not arising from an act or omission complained of as a felony, e.g., culpa contractual or obligations arising from law under Article 31 of the Civil Code, intentional torts under Articles 32 and 34, and culpa aquiliana under Article 2176 of the Civil Code; or (b) where the injured party is granted a right to file an action independent and distinct from the criminal action under Article 33 of the Civil Code.[15] Either of these liabilities may be enforced against the offender subject to the caveat under Article 2177 of the Civil Code that the plaintiff cannot recover damages twice for the same act or omission of the defendant and the similar proscription against double recovery under the Rules above-quoted. At the time of the filing of the complaint for damages in this case, the cause of action ex quasi delicto had already prescribed. Nonetheless, petitioners can pursue the remaining avenue opened for them by their reservation, i.e., the surviving cause of action ex delicto. This is so because the prescription of the action ex quasi delicto does not operate as a bar to an action to enforce the civil liability arising from crime especially as the latter action had been expressly reserved. The case of Mendoza v. La Mallorca Bus Company[16] was decided upon a similar set of facts. Therein, the driver of La Mallorca Bus Company was charged with reckless imprudence resulting to damage to property. The plaintiff made an express reservation for the filing of a separate civil action. The driver was convicted which conviction was affirmed by this Court. Later, plaintiff filed a separate civil action for damages based on quasi delict which was ordered dismissed by the trial court upon finding that the action was instituted more than six (6) years from the date of the accident and thus, had already prescribed. Subsequently, plaintiff instituted another action, this time based on the subsidiary liability of the bus company. The trial court dismissed the action holding that the dismissal of the earlier civil case operated as a bar to the filing of the action to enforce the bus company’s subsidiary liability. We held that the dismissal of the action based on culpa aquiliana is not a bar to the enforcement of the subsidiary liability of the employer. Once there is a conviction for a felony, final in character, the employer becomes subsidiarily liable if the commission of the crime was in the discharge of the duties of the employees. This is so because Article 103 of the Revised Penal Code operates with controlling force to obviate the possibility of the aggrieved party being deprived of indemnity even after the rendition of a final judgment convicting the employee. Seen in this light, the trial court should not have dismissed the complaint on the ground of prescription, but instead allowed the complaint for damages ex delicto to be prosecuted on the merits, considering petitioners’ allegations in their complaint, opposition to the motion to dismiss[17] and motion for reconsideration[18] of the order of dismissal, insisting that the action was to recover civil liability arising from crime. This does not offend the policy that the reservation or institution of a separate civil action waives the other civil actions. The rationale behind this rule is the avoidance of multiple suits between the same litigants arising out of the same act or omission of the offender.[19] However, since the stale action for damages based on quasi delict should be considered waived, there is no more occasion for petitioners to file multiple suits against private respondents as the only recourse available to them is to pursue damages ex delicto. This interpretation is also consistent with the bar against double recovery for obvious reasons. Now the procedural issue. Admittedly, petitioners should have appealed the order of dismissal of the trial court instead of filing a petition for certiorari with the Court of Appeals. Such procedural misstep, however, should be exempted from the strict application of the rules in order to promote their fundamental objective of securing substantial justice.[20] We are loathe to deprive petitioners of the indemnity to which they are entitled by law and by a final judgment of conviction based solely on a technicality. It is our duty to prevent such an injustice.[21] WHEREFORE, judgment is hereby rendered SETTING ASIDE the resolutions of the Court of Appeals dated September 10, 2001 and January 9, 2002, respectively dismissing the present action and denying petitioners’ motion for reconsideration, as well as the orders of the lower court dated February 26, 2001 and July 16, 2001. Let the case be REMANDED to the trial court for further proceedings. SO ORDERED.

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Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Chico-Nazario, JJ., concur.

SPS. HERNANDEZ VS SPS. DOLOR FIRST DIVISION [G.R. No. 160286. July 30, 2004] SPOUSES FRANCISCO M. HERNANDEZ and ANICETA ABEL-HERNANDEZ and JUAN GONZALES, petitioners, vs. SPOUSES LORENZO DOLOR and MARGARITA DOLOR, FRED PANOPIO, JOSEPH SANDOVAL, RENE CASTILLO, SPOUSES FRANCISCO VALMOCINA and VIRGINIA VALMOCINA, SPOUSES VICTOR PANOPIO and MARTINA PANOPIO, and HON. COURT OF APPEALS, respondents. D E C I S I O N YNARES-SANTIAGO, J.: This is a petition for review under Rule 45 of the Rules of Court seeking the reversal of the decision[1] of the Court of Appeals, dated April 29, 2003, in CA-G.R. CV No. 60357, which affirmed with modification the amount of damages awarded in the November 24, 1997 decision[2] of the Regional Trial Court of Batangas City, Branch IV. The undisputed facts are as follows: At about 3:00 p.m. of December 19, 1986, Lorenzo Menard “Boyet” Dolor, Jr. was driving an owner-type jeepney with plate no. DEB 804 owned by her mother, Margarita, towards Anilao, Batangas. As he was traversing the road at Barangay Anilao East, Mabini, Batangas, his vehicle collided with a passenger jeepney bearing plate no. DEG 648, driven by petitioner Juan Gonzales and owned by his co-petitioner Francisco Hernandez, which was travelling towards Batangas City. Boyet Dolor and his passenger, Oscar Valmocina, died as a result of the collision. Fred Panopio, Rene Castillo and Joseph Sandoval, who were also on board the owner-type jeep, which was totally wrecked, suffered physical injuries. The collision also damaged the passenger jeepney of Francisco Hernandez and caused physical injuries to its passengers, namely, Virgie Cadavida, Fiscal Artemio Reyes and Francisca Corona.[3] Consequently, respondents commenced an action[4] for damages against petitioners before the Regional Trial Court of Batangas City, alleging that driver Juan Gonzales was guilty of negligence and lack of care and that the Hernandez spouses were guilty of negligence in the selection and supervision of their employees.[5] Petitioners countered that the proximate cause of the death and injuries sustained by the passengers of both vehicles was the recklessness of Boyet Dolor, the driver of the owner-type jeepney, who was driving in a zigzagging manner under the influence of alcohol. Petitioners also alleged that Gonzales was not the driver-employee of the Hernandez spouses as the former only leased the passenger jeepney on a daily basis. The Hernandez spouses further claimed that even if an employer-employee relationship is found to exist between them, they cannot be held liable because as employers they exercised due care in the selection and supervision of their employee. During the trial of the case, it was established that the drivers of the two vehicles were duly licensed to drive and that the road where the collision occurred was asphalted and in fairly good condition.[6] The owner-type jeep was travelling uphill while the passenger jeepney was going downhill. It was further established that the owner-type jeep was moderately moving and had just passed a road bend when its passengers, private respondents Joseph Sandoval and Rene Castillo, saw the passenger jeepney at a distance of three meters away. The passenger jeepney was traveling fast when it bumped the owner type jeep.[7] Moreover, the evidence presented by respondents before the trial court showed that petitioner Juan Gonzales obtained his professional driver’s license only on September 24, 1986, or three months before the accident. Prior to this, he was holder of a student driver’s permit issued on April 10, 1986.[8] On November 24, 1997, the trial court rendered a decision in favor of respondents, the dispositive portion of which states:

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Premises duly considered and the plaintiffs having satisfactorily convincingly and credibly presented evidence clearly satisfying the requirements of preponderance of evidence to sustain the complaint, this Court hereby declares judgment in favor of the plaintiffs and against the defendants. Defendants-spouses Francisco Hernandez and Aniceta Abel Hernandez and Juan Gonzales are therefore directed to pay jointly and severally, the following: 1) To spouses Lorenzo Dolor and Margarita Dolor: a) P50,000.00 – for the death of their son, Lorenzo Menard “Boyet” Dolor, Jr.; b) P142,000.00 – as actual and necessary funeral expenses; c) P50,000.00 – reasonable value of the totally wrecked owner-type jeep with plate no. DEB 804 Phil ’85; d) P20,000.00 – as moral damages; e) P20,000.00 as reasonable litigation expenses and attorney’s fees. 2) To spouses Francisco Valmocina and Virginia Valmocina: a) P50,000.00 – for the death of their son, Oscar Balmocina (sic); b) P20,000.00 – as moral damages; c) P18,400.00 – for funeral expenses; d) P10,000.00 – for litigation expenses and attorney’s fees. 3) To spouses Victor Panopio and Martina Panopio: a) P10,450.00 – for the cost of the artificial leg and crutches being used by their son Fred Panopio; b) P25,000.00 – for hospitalization and medical expenses they incurred for the treatment of their son, Fred Panopio. 4) To Fred Panopio: a) P25,000.00 – for the loss of his right leg; b) P10,000.00 – as moral damages. 5) To Joseph Sandoval: a) P4,000.00 for medical treatment. The defendants are further directed to pay the costs of this proceedings. SO ORDERED.[9] Petitioners appealed[10] the decision to the Court of Appeals, which affirmed the same with modifications as to the amount of damages, actual expenses and attorney’s fees awarded to the private respondents. The decretal portion of the decision of the Court of Appeals reads: WHEREFORE, the foregoing premises considered, the appealed decision is AFFIRMED. However, the award for damages, actual expenses and attorney’s fees shall be MODIFIED as follows: 1) To spouses Lorenzo Dolor and Margarita Dolor: a) P50,000.00 – civil indemnity for their son Lorenzo Menard Dolor, Jr.; b) P58,703.00 – as actual and necessary funeral expenses; c) P25,000,00 – as temperate damages; d) P100,000.00 – as moral damages; e) P20,000.00 – as reasonable litigation expenses and attorney’s fees. 2) To Spouses Francisco Valmocina and Virginia Valmocina: a) P50,000.00 – civil indemnity for the death of their son, Oscar Valmocina; b) P100,000.00 – as moral damages; c) P10,000.00 – as temperate damages; d) P10,000.00 – as reasonable litigation expenses and attorney’s fees. 3) To Spouses Victor Panopio and Martina Panopio:

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a) P10,352.59 – as actual hospitalization and medical expenses; b) P5,000.00 – as temperate damages. 4) To Fred Panopio: a) P50,000.00 – as moral damages. 5) To Joseph Sandoval: a) P3,000.00 as temperate damages. SO ORDERED.[11] Hence the present petition raising the following issues: 1. Whether the Court of Appeals was correct when it pronounced the Hernandez spouses as solidarily liable with Juan Gonzales, although it is of record that they were not in the passenger jeepney driven by latter when the accident occurred; 2. Whether the Court of Appeals was correct in awarding temperate damages to private respondents namely the Spouses Dolor, Spouses Valmocina and Spouses Panopio and to Joseph Sandoval, although the grant of temperate damages is not provided for in decision of the court a quo; 3. Whether the Court of Appeals was correct in increasing the award of moral damages to respondents, Spouses Dolor, Spouses Valmocina and Fred Panopio; 4. Whether the Court of Appeals was correct in affirming the grant of attorney’s fees to Spouses Dolor and to Spouses Valmocina although the lower court did not specify the fact and the law on which it is based. Petitioners contend that the absence of the Hernandez spouses inside the passenger jeepney at the time of the collision militates against holding them solidarily liable with their co-petitioner, Juan Gonzales, invoking Article 2184 of the Civil Code, which provides: ARTICLE 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver, if the former, who was in the vehicle, could have, by the use of the due diligence, prevented the misfortune. It is disputably presumed that a driver was negligent, if he had been found guilty of reckless driving or violating traffic regulations at least twice within the next preceding two months. If the owner was not in the motor vehicle, the provisions of article 2180 are applicable. The Hernandez spouses argues that since they were not inside the jeepney at the time of the collision, the provisions of Article 2180 of the Civil Code, which does not provide for solidary liability between employers and employees, should be applied. We are not persuaded. Article 2180 provides: ARTICLE 2180. The obligation imposed by article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for whom one is responsible. The father and, in case of his death or incapacity, the mother, are responsible for the damages caused by the minor children who live in their company. Guardians are liable for damages caused by the minors or incapacitated persons who are under their authority and live in their company.

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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. (Underscoring supplied) On the other hand, Article 2176 provides – Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. While the above provisions of law do not expressly provide for solidary liability, the same can be inferred from the wordings of the first paragraph of Article 2180 which states that 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. Moreover, Article 2180 should be read with Article 2194 of the same Code, which categorically states that the responsibility of two or more persons who are liable for quasi-delict is solidary. In other words, the liability of joint tortfeasors is solidary.[12] Verily, under Article 2180 of the Civil Code, an employer may be held solidarily liable for the negligent act of his employee.[13] The solidary liability of employers with their employees for quasi-delicts having been established, the next question is whether Julian Gonzales is an employee of the Hernandez spouses. An affirmative answer will put to rest any issue on the solidary liability of the Hernandez spouses for the acts of Julian Gonzales. The Hernandez spouses maintained that Julian Gonzales is not their employee since their relationship relative to the use of the jeepney is that of a lessor and a lessee. They argue that Julian Gonzales pays them a daily rental of P150.00 for the use of the jeepney.[14] In essence, petitioners are practicing the “boundary system” of jeepney operation albeit disguised as a lease agreement between them for the use of the jeepney. We hold that an employer-employee relationship exists between the Hernandez spouses and Julian Gonzales. Indeed to exempt from liability the owner of a public vehicle who operates it under the “boundary system” on the ground that he is a mere lessor would be not only to abet flagrant violations of the Public Service Law, but also to place the riding public at the mercy of reckless and irresponsible drivers — reckless because the measure of their earnings depends largely upon the number of trips they make and, hence, the speed at which they drive; and irresponsible because most if not all of them are in no position to pay the damages they might cause.[15] Anent the award of temperate damages to the private respondents, we hold that the appellate court committed no reversible error in awarding the same to the respondents. Temperate or moderate damages are damages which are more than nominal but less than compensatory which 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.[16] Temperate damages are awarded for those cases where, from the nature of the case, definite proof of pecuniary

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loss cannot be offered, although the court is convinced that there has been such loss. A judge should be empowered to calculate moderate damages in such cases, rather than the plaintiff should suffer, without redress, from the defendant’s wrongful act.[17] The assessment of temperate damages is left to the sound discretion of the court provided that such an award is reasonable under the circumstances.[18] We have gone through the records of this case and we find that, indeed, respondents suffered losses which cannot be quantified in monetary terms. These losses came in the form of the damage sustained by the owner type jeep of the Dolor spouses; the internment and burial of Oscar Valmocina; the hospitalization of Joseph Sandoval on account of the injuries he sustained from the collision and the artificial leg and crutches that respondent Fred Panopio had to use because of the amputation of his right leg. Further, we find that the amount of temperate damages awarded to the respondents were reasonable under the circumstances. As to the amount of moral damages which was awarded to respondents, a review of the records of this case shows that there exists no cogent reason to overturn the action of the appellate court on this aspect. Under Article 2206, the “spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish for the death of the deceased.” The reason for the grant of moral damages has been explained, thus: . . . the award of moral damages is aimed at a restoration, within the limits possible, of the spiritual status quo ante; and therefore, it must be proportionate to the suffering inflicted. The intensity of the pain experienced by the relatives of the victim is proportionate to the intensity of affection for him and bears no relation whatsoever with the wealth or means of the offender.[19] Moral damages are emphatically not intended to enrich a plaintiff at the expense of the defendant. They are awarded to allow the former to obtain means, diversion or amusements that will serve to alleviate the moral suffering he has undergone due to the defendant’s culpable action and must, perforce, be proportional to the suffering inflicted.[20] Truly, the pain of the sudden loss of one’s offspring, especially of a son who was in the prime of his youth, and who holds so much promise waiting to be fulfilled is indeed a wellspring of intense pain which no parent should be made to suffer. While it is true that there can be no exact or uniform rule for measuring the value of a human life and the measure of damages cannot be arrived at by a precise mathematical calculation,[21] we hold that the Court of Appeals’ award of moral damages of P100,000.00 each to the Spouses Dolor and Spouses Valmocina for the death of their respective sons, Boyet Dolor and Oscar Valmocina, is in full accord with prevailing jurisprudence.[22] With respect to the award of attorney’s fees to respondents, no sufficient basis was established for the grant thereof. It is well settled that attorney’s fees should not be awarded in the absence of stipulation except under the instances enumerated in Article 2208 of the Civil Code. As we have held in Rizal Surety and Insurance Company v. Court of Appeals:[23] Article 2208 of the Civil Code allows attorney’s fees to be awarded by a court when its claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act or omission of the party from whom it is sought. While judicial discretion is here extant, an award thereof demands, nevertheless, a factual, legal or equitable justification. The matter cannot and should not be left to speculation and conjecture (Mirasol vs. De la Cruz, 84 SCRA 337; Stronghold Insurance Company, Inc. vs. Court of Appeals, 173 SCRA 619). In the case at bench, the records do not show enough basis for sustaining the award for attorney’s fees and to adjudge its payment by petitioner. x x x. Likewise, this Court held in Stronghold Insurance Company, Inc. vs. Court of Appeals that: “In Abrogar v. Intermediate Appellate Court [G.R. No. 67970, January 15, 1988, 157 SCRA 57], the Court had occasion to state that ‘[t]he reason for the award of attorney’s fees must be stated in the

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text of the court’s decision, otherwise, if it is stated only in the dispositive portion of the decision, the same must be disallowed on appeal.’ x x x.”[24] WHEREFORE, the petition is DENIED. The assailed decision of the Court of Appeals is AFFIRMED with the MODIFICATION that the grant of attorney’s fees is DELETED for lack of basis. Costs against petitioners. SO ORDERED. Davide, Jr., C.J., (Chairman), Quisumbing, Carpio, and Azcuna, JJ., concur.

CEREZO VS TUAZON TORTS: Presumption of Negligence: Employer's Vicarious Liability v. Subsidiary Liability FACTS: Noontime, June 26, 1993 -- A Country Bus Lines passenger bus collided with a tricycle in Pampanga. The driver of the tricycle Tuazon filed a complaint for damages against Mrs. Cerezo, the owner of the bus lines, her husband, Atty. Cerezo, and bus driver Foronda. According to the facts alleged in the complaint, Tuazon was driving on the proper lane. There was a "Slow Down" sign which Foronda ignored. After the complaint was filed, alias summons was served upon the person of Atty. Cerezo, the Tarlac Provincial Prosecutor. In their reply, Mrs. Cerezo contended that the trial court did not acquire jurisdiction because there was no service of summons on Foronda. Moreover, Tuazon failed to reserve his right to institute a separate civil action for damages in the criminal action. ISSUE: Whether or not Mrs. Cerezo is liable for damages HELD: Mrs. Cerezo's contention is wrong. Tuazon's case is not based on criminal law but on quasi-delict under the Civil Code. The same negligent act may produce civil liability arising from a delict under Art. 103, RPC, or may give rise to an action for quasi-delict under Art. 2180, C.C. An aggrieved party may choose between the two remedies. An action based on quasi-delict may proceed independently from the criminal action. There is, however, a distinction between civil liability arising from a delict and civil liability arising from a quasi-delict. The choice of remedy whether to sue for a delict or a quasi-delict, affects the procedural and jurisdictional issues of the action. Tuazon's action is based on quasi-delict under Art. 2180: Employer's liability. Foronda is not an indispensable party, contrary to Mrs. Cerezo's contention. An indispensable party is one whose interest is affected by the court's action in the litigation, and without whom no final resolution of the case is possible. However, Mrs. Cerezo's liability as an employer in action for quasi-delict is not only solidary, it is also primary and direct. The responsibility of two or more persons who are liable for a quasi-delict is solidary. Where there is a solidary liability on the part of the debtors, as in this case, each debtor is liable for the entire obligation. Hence, each debtor is liable to pay for the entire obligation in full. There is no merger or renunciation of rights, but only mutual representation. Where the obligation of the parties is solidary, either of the parties is indispensable, and the other is not even a necessary party because complete relief is available from either. Therefore, jurisdiction over Foronda is not even necessary as Tuazon may collect from Mrs. Cerezo alone.

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Moreover, an employer's liability based on a quasi-delict is primary and direct, while the employer's liability based on a delict is merely subsidiary. The words "primary and direct," as contrasted with "subsidiary," refers to the remedy provided by law for enforcing the obligation rather than to the character and limits of the obligation. Although liability under Art. 2180 originates from the negligent act of the employee, the aggrieved party may sue the employer directly. When an employee causes damage, the law presumes that the employer has himself committed an act of negligence in not preventing or avoiding the damage. This is the fault that the law condemns. While the employer is civilly liable in a subsidiary capacity for the employee's criminal negligence, the employer is also civilly liable directly and separate for his own civil negligence in failing to exercise due diligence in selecting and supervising his employee. The idea that the employer's liability is wholly subsidiary is wrong. The action can be brought directly against the person responsible (for another) without including the author of the act. The action against the principal is accessory in the sense that it implies the existence of a prejudicial act committed by the employee, but is not subsidiary in the sense that it cannot be instituted till after the judgment against he author of the act or at least, that it is subsidiary to the principal action; action for responsibility (of the employer) is in itself a principal action. In contrast, an action based on a delict seeks to enforce the subsidiary liability of the employer for the criminal negligence of the employee as provided in Art. 103, RPC. To hold the employer liable in a subsidiary capacity under a delict, the aggrieved party must initiate a criminal action where the employee's delict and corresponding primary liability are established. If the present action proceeds from a delict, then the trial court's jurisdiction over Foronda is necessary. However, the action filed by Tuazon was based on a quasi-delict, which is separate and independent from an action based on a delict. Hence, there was no need to reserve the filing of a separate civil action. The purpose of allowing the filing the of an independent action based on quasi-delict against the employer is to facilitate the remedy for civil wrongs. FULL TEXT FIRST DIVISION [G.R. No. 141538. March 23, 2004] Hermana R. Cerezo, petitioner, vs. David Tuazon, respondent. D E C I S I O N CARPIO, J.: The Case This is a petition for review on certiorari[1] to annul the Resolution[2] dated 21 October 1999 of the Court of Appeals in CA-G.R. SP No. 53572, as well as its Resolution dated 20 January 2000 denying the motion for reconsideration. The Court of Appeals denied the petition for annulment of the Decision[3] dated 30 May 1995 rendered by the Regional Trial Court of Angeles City, Branch 56 (“trial court”), in Civil Case No. 7415. The trial court ordered petitioner Hermana R. Cerezo (“Mrs. Cerezo”) to pay respondent David Tuazon (“Tuazon”) actual damages, loss of earnings, moral damages, and costs of suit. Antecedent Facts Around noontime of 26 June 1993, a Country Bus Lines passenger bus with plate number NYA 241 collided with a tricycle bearing plate number TC RV 126 along Captain M. Palo Street, Sta. Ines, Mabalacat, Pampanga. On 1 October 1993, tricycle driver Tuazon filed a complaint for damages against Mrs. Cerezo, as owner of the bus line, her husband Attorney Juan Cerezo (“Atty. Cerezo”), and bus driver Danilo A. Foronda (“Foronda”). The complaint alleged that: 7. At the time of the incident, plaintiff [Tuazon] was in his proper lane when the second-named defendant [Foronda], being then the driver and person in charge of the Country Bus with plate number NYA 241, did then and there willfully, unlawfully, and feloniously operate the said motor vehicle in a negligent, careless, and imprudent manner without due regard to traffic rules and

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regulations, there being a “Slow Down” sign near the scene of the incident, and without taking the necessary precaution to prevent loss of lives or injuries, his negligence, carelessness and imprudence resulted to severe damage to the tricycle and serious physical injuries to plaintiff thus making him unable to walk and becoming disabled, with his thumb and middle finger on the left hand being cut[.][4] On 1 October 1993, Tuazon filed a motion to litigate as a pauper. Subsequently, the trial court issued summons against Atty. Cerezo and Mrs. Cerezo (“the Cerezo spouses”) at the Makati address stated in the complaint. However, the summons was returned unserved on 10 November 1993 as the Cerezo spouses no longer held office nor resided in Makati. On 18 April 1994, the trial court issued alias summons against the Cerezo spouses at their address in Barangay Sta. Maria, Camiling, Tarlac. The alias summons and a copy of the complaint were finally served on 20 April 1994 at the office of Atty. Cerezo, who was then working as Tarlac Provincial Prosecutor. Atty. Cerezo reacted angrily on learning of the service of summons upon his person. Atty. Cerezo allegedly told Sheriff William Canlas: “Punyeta, ano ang gusto mong mangyari? Gusto mong hindi ka makalabas ng buhay dito? Teritoryo ko ito. Wala ka sa teritoryo mo.”[5] The records show that the Cerezo spouses participated in the proceedings before the trial court. The Cerezo spouses filed a comment with motion for bill of particulars dated 29 April 1994 and a reply to opposition to comment with motion dated 13 June 1994.[6] On 1 August 1994, the trial court issued an order directing the Cerezo spouses to file a comment to the opposition to the bill of particulars. Atty. Elpidio B. Valera (“Atty. Valera”) of Valera and Valera Law Offices appeared on behalf of the Cerezo spouses. On 29 August 1994, Atty. Valera filed an urgent ex-parte motion praying for the resolution of Tuazon’s motion to litigate as a pauper and for the issuance of new summons on the Cerezo spouses to satisfy proper service in accordance with the Rules of Court.[7] On 30 August 1994, the trial court issued an order resolving Tuazon’s motion to litigate as a pauper and the Cerezo spouses’ urgent ex-parte motion. The order reads: At the hearing on August 30, 1994, the plaintiff [Tuazon] testified that he is presently jobless; that at the time of the filing of this case, his son who is working in Malaysia helps him and sends him once in a while P300.00 a month, and that he does not have any real property. Attached to the Motion to Litigate as Pauper are his Affidavit that he is unemployed; a Certification by the Barangay Captain of his poblacion that his income is not enough for his family’s subsistence; and a Certification by the Office of the Municipal Assessor that he has no landholding in the Municipality of Mabalacat, Province of Pampanga. The Court is satisfied from the unrebutted testimony of the plaintiff that he is entitled to prosecute his complaint in this case as a pauper under existing rules. On the other hand, the Court denies the prayer in the Appearance and Urgent Ex-Parte Motion requiring new summons to be served to the defendants. The Court is of the opinion that any infirmity in the service of the summons to the defendant before plaintiff was allowed to prosecute his complaint in this case as a pauper has been cured by this Order. If within 15 days from receipt of this Order, the defendants do not question on appeal this Order of this Court, the Court shall proceed to resolve the Motion for Bill of Particulars.[8] On 27 September 1994, the Cerezo spouses filed an urgent ex-parte motion for reconsideration. The trial court denied the motion for reconsideration. On 14 November 1994, the trial court issued an order directing the Cerezo spouses to file their answer within fifteen days from receipt of the order. The Cerezo spouses did not file an answer. On 27 January 1995, Tuazon filed a motion to declare the Cerezo spouses in default. On 6 February 1995, the trial court issued an order declaring the Cerezo spouses in default and authorizing Tuazon to present his evidence. [9] On 30 May 1995, after considering Tuazon’s testimonial and documentary evidence, the trial court ruled in Tuazon’s favor. The trial court made no pronouncement on Foronda’s liability because there was no service of summons on him. The trial court did not hold Atty. Cerezo liable as Tuazon failed to show that Mrs. Cerezo’s business benefited the family, pursuant to Article 121(3) of the Family

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Code. The trial court held Mrs. Cerezo solely liable for the damages sustained by Tuazon arising from the negligence of Mrs. Cerezo’s employee, pursuant to Article 2180 of the Civil Code. The dispositive portion of the trial court’s decision reads: WHEREFORE, judgment is hereby rendered ordering the defendant Hermana Cerezo to pay the plaintiff: a) For Actual Damages 1) Expenses for operation and medical Treatment - P69,485.35 2) Cost of repair of the tricycle - 39,921.00 b) For loss of earnings - 43,300.00 c) For moral damages - 20,000.00 d) And to pay the cost of the suit. The docket fees and other expenses in the filing of this suit shall be lien on whatever judgment may be rendered in favor of the plaintiff. SO ORDERED.[10] Mrs. Cerezo received a copy of the decision on 25 June 1995. On 10 July 1995, Mrs. Cerezo filed before the trial court a petition for relief from judgment on the grounds of “fraud, mistake or excusable negligence.” Testifying before the trial court, both Mrs. Cerezo and Atty. Valera denied receipt of notices of hearings and of orders of the court. Atty. Valera added that he received no notice before or during the 8 May 1995 elections, “when he was a senatorial candidate for the KBL Party, and very busy, using his office and residence as Party National Headquarters.” Atty. Valera claimed that he was able to read the decision of the trial court only after Mrs. Cerezo sent him a copy.[11] Tuazon did not testify but presented documentary evidence to prove the participation of the Cerezo spouses in the case. Tuazon presented the following exhibits: Exhibit 1 - Sheriff’s return and summons; Exhibit 1-A - Alias summons dated April 20, 1994; Exhibit 2 - Comment with Motion; Exhibit 3 - Minutes of the hearing held on August 1, 1994; Exhibit 3-A - Signature of defendant’s counsel; Exhibit 4 - Minutes of the hearing held on August 30, 1994; Exhibit 4-A - Signature of the defendant’s counsel; Exhibit 5 - Appearance and Urgent Ex-Parte Motion; Exhibit 6 - Order dated November 14, 1994; Exhibit 6-A - Postal certification dated January 13, 1995; Exhibit 7 - Order dated February [illegible]; Exhibit 7-A - Court’s return slip addressed to Atty. Elpidio Valera; Exhibit 7-B - Court’s return slip addressed to Spouses Juan and Hermana Cerezo; Exhibit 8 - Decision dated May [30], 1995 Exhibit 8-A - Court’s return slip addressed to defendant Hermana Cerezo; Exhibit 8-B - Court’s return slip addressed to defendant’s counsel, Atty. Elpidio Valera; Exhibit 9 - Order dated September 21, 1995; Exhibit 9-A - Second Page of Exhibit 9; Exhibit 9-B - Third page of Exhibit 9; Exhibit 9-C - Fourth page of Exhibit 9; Exhibit 9-D - Court’s return slip addressed to Atty. Elpidio Valera; and Exhibit 9-E - Court’s return slip addressed to plaintiff’s counsel, Atty. Norman Dick de Guzman.[12] On 4 March 1998, the trial court issued an order[13] denying the petition for relief from judgment. The trial court stated that having received the decision on 25 June 1995, the Cerezo spouses should

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have filed a notice of appeal instead of resorting to a petition for relief from judgment. The trial court refused to grant relief from judgment because the Cerezo spouses could have availed of the remedy of appeal. Moreover, the Cerezo spouses not only failed to prove fraud, accident, mistake or excusable negligence by conclusive evidence, they also failed to prove that they had a good and substantial defense. The trial court noted that the Cerezo spouses failed to appeal because they relied on an expected settlement of the case. The Cerezo spouses subsequently filed before the Court of Appeals a petition for certiorari under Section 1 of Rule 65. The petition was docketed as CA-G.R. SP No. 48132.[14] The petition questioned whether the trial court acquired jurisdiction over the case considering there was no service of summons on Foronda, whom the Cerezo spouses claimed was an indispensable party. In a resolution[15] dated 21 January 1999, the Court of Appeals denied the petition for certiorari and affirmed the trial court’s order denying the petition for relief from judgment. The Court of Appeals declared that the Cerezo spouses’ failure to file an answer was due to their own negligence, considering that they continued to participate in the proceedings without filing an answer. There was also nothing in the records to show that the Cerezo spouses actually offered a reasonable settlement to Tuazon. The Court of Appeals also denied Cerezo spouses’ motion for reconsideration for lack of merit. The Cerezo spouses filed before this Court a petition for review on certiorari under Rule 45. Atty. Cerezo himself signed the petition, docketed as G.R. No. 137593. On 13 April 1999, this Court rendered a resolution denying the petition for review on certiorari for failure to attach an affidavit of service of copies of the petition to the Court of Appeals and to the adverse parties. Even if the petition complied with this requirement, the Court would still have denied the petition as the Cerezo spouses failed to show that the Court of Appeals committed a reversible error. The Court’s resolution was entered in the Book of Entries and Judgments when it became final and executory on 28 June 1999.[16] Undaunted, the Cerezo spouses filed before the Court of Appeals on 6 July 1999 a petition for annulment of judgment under Rule 47 with prayer for restraining order. Atty. Valera and Atty. Dionisio S. Daga (“Atty. Daga”) represented Mrs. Cerezo in the petition, docketed as CA-G.R. SP No. 53572.[17] The petition prayed for the annulment of the 30 May 1995 decision of the trial court and for the issuance of a writ of preliminary injunction enjoining execution of the trial court’s decision pending resolution of the petition. The Court of Appeals denied the petition for annulment of judgment in a resolution dated 21 October 1999. The resolution reads in part: In this case, records show that the petitioner previously filed with the lower court a Petition for Relief from Judgment on the ground that they were wrongfully declared in default while waiting for an amicable settlement of the complaint for damages. The court a quo correctly ruled that such petition is without merit. The defendant spouses admit that during the initial hearing they appeared before the court and even mentioned the need for an amicable settlement. Thus, the lower court acquired jurisdiction over the defendant spouses. Therefore, petitioner having availed of a petition for relief, the remedy of an annulment of judgment is no longer available. The proper action for the petitioner is to appeal the order of the lower court denying the petition for relief. Wherefore, the instant petition could not be given due course and should accordingly be dismissed. SO ORDERED.[18] On 20 January 2000, the Court of Appeals denied the Cerezo spouses’ motion for reconsideration.[19] The Court of Appeals stated: A distinction should be made between a court’s jurisdiction over a person and its jurisdiction over the subject matter of a case. The former is acquired by the proper service of summons or by the parties’ voluntary appearance; while the latter is conferred by law.

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Resolving the matter of jurisdiction over the subject matter, Section 19(1) of B[atas] P[ambansa] 129 provides that Regional Trial Courts shall exercise exclusive original jurisdiction in all civil actions in which the subject of the litigation is incapable of pecuniary estimation. Thus it was proper for the lower court to decide the instant case for damages. Unlike jurisdiction over the subject matter of a case which is absolute and conferred by law; any defects [sic] in the acquisition of jurisdiction over a person (i.e., improper filing of civil complaint or improper service of summons) may be waived by the voluntary appearance of parties. The lower court admits the fact that no summons was served on defendant Foronda. Thus, jurisdiction over the person of defendant Foronda was not acquired, for which reason he was not held liable in this case. However, it has been proven that jurisdiction over the other defendants was validly acquired by the court a quo. The defendant spouses admit to having appeared in the initial hearings and in the hearing for plaintiff’s motion to litigate as a pauper. They even mentioned conferences where attempts were made to reach an amicable settlement with plaintiff. However, the possibility of amicable settlement is not a good and substantial defense which will warrant the granting of said petition. x x x Assuming arguendo that private respondent failed to reserve his right to institute a separate action for damages in the criminal action, the petitioner cannot now raise such issue and question the lower court’s jurisdiction because petitioner and her husband have waived such right by voluntarily appearing in the civil case for damages. Therefore, the findings and the decision of the lower court may bind them. Records show that the petitioner previously filed with the lower court a Petition for Relief from Judgment on the ground that they were wrongfully declared in default while waiting for an amicable settlement of the complaint for damages. The court a quo correctly ruled that such petition is without merit, jurisdiction having been acquired by the voluntary appearance of defendant spouses. Once again, it bears stressing that having availed of a petition for relief, the remedy of annulment of judgment is no longer available. Based on the foregoing, the motion for reconsideration could not be given due course and is hereby DENIED. SO ORDERED.[20] The Issues On 7 February 2000, Mrs. Cerezo, this time with Atty. Daga alone representing her, filed the present petition for review on certiorari before this Court. Mrs. Cerezo claims that: 1. In dismissing the Petition for Annulment of Judgment, the Court of Appeals assumes that the issues raised in the petition for annulment is based on extrinsic fraud related to the denied petition for relief notwithstanding that the grounds relied upon involves questions of lack of jurisdiction. 2. In dismissing the Petition for Annulment, the Court of Appeals disregarded the allegation that the lower court[’s] findings of negligence against defendant-driver Danilo Foronda [whom] the lower court did not summon is null and void for want of due process and consequently, such findings of negligence which is [sic] null and void cannot become the basis of the lower court to adjudge petitioner-employer liable for civil damages. 3. In dismissing the Petition for Annulment, the Court of Appeals ignored the allegation that defendant-driver Danilo A. Foronda whose negligence is the main issue is an indispensable party whose presence is compulsory but [whom] the lower court did not summon. 4. In dismissing the Petition for Annulment, the Court of Appeals ruled that assuming arguendo that private respondent failed to reserve his right to institute a separate action for damages in the criminal

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action, the petitioner cannot now raise such issue and question the lower court’s jurisdiction because petitioner [has] waived such right by voluntarily appearing in the civil case for damages notwithstanding that lack of jurisdiction cannot be waived.[21] The Court’s Ruling The petition has no merit. As the issues are interrelated, we shall discuss them jointly. Remedies Available to a Party Declared in Default An examination of the records of the entire proceedings shows that three lawyers filed and signed pleadings on behalf of Mrs. Cerezo, namely, Atty. Daga, Atty. Valera, and Atty. Cerezo. Despite their number, Mrs. Cerezo’s counsels failed to avail of the proper remedies. It is either by sheer ignorance or by malicious manipulation of legal technicalities that they have managed to delay the disposition of the present case, to the detriment of pauper litigant Tuazon. Mrs. Cerezo claims she did not receive any copy of the order declaring the Cerezo spouses in default. Mrs. Cerezo asserts that she only came to know of the default order on 25 June 1995, when she received a copy of the decision. On 10 July 1995, Mrs. Cerezo filed before the trial court a petition for relief from judgment under Rule 38, alleging “fraud, mistake, or excusable negligence” as grounds. On 4 March 1998, the trial court denied Mrs. Cerezo’s petition for relief from judgment. The trial court stated that Mrs. Cerezo could have availed of appeal as a remedy and that she failed to prove that the judgment was entered through fraud, accident, mistake, or excusable negligence. Mrs. Cerezo then filed before the Court of Appeals a petition for certiorari under Section 1 of Rule 65 assailing the denial of the petition for relief from judgment. On 21 January 1999, the Court of Appeals dismissed Mrs. Cerezo’s petition. On 24 February 1999, the appellate court denied Mrs. Cerezo’s motion for reconsideration. On 11 March 1999, Mrs. Cerezo filed before this Court a petition for review on certiorari under Rule 45, questioning the denial of the petition for relief from judgment. We denied the petition and our resolution became final and executory on 28 June 1999. On 6 July 1999, a mere eight days after our resolution became final and executory, Mrs. Cerezo filed before the Court of Appeals a petition for annulment of the judgment of the trial court under Rule 47. Meanwhile, on 25 August 1999, the trial court issued over the objection of Mrs. Cerezo an order of execution of the judgment in Civil Case No. 7415. On 21 October 1999, the Court of Appeals dismissed the petition for annulment of judgment. On 20 January 2000, the Court of Appeals denied Mrs. Cerezo’s motion for reconsideration. On 7 February 2000, Mrs. Cerezo filed the present petition for review on certiorari under Rule 45 challenging the dismissal of her petition for annulment of judgment. Lina v. Court of Appeals[22] enumerates the remedies available to a party declared in default: a) The defendant in default may, at any time after discovery thereof and before judgment, file a motion under oath to set aside the order of default on the ground that his failure to answer was due to fraud, accident, mistake or excusable negligence, and that he has a meritorious defense (Sec. 3, Rule 18 [now Sec. 3(b), Rule 9]); b) If the judgment has already been rendered when the defendant discovered the default, but before the same has become final and executory, he may file a motion for new trial under Section 1 (a) of Rule 37; c) If the defendant discovered the default after the judgment has become final and executory, he may file a petition for relief under Section 2 [now Section 1] of Rule 38; and d) He may also appeal from the judgment rendered against him as contrary to the evidence or to the law, even if no petition to set aside the order of default has been presented by him (Sec. 2, Rule 41). (Emphasis added) Moreover, a petition for certiorari to declare the nullity of a judgment by default is also available if the trial court improperly declared a party in default, or even if the trial court properly declared a party in default, if grave abuse of discretion attended such declaration.[23]

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Mrs. Cerezo admitted that she received a copy of the trial court’s decision on 25 June 1995. Based on this admission, Mrs. Cerezo had at least three remedies at her disposal: an appeal, a motion for new trial, or a petition for certiorari. Mrs. Cerezo could have appealed under Rule 41[24] from the default judgment within 15 days from notice of the judgment. She could have availed of the power of the Court of Appeals to try cases and conduct hearings, receive evidence, and perform all acts necessary to resolve factual issues raised in cases falling within its appellate jurisdiction.[25] Mrs. Cerezo also had the option to file under Rule 37[26] a motion for new trial within the period for taking an appeal. If the trial court grants a new trial, the original judgment is vacated, and the action will stand for trial de novo. The recorded evidence taken in the former trial, as far as the same is material and competent to establish the issues, shall be used at the new trial without retaking the same.[27] Mrs. Cerezo also had the alternative of filing under Rule 65[28] a petition for certiorari assailing the order of default within 60 days from notice of the judgment. An order of default is interlocutory, and an aggrieved party may file an appropriate special civil action under Rule 65.[29] In a petition for certiorari, the appellate court may declare void both the order of default and the judgment of default. Clearly, Mrs. Cerezo had every opportunity to avail of these remedies within the reglementary periods provided under the Rules of Court. However, Mrs. Cerezo opted to file a petition for relief from judgment, which is available only in exceptional cases. A petition for relief from judgment should be filed within the reglementary period of 60 days from knowledge of judgment and six months from entry of judgment, pursuant to Rule 38 of the Rules of Civil Procedure.[30] Tuason v. Court of Appeals[31] explained the nature of a petition for relief from judgment: When a party has another remedy available to him, which may either be a motion for new trial or appeal from an adverse decision of the trial court, and he was not prevented by fraud, accident, mistake or excusable negligence from filing such motion or taking such appeal, he cannot avail himself of this petition. Indeed, relief will not be granted to a party who seeks avoidance from the effects of the judgment when the loss of the remedy at law was due to his own negligence; otherwise the petition for relief can be used to revive the right to appeal which has been lost thru inexcusable negligence. Evidently, there was no fraud, accident, mistake, or excusable negligence that prevented Mrs. Cerezo from filing an appeal, a motion for new trial or a petition for certiorari. It was error for her to avail of a petition for relief from judgment. After our resolution denying Mrs. Cerezo’s petition for relief became final and executory, Mrs. Cerezo, in her last ditch attempt to evade liability, filed before the Court of Appeals a petition for annulment of the judgment of the trial court. Annulment is available only on the grounds of extrinsic fraud and lack of jurisdiction. If based on extrinsic fraud, a party must file the petition within four years from its discovery, and if based on lack of jurisdiction, before laches or estoppel bars the petition. Extrinsic fraud is not a valid ground if such fraud was used as a ground, or could have been used as a ground, in a motion for new trial or petition for relief from judgment.[32] Mrs. Cerezo insists that lack of jurisdiction, not extrinsic fraud, was her ground for filing the petition for annulment of judgment. However, a party may avail of the remedy of annulment of judgment under Rule 47 only if the ordinary remedies of new trial, appeal, petition for relief from judgment, or other appropriate remedies are no longer available through no fault of the party.[33] Mrs. Cerezo could have availed of a new trial or appeal but through her own fault she erroneously availed of the remedy of a petition for relief, which was denied with finality. Thus, Mrs. Cerezo may no longer avail of the remedy of annulment. In any event, the trial court clearly acquired jurisdiction over Mrs. Cerezo’s person. Mrs. Cerezo actively participated in the proceedings before the trial court, submitting herself to the jurisdiction of the trial court. The defense of lack of jurisdiction fails in light of her active participation in the trial

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court proceedings. Estoppel or laches may also bar lack of jurisdiction as a ground for nullity especially if raised for the first time on appeal by a party who participated in the proceedings before the trial court, as what happened in this case.[34] For these reasons, the present petition should be dismissed for utter lack of merit. The extraordinary action to annul a final judgment is restricted to the grounds specified in the rules. The reason for the restriction is to prevent this extraordinary action from being used by a losing party to make a complete farce of a duly promulgated decision that has long become final and executory. There would be no end to litigation if parties who have unsuccessfully availed of any of the appropriate remedies or lost them through their fault could still bring an action for annulment of judgment.[35] Nevertheless, we shall discuss the issues raised in the present petition to clear any doubt about the correctness of the decision of the trial court. Mrs. Cerezo’s Liability and the Trial Court’s Acquisition of Jurisdiction Mrs. Cerezo contends that the basis of the present petition for annulment is lack of jurisdiction. Mrs. Cerezo asserts that the trial court could not validly render judgment since it failed to acquire jurisdiction over Foronda. Mrs. Cerezo points out that there was no service of summons on Foronda. Moreover, Tuazon failed to reserve his right to institute a separate civil action for damages in the criminal action. Such contention betrays a faulty foundation. Mrs. Cerezo’s contention proceeds from the point of view of criminal law and not of civil law, while the basis of the present action of Tuazon is quasi-delict under the Civil Code, not delict under the Revised Penal Code. The same negligent act may produce civil liability arising from a delict under Article 103 of the Revised Penal Code, or may give rise to an action for a quasi-delict under Article 2180 of the Civil Code. An aggrieved party may choose between the two remedies. An action based on a quasi-delict may proceed independently from the criminal action.[36] There is, however, a distinction between civil liability arising from a delict and civil liability arising from a quasi-delict. The choice of remedy, whether to sue for a delict or a quasi-delict, affects the procedural and jurisdictional issues of the action.[37] Tuazon chose to file an action for damages based on a quasi-delict. In his complaint, Tuazon alleged that Mrs. Cerezo, “without exercising due care and diligence in the supervision and management of her employees and buses,” hired Foronda as her driver. Tuazon became disabled because of Foronda’s “recklessness, gross negligence and imprudence,” aggravated by Mrs. Cerezo’s “lack of due care and diligence in the selection and supervision of her employees, particularly Foronda.”[38] The trial court thus found Mrs. Cerezo liable under Article 2180 of the Civil Code. Article 2180 states in part: 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. Contrary to Mrs. Cerezo’s assertion, Foronda is not an indispensable party to the case. An indispensable party is one whose interest is affected by the court’s action in the litigation, and without whom no final resolution of the case is possible.[39] However, Mrs. Cerezo’s liability as an employer in an action for a quasi-delict is not only solidary, it is also primary and direct. Foronda is not an indispensable party to the final resolution of Tuazon’s action for damages against Mrs. Cerezo. The responsibility of two or more persons who are liable for a quasi-delict is solidary.[40] Where there is a solidary obligation on the part of debtors, as in this case, each debtor is liable for the entire obligation. Hence, each debtor is liable to pay for the entire obligation in full. There is no merger or renunciation of rights, but only mutual representation.[41] Where the obligation of the parties is solidary, either of the parties is indispensable, and the other is not even a necessary party because complete relief is available from either.[42] Therefore, jurisdiction over Foronda is not even necessary as Tuazon may collect damages from Mrs. Cerezo alone. Moreover, an employer’s liability based on a quasi-delict is primary and direct, while the employer’s liability based on a delict is merely subsidiary.[43] The words “primary and direct,” as contrasted

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with “subsidiary,” refer to the remedy provided by law for enforcing the obligation rather than to the character and limits of the obligation.[44] Although liability under Article 2180 originates from the negligent act of the employee, the aggrieved party may sue the employer directly. When an employee causes damage, the law presumes that the employer has himself committed an act of negligence in not preventing or avoiding the damage. This is the fault that the law condemns. While the employer is civilly liable in a subsidiary capacity for the employee’s criminal negligence, the employer is also civilly liable directly and separately for his own civil negligence in failing to exercise due diligence in selecting and supervising his employee. The idea that the employer’s liability is solely subsidiary is wrong.[45] The action can be brought directly against the person responsible (for another), without including the author of the act. The action against the principal is accessory in the sense that it implies the existence of a prejudicial act committed by the employee, but it is not subsidiary in the sense that it can not be instituted till after the judgment against the author of the act or at least, that it is subsidiary to the principal action; the action for responsibility (of the employer) is in itself a principal action.[46] Thus, there is no need in this case for the trial court to acquire jurisdiction over Foronda. The trial court’s acquisition of jurisdiction over Mrs. Cerezo is sufficient to dispose of the present case on the merits. In contrast, an action based on a delict seeks to enforce the subsidiary liability of the employer for the criminal negligence of the employee as provided in Article 103 of the Revised Penal Code. To hold the employer liable in a subsidiary capacity under a delict, the aggrieved party must initiate a criminal action where the employee’s delict and corresponding primary liability are established.[47] If the present action proceeds from a delict, then the trial court’s jurisdiction over Foronda is necessary. However, the present action is clearly for the quasi-delict of Mrs. Cerezo and not for the delict of Foronda. The Cerezo spouses’ contention that summons be served anew on them is untenable in light of their participation in the trial court proceedings. To uphold the Cerezo spouses’ contention would make a fetish of a technicality.[48] Moreover, any irregularity in the service of summons that might have vitiated the trial court’s jurisdiction over the persons of the Cerezo spouses was deemed waived when the Cerezo spouses filed a petition for relief from judgment.[49] We hold that the trial court had jurisdiction and was competent to decide the case in favor of Tuazon and against Mrs. Cerezo even in the absence of Foronda. Contrary to Mrs. Cerezo’s contention, Foronda is not an indispensable party to the present case. It is not even necessary for Tuazon to reserve the filing of a separate civil action because he opted to file a civil action for damages against Mrs. Cerezo who is primarily and directly liable for her own civil negligence. The words of Justice Jorge Bocobo in Barredo v. Garcia still hold true today as much as it did in 1942: x x x [T]o hold that there is only one way to make defendant’s 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 relief. 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 [2180] 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 other similar public conveyances 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.[50] Interest at the rate of 6% per annum is due on the amount of damages adjudged by the trial court.[51] The 6% per annum interest shall commence from 30 May 1995, the date of the decision of the trial court. Upon finality of this decision, interest at 12% per annum, in lieu of 6% per annum, is due on the amount of damages adjudged by the trial court until full payment. WHEREFORE, we DENY the instant petition for review. The Resolution dated 21 October 1999 of the Court of Appeals in CA-G.R. SP No. 53572, as well as its Resolution dated 20 January 2000 denying the motion for reconsideration, is AFFIRMED with the MODIFICATION that the amount due shall earn

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legal interest at 6% per annum computed from 30 May 1995, the date of the trial court’s decision. Upon finality of this decision, the amount due shall earn interest at 12% per annum, in lieu of 6% per annum, until full payment. SO ORDERED. Davide, Jr., C.J., (Chairman), Ynares-Santiago, and Azcuna, JJ., concur. Panganiban, J., on official leave.

PROF. SVCS., INC. VS SPS. AGANA FACTS: Enrique Agana told his wife Natividad Agana to go look for their neighbor, Dr. Ampil, a surgeon staff member of Medical City, a prominent and known hospital. Natividad suffered from injury due to 2 gauges left inside her body so they sued Professional Inc. (PSI). Despite, the report of 2 missing gauzes after the operation PSI did NOT initiate an investigation ISSUE: W/N PSI should be liable for tort. HELD: YES. 15M + 12% int. until full satisfaction. While PSI had no power to control the means/method by which Dr. Ampil conducted the surgery on Natividad, they had the power to review or cause the review PSI had the duty to tread on as captain of the ship for the purpose of ensuing the safety of the patients availing themselves of its services and facilities PSI defined its standards of corporate conduct: Even after her operation to ensure her safety as a patient. NOT limited to record the 2 missing gauzes. Extended to determining Dr. Ampils role in it, bringing the matter to his attention and correcting his negligence. Admission bars itself from arguing that its corp. resp. is NOT yet in existence at the time Natividad underwent treatment Dr. Ampil - medial negligence PSI - Corporate Negligence NOTE: Liability unique to this case because of implied agency and admitted corporate duty 26 years already and Dr. Ampil's status could no longer be ascertained FULL TEXT FIRST DIVISION G.R. No. 126297 January 31, 2007 PROFESSIONAL SERVICES, INC., Petitioner, vs. NATIVIDAD and ENRIQUE AGANA, Respondents. x - - - - - - - - - - - - - - - - - - - - - - - x G.R. No. 126467 January 31, 2007 NATIVIDAD (Substituted by her children MARCELINO AGANA III, ENRIQUE AGANA, JR., EMMA AGANA ANDAYA, JESUS AGANA, and RAYMUND AGANA) and ENRIQUE AGANA, Petitioners, vs. JUAN FUENTES, Respondent. x- - - - - - - - - - - - - - - - - - - -- - - - x G.R. No. 127590 January 31, 2007 MIGUEL AMPIL, Petitioner, vs. NATIVIDAD AGANA and ENRIQUE AGANA, Respondents.

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D E C I S I O N SANDOVAL-GUTIERREZ, J.: Hospitals, having undertaken one of mankind’s most important and delicate endeavors, must assume the grave responsibility of pursuing it with appropriate care. The care and service dispensed through this high trust, however technical, complex and esoteric its character may be, must meet standards of responsibility commensurate with the undertaking to preserve and protect the health, and indeed, the very lives of those placed in the hospital’s keeping.1 Assailed in these three consolidated petitions for review on certiorari is the Court of Appeals’ Decision2 dated September 6, 1996 in CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198 affirming with modification the Decision3 dated March 17, 1993 of the Regional Trial Court (RTC), Branch 96, Quezon City in Civil Case No. Q-43322 and nullifying its Order dated September 21, 1993. The facts, as culled from the records, are: On April 4, 1984, Natividad Agana was rushed to the Medical City General Hospital (Medical City Hospital) because of difficulty of bowel movement and bloody anal discharge. After a series of medical examinations, Dr. Miguel Ampil, petitioner in G.R. No. 127590, diagnosed her to be suffering from "cancer of the sigmoid." On April 11, 1984, Dr. Ampil, assisted by the medical staff4 of the Medical City Hospital, performed an anterior resection surgery on Natividad. He found that the malignancy in her sigmoid area had spread on her left ovary, necessitating the removal of certain portions of it. Thus, Dr. Ampil obtained the consent of Natividad’s husband, Enrique Agana, to permit Dr. Juan Fuentes, respondent in G.R. No. 126467, to perform hysterectomy on her. After Dr. Fuentes had completed the hysterectomy, Dr. Ampil took over, completed the operation and closed the incision. However, the operation appeared to be flawed. In the corresponding Record of Operation dated April 11, 1984, the attending nurses entered these remarks: "sponge count lacking 2 "announced to surgeon searched (sic) done but to no avail continue for closure." On April 24, 1984, Natividad was released from the hospital. Her hospital and medical bills, including the doctors’ fees, amounted to P60,000.00. After a couple of days, Natividad complained of excruciating pain in her anal region. She consulted both Dr. Ampil and Dr. Fuentes about it. They told her that the pain was the natural consequence of the surgery. Dr. Ampil then recommended that she consult an oncologist to examine the cancerous nodes which were not removed during the operation. On May 9, 1984, Natividad, accompanied by her husband, went to the United States to seek further treatment. After four months of consultations and laboratory examinations, Natividad was told she was free of cancer. Hence, she was advised to return to the Philippines. On August 31, 1984, Natividad flew back to the Philippines, still suffering from pains. Two weeks thereafter, her daughter found a piece of gauze protruding from her vagina. Upon being informed about it, Dr. Ampil proceeded to her house where he managed to extract by hand a piece of gauze measuring 1.5 inches in width. He then assured her that the pains would soon vanish. Dr. Ampil’s assurance did not come true. Instead, the pains intensified, prompting Natividad to seek treatment at the Polymedic General Hospital. While confined there, Dr. Ramon Gutierrez detected the presence of another foreign object in her vagina -- a foul-smelling gauze measuring 1.5 inches in width which badly infected her vaginal vault. A recto-vaginal fistula had formed in her reproductive

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organs which forced stool to excrete through the vagina. Another surgical operation was needed to remedy the damage. Thus, in October 1984, Natividad underwent another surgery. On November 12, 1984, Natividad and her husband filed with the RTC, Branch 96, Quezon City a complaint for damages against the Professional Services, Inc. (PSI), owner of the Medical City Hospital, Dr. Ampil, and Dr. Fuentes, docketed as Civil Case No. Q-43322. They alleged that the latter are liable for negligence for leaving two pieces of gauze inside Natividad’s body and malpractice for concealing their acts of negligence. Meanwhile, Enrique Agana also filed with the Professional Regulation Commission (PRC) an administrative complaint for gross negligence and malpractice against Dr. Ampil and Dr. Fuentes, docketed as Administrative Case No. 1690. The PRC Board of Medicine heard the case only with respect to Dr. Fuentes because it failed to acquire jurisdiction over Dr. Ampil who was then in the United States. On February 16, 1986, pending the outcome of the above cases, Natividad died and was duly substituted by her above-named children (the Aganas). On March 17, 1993, the RTC rendered its Decision in favor of the Aganas, finding PSI, Dr. Ampil and Dr. Fuentes liable for negligence and malpractice, the decretal part of which reads: WHEREFORE, judgment is hereby rendered for the plaintiffs ordering the defendants PROFESSIONAL SERVICES, INC., DR. MIGUEL AMPIL and DR. JUAN FUENTES to pay to the plaintiffs, jointly and severally, except in respect of the award for exemplary damages and the interest thereon which are the liabilities of defendants Dr. Ampil and Dr. Fuentes only, as follows: 1. As actual damages, the following amounts: a. The equivalent in Philippine Currency of the total of US$19,900.00 at the rate of P21.60-US$1.00, as reimbursement of actual expenses incurred in the United States of America; b. The sum of P4,800.00 as travel taxes of plaintiffs and their physician daughter; c. The total sum of P45,802.50, representing the cost of hospitalization at Polymedic Hospital, medical fees, and cost of the saline solution; 2. As moral damages, the sum of P2,000,000.00; 3. As exemplary damages, the sum of P300,000.00; 4. As attorney’s fees, the sum of P250,000.00; 5. Legal interest on items 1 (a), (b), and (c); 2; and 3 hereinabove, from date of filing of the complaint until full payment; and 6. Costs of suit. SO ORDERED. Aggrieved, PSI, Dr. Fuentes and Dr. Ampil interposed an appeal to the Court of Appeals, docketed as CA-G.R. CV No. 42062. Incidentally, on April 3, 1993, the Aganas filed with the RTC a motion for a partial execution of its Decision, which was granted in an Order dated May 11, 1993. Thereafter, the sheriff levied upon certain properties of Dr. Ampil and sold them for P451,275.00 and delivered the amount to the Aganas. Following their receipt of the money, the Aganas entered into an agreement with PSI and Dr. Fuentes to indefinitely suspend any further execution of the RTC Decision. However, not long thereafter, the Aganas again filed a motion for an alias writ of execution against the properties of PSI and Dr. Fuentes. On September 21, 1993, the RTC granted the motion and issued the corresponding writ, prompting

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Dr. Fuentes to file with the Court of Appeals a petition for certiorari and prohibition, with prayer for preliminary injunction, docketed as CA-G.R. SP No. 32198. During its pendency, the Court of Appeals issued a Resolution5 dated October 29, 1993 granting Dr. Fuentes’ prayer for injunctive relief. On January 24, 1994, CA-G.R. SP No. 32198 was consolidated with CA-G.R. CV No. 42062. Meanwhile, on January 23, 1995, the PRC Board of Medicine rendered its Decision6 in Administrative Case No. 1690 dismissing the case against Dr. Fuentes. The Board held that the prosecution failed to show that Dr. Fuentes was the one who left the two pieces of gauze inside Natividad’s body; and that he concealed such fact from Natividad. On September 6, 1996, the Court of Appeals rendered its Decision jointly disposing of CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198, thus: WHEREFORE, except for the modification that the case against defendant-appellant Dr. Juan Fuentes is hereby DISMISSED, and with the pronouncement that defendant-appellant Dr. Miguel Ampil is liable to reimburse defendant-appellant Professional Services, Inc., whatever amount the latter will pay or had paid to the plaintiffs-appellees, the decision appealed from is hereby AFFIRMED and the instant appeal DISMISSED. Concomitant with the above, the petition for certiorari and prohibition filed by herein defendant-appellant Dr. Juan Fuentes in CA-G.R. SP No. 32198 is hereby GRANTED and the challenged order of the respondent judge dated September 21, 1993, as well as the alias writ of execution issued pursuant thereto are hereby NULLIFIED and SET ASIDE. The bond posted by the petitioner in connection with the writ of preliminary injunction issued by this Court on November 29, 1993 is hereby cancelled. Costs against defendants-appellants Dr. Miguel Ampil and Professional Services, Inc. SO ORDERED. Only Dr. Ampil filed a motion for reconsideration, but it was denied in a Resolution7 dated December 19, 1996. Hence, the instant consolidated petitions. In G.R. No. 126297, PSI alleged in its petition that the Court of Appeals erred in holding that: (1) it is estopped from raising the defense that Dr. Ampil is not its employee; (2) it is solidarily liable with Dr. Ampil; and (3) it is not entitled to its counterclaim against the Aganas. PSI contends that Dr. Ampil is not its employee, but a mere consultant or independent contractor. As such, he alone should answer for his negligence. In G.R. No. 126467, the Aganas maintain that the Court of Appeals erred in finding that Dr. Fuentes is not guilty of negligence or medical malpractice, invoking the doctrine of res ipsa loquitur. They contend that the pieces of gauze are prima facie proofs that the operating surgeons have been negligent. Finally, in G.R. No. 127590, Dr. Ampil asserts that the Court of Appeals erred in finding him liable for negligence and malpractice sans evidence that he left the two pieces of gauze in Natividad’s vagina. He pointed to other probable causes, such as: (1) it was Dr. Fuentes who used gauzes in performing the hysterectomy; (2) the attending nurses’ failure to properly count the gauzes used during surgery; and (3) the medical intervention of the American doctors who examined Natividad in the United States of America. For our resolution are these three vital issues: first, whether the Court of Appeals erred in holding Dr. Ampil liable for negligence and malpractice; second, whether the Court of Appeals erred in absolving Dr. Fuentes of any liability; and third, whether PSI may be held solidarily liable for the negligence of Dr. Ampil. I - G.R. No. 127590 Whether the Court of Appeals Erred in Holding Dr. Ampil

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Liable for Negligence and Malpractice. Dr. Ampil, in an attempt to absolve himself, gears the Court’s attention to other possible causes of Natividad’s detriment. He argues that the Court should not discount either of the following possibilities: first, Dr. Fuentes left the gauzes in Natividad’s body after performing hysterectomy; second, the attending nurses erred in counting the gauzes; and third, the American doctors were the ones who placed the gauzes in Natividad’s body. Dr. Ampil’s arguments are purely conjectural and without basis. Records show that he did not present any evidence to prove that the American doctors were the ones who put or left the gauzes in Natividad’s body. Neither did he submit evidence to rebut the correctness of the record of operation, particularly the number of gauzes used. As to the alleged negligence of Dr. Fuentes, we are mindful that Dr. Ampil examined his (Dr. Fuentes’) work and found it in order. The glaring truth is that all the major circumstances, taken together, as specified by the Court of Appeals, directly point to Dr. Ampil as the negligent party, thus: First, it is not disputed that the surgeons used gauzes as sponges to control the bleeding of the patient during the surgical operation. Second, immediately after the operation, the nurses who assisted in the surgery noted in their report that the ‘sponge count (was) lacking 2’; that such anomaly was ‘announced to surgeon’ and that a ‘search was done but to no avail’ prompting Dr. Ampil to ‘continue for closure’ x x x. Third, after the operation, two (2) gauzes were extracted from the same spot of the body of Mrs. Agana where the surgery was performed. An operation requiring the placing of sponges in the incision is not complete until the sponges are properly removed, and it is settled that the leaving of sponges or other foreign substances in the wound after the incision has been closed is at least prima facie negligence by the operating surgeon.8 To put it simply, such act is considered so inconsistent with due care as to raise an inference of negligence. There are even legions of authorities to the effect that such act is negligence per se.9 Of course, the Court is not blind to the reality that there are times when danger to a patient’s life precludes a surgeon from further searching missing sponges or foreign objects left in the body. But this does not leave him free from any obligation. Even if it has been shown that a surgeon was required by the urgent necessities of the case to leave a sponge in his patient’s abdomen, because of the dangers attendant upon delay, still, it is his legal duty to so inform his patient within a reasonable time thereafter by advising her of what he had been compelled to do. This is in order that she might seek relief from the effects of the foreign object left in her body as her condition might permit. The ruling in Smith v. Zeagler10 is explicit, thus: The removal of all sponges used is part of a surgical operation, and when a physician or surgeon fails to remove a sponge he has placed in his patient’s body that should be removed as part of the operation, he thereby leaves his operation uncompleted and creates a new condition which imposes upon him the legal duty of calling the new condition to his patient’s attention, and endeavoring with the means he has at hand to minimize and avoid untoward results likely to ensue therefrom. Here, Dr. Ampil did not inform Natividad about the missing two pieces of gauze. Worse, he even misled her that the pain she was experiencing was the ordinary consequence of her operation. Had he been more candid, Natividad could have taken the immediate and appropriate medical remedy to remove the gauzes from her body. To our mind, what was initially an act of negligence by Dr. Ampil has ripened into a deliberate wrongful act of deceiving his patient. This is a clear case of medical malpractice or more appropriately, medical negligence. To successfully pursue this kind of case, a patient must only prove that a health care provider either failed to do something which a reasonably prudent health care provider would have done, or that he did something that a reasonably prudent provider would not have done; and that failure or action caused injury to the patient.11 Simply put, the elements are duty, breach, injury and proximate causation. Dr, Ampil, as the lead surgeon, had the duty to remove all foreign objects, such as gauzes, from

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Natividad’s body before closure of the incision. When he failed to do so, it was his duty to inform Natividad about it. Dr. Ampil breached both duties. Such breach caused injury to Natividad, necessitating her further examination by American doctors and another surgery. That Dr. Ampil’s negligence is the proximate cause12 of Natividad’s injury could be traced from his act of closing the incision despite the information given by the attending nurses that two pieces of gauze were still missing. That they were later on extracted from Natividad’s vagina established the causal link between Dr. Ampil’s negligence and the injury. And what further aggravated such injury was his deliberate concealment of the missing gauzes from the knowledge of Natividad and her family. II - G.R. No. 126467 Whether the Court of Appeals Erred in Absolving Dr. Fuentes of any Liability The Aganas assailed the dismissal by the trial court of the case against Dr. Fuentes on the ground that it is contrary to the doctrine of res ipsa loquitur. According to them, the fact that the two pieces of gauze were left inside Natividad’s body is a prima facie evidence of Dr. Fuentes’ negligence. We are not convinced. Literally, res ipsa loquitur means "the thing speaks for itself." It is the rule that the fact of the occurrence of an injury, taken with the surrounding circumstances, may permit an inference or raise a presumption of negligence, or make out a plaintiff’s prima facie case, and present a question of fact for defendant to meet with an explanation.13 Stated differently, where the thing which caused the injury, without the fault of the injured, is under the exclusive control of the defendant and the injury is such that it should not have occurred if he, having such control used proper care, it affords reasonable evidence, in the absence of explanation that the injury arose from the defendant’s want of care, and the burden of proof is shifted to him to establish that he has observed due care and diligence.14 From the foregoing statements of the rule, the requisites for the applicability of the doctrine of res ipsa loquitur are: (1) the occurrence of an injury; (2) the thing which caused the injury was under the control and management of the defendant; (3) the occurrence was such that in the ordinary course of things, would not have happened if those who had control or management used proper care; and (4) the absence of explanation by the defendant. Of the foregoing requisites, the most instrumental is the "control and management of the thing which caused the injury."15 We find the element of "control and management of the thing which caused the injury" to be wanting. Hence, the doctrine of res ipsa loquitur will not lie. It was duly established that Dr. Ampil was the lead surgeon during the operation of Natividad. He requested the assistance of Dr. Fuentes only to perform hysterectomy when he (Dr. Ampil) found that the malignancy in her sigmoid area had spread to her left ovary. Dr. Fuentes performed the surgery and thereafter reported and showed his work to Dr. Ampil. The latter examined it and finding everything to be in order, allowed Dr. Fuentes to leave the operating room. Dr. Ampil then resumed operating on Natividad. He was about to finish the procedure when the attending nurses informed him that two pieces of gauze were missing. A "diligent search" was conducted, but the misplaced gauzes were not found. Dr. Ampil then directed that the incision be closed. During this entire period, Dr. Fuentes was no longer in the operating room and had, in fact, left the hospital. Under the "Captain of the Ship" rule, the operating surgeon is the person in complete charge of the surgery room and all personnel connected with the operation. Their duty is to obey his orders.16 As stated before, Dr. Ampil was the lead surgeon. In other words, he was the "Captain of the Ship." That he discharged such role is evident from his following conduct: (1) calling Dr. Fuentes to perform a hysterectomy; (2) examining the work of Dr. Fuentes and finding it in order; (3) granting Dr. Fuentes’ permission to leave; and (4) ordering the closure of the incision. To our mind, it was this act of ordering the closure of the incision notwithstanding that two pieces of gauze remained unaccounted for, that caused injury to Natividad’s body. Clearly, the control and management of the thing which caused the injury was in the hands of Dr. Ampil, not Dr. Fuentes.

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In this jurisdiction, res ipsa loquitur is not a rule of substantive law, hence, does not per se create or constitute an independent or separate ground of liability, being a mere evidentiary rule.17 In other words, mere invocation and application of the doctrine does not dispense with the requirement of proof of negligence. Here, the negligence was proven to have been committed by Dr. Ampil and not by Dr. Fuentes. III - G.R. No. 126297 Whether PSI Is Liable for the Negligence of Dr. Ampil The third issue necessitates a glimpse at the historical development of hospitals and the resulting theories concerning their liability for the negligence of physicians. Until the mid-nineteenth century, hospitals were generally charitable institutions, providing medical services to the lowest classes of society, without regard for a patient’s ability to pay.18 Those who could afford medical treatment were usually treated at home by their doctors.19 However, the days of house calls and philanthropic health care are over. The modern health care industry continues to distance itself from its charitable past and has experienced a significant conversion from a not-for-profit health care to for-profit hospital businesses. Consequently, significant changes in health law have accompanied the business-related changes in the hospital industry. One important legal change is an increase in hospital liability for medical malpractice. Many courts now allow claims for hospital vicarious liability under the theories of respondeat superior, apparent authority, ostensible authority, or agency by estoppel. 20 In this jurisdiction, the statute governing liability for negligent acts is Article 2176 of the Civil Code, which reads: Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. A derivative of this provision is Article 2180, the rule governing vicarious liability under the doctrine of respondeat superior, thus: ART. 2180. The obligation imposed by Article 2176 is demandable not only for one’s own acts or omissions, but also for those of persons for whom one is responsible. x x x x x x The owners and managers of an establishment or enterprise are likewise responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions. Employers shall be liable for the damages caused by their employees and household helpers acting within the scope of their assigned tasks even though the former are not engaged in any business or industry. x x x x x x The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the diligence of a good father of a family to prevent damage. A prominent civilist commented that professionals engaged by an employer, such as physicians, dentists, and pharmacists, are not "employees" under this article because the manner in which they perform their work is not within the control of the latter (employer). In other words, professionals are considered personally liable for the fault or negligence they commit in the discharge of their duties, and their employer cannot be held liable for such fault or negligence. In the context of the present case, "a hospital cannot be held liable for the fault or negligence of a physician or surgeon in the treatment or operation of patients."21 The foregoing view is grounded on the traditional notion that the professional status and the very nature of the physician’s calling preclude him from being classed as an agent or employee of a hospital, whenever he acts in a professional capacity.22 It has been said that medical practice strictly

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involves highly developed and specialized knowledge,23 such that physicians are generally free to exercise their own skill and judgment in rendering medical services sans interference.24 Hence, when a doctor practices medicine in a hospital setting, the hospital and its employees are deemed to subserve him in his ministrations to the patient and his actions are of his own responsibility.25 The case of Schloendorff v. Society of New York Hospital26 was then considered an authority for this view. The "Schloendorff doctrine" regards a physician, even if employed by a hospital, as an independent contractor because of the skill he exercises and the lack of control exerted over his work. Under this doctrine, hospitals are exempt from the application of the respondeat superior principle for fault or negligence committed by physicians in the discharge of their profession. However, the efficacy of the foregoing doctrine has weakened with the significant developments in medical care. Courts came to realize that modern hospitals are increasingly taking active role in supplying and regulating medical care to patients. No longer were a hospital’s functions limited to furnishing room, food, facilities for treatment and operation, and attendants for its patients. Thus, in Bing v. Thunig,27 the New York Court of Appeals deviated from the Schloendorff doctrine, noting that modern hospitals actually do far more than provide facilities for treatment. Rather, they regularly employ, on a salaried basis, a large staff of physicians, interns, nurses, administrative and manual workers. They charge patients for medical care and treatment, even collecting for such services through legal action, if necessary. The court then concluded that there is no reason to exempt hospitals from the universal rule of respondeat superior. In our shores, the nature of the relationship between the hospital and the physicians is rendered inconsequential in view of our categorical pronouncement in Ramos v. Court of Appeals28 that for purposes of apportioning responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians. This Court held: "We now discuss the responsibility of the hospital in this particular incident. The unique practice (among private hospitals) of filling up specialist staff with attending and visiting "consultants," who are allegedly not hospital employees, presents problems in apportioning responsibility for negligence in medical malpractice cases. However, the difficulty is more apparent than real. In the first place, hospitals exercise significant control in the hiring and firing of consultants and in the conduct of their work within the hospital premises. Doctors who apply for ‘consultant’ slots, visiting or attending, are required to submit proof of completion of residency, their educational qualifications, generally, evidence of accreditation by the appropriate board (diplomate), evidence of fellowship in most cases, and references. These requirements are carefully scrutinized by members of the hospital administration or by a review committee set up by the hospital who either accept or reject the application. x x x. After a physician is accepted, either as a visiting or attending consultant, he is normally required to attend clinico-pathological conferences, conduct bedside rounds for clerks, interns and residents, moderate grand rounds and patient audits and perform other tasks and responsibilities, for the privilege of being able to maintain a clinic in the hospital, and/or for the privilege of admitting patients into the hospital. In addition to these, the physician’s performance as a specialist is generally evaluated by a peer review committee on the basis of mortality and morbidity statistics, and feedback from patients, nurses, interns and residents. A consultant remiss in his duties, or a consultant who regularly falls short of the minimum standards acceptable to the hospital or its peer review committee, is normally politely terminated. In other words, private hospitals, hire, fire and exercise real control over their attending and visiting ‘consultant’ staff. While ‘consultants’ are not, technically employees, x x x, the control exercised, the hiring, and the right to terminate consultants all fulfill the important hallmarks of an employer-employee relationship, with the exception of the payment of wages. In assessing whether such a relationship in fact exists, the control test is determining. Accordingly, on the basis of the foregoing, we rule that for the purpose of allocating responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians. "

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But the Ramos pronouncement is not our only basis in sustaining PSI’s liability. Its liability is also anchored upon the agency principle of apparent authority or agency by estoppel and the doctrine of corporate negligence which have gained acceptance in the determination of a hospital’s liability for negligent acts of health professionals. The present case serves as a perfect platform to test the applicability of these doctrines, thus, enriching our jurisprudence. Apparent authority, or what is sometimes referred to as the "holding out" theory, or doctrine of ostensible agency or agency by estoppel,29 has its origin from the law of agency. It imposes liability, not as the result of the reality of a contractual relationship, but rather because of the actions of a principal or an employer in somehow misleading the public into believing that the relationship or the authority exists.30 The concept is essentially one of estoppel and has been explained in this manner: "The principal is bound by the acts of his agent with the apparent authority which he knowingly permits the agent to assume, or which he holds the agent out to the public as possessing. The question in every case is whether the principal has by his voluntary act placed the agent in such a situation that a person of ordinary prudence, conversant with business usages and the nature of the particular business, is justified in presuming that such agent has authority to perform the particular act in question.31 The applicability of apparent authority in the field of hospital liability was upheld long time ago in Irving v. Doctor Hospital of Lake Worth, Inc.32 There, it was explicitly stated that "there does not appear to be any rational basis for excluding the concept of apparent authority from the field of hospital liability." Thus, in cases where it can be shown that a hospital, by its actions, has held out a particular physician as its agent and/or employee and that a patient has accepted treatment from that physician in the reasonable belief that it is being rendered in behalf of the hospital, then the hospital will be liable for the physician’s negligence. Our jurisdiction recognizes the concept of an agency by implication or estoppel. Article 1869 of the Civil Code reads: ART. 1869. Agency may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority. In this case, PSI publicly displays in the lobby of the Medical City Hospital the names and specializations of the physicians associated or accredited by it, including those of Dr. Ampil and Dr. Fuentes. We concur with the Court of Appeals’ conclusion that it "is now estopped from passing all the blame to the physicians whose names it proudly paraded in the public directory leading the public to believe that it vouched for their skill and competence." Indeed, PSI’s act is tantamount to holding out to the public that Medical City Hospital, through its accredited physicians, offers quality health care services. By accrediting Dr. Ampil and Dr. Fuentes and publicly advertising their qualifications, the hospital created the impression that they were its agents, authorized to perform medical or surgical services for its patients. As expected, these patients, Natividad being one of them, accepted the services on the reasonable belief that such were being rendered by the hospital or its employees, agents, or servants. The trial court correctly pointed out: x x x regardless of the education and status in life of the patient, he ought not be burdened with the defense of absence of employer-employee relationship between the hospital and the independent physician whose name and competence are certainly certified to the general public by the hospital’s act of listing him and his specialty in its lobby directory, as in the case herein. The high costs of today’s medical and health care should at least exact on the hospital greater, if not broader, legal responsibility for the conduct of treatment and surgery within its facility by its accredited physician or surgeon, regardless of whether he is independent or employed."33 The wisdom of the foregoing ratiocination is easy to discern. Corporate entities, like PSI, are capable of acting only through other individuals, such as physicians. If these accredited physicians do their job well, the hospital succeeds in its mission of offering quality medical services and thus profits financially. Logically, where negligence mars the quality of its services, the hospital should not be allowed to escape liability for the acts of its ostensible agents.

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We now proceed to the doctrine of corporate negligence or corporate responsibility. One allegation in the complaint in Civil Case No. Q-43332 for negligence and malpractice is that PSI as owner, operator and manager of Medical City Hospital, "did not perform the necessary supervision nor exercise diligent efforts in the supervision of Drs. Ampil and Fuentes and its nursing staff, resident doctors, and medical interns who assisted Drs. Ampil and Fuentes in the performance of their duties as surgeons."34 Premised on the doctrine of corporate negligence, the trial court held that PSI is directly liable for such breach of duty. We agree with the trial court. Recent years have seen the doctrine of corporate negligence as the judicial answer to the problem of allocating hospital’s liability for the negligent acts of health practitioners, absent facts to support the application of respondeat superior or apparent authority. Its formulation proceeds from the judiciary’s acknowledgment that in these modern times, the duty of providing quality medical service is no longer the sole prerogative and responsibility of the physician. The modern hospitals have changed structure. Hospitals now tend to organize a highly professional medical staff whose competence and performance need to be monitored by the hospitals commensurate with their inherent responsibility to provide quality medical care.35 The doctrine has its genesis in Darling v. Charleston Community Hospital.36 There, the Supreme Court of Illinois held that "the jury could have found a hospital negligent, inter alia, in failing to have a sufficient number of trained nurses attending the patient; failing to require a consultation with or examination by members of the hospital staff; and failing to review the treatment rendered to the patient." On the basis of Darling, other jurisdictions held that a hospital’s corporate negligence extends to permitting a physician known to be incompetent to practice at the hospital.37 With the passage of time, more duties were expected from hospitals, among them: (1) the use of reasonable care in the maintenance of safe and adequate facilities and equipment; (2) the selection and retention of competent physicians; (3) the overseeing or supervision of all persons who practice medicine within its walls; and (4) the formulation, adoption and enforcement of adequate rules and policies that ensure quality care for its patients.38 Thus, in Tucson Medical Center, Inc. v. Misevich,39 it was held that a hospital, following the doctrine of corporate responsibility, has the duty to see that it meets the standards of responsibilities for the care of patients. Such duty includes the proper supervision of the members of its medical staff. And in Bost v. Riley,40 the court concluded that a patient who enters a hospital does so with the reasonable expectation that it will attempt to cure him. The hospital accordingly has the duty to make a reasonable effort to monitor and oversee the treatment prescribed and administered by the physicians practicing in its premises. In the present case, it was duly established that PSI operates the Medical City Hospital for the purpose and under the concept of providing comprehensive medical services to the public. Accordingly, it has the duty to exercise reasonable care to protect from harm all patients admitted into its facility for medical treatment. Unfortunately, PSI failed to perform such duty. The findings of the trial court are convincing, thus: x x x PSI’s liability is traceable to its failure to conduct an investigation of the matter reported in the nota bene of the count nurse. Such failure established PSI’s part in the dark conspiracy of silence and concealment about the gauzes. Ethical considerations, if not also legal, dictated the holding of an immediate inquiry into the events, if not for the benefit of the patient to whom the duty is primarily owed, then in the interest of arriving at the truth. The Court cannot accept that the medical and the healing professions, through their members like defendant surgeons, and their institutions like PSI’s hospital facility, can callously turn their backs on and disregard even a mere probability of mistake or negligence by refusing or failing to investigate a report of such seriousness as the one in Natividad’s case. It is worthy to note that Dr. Ampil and Dr. Fuentes operated on Natividad with the assistance of the Medical City Hospital’s staff, composed of resident doctors, nurses, and interns. As such, it is reasonable to conclude that PSI, as the operator of the hospital, has actual or constructive knowledge of the procedures carried out, particularly the report of the attending nurses that the two pieces of gauze were missing. In Fridena v. Evans,41 it was held that a corporation is bound by the knowledge acquired by or notice given to its agents or officers within the scope of their authority and in reference

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to a matter to which their authority extends. This means that the knowledge of any of the staff of Medical City Hospital constitutes knowledge of PSI. Now, the failure of PSI, despite the attending nurses’ report, to investigate and inform Natividad regarding the missing gauzes amounts to callous negligence. Not only did PSI breach its duties to oversee or supervise all persons who practice medicine within its walls, it also failed to take an active step in fixing the negligence committed. This renders PSI, not only vicariously liable for the negligence of Dr. Ampil under Article 2180 of the Civil Code, but also directly liable for its own negligence under Article 2176. In Fridena, the Supreme Court of Arizona held: x x x In recent years, however, the duty of care owed to the patient by the hospital has expanded. The emerging trend is to hold the hospital responsible where the hospital has failed to monitor and review medical services being provided within its walls. See Kahn Hospital Malpractice Prevention, 27 De Paul . Rev. 23 (1977). Among the cases indicative of the ‘emerging trend’ is Purcell v. Zimbelman, 18 Ariz. App. 75,500 P. 2d 335 (1972). In Purcell, the hospital argued that it could not be held liable for the malpractice of a medical practitioner because he was an independent contractor within the hospital. The Court of Appeals pointed out that the hospital had created a professional staff whose competence and performance was to be monitored and reviewed by the governing body of the hospital, and the court held that a hospital would be negligent where it had knowledge or reason to believe that a doctor using the facilities was employing a method of treatment or care which fell below the recognized standard of care. Subsequent to the Purcell decision, the Arizona Court of Appeals held that a hospital has certain inherent responsibilities regarding the quality of medical care furnished to patients within its walls and it must meet the standards of responsibility commensurate with this undertaking. Beeck v. Tucson General Hospital, 18 Ariz. App. 165, 500 P. 2d 1153 (1972). This court has confirmed the rulings of the Court of Appeals that a hospital has the duty of supervising the competence of the doctors on its staff. x x x. x x x x x x In the amended complaint, the plaintiffs did plead that the operation was performed at the hospital with its knowledge, aid, and assistance, and that the negligence of the defendants was the proximate cause of the patient’s injuries. We find that such general allegations of negligence, along with the evidence produced at the trial of this case, are sufficient to support the hospital’s liability based on the theory of negligent supervision." Anent the corollary issue of whether PSI is solidarily liable with Dr. Ampil for damages, let it be emphasized that PSI, apart from a general denial of its responsibility, failed to adduce evidence showing that it exercised the diligence of a good father of a family in the accreditation and supervision of the latter. In neglecting to offer such proof, PSI failed to discharge its burden under the last paragraph of Article 2180 cited earlier, and, therefore, must be adjudged solidarily liable with Dr. Ampil. Moreover, as we have discussed, PSI is also directly liable to the Aganas. One final word. Once a physician undertakes the treatment and care of a patient, the law imposes on him certain obligations. In order to escape liability, he must possess that reasonable degree of learning, skill and experience required by his profession. At the same time, he must apply reasonable care and diligence in the exercise of his skill and the application of his knowledge, and exert his best judgment. WHEREFORE, we DENY all the petitions and AFFIRM the challenged Decision of the Court of Appeals in CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198. Costs against petitioners PSI and Dr. Miguel Ampil. SO ORDERED.

LIABILITY OF SCHOOLS, TEACHERS AND ADMINISTRATORS

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ST. FRANCIS HIGH SCHOOL VS CA SECOND DIVISION G.R. No. 82465 February 25, 1991 ST. FRANCIS HIGH SCHOOL, as represented by SPS. FERNANDO NANTES AND ROSARIO LACANDULA, BENJAMIN ILUMIN, TIRSO DE CHAVEZ, LUISITO VINAS, CONNIE ARQUIO AND PATRIA CADIZ, petitioners, vs. THE HONORABLE COURT OF APPEALS, ELEVENTH DIVISION and DR. ROMULO CASTILLO and LILIA CADIZ, respondents. PARAS, J.:p This is a petition for review of the decision * of the Court of Appeals, the dispositive portion of which reads: WHEREFORE, the decision under appeal is hereby affirmed, with the following modifications: (1) Exemplary damages in the amount of P20,000.00 are hereby awarded to plaintiffs, in addition to the actual damages of P30,000.00, moral damages of P20,000.00 and attorney's fees in the amount of P15,000.00 awarded to plaintiffs in the decision under appeal; (2) St. Francis High School, represented by the Spouses Fernando Nantes and Rosario Lacandula, and Benjamin Illumin, are hereby held jointly and severally liable with defendants Connie Arquio, Tirso de Chaves, Luisito Vinas and Patria Cadis for the payment to plaintiffs of the abovementioned actual damages, moral damages, exemplary damages and attorney's fees, and for costs; and (3) Defendants Yoly Jaro and Nida Aragones are hereby absolved from liability, and the case against them, together with their respective counterclaims, is hereby ordered dismissed. SO ORDERED. (p. 60, Rollo) The complaint alleged that Ferdinand Castillo, then a freshman student of Section 1-C at the St. Francis High School, wanted to join a school picnic undertaken by Class I-B and Class I-C at Talaan Beach, Sariaya, Quezon. Ferdinand's parents, respondents spouses Dr. Romulo Castillo and Lilia Cadiz Castillo, because of short notice, did not allow their son to join but merely allowed him to bring food to the teachers for the picnic, with the directive that he should go back home after doing so. However, because of persuasion of the teachers, Ferdinand went on with them to the beach. During the picnic and while the students, including Ferdinand, were in the water, one of the female teachers was apparently drowning. Some of the students, including Ferdinand, came to her rescue, but in the process, it was Ferdinand himself who drowned. His body was recovered but efforts to resuscitate him ashore failed. He was brought to a certain Dr. Luna in Sariaya, Quezon and later to the Mt. Cannel General Hospital where he was pronounced dead on arrival. Thereupon, respondent spouses filed a complaint docketed as Civil Case No. 8834, in the Regional Trial Court, Branch LVIII of Lucena City, against the St. Francis High School, represented by the spouses Fernando Nantes and Rosario Lacandula, Benjamin Illumin (its principal), and the teachers: Tirso de Chaves, Luisito Vinas, Connie Arquio, Nida Aragones, Yoly Jaro, and Patria Cadiz, for Damages which respondents allegedly incurred from the death of their 13-year old son, Ferdinand Castillo. Contending that the death of their son was due to the failure of the petitioners to exercise the proper diligence of a good father of the family in preventing their son's drowning, respondents prayed of actual, moral and exemplary damages, attorney's fees and expenses for litigation. The trial court found in favor of the respondents and against petitioners-teachers Arquio, de Chaves, Vinas, Aragones, Jaro and Cadiz, ordering all of them jointly and severally to pay respondents the sum of P30,000.00 as actual damages, P20,000.00 as moral damages, P15,000.00 as attorney's fees, and to pay the costs. The court a quo reasoned: Taking into consideration the evidence presented, this Court believes that the defendant teachers namely: Connie Arquio, Luisito Vinas, Tirso de Chaves, Yoly Jaro, Nida Aragones and Patria Cadiz had

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failed to exercise the diligence required of them by law under the circumstances to guard against the harm they had foreseen. (pp. 2930, Rollo) xxx xxx xxx While it is alleged that when defendants Yoly Jaro and Nida Aragones arrived at the picnic site, the drowning incident had already occurred, such fact does not and cannot excuse them from their liability. In fact, it could be said that by coming late, they were remiss in their duty to safeguard the students. (p. 30, Rollo) The students, young as they were then (12 to 13 years old), were easily attracted to the sea without aforethought of the dangers it offers. Yet, the precautions and reminders allegedly performed by the defendants-teachers definitely fell short of the standard required by law under the circumstances. While the defendants-teachers admitted that some parts of the sea where the picnic was held are deep, the supposed lifeguards of the children did not even actually go to the water to test the depth of the particular area where the children would swim. And indeed the fears of the plaintiffs that the picnic area was dangerous was confirmed by the fact that three persons during the picnic got drowned at the same time. Had the defendant teachers made an actual and physical observation of the water before they allowed the students to swim, they could have found out that the area where the children were swimming was indeed dangerous. And not only that, the male teachers who according to the female teachers were there to supervise the children to ensure their safety were not even at the area where the children were swimming. They were somewhere and as testified to by plaintiffs' witness they were having a drinking spree. (pp. 55-56, Rollo) On the other hand, the trial court dismissed the case against the St. Francis High School, Benjamin Illumin and Aurora Cadorna. Said the court a quo: As shown and adverted to above, this Court cannot find sufficient evidence showing that the picnic was a school sanctioned one. Similarly no evidence has been shown to hold defendants Benjamin Illumin and Aurora Cadorna responsible for the death of Ferdinand Castillo together with the other defendant teachers. It has been sufficiently shown that Benjamin Illumin had himself not consented to the picnic and in fact he did not join it. On the other hand, defendant Aurora Cadorna had then her own class to supervise and in fact she was not amongst those allegedly invited by defendant Connie Arquio to supervise class I-C to which Ferdinand Castillo belongs. (p. 30, Rollo) Both petitioners and respondents appealed to the Court of Appeals. Respondents-spouses assigned the following errors committed by the trial court: 1. The lower court erred in not declaring the defendant St. Francis High School and its administrator/principal Benjamin Illumin as equally liable not only for its approved co-curricular activities but also for those which they unreasonably failed to exercise control and supervision like the holding of picnic in the dangerous water of Talaan Beach, Sariaya, Quezon. 2. The lower court erred in not declaring the St. Francis High School and principal Benjamin Illumin as jointly and solidarily liable with their co-defendants-teachers Rosario Lacandula, et als., for the tragic death of Ferdinand Castillo in a picnic at Talaan Beach, Sariaya, Quezon, last March 20, 1982. 3. The lower court erred in not declaring higher amount for actual and moral damages for the untimely and tragic death of Ferdinand Castillo in favor of plaintiffs-appellants against all the defendants. (pp. 56-57, Rollo) The Court of Appeals ruled: We find plaintiffs-appellants' submission well-taken. Even were We to find that the picnic in question was not a school-sponsored activity, nonetheless it cannot be gainsaid that the same was held under the supervision of the teachers employed by the said school, particularly the teacher in charge of Class I-C to whom the victim belonged, and those whom she invited to help her in supervising the class during the picnic. Considering that the court a quo found negligence on the part of the six defendants-teachers who, as such, were charged with the

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supervision of the children during the picnic, the St. Francis High School and the school principal, Benjamin Illumin, are liable under Article 2176 taken together with the 1st, 4th and 5th paragraphs of Article 2180 of the Civil Code. They cannot escape liability on the mere excuse that the picnic was not an "extra-curricular activity of the St. Francis High School." We find from the evidence that, as claimed by plaintiffs-appellants, the school principal had knowledge of the picnic even from its planning stage and had even been invited to attend the affair; and yet he did not express any prohibition against undertaking the picnic, nor did he prescribe any precautionary measures to be adopted during the picnic. At the least, We must find that the school and the responsible school officials, particularly the principal, Benjamin Illumin, had acquiesced to the holding of the picnic. Under Article 2180, supra, the defendant school and defendant school principal must be found jointly and severally liable with the defendants-teachers for the damages incurred by the plaintiffs as a result of the death of their son. It is the rule that in cases where the above-cited provisions find application, the negligence of the employees in causing the injury or damage gives rise to a presumption of negligence on the part of the owner and/or manager of the establishment (in the present case, St. Francis High School and its principal); and while this presumption is not conclusive, it may be overthrown only by clear and convincing proof that the owner and/or manager exercised the care and diligence of a good father of a family in the selection and/or supervision of the employee or employees causing the injury or damage (in this case, the defendants-teachers). The record does not disclose such evidence as would serve to overcome the aforesaid presumption and absolve the St. Francis High School and its principal from liability under the above-cited provisions. As to the third assigned error interposed by plaintiffs-appellants, while We cannot but commiserate with the plaintiffs for the tragedy that befell them in the untimely death of their son Ferdinand Castillo and understand their suffering as parents, especially the victim's mother who, according to appellants, suffered a nervous breakdown as a result of the tragedy, We find that the amounts fixed by the court a quo as actual damages and moral damages (P30,000.00 and P20,000.00, respectively) are reasonable and are those which are sustained by the evidence and the law. However, We believe that exemplary or corrective damages in the amount of P20,000.00 may and should be, as it is hereby, imposed in the present case by way of example of correction for the public good, pursuant to Article 2229 of the Civil Code. (pp. 57-59, Rollo) On the other hand, petitioners-teachers assigned the following errors committed by the trial court: 1. ". . . in finding the defendants Connie Arquio, Tirso de Chavez, Luisito Vinas, Nida Aragones, Yoly Jaro and Patria Cadiz guilty of negligence and jointly and severally liable for damages such finding not being supported by facts and evidence. 2. ". . . in dismissing the counterclaim interposed by the defendants. (p. 59, Rollo) On this score, respondent Court ruled: The main thrust of defendants-appellants appeal is that plaintiffs, the parents of the victim Ferdinand Castillo, were not able to prove by their evidence that they did not give their son consent to join the picnic in question. However, We agree with the trial court in its finding that whether or not the victim's parents had given such permission to their son was immaterial to the determination of the existence of liability on the part of the defendants for the damage incurred by the plaintiffs-appellants as a result of the death of their son. What is material to such a determination is whether or not there was negligence on the part of defendants vis-a-vis the supervision of the victim's group during the picnic; and, as correctly found by the trial court, an affirmative reply to this question has been satisfactorily established by the evidence, as already pointed out. However, We sustain defendants-appellants insofar as two of the defendants-teachers, Yoly Jaro and Nida Aragones, are concerned. As to them, the trial court found: While it is alleged that when defendants Yoly Jaro and Nida Aragones arrived at the picnic site, the drowning incident had already occurred, such fact does not and cannot excuse them from their liability. In fact, it could be said that by coming late, they were remiss in their duty to safeguard the students.

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The evidence shows that these two defendants had satisfactorily explained why they were late in going to the picnic site, namely, that they had to attend to the entrance examination being conducted by the school which is part of their duty as teachers thereof. Since they were not at the picnic site during the occurrence in question, it cannot be said that they had any participation in the negligence attributable to the other defendants-teachers who failed to exercise diligence in the supervision of the children during the picnic and which failure resulted in the drowning of plaintiffs' son. Thus, We may not attribute any act or omission to the two teachers, Yoly Jaro and Nida Aragones, as to make them liable for the injury caused to the plaintiffs because of the death of their son resulting from his drowning at the picnic. Accordingly, they must be absolved from any liability. As to the second assigned error raised by defendants-appellants, We agree with the court a quo that the counterclaim must be dismissed for lack of merit. (pp. 59-60, Rollo) Hence, this petition. The issues presented by petitioners are: A) Whether or not there was negligence attributable to the defendants which will warrant the award of damages to the plaintiffs; B) Whether or not Art. 2180, in relation to Art. 2176 of the New Civil Code is applicable to the case at bar; C) Whether or not the award of exemplary and moral damages is proper under the circumstances surrounding the case at bar. (pp. 81-82, Rollo) In the resolution of January 16, 1989, We gave due course to the petition and required the parties to submit their respective memoranda. The petition is impressed with merit. If at all petitioners are liable for negligence, this is because of their own negligence or the negligence of people under them. In the instant case however, as will be shown hereunder, petitioners are neither guilty of their own negligence or guilty of the negligence of those under them. Hence, it cannot be said that they are guilty at all of any negligence. Consequently they cannot be held liable for damages of any kind. At the outset, it should be noted that respondent spouses, parents of the victim Ferdinand, allowed their son to join the excursion. Testimony of Dr. Castillo on cross exam. by Atty. Flores Q Now, when your son asked you for money to buy food, did you not ask him where he will bring this? A I asked him where he was going, he answered, I am going to the picnic, and when I asked him where, he did not answer, sir. Q And after giving the money, you did not tell him anything more? A No more, sir. Q And after that you just learned that your son join the picnic? A Yes, sir. Q And you came to know of it after the news that your son was drowned in the picnic came to you, is that correct? A Yes, sir.

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Q From 8:00 o'clock in the morning up to 12:00 o'clock noon of March 20, 1982, you did not know that your son join the picnic? A No, sir, I did not know. Q Did you not look for your son during that time? A I am too busy with my profession, that is why I was not able, sir. Q You did not ask your wife? A I did not, sir. Q And neither did your wife tell you that your son join the picnic? A Later on after 12:00, sir. Q And during that time you were too busy that you did not inquire whether your son have joined that picnic? A Yes, sir. (TSN, pp. 16-17, hearing of April 2, 1984 witness Romulo Castillo) The fact that he gave money to his son to buy food for the picnic even without knowing where it will be held, is a sign of consent for his son to join the same. Furthermore. Testimony of Dr. Lazaro on cross examination: Q How did you conduct this mental and physical examination? A I have interviewed several persons and the patient herself She even felt guilty about the death of her son because she cooked adobo for him so he could join the excursion where her son died of drowning. Q Why were you able to say she was feeling guilty because she was the one who personally cooked the adobo for her son? A It was during the interview that I had gathered it from the patient herself. She was very sorry had she not allowed her son to join the excursion her son would have not drowned. I don't know if she actually permitted her son although she said she cooked adobo so he could join. (Emphasis Supplied) (TSN, p. 19, hearing of April 30, 1984, Dr. Lazaro — witness). Respondent Court of Appeals committed an error in applying Article 2180 of the Civil Code in rendering petitioner school liable for the death of respondent's son. Article 2180, par. 4 states that: 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 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. Under this paragraph, it is clear that before an employer may be held liable for the negligence of his employee, the act or omission which caused damage or prejudice must have occurred while an employee was in the performance of his assigned tasks.

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In the case at bar, the teachers/petitioners were not in the actual performance of their assigned tasks. The incident happened not within the school premises, not on a school day and most importantly while the teachers and students were holding a purely private affair, a picnic. It is clear from the beginning that the incident happened while some members of the I-C class of St. Francis High School were having a picnic at Talaan Beach. This picnic had no permit from the school head or its principal, Benjamin Illumin because this picnic is not a school sanctioned activity neither is it considered as an extra-curricular activity. As earlier pointed out by the trial court, mere knowledge by petitioner/principal Illumin of the planning of the picnic by the students and their teachers does not in any way or in any manner show acquiescence or consent to the holding of the same. The application therefore of Article 2180 has no basis in law and neither is it supported by any jurisprudence. If we were to affirm the findings of respondent Court on this score, employers wig forever be exposed to the risk and danger of being hailed to Court to answer for the misdeeds or omissions of the employees even if such act or omission he committed while they are not in the performance of their duties. Finally, no negligence could be attributable to the petitioners-teachers to warrant the award of damages to the respondents-spouses. Petitioners Connie Arquio the class adviser of I-C, the section where Ferdinand belonged, did her best and exercised diligence of a good father of a family to prevent any untoward incident or damages to all the students who joined the picnic. In fact, Connie invited co-petitioners Tirso de Chavez and Luisito Vinas who are both P.E. instructors and scout masters who have knowledge in First Aid application and swimming. Moreover, even respondents' witness, Segundo Vinas, testified that "the defendants (petitioners herein) had life savers especially brought by the defendants in case of emergency." (p. 85, Rollo) The records also show that both petitioners Chavez and Vinas did all what is humanly possible to save the child. Testimony of Luisito Vinas on cross examination, Q And when you saw the boy, Ferdinand Castillo, you approached the boy and claim also having applied first aid on him? A Yes, sir. Q And while you were applying the so called first aid, the children were covering you up or were surrounding you? A Yes, sir. Q You were rattled at that time, is it not? A No, sir. Q You mean you were in calm and peaceful condition? A Yes, sir. Q Despite the fact that the boy was no longer responding to your application of first aid? A Yes, sir. Q You have never been disturbed, "nababahala" in the process of your application of the first aid on the body of Ferdinand Castillo? A No, sir, because we were attending to the application of first aid that we were doing, sir. Q After you have applied back to back pressure and which you claimed the boy did not respond, were you not disturb anyway?

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A I was disturbed during that time, sir. Q For how many minutes have you applied the back to back pressure? A From 9 to 11 times, sir. Q You mean 9 to 11 times of having applied the pressure of your body on the body of Ferdinand Castillo? A Yes, sir. Q Will you please describe how you applied a single act of back to back pressure? A This has been done by placing the boy lay first downwards, then the face was a little bit facing right and doing it by massaging the back of the child, sir." (TSN, pp. 32-35, hearing of July 30, 1984) Testimony of Tirso de Chavez on direct examination ATTY. FLORES: Q Who actually applied the first aid or artificial respiration to the child? A Myself, sir. Q How did you apply the first aid to the guy? A The first step that I took, with the help of Mr. Luisito Vinas, was I applied back to back pressure and took notice of the condition of the child. We placed the feet in a higher position, that of the head of the child, sir. Q After you have placed the boy in that particular position, where the feet were on a higher level than that of the head, what did you do next? A The first thing that we did, particularly myself, was that after putting the child in that position, I applied the back to back pressure and started to massage from the waistline up, but I noticed that the boy was not responding, sir. Q For how long did you apply this back to back pressure on the boy? A About 10 seconds, sir. Q What about Mr. Vinas? A Almost the same a little longer, for 15 seconds, sir. Q After you noticed that the boy was not responding, what did you do? A When we noticed that the boy was not responding, we changed the position of the boy by placing the child facing upwards laying on the sand then we applied the mouth to mouth resuscitation, sir. (pp. 92-93, Rollo) With these facts in mind, no moral nor exemplary damages may be awarded in favor of respondents-spouses. The case at bar does not fall under any of the grounds to grant moral damages. Art. 2217. Moral Damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant's wrongful act or omission.

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Moreover, as already pointed out hereinabove, petitioners are not guilty of any fault or negligence, hence, no moral damages can be assessed against them. While it is true that respondents-spouses did give their consent to their son to join the picnic, this does not mean that the petitioners were already relieved of their duty to observe the required diligence of a good father of a family in ensuring the safety of the children. But in the case at bar, petitioners were able to prove that they had exercised the required diligence. Hence, the claim for moral or exemplary damages becomes baseless. PREMISES CONSIDERED, the questioned decision dated November 19, 1987, finding petitioners herein guilty of negligence and liable for the death of Ferdinand Castillo and awarding the respondents damages, is hereby SET ASIDE insofar as the petitioners herein are concerned, but the portion of the said decision dismissing their counterclaim, there being no merit, is hereby AFFIRMED. SO ORDERED. Sarmiento and Regalado, JJ., concur. Separate Opinions PADILLA, J., dissenting: I regret that I can not concur with the majority. I believe that the reversal of respondent appellate court's decision gives rise to a situation which was neither contemplated nor intended by the applicable laws. I refer more particularly to the fact that the ponencia has left private respondents-spouses with no one to hold liable for the untimely demise of their son. On the other hand, they have, to my mind, been wronged. and they should at least be recompensed for their sufferings. For this and other reasons stated hereunder. I dissent. The issues, as adopted by the ponencia from the record, are as follows: A) Whether or not there was negligence attributable to the defendants which will warrant the award of damages to the plaintiffs; B) Whether or not Art. 2180, in relation to Art. 2176 of the New Civil Code is applicable to the case at bar; C) Whether or not the award of exemplary and moral damages is proper under the circumstances surrounding the case at bar. 1 In my opinion, the record clearly shows negligence on the part of the petitioners-teachers, with the exception of Aragones and Jaro. As to these two, respondent court absolved them from liability for their having satisfactorily demonstrated lack of participation in the negligence of their colleagues. I am in agreement with said conclusion. But I also agree with the respondent court in its finding that Tirso de Chavez, Luisito Viñas, Connie Arguio and Patria Cadiz failed to exercise DILIGENT SUPERVISION over the children during the ill-fated excursion. I may concede, albeit with reservation, that the afore-mentioned petitioners may not have been negligent in finding ways and means to revive the young Castillo AFTER the drowning incident. Their application of first-aid measures may have failed to revive him but the petitioners had fully exhausted their efforts to save the deceased. This concession, however, is given with hesitation, for there is indication in the record that petitioner petitioners may have tarried too long in securing immediate medical attention for the deceased. I refer to the trial court's finding that "it still took the jeep which

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brought Ferdinand Castillo to the poblacion six (6) minutes before it finally moved to await the other teachers." 2 All this aside, I am really disturbed about, and would like to emphasize the demonstrated lack of diligence on the part of the petitioners-teachers BEFORE the unfortunate incident took place. Despite awareness that the waters in the area were deep, petitioners- teachers did not take concrete steps to make sure their wards did not stray too far and too deeply. Even if they were not actually informed of the possible dangers which the area posed, petitioners-teachers should have first "tested the waters", so to speak, to ensure which parts thereof were safe for swimming purposes. However, this was not the case for as testified to by petitioner de Chavez, "they admitted that they did not even go to the water to check its depth although they were aware that some parts of it were deep." 3 At best, it appears that only oral safety instructions were imparted to the young excursionists. But, what I find most disturbing is the fact that at the time the trouble arose, Viñas and de Chavez, the male teachers who were supposed to ensure the children's safety, being physical education instructors, were nowhere within the immediate vicinity but were, in fact, as admitted by the latter, "at his house getting some foods (sic) and thinks." The Court a quo even went as far as to say that "they were somewhere and as testified to by plaintiffs' witness they were having a drinking spree!" 4 It thus appears that the petitioners-teachers failed to exercise the proper diligence or what I may refer to as DILIGENCE BEFORE THE FACT. As earlier mentioned, the steps taken to revive the deceased may be considered adequate, despite my reservations, but the over-all lack of diligence on the part of petitioners-teachers suffices to put them within the standards set by this Court in determining the existence of negligence. As held in Hedy Gan y Yu vs. Court of Appeals, et al., the test in 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 on the doer TO TAKE PRECAUTION against its mischievous results and the failure to do so constitutes negligence. 5 The next issue to be addressed pertains to the liability of the petitioner St. Francis High School as represented by petitioners-spouses Fernando Nantes and Rosario Lacandula. The majority would like to emphasize the fact that the unfortunate incident having occurred during a purely private affair, the teachers involved therein were not in the actual performance of their assigned tasks. Consequently, any act or omission caused by them cannot bind their employer, petitioner St. Francis High School. I take exception to this proposition. Although the excursion may not have been attended by the appropriate school authorities, the presence or stamp of authority of the school nevertheless pervaded by reason of the participation not of one but of several teachers, the petitioners. As found by the court a quo, the excursion was an activity "organized by the teachers themselves, for the students and to which the student, NATURALLY, acceded." 6 Moreover, the record indicates that petitioner Benjamin Illumin, school principal, knew of the excursion and had, in fact, been invited to attend. As the majority see it, such knowledge does not in any manner show acquiescence or consent to the holding of the excursion, a view which I do not accept. It seems to me that having known of the forthcoming activity, petitioner Illumin, as school principal, should have taken appropriate measures to ensure the safety of his students. Having preferred to remain silent, and even indifferent, he now seeks excuse from such omission by invoking his alleged lack of consent to the excursion. But it is precisely his silence and negligence in performing his role as principal head of the school that must be construed as an implied consent to such activity. As administrative head (principal) of St. Francis High School, petitioner Illumin acted as the agent of his principal (the school) or its representatives, the petitioners-spouses Nantes and Lacandula. Consequently, and as found by the respondent court. Article 2176 in conjunction with Article 2180, paragraphs (1) and (5) are applicable to the situation. In the application of these provisions, the negligence of the employee in causing injury or damage gives rise to a presumption of negligence on the part of the owner and/or manager of the establishment. While this presumption is not conclusive, it may be overcome only by clear and convincing evidence that the owner and/or manager exercised the care and diligence of a good father of a family in the selection and/or supervision of the employees

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causing the injury or damage. I agree with the respondent court that no proof was presented to absolve the owner and/or manager, herein petitioners-spouses Nantes and Lacandula, and Illumin. Thus, as correctly held by the respondent court, they too must be accountable for the death of Ferdinand Castillo. The majority view appears to be apprehensive that employers will be continuously held accountable for misdeeds of their employees committed even when the same are done not in the actual exercise of their duties. I fail to appreciate such apprehensions, which need not arise on the part of employers, so long as the latter have no knowledge of, or give consent to, such act or omission on the part of their employee. Educational institutions have responsibilities which cannot be equated with those of the ordinary employer or business establishment. Such institutions, particularly the primary and secondary schools, hold the tremendous responsibility of exercising supervision over young children. Too often, such schools avoid liabilities, as in the instant cage, by invoking the absence of approval on their part for activities that may be held outside school premises or held on a day not a school day. It is about time that such schools realize that theirs is not a mere moneymaking entity or one impersonally established for the sole task of teaching the rudimentary skills of "reading, writing and 'rithmetic." They must consider that their students are children of tender years who are in need of adequate care, continuing attention and guidance. Anent the issue of damages, from the foregoing discussion the award thereof is clearly proper. I only wish to point out the basis for moral damages which is found in Article 2219 of the Civil Code, to wit: Moral damages may be recovered in the following and analogous cases: 1. . . . . 2. Quasi-delicts causing physical injuries; xxx xxx xxx It should be noted that the term "physical injuries" must not be construed in its penal sense alone but rather in its generic sense, in the spirit of this Court's rulings in Carandang vs. Santiago (51 O.G. 2878) and Madeja vs. Caro, et al., (G.R. No. 51183, 21 December 1983, 126 SCRA 293). Thus, the death of private respondents' son as a result of petitioners' negligence gives rise to an action for quasi-delict which, as provided, entitles the claimant to an award of moral damages. In the light of the foregoing, I vote to AFFIRM the decision of the respondent court and thus hold the petitioners jointly and severally liable for the death of Ferdinand Castillo. Melencio-Herrera, J., concur. Separate Opinions PADILLA, J., dissenting: I regret that I can not concur with the majority. I believe that the reversal of respondent appellate court's decision gives rise to a situation which was neither contemplated nor intended by the applicable laws. I refer more particularly to the fact that the ponencia has left private respondents-spouses with no one to hold liable for the untimely demise of their son. On the other hand, they have, to my mind, been wronged. and they should at least be recompensed for their sufferings. For this and other reasons stated hereunder. I dissent. The issues, as adopted by the ponencia from the record, are as follows: A) Whether or not there was negligence attributable to the defendants which will warrant the award of damages to the plaintiffs;

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B) Whether or not Art. 2180, in relation to Art. 2176 of the New Civil Code is applicable to the case at bar; C) Whether or not the award of exemplary and moral damages is proper under the circumstances surrounding the case at bar. 1 In my opinion, the record clearly shows negligence on the part of the petitioners-teachers, with the exception of Aragones and Jaro. As to these two, respondent court absolved them from liability for their having satisfactorily demonstrated lack of participation in the negligence of their colleagues. I am in agreement with said conclusion. But I also agree with the respondent court in its finding that Tirso de Chavez, Luisito Viñas, Connie Arguio and Patria Cadiz failed to exercise DILIGENT SUPERVISION over the children during the ill-fated excursion. I may concede, albeit with reservation, that the afore-mentioned petitioners may not have been negligent in finding ways and means to revive the young Castillo AFTER the drowning incident. Their application of first-aid measures may have failed to revive him but the petitioners had fully exhausted their efforts to save the deceased. This concession, however, is given with hesitation, for there is indication in the record that petitioner petitioners may have tarried too long in securing immediate medical attention for the deceased. I refer to the trial court's finding that "it still took the jeep which brought Ferdinand Castillo to the poblacion six (6) minutes before it finally moved to await the other teachers." 2 All this aside, I am really disturbed about, and would like to emphasize the demonstrated lack of diligence on the part of the petitioners-teachers BEFORE the unfortunate incident took place. Despite awareness that the waters in the area were deep, petitioners- teachers did not take concrete steps to make sure their wards did not stray too far and too deeply. Even if they were not actually informed of the possible dangers which the area posed, petitioners-teachers should have first "tested the waters", so to speak, to ensure which parts thereof were safe for swimming purposes. However, this was not the case for as testified to by petitioner de Chavez, "they admitted that they did not even go to the water to check its depth although they were aware that some parts of it were deep." 3 At best, it appears that only oral safety instructions were imparted to the young excursionists. But, what I find most disturbing is the fact that at the time the trouble arose, Viñas and de Chavez, the male teachers who were supposed to ensure the children's safety, being physical education instructors, were nowhere within the immediate vicinity but were, in fact, as admitted by the latter, "at his house getting some foods (sic) and thinks." The Court a quo even went as far as to say that "they were somewhere and as testified to by plaintiffs' witness they were having a drinking spree!" 4 It thus appears that the petitioners-teachers failed to exercise the proper diligence or what I may refer to as DILIGENCE BEFORE THE FACT. As earlier mentioned, the steps taken to revive the deceased may be considered adequate, despite my reservations, but the over-all lack of diligence on the part of petitioners-teachers suffices to put them within the standards set by this Court in determining the existence of negligence. As held in Hedy Gan y Yu vs. Court of Appeals, et al., the test in 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 on the doer TO TAKE PRECAUTION against its mischievous results and the failure to do so constitutes negligence. 5 The next issue to be addressed pertains to the liability of the petitioner St. Francis High School as represented by petitioners-spouses Fernando Nantes and Rosario Lacandula. The majority would like to emphasize the fact that the unfortunate incident having occurred during a purely private affair, the teachers involved therein were not in the actual performance of their assigned tasks. Consequently, any act or omission caused by them cannot bind their employer, petitioner St. Francis High School. I take exception to this proposition. Although the excursion may not have been attended by the appropriate school authorities, the presence or stamp of authority of the school nevertheless pervaded by reason of the participation not of one but of several teachers, the petitioners. As found

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by the court a quo, the excursion was an activity "organized by the teachers themselves, for the students and to which the student, NATURALLY, acceded." 6 Moreover, the record indicates that petitioner Benjamin Illumin, school principal, knew of the excursion and had, in fact, been invited to attend. As the majority see it, such knowledge does not in any manner show acquiescence or consent to the holding of the excursion, a view which I do not accept. It seems to me that having known of the forthcoming activity, petitioner Illumin, as school principal, should have taken appropriate measures to ensure the safety of his students. Having preferred to remain silent, and even indifferent, he now seeks excuse from such omission by invoking his alleged lack of consent to the excursion. But it is precisely his silence and negligence in performing his role as principal head of the school that must be construed as an implied consent to such activity. As administrative head (principal) of St. Francis High School, petitioner Illumin acted as the agent of his principal (the school) or its representatives, the petitioners-spouses Nantes and Lacandula. Consequently, and as found by the respondent court. Article 2176 in conjunction with Article 2180, paragraphs (1) and (5) are applicable to the situation. In the application of these provisions, the negligence of the employee in causing injury or damage gives rise to a presumption of negligence on the part of the owner and/or manager of the establishment. While this presumption is not conclusive, it may be overcome only by clear and convincing evidence that the owner and/or manager exercised the care and diligence of a good father of a family in the selection and/or supervision of the employees causing the injury or damage. I agree with the respondent court that no proof was presented to absolve the owner and/or manager, herein petitioners-spouses Nantes and Lacandula, and Illumin. Thus, as correctly held by the respondent court, they too must be accountable for the death of Ferdinand Castillo. The majority view appears to be apprehensive that employers will be continuously held accountable for misdeeds of their employees committed even when the same are done not in the actual exercise of their duties. I fail to appreciate such apprehensions, which need not arise on the part of employers, so long as the latter have no knowledge of, or give consent to, such act or omission on the part of their employee. Educational institutions have responsibilities which cannot be equated with those of the ordinary employer or business establishment. Such institutions, particularly the primary and secondary schools, hold the tremendous responsibility of exercising supervision over young children. Too often, such schools avoid liabilities, as in the instant cage, by invoking the absence of approval on their part for activities that may be held outside school premises or held on a day not a school day. It is about time that such schools realize that theirs is not a mere moneymaking entity or one impersonally established for the sole task of teaching the rudimentary skills of "reading, writing and 'rithmetic." They must consider that their students are children of tender years who are in need of adequate care, continuing attention and guidance. Anent the issue of damages, from the foregoing discussion the award thereof is clearly proper. I only wish to point out the basis for moral damages which is found in Article 2219 of the Civil Code, to wit: Moral damages may be recovered in the following and analogous cases: 1. . . . . 2. Quasi-delicts causing physical injuries; xxx xxx xxx It should be noted that the term "physical injuries" must not be construed in its penal sense alone but rather in its generic sense, in the spirit of this Court's rulings in Carandang vs. Santiago (51 O.G. 2878) and Madeja vs. Caro, et al., (G.R. No. 51183, 21 December 1983, 126 SCRA 293). Thus, the death of private respondents' son as a result of petitioners' negligence gives rise to an action for quasi-delict which, as provided, entitles the claimant to an award of moral damages. In the light of the foregoing, I vote to AFFIRM the decision of the respondent court and thus hold the petitioners jointly and severally liable for the death of Ferdinand Castillo.

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Melencio-Herrera, J., concur.

AMADORA VS CA Civil Law – Torts and Damages – Article 2180 – Liability of Schools of Arts and Trades and Academic Schools – Liability of Teachers and Heads of School In April 1972, while the high school students of Colegio de San Jose-Recoletos were in the school auditorium, a certain Pablito Daffon fired a gun. The stray bullet hit Alfredo Amadora. Alfredo died. Daffon was convicted of reckless imprudence resulting in homicide. The parents of Alfredo sued the school for damages under Article 2180 of the Civil Code because of the school’s negligence. The trial court ruled in favor of Amadora. The trial court ruled that the principal, the dean of boys, as well as the teacher-in-charge are all civilly liable. The school appealed as it averred that when the incident happened, the school year has already ended. Amadora argued that even though the semester has already ended, his son was there in school to complete a school requirement in his Physics subject. The Court of Appeals ruled in favor of the school. The CA ruled that under the last paragraph of Article 2180, only schools of arts and trades (vocational schools) are liable not academic schools like Colegio de San Jose-Recoletos. ISSUE: Whether or not Colegio de San Jose-Recoletos, an academic school, is liable under Article 2180 of the Civil Code for the tortuous act of its students. HELD: Yes. The Supreme Court made a re-examination of the provision on the last paragraph of Article 2180 which provides: 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 Supreme Court said that it is time to update the interpretation of the above law due to the changing times where there is hardly a distinction between schools of arts and trade and academic schools. That being said, the Supreme Court ruled that ALL schools, academic or not, may be held liable under the said provision of Article 2180. The Supreme Court however clarified that the school, whether academic or not, should not be held directly liable. Its liability is only subsidiary. For non-academic schools, it would be the principal or head of school who should be directly liable for the tortuous act of its students. This is because historically, in non-academic schools, the head of school exercised a closer administration over their students than heads of academic schools. In short, they are more hands on to their students. For academic schools, it would be the teacher-in-charge who would be directly liable for the tortuous act of the students and not the dean or the head of school. The Supreme Court also ruled that such liability does not cease when the school year ends or when the semester ends. Liability applies whenever the student is in the custody of the school authorities as long as he is under the control and influence of the school and within its premises, whether the semester has not yet begun or has already ended at the time of the happening of the incident. As long as it can be shown that the student is in the school premises in pursuance of a legitimate student objective, in the exercise of a legitimate student right, and even in the enjoyment of a legitimate student right, and even in the enjoyment of a legitimate student privilege, the responsibility of the school authorities over the student continues. Indeed, even if the student should be doing nothing more than relaxing in the campus in the company of his classmates and friends and enjoying the ambience and atmosphere of the school, he is still within the custody and subject to the discipline of the school authorities under the provisions of Article 2180. At any rate, the REMEDY of the teacher, to avoid direct liability, and for the school, to avoid subsidiary liability, is to show proof that he, the teacher, exercised the necessary precautions to prevent the injury complained of, and the school exercised the diligence of a bonus pater familias. In this case however, the Physics teacher in charge was not properly named, and there was no sufficient evidence presented to make the said teacher-in-charge liable. Absent the direct liability of the teachers because of the foregoing reason, the school cannot be held subsidiarily liable too. This case abandoned fully the cases of Exconde vs Capuno and Mercado vs Court of Appeals.

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FULL TEXT EN BANC G.R. No. L-47745 April 15, 1988 JOSE S. AMADORA, LORETA A. AMADORA, JOSE A. AMADORA JR., NORMA A. YLAYA PANTALEON A. AMADORA, JOSE A. AMADORA III, LUCY A. AMADORA, ROSALINDA A. AMADORA, PERFECTO A. AMADORA, SERREC A. AMADORA, VICENTE A. AMADORA and MARIA TISCALINA A. AMADORA, petitioners , vs. HONORABLE COURT OF APPEALS, COLEGIO DE SAN JOSE-RECOLETOS, VICTOR LLUCH SERGIO P. DLMASO JR., CELESTINO DICON, ANIANO ABELLANA, PABLITO DAFFON thru his parents and natural guardians, MR. and MRS. NICANOR GUMBAN, and ROLANDO VALENCIA, thru his guardian, A. FRANCISCO ALONSO, respondents. Jose S. Amadora & Associates for petitioners. Padilla Law Office for respondents. D E C I S I O N CRUZ, J.: Like any prospective graduate, Alfredo Amadora was looking forward to the commencement exercises where he would ascend the stage and in the presence of his relatives and friends receive his high school diploma. These ceremonies were scheduled on April 16, 1972. As it turned out, though, fate would intervene and deny him that awaited experience. On April 13, 1972, while they were in the auditorium of their school, the Colegio de San Jose-Recoletos, a classmate, Pablito Daffon, fired a gun that mortally hit Alfredo, ending all his expectations and his life as well. The victim was only seventeen years old. 1 Daffon was convicted of homicide thru reckless imprudence . 2 Additionally, the herein petitioners, as the victim’s parents, filed a civil action for damages under Article 2180 of the Civil Code against the Colegio de San Jose-Recoletos, its rector the high school principal, the dean of boys, and the physics teacher, together with Daffon and two other students, through their respective parents. The complaint against the students was later dropped. After trial, the Court of First Instance of Cebu held the remaining defendants liable to the plaintiffs in the sum of P294,984.00, representing death compensation, loss of earning capacity, costs of litigation, funeral expenses, moral damages, exemplary damages, and attorney’s fees . 3 On appeal to the respondent court, however, the decision was reversed and all the defendants were completely absolved . 4 In its decision, which is now the subject of this petition for certiorari under Rule 45 of the Rules of Court, the respondent court found that Article 2180 was not applicable as the Colegio de San Jose-Recoletos was not a school of arts and trades but an academic institution of learning. It also held that the students were not in the custody of the school at the time of the incident as the semester had already ended, that there was no clear identification of the fatal gun and that in any event the defendant, had exercised the necessary diligence in preventing the injury. 5 The basic undisputed facts are that Alfredo Amadora went to the San Jose-Recoletos on April 13, 1972, and while in its auditorium was shot to death by Pablito Daffon, a classmate. On the implications and consequences of these facts, the parties sharply disagree. The petitioners contend that their son was in the school to show his physics experiment as a prerequisite to his graduation; hence, he was then under the custody of the private respondents. The private respondents submit that Alfredo Amadora had gone to the school only for the purpose of submitting his physics report and that he was no longer in their custody because the semester had already ended. There is also the question of the identity of the gun used which the petitioners consider important because of an earlier incident which they claim underscores the negligence of the school and at least one of the private respondents. It is not denied by the respondents that on April 7, 1972, Sergio Damaso, Jr., the dean of boys, confiscated from Jose Gumban an unlicensed pistol but later returned it to him without making a report to the principal or taking any further action . 6 As Gumban was one of the companions of Daffon when the latter fired the gun that killed Alfredo, the petitioners contend that this was the same pistol that had been confiscated from Gumban and that their son would not have been killed if it had not been returned by Damaso. The respondents say, however, that there is no proof that the gun was the same firearm that killed Alfredo. Resolution of all these disagreements will depend on the interpretation of Article 2180 which, as it happens, is invoked by both parties in support of their conflicting positions. The pertinent part of this article reads as follows:

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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. Three cases have so far been decided by the Court in connection with the above-quoted provision, to wit: Exconde v. Capuno 7 Mercado v. Court of Appeals, 8 and Palisoc v. Brillantes. 9 These will be briefly reviewed in this opinion for a better resolution of the case at bar. In the Exconde Case, Dante Capuno, a student of the Balintawak Elementary School and a Boy Scout, attended a Rizal Day parade on instructions of the city school supervisor. After the parade, the boy boarded a jeep, took over its wheel and drove it so recklessly that it turned turtle, resulting in the death of two of its passengers. Dante was found guilty of double homicide with reckless imprudence. In the separate civil action filed against them, his father was held solidarily liable with him in damages under Article 1903 (now Article 2180) of the Civil Code for the tort committed by the 15-year old boy. This decision, which was penned by Justice Bautista Angelo on June 29, 1957, exculpated the school in an obiter dictum (as it was not a party to the case) on the ground that it was not a school of arts and trades. Justice J.B.L. Reyes, with whom Justices Sabino Padilla and Alex Reyes concurred, dissented, arguing that it was the school authorities who should be held liable under this rule. Liability, he said, was imposed on (1) teachers in general; and (2) heads of schools of arts and trades in particular. The modifying clause “of establishments of arts and trades” should apply only to “heads” and not “teachers.” Exconde was reiterated in the Mercado Case, and with an elaboration. A student cut a classmate with a razor blade during recess time at the Lourdes Catholic School in Quezon City, and the parents of the victim sued the culprits parents for damages. Through Justice Labrador, the Court declared in another obiter (as the school itself had also not been sued that the school was not liable because it was not an establishment of arts and trades. Moreover, the custody requirement had not been proved as this “contemplates a situation where the student lives and boards with the teacher, such that the control, direction and influences on the pupil supersede those of the parents.” Justice J.B.L. Reyes did not take part but the other members of the court concurred in this decision promulgated on May 30, 1960. In Palisoc vs. Brillantes, decided on October 4, 1971, a 16-year old student was killed by a classmate with fist blows in the laboratory of the Manila Technical Institute. Although the wrongdoer — who was already of age — was not boarding in the school, the head thereof and the teacher in charge were held solidarily liable with him. The Court declared through Justice Teehankee: The phrase used in the cited article — “so long as (the students) remain in their custody” — means the protective and supervisory custody that the school and its heads and teachers exercise over the pupils and students for as long as they are at attendance in the school, including recess time. There is nothing in the law that requires that for such liability to attach, the pupil or student who commits the tortious act must live and board in the school, as erroneously held by the lower court, and the dicta in Mercado (as well as in Exconde) on which it relied, must now be deemed to have been set aside by the present decision. This decision was concurred in by five other members, 10 including Justice J.B.L. Reyes, who stressed, in answer to the dissenting opinion, that even students already of age were covered by the provision since they were equally in the custody of the school and subject to its discipline. Dissenting with three others, 11 Justice Makalintal was for retaining the custody interpretation in Mercado and submitted that the rule should apply only to torts committed by students not yet of age as the school would be acting only in loco parentis. In a footnote, Justice Teehankee said he agreed with Justice Reyes’ dissent in the Exconde Case but added that “since the school involved at bar is a non-academic school, the question as to the applicability of the cited codal provision to academic institutions will have to await another case wherein it may properly be raised.” This is the case. Unlike in Exconde and Mercado, the Colegio de San Jose-Recoletos has been directly impleaded and is sought to be held liable under Article 2180; and unlike in Palisoc, it is not a school of arts and trades but an academic institution of learning. The parties herein have also directly raised the question of whether or not Article 2180 covers even establishments which are technically not schools of arts and trades, and, if so, when the offending student is supposed to be “in its custody.” After an exhaustive examination of the problem, the Court has come to the conclusion that the provision in question should apply to all schools, academic as well as non-academic. Where the school is academic rather than technical or vocational in nature, responsibility for the tort committed by the student will attach to the teacher in charge of such student, following the first part of the provision. This is the general rule. In the case of establishments of arts and trades, it is the head thereof, and only he, who shall be held liable as an exception to the general rule. In other words, teachers in general shall be liable for the acts of their students except where the school is technical in nature, in

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which case it is the head thereof who shall be answerable. Following the canon of reddendo singula singulis “teachers” should apply to the words “pupils and students” and “heads of establishments of arts and trades” to the word “apprentices.” The Court thus conforms to the dissenting opinion expressed by Justice J.B.L. Reyes in Exconde where he said in part: I can see no sound reason for limiting Art. 1903 of the Old Civil Code to teachers of arts and trades and not to academic ones. What substantial difference is there between them insofar as concerns the proper supervision and vice over their pupils? It cannot be seriously contended that an academic teacher is exempt from the duty of watching that his pupils do not commit a tort to the detriment of third Persons, so long as they are in a position to exercise authority and Supervision over the pupil. In my opinion, in the phrase “teachers or heads of establishments of arts and trades” used in Art. 1903 of the old Civil Code, the words “arts and trades” does not qualify “teachers” but only “heads of establishments.” The phrase is only an updated version of the equivalent terms “preceptores y artesanos” used in the Italian and French Civil Codes. If, as conceded by all commentators, the basis of the presumption of negligence of Art. 1903 in some culpa in vigilando that the parents, teachers, etc. are supposed to have incurred in the exercise of their authority, it would seem clear that where the parent places the child under the effective authority of the teacher, the latter, and not the parent, should be the one answerable for the torts committed while under his custody, for the very reason/that the parent is not supposed to interfere with the discipline of the school nor with the authority and supervision of the teacher while the child is under instruction. And if there is no authority, there can be no responsibility. There is really no substantial distinction between the academic and the non-academic schools insofar as torts committed by their students are concerned. The same vigilance is expected from the teacher over the students under his control and supervision, whatever the nature of the school where he is teaching. The suggestion in the Exconde and Mercado Cases is that the provision would make the teacher or even the head of the school of arts and trades liable for an injury caused by any student in its custody but if that same tort were committed in an academic school, no liability would attach to the teacher or the school head. All other circumstances being the same, the teacher or the head of the academic school would be absolved whereas the teacher and the head of the non-academic school would be held liable, and simply because the latter is a school of arts and trades. The Court cannot see why different degrees of vigilance should be exercised by the school authorities on the basis only of the nature of their respective schools. There does not seem to be any plausible reason for relaxing that vigilance simply because the school is academic in nature and for increasing such vigilance where the school is non-academic. Notably, the injury subject of liability is caused by the student and not by the school itself nor is it a result of the operations of the school or its equipment. The injury contemplated may be caused by any student regardless of the school where he is registered. The teacher certainly should not be able to excuse himself by simply showing that he is teaching in an academic school where, on the other hand, the head would be held liable if the school were non-academic. These questions, though, may be asked: If the teacher of the academic school is to be held answerable for the torts committed by his students, why is it the head of the school only who is held liable where the injury is caused in a school of arts and trades? And in the case of the academic or non- technical school, why not apply the rule also to the head thereof instead of imposing the liability only on the teacher? The reason for the disparity can be traced to the fact that historically the head of the school of arts and trades exercised a closer tutelage over his pupils than the head of the academic school. The old schools of arts and trades were engaged in the training of artisans apprenticed to their master who personally and directly instructed them on the technique and secrets of their craft. The head of the school of arts and trades was such a master and so was personally involved in the task of teaching his students, who usually even boarded with him and so came under his constant control, supervision and influence. By contrast, the head of the academic school was not as involved with his students and exercised only administrative duties over the teachers who were the persons directly dealing with the students. The head of the academic school had then (as now) only a vicarious relationship with the students. Consequently, while he could not be directly faulted for the acts of the students, the head of the school of arts and trades, because of his closer ties with them, could be so blamed. It is conceded that the distinction no longer obtains at present in view of the expansion of the schools of arts and trades, the consequent increase in their enrollment, and the corresponding diminution of the direct and personal contract of their heads with the students. Article 2180, however, remains unchanged. In its present state, the provision must be interpreted by the Court according to its clear and original mandate until the legislature, taking into account the charges in the situation subject to be regulated, sees fit to enact the necessary amendment.

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The other matter to be resolved is the duration of the responsibility of the teacher or the head of the school of arts and trades over the students. Is such responsibility co-extensive with the period when the student is actually undergoing studies during the school term, as contended by the respondents and impliedly admitted by the petitioners themselves? From a reading of the provision under examination, it is clear that while the custody requirement, to repeat Palisoc v. Brillantes, does not mean that the student must be boarding with the school authorities, it does signify that the student should be within the control and under the influence of the school authorities at the time of the occurrence of the injury. This does not necessarily mean that such, custody be co-terminous with the semester, beginning with the start of classes and ending upon the close thereof, and excluding the time before or after such period, such as the period of registration, and in the case of graduating students, the period before the commencement exercises. In the view of the Court, the student is in the custody of the school authorities as long as he is under the control and influence of the school and within its premises, whether the semester has not yet begun or has already ended. It is too tenuous to argue that the student comes under the discipline of the school only upon the start of classes notwithstanding that before that day he has already registered and thus placed himself under its rules. Neither should such discipline be deemed ended upon the last day of classes notwithstanding that there may still be certain requisites to be satisfied for completion of the course, such as submission of reports, term papers, clearances and the like. During such periods, the student is still subject to the disciplinary authority of the school and cannot consider himself released altogether from observance of its rules. As long as it can be shown that the student is in the school premises in pursuance of a legitimate student objective, in the exercise of a legitimate student right, and even in the enjoyment of a legitimate student right, and even in the enjoyment of a legitimate student privilege, the responsibility of the school authorities over the student continues. Indeed, even if the student should be doing nothing more than relaxing in the campus in the company of his classmates and friends and enjoying the ambience and atmosphere of the school, he is still within the custody and subject to the discipline of the school authorities under the provisions of Article 2180. During all these occasions, it is obviously the teacher-in-charge who must answer for his students’ torts, in practically the same way that the parents are responsible for the child when he is in their custody. The teacher-in-charge is the one designated by the dean, principal, or other administrative superior to exercise supervision over the pupils in the specific classes or sections to which they are assigned. It is not necessary that at the time of the injury, the teacher be physically present and in a position to prevent it. Custody does not connote immediate and actual physical control but refers more to the influence exerted on the child and the discipline instilled in him as a result of such influence. Thus, for the injuries caused by the student, the teacher and not the parent shall be held responsible if the tort was committed within the premises of the school at any time when its authority could be validly exercised over him. In any event, it should be noted that the liability imposed by this article is supposed to fall directly on the teacher or the head of the school of arts and trades and not on the school itself. If at all, the school, whatever its nature, may be held to answer for the acts of its teachers or even of the head thereof under the general principle of respondeat superior, but then it may exculpate itself from liability by proof that it had exercised the diligence of a bonus paterfamilias. Such defense is, of course, also available to the teacher or the head of the school of arts and trades directly held to answer for the tort committed by the student. As long as the defendant can show that he had taken the necessary precautions to prevent the injury complained of, he can exonerate himself from the liability imposed by Article 2180, which also states that: 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 damages. In this connection, it should be observed that the teacher will be held liable not only when he is acting in loco parentis for the law does not require that the offending student be of minority age. Unlike the parent, who will be liable only if his child is still a minor, the teacher is held answerable by the law for the act of the student under him regardless of the student’s age. Thus, in the Palisoc Case, liability attached to the teacher and the head of the technical school although the wrongdoer was already of age. In this sense, Article 2180 treats the parent more favorably than the teacher. The Court is not unmindful of the apprehensions expressed by Justice Makalintal in his dissenting opinion in Palisoc that the school may be unduly exposed to liability under this article in view of the increasing activism among the students that is likely to cause violence and resulting injuries in the school premises. That is a valid fear, to be sure. Nevertheless, it should be repeated that, under the present ruling, it is not the school that will be held directly liable. Moreover, the defense of due

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diligence is available to it in case it is sought to be held answerable as principal for the acts or omission of its head or the teacher in its employ. The school can show that it exercised proper measures in selecting the head or its teachers and the appropriate supervision over them in the custody and instruction of the pupils pursuant to its rules and regulations for the maintenance of discipline among them. In almost all cases now, in fact, these measures are effected through the assistance of an adequate security force to help the teacher physically enforce those rules upon the students. This should bolster the claim of the school that it has taken adequate steps to prevent any injury that may be committed by its students. A fortiori, the teacher himself may invoke this defense as it would otherwise be unfair to hold him directly answerable for the damage caused by his students as long as they are in the school premises and presumably under his influence. In this respect, the Court is disposed not to expect from the teacher the same measure of responsibility imposed on the parent for their influence over the child is not equal in degree. Obviously, the parent can expect more obedience from the child because the latter’s dependence on him is greater than on the teacher. It need not be stressed that such dependence includes the child’s support and sustenance whereas submission to the teacher’s influence, besides being coterminous with the period of custody is usually enforced only because of the students’ desire to pass the course. The parent can instill more las discipline on the child than the teacher and so should be held to a greater accountability than the teacher for the tort committed by the child. And if it is also considered that under the article in question, the teacher or the head of the school of arts and trades is responsible for the damage caused by the student or apprentice even if he is already of age — and therefore less tractable than the minor — then there should all the more be justification to require from the school authorities less accountability as long as they can prove reasonable diligence in preventing the injury. After all, if the parent himself is no longer liable for the student’s acts because he has reached majority age and so is no longer under the former’s control, there is then all the more reason for leniency in assessing the teacher’s responsibility for the acts of the student. Applying the foregoing considerations, the Court has arrived at the following conclusions: 1. At the time Alfredo Amadora was fatally shot, he was still in the custody of the authorities of Colegio de San Jose-Recoletos notwithstanding that the fourth year classes had formally ended. It was immaterial if he was in the school auditorium to finish his physics experiment or merely to submit his physics report for what is important is that he was there for a legitimate purpose. As previously observed, even the mere savoring of the company of his friends in the premises of the school is a legitimate purpose that would have also brought him in the custody of the school authorities. 2. The rector, the high school principal and the dean of boys cannot be held liable because none of them was the teacher-in-charge as previously defined. Each of them was exercising only a general authority over the student body and not the direct control and influence exerted by the teacher placed in charge of particular classes or sections and thus immediately involved in its discipline. The evidence of the parties does not disclose who the teacher-in-charge of the offending student was. The mere fact that Alfredo Amadora had gone to school that day in connection with his physics report did not necessarily make the physics teacher, respondent Celestino Dicon, the teacher-in-charge of Alfredo’s killer. 3. At any rate, assuming that he was the teacher-in-charge, there is no showing that Dicon was negligent in enforcing discipline upon Daffon or that he had waived observance of the rules and regulations of the school or condoned their non-observance. His absence when the tragedy happened cannot be considered against him because he was not supposed or required to report to school on that day. And while it is true that the offending student was still in the custody of the teacher-in-charge even if the latter was physically absent when the tort was committed, it has not been established that it was caused by his laxness in enforcing discipline upon the student. On the contrary, the private respondents have proved that they had exercised due diligence, through the enforcement of the school regulations, in maintaining that discipline. 4. In the absence of a teacher-in-charge, it is probably the dean of boys who should be held liable especially in view of the unrefuted evidence that he had earlier confiscated an unlicensed gun from one of the students and returned the same later to him without taking disciplinary action or reporting the matter to higher authorities. While this was clearly negligence on his part, for which he deserves sanctions from the school, it does not necessarily link him to the shooting of Amador as it has not been shown that he confiscated and returned pistol was the gun that killed the petitioners’ son. 5. Finally, as previously observed, the Colegio de San Jose-Recoletos cannot be held directly liable under the article because only the teacher or the head of the school of arts and trades is made responsible for the damage caused by the student or apprentice. Neither can it be held to answer for the tort committed by any of the other private respondents for none of them has been found to have

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been charged with the custody of the offending student or has been remiss in the discharge of his duties in connection with such custody. In sum, the Court finds under the facts as disclosed by the record and in the light of the principles herein announced that none of the respondents is liable for the injury inflicted by Pablito Damon on Alfredo Amadora that resulted in the latter’s death at the auditorium of the Colegio de San Jose-Recoletos on April 13, 1972. While we deeply sympathize with the petitioners over the loss of their son under the tragic circumstances here related, we nevertheless are unable to extend them the material relief they seek, as a balm to their grief, under the law they have invoked. WHEREFORE, the petition is DENIED, without any pronouncement as to costs. It is so ordered. Yap, Narvasa, Paras, Feliciano, Gancayco, Bidin, Sarmiento, Cortes and Griño-Aquino, JJ., concur. Fernan, Padilla and Teehankee, C.J., JJ, took no part.

YLARDE VS AQUINO FACTS: Private respondent Mariano Soriano was the principal of the Gabaldon Primary School in Pangasinan. Defendant Edgardo Aquino was a teacher therein. During that time, the school had several concrete blocks which were remnants of the old school shop destroyed in World War II. Defendant decided to help clear the area so he gathered 18 of his male students and ordered them to dig beside a one ton concrete block in making a hole where the stone can be buried. It was left unfinished so the following day he called 4 of the 18 students including the Novelito Ylarde to complete the excavation. Defendant left the children to level the loose soil while he went to see Banez for the key to the school workroom where he can get some rope. It was alleged that before leaving, he told the children “not to touch the stone”. After he left, the children playfully jumped into the pit when suddenly the concrete block slide down. Unfortunately, Novelito Ylarde was pinned to the wall causing serious physical injuries which as a consequence led to his death, 3 days thereafter. The parents of the victim, herein petitioners, filed a suit for damages against both Aquino and Soriano. ISSUE: WON both Soriano and Aquino can be held liable for damages. HELD: As held in Amadora vs CA, “it is only the teacher and not the head of an academic school who should be answerable for torts committed by their students”. Where the school is academic rather than technical or vocational in nature, responsibility for the tort committed by the student will attach to the teacher in charge of such student, this is the general rule. However, in casea of establishments of arts and trades, it is the head thereof, and only he, who shall be held liable as an exception to the general rule. In other words, teachers in general shall be liable for the acts of their students except where the school is technical in nature, in which case it is the head thereof who shall be answerable. Hence, Soriano as principal cannot be held liable for the reason that the school he heads is an academic school and he did not give any instruction regarding the digging. A teacher who stands in loco parentis to his tudents should make sure that the children are protected from all harm. The excavation instructed clearly exposed the students to risk and should not be placed under the category of Work Education such as school gardening, planting trees etc. Aquino acted with fault and gross negligence where instead of availing himself of adult manual laborers he instead utilized his students. Furthermore, the warning given is not sufficient to cast away all serious danger that the concrete block adjacent to the excavation would present to the children. He is therefore ordered to pay damages to the petitioners. FIRST DIVISION G.R. No. L-33722 July 29, 1988 FEDERICO YLARDE and ADELAIDA DORONIO petitioners, vs. EDGARDO AQUINO, MAURO SORIANO and COURT OF APPEALS, respondents. Buenaventura C. Evangelista for petitioners.

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Modesto V. Cabanela for respondent Edgardo Aquino. Manuel P. Pastor for respondent Mauro Soriano. GANCAYCO, J.: In this petition for review on certiorari seeking the reversal of the decision of the Court of Appeals in CA-G.R. No. 36390-R entitled "Federico Ylarde, et al. vs. Edgardo Aquino, et al.," a case which originated from the Court of First Instance of Pangasinan, We are again caned upon determine the responsibility of the principals and teachers towards their students or pupils. In 1963, private respondent Mariano Soriano was the principal of the Gabaldon Primary School, a public educational institution located in Tayug, Pangasinan-Private respondent Edgardo Aquino was a teacher therein. At that time, the school was fittered with several concrete blocks which were remnants of the old school shop that was destroyed in World War II. Realizing that the huge stones were serious hazards to the schoolchildren, another teacher by the name of Sergio Banez started burying them one by one as early as 1962. In fact, he was able to bury ten of these blocks all by himself. Deciding to help his colleague, private respondent Edgardo Aquino gathered eighteen of his male pupils, aged ten to eleven, after class dismissal on October 7, 1963. Being their teacher-in-charge, he ordered them to dig beside a one-ton concrete block in order to make a hole wherein the stone can be buried. The work was left unfinished. The following day, also after classes, private respondent Aquino called four of the original eighteen pupils to continue the digging. These four pupils — Reynaldo Alonso, Francisco Alcantara, Ismael Abaga and Novelito Ylarde, dug until the excavation was one meter and forty centimeters deep. At this point, private respondent Aquino alone continued digging while the pupils remained inside the pit throwing out the loose soil that was brought about by the digging. When the depth was right enough to accommodate the concrete block, private respondent Aquino and his four pupils got out of the hole. Then, said private respondent left the children to level the loose soil around the open hole while he went to see Banez who was about thirty meters away. Private respondent wanted to borrow from Banez the key to the school workroom where he could get some rope. Before leaving. , private respondent Aquino allegedly told the children "not to touch the stone." A few minutes after private respondent Aquino left, three of the four kids, Alonso, Alcantara and Ylarde, playfully jumped into the pit. Then, without any warning at all, the remaining Abaga jumped on top of the concrete block causing it to slide down towards the opening. Alonso and Alcantara were able to scramble out of the excavation on time but unfortunately fo Ylarde, the concrete block caught him before he could get out, pinning him to the wall in a standing position. As a result thereof, Ylarde sustained the following injuries: 1. Contusion with hematoma, left inguinal region and suprapubic region. 2. Contusion with ecchymosis entire scrotal region. 3. Lacerated wound, left lateral aspect of penile skin with phimosis 4. Abrasion, gluteal region, bilateral. 5. Intraperitoneal and extrapertitoneal extravasation of blood and urine about 2 liters. 6. Fracture, simple, symphesis pubis 7. Ruptured (macerated) urinary bladder with body of bladder almost entirely separated from its neck. REMARKS:

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1. Above were incurred by crushing injury. 2. Prognosis very poor. (Sgd.) MELQUIADES A. BRAVO Physician on Duty. 1 Three days later, Novelito Ylarde died. Ylarde's parents, petitioners in this case, filed a suit for damages against both private respondents Aquino and Soriano. The lower court dismissed the complaint on the following grounds: (1) that the digging done by the pupils is in line with their course called Work Education; (2) that Aquino exercised the utmost diligence of a very cautious person; and (3) that the demise of Ylarde was due to his own reckless imprudence. 2 On appeal, the Court of Appeals affirmed the Decision of the lower court. Petitioners base their action against private respondent Aquino on Article 2176 of the Civil Code for his alleged negligence that caused their son's death while the complaint against respondent Soriano as the head of school is founded on Article 2180 of the same Code. Article 2176 of the Civil Code provides: Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre- existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. On the other hand, the applicable provision of Article 2180 states: Art. 2180. x x x xxx xxx xxx Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils and students or apprentices, so long as they remain in their custody. 3 The issue to be resolved is whether or not under the cited provisions, both private respondents can be held liable for damages. As regards the principal, We hold that he cannot be made responsible for the death of the child Ylarde, he being the head of an academic school and not a school of arts and trades. This is in line with Our ruling in Amadora vs. Court of Appeals, 4 wherein this Court thoroughly discussed the doctrine that under Article 2180 of the Civil Code, it is only the teacher and not the head of an academic school who should be answerable for torts committed by their students. This Court went on to say that in a school of arts and trades, it is only the head of the school who can be held liable. In the same case, We explained: After an exhaustive examination of the problem, the Court has come to the conclusion that the provision in question should apply to all schools, academic as well as non-academic. Where the school is academic rather than technical or vocational in nature, responsibility for the tort committed by the student will attach to the teacher in charge of such student, following the first part of the provision. This is the general rule. In the case of establishments of arts and trades, it is the head thereof, and only he, who shall be held liable as an exception to the general rule. In other words, teachers in general shall be liable for the acts of their students except where the school is technical in nature, in which case it is the head thereof who shall be answerable. Following the canon of reddendo singula sinquilis 'teachers' should apply to the words "pupils and students' and 'heads of establishments of arts and trades to the word "apprentices."

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Hence, applying the said doctrine to this case, We rule that private respondent Soriano, as principal, cannot be held liable for the reason that the school he heads is an academic school and not a school of arts and trades. Besides, as clearly admitted by private respondent Aquino, private respondent Soriano did not give any instruction regarding the digging. From the foregoing, it can be easily seen that private respondent Aquino can be held liable under Article 2180 of the Civil Code as the teacher-in-charge of the children for being negligent in his supervision over them and his failure to take the necessary precautions to prevent any injury on their persons. However, as earlier pointed out, petitioners base the alleged liability of private respondent Aquino on Article 2176 which is separate and distinct from that provided for in Article 2180. With this in mind, the question We need to answer is this: Were there acts and omissions on the part of private respondent Aquino amounting to fault or negligence which have direct causal relation to the death of his pupil Ylarde? Our answer is in the affirmative. He is liable for damages. From a review of the record of this case, it is very clear that private respondent Aquino acted with fault and gross negligence when he: (1) failed to avail himself of services of adult manual laborers and instead utilized his pupils aged ten to eleven to make an excavation near the one-ton concrete stone which he knew to be a very hazardous task; (2) required the children to remain inside the pit even after they had finished digging, knowing that the huge block was lying nearby and could be easily pushed or kicked aside by any pupil who by chance may go to the perilous area; (3) ordered them to level the soil around the excavation when it was so apparent that the huge stone was at the brink of falling; (4) went to a place where he would not be able to check on the children's safety; and (5) left the children close to the excavation, an obviously attractive nuisance. The negligent act of private respondent Aquino in leaving his pupils in such a dangerous site has a direct causal connection to the death of the child Ylarde. Left by themselves, it was but natural for the children to play around. Tired from the strenuous digging, they just had to amuse themselves with whatever they found. Driven by their playful and adventurous instincts and not knowing the risk they were facing three of them jumped into the hole while the other one jumped on the stone. Since the stone was so heavy and the soil was loose from the digging, it was also a natural consequence that the stone would fall into the hole beside it, causing injury on the unfortunate child caught by its heavy weight. Everything that occurred was the natural and probable effect of the negligent acts of private respondent Aquino. Needless to say, the child Ylarde would not have died were it not for the unsafe situation created by private respondent Aquino which exposed the lives of all the pupils concerned to real danger. We cannot agree with the finding of the lower court that the injuries which resulted in the death of the child Ylarde were caused by his own reckless imprudence, It should be remembered that he was only ten years old at the time of the incident, As such, he is expected to be playful and daring. His actuations were natural to a boy his age. Going back to the facts, it was not only him but the three of them who jumped into the hole while the remaining boy jumped on the block. From this, it is clear that he only did what any other ten-year old child would do in the same situation. In ruling that the child Ylarde was imprudent, it is evident that the lower court did not consider his age and maturity. This should not be the case. The degree of care required to be exercised must vary with the capacity of the person endangered to care for himself. A minor should not be held to the same degree of care as an adult, but his conduct should be judged according to the average conduct of persons of his age and experience. 5 The standard of conduct to which a child must conform for his own protection is that degree of care ordinarily exercised by children of the same age, capacity, discretion, knowledge and experience under the same or similar circumstances. 6 Bearing this in mind, We cannot charge the child Ylarde with reckless imprudence. The court is not persuaded that the digging done by the pupils can pass as part of their Work Education. A single glance at the picture showing the excavation and the huge concrete block 7 would reveal a dangerous site requiring the attendance of strong, mature laborers and not ten-year old grade-four pupils. We cannot comprehend why the lower court saw it otherwise when private respondent Aquino himself admitted that there were no instructions from the principal requiring what the pupils were told to do. Nor was there any showing that it was included in the lesson plan for their Work Education. Even the Court of Appeals made mention of the fact that respondent Aquino decided all by himself to help his co-teacher Banez bury the concrete remnants of the old school shop.

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8 Furthermore, the excavation should not be placed in the category of school gardening, planting trees, and the like as these undertakings do not expose the children to any risk that could result in death or physical injuries. The contention that private respondent Aquino exercised the utmost diligence of a very cautious person is certainly without cogent basis. A reasonably prudent person would have foreseen that bringing children to an excavation site, and more so, leaving them there all by themselves, may result in an accident. An ordinarily careful human being would not assume that a simple warning "not to touch the stone" is sufficient to cast away all the serious danger that a huge concrete block adjacent to an excavation would present to the children. Moreover, a teacher who stands in loco parentis to his pupils would have made sure that the children are protected from all harm in his company. We close by categorically stating that a truly careful and cautious person would have acted in all contrast to the way private respondent Aquino did. Were it not for his gross negligence, the unfortunate incident would not have occurred and the child Ylarde would probably be alive today, a grown- man of thirty-five. Due to his failure to take the necessary precautions to avoid the hazard, Ylarde's parents suffered great anguish all these years. WHEREFORE, in view of the foregoing, the petition is hereby GRANTED and the questioned judgment of the respondent court is REVERSED and SET ASIDE and another judgment is hereby rendered ordering private respondent Edagardo Aquino to pay petitioners the following: (1) Indemnity for the death of Child Ylarde P30,000.00 (2) Exemplary damages 10,000.00 (3) Moral damages 20,000.00 SO ORDERED. Narvasa Cruz, Griño-Aquino and Medialdea, JJ., concur.

PASCO VS CFI SECOND DIVISION G.R. No. L-54357 April 25, 1988 REYNALDO PASCO, assisted by his father PEDRO PASCO, petitioner, vs. COURT OF FIRST INSTANCE OF BULACAN, BRANCH V, STA. MARIA and ARANETA UNIVERSITY, respondents. Ponciano G. Hernandez for petitioner. Marcelo C. Aniana for respondents. PARAS, J.: The sole question of law raised by petitioner in this case is whether the provision of the penultimate paragraph of Article 2180 of the Civil Code which states: 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. is equally applicable to academic institutions. The facts of this case are as follows:

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On August 24, 1979 at about 5:00 o'clock in the afternoon, petitioner, together with two companions, while walking inside the campus of the private respondent Araneta University, after attending classes in said university, was accosted and mauled by a group of Muslim students led by Abdul Karim Madidis alias "Teng." Said Muslim group were also students of the Araneta University. Petitioner was subsequently stabbed by Abdul and as a consequence he was hospitalized at the Manila Central University (MCU) Hospital where he underwent surgery to save his life. On October 5, 1979, petitioner, assisted by his father Pedro Pasco, filed a complaint for damages against Abdul Karim Madidis and herein private respondent Gregorio Araneta University which was docketed as Civil Case No. SM-1027. Said school was impleaded as a party defendant based on the aforementioned provision of the Civil Code. On October 26, 1979, respondent school filed a Motion to Dismiss on the following grounds: a. The penultimate paragraph of Article 2180 of the New Civil Code under which it was sued applies only to vocational schools and not to academic institutions; b. That every person criminally liable for a felony is also civilly liable under Article 100 of the Revised Penal Code. Hence, the civil liability in this case arises from a criminal action which the defendant university has not committed; c. Since this is a civil case, a demand should have been made by the plaintiff, hence, it would be premature to bring an action for damages against defendant University. (Rollo, p. 96) On May 12, 1980, respondent court issued an Order * granting said Motion to Dismiss. Petitioner moved to reconsider the Order of Dismissal but the motion was likewise denied on the ground that there is no sufficient justification to disturb its ruling. Hence, this instant Petition for certiorari under Republic Act No. 5440, praying that judgment be rendered setting aside the questioned order of May 12, 1980 dismissing the complaint as against respondent school and the order of July 17, 1980 denying the reconsideration of the questioned order of dismissal, with costs against respondent school. We find no necessity of discussing the applicability of the Article to educational institutions (which are not schools of arts and trades) for the issue in this petition is actually whether or not, under the article, the school or the university itself (as distinguished from the teachers or heads) is liable. We find the answer in the negative, for surely the provision concerned speaks only of "teachers or heads." WHEREFORE, this Petition is DISMISSED for lack of merit. SO ORDERED. Yap, C.J. and Padilla, JJ., concur. Separate Opinions SARMIENTO, J., dissenting: I dissent. Paragraph 5 of Art. 2180 may be construed as the basis for the liability of the school as the employer for the failure of its teachers or school heads to perform their mandatory legal duties as substitute parents. Herrera, J. concurring (Amadora et al. vs. Court of Appeals, et al., G.R. No. L-47745, citing Sangco, Philippine Law on Torts & Damages, 1978 ed., p. 201). MELENCIO-HERRERA, J., dissenting:

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I join Justice Sarmiento in his dissent. As stated by him, my view is that while the educational institution is not directly liable, yet the school, as the employer, may be held liable for the failure of its teachers or school heads to perform their mandatory legal duties as substitute parents (Article 2180, Civil Code). The school, however, may exculpate itself from liability by proving that it had exercised the diligence of a good father of the family. Melencio-Herrera, J., dissent. Separate Opinions SARMIENTO, J., dissenting: I dissent. Paragraph 5 of Art. 2180 may be construed as the basis for the liability of the school as the employer for the failure of its teachers or school heads to perform their mandatory legal duties as substitute parents. Herrera, J. concurring (Amadora et al. vs. Court of Appeals, et al., G.R. No. L-47745, citing Sangco, Philippine Law on Torts & Damages, 1978 ed., p. 201). MELENCIO-HERRERA, J., dissenting: I join Justice Sarmiento in his dissent. As stated by him, my view is that while the educational institution is not directly liable, yet the school, as the employer, may be held liable for the failure of its teachers or school heads to perform their mandatory legal duties as substitute parents (Article 2180, Civil Code). The school, however, may exculpate itself from liability by proving that it had exercised the diligence of a good father of the family. Melencio-Herrera, J., dissent.

PSBA VS CA School's responsibility in loco parentis over its own students: the harm or negligent act must be committed by its students against another student, not by an outsider General rule on the application of quasi-delict: no pre-existing contract between the parties FACTS: Carlitos Bautista, a third-year commerce student of PSBA, was stabbed to death while on the second-floor premises of the school. The assailants were not members of the schools’ academic community but were elements from outside the school. The parents of Carlitos filed a civil action against the school authorities, alleging them negligent, reckless and with failure to take security precautions, means and methods before, during and after the attack on the victim. The appellate court found in their favor, primarily anchoring its decision on the law of quasi-delicts. Hence, the petition. ISSUE: Whether or not the appellate court was correct in deciding the case based on Article 2180 (in loco parentis) Whether or not the application of the law on quasi-delict is proper when there is a pre-existing contract HELD:

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The SC did not agree with the premises of the CA’s ruling. Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule in in loco parentis. It had been stressed that the law (Article 2180) plainly provides that the damage should have been caused or inflicted by pupils or students of the educational institution sought to be held liable for the acts of its pupils or students while in its custody. However, this material situation does not exist in the present case for, as earlier indicated, the assailants of Carlitos were not students of PSBA, for whose acts the school could have been made liable. IS PSBA EXCULPATED FROM LIABILITY? It does not necessarily follow. When an academic institution accepts students for enrollment, there is established a contract between them, resulting in bilateral obligations which both parties are bound to comply with. Moreover, there is that “built-in” obligation to provide students with an atmosphere that promotes or assists in attaining its primary undertaking of imparting knowledge. The school must ensure that adequate steps are taken to maintain peace and order within the campus premises and to prevent the breakdown thereof. Because the circumstances of the present case evince a contractual relation between PSBA and Carlitos, the rules on quasi-delict do not really govern. However, the mere fact that a person is bound to another by contract does not relieve him from extra-contractual liability to such person. When such a contractual relation exists the obligor may break the contract under such conditions that the same act which constitutes a breach of the contract would have constituted the source of an extra-contractual obligation had no contract existed between the parties. Art. 21 of the Civil Code comes to mind, so that should the act which breaches a contract be done in bad faith and violative of Art. 21, then there is a cause to view the act as constituting a quasi-delict. In the present case, there is no finding that the contract between the school and Carlitos had been breached thru the former’s negligence in providing proper security measures. FULL TEXT SECOND DIVISION G.R. No. 84698 February 4, 1992 PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION, JUAN D. LIM, BENJAMIN P. PAULINO, ANTONIO M. MAGTALAS, COL. PEDRO SACRO and LT. M. SORIANO, petitioners, vs. COURT OF APPEALS, HON. REGINA ORDOÑEZ-BENITEZ, in her capacity as Presiding Judge of Branch 47, Regional Trial Court, Manila, SEGUNDA R. BAUTISTA and ARSENIA D. BAUTISTA, respondents. Balgos and Perez for petitioners. Collantes, Ramirez & Associates for private respondents. PADILLA, J.: A stabbing incident on 30 August 1985 which caused the death of Carlitos Bautista while on the second-floor premises of the Philippine School of Business Administration (PSBA) prompted the parents of the deceased to file suit in the Regional Trial Court of Manila (Branch 47) presided over by Judge (now Court of Appeals justice) Regina Ordoñez-Benitez, for damages against the said PSBA and its corporate officers. At the time of his death, Carlitos was enrolled in the third year commerce course at the PSBA. It was established that his assailants were not members of the school's academic community but were elements from outside the school. Specifically, the suit impleaded the PSBA and the following school authorities: Juan D. Lim (President), Benjamin P. Paulino (Vice-President), Antonio M. Magtalas (Treasurer/Cashier), Col.

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Pedro Sacro (Chief of Security) and a Lt. M. Soriano (Assistant Chief of Security). Substantially, the plaintiffs (now private respondents) sought to adjudge them liable for the victim's untimely demise due to their alleged negligence, recklessness and lack of security precautions, means and methods before, during and after the attack on the victim. During the proceedings a quo, Lt. M. Soriano terminated his relationship with the other petitioners by resigning from his position in the school. Defendants a quo (now petitioners) sought to have the suit dismissed, alleging that since they are presumably sued under Article 2180 of the Civil Code, the complaint states no cause of action against them, as jurisprudence on the subject is to the effect that academic institutions, such as the PSBA, are beyond the ambit of the rule in the afore-stated article. The respondent trial court, however, overruled petitioners' contention and thru an order dated 8 December 1987, denied their motion to dismiss. A subsequent motion for reconsideration was similarly dealt with by an order dated 25 January 1988. Petitioners then assailed the trial court's disposition before the respondent appellate court which, in a decision * promulgated on 10 June 1988, affirmed the trial court's orders. On 22 August 1988, the respondent appellate court resolved to deny the petitioners' motion for reconsideration. Hence, this petition. At the outset, it is to be observed that the respondent appellate court primarily anchored its decision on the law of quasi-delicts, as enunciated in Articles 2176 and 2180 of the Civil Code. 1 Pertinent portions of the appellate court's now assailed ruling state: Article 2180 (formerly Article 1903) of the Civil Code is an adoption from the old Spanish Civil Code. The comments of Manresa and learned authorities on its meaning should give way to present day changes. The law is not fixed and flexible (sic); it must be dynamic. In fact, the greatest value and significance of law as a rule of conduct in (sic) its flexibility to adopt to changing social conditions and its capacity to meet the new challenges of progress. Construed in the light of modern day educational system, Article 2180 cannot be construed in its narrow concept as held in the old case of Exconde vs. Capuno 2 and Mercado vs. Court of Appeals; 3 hence, the ruling in the Palisoc 4 case that it should apply to all kinds of educational institutions, academic or vocational. At any rate, the law holds the teachers and heads of the school staff liable unless they relieve themselves of such liability pursuant to the last paragraph of Article 2180 by "proving that they observed all the diligence to prevent damage." This can only be done at a trial on the merits of the case. 5 While we agree with the respondent appellate court that the motion to dismiss the complaint was correctly denied and the complaint should be tried on the merits, we do not however agree with the premises of the appellate court's ruling. Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule of in loco parentis. This Court discussed this doctrine in the afore-cited cases of Exconde, Mendoza, Palisoc and, more recently, in Amadora vs. Court of Appeals. 6 In all such cases, it had been stressed that the law (Article 2180) plainly provides that the damage should have been caused or inflicted by pupils or students of he educational institution sought to be held liable for the acts of its pupils or students while in its custody. However, this material situation does not exist in the present case for, as earlier indicated, the assailants of Carlitos were not students of the PSBA, for whose acts the school could be made liable. However, does the appellate court's failure to consider such material facts mean the exculpation of the petitioners from liability? It does not necessarily follow. When an academic institution accepts students for enrollment, there is established a contract between them, resulting in bilateral obligations which both parties are bound to comply with. 7 For its part, the school undertakes to provide the student with an education that would presumably suffice to equip him with the necessary tools and skills to pursue higher education or a profession. On the other hand, the student covenants to abide by the school's academic requirements and observe its rules and regulations.

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Institutions of learning must also meet the implicit or "built-in" obligation of providing their students with an atmosphere that promotes or assists in attaining its primary undertaking of imparting knowledge. Certainly, no student can absorb the intricacies of physics or higher mathematics or explore the realm of the arts and other sciences when bullets are flying or grenades exploding in the air or where there looms around the school premises a constant threat to life and limb. Necessarily, the school must ensure that adequate steps are taken to maintain peace and order within the campus premises and to prevent the breakdown thereof. Because the circumstances of the present case evince a contractual relation between the PSBA and Carlitos Bautista, the rules on quasi-delict do not really govern. 8 A perusal of Article 2176 shows that obligations arising from quasi-delicts or tort, also known as extra-contractual obligations, arise only between parties not otherwise bound by contract, whether express or implied. However, this impression has not prevented this Court from determining the existence of a tort even when there obtains a contract. In Air France vs. Carrascoso (124 Phil. 722), the private respondent was awarded damages for his unwarranted expulsion from a first-class seat aboard the petitioner airline. It is noted, however, that the Court referred to the petitioner-airline's liability as one arising from tort, not one arising from a contract of carriage. In effect, Air France is authority for the view that liability from tort may exist even if there is a contract, for the act that breaks the contract may be also a tort. (Austro-America S.S. Co. vs. Thomas, 248 Fed. 231). This view was not all that revolutionary, for even as early as 1918, this Court was already of a similar mind. In Cangco vs. Manila Railroad (38 Phil. 780), Mr. Justice Fisher elucidated thus: The field of non-contractual obligation is much broader than that of contractual obligation, comprising, as it does, the whole extent of juridical human relations. These two fields, figuratively speaking, concentric; that is to say, the mere fact that a person is bound to another by contract does not relieve him from extra-contractual liability to such person. When such a contractual relation exists the obligor may break the contract under such conditions that the same act which constitutes a breach of the contract would have constituted the source of an extra-contractual obligation had no contract existed between the parties. Immediately what comes to mind is the chapter of the Civil Code on Human Relations, particularly Article 21, which provides: Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good custom or public policy shall compensate the latter for the damage. (emphasis supplied). Air France penalized the racist policy of the airline which emboldened the petitioner's employee to forcibly oust the private respondent to cater to the comfort of a white man who allegedly "had a better right to the seat." In Austro-American, supra, the public embarrassment caused to the passenger was the justification for the Circuit Court of Appeals, (Second Circuit), to award damages to the latter. From the foregoing, it can be concluded that should the act which breaches a contract be done in bad faith and be violative of Article 21, then there is a cause to view the act as constituting a quasi-delict. In the circumstances obtaining in the case at bar, however, there is, as yet, no finding that the contract between the school and Bautista had been breached thru the former's negligence in providing proper security measures. This would be for the trial court to determine. And, even if there be a finding of negligence, the same could give rise generally to a breach of contractual obligation only. Using the test of Cangco, supra, the negligence of the school would not be relevant absent a contract. In fact, that negligence becomes material only because of the contractual relation between PSBA and Bautista. In other words, a contractual relation is a condition sine qua non to the school's liability. The negligence of the school cannot exist independently of the contract, unless the negligence occurs under the circumstances set out in Article 21 of the Civil Code. This Court is not unmindful of the attendant difficulties posed by the obligation of schools, above-mentioned, for conceptually a school, like a common carrier, cannot be an insurer of its students against all risks. This is specially true in the populous student communities of the so-called "university belt" in Manila where there have been reported several incidents ranging from gang wars to other forms of hooliganism. It would not be equitable to expect of schools to anticipate all types of violent trespass upon their premises, for notwithstanding the security measures installed, the same

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may still fail against an individual or group determined to carry out a nefarious deed inside school premises and environs. Should this be the case, the school may still avoid liability by proving that the breach of its contractual obligation to the students was not due to its negligence, here statutorily defined to be the omission of that degree of diligence which is required by the nature of the obligation and corresponding to the circumstances of persons, time and place. 9 As the proceedings a quo have yet to commence on the substance of the private respondents' complaint, the record is bereft of all the material facts. Obviously, at this stage, only the trial court can make such a determination from the evidence still to unfold. WHEREFORE, the foregoing premises considered, the petition is DENIED. The court of origin (RTC, Manila, Br. 47) is hereby ordered to continue proceedings consistent with this ruling of the Court. Costs against the petitioners. SO ORDERED. Melencio-Herrera, Paras, Regalado and Nocon, JJ., concur.

LIABILITY OF THE STATE

CITY OF MANILA VS IAC SECOND DIVISION G.R. No. 71159 November 15, 1989 CITY OF MANILA, and EVANGELINE SUVA, petitioners, vs. HON. INTERMEDIATE APPELLATE COURT, IRENE STO. DOMINGO and for and in behalf of her minor children, VIVENCIO, JR., IRIS, VERGEL and IMELDA, all surnamed STO. DOMINGO, respondents. The City Legal Officer for petitioners. Jose M. Castillo for respondents. PARAS, J.: This is a petition for review on certiorari seeking to reverse and set aside: (a) the Decision of the Intermediate Appellate Court now Court of Appeals 1 promulgated on May 31, 1984 in AC-G.R. CV No. 00613-R entitled Irene Sto. Domingo et al., v. City Court of Manila et al., modifying the decision of the then Court of First Instance of Manila, Branch VIII 2 in Civil Case No. 121921 ordering the defendants (herein petitioners,) to give plaintiffs (herein private respondents) the right to use a burial lot in the North Cemetery corresponding to the unexpired term of the fully paid lease sued upon, to search the remains of the late Vivencio Sto. Domingo, Sr. and to bury the same in a substitute lot to be chosen by the plaintiffs; and (b) the Resolution of the Court of Appeals dated May 28, 1985 denying petitioner's motion for reconsideration. As found by the Court of Appeals and the trial court, the undisputed facts of the case are as follows: Brought on February 22, 1979 by the widow and children of the late Vivencio Sto. Domingo, Sr. was this action for damages against the City of Manila; Evangeline Suva of the City Health Office; Sergio Mallari, officer-in-charge of the North Cemetery; and Joseph Helmuth, the latter's predecessor as officer-in-charge of the said burial grounds owned and operated by the City Government of Manila. Vivencio Sto. Domingo, Sr. deceased husband of plaintiff Irene Sto. Domingo and father of the litigating minors, died on June 4,1971 and buried on June 6,1971 in Lot No. 159, Block No. 194 of the North Cemetery which lot was leased by the city to Irene Sto. Domingo for the period from June 6, 1971 to June 6, 2021 per Official Receipt No. 61307 dated June 6, 1971 (see Exh. A) with an expiry date of June 6, 2021 (see Exh. A-1). Full payment of the rental therefor of P50.00 is evidenced by the said receipt which appears to be regular on its face. Apart from the aforementioned receipt, no other document was executed to embody such lease over the burial lot in question. In fact, the burial record for Block No. 194 of Manila North Cemetery (see Exh. 2) in which subject Lot No. 159 is situated does not reflect the term of duration of the lease thereover in favor of the Sto. Domingos.

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Believing in good faith that, in accordance with Administrative Order No. 5, Series of 1975, dated March 6, 1975, of the City Mayor of Manila (See Exh. 1) prescribing uniform procedure and guidelines in the processing of documents pertaining to and for the use and disposition of burial lots and plots within the North Cemetery, etc., subject Lot No. 159 of Block 194 in which the mortal remains of the late Vivencio Sto. Domingo were laid to rest, was leased to the bereaved family for five (5) years only, subject lot was certified on January 25, 1978 as ready for exhumation. On the basis of such certification, the authorities of the North Cemetery then headed by defendant Joseph Helmuth authorized the exhumation and removal from subject burial lot the remains of the late Vivencio Sto. Domingo, Sr., placed the bones and skull in a bag or sack and kept the same in the depository or bodega of the cemetery y Subsequently, the same lot in question was rented out to another lessee so that when the plaintiffs herein went to said lot on All Souls Day in their shock, consternation and dismay, that the resting place of their dear departed did not anymore bear the stone marker which they lovingly placed on the tomb. Indignant and disgusted over such a sorrowful finding, Irene Sto. Domingo lost no time in inquiring from the officer-in-charge of the North Cemetery, defendant Sergio Mallari, and was told that the remains of her late husband had been taken from the burial lot in question which was given to another lessee. Irene Sto. Domingo was also informed that she can look for the bones of her deceased husband in the warehouse of the cemetery where the exhumed remains from the different burial lots of the North Cemetery are being kept until they are retrieved by interested parties. But to the bereaved widow, what she was advised to do was simply unacceptable. According to her, it was just impossible to locate the remains of her late husband in a depository containing thousands upon thousands of sacks of human bones. She did not want to run the risk of claiming for the wrong set of bones. She was even offered another lot but was never appeased. She was too aggrieved that she came to court for relief even before she could formally present her claims and demands to the city government and to the other defendants named in the present complaint. (Decision, Court of Appeals, pp. 2-3; Rollo, pp. 34-55) The trial court, on August 4, 1981, rendered its Decision, the dispositive portion of which states: WHEREFORE, judgment is hereby rendered, ordering the defendants to give plaintiffs the right to make use of another single lot within the North Cemetery for a period of forty-three (43) years four (4) months and eleven (11) days, corresponding to the unexpired term of the fully paid lease sued upon; and to search without let up and with the use of all means humanly possible, for the remains of the late Vivencio Sto. Domingo, Sr. and thereafter, to bury the same in the substitute lot to be chosen by the plaintiffs pursuant to this decision. For want of merit, defendant's counterclaim is DISMISSED. No pronouncement as to costs. SO ORDERED. (Rollo, p. 31) The decision was appealed to the Court of Appeals which on May 31, 1984 rendered a decision (Rollo, pp. 33-40) modifying the decision appealed from, the dispositive portion of which reads: WHEREFORE, PREMISES CONSIDERED, the decision appealed from is hereby REVERSED (is hereby modified) and another one is hereby entered: 1. Requiring in full force the defendants to look in earnest for the bones and skull of the late Vivencio Sto. Domingo, Sr., and to bury the same in the substitute lot adjudged in favor of plaintiffs hereunder; 2. Ordering defendants to pay plaintiffs-appellants jointly and severally P10,000.00 for breach of contract; 3. Ordering defendants to pay plaintiffs-appellants, jointly and severally, P20,000.00 for moral damages; 4. Ordering defendants to pay plaintiffs-appellants jointly and severally, P20,000.00 for exemplary damages; 5. Ordering defendants to pay plaintiffs-appellants, jointly and severally, P10,000.00 as and for attorney's fees; 6. Ordering defendants, to pay plaintiffs-appellants, jointly and severally, on the foregoing amounts legal rate of interest computed from filing hereof until fully paid; and 7. Ordering defendants, to pay plaintiffs-appellants, jointly and severally, the cost of suit. SO ORDERED. (Rollo, p. 40)

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The petitioners' motion for reconsideration was likewise denied. Hence, this instant petition (Rollo, pp. 7-27) filed on July 27, 1985. The grounds relied upon for this petition are as follows: I THE HONORABLE INTERMEDIATE APPELLATE COURT ERRED IN AWARDING DAMAGES AGAINST THE PETITIONERS HEREIN, NOTWITHSTANDING THEIR GOOD FAITH AND THEIR LACK OF KNOWLEDGE OR CONSENT TO THE REMOVAL OF THE SKELETAL REMAINS OF THE LATE VIVENCIO STO. DOMINGO, SR. FROM THE SUBJECT BURIAL LOT. II THE HON. INTERMEDIATE APPELLATE COURT ERRED IN HOLDING PETITIONERS HEREIN RESPONSIBLE FOR THE ALLEGED TORTS OF THEIR SUBORDINATE OFFICIALS AND EMPLOYEES, INSPITE OF THE PROVISIONS OF SECTION 4 OF THE REPUBLIC ACT NO. 409 (REVISED CHARTER OF MANILA) AND OTHER APPLICABLE JURISPRUDENCE ON THE SUBJECT EXEMPTING THE PETITIONERS FROM DAMAGES FROM THE MALFEASANCE OR MISFEASANCE OF THEIR OFFICIALS AND EMPLOYEES, IF THERE BE ANY IN THIS CASE. (Brief for Petitioners, Rollo, pp. 93-94) In the resolution dated November 13, 1985 (,Rollo, p. 84), the petition was given due course. The pivotal issue of this case is whether or not the operations and functions of a public cemetery are a governmental, or a corporate or proprietary function of the City of Manila. The resolution of this issue is essential to the determination of the liability for damages of the petitioner city. Petitioners alleged in their petition that the North Cemetery is exclusively devoted for public use or purpose as stated in Sec. 316 of the Compilation of the Ordinances of the City of Manila. They conclude that since the City is a political subdivision in the performance of its governmental function, it is immune from tort liability which may be caused by its public officers and subordinate employees. Further Section 4, Article I of the Revised Charter of Manila exempts the city from liability for damages or injuries to persons or property arising from the failure of the Mayor, the Municipal Board, or any other city officer, to enforce the provision of its charter or any other laws, or ordinance, or from negligence of said Mayor, Municipal Board or any other officers while enforcing or attempting to enforce said provisions. They allege that the Revised Charter of Manila being a special law cannot be defeated by the Human Relations provisions of the Civil Code being a general law. Private respondents on the other hand maintain that the City of Manila entered into a contract of lease which involve the exercise of proprietary functions with private respondent Irene Sto. Domingo. The city and its officers therefore can be sued for any-violation of the contract of lease. Private respondents' contention is well-taken. Under Philippine laws, the City of Manila is a political body corporate and as such endowed with the faculties of municipal corporations to be exercised by and through its city government in conformity with law, and in its proper corporate name. It may sue and be sued, and contract and be contracted with. Its powers are twofold in character-public, governmental or political on the one hand, and corporate, private and proprietary on the other. Governmental powers are those exercised in administering the powers of the state and promoting the public welfare and they include the legislative, judicial, public and political. Municipal powers on the one hand are exercised for the special benefit and advantage of the community and include those which are ministerial, private and corporate. In McQuillin on Municipal Corporation, the rule is stated thus: "A municipal corporation proper has ... a public character as regards the state at large insofar as it is its agent in government, and private (so called) insofar as it is to promote local necessities and conveniences for its own community (Torio v. Fontanilla, 85 SCRA 599 [1978]). In connection with the powers of a municipal corporation, it may acquire property in its public or governmental capacity, and private or proprietary capacity. The New Civil Code divides such properties into property for public use and patrimonial properties (Article 423), and further enumerates the properties for public use as provincial roads, city streets, municipal streets, the squares, fountains, public waters, promenades, and public works for public service paid for by said provisions, cities or municipalities, all other property is patrimonial without prejudice to the provisions of special laws (Article 424; Province of Zamboanga del Norte v. City of Zamboanga, et al., 22 SCRA 1334 [1968]). Thus in Torio v. Fontanilla, supra, the Court declared that with respect to proprietary functions the settled rule is that a municipal corporation can be held liable to third persons ex contractu (Municipality of Moncada v. Cajuigan, et al., 21 Phil. 184 (1912) or ex delicto (Mendoza v. de Leon, 33 Phil. 508 (1916).

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The Court further stressed: Municipal corporations are subject to be sued upon contracts and in tort.... xxx xxx xxx The rule of law is a general one, that the superior or employer must answer civilly for the negligence or want of skill of its agent or servant in the course or line of his employment, by which another who is free from contributory fault, is injured. Municipal corporations under the conditions herein stated, fall within tile operation of this rule of law, and are liable accordingly, to civil actions for damages when the requisite elements of liability co-exist. ... (Emphasis supplied) The Court added: ... while the following are corporate or proprietary in character, viz: municipal waterworks, slaughter houses, markets, stables, bathing establishments, wharves, ferries and fisheries. Maintenance of parks, golf courses, cemeteries and airports among others, are also recognized as municipal or city activities of a proprietary character. (Dept. of Treasury v. City of Evansvulle, Sup. Ct. of Indiana, 60 N.E. 2nd 952, 954 cited in Torio v. Fontanilla, supra) (Emphasis supplied) Under the foregoing considerations and in the absence of a special law, the North Cemetery is a patrimonial property of the City of Manila which was created by resolution of the Municipal Board of August 27, 1903 and January 7, 1904 (Petition, Rollo pp. 20-21 Compilation of the Ordinances of the City of Manila). The administration and government of the cemetery are under the City Health Officer (Ibid., Sec. 3189), the order and police of the cemetery (Ibid., See. 319), the opening of graves, niches, or tombs, the exhuming of remains, and the purification of the same (Ibid., Sec. 327) are under the charge and responsibility of the superintendent of the cemetery. The City of Manila furthermore prescribes the procedure and guidelines for the use and dispositions of burial lots and plots within the North Cemetery through Administrative Order No. 5, s. 1975 (Rollo, p. 44). With the acts of dominion, there is, therefore no doubt that the North Cemetery is within the class of property which the City of Manila owns in its proprietary or private character. Furthermore, there is no dispute that the burial lot was leased in favor of the private respondents. Hence, obligations arising from contracts have the force of law between the contracting parties. Thus a lease contract executed by the lessor and lessee remains as the law between them. (Henson v. Intermediate Appellate Court, 148 SCRA 11 [1 987]). Therefore, a breach of contractual provision entitles the other party to damages even if no penalty for such breach is prescribed in the contract. (Boysaw v. Interphil Promotions, Inc., 148 SCRA 635 [1987]). Noteworthy are the findings of the Court of Appeals as to the harrowing experience of private respondents and their wounded feelings upon discovery that the remains of their loved one were exhumed without their knowledge and consent, as said Court declared: It has been fully established that the appellants, in spite or perhaps because, of their lowly station in life have found great consolation in their bereavement from the loss of their family head, by visiting his grave on special or even ordinary occasions, but particularly on All Saints Day, in keeping with the deep, beautiful and Catholic Filipino tradition of revering the memory of their dead. It would have been but fair and equitable that they were notified of the intention of the city government to transfer the skeletal remains of the late Vivencio Sto. Domingo to give them an opportunity to demand the faithful fulfillment of their contract, or at least to prepare and make provisions for said transfer in order that they would not lose track of the remains of their beloved dead, as what has actually happened on this case. We understand fully what the family of the deceased must have felt when on All Saints Day of 1978, they found a new marker on the grave they were to visit, only to be told to locate their beloved dead among thousands of skeletal remains which to them was desecration and an impossible task. Even the lower court recognized this when it stated in its decision thus: All things considered, even as the Court commiserates with plaintiffs for the unfortunate happening complained of and untimely desecration of the resting place and remains of their deceased dearly beloved, it finds the reliefs prayed for by them lacking in legal and factual basis. Under the aforementioned facts and circumstances, the most that plaintiffs ran ask for is the replacement of subject lot with another lot of equal size and similar location in the North Cemetery which substitute lot plaintiffs can make use of without paying any rental to the city government for a period of forty-three (43) years, four (4) months and eleven (11) days corresponding to the unexpired portion of the term of the lease sued upon as of January 25, 1978 when the remains of the late Vivencio Sto. Domingo, Sr. were prematurely removed from the disputed lot; and to require the defendants to look in earnest for the bones and skull of the late Vivencio Sto. Domingo Sr. and to bury the same in the substitute lot adjudged in favor of plaintiffs hereunder. (Decision, Intermediate Appellate Court, p. 7, Rollo, p. 39) As regards the issue of the validity of the contract of lease of grave lot No. 159, Block No. 195 of the North Cemetery for 50 years beginning from June 6, 1971 to June 6, 2021 as clearly stated in the receipt duly signed by the deputy treasurer of the City of Manila and sealed by the city government, there is nothing in the record

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that justifies the reversal of the conclusion of both the trial court and the Intermediate Appellate Court to the effect that the receipt is in itself a contract of lease. (Decision, Intermediate Appellate Court, p. 3, Rollo, pp. 5-6). Under the doctrine of respondent superior, (Torio v. Fontanilla, supra), petitioner City of Manila is liable for the tortious act committed by its agents who failed to verify and check the duration of the contract of lease. The contention of the petitioner-city that the lease is covered by Administrative Order No. 5, series of 1975 dated March 6, 1975 of the City of Manila for five (5) years only beginning from June 6, 1971 is not meritorious for the said administrative order covers new leases. When subject lot was certified on January 25, 1978 as ready for exhumation, the lease contract for fifty (50) years was still in full force and effect. PREMISES CONSIDERED, the Decision of the Intermediate Appellate Court is hereby AFFIRMED. SO ORDERED.

GENSON VS ADARLE THIRD DIVISION G.R. No. 73928 August 31, 1987 JOSE E. GENSON, petitioner, vs. SPS. EDUARDO ADARLE and SHERLITA MARI-ON, and INTERMEDIATE APPELLATE COURT, respondents. GUTIERREZ, JR., J.: This is a Petition for review which seeks to set aside the decision in CA-G.R. No. 00783 on the ground that the findings of the respondent Court of Appeals are based on misapprehension of facts and conflict with those of the trial court and that the conclusions drawn therefrom are based on speculations and conjectures. Arturo Arbatin was the successful bidder in the sale at public auction of junk and other unserviceable government property located at the compound of the Highway District Engineer's Office of Roxas City. Private respondent Eduardo Adarle was hired as a laborer by Arbatin to gather and take away scrap iron from the said compound with a daily wage of P12.00 or about 312.00 a month. On September 8, 1979, at 4:00 o'clock in the morning, on a Saturday and a non-working day, while the private respondent was tying a cable to a pile of scrap iron to be loaded on a truck inside the premises of the compound, and while the bucket of the payloader driven by Ramon Buensalido was being raised, the bucket suddenly fell and hit Adarle on the right back portion of his head just below the nape of his neck. Adarle was rushed to the St. Anthony Hospital, Roxas City. According to the medical certificate issued by the attending physician, the private respondent suffered the following injuries: 1) Comminuted fracture of the vertebral body of 13 with extreme Kyphosis of the segment by x-ray. 2) Cord compression 2nd to the injury with paralysis of the lower extremity, inability to defecate and urinate. (E Exh. A, Exhibits for the plaintiff-appellant, Original Records.) The medical certificate also reported that: The patient recovered the use of his urinary bladder and was able to defecate 2 months after surgery. He is paralyzed from the knee down to his toes. He can only sit on a wheel chair. The above residual damage is permanent 2nd to the injury incurred by Mr. Adarle, he is still confined in the Hospital. (idem) While still in the hospital, the private respondent instituted the action below for damages against Arbatin, his employer; Buensalido, the payloader operator; Candelario Marcelino, the civil engineer; and petitioner, the Highway District Engineer. During the trial on the merits, the petitioner put up the defense that he had no knowledge of or participation in the accident and that, when it happened, he was not present in the government compound. Apart from the fact that it was a Saturday and a non-working day, he was in Iloilo. As part of his evidence, the petitioner presented a memorandum directed to a certain Mr. Orlando Panaguiton ordering the latter to take charge of the district until his return (Exh. 1). The trial court found that, with the exception of the petitioner, all of the defendants were present at the Highway's compound when the accident occurred. However, it still adjudged the petitioner liable for damages

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because the petitioner was supposed to know what his men do with their government equipment within an area under his supervision. Thus, on January 19, 1982, the trial court rendered a decision finding all the defendants liable for damages under Articles 1172 and 2176 of the New Civil Code. The dispositive portion of the decision reads: WHEREFORE, this court orders the defendants to pay to plaintiff the amounts stated in the complainant's prayer as follows: Ordering the defendants jointly and severally to pay the plaintiff the sum of 312.00 monthly from September 8, 1979 until his release from the hospital. Ordering the defendants jointly and severally to pay the plaintiff the sum of P7,410.63 for hospital expenses up to January 14, 1980 and an additional amount for further hospitalization until the release of plaintiff from the hospital; Ordering the defendants jointly and severally to pay the plaintiff the sum of at least P100,000.00 as actual and compensatory damages, considering that plaintiff Eduardo Adarle is totally incapacitated for any employment for life; Ordering the defendants jointly and severally to pay the plaintiff the sum of P20,000.00 as moral damages and another sum for exemplary damages which we leave to the sound discretion of the Honorable Court; Ordering the defendants jointly and severally to pay the plaintiff the sum of P5,000.00 as attorney's fees. (pp. 129- 130, Original Records). The petitioner appealed to the Intermediate Appellate Court which affirmed the decision of the trial court and further ordered the defendants to pay P5,000.00 exemplary damages. Defendant Candelario Marcelino was, however, absolved from liability. In its decision, the appellate court ruled: That payloader owned by the Government, as found by the lower court, should not have been operated that Saturday, September 8, 1979, a Saturday, a non-working holiday. There is no official order from the proper authorities authorizing Arbatin and plaintiff to work and Buensalido to operate the payloader on that day inside the Highway compound. Thereabouts, we can logically deduce that Arbatin and plaintiff went to the compound to work with the previous knowledge and consent of Highway District Engineer Jose E. Genson. And allowed him, probably upon the request of Arbatin. We have noted that Genson testified that his office does not authorize work on Saturdays. Genson testified that he was in Iloilo from September 9 and 10, 1979. The accident occurred on September 8, in the morning. In his answer, Genson did not allege his presence in Iloilo on September 9 and 10 ... . We fully concur with the lower court's conclusions regarding the physical presence of appellants inside the compound on that fateful day, pursuant to a previous understanding with Arbatin for plaintiff to work on the scrap iron and for Buensalido to operate the payloader inside the compound. Arbatin and plaintiff would not go to the compound on that Saturday, if there was no previous understanding with Genson and Buensalido. The liability of Genson is based on fault, intentional and voluntary or negligent (Eleano v. Hill, 77 SCRA 106; Jimena v. Lincallo, 63 O.G. 11,15, 8 C. A.R. 2567). He gave permission to Arbatin, plaintiff and Buensalido to work on Saturday, a non-working day, in contravention of his office' rules and regulations outlawing work on Saturdays.. (pp. 29-30, Rollo) In this present petition, the petitioner contends that the appellate court committed a palpable error when it ruled that the petitioner was present when the accident happened and that he had given permission to the other defendants to work on a Saturday, a non-working day. The petitioner argues that considering these were the facts relied upon by the said court in holding that he was negligent and thus liable for damages, such a conclusion, is without basis. The petitioner further contends that the appellate court erred in not holding that the suit against the petitioner was, in effect, a suit against the government and, therefore, should be dismissed under the principle of non-suability of the state. As regards the petitioner's second contention, we hold that the petitioner's Identification as the Highway District Engineer in the complaint filed by the private respondent did not result in the said complaint's becoming a suit against the government or state.

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In Belizar v. Brazas, (2 SCRA 526), we ruled that "the fact that the duties and positions of the defendants are indicated does not mean that they are being sued in their official capacities, especially as the present action is not one against the Government." Furthermore, the accident in the case at bar happened on a non-working day and there was no showing that the work performed on that day was authorized by the government. While the equipment used belongs to the Government, the work was private in nature, for the benefit of a purchaser of junk. As we have held in the case of Republic v. Palacio (23 SCRA 899,906). xxx xxx xxx the ISU liability thus arose from tort and not from contract, and it is a well-entrenched rule in this jurisdiction, embodied in Article 2180 of the Civil Code of the Philippines, that the State is liable only for torts caused by its special agents, specially commissioned to carry out the acts complained of outside of such agent's regular duties (Merritt v. Insular Government, supra; Rosete v. Auditor General, 81 Phil. 453) There being no proof that the making of the tortious inducement was authorized, neither the State nor its funds can be made liable therefor. Therefore, the defense of the petitioner that he cannot be made liable under the principle of non-suability of the state cannot be sustained. With regard to the main contention of the petitioner that the appellate court based its conclusions on an erroneous finding of fact, we agree with him that the appellate court's finding that he was present within the premises when the accident happened is not supported by evidence indisputably showing that he was indeed there. Since the evidence fails to establish petitioner Genson's presence when the payloader's bucket fell on the head of Mr. Adarle, any liability on his part would be based only on his alleged failure to exercise proper supervision over his subordinates (See Umali v. Bacani, 69 SCRA 263, 267-268). According to the trial court, Mr. Genson authorized work on a Saturday when no work was supposed to be done. It stated that the petitioner should know what his men do with their government equipment and he should neither be lax nor lenient in his supervision over them. The petitioner contends that: 1. No evidence on record exists that Genson gave authority to Adarle and Arbatin, either verbally or in writing, to enter the work inside the Highways Compound on September 8, 1979; 2. Genson never knew or met Arbatin until the trial of the case. This fact was never denied by Arbatin nor rebutted by Adarle. How then could Genson have ordered or allowed Arbatin to enter the Highways Compound with Adarle? 3. Adarle himself repeatedly admitted that Arbatin, his employer, gave him the instructions to enter the compound, thus: Q. Now particularly on September 8, 1979, did Arbatin ask you to go to the compound in the Highway? A. Yes sr. Q. Are you sure of that? A. Yes, sir. Q. Where did he say that to you? A. We went to the Highway compound for many times already and that was the time when I met the incident. Q. The particular day in question September 8. 1979, did you see Arturo Arbatin and he asked you to go the compound on that day? A. That date was included on the first day when "he instructed us to gather scrap iron until that work could be finished." (pp. 25-26, tsn., October 10, 1980) (Emphasis supplied) Q. Who told you to work there? A. "Through the instruction of Arturo Arbatin" (pp. 32, tsn., Oct. 10, 1980) (Emphasis supplied) (pp. 12-13, Rollo).

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Insofar as work on a Saturday is concerned, and assuming Mr. Genson verbally allowed it, we see nothing wrong in the petitioner's authorizing work on that day. As a matter of fact, it could even be required that the hauling of junk and unserviceable equipment sold at public auction must be done on non-working days. The regular work of the District Engineer's office would not be disturbed or prejudiced by a private bidder bringing in his trucks and obstructing the smooth flow of traffic and the daily routine within the compound. Obviously, it would also be safer for all concerned to effect the clearing of the junk pile when everything is peaceful and quiet. There is no showing from the records that it is against regulations to use government cranes and payloaders to load items sold at public auction on the trucks of the winning bidder. The items were formerly government property. Unless the contract specifies otherwise, it may be presumed that all the parties were in agreement regarding the use of equipment already there for that purpose. Of course, it would be different if the junk pile is in a compound where there is no equipment for loading or unloading and the cranes or payloaders have to be brought there. There is likewise no sufficient basis for the "master-servant" doctrine in tort law to apply. Buensalido was not working overtime as a government employee. It is doubtful if the district engineer can be considered an "employer" for purposes of tort liability who may be liable even if he was not there. No evidence was presented to show that an application for overtime work or a claim for overtime pay from the district engineer's office was ever filed. It is more logical to presume that Buensalido, the operator of the payloader, was trying to earn a little money on the side from the junk buyer and that his presence in the compound on that Saturday was a purely private arrangement. From the records of this case, we are not disposed to rule that a supervisor who tolerates his subordinates to moonlight on a non-working day in their office premises can be held liable for everything that happens on that day. It would have been preferable if Mr. Arbatin brought his own payloader operator and perhaps, his own equipment but we are not dealing with sound office practice in this case. The issue before us is subsidiary liability for tort comitted by a government employee who is moonlighting on a non-working day. This Court ruled in Dumlao v. Court of Appeals (114 SCRA 247, 251): Nevertheless, it is a well-settled principle of law that a public official may be liable in his personal private capacity for whatever damage he may have caused by his act done with malice and in bad faith, (Mindanao realty Corp. v. Kintanar, 6 SCRA 814) or beyond the scope of his authority or jurisdiction. (the Philippine Racing Club v. Bonifacio, G.R. No. L-11844, August 31, 1960) The question, therefore, is whether petitioner did act in any of the manner aforesaid. Petitioner contends that, contrary to the holding of the respondent Court of Appeals, he was not sued in his personal capacity, but in his official capacity. Neither was malice or bad faith alleged against him in the complaint, much less proven by the evidence, as the respondent court made no such finding of malice or bad faith. Examining the allegations of the complaint and reviewing the evidence it would indeed be correct to say that petitioner was sued in his official capacity, and that the most that was imputed to him is act of culpable neglect, inefficiency and gross indifference in the performance of his official duties. Verily, this is not imputation of bad faith or malice, and what is more was not convincingly proven. According to the respondent court, "Genson and Buensalido divested themselves of their public positions and privileges to accomodate an acquaintance or probably for inordinate gain." (p. 31, Rollo). There is no showing from the records that Genson received anything which could be called "inordinate gain." It is possible that he permitted work on a Saturday to accomodate an acquaintance but it is more plausible that he simply wanted to clear his compound of junk and the best time for the winning bidder to do it was on a non-working day. At any rate, we see no malice, bad faith, or gross negligence on the part of Genson to hold him liable for the acts of Buensalido and Arbatin. WHEREFORE, the decision of the Intermediate Appellate Court is hereby REVERSED and SET ASIDE. The complaint against Jesus Genson is DISMISSED. SO ORDERED.

MUN. OF SAN FERNANDO LA UNION VS FIRME FIRST DIVISION

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G.R. No. L-52179 April 8, 1991 MUNICIPALITY OF SAN FERNANDO, LA UNION, petitioner vs. HON. JUDGE ROMEO N. FIRME, JUANA RIMANDO-BANIÑA, IAUREANO BANIÑA, JR., SOR MARIETA BANIÑA, MONTANO BANIÑA, ORJA BANIÑA, AND LYDIA R. BANIÑA, respondents. Mauro C. Cabading, Jr. for petitioner. Simeon G. Hipol for private respondent. MEDIALDEA, J.:p This is a petition for certiorari with prayer for the issuance of a writ of preliminary mandatory injunction seeking the nullification or modification of the proceedings and the orders issued by the respondent Judge Romeo N. Firme, in his capacity as the presiding judge of the Court of First Instance of La Union, Second Judicial District, Branch IV, Bauang, La Union in Civil Case No. 107-BG, entitled "Juana Rimando Baniña, et al. vs. Macario Nieveras, et al." dated November 4, 1975; July 13, 1976; August 23,1976; February 23, 1977; March 16, 1977; July 26, 1979; September 7, 1979; November 7, 1979 and December 3, 1979 and the decision dated October 10, 1979 ordering defendants Municipality of San Fernando, La Union and Alfredo Bislig to pay, jointly and severally, the plaintiffs for funeral expenses, actual damages consisting of the loss of earning capacity of the deceased, attorney's fees and costs of suit and dismissing the complaint against the Estate of Macario Nieveras and Bernardo Balagot. The antecedent facts are as follows: Petitioner Municipality of San Fernando, La Union is a municipal corporation existing under and in accordance with the laws of the Republic of the Philippines. Respondent Honorable Judge Romeo N. Firme is impleaded in his official capacity as the presiding judge of the Court of First Instance of La Union, Branch IV, Bauang, La Union. While private respondents Juana Rimando-Baniña, Laureano Baniña, Jr., Sor Marietta Baniña, Montano Baniña, Orja Baniña and Lydia R. Baniña are heirs of the deceased Laureano Baniña Sr. and plaintiffs in Civil Case No. 107-Bg before the aforesaid court. At about 7 o'clock in the morning of December 16, 1965, a collision occurred involving a passenger jeepney driven by Bernardo Balagot and owned by the Estate of Macario Nieveras, a gravel and sand truck driven by Jose Manandeg and owned by Tanquilino Velasquez and a dump truck of the Municipality of San Fernando, La Union and driven by Alfredo Bislig. Due to the impact, several passengers of the jeepney including Laureano Baniña Sr. died as a result of the injuries they sustained and four (4) others suffered varying degrees of physical injuries. On December 11, 1966, the private respondents instituted a compliant for damages against the Estate of Macario Nieveras and Bernardo Balagot, owner and driver, respectively, of the passenger jeepney, which was docketed Civil Case No. 2183 in the Court of First Instance of La Union, Branch I, San Fernando, La Union. However, the aforesaid defendants filed a Third Party Complaint against the petitioner and the driver of a dump truck of petitioner. Thereafter, the case was subsequently transferred to Branch IV, presided over by respondent judge and was subsequently docketed as Civil Case No. 107-Bg. By virtue of a court order dated May 7, 1975, the private respondents amended the complaint wherein the petitioner and its regular employee, Alfredo Bislig were impleaded for the first time as defendants. Petitioner filed its answer and raised affirmative defenses such as lack of cause of action, non-suability of the State, prescription of cause of action and the negligence of the owner and driver of the passenger jeepney as the proximate cause of the collision. In the course of the proceedings, the respondent judge issued the following questioned orders, to wit: (1) Order dated November 4, 1975 dismissing the cross-claim against Bernardo Balagot; (2) Order dated July 13, 1976 admitting the Amended Answer of the Municipality of San Fernando, La Union and Bislig and setting the hearing on the affirmative defenses only with respect to the supposed lack of jurisdiction; (3) Order dated August 23, 1976 deferring there resolution of the grounds for the Motion to Dismiss until the trial;

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(4) Order dated February 23, 1977 denying the motion for reconsideration of the order of July 13, 1976 filed by the Municipality and Bislig for having been filed out of time; (5) Order dated March 16, 1977 reiterating the denial of the motion for reconsideration of the order of July 13, 1976; (6) Order dated July 26, 1979 declaring the case deemed submitted for decision it appearing that parties have not yet submitted their respective memoranda despite the court's direction; and (7) Order dated September 7, 1979 denying the petitioner's motion for reconsideration and/or order to recall prosecution witnesses for cross examination. On October 10, 1979 the trial court rendered a decision, the dispositive portion is hereunder quoted as follows: IN VIEW OF ALL OF (sic) THE FOREGOING, judgment is hereby rendered for the plaintiffs, and defendants Municipality of San Fernando, La Union and Alfredo Bislig are ordered to pay jointly and severally, plaintiffs Juana Rimando-Baniña, Mrs. Priscilla B. Surell, Laureano Baniña Jr., Sor Marietta Baniña, Mrs. Fe B. Soriano, Montano Baniña, Orja Baniña and Lydia B. Baniña the sums of P1,500.00 as funeral expenses and P24,744.24 as the lost expected earnings of the late Laureano Baniña Sr., P30,000.00 as moral damages, and P2,500.00 as attorney's fees. Costs against said defendants. The Complaint is dismissed as to defendants Estate of Macario Nieveras and Bernardo Balagot. SO ORDERED. (Rollo, p. 30) Petitioner filed a motion for reconsideration and for a new trial without prejudice to another motion which was then pending. However, respondent judge issued another order dated November 7, 1979 denying the motion for reconsideration of the order of September 7, 1979 for having been filed out of time. Finally, the respondent judge issued an order dated December 3, 1979 providing that if defendants municipality and Bislig further wish to pursue the matter disposed of in the order of July 26, 1979, such should be elevated to a higher court in accordance with the Rules of Court. Hence, this petition. Petitioner maintains that the respondent judge committed grave abuse of discretion amounting to excess of jurisdiction in issuing the aforesaid orders and in rendering a decision. Furthermore, petitioner asserts that while appeal of the decision maybe available, the same is not the speedy and adequate remedy in the ordinary course of law. On the other hand, private respondents controvert the position of the petitioner and allege that the petition is devoid of merit, utterly lacking the good faith which is indispensable in a petition for certiorari and prohibition. (Rollo, p. 42.) In addition, the private respondents stress that petitioner has not considered that every court, including respondent court, has the inherent power to amend and control its process and orders so as to make them conformable to law and justice. (Rollo, p. 43.) The controversy boils down to the main issue of whether or not the respondent court committed grave abuse of discretion when it deferred and failed to resolve the defense of non-suability of the State amounting to lack of jurisdiction in a motion to dismiss. In the case at bar, the respondent judge deferred the resolution of the defense of non-suability of the State amounting to lack of jurisdiction until trial. However, said respondent judge failed to resolve such defense, proceeded with the trial and thereafter rendered a decision against the municipality and its driver. The respondent judge did not commit grave abuse of discretion when in the exercise of its judgment it arbitrarily failed to resolve the vital issue of non-suability of the State in the guise of the municipality. However, said judge acted in excess of his jurisdiction when in his decision dated October 10, 1979 he held the municipality liable for the quasi-delict committed by its regular employee. The doctrine of non-suability of the State is expressly provided for in Article XVI, Section 3 of the Constitution, to wit: "the State may not be sued without its consent." Stated in simple parlance, the general rule is that the State may not be sued except when it gives consent to be sued. Consent takes the form of express or implied consent. Express consent may be embodied in a general law or a special law. The standing consent of the State to be sued in case of money claims involving liability arising from contracts is found in Act No. 3083. A special law may be passed to enable a person to sue the government for an alleged quasi-delict, as in Merritt v. Government

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of the Philippine Islands (34 Phil 311). (see United States of America v. Guinto, G.R. No. 76607, February 26, 1990, 182 SCRA 644, 654.) Consent is implied when the government enters into business contracts, thereby descending to the level of the other contracting party, and also when the State files a complaint, thus opening itself to a counterclaim. (Ibid) Municipal corporations, for example, like provinces and cities, are agencies of the State when they are engaged in governmental functions and therefore should enjoy the sovereign immunity from suit. Nevertheless, they are subject to suit even in the performance of such functions because their charter provided that they can sue and be sued. (Cruz, Philippine Political Law, 1987 Edition, p. 39) A distinction should first be made between suability and liability. "Suability depends on the consent of the state to be sued, liability on the applicable law and the established facts. The circumstance that a state is suable does not necessarily mean that it is liable; on the other hand, it can never be held liable if it does not first consent to be sued. Liability is not conceded by the mere fact that the state has allowed itself to be sued. When the state does waive its sovereign immunity, it is only giving the plaintiff the chance to prove, if it can, that the defendant is liable." (United States of America vs. Guinto, supra, p. 659-660) Anent the issue of whether or not the municipality is liable for the torts committed by its employee, the test of liability of the municipality depends on whether or not the driver, acting in behalf of the municipality, is performing governmental or proprietary functions. As emphasized in the case of Torio vs. Fontanilla (G. R. No. L-29993, October 23, 1978. 85 SCRA 599, 606), the distinction of powers becomes important for purposes of determining the liability of the municipality for the acts of its agents which result in an injury to third persons. Another statement of the test is given in City of Kokomo vs. Loy, decided by the Supreme Court of Indiana in 1916, thus: Municipal corporations exist in a dual capacity, and their functions are twofold. In one they exercise the right springing from sovereignty, and while in the performance of the duties pertaining thereto, their acts are political and governmental. Their officers and agents in such capacity, though elected or appointed by them, are nevertheless public functionaries performing a public service, and as such they are officers, agents, and servants of the state. In the other capacity the municipalities exercise a private, proprietary or corporate right, arising from their existence as legal persons and not as public agencies. Their officers and agents in the performance of such functions act in behalf of the municipalities in their corporate or individual capacity, and not for the state or sovereign power." (112 N.E., 994-995) (Ibid, pp. 605-606.) It has already been remarked that municipal corporations are suable because their charters grant them the competence to sue and be sued. Nevertheless, they are generally not liable for torts committed by them in the discharge of governmental functions and can be held answerable only if it can be shown that they were acting in a proprietary capacity. In permitting such entities to be sued, the State merely gives the claimant the right to show that the defendant was not acting in its governmental capacity when the injury was committed or that the case comes under the exceptions recognized by law. Failing this, the claimant cannot recover. (Cruz, supra, p. 44.) In the case at bar, the driver of the dump truck of the municipality insists that "he was on his way to the Naguilian river to get a load of sand and gravel for the repair of San Fernando's municipal streets." (Rollo, p. 29.) In the absence of any evidence to the contrary, the regularity of the performance of official duty is presumed pursuant to Section 3(m) of Rule 131 of the Revised Rules of Court. Hence, We rule that the driver of the dump truck was performing duties or tasks pertaining to his office. We already stressed in the case of Palafox, et. al. vs. Province of Ilocos Norte, the District Engineer, and the Provincial Treasurer (102 Phil 1186) that "the construction or maintenance of roads in which the truck and the driver worked at the time of the accident are admittedly governmental activities." After a careful examination of existing laws and jurisprudence, We arrive at the conclusion that the municipality cannot be held liable for the torts committed by its regular employee, who was then engaged in the discharge of governmental functions. Hence, the death of the passenger –– tragic and deplorable though it may be –– imposed on the municipality no duty to pay monetary compensation. All premises considered, the Court is convinced that the respondent judge's dereliction in failing to resolve the issue of non-suability did not amount to grave abuse of discretion. But said judge exceeded his jurisdiction when it ruled on the issue of liability. ACCORDINGLY, the petition is GRANTED and the decision of the respondent court is hereby modified, absolving the petitioner municipality of any liability in favor of private respondents.

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SO ORDERED.

PNR VS IAC THIRD DIVISION G.R. No. 70547 January 22, 1993 PHILIPPINE NATIONAL RAILWAYS and HONORIO CABARDO, petitioners, vs. INTERMEDIATE APPELLATE COURT, and BALIWAG TRANSIT, INC., respondents. The Solicitor General for petitioner. Leopoldo Sta. Maria for private respondents. MELO, J.: The imputation of culpa on the part of herein petitioners as a result of the collision between its strain, bound for Manila from La Union, with a Baliwag transit bus at the railroad crossing on the road going to Hagonoy, Bulacan on August l0, 1974, is the subject of the petition at bar directed against the judgment of affirmance rendered by respondent court, through the Fourth Civil Cases Division (Sison, Bidin (P), Veloso, JJ.), vis-a-vis the decretal portion handed down by the court of origin in: 1. Ordering the defendants, jointly and severally to pay the plaintiff the amount of P179,511.52 as actual damages. 2. Ordering the defendants jointly and severally to pay the plaintiff P436,642.03 as reimbursement for the damages paid by the plaintiff to death, injury and damage claimants. 3. Ordering the defendants jointly and severally to pay exemplary damages in the amount of P50, 000.00 to the plaintiff. 4. Ordering the defendants jointly and severally to pay the plaintiff attorney's fees in the amount of P5, 000.00. 5. Ordering the defendants, jointly and severally to pay the plaintiff interest at the legal rate on the above amounts due the plaintiff from August 10, 1974 until fully paid. 6. Ordering the defendants to pay the cost of this suit. 7. Ordering the dismissal of the defendants' counterclaim for lack of factual and legal basis. (p. 101, Record on Appeal; p. 103. Rollo.) Culled from the text of the assailed disposition are the facts of the case at bar which are hereunder adopted verbatim: The case arose from a collision of a passenger express train of defendant Philippine National Railways, (PNR) coming from San Fernando, La Union and bound for Manila and a passenger bus of Baliwag Transit, Inc. which was on its way to Hagonoy, Bulacan, from Manila, but upon reaching the railroad crossing at Barrio Balungao, Calumpit, Bulacan at about 1:30 in the afternoon of August 10, 1974, got stalled and was hit by defendant's express train causing damages to plaintiff's bus and its passengers, eighteen (18) of whom died and fifty-three (53) others suffered physical injuries. Plaintiff alleging that the proximate cause of the collision was the negligence and imprudence of defendant PNR and its locomotive engineer, Honorio Cirbado, in operating its passenger train in a busy intersection without any bars, semaphores, signal lights, flagman or switchman to warn the public of approaching train that would pass through the crossing, filed the instant action for Damages against defendants. The defendants, in their Answer traversed the material allegation of the Complaint and

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as affirmative defense alleged that the collision was caused by the negligence, imprudence and lack of foresight of plaintiff's bus driver, Romeo Hughes. At the pre-trial conference held on June 23, 1976, the parties agreed on a partial stipulation of facts and issues which as amplified at the continuation of the pre-trial conference, on July 12, 1976, are as follows: 1 That plaintiff is a duly constituted corporation registered with the Securities and Exchange Commission engaged in the business of transportation and operating public utility buses for the public with lines covering Manila, Caloocan City, Quezon City, Malabon, Rizal, Bulacan, Pampanga and Nueva Ecija, and particularly from Manila to Hagonoy, Bulacan and return in the month of August, l974 passing thru the town of Calumpit Bulacan, temporarily while the bridge at Hagonoy, Bulacan was under construction; 2 That defendant Philippine National Railways is a purely government owned and controlled corporation duly registered and existing virtue of Presidential Decree No. 741, with capacity to sue and be sued, and is likewise engaged in transporting passengers and cargoes by trains and buses and that, it operates a train line between San Fernando, La Union and Manila particularly Passenger Express Train with Body No. 73, passing along the intersection of Barrio Balungao, Calumpit, Bulacan, in going to San Fernando, La Union from Manila and return; 3. That on August 10, 1974, at about 1:20 o'clock in the afternoon, a Baliuag Transit Bus with Body No. 1066 and Plate No. XS-929 PUB-Bulacan '74 was driven by its authorized driver Romeo Hughes and PNR Train No. 73 was operated by Train Engineer Honorio Cabardo alias Honorio Cirbado and at the railroad intersection at Barrio Balungao, Calumpit, Bulacan, said passenger train No. 73 hit and bumped the right mid portion of the plaintiff's passenger bus No. 1066, while the rear portion of said bus was at the railroad track and its direction was towards Hagonoy, Bulacan at about 1:30 o'clock in the afternoon; 4. That at the time of the collision there was a slight rainfall in the vicinity of the scene of the accident and that there was at said intersection no bars, semaphores, and signal lights that would warn the public of the approaching train that was about to pass through the intersection and likewise there was no warning devices to passing trains showing that they were about to pass an intersection in going to Manila from San Fernando, La Union and back; 5. That on account of said collision, the Baliuag Transit Bus with Body No. 1066 driven by Romeo Hughes was damaged and eighteen (18) of its passengers died and the rest who were more than fifty three (53) passengers suffered physical injuries; 6. That after the investigation the Chief of Police of Calumpit, Bulacan, filed a criminal case of Reckless Imprudence Causing Multiple Homicide with Multiple Physical Injuries and Damage to Property against Romeo Hughes y Parfan, driver of the Baliuag Transit bus docketed under Crim. Case No. 2392; while the train Engineer Honorio Cabardo alias Honorio Cirbado was not included as an accused in said case, although his train No. 73 was the one that hit and bumped the right rear portion of the said bus; 7. That immediately after the said accident Major Manuel A. Macam, Chief of the Municipal Police of Calumpit, Bulacan, together with some of his policemen conducted an investigation of the accident; 8. That at the railroad crossing in Calumpit, Bulacan where the accident took place there is no railroad crossing bar, however, during the pre-war days there was a railroad crossing bar at said intersection; that, however, there was only one sign of railroad crossing "Stop, Look and Listen" placed on a concrete slab and attached to a concrete post existing at the approach of the railroad track from the Highway going towards Hagonoy, Bulacan and that after the said railroad track there was a designated jeep parking area at the right side in the direction from the Highway to Hagonoy Bulacan; 9. That the train No. 73 driven by Train Engineer Honorio Cabardo alias Honorio Cirbado stopped after passing the railroad crossing at a distance of about 50 meters from the said intersection after the collision on August, 1974;

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10. That the expected time of arrival of said Train No. 73 in Manila was 2:41 P.M. and its departure time from San Fernando, La Union was 9:00 A.M. and its expected arrival at Calumpit, Bulacan was 1:41 P.M. with no stop at Calumpit, Bulacan. SIMPLIFICATION OF ISSUES 11. That the principal issue in the instant case is who between the driver Romeo Hughes of Baliuag Transit, Incorporated and the train engineer Honorio Cabardo alias Honorio Cirbado of the Philippine National Railways was negligent or whether or not both are negligent; that likewise which of said companies was negligent at said railroad intersection; 12. That another additional issue is whether the Baliuag Transit Incorporated has exercised the diligence of a good father of the family in the selection and supervision of its employees. (pp. 85-87, Record on Appeal). ( Annex A, Petition; pp. 79-82, Rollo) In addition, respondent court deemed it necessary to reflect the salient findings of the case for damages as formulated by the trial court: Posed for resolution are the following issues: Who between the driver Romeo Hughes of the Baliuag Transit Incorporated and Honorio Cabardo, train Engineer of the Philippine National Railways was negligent in the operation of their respective vehicles, or whether or both were negligent? Could either of the companies Baliuag Transit Incorporated and the Philippine National Railways be held accountable for the collision because of negligence? The defendants presented several statements or affidavits of alleged witnesses to the collision, specifically Exhibits 2, 3, 4, 5, 6, 11, 13, 14, 15, 16, 17, 18 and 19; the Court is at a loss as to why the persons who gave the said statements were not presented as witnesses during the trial of the case, as aptly said, the statements are hearsay evidence (Azcueta v. Cabangbang, — 45 O.G. 144); at most they be taken as proof only of the fact that statements of said persons were taken and that investigation was conducted of the incident; the Court cannot consider the averments in said statements as testimonies or evidence of truth. Defendants endeavored to show that the proximate and immediate cause of the collision was the negligence of the bus driver because the driver did not make a stop before ascending the railtrack; he did not heed the warning or shoutings of bystanders and passengers and proceeded in traversing the railtrack at a fast speed; that the bus driver was in fact violating Section 42(d) of R.A. 4136, otherwise known as the Land Transportation and Traffic Code for failure to "stop, look, and listen" at the intersection, before crossing the railtrack; that it is incumbent upon him to take the necessary precautions at the intersection because the railroad track is in itself a warning; and the bus driver ignored such a warning and must assume the responsibility for the result of the motion taken by him (U.S. v. Mananquil, 42 Phil. 90) Except the testimony of the train engineer Cabardo, there is no admissible evidence to show that indeed, the bus driver did not take the necessary precaution in traversing the track. Note that he first noticed the bus when it was only 15 meters away from him; he could not have possibly noticed the position of the bus before negotiating the track. On the other hand, it was shown by plaintiff that the bus driver Romeo Hughes took the necessary precautions in traversing the track. The bus driver had stopped before traversing the track and in fact asked the conductor to alight and made a "Look and Listen" before proceeding; the conductor had done just that and made a signal to proceed when he did not see any oncoming train. (TSN, October 2l, 1976, p. 4); plaintiff's bus drivers and conductors are enjoined to observe such a precautionary measure in seminars conducted by the company. (TSN, September 23, 1976. pp. 26-27). The evidence disclosed that the train was running fast because by his own testimony, the train engineer had testified that before reaching the station of Calumpit the terrain was downgrade and levelled only after passing the Calumpit bridge (TSN, July 28, 1976, p. 14 ); the tendency of the train,

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coming from a high point is to accelerate as the gravity will necessarily make it so, especially when it is pulling seven coaches loaded with goods and passengers. Moreover, upon impact, the bus loaded with passengers was dragged and thrown into a ditch several meters away; the train had stopped only after the engine portion was about 190 meters away from the fallen bus; several passengers were injured and at least 20 died; such facts conclusively indicate that the train was speeding, because if it were moving at moderate speed, it would not run some 190 meters after impact and throw the bus at quite a distance especially so when it is claimed that the train's emergency brakes were applied. Further, the train was an express train; its departure was 9:00 A.M. at San Fernando, La Union and expected in Manila at 2:41 P.M.; the collision occurred at 1:30 P.M. or 4 1/2 hours after it left La Union; surely, the train could have not negotiated such a distance in so short a time if it were not running at fast speed. It may be argued that a railroad is not subject to the same restrictions to the speed of its train as a motorists (Mckelvey v. Delaware L. and W.R. Co. 253 App. D.V. 109, 300 NYS 1263 ); but it does not follow that a train will be permitted to run fast under all conditions at any rate of speed it may choose. It must regulate its speed with proper regard for the safety of human life and property (Johnson v. Southern Pacific Company (Cal. App. 288 p. 81), considering the surrounding circumstances particularly the nature of the locality (Atchinson, T. and SFR Co. v. Nicks (Arts) 165 p. 2d 167). Cabardo's route included the passage over the said intersection; he could have noticed that it is a very busy intersection because the crossroad leads to the Calumpit Poblacion as well as to the neighboring town of Hagonoy; there was a parking lot by the side of the track whereat passengers board jeepneys for the neighboring barrios and towns; stalls abound in the vicinity and bystanders congregate nearby. A prudent train operator must, under the circumstances, slacken his speed almost for the protection of motorists and pedestrians, not only when a collision is inevitable but even if no hindrance is apparent on the way; Moreover, there was an intermittent rain at the time of the collision (see stipulation of facts and photographs); the condition of the weather was such that even if for this reason alone, the train engineer should have foreseen that danger of collision lurked because of poor visibility of slippery road; he should have taken extra precaution by considerably slackening its speed. This he failed to do even if the nature of his job required him to observe care exercised by a prudent man. Contributory negligence may not be ascribed to the bus driver; it was evident that he had taken the necessary precautions before passing over the railway track; if the bus was hit, it was for reasons beyond the control of the bus driver because he had no place to go; there were vehicles to his left which prevented him in swerving towards that direction; his bus stalled in view of the obstructions in his front where a sand and gravel truck stopped because of a jeep maneuvering into a garage up front. All the wheels at the bus have already passed the rail portion of the track and only the rear portion of the bus' body occupied or covered the railtrack. This was evident because the part of the bus hit by the train was the rear since the bus fell on a nearby ditch. Otherwise, if the bus was really hit in mid-body, the bus could have been halved into two because of the force of the impact. The stipulation of facts between the parties show that there was no crossing bar at the railroad intersection at Calumpit, Bulacan at the time of collision (par. 8, Stipulation of Facts); the plaintiff contended and the defendants did not deny, that there were no signal lights, semaphores, flagman or switchman thereat; the absence of such devices, the plaintiff argues constitute negligence on the part of the Philippine National Railways. A railroad is not required to have a gate (crossing bar) or a flagman, or to maintain signals at every intersection; only at such places reasonably necessary; what is considered reasonably necessary will depend on the amount of travel upon the road, the frequency with which trains pass over it and the view which could be obtained of trains as they approach the crossing, and other conditions (Pari v. Los Angeles, Ry. Corporation (Cal A2d) 128 p2d 563; Swdyk v. Indiana Harbor Belt R. Co. 148 F. 2d 795, and others). As has been amply discussed, the crossroad at the intersection at Calumpit is one which is a busy thoroughfare; it leads to the Poblacion at Calumpit and other barrios as well as the town of Hagonoy;

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the vicinity is utilized as a parking and waiting area for passengers of jeepneys that ply between the barrios, clearly, the flow of vehicular traffic thereat is huge. It can be said also that, since there is no other railtrack going North except that one passing at Calumpit, trains pass over it frequently; A portion of the intersection is being used as a parking area with stalls and other obstructions present making it difficult, if not impossible, to see approaching trains (see photographs). The failure of the Philippine National Railways to put a cross bar, or signal light, flagman or switchman, or semaphores is evidence of negligence and disregard of the safety of the public, even if there is no law or ordinance requiring it, because public safety demands that said devices or equipments be installed, in the light of aforesaid jurisprudence. In the opinion of this Court the X sign or the presence of "STOP, LOOK, LISTEN" warnings would not be sufficient protection of the motoring public as well as the pedestrians, in the said intersection; The parties likewise have stipulated that during the pre-war days, there was a railroad crossing bar at the said intersection (Par-8, Stipulation of Facts). It appears that it was a self imposed requirement which has been abandoned. In a case it was held that where the use of a flagman was self imposed, the abandonment thereof may constitute negligence. (Fleming v. Missouri and A. Ry. Co. 198 ARDC 290, 128 S.W. 2d 286 and others; cited in Sec. 1082 SCRWARTZ, Vol. 2). Similarly, the abandonment by the PNR of the use of the crossing bar at the intersection at Calumpit constitutes negligence, as its installation has become imperative, because of the prevailing circumstances in the place. A railroad company has been adjudged guilty of negligence and civilly liable for damages when it failed to install semaphores, or where it does not see to it that its flagman or switchman comply with their duties faithfully, to motorist injured by a crossing train as long as he had crossed without negligence on his part (Lilius vs. MRR, 39 Phil. 758). (Decision, pages 94-100, R A.; pp. 83-89, Rollo). On the aspect of whether the Philippine National Railways enjoys immunity from suit, respondent court initially noted that an exculpation of this nature that was raised for the first time on appeal may no longer be entertained in view of the proscription under Section 2, Rule 9 of the Revised Rules of Court, apart from the fact that the lawyer of petitioner agreed to stipulate inter alia that the railroad company had capacity to sue and be sued. This being so, respondent court continued, PNR was perforce estopped from disavowing the prejudicial repercussion of an admission in judicio. Even as the laws governing the creation and rehabilitation of the PNR were entirely mute on its power to sue and be sued, respondent court nonetheless opined that such prerogative was implied from the general power to transact business pertinent or indispensable to the attainment of the goals of the railroad company under Section 4 of Republic Act No. 4156 as amended by Republic Act No. 6366: Sec. 4 General Powers — The Philippine National Railways shall have the following general powers: (a) To do all such other things and to transact all such business directly or indirectly necessary, incidental or conducive to the attainment of the purpose of the corporation; and (b) Generally, to exercise all powers of a railroad corporation under the Corporation law. in conjunction with Section 2(b) of Presidential Decree No. 741: (b) To own or operate railroad transways, bus lines, trucklines, subways, and other kinds of land transportation, vessels, and pipelines, for the purpose of transporting for consideration, passengers, mail and property between any points in the Philippines; Thus, respondent court utilized the doctrine of implied powers announced in National Airports Corporation vs. Teodoro, Sr. and Philippine Airlines, Inc. (91 Phil. 203 [1952]), to the effect that the power to sue and be sued is implicit from the faculty to transact private business. At any rate, respondent court characterized the railroad company as a private entity created not to discharge a governmental function but, among other things, to operate a transport service which is essentially a business concern, and thus barred from invoking immunity from suit. In brushing aside petitioners' asseveration that the bus driver outraced the train at the crossing, respondent court observed that the bus was hit by the train at its rear portion then protruding over the tracks as the bus could not move because another truck at its front was equally immobile due to

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a jeep maneuvering into a nearby parking area. Under these tight conditions, respondent court blamed the train engineer who admitted to have seen the maneuvering jeep at a distance (TSN, July 28, 1976, page 18) and had the last clear chance to apply the brakes, knowing fully well that the vehicles following the jeep could not move away from the path of the train. Apart from these considerations, it was perceived below that the train was running fast during the entire trip since the train stopped 190 meters from the point of impact and arrived at Calumpit, Bulacan earlier than its expected time of arrival thereat. Moreover, respondent court agreed with the conclusion reached by the trial court that the absence of a crossing bar, signal light, flagman or switchman to warn the public of an approaching train constitutes negligence per the pronouncement of this Court in Lilius vs. Manila Railroad Company (59 Phil 758 [1934]). Concerning the exercise of diligence normally expected of an employer in the selection and supervision of its employees, respondent court expressed the view that PNR was remiss on this score since it allowed Honorio Cabardo, who finished only primary education and became an engineer only through sheer experience, to operate the locomotive, not to mention the fact that such plea in avoidance was not asserted in the answer and was thus belatedly raised on appeal. Petitioner moved to reconsider, but respondent court was far from persuaded. Hence, the petition before Us which, in essence, incorporates similar disputations anent PNR's immunity from suit and the attempt to toss the burden of negligence from the train engineer to the bus driver of herein private respondent. The bone of contention for exculpation is premised on the familiar maxim in political law that the State, by virtue of its sovereign nature and as reaffirmed by constitutional precept, is insulated from suits without its consent (Article 16, Section 3, 1987 Constitution). However, equally conceded is the legal proposition that the acquiescence of the State to be sued can be manifested expressly through a general or special law, or indicated implicitly, as when the State commences litigation for the purpose of asserting an affirmative relief or when it enters into a contract (Cruz, Philippine Political Law, 1991 edition, page 33; Sinco, Philippine Political Law, Eleventh Edition, 1962, page 34). When the State participates in a covenant, it is deemed to have descended from its superior position to the level of an ordinary citizen and thus virtually opens itself to judicial process. Of course, We realize that this Court qualified this form of consent only to those contracts concluded in a proprietary capacity and therefore immunity will attach for those contracts entered into in a governmental capacity, following the ruling in the 1985 case of United States of America vs. Ruiz (136 SCRA 487 [1985]; cited by Cruz, supra at pages 36-37). But the restrictive interpretation laid down therein is of no practical worth nor can it give rise to herein petitioner PNR's exoneration since the case of Malong vs. Philippine National Railways (138 SCRA 63, [1985]); 3 Padilla, 1987 Constitution with Comments and Cases, 1991 edition, page 644), decided three months after Ruiz was promulgated, was categorical enough to specify that the Philippine National Railways "is not performing any governmental function" (supra, at page 68). In Malong, Justice Aquino, speaking for the Court en banc, declared: The Manila Railroad Company, the PNR's predecessor, as a common carrier, was not immune from suit under Act No. 1510, its charter. The PNR Charter, Republic Act No. 4156, as amended by Republic Act No. 6366 and Presidential Decree No. 741, provides that the PNR is a government instrumentality under government ownership during its 50-year term, 1964 to 2014. It is under the Office of the President of the Philippines. Republic Act No. 6366 provides: Sec. 1-a. Statement of policy. — The Philippine National Railways, being a factor for socio-economic development and growth, shall be a part of the infrastructure program of the government and as such shall remain in and under government ownership during its corporate existence. The Philippine National Railways must be administered with the view of serving the interests of the public by providing them the maximum of service and, while aiming at its greatest utility by the public, the economy of operation must be ensured so that service can be rendered at the minimum passenger and freight prices possible.

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The charter also provides: Sec. 4. General powers. — The Philippine National Railways shall have the following general powers: (a) To do all such other things and to transact all such business directly or indirectly necessary, incidental or conducive to the attainment of the purpose of the corporation; and (b) Generally, to exercise all powers of a railroad corporation under the Corporation Law. (This refers to Sections 81 to 102 of the Corporation Law on railroad corporations, not reproduced in the Corporation Code.) Section 36 of the Corporation Code provides that every corporation has the power to sue and be sued in its corporate name. Section 13(2) of the Corporation Law provides that every corporation has the power to sue and be sued in any court. A sovereign is exempt from suit, not because of any formal conception or obsolete theory, but on the logical and practical ground that there can be no legal right as against the authority that makes the law on which the right depends (Justice Holmes in Kawananakoa vs. Polyblank, 205 U.S. 353, 51 L. 3d 834). The public service would be hindered, and public safety endangered, if the supreme authority could be subjected to suit at the instance of every citizen and, consequently, controlled in the use and disposition of the means required for the proper administration of the Government (The Siren vs. U.S., 7 Wall. 152, 19 L. ed. 129). (at pp. 65-66). To the pivotal issue of whether the State acted in a sovereign capacity when it organized the PNR for the purpose of engaging in transportation, Malong continued to hold that: . . . in the instant case the State divested itself of its sovereign capacity when it organized the PNR which is no different from its predecessor, the Manila Railroad Company. The PNR did not become immune from suit. It did not remove itself from the operation of Articles 1732 to 1766 of the Civil Code on common carriers. The correct rule is that "not all government entities, whether corporate or noncorporate, are immune from suits. Immunity from suit is determined by the character of the objects for which the entity was organized." (Nat. Airports Corp. vs. Teodoro and Phil. Airlines, Inc., 91 Phil. 203, 206; Santos vs. Santos, 92 Phil. 281, 285; Harry Lyons, Inc. vs. USA, 104 Phil. 593). Suits against State agencies with respect to matters in which they have assumed to act in a private or nongovernmental capacity are not suits against the State (81 C.J.S. 1319). Suits against State agencies with relation to matters in which they have assumed to act in a private or nongovernmental capacity, and various suits against certain corporations created by the State for public purposes, but to engage in matters partaking more of the nature of ordinary business rather than functions of a governmental or political character, are not regarded as suits against the State. The latter is true, although the State may own the stock or property of such a corporation, for by engaging in business operations through a corporation the State divests itself so far of its sovereign character, and by implicating consents to suits against the corporation. (81 C.J.S. 1319). The foregoing rule was applied to State Dock Commissions carrying on business relating to pilots, terminals and transportation (Standard Oil Co. of New Jersey vs. U.S., 27 Fed. 2nd 370) and to State Highways Commissions created to build public roads and given appropriations in advance to discharge obligations incurred in their behalf (Arkansas State Highway Commission vs. Dodge, 26 SW 2nd 879 and State Highway Commission of Missouri vs. Bates, 296 SW 418, cited in National Airports case). The point is that when the government enters into a commercial business it abandons its sovereign capacity and is to be treated like any other private corporation (Bank of the U.S. vs. Planters' Bank, 9

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Wheat. 904, 6 L ed. 244, cited in Manila Hotel Employees Association vs. Manila Hotel Company, et al., 73 Phil. 374, 388). The Manila Hotel case also relied on the following rulings: By engaging in a particular business through the instrumentality of a corporation, the government divests itself pro hac vice of its sovereign character, so as to render the corporation subject to the rules of law governing private corporations. When the State acts in its proprietary capacity, it is amenable to all the rules of law which bind private individuals. There is not one law for the sovereign and another for the subject, but when the sovereign engages in business and the conduct of business enterprises, and contracts with individuals, whenever the contract in any form comes before the courts, the rights and obligation of the contracting parties must be adjusted upon the same principles as if both contracting parties were private persons. Both stand upon equality before the law, and the sovereign is merged in the dealer, contractor and suitor (People vs. Stephens, 71 N.Y. 549). It should be noted that in Philippine National Railways vs. Union de Maquinistas, etc., L-31948, July 25, 1978, 84 SCRA 223, it was held that the PNR funds could be garnished at the instance of a labor union. It would be unjust if the heirs of the victim of an alleged negligence of the PNR employees could not sue the PNR for damages. Like any private common carrier, the PNR is subject to the obligations of persons engaged in that private enterprise. It is not performing any governmental function. Thus, the National Development Company is not immune from suit. It does not exercise sovereign functions. It is an agency for the performance of purely corporate, proprietary or business functions (National Development Company vs. Tobias, 117 Phil. 703, 705 and cases cited therein; National Development Company vs. NDC Employees and Workers' Union, L-32387, August 19, 1975, 66 SCRA 18l, 184). Other government agencies not enjoying immunity from suit are the Social Security System (Social Security System vs. Court of Appeals, L-41299, February 21, 1983, 120 SCRA 707) and the Philippine National Bank (Republic vs. Philippine National Bank, 121 Phil. 26). (at pp. 66-68). We come now to the question of whether respondent court properly agreed with the trial court in imputing negligence on the part of the train engineer and his employer. It was demonstrated beyond cavil in the course of the pre-trial hearings held for the purpose of stipulating on crucial facts that the bus was hit on the rear portion thereof after it crossed the railroad tracks. Then, too the train engineer was frank enough to say that he saw the jeep maneuvering into a parking area near the crossing which caused the obstruction in the flow of traffic such that the gravel and sand truck including the bus of herein private respondent were not able to move forward or to take the opposite lane due to other vehicles. The unmindful demeanor of the train engineer in surging forward despite the obstruction before him is definitely anathema to the conduct of a prudent person placed under the same set of perceived danger. Indeed: When it is apparent, or when in the exercise of reasonable diligence commensurate with the surroundings it should be apparent, to the company that a person on its track or to get on its track is unaware of his danger or cannot get out of the way, it becomes the duty of the company to use such precautions, by warnings, applying brakes, or otherwise, as may be reasonably necessary to avoid injury to him. (65 Am. Jur., Second Edition. p. 649). Likewise, it was established that the weather condition was characterized with intermittent rain which should have prompted the train engineer to exercise extra precaution. Also, the train reached Calumpit, Bulacan ahead of scheduled arrival thereat, indicating that the train was travelling more than the normal speed of 30 kilometers per hour. If the train were really running at 30 kilometers per hour when it was approaching the intersection, it would probably not have travelled 190 meters more from the place of the accident (page 10, Brief for Petitioners). All of these factors, taken collectively, engendered the concrete and yes, correct conclusion that the train engineer was

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negligent who, moreover, despite the last opportunity within his hands vis-a-vis the weather condition including the presence of people near the intersection, could have obviated the impending collision had he slackened his speed and applied the brakes (Picart vs. Smith, 37 Phil. 809 [1918]).Withal, these considerations were addressed to the trial judge who, unlike appellate magistrates, was in a better position to assign weight on factual questions. Having resolved the question of negligence between the train engineer and the bus driver after collating the mass of evidence, the conclusion reached thereafter thus commands great respect especially so in this case where respondent court gave its nod of approval to the findings of the court of origin (Co vs. Court of Appeals, 193 SCRA 198; 206 [1991]); Amigo vs. Teves, 50 O.G. 5799; Regalado, Remedial Law Compendium, Fifth edition, page 353). What exacerbates against petitioners' contention is the authority in this jurisdiction to the effect that the failure of a railroad company to install a semaphore or at the very least, to post a flagman or watchman to warn the public of the passing train amounts to negligence (Lilius vs. Manila Railroad Company, 59 Phil. 758 [1934]). WHEREFORE, the petition is hereby DISMISSED and the decision of respondent court AFFIRMED. SO ORDERED. Gutierrez, Jr., Davide, Jr. and Romero, JJ., concur. Bidin, J., took no part.

PROVISIONS APPLICABLE IN MOTOR VEHICLE MISHAP Art. 2184. In motor vehicle mishaps, the owner is solidarily liable with his driver, if the former, who was in the vehicle, could have, by the use of the due diligence, prevented the misfortune. It is disputably presumed that a driver was negligent, if he had been found guilty or reckless driving or violating traffic regulations at least twice within the next preceding two months. If the owner was not in the motor vehicle, the provisions of Article 2180 are applicable. (n) Art. 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation. (n) Art. 2186. Every owner of a motor vehicle shall file with the proper government office a bond executed by a government-controlled corporation or office, to answer for damages to third persons. The amount of the bond and other terms shall be fixed by the competent public official. (n) Art. 2194. The responsibility of two or more persons who are liable for quasi-delict is solidary. (n)

ST. MARY’S ACADEMY VS CARPITANOS FIRST DIVISION [G.R. No. 143363. February 6, 2002] ST. MARY’S ACADEMY, petitioner, vs. WILLIAM CARPITANOS and LUCIA S. CARPITANOS, GUADA DANIEL, JAMES DANIEL II, JAMES DANIEL, SR., and VIVENCIO VILLANUEVA, respondents. D E C I S I O N PARDO, J.: The Case

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The case is an appeal via certiorari from the decision[1] of the Court of Appeals as well as the resolution denying reconsideration, holding petitioner liable for damages arising from an accident that resulted in the death of a student who had joined a campaign to visit the public schools in Dipolog City to solicit enrollment. The Facts The facts, as found by the Court of Appeals, are as follows: “Claiming damages for the death of their only son, Sherwin Carpitanos, spouses William Carpitanos and Lucia Carpitanos filed on June 9, 1995 a case against James Daniel II and his parents, James Daniel Sr. and Guada Daniel, the vehicle owner, Vivencio Villanueva and St. Mary’s Academy before the Regional Trial Court of Dipolog City. “On 20 February 1997, Branch 6 of the Regional Trial Court of Dipolog City rendered its decision the dispositive portion of which reads as follows: “‘WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered in the following manner: 1. Defendant St. Mary’s Academy of Dipolog City, is hereby ordered to pay plaintiffs William Carpitanos and Luisa Carpitanos, the following sums of money: a. FIFTY THOUSAND PESOS (P50,000.00) indemnity for the loss of life of Sherwin S. Carpitanos; b. FORTY THOUSAND PESOS (P40,000.00) actual damages incurred by plaintiffs for burial and related expenses; c. TEN THOUSAND PESOS (P10,000.00) for attorney’s fees; d. FIVE HUNDRED THOUSAND PESOS (P500,000.00) for moral damages; and to pay costs. 2. Their liability being only subsidiary, defendants James Daniel, Sr. and Guada Daniel are hereby ordered to pay herein plaintiffs the amount of damages above-stated in the event of insolvency of principal obligor St. Mary’s Academy of Dipolog City; 3. Defendant James Daniel II, being a minor at the time of the commission of the tort and who was under special parental authority of defendant St. Mary’s Academy, is ABSOLVED from paying the above-stated damages, same being adjudged against defendants St. Mary’s Academy, and subsidiarily, against his parents; 4. Defendant Vivencio Villanueva is hereby ABSOLVED of any liability. His counterclaim not being in order as earlier discussed in this decision, is hereby DISMISSED. IT IS SO ORDERED.”’ (Decision, pp. 32-33; Records, pp. 205-206).” “From the records it appears that from 13 to 20 February 1995, defendant-appellant St. Mary’s Academy of Dipolog City conducted an enrollment drive for the school year 1995-1996. A facet of the enrollment campaign was the visitation of schools from where prospective enrollees were studying. As a student of St. Mary’s Academy, Sherwin Carpitanos was part of the campaigning group. Accordingly, on the fateful day, Sherwin, along with other high school students were riding in a Mitsubishi jeep owned by defendant Vivencio Villanueva on their way to Larayan Elementary School, Larayan, Dapitan City. The jeep was driven by James Daniel II then 15 years old and a student of the same school. Allegedly, the latter drove the jeep in a reckless manner and as a result the jeep turned turtle. “Sherwin Carpitanos died as a result of the injuries he sustained from the accident.”[2] In due time, petitioner St. Mary’s academy appealed the decision to the Court of Appeals.[3] On February 29, 2000, the Court of Appeals promulgated a decision reducing the actual damages to P25,000.00 but otherwise affirming the decision a quo, in toto.[4]

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On February 29, 2000, petitioner St. Mary’s Academy filed a motion for reconsideration of the decision. However, on May 22, 2000, the Court of Appeals denied the motion.[5] Hence, this appeal.[6] The Issues 1) Whether the Court of Appeals erred in holding the petitioner liable for damages for the death of Sherwin Carpitanos. 2) Whether the Court of Appeals erred in affirming the award of moral damages against the petitioner. The Court’s Ruling We reverse the decision of the Court of Appeals. The Court of Appeals held petitioner St. Mary’s Academy liable for the death of Sherwin Carpitanos under Articles 218[7] and 219[8] of the Family Code, pointing out that petitioner was negligent in allowing a minor to drive and in not having a teacher accompany the minor students in the jeep. Under Article 218 of the Family Code, the following shall have special parental authority over a minor child while under their supervision, instruction or custody: (1) the school, its administrators and teachers; or (2) the individual, entity or institution engaged in child care. This special parental authority and responsibility applies to all authorized activities, whether inside or outside the premises of the school, entity or institution. Thus, such authority and responsibility applies to field trips, excursions and other affairs of the pupils and students outside the school premises whenever authorized by the school or its teachers.[9] Under Article 219 of the Family Code, if the person under custody is a minor, those exercising special parental authority are principally and solidarily liable for damages caused by the acts or omissions of the unemancipated minor while under their supervision, instruction, or custody.[10] However, for petitioner to be liable, there must be a finding that the act or omission considered as negligent was the proximate cause of the injury caused because the negligence must have a causal connection to the accident.[11] “In order that there may be a recovery for an injury, however, it must be shown that the ‘injury for which recovery is sought must be the legitimate consequence of the wrong done; the connection between the negligence and the injury must be a direct and natural sequence of events, unbroken by intervening efficient causes.’ In other words, the negligence must be the proximate cause of the injury. For, ‘negligence, no matter in what it consists, cannot create a right of action unless it is the proximate cause of the injury complained of.’ And ‘the proximate cause of an injury 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.’”[12] In this case, the respondents failed to show that the negligence of petitioner was the proximate cause of the death of the victim. Respondents Daniel spouses and Villanueva admitted that the immediate cause of the accident was not the negligence of petitioner or the reckless driving of James Daniel II, but the detachment of the steering wheel guide of the jeep. In their comment to the petition, respondents Daniel spouses and Villanueva admitted the documentary exhibits establishing that the cause of the accident was the detachment of the steering wheel guide of the jeep. Hence, the cause of the accident was not the recklessness of James Daniel II but the mechanical defect in the jeep of Vivencio Villanueva. Respondents, including the spouses Carpitanos, parents of the deceased Sherwin Carpitanos, did not dispute the report and testimony of the traffic investigator who stated that the cause of the accident was the detachment of the steering wheel guide that caused the jeep to turn turtle.

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Significantly, respondents did not present any evidence to show that the proximate cause of the accident was the negligence of the school authorities, or the reckless driving of James Daniel II. Hence, the respondents’ reliance on Article 219 of the Family Code that “those given the authority and responsibility under the preceding Article shall be principally and solidarily liable for damages caused by acts or omissions of the unemancipated minor” was unfounded. Further, there was no evidence that petitioner school allowed the minor James Daniel II to drive the jeep of respondent Vivencio Villanueva. It was Ched Villanueva, grandson of respondent Vivencio Villanueva, who had possession and control of the jeep. He was driving the vehicle and he allowed James Daniel II, a minor, to drive the jeep at the time of the accident. Hence, liability for the accident, whether caused by the negligence of the minor driver or mechanical detachment of the steering wheel guide of the jeep, must be pinned on the minor’s parents primarily. The negligence of petitioner St. Mary’s Academy was only a remote cause of the accident. Between the remote cause and the injury, there intervened the negligence of the minor’s parents or the detachment of the steering wheel guide of the jeep. “The proximate cause of an injury 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.”[13] Considering that the negligence of the minor driver or the detachment of the steering wheel guide of the jeep owned by respondent Villanueva was an event over which petitioner St. Mary’s Academy had no control, and which was the proximate cause of the accident, petitioner may not be held liable for the death resulting from such accident. Consequently, we find that petitioner likewise cannot be held liable for moral damages in the amount of P500,000.00 awarded by the trial court and affirmed by the Court of Appeals. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant’s wrongful act or omission.[14] In this case, the proximate cause of the accident was not attributable to petitioner. For the reason that petitioner was not directly liable for the accident, the decision of the Court of Appeals ordering petitioner to pay death indemnity to respondent Carpitanos must be deleted. Moreover, the grant of attorney’s fees as part of damages is the exception rather than the rule.[15] The power of the court to award attorney’s fees under Article 2208 of the Civil Code demands factual, legal and equitable justification.[16] Thus, the grant of attorney’s fees against the petitioner is likewise deleted. Incidentally, there was no question that the registered owner of the vehicle was respondent Villanueva. He never denied and in fact admitted this fact. We have held that the registered owner of any vehicle, even if not used for public service, would primarily be responsible to the public or to third persons for injuries caused the latter while the vehicle was being driven on the highways or streets.”[17] Hence, with the overwhelming evidence presented by petitioner and the respondent Daniel spouses that the accident occurred because of the detachment of the steering wheel guide of the jeep, it is not the school, but the registered owner of the vehicle who shall be held responsible for damages for the death of Sherwin Carpitanos. The Fallo WHEREFORE, the Court REVERSES and SETS ASIDE the decision of the Court of Appeals[18] and that of the trial court.[19] The Court remands the case to the trial court for determination of the liability of defendants, excluding petitioner St. Mary’s Academy, Dipolog City. No costs. SO ORDERED. Davide, Jr., C.J., (Chairman), Kapunan, and Ynares-Santiago, JJ., concur.

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Puno, J., in the result.

FEB LEASING & FINANCE CORP. VS SPS. BAYLON SECOND DIVISION FEB LEASING AND FINANCE CORPORATION (now BPI LEASING CORPORATION) , Petitioner, - versus - SPOUSES SERGIO P. BAYLON and MARITESS VILLENA-BAYLON, BG HAULER, INC., and MANUEL Y. ESTILLOSO, Respondents. June 29, 2011 G.R. No. 181398 D E C I S I O N CARPIO, J.: The Case This is a petition for review on certiorari1 of the 9 October 2007 Decision2 and the 18 January 2008 Resolution3 of the Court of Appeals in CA-G.R. CV No. 81446. The 9 October 2007 Decision affirmed the 30 October 2003 Decision4 of the Regional Trial Court (Branch 35) of Gapan City in Civil Case No. 2334 ordering petitioner to pay respondents damages. The 18 January 2008 Resolution denied petitioner’s motion for reconsideration. The Facts On 2 September 2000, an Isuzu oil tanker running along Del Monte Avenue in Quezon City and bearing plate number TDY 712 hit Loretta V. Baylon (Loretta), daughter of respondent spouses Sergio P. Baylon and Maritess Villena-Baylon (spouses Baylon). At the time of the accident, the oil tanker was registered5 in the name of petitioner FEB Leasing and Finance Corporation6 (petitioner). The oil tanker was leased7 to BG Hauler, Inc. (BG Hauler) and was being driven by the latter’s driver, Manuel Y. Estilloso. The oil tanker was insured8 by FGU Insurance Corp. (FGU Insurance). The accident took place at around 2:00 p.m. as the oil tanker was coming from Balintawak and heading towards Manila. Upon reaching the intersection of Bonifacio Street and Del Monte Avenue, the oil tanker turned left. While the driver of the oil tanker was executing a left turn side by side with another vehicle towards Del Monte Avenue, the oil tanker hit Loretta who was then crossing Del Monte Avenue coming from Mayon Street. Due to the strong impact, Loretta was violently thrown away about three to five meters from the point of impact. She fell to the ground unconscious. She was brought for treatment to the Chinese General Hospital where she remained in a coma until her death two days after.9 The spouses Baylon filed with the RTC (Branch 35) of Gapan City a Complaint10 for damages against petitioner, BG Hauler, the driver, and FGU Insurance. Petitioner filed its answer with compulsory counterclaim while FGU Insurance filed its answer with counterclaim. On the other hand, BG Hauler filed its answer with compulsory counterclaim and cross-claim against FGU Insurance. Petitioner claimed that the spouses Baylon had no cause of action against it because under its lease contract with BG Hauler, petitioner was not liable for any loss, damage, or injury that the leased oil tanker might cause. Petitioner claimed that no employer-employee relationship existed between petitioner and the driver.

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BG Hauler alleged that neither do the spouses Baylon have a cause of action against it since the oil tanker was not registered in its name. BG Hauler contended that the victim was guilty of contributory negligence in crossing the street. BG Hauler claimed that even if its driver was at fault, BG Hauler exercised the diligence of a good father of a family in the selection and supervision of its driver. BG Hauler also contended that FGU Insurance is obliged to assume all liabilities arising from the use of the insured oil tanker. For its part, FGU Insurance averred that the victim was guilty of contributory negligence. FGU Insurance concluded that the spouses Baylon could not expect to be paid the full amount of their claims. FGU Insurance pointed out that the insurance policy covering the oil tanker limited any claim to a maximum of P400,000.00. During trial, FGU Insurance moved that (1) it be allowed to deposit in court the amount of P450,000.00 in the joint names of the spouses Baylon, petitioner, and BG Hauler and (2) it be released from further participating in the proceedings. After the RTC granted the motion, FGU Insurance deposited in the Branch Clerk of Court a check in the names of the spouses Baylon, petitioner, and BG Hauler. The RTC then released FGU Insurance from its contractual obligations under the insurance policy. The Ruling of the RTC After weighing the evidence submitted by the parties, the RTC found that the death of Loretta was due to the negligent act of the driver. The RTC held that BG Hauler, as the employer, was solidarily liable with the driver. The RTC further held that petitioner, as the registered owner of the oil tanker, was also solidarily liable. The RTC found that since FGU Insurance already paid the amount of P450,000.00 to the spouses Baylon, BG Hauler, and petitioner, the insurer’s obligation has been satisfactorily fulfilled. The RTC thus dismissed the cross-claim of BG Hauler against FGU Insurance. The decretal part of the RTC’s decision reads: Wherefore, premises considered, judgment is hereby rendered in favor of the plaintiffs and against defendants FEB Leasing (now BPI Leasing), BG Hauler, and Manuel Estilloso, to wit: 1. Ordering the defendants, jointly and severally, to pay plaintiffs the following:

a. the amount of P62,000.00 representing actual expenses incurred by the plaintiffs; b. the amount of P50,000.00 as moral damages; c. the amount of P2,400,000.00 for loss of earning capacity of the deceased victim, Loretta V. Baylon; d. the sum of P50,000.00 for death indemnity; e. the sum of P50,000.00 for and as attorney’s fees; and f. with costs against the defendants.

2. Ordering the dismissal of defendants’ counter-claim for lack of merit and the cross claim of defendant BG Hauler against defendant FGU Insurance. SO ORDERED.11 Petitioner, BG Hauler, and the driver appealed the RTC Decision to the Court of Appeals. Petitioner claimed that as financial lessor, it is exempt from liability resulting from any loss, damage, or injury the oil tanker may cause while being operated by BG Hauler as financial lessee. On the other hand, BG Hauler and the driver alleged that no sufficient evidence existed proving the driver to be at fault. They claimed that the RTC erred in finding BG Hauler negligent despite the fact that it had exercised the diligence of a good father of a family in the selection and supervision of its driver and in the maintenance of its vehicles. They contended that petitioner, as the registered owner of the oil tanker, should be solely liable for Loretta’s death. The Ruling of the Court of Appeals The Court of Appeals held that petitioner, BG Hauler, and the driver are solidarily liable for damages arising from Loretta’s death. Petitioner’s liability arose from the fact that it was the registered owner

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of the oil tanker while BG Hauler’s liability emanated from a provision in the lease contract providing that the lessee shall be liable in case of any loss, damage, or injury the leased oil tanker may cause. Thus, the Court of Appeals affirmed the RTC Decision but with the modification that the award of attorney’s fees be deleted for being speculative. The dispositive part of the appellate court’s Decision reads: WHEREFORE, in the light of the foregoing, the instant appeal is DENIED. Consequently, the assailed Decision of the lower court is AFFIRMED with the MODIFICATION that the award of attorney’s fees is DELETED. IT IS SO ORDERED.12 Dissatisfied, petitioner and BG Hauler, joined by the driver, filed two separate motions for reconsideration. In its 18 January 2008 Resolution, the Court of Appeals denied both motions for lack of merit. Unconvinced, petitioner alone filed with this Court the present petition for review on certiorari impleading the spouses Baylon, BG Hauler, and the driver as respondents.13 The Issue The sole issue submitted for resolution is whether the registered owner of a financially leased vehicle remains liable for loss, damage, or injury caused by the vehicle notwithstanding an exemption provision in the financial lease contract. The Court’s Ruling Petitioner contends that the lease contract between BG Hauler and petitioner specifically provides that BG Hauler shall be liable for any loss, damage, or injury the leased oil tanker may cause even if petitioner is the registered owner of the said oil tanker. Petitioner claims that the Court of Appeals erred in holding petitioner solidarily liable with BG Hauler despite having found the latter liable under the lease contract. For their part, the spouses Baylon counter that the lease contract between petitioner and BG Hauler cannot bind third parties like them. The spouses Baylon maintain that the existence of the lease contract does not relieve petitioner of direct responsibility as the registered owner of the oil tanker that caused the death of their daughter. On the other hand, BG Hauler and the driver argue that at the time petitioner and BG Hauler entered into the lease contract, Republic Act No. 598014 was still in effect. They point out that the amendatory law, Republic Act No. 8556,15 which exempts from liability in case of any loss, damage, or injury to third persons the registered owners of vehicles financially leased to another, was not yet enacted at that time. In point is the 2008 case of PCI Leasing and Finance, Inc. v. UCPB General Insurance Co., Inc.16 There, we held liable PCI Leasing and Finance, Inc., the registered owner of an 18-wheeler Fuso Tanker Truck leased to Superior Gas & Equitable Co., Inc. (SUGECO) and being driven by the latter’s driver, for damages arising from a collision. This despite an express provision in the lease contract to the effect that the lessee, SUGECO, shall indemnify and hold the registered owner free from any liabilities, damages, suits, claims, or judgments arising from SUGECO’s use of the leased motor vehicle. In the instant case, Section 5.1 of the lease contract between petitioner and BG Hauler provides: Sec. 5.1. It is the principle of this Lease that while the title or ownership of the EQUIPMENT, with all the rights consequent thereof, are retained by the LESSOR, the risk of loss or damage of the EQUIPMENT from whatever source arising, as well as any liability resulting from the ownership, operation and/or possession thereof, over and above those actually compensated by insurance, are hereby transferred to and assumed by the LESSEE hereunder which shall continue in full force and effect.17 (Emphasis supplied)

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If it so wishes, petitioner may proceed against BG Hauler to seek enforcement of the latter’s contractual obligation under Section 5.1 of the lease contract. In the present case, petitioner did not file a cross-claim against BG Hauler. Hence, this Court cannot require BG Hauler to reimburse petitioner for the latter’s liability to the spouses Baylon. However, as the registered owner of the oil tanker, petitioner may not escape its liability to third persons. Under Section 5 of Republic Act No. 4136,18 as amended, all motor vehicles used or operated on or upon any highway of the Philippines must be registered with the Bureau of Land Transportation (now Land Transportation Office) for the current year.19 Furthermore, any encumbrances of motor vehicles must be recorded with the Land Transportation Office in order to be valid against third parties.20 In accordance with the law on compulsory motor vehicle registration, this Court has consistently ruled that, with respect to the public and third persons, the registered owner of a motor vehicle is directly and primarily responsible for the consequences of its operation regardless of who the actual vehicle owner might be.21 Well-settled is the rule that the registered owner of the vehicle is liable for quasi-delicts resulting from its use. Thus, even if the vehicle has already been sold, leased, or transferred to another person at the time the vehicle figured in an accident, the registered vehicle owner would still be liable for damages caused by the accident. The sale, transfer or lease of the vehicle, which is not registered with the Land Transportation Office, will not bind third persons aggrieved in an accident involving the vehicle. The compulsory motor vehicle registration underscores the importance of registering the vehicle in the name of the actual owner. The policy behind the rule is to enable the victim to find redress by the expedient recourse of identifying the registered vehicle owner in the records of the Land Transportation Office. The registered owner can be reimbursed by the actual owner, lessee or transferee who is known to him. Unlike the registered owner, the innocent victim is not privy to the lease, sale, transfer or encumbrance of the vehicle. Hence, the victim should not be prejudiced by the failure to register such transaction or encumbrance. As the Court held in PCI Leasing: The burden of registration of the lease contract is minuscule compared to the chaos that may result if registered owners or operators of vehicles are freed from such responsibility. Petitioner pays the price for its failure to obey the law on compulsory registration of motor vehicles for registration is a pre-requisite for any person to even enjoy the privilege of putting a vehicle on public roads.22 In the landmark case of Erezo v. Jepte,23 the Court succinctly laid down the public policy behind the rule, thus: 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. x x x Were a registered owner allowed to evade responsibility by proving who the supposed transferee or owner is, it would be easy for him, by collusion with others or, or otherwise, to escape said responsibility and transfer the same to an indefinite person, or to one who possesses no property with which to respond financially for the damage or injury done. A victim of recklessness on the public highways is usually without means to discover or identify the person actually causing the injury or damage. He has no means other than by a recourse to the registration in the Motor Vehicles Office to determine who is the owner. The protection that the law aims to extend to him would become illusory were the registered owner given the opportunity to escape liability by disproving his ownership. If the policy of the law is to be enforced and carried out, the registered owner should not be allowed to prove the contrary to the prejudice of the person injured, that is to prove that a third person or another has become the owner, so that he may be thereby be relieved of the responsibility to the injured person.24

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In this case, petitioner admits that it is the registered owner of the oil tanker that figured in an accident causing the death of Loretta. As the registered owner, it cannot escape liability for the loss arising out of negligence in the operation of the oil tanker. Its liability remains even if at the time of the accident, the oil tanker was leased to BG Hauler and was being driven by the latter’s driver, and despite a provision in the lease contract exonerating the registered owner from liability. As a final point, we agree with the Court of Appeals that the award of attorney’s fees by the RTC must be deleted for lack of basis. The RTC failed to justify the award of P50,000 attorney’s fees to respondent spouses Baylon. The award of attorney’s fees must have some factual, legal and equitable bases and cannot be left to speculations and conjectures.25 Consistent with prevailing jurisprudence,26 attorney’s fees as part of damages are awarded only in the instances enumerated in Article 2208 of the Civil Code.27 Thus, the award of attorney’s fees is the exception rather than the rule. Attorney’s fees are not awarded every time a party prevails in a suit because of the policy that no premium should be placed on the right to litigate.28 WHEREFORE, we DENY the petition. We AFFIRM the 9 October 2007 Decision and the 18 January 2008 Resolution of the Court of Appeals in CA-G.R. CV No. 81446 affirming with modification the 30 October 2003 Decision of the Regional Trial Court (Branch 35) of Gapan City in Civil Case No. 2334 ordering petitioner FEB Leasing and Finance Corporation, BG Hauler, Inc., and driver Manuel Y. Estilloso to solidarily pay respondent spouses Sergio P. Baylon and Maritess Villena-Baylon the following amounts: a. P62,000.00 representing actual expenses incurred by the plaintiffs; b. P50,000.00 as moral damages; c. P2,400,000.00 for loss of earning capacity of the deceased victim, Loretta V. Baylon; and d. P50,000.00 for death indemnity. Costs against petitioner. SO ORDERED.

RELIEFS Art. 2181. Whoever pays for the damage caused by his dependents or employees may recover from the latter what he has paid or delivered in satisfaction of the claim. (1904) Art. 2182. If the minor or insane person causing damage has no parents or guardian, the minor or insane person shall be answerable with his own property in an action against him where a guardian ad litem shall be appointed. (n)