G.R. No.

157906

November 2, 2006

JOAQUINITA P. CAPILI, Petitioner,

vs.
SPS. DOMINADOR CARDAA and ROSALITA CARDAA, Respondents.
DECISION
QUISUMBING, J.:
Before us is a petition for review assailing the Decision1 dated October 18, 2002 of the Court of Appeals in CA-G.R. CV. No. 54412, declaring
petitioner liable for negligence that resulted in the death of Jasmin Cardaa, a school child aged 12, enrolled in Grade 6, of San Roque Elementary
School, where petitioner is the principal. Likewise assailed is the Resolution2 dated March 20, 2003 denying reconsideration.
The facts are as follows:
On February 1, 1993, Jasmin Cardaa was walking along the perimeter fence of the San Roque Elementary School when a branch of a caimito tree
located within the school premises fell on her, causing her instantaneous death. Thus, her parents - Dominador and Rosalita Cardaa - filed a case for
damages before the Regional Trial Court of Palo, Leyte against petitioner.
The Cardaas alleged in their complaint that even as early as December 15, 1992, a resident of the barangay, Eufronio Lerios, reported on the
possible danger the tree posed to passersby. Lerios even pointed to the petitioner the tree that stood near the principals office. The Cardaas averred
that petitioners gross negligence and lack of foresight caused the death of their daughter.
Petitioner denied the accusation and said that at that time Lerios had only offered to buy the tree. She also denied knowing that the tree was dead and
rotting. To prove her point, she presented witnesses who attested that she had brought up the offer of Lerios to the other teachers during a meeting on
December 15, 1992 and assigned Remedios Palaa to negotiate the sale.
In a Decision3 dated February 5, 1996, the trial court dismissed the complaint for failure of the respondents to establish negligence on the part of the
petitioner.
On appeal, the Court of Appeals reversed the trial courts decision. The appellate court found the appellee (herein petitioner) liable for Jasmins death,
as follows:
Foregoing premises considered, the instant appeal is GRANTED. Appellee Joaquinita Capili is hereby declared liable for negligence resulting to the
death of Jasmin D. Cardaa. She is hereby ordered to indemnify appellants, parents of Jasmin, the following amounts:

1. For the life of Jasmin D. Cardaa P50,000.00;

2. For burial expenses 15,010.00;
3. For moral damages 50,000.00;
4.
expenses

For

attorneys

fees

and

litigation

10,000.00.

SO ORDERED.4
Petitioners motion for reconsideration was denied. Petitioner now comes before us submitting the following issues for our resolution:
I
WHETHER OR NOT THE COURT OF APPEALS VIS--VIS THE SET OF FACTS STATED IN THE CHALLENGED DECISION, ERRED IN
FINDING THE PETITIONER NEGLIGENT AND THEREFORE LIABLE FOR DAMAGES UNDER ARTICLE 2206 OF THE CIVIL CODE AND IN
ORDERING THE PETITIONER TO PAY DAMAGES TO THE RESPONDENTS; AND
II
WHETHER OR NOT THE COURT OF APPEALS ERRED IN DENYING PETITIONERS MOTION FOR RECONSIDERATION.5
On the other hand, respondents posit the following issue:
Whether or not the Decision of the Honorable Court of Appeals, Twelfth Division, in CA G.R. CV. No. 54412 promulgated on October 18, 2002
should be affirmed and respected, thus remain undisturbed.6
Primarily, the issue is whether petitioner is negligent and liable for the death of Jasmin Cardaa.
Petitioner asserts that she was not negligent about the disposal of the tree since she had assigned her next-in-rank, Palaa, to see to its disposal; that
despite her physical inspection of the school grounds, she did not observe any indication that the tree was already rotten nor did any of her 15
teachers inform her that the tree was already rotten;7 and that moral damages should not be granted against her since there was no fraud nor bad
faith on her part.
On the other hand, respondents insist that petitioner knew that the tree was dead and rotting, yet, she did not exercise reasonable care and caution
which an ordinary prudent person would have done in the same situation.

To begin, we have to point out that whether petitioner was negligent or not is a question of fact which is generally not proper in a petition for review,
and when this determination is supported by substantial evidence, it becomes conclusive and binding on this Court.8 However, there is an exception,
that is, when the findings of the Court of Appeals are incongruent with the findings of the lower court.9 In our view, the exception finds application in
the present case.
The trial court gave credence to the claim of petitioner that she had no knowledge that the tree was already dead and rotting and that Lerios merely
informed her that he was going to buy the tree for firewood. It ruled that petitioner exercised the degree of care and vigilance which the circumstances
require and that there was an absence of evidence that would require her to use a higher standard of care more than that required by the attendant
circumstances.10 The Court of Appeals, on the other hand, ruled that petitioner should have known of the condition of the tree by its mere sighting and
that no matter how hectic her schedule was, she should have had the tree removed and not merely delegated the task to Palaa. The appellate court
ruled that the deadcaimito tree was a nuisance that should have been removed soon after petitioner had chanced upon it.11
A negligent act is an inadvertent act; it may be merely carelessly done from a lack of ordinary prudence and may be one which creates a situation
involving an unreasonable risk to another because of the expectable action of the other, a third person, an animal, or a force of nature. A negligent act
is one from which an ordinary prudent person in the actors position, in the same or similar circumstances, would foresee such an appreciable risk of
harm to others as to cause him not to do the act or to do it in a more careful manner.12
The probability that the branches of a dead and rotting tree could fall and harm someone is clearly a danger that is foreseeable. As the school
principal, petitioner was tasked to see to the maintenance of the school grounds and safety of the children within the school and its premises. That she
was unaware of the rotten state of a tree whose falling branch had caused the death of a child speaks ill of her discharge of the responsibility of her
position.
In every tort case filed under Article 2176 of the Civil Code, plaintiff has to prove by a preponderance of evidence: (1) the damages suffered by the
plaintiff; (2) the fault or negligence of the defendant or some other person for whose act he must respond; and (3) the connection of cause and effect
between the fault or negligence and the damages incurred.13
The fact, however, that respondents daughter, Jasmin, died as a result of the dead and rotting tree within the schools premises shows that the tree
was indeed an obvious danger to anyone passing by and calls for application of the principle of res ipsa loquitur.
The doctrine of res ipsa loquitur applies where (1) the accident was of such character as to warrant an inference that it would not have happened
except for the defendants negligence; (2) the accident must have been caused by an agency or instrumentality within the exclusive management or
control of the person charged with the negligence complained of; and (3) the accident must not have been due to any voluntary action or contribution
on the part of the person injured.14
The effect of the doctrine of res ipsa loquitur is to warrant a presumption or inference that the mere falling of the branch of the dead and rotting tree
which caused the death of respondents daughter was a result of petitioners negligence, being in charge of the school.

In the case of D.M. Consunji, Inc. v. Court of Appeals,15 this Court held:
As a rule of evidence, the doctrine of res ipsa loquitur is peculiar to the law of negligence which recognizes that prima facie negligence may be
established without direct proof and furnishes a substitute for specific proof of negligence.
The concept of res ipsa loquitur has been explained in this wise:
While negligence is not ordinarily inferred or presumed, and while the mere happening of an accident or injury will not generally give rise to an
inference or presumption that it was due to negligence on defendants part, under the doctrine of res ipsa loquitur, which means, literally, the thing or
transaction speaks for itself, or in one jurisdiction, that the thing or instrumentality speaks for itself, the facts or circumstances accompanying an injury
may be such as to raise a presumption, or at least permit an inference of negligence on the part of the defendant, or some other person who is
charged with negligence.
x x x where it is shown that the thing or instrumentality which caused the injury complained of was under the control or management of the defendant,
and that the occurrence resulting in the injury was such as in the ordinary course of things would not happen if those who had its control or
management used proper care, there is sufficient evidence, or, as sometimes stated, reasonable evidence, in the absence of explanation by the
defendant, that the injury arose from or was caused by the defendants want of care.
The procedural effect of the doctrine of res ipsa loquitur is that petitioners negligence is presumed once respondents established the requisites for the
doctrine to apply. Once respondents made out a prima facie case of all requisites, the burden shifts to petitioner to explain. The presumption or
inference may be rebutted or overcome by other evidence and, under appropriate circumstances a disputable presumption, such as that of due care
or innocence, may outweigh the inference.16
Was petitioners explanation as to why she failed to have the tree removed immediately sufficient to exculpate her?
As the school principal, petitioner was tasked to see to the maintenance of the school grounds and safety of the children within the school and its
premises. That she was unaware of the rotten state of the tree calls for an explanation on her part as to why she failed to be vigilant.
Petitioner contends she was unaware of the state of the dead and rotting tree because Lerios merely offered to buy the tree and did not inform her of
its condition. Neither did any of her teachers inform her that the tree was an imminent danger to anyone. She argues that she could not see the
immediate danger posed by the tree by its mere sighting even as she and the other teachers conducted ground inspections. She further argues that,
even if she should have been aware of the danger, she exercised her duty by assigning the disposition of the tree to another teacher.
We find petitioners explanation wanting. As school principal, petitioner is expected to oversee the safety of the schools premises.1wphi1 The fact
that she failed to see the immediate danger posed by the dead and rotting tree shows she failed to exercise the responsibility demanded by her
position.

Moreover, even if petitioner had assigned disposal of the tree to another teacher, she exercises supervision over her assignee.17 The record shows
that more than a month had lapsed from the time petitioner gave instruction to her assistant Palaa on December 15, 1992, to the time the incident
occurred on February 1, 1993. Clearly, she failed to check seasonably if the danger posed by the rotting tree had been removed. Thus, we cannot
accept her defense of lack of negligence.
Lastly, petitioner questions the award of moral damages. Moral damages are awarded if the following elements exist in the case: (1) an injury clearly
sustained by the claimant; (2) a culpable act or omission factually established; (3) a wrongful act or omission by the defendant as the proximate cause
of the injury sustained by the claimant; and (4) the award of damages predicated on any of the cases stated in Article 2219 of the Civil
Code.18 However, the person claiming moral damages must prove the existence of bad faith by clear and convincing evidence for the law always
presumes good faith. It is not enough that one merely suffered sleepless nights, mental anguish, and serious anxiety as the result of the actuations of
the other party. Invariably, such action must be shown to have been willfully done in bad faith or with ill motive.19 Under the circumstances, we have to
concede that petitioner was not motivated by bad faith or ill motive vis--vis respondents daughters death. The award of moral damages is therefore
not proper.
In line with applicable jurisprudence, we sustain the award by the Court of Appeals of P50,000 as indemnity for the death of Jasmin,20 and P15,010 as
reimbursement of her burial expenses.21
WHEREFORE, the petition is DENIED. The Decision dated October 18, 2002 and the Resolution dated March 20, 2003, of the Court of Appeals in
CA-G.R. CV. No. 54412 are AFFIRMED with MODIFICATION such that the award of moral damages is hereby deleted.
Costs against petitioner.
G.R. No. 169891

November 2, 2006

PHILIPPINE NATIONAL RAILWAYS, Petitioner,

vs.
ETHEL BRUNTY and JUAN MANUEL M. GARCIA, Respondents.
DECISION
CALLEJO, SR., J.:
This is a Petition for Review on Certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 47567 and its Resolution2 denying the
motion for reconsideration thereof. The assailed decision affirmed with partial modification the ruling 3 of the Regional Trial Court (RTC) of Manila,
Branch 20, directing petitioner Philippine National Railways (PNR) to indemnify respondents Ethel Brunty and Juan Manuel M. Garcia for the death of
Rhonda Brunty, and to pay actual and moral damages, attorneys fees and cost of suit.

Rhonda Brunty, daughter of respondent Ethel Brunty and an American citizen, came to the Philippines for a visit sometime in January 1980. Prior to
her departure, she, together with her Filipino host Juan Manuel M. Garcia, traveled to Baguio City on board a Mercedes Benz sedan with plate
number FU 799, driven by Rodolfo L. Mercelita. It was about 12:00 midnight, January 25, 1980. By then, PNR Train No. T-71, driven by Alfonso
Reyes, was on its way to Tutuban, Metro Manila4 as it had left the La Union station at 11:00 p.m., January 24, 1980.
By 2:00 a.m., Rhonda Brunty, Garcia and Mercelita were already approaching the railroad crossing at Barangay Rizal, Moncada, Tarlac. Mercelita,
driving at approximately 70 km/hr, drove past a vehicle, unaware of the railroad track up ahead and that they were about to collide with PNR Train No.
T-71. Mercelita was instantly killed when the Mercedes Benz smashed into the train; the two other passengers suffered serious physical injuries.5 A
certain James Harrow6 brought Rhonda Brunty to the Central Luzon Doctors Hospital in Tarlac, where she was pronounced dead after ten minutes
from arrival. Garcia, who had suffered severe head injuries, was brought via ambulance to the same hospital. He was transferred to the Manila
Doctors Hospital, and later to the Makati Medical Center for further treatment.7
On July 28, 1981, Ethel Brunty sent a demand letter8 to the PNR demanding payment of actual, compensatory, and moral damages, as a result of her
daughters death. When PNR did not respond, Ethel Brunty and Garcia, filed a complaint9 for damages against the PNR before the RTC of Manila.
The case was raffled to Branch 20 and was docketed as Civil Case No. 83-18645. They alleged that the death of Mercelita and Rhonda Brunty, as
well as the physical injuries suffered by Garcia, were the direct and proximate result of the gross and reckless negligence of PNR in not providing the
necessary equipment at the railroad crossing in Barangay Rizal, Municipality of Moncada, Tarlac. They pointed out that there was no flagbar or red
light signal to warn motorists who were about to cross the railroad track, and that the flagman or switchman was only equipped with a hand
flashlight.10 Plaintiffs likewise averred that PNR failed to supervise its employees in the performance of their respective tasks and duties, more
particularly the pilot and operator of the train.11 They prayed for the payment of the following damages:
1.) P200,000.00 as actual and compensatory damages to plaintiff Ethel Brunty;
2.) P2,800,000.00 for compensatory damages to plaintiff Ethel Brunty representing lost or unearned income of Rhonda Brunty;
3.) Such amounts of moral and exemplary damages as may be warranted by the evidence adduced, to plaintiff Ethel Brunty;
4.) At least P64,057.61 as actual damages representing medical expenses to plaintiff Juan Manuel M. Garcia and at least P1,000,000.00 as
unearned or lost income of said plaintiff;
5.) At least P72,760.00 as actual damages representing cost of the Mercedes Benz car to plaintiff Juan Manuel M. Garcia;
6.) Such amounts of moral and exemplary damages as may be warranted by the evidence adduced, to plaintiff Juan Manuel M. Garcia; and
7.) Attorneys fees equivalent to at least 15% of the total award to plaintiffs herein.12

In its Answer,13 PNR claimed that it exercised the diligence of a good father of a family not only in the selection but also in the supervision of its
employees.14 By way of special and affirmative defense, it stressed that it had the right of way on the railroad crossing in question, and that it has no
legal duty to put up a bar or red light signal in any such crossing. It insisted that there were adequate, visible, and clear warning signs strategically
posted on the sides of the road before the railroad crossing. It countered that the immediate and proximate cause of the accident was Mercelitas
negligence, and that he had the last clear chance to avoid the accident. The driver disregarded the warning signs, the whistle blasts of the oncoming
train and the flashlight signals to stop given by the guard.15 As counterclaim, it prayed that it be awarded actual and compensatory damages, and
litigation expenses.16
Plaintiffs filed an Amended Complaint17 dated July 28, 1986 to include, as party plaintiff, Chemical Industries of the Philippines, Inc. (Chemphil),
Garcias employer, who claimed to have paid for the latters medical and hospitalization expenses, the services rendered by the funeral parlor of the
deceased, and the expenses in transferring the remains of Rhonda Brunty to the United States.18
After trial on the merits, the RTC rendered its Decision19 on May 21, 1990 in favor of plaintiffs. The fallo reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs Ethel Brunty and Juan Manuel M. Garcia and against the defendant Philippine
National Railways directing the latter to pay the former the sum of:
1. Thirty Thousand Pesos (P30,000.00) Philippine Currency, for the death of Rhonda Brunty formerly a resident of 1595 Ashland Avenue, Des
Plaines, Illinois, U.S.A.;
2. One Million Pesos (P1,000,000.00) Philippine Currency for moral and actual damages due the heirs of Rhonda Brunty;
3. Seventy-Two Thousand Seven Hundred Sixty Pesos (P72,760.00) Philippine Currency for damages sustained by the Mercedes Benz;
4. Fifty Thousand Pesos (P50,000.00) Philippine Currency as and for attorney's fees, and;
5. Costs of suit.
SO ORDERED.20
Aggrieved, the PNR appealed the case to the CA, raising the following errors:
I.
THE TRIAL COURT ERRED IN ADJUDGING DEFENDANT-APPELLANT PNR LIABLE FOR THE DEATH OF RHONDA BRUNTY AND THE
CONSEQUENT AWARD OF DAMAGES DUE THE HEIRS OF RHONDA BRUNTY.

II.
THE TRIAL COURT ERRED IN ADJUDGING DEFENDANT-APPELLANT PNR LIABLE FOR THE DAMAGES SUFFERED BY PLAINTIFFAPPELLEES MERCEDES BENZ IN THE AMOUNT OF SEVENTY-TWO THOUSAND SEVEN HUNDRED AND SIXTY PESOS (P72,760.00).
III.
THE LOWER COURT ERRED IN AWARDING ATTORNEYS FEES TO THE PLAINTIFFS-APPELLEES.21
In its Brief, PNR insisted that the sole and proximate cause of the accident was the negligence and recklessness of Garcia and Mercelita.22 It insisted
that it had provided adequate warning signals at the railroad crossing23 and had exercised due care in the selection and supervision of its
employees.24 The RTC erred in awarding damages to Rhonda Brunty as she cannot be allowed to receive what she is not in a position to give, having
been a non-resident alien who did not own a property in the Philippines.25 It likewise questioned the award of damages on the Mercedes Benz as well
as the grant of attorneys fees.26 At the very least, Mercelita was guilty of contributory negligence.27
For their part, appellees countered that appellant was grossly and recklessly negligent in not properly providing the necessary equipment at the
railroad crossing in Rizal, Moncada, Tarlac;28 appellant was negligent in not exercising due diligence of a good father of a family in the supervision of
its employees, particularly the train operator Alfonso Reyes;29 the car was driven in a careful and diligent manner, and at a moderate speed, with due
regard to all traffic rules and regulations at that particular time;30 the doctrine of "last clear chance" is not applicable;31 Ethel Brunty is a non-resident
alien who can rightfully file the instant case;32 and they are entitled to recover damages from appellant.33
The CA rendered the assailed Decision34 on August 15, 2005. The dispositive portion reads:
WHEREFORE, premises considered, the assailed decision is hereby AFFIRMED with PARTIAL MODIFICATIONS, increasing the death indemnity
award from P30,000.00 to P50,000.00, and deleting the award for damages sustained by the Mercedes Benz.
SO ORDERED.35
The appellate court affirmed the findings of the RTC as to the negligence of the PNR. Considering the circumstances prevailing at the time of the fatal
accident, it ruled that the alleged safety measures installed by the PNR at the railroad crossing were not merely inadequate they did not satisfy the
well-settled safety standards in transportation.36 However, the CA did not agree with the RTCs findings on the contributory negligence of Mercelita,
the driver of the Mercedes Benz. It held that Mercelita could not have foreseen the harm that would befall him and the two other passengers under the
prevailing circumstances, thus, could not be considered guilty of contributory negligence.37
The PNR, now petitioner, comes before this Court in this Petition for Review on Certiorari on the following grounds:
I.

THE COURT OF APPEALS ERRED IN MANIFESTLY OVERLOOKING CERTAIN RELEVANT FACTS NOT DISPUTED BY THE PARTIES AND
WHICH, IF PROPERLY CONSIDERED, WOULD JUSTIFY A DIFFERENT CONCLUSION SUCH AS:
THE RESPONDENTS DRIVER OVERTOOK ANOTHER VEHICLE BY ACCELERATING AT 70 KILOMETERS PER HOUR WITHIN JUST 50 YARDS
AWAY FROM THE RAILROAD TRACKS.
II.
THE FINDINGS OF FACT OF THE COURT OF APPEALS ARE CONTRARY TO THOSE OF THE TRIAL COURT REGARDING CONTRIBUTORY
NEGLIGENCE OF THE RESPONDENTS DRIVER.
III.
THE COURT OF APPEALS ERRED IN NOT APPLYING THE DOCTRINE OF LAST CLEAR CHANCE IN THE INSTANT CASE. 38
Petitioner insists that the proximate cause of the mishap was Mercelitas disregard of traffic rules and regulations. Had the court considered the fact
that Mercelita had overtaken another vehicle a few yards before the railroad track, it would have reached a different conclusion.39 Moreover, petitioner
asserts, considering that the decisions of the RTC and the CA vary as to whether or not Mercelita was guilty of contributory negligence, the findings of
the RTC should prevail. Thus, Mercelitas contributory negligence should not have been ignored.40Lastly, petitioner avers that since there is freedom
of control and greater maneuverability on the part of motor vehicles, it is obvious that in railroad crossings, they have the last clear chance to prevent
or avoid an unwanted accident from taking place.41
In their Comment42 on the petition, respondents reiterate the findings of the RTC and the CA that the breach by petitioner of its legal duty to provide
adequate and necessary public safety device and equipment within the area or scene of the accident was the proximate cause of the mishap.43 While
it is true that as a general rule, the trial court is in the best position to evaluate and observe the conduct and demeanor of the witnesses presented
during the trial, the CA, in the exercise of its appellate jurisdiction, has the vested right to modify, reject, or set aside the trial courts evaluation and
findings.44 As to the application of the doctrine of last clear chance, respondents claim that said issue is being raised for the first time in this
petition.45 Lastly, respondents cite foreign jurisprudence stating that if the violation is one which gives rise to liability per se for any resulting injury, the
defenses ordinarily available in actions for diligence are barred and the contributory negligence of the person injured is no defense.46
The Court is thus tasked to answer the following factual questions: (1) As between petitioner and Mercelita, whose negligence resulted in the
unfortunate collision? (2) Is Mercelita (the driver of the Mercedes Benz) guilty of contributory negligence? Finally, the application in this case of the
doctrine of last clear chance is likewise in question.
Negligence is the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human
affairs, would do, or the doing of something which a prudent and reasonable man would not do.47 In Corliss v. Manila Railroad Company,48 this Court
held that negligence is want of the care required by the circumstances. It is a relative or comparative, not an absolute, term and its application

depends upon the situation of the parties and the degree of care and vigilance which the circumstances reasonably require.49 In determining whether
or not there is negligence on the part of the parties in a given situation, jurisprudence50 has laid down the following test: Did defendant, in doing the
alleged negligent act, use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, the
person is guilty of negligence. The law, in effect, adopts the standard supposed to be supplied by the imaginary conduct of the discreet pater familias
of the Roman law.
The issue of who, between the parties, was negligent was thoroughly discussed by both the RTC and the CA. In petitions for review under Rule 45 of
the Revised Rules of Court, only questions of law may be put into issue, and questions of fact as a general rule, cannot be entertained. The finding of
negligence by the RTC, as affirmed by the CA, is a question of fact which this Court cannot pass upon as it would entail going into factual matters on
which the finding of negligence was based.51 The established rule is that factual findings of the CA affirming those of the trial court are conclusive and
binding on this Court.52
The records of the instant case show that both the RTC and the CA carefully examined the factual circumstances surrounding the case, and we find
no cogent reason to disturb the same. It is, however, worthy to emphasize that petitioner was found negligent because of its failure to provide the
necessary safety device to ensure the safety of motorists in crossing the railroad track. As such, it is liable for damages for violating the provisions of
Article 2176 of the New Civil Code, viz:
Article 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.
In a long line of cases, the Court held that in order to sustain a claim based on quasi-delict, the following requisites must concur: (1) damage to
plaintiff; (2) negligence, by act or omission, of which defendant, or some person for whose acts he must respond was guilty; and (3) connection of
cause and effect between such negligence and damage.53 Applying the foregoing requisites, the CA correctly made the following conclusions:
It was clearly established that plaintiffs-appellees (respondents herein) sustained damage or injury as a result of the collision. That there was
negligence on the part of PNR is, likewise, beyond cavil. Considering the circumstances prevailing at the time of the fatal accident, the alleged safety
measures installed by the PNR at the railroad crossing is not only inadequate but does not satisfy well-settled safety standards in transportation. x x x
xxxx
x x x An examination of the photographs of the railroad crossing at Moncada, Tarlac presented as evidence by PNR itself would yield the following:
(1.) absence of flagbars or safety railroad bars; (2.) inadequacy of the installed warning signals; and (3.) lack of proper lighting within the area. Thus,
even if there was a flagman stationed at the site as claimed by PNR (petitioner), it would still be impossible to know or see that there is a railroad
crossing/tracks ahead, or that there is an approaching train from the Moncada side of the road since ones view would be blocked by a cockpit arena.
x x x54

Moreover, the CA held that a vehicle coming from the Moncada side would have difficulty in knowing that there is an approaching train because of the
slight curve, more so, at an unholy hour as 2:00 a.m. Thus, it is imperative on the part of the PNR to provide adequate safety equipment in the area.55
It may broadly be stated that railroad companies owe to the public a duty of exercising a reasonable degree of care to avoid injury to persons and
property at railroad crossings, which duties pertain both in the operation of trains and in the maintenance of the crossings. 56 Moreover, every
corporation constructing or operating a railway shall make and construct at all points where such railway crosses any public road, good, sufficient, and
safe crossings and erect at such points, at a sufficient elevation from such road as to admit a free passage of vehicles of every kind, a sign with large
and distinct letters placed thereon, to give notice of the proximity of the railway, and warn persons of the necessity of looking out for trains.57
This Court has previously determined the liability of the PNR for damages for its failure to put a cross bar, or signal light, flagman or switchman, or
semaphores. Such failure is evidence of negligence and disregard of the safety of the public, even if there is no law or ordinance requiring it because
public safety demands that said device or equipment be installed.58
In view of the foregoing, we affirm the factual findings of the CA as well as its conclusion on petitioners negligence.
As to whether or not Mercelita was guilty of contributory negligence, we agree with petitioner. 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.59 To hold a person as having contributed to his injuries, it must be shown that he performed an act that brought about his injuries in
disregard of warning or signs of an impending danger to health and body.60 To prove contributory negligence, it is still necessary to establish a causal
link, although not proximate, between the negligence of the party and the succeeding injury. In a legal sense, negligence is contributory only when it
contributes proximately to the injury, and not simply a condition for its occurrence.61
The court below found that there was a slight curve before approaching the tracks; the place was not properly illuminated; ones view was blocked by
a cockpit arena; and Mercelita was not familiar with the road. Yet, it was also established that Mercelita was then driving the Mercedes Benz at a
speed of 70 km/hr and, in fact, had overtaken a vehicle a few yards before reaching the railroad track. Mercelita should not have driven the car the
way he did. However, while his acts contributed to the collision, they nevertheless do not negate petitioners liability. Pursuant to Article 217962 of the
New Civil Code, the only effect such contributory negligence could have is to mitigate liability, which, however, is not applicable in this case, as will be
discussed later.1wphi1
As to whether or not the doctrine of last clear chance is applicable, we rule in the negative. The doctrine of last clear chance states that where both
parties are negligent but the negligent act of one is appreciably later than that of the other, or where it is impossible to determine whose fault or
negligence caused the loss, the one who had the last clear opportunity to avoid the loss but failed to do so, is chargeable with the loss. Stated
differently, the antecedent negligence of plaintiff does not preclude him from recovering damages caused by the supervening negligence of defendant,
who had the last fair chance to prevent the impending harm by the exercise of due diligence.63 The proximate cause of the injury having been
established to be the negligence of petitioner, we hold that the above doctrine finds no application in the instant case.

We note that the damages awarded by the appellate court consist of (1) P50,000.00 as indemnity for the death of Rhonda Brunty; (2) P1,000,000.00
as actual and moral damages due the heirs of Rhonda Brunty; and (3)P50,000.00 as and by way of attorneys fees. No damages, however, were
awarded for the injuries suffered by Garcia, yet, the latter never interposed an appeal before the CA nor even before this Court. The record is,
likewise, bereft of any allegation and proof as to the relationship between Mercelita (the driver) and Rhonda Brunty. Hence, the earlier finding of
contributory negligence on the part of Mercelita, which generally has the effect of mitigation of liability, does not apply.
As to the amount of damages awarded, a modification of the same is in order, specifically on the award of actual and moral damages in the aggregate
amount of P1,000,000.00.
Actual or compensatory damages are those awarded in order to compensate a party for an injury or loss he suffered. They arise out of a sense of
natural justice, aimed at repairing the wrong done. To be recoverable, they must be duly proved with a reasonable degree of certainty. A court cannot
rely on speculation, conjecture, or guesswork as to the fact and amount of damages, but must depend upon competent proof that they have suffered,
and on evidence of the actual amount thereof.64 Respondents, however, failed to present evidence for such damages; hence, the award of actual
damages cannot be sustained. However, as the heirs of Rhonda Brunty undeniably incurred expenses for the wake and burial of the latter, we deem it
proper to award temperate damages in the amount of P25,000.00 pursuant to prevailing jurisprudence.65 This is in lieu of actual damages as it would
be unfair for the victims heirs to get nothing, despite the death of their kin, for the reason alone that they cannot produce receipts.66
The relatives of the victim who incurred physical injuries in a quasi-delict are not proscribed from recovering moral damages in meritorious
cases.67 We, therefore, sustain the award of moral damages in favor of the heirs of Rhonda Brunty.
Moral damages are not punitive in nature, but are designed to compensate and alleviate in some way the physical suffering, mental anguish, fright,
serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury unjustly caused a person. Although
incapable of pecuniary computation, moral damages must nevertheless be somehow proportional to and in approximation of the suffering inflicted.68 In
the instant case, the moral suffering of the heirs of Rhonda Brunty was sufficiently established by Ethel Brunty in her deposition,69 viz:
Q: What have you felt as a result of the death of Rhonda?
A: I felt earnest anguish and mixed feelings of anger and extreme sorrow because she died so far away and alone, and because her death could so
easily be prevented if there had been adequate and appropriate warning signals at the railroad crossing and it is just an unbearable and irreparable
loss. In so many ways, she was my life. It seemed to me that losing her was just like losing my own life, or worst, and even now, there is no end to our
bereavement. I am still on constant medication to be able to sleep and to be able to perform my duties effectively in my job but it does not take away
the pain of loss.70
In People v. Teehankee, Jr.,71 and in Metro Manila Transit Corporation v. Court of Appeals,72 we awarded moral damages in the amount
of P1,000,000.00 to the heirs of the deceased. In Victory Liner, Inc. v. Heirs of Malecdan,73 the award of P100,000.00 as moral damages was held in
keeping with the purpose of the law, while in Macalinao v. Ong,74 the amount of P50,000.00 was held sufficient.1wphi1

Considering the circumstances attendant in this case, we find that an award of P500,000.00 as moral damages to the heirs of Rhonda Brunty is
proper. In view of recent jurisprudence, indemnity of P50,000.00 for the death of Rhonda Brunty and attorneys fees amounting to P50,000.00 is
likewise proper.
WHEREFORE, premises considered, the Decision of the Court of Appeals dated August 15, 2005 is AFFIRMED WITH MODIFICATIONS. The award
of actual damages is deleted, and in lieu thereof, temperate damages ofP25,000.00 is awarded to the heirs of Rhonda Brunty. The award of moral
damages is reduced to P500,000.00.
G.R. No. 159270. August 22, 2005
PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, Petitioners,
vs.
HON. COURT OF APPEALS, RODRIGO ARNAIZ, REGINA LATAGAN, RICARDO GENERALAO and PAMPANGA SUGAR DEVELOPMENT
COMPANY, INC., CORPORATION, Respondent.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari of the Decision1 of the Court of Appeals (CA) in CA-G.R. CV No. 47699 affirming, with modification, the
decision of the Regional Trial Court (RTC) of Manila in Civil Case No. 93-64803.
The Antecedents
Pampanga Sugar Development Company, Inc. (PASUDECO) transports sugarcane from Mabalacat and Magalang, Pampanga. When the Mount
Pinatubo eruption of 1991 heavily damaged the national bridges along Abacan-Angeles and Sapang Maragul via Magalang, Pampanga, it requested
permission from the Toll Regulatory Board (TRB) for its trucks to enter and pass through the North Luzon Expressway (NLEX) via Dau-Sta. Ines from
Mabalacat, and via Angeles from Magalang, and exit at San Fernando going to its milling factory.2 The TRB furnished the Philippine National
Construction Corporation (PNCC) (the franchisee that operates and maintains the toll facilities in the North and South Luzon Toll Expressways) with a
copy of the said request for it to comment thereon.3
On November 5, 1991, TRB and PASUDECO entered into a Memorandum of Agreement4 (MOA), where the latter was allowed to enter and pass
through the NLEX on the following terms and conditions:
1. PASUDECO trucks should move in convoy;
2. Said trucks will stay on the right lane;

3. A vehicle with blinking lights should be assigned at the rear end of the convoy with a sign which should read as follows: Caution: CONVOY
AHEAD!!!;
4. Tollway safety measures should be properly observed;
5. Accidents or damages to the toll facilities arising out of any activity related to this approval shall be the responsibility of PASUDECO;
6. PASUDECO shall be responsible in towing their stalled trucks immediately to avoid any inconvenience to the other motorists;
7. This request will be in force only while the national bridges along Abacan-Angeles and Sapang Maragul viaMagalang remain impassable.
PASUDECO furnished the PNCC with a copy of the MOA.5 In a Letter6 dated October 22, 1992, the PNCC informed PASUDECO that it interposed no
objection to the MOA.
At around 2:30 a.m. on January 23, 1993, Alex Sendin, the PNCC security supervisor, and his co-employees Eduardo Ducusin and Vicente Pascual
were patrolling Km. 72 going north of the NLEX. They saw a pile of sugarcane in the middle portion of the north and southbound lanes of the
road.7 They placed lit cans with diesel oil in the north and southbound lanes, including lane dividers with reflectorized markings, to warn motorists of
the obstruction. Sendin, Ducusin and Pascual proceeded to the PASUDECO office, believing that the pile of sugarcane belonged to it since it was the
only milling company in the area. They requested for a payloader or grader to clear the area. However, Engineer Oscar Mallari, PASUDECOs
equipment supervisor and transportation superintendent, told them that no equipment operator was available as it was still very early.8Nonetheless,
Mallari told them that he would send someone to clear the affected area. Thereafter, Sendin and company went back to Km. 72 and manned the
traffic. At around 4:00 a.m., five (5) PASUDECO men arrived, and started clearing the highway of the sugarcane. They stacked the sugarcane at the
side of the road. The men left the area at around 5:40 a.m., leaving a few flattened sugarcanes scattered on the road. As the bulk of the sugarcanes
had been piled and transferred along the roadside, Sendin thought there was no longer a need to man the traffic. As dawn was already approaching,
Sendin and company removed the lighted cans and lane dividers.9 Sendin went to his office in Sta. Rita, Guiguinto, Bulacan, and made the necessary
report.10
At about 6:30 a.m., Rodrigo S. Arnaiz, a certified mechanic and marketing manager of JETTY Marketing, Inc.,11was driving his two-door Toyota
Corolla with plate number FAG 961 along the NLEX at about 65 kilometers per hour. 12 He was with his sister Regina Latagan, and his friend Ricardo
Generalao; they were on their way to Baguio to attend their grandmothers first death anniversary.13 As the vehicle ran over the scattered sugarcane, it
flew out of control and turned turtle several times. The accident threw the car about fifteen paces away from the scattered sugarcane.
Police Investigator Demetrio Arcilla investigated the matter and saw black and white sugarcanes on the road, on both lanes, which appeared to be
flattened.14
On March 4, 1993, Arnaiz, Latagan and Generalao filed a complaint15 for damages against PASUDECO and PNCC in the RTC of Manila, Branch 16.
The case was docketed as Civil Case No. 93-64803. They alleged, inter alia, that through its negligence, PNCC failed to keep and maintain the NLEX

safe for motorists when it allowed PASUDECO trucks with uncovered and unsecured sugarcane to pass through it; that PASUDECO negligently
spilled sugarcanes on the NLEX, and PNCC failed to put up emergency devices to sufficiently warn approaching motorists of the existence of such
spillage; and that the combined gross negligence of PASUDECO and PNCC was the direct and proximate cause of the injuries sustained by Latagan
and the damage to Arnaizs car. They prayed, thus:
WHEREFORE, it is respectfully prayed that, after due hearing, judgment be rendered for the plaintiffs, ordering the defendants jointly and severally:
(a) To pay unto plaintiff Rodrigo Arnaiz the sum of P100,000.00 representing the value of his car which was totally wrecked;
(b) to pay unto plaintiff Regina Latagan the sum of P100,000.00 by way of reimbursement for medical expenses, the sum of P50,000.00 by way of
moral damages, and the sum of P30,000.00 by way of exemplary damages;
(c) To pay unto plaintiffs Rodrigo Arnaiz and Ricardo Generalao the sum of P5,000.00 by way of reimbursement for medical expenses; and
(d) To pay unto the plaintiffs the sum of P30,000.00 by way of attorneys fees; plus the costs of suit.
Plaintiffs pray for other reliefs which the Honorable Court may find due them in the premises.16
In its Answer,17 PNCC admitted that it was under contract to manage the North Luzon Expressway, to keep it safe for motorists. It averred that the
mishap was due to the "unreasonable speed" at which Arnaizs car was running, causing it to turn turtle when it passed over some pieces of flattened
sugarcane. It claimed that the proximate cause of the mishap was PASUDECOs gross negligence in spilling the sugarcane, and its failure to clear
and mop up the area completely. It also alleged that Arnaiz was guilty of contributory negligence in driving his car at such speed.
The PNCC interposed a compulsory counterclaim18 against the plaintiffs and cross-claim19 against its co-defendant PASUDECO.
PASUDECO adduced evidence that aside from it, there were other sugarcane mills in the area, like the ARCAM Sugar Central (formerly known as
Pampanga Sugar Mills) and the Central Azucarrera de Tarlac;20 it was only through the expressway that a vehicle could access these three (3) sugar
centrals;21 and PASUDECO was obligated to clear spillages whether the planters truck which caused the spillage was bound for PASUDECO,
ARCAM or Central Azucarera.22
On rebuttal, PNCC adduced evidence that only planters trucks with "PSD" markings were allowed to use the tollway; 23 that all such trucks would
surely enter the PASUDECO compound. Thus, the truck which spilled sugarcane in January 1993 in Km. 72 was on its way to the PASUDECO
compound.24
On November 11, 1994, the RTC rendered its decision25 in favor of Latagan, dismissing that of Arnaiz and Generalao for insufficiency of evidence.
The case as against the PNCC was, likewise, dismissed. The decretal portion of the decision reads:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered:

I. ORDERING defendant PASUDECO:
1. To pay plaintiff Regina Latagan:
a. P25,000 = for actual damages
b. P15,000 = for moral damages
c. P10,000 = for attorneys fees
P50,000
2. To pay costs of suit.
II. The case is DISMISSED as to defendant PNCC. No pronouncement as to costs. Its counterclaim is, likewise, DISMISSED.
III. The claims for damages of plaintiffs Rodrigo Arnaiz and Ricardo Generalao are hereby DISMISSED for insufficiency of evidence.
SO ORDERED.26
Both the plaintiffs Arnaiz, Latagan and Generalao and defendant PASUDECO appealed the decision to the CA. Since the plaintiffs failed to file their
brief, the CA dismissed their appeal.27
Resolving PASUDECOs appeal, the CA rendered judgment on April 29, 2003, affirming the RTC decision with modification. The appellate court ruled
that Arnaiz was negligent in driving his car, but that such negligence was merely contributory to the cause of the mishap, i.e., PASUDECOs failure to
properly supervise its men in clearing the affected area. Its supervisor, Mallari, admitted that he was at his house while their men were clearing Km.
72. Thus, the appellate court held both PASUDECO and PNCC, jointly and severally, liable to Latagan. The decretal portion of the decision reads:
WHEREFORE, premises considered, the assailed DECISION is hereby MODIFIED and judgment is hereby rendered declaring PASUDECO and
PNCC, jointly and solidarily, liable:
1. To pay plaintiff Regina Latagan:
a. P25,000 = for actual damages
b. P15,000 = for moral damages

c. P10,000 = for attorneys fees

2. To pay costs of suit.
SO ORDERED. 28
The PNCC, now the petitioner, filed a petition for review on certiorari under Rule 45 of the Revised Rules of Court, alleging that:
THE HONORABLE COURT OF APPEALS ERRED IN MODIFYING THE DECISION OF THE TRIAL COURT AND MAKING PETITIONER PNCC,
JOINTLY AND [SOLIDARILY], LIABLE WITH PRIVATE RESPONDENT PASUDECO.29
The petitioner asserts that the trial court was correct when it held that PASUDECO should be held liable for the mishap, since it had assumed such
responsibility based on the MOA between it and the TRB. The petitioner relies on the trial courts finding that only PASUDECO was given a permit to
pass through the route.
The petitioner insists that the respondents failed to prove that it was negligent in the operation and maintenance of the NLEX. It maintains that it had
done its part in clearing the expressway of sugarcane piles, and that there were no more piles of sugarcane along the road when its men left Km. 72;
only a few scattered sugarcanes flattened by the passing motorists were left. Any liability arising from any mishap related to the spilled sugarcanes
should be borne by PASUDECO, in accordance with the MOA which provides that "accidents or damages to the toll facilities arising out of any activity
related to this approval shall be the responsibility of PASUDECO."
The petitioner also argues that the respondents should bear the consequences of their own fault or negligence, and that the proximate and immediate
cause of the mishap in question was respondent Arnaizs reckless imprudence or gross negligence.
The Court notes that the issues raised in the petition are factual in nature. Under Rule 45 of the Rules of Court, only questions of law may be raised in
this Court, and while there are exceptions to the rule, no such exception is present in this case. On this ground alone, the petition is destined to fail.
The Court, however, has reviewed the records of the case, and finds that the petition is bereft of merit.
The petitioner is the grantee of a franchise, giving it the right, privilege and authority to construct, operate and maintain toll facilities covering the
expressways, collectively known as the NLEX.30 Concomitant thereto is its right to collect toll fees for the use of the said expressways and its
obligation to keep it safe for motorists.
There are three elements of a quasi-delict: (a) damages suffered by the plaintiff; (b) fault or negligence of the defendant, or some other person for
whose acts he must respond; and (c) the connection of cause and effect between the fault or negligence of the defendant and the damages incurred
by the plaintiff.31 Article 2176 of the New 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.
Negligence is the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human
affairs, would do, or the doing of something which a prudent and reasonable man would do.32 It also refers to the conduct which creates undue risk of
harm to another, the failure to observe that degree of care, precaution and vigilance that the circumstance justly demand, whereby that other person
suffers injury.33 The Court declared the test by which to determine the existence of negligence in Picart v. Smith,34 viz:
The test by which to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in doing the alleged
negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty
of negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary conduct of the discreet paterfamilias of the
Roman law. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before
him. The law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by
that.
The test for determining whether a person is negligent in doing an act whereby injury or damage results to the person or property of another is this:
could a prudent man, in the position of the person to whom negligence is attributed, foresee harm to the person injured as a reasonable consequence
of the course actually pursued? If so, the law imposes a duty on the actor to refrain from that course or to take precautions to guard against its
mischievous results, and the failure to do so constitutes negligence. Reasonable foresight of harm, followed by the ignoring of the admonition born of
this provision, is always necessary before negligence can be held to exist.35
In the case at bar, it is clear that the petitioner failed to exercise the requisite diligence in maintaining the NLEX safe for motorists. The lighted cans
and lane dividers on the highway were removed even as flattened sugarcanes lay scattered on the ground.36 The highway was still wet from the juice
and sap of the flattened sugarcanes.37 The petitioner should have foreseen that the wet condition of the highway would endanger motorists passing by
at night or in the wee hours of the morning.
The petitioner cannot escape liability under the MOA between PASUDECO and TRB, since respondent Latagan was not a party thereto. We agree
with the following ruling of the CA:
Both defendants, appellant PASUDECO and appellee PNCC, should be held liable. PNCC, in charge of the maintenance of the expressway, has been
negligent in the performance of its duties. The obligation of PNCC should not be relegated to, by virtue of a private agreement, to other parties.
PNCC declared the area free from obstruction since there were no piles of sugarcane, but evidence shows there were still pieces of sugarcane stalks
left flattened by motorists. There must be an observance of that degree of care, precaution, and vigilance which the situation demands. There should
have been sufficient warning devices considering that there were scattered sugarcane stalks still left along the tollway.

The records show, and as admitted by the parties, that Arnaizs car ran over scattered sugarcanes spilled from a hauler truck.38
Moreover, the MOA refers to accidents or damages to the toll facilities. It does not cover damages to property or injuries caused to motorists on the
NLEX who are not privies to the MOA.
PASUDECOs negligence in transporting sugarcanes without proper harness/straps, and that of PNCC in removing the emergency warning devices,
were two successive negligent acts which were the direct and proximate cause of Latagans injuries. As such, PASUDECO and PNCC are jointly and
severally liable. As the Court held in the vintage case of Sabido v. Custodio:39
According to the great weight of authority, where the concurrent or successive negligent acts or omission of two or more persons, although acting
independently of each other, are, in combination, the direct and proximate cause of a single injury to a third person and it is impossible to determine in
what proportion each contributed to the injury, either is responsible for the whole injury, even though his act alone might not have caused the entire
injury, or the same damage might have resulted from the acts of the other tort-feasor. ...
In Far Eastern Shipping Company v. Court of Appeals,40 the Court declared that the liability of joint tortfeasors is joint and solidary, to wit:
It may be said, as a general rule, that negligence in order to render a person liable need not be the sole cause of an injury. It is sufficient that his
negligence, concurring with one or more efficient causes other than plaintiff's, is the proximate cause of the injury. Accordingly, where several causes
combine to produce injuries, a person is not relieved from liability because he is responsible for only one of them, it being sufficient that the negligence
of the person charged with injury is an efficient cause without which the injury would not have resulted to as great an extent, and that such cause is
not attributable to the person injured. It is no defense to one of the concurrent tortfeasors that the injury would not have resulted from his negligence
alone, without the negligence or wrongful acts of the other concurrent tortfeasors. Where several causes producing an injury are concurrent and each
is an efficient cause without which the injury would not have happened, the injury may be attributed to all or any of the causes and recovery may be
had against any or all of the responsible persons although under the circumstances of the case, it may appear that one of them was more culpable,
and that the duty owed by them to the injured person was not the same. No actor's negligence ceases to be a proximate cause merely because it
does not exceed the negligence of other actors. Each wrongdoer is responsible for the entire result and is liable as though his acts were the sole
cause of the injury.
There is no contribution between joint tortfeasors whose liability is solidary since both of them are liable for the total damage. Where the concurrent or
successive negligent acts or omissions of two or more persons, although acting independently, are in combination with the direct and proximate cause
of a single injury to a third person, it is impossible to determine in what proportion each contributed to the injury and either of them is responsible for
the whole injury. Where their concurring negligence resulted in injury or damage to a third party, they become joint tortfeasors and are solidarily liable
for the resulting damage under Article 2194 of the Civil Code.
Thus, with PASUDECOs and the petitioners successive negligent acts, they are joint tortfeasors who are solidarily liable for the resulting damage
under Article 2194 of the New Civil Code.41

Anent respondent Arnaizs negligence in driving his car, both the trial court and the CA agreed that it was only contributory, and considered the same
in mitigating the award of damages in his favor as provided under Article 217942 of the New Civil Code. 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.43 Even the petitioner itself described Arnaizs negligence as contributory. In its Answer to the complaint filed with the trial court, the
petitioner asserted that "the direct and proximate cause of the accident was the gross negligence of PASUDECO personnel which resulted in the
spillage of sugarcane and the apparent failure of the PASUDECO workers to clear and mop up the area completely, coupled with the contributory
negligence of Arnaiz in driving his car at an unreasonable speed."44 However, the petitioner changed its theory in the present recourse, and now
claims that the proximate and immediate cause of the mishap in question was the reckless imprudence or gross negligence of respondent
Arnaiz.45 Such a change of theory cannot be allowed. When a party adopts a certain theory in the trial court, he will not be permitted to change his
theory on appeal, for to permit him to do so would not only be unfair to the other party but it would also be offensive to the basic rules of fair play,
justice and due process.46
IN LIGHT OF ALL THE FOREGOING, the present petition is hereby DENIED for lack of merit. The Decision of the Court of Appeals in CA-G.R. CV
No. 47699, dated April 29, 2003, is AFFIRMED. Costs against the petitioner.
G.R. No. 159636

November 25, 2004

VICTORY LINER, INC., petitioner,

vs.
ROSALITO GAMMAD, APRIL ROSSAN P. GAMMAD, ROI ROZANO P. GAMMAD and DIANA FRANCES P. GAMMAD, respondents.
DECISION
YNARES-SANTIAGO, J.:
Assailed in this petition for review on certiorari is the April 11, 2003 decision1 of the Court of Appeals in CA-G.R. CV No. 63290 which affirmed with
modification the November 6, 1998 decision2 of the Regional Trial Court of Tuguegarao, Cagayan, Branch 5 finding petitioner Victory Liner, Inc. liable
for breach of contract of carriage in Civil Case No. 5023.
The facts as testified by respondent Rosalito Gammad show that on March 14, 1996, his wife Marie Grace Pagulayan-Gammad,3 was on board an airconditioned Victory Liner bus bound for Tuguegarao, Cagayan from Manila. At about 3:00 a.m., the bus while running at a high speed fell on a ravine
somewhere in Barangay Baliling, Sta. Fe, Nueva Vizcaya, which resulted in the death of Marie Grace and physical injuries to other passengers.4
On May 14, 1996, respondent heirs of the deceased filed a complaint5 for damages arising from culpa contractual against petitioner. In its
answer,6 the petitioner claimed that the incident was purely accidental and that it has always exercised extraordinary diligence in its 50 years of
operation.

After several re-settings,7 pre-trial was set on April 10, 1997.8 For failure to appear on the said date, petitioner was declared as in default.9 However,
on petitioners motion10 to lift the order of default, the same was granted by the trial court.11
At the pre-trial on May 6, 1997, petitioner did not want to admit the proposed stipulation that the deceased was a passenger of the Victory Liner Bus
which fell on the ravine and that she was issued Passenger Ticket No. 977785. Respondents, for their part, did not accept petitioners proposal to pay
P50,000.00.12
After respondent Rosalito Gammad completed his direct testimony, cross-examination was scheduled for November 17, 199713 but moved to
December 8, 1997,14 because the parties and the counsel failed to appear. On December 8, 1997, counsel of petitioner was absent despite due notice
and was deemed to have waived right to cross-examine respondent Rosalito.15
Petitioners motion to reset the presentation of its evidence to March 25, 199816 was granted. However, on March 24, 1998, the counsel of petitioner
sent the court a telegram17 requesting postponement but the telegram was received by the trial court on March 25, 1998, after it had issued an order
considering the case submitted for decision for failure of petitioner and counsel to appear.18
On November 6, 1998, the trial court rendered its decision in favor of respondents, the dispositive portion of which reads:
WHEREFORE, premises considered and in the interest of justice, judgment is hereby rendered in favor of the plaintiffs and against the
defendant Victory Liner, Incorporated, ordering the latter to pay the following:
1. Actual Damages -------------------- P 122,000.00
2. Death Indemnity --------------------- 50,000.00
3. Exemplary and Moral Damages----- 400,000.00
4. Compensatory Damages ---------- 1,500,000.00
5. Attorneys Fees --------------------- 10% of the total amount granted
6. Cost of the Suit.
SO ORDERED.19
On appeal by petitioner, the Court of Appeals affirmed the decision of the trial court with modification as follows:
[T]he Decision dated 06 November 1998 is hereby MODIFIED to reflect that the following are hereby adjudged in favor of plaintiffs-appellees:

1. Actual Damages in the amount of P88,270.00;

2. Compensatory Damages in the amount of P1,135,536,10;
3. Moral and Exemplary Damages in the amount of P400,000.00; and
4. Attorneys fees equivalent to 10% of the sum of the actual, compensatory, moral, and exemplary damages herein adjudged.
The court a quos judgment of the cost of the suit against defendant-appellant is hereby AFFIRMED.
SO ORDERED.20
Represented by a new counsel, petitioner on May 21, 2003 filed a motion for reconsideration praying that the case be remanded to the trial court for
cross- examination of respondents witness and for the presentation of its evidence; or in the alternative, dismiss the respondents
complaint.21 Invoking APEX Mining, Inc. v. Court of Appeals,22 petitioner argues, inter alia, that the decision of the trial court should be set aside
because the negligence of its former counsel, Atty. Antonio B. Paguirigan, in failing to appear at the scheduled hearings and move for reconsideration
of the orders declaring petitioner to have waived the right to cross-examine respondents witness and right to present evidence, deprived petitioner of
its day in court.
On August 21, 2003, the Court of Appeals denied petitioners motion for reconsideration.23
Hence, this petition for review principally based on the fact that the mistake or gross negligence of its counsel deprived petitioner of due process of
law. Petitioner also argues that the trial courts award of damages were without basis and should be deleted.
The issues for resolution are: (1) whether petitioners counsel was guilty of gross negligence; (2) whether petitioner should be held liable for breach of
contract of carriage; and (3) whether the award of damages was proper.
It is settled that the negligence of counsel binds the client. This is based on the rule that any act performed by a counsel within the scope of his
general or implied authority is regarded as an act of his client. Consequently, the mistake or negligence of counsel may result in the rendition of an
unfavorable judgment against the client. However, the application of the general rule to a given case should be looked into and adopted according to
the surrounding circumstances obtaining. Thus, exceptions to the foregoing have been recognized by the court in cases where reckless or gross
negligence of counsel deprives the client of due process of law, or when its application will result in outright deprivation of the clients liberty or
property or where the interests of justice so require, and accord relief to the client who suffered by reason of the lawyers gross or palpable mistake or
negligence.24
The exceptions, however, are not present in this case. The record shows that Atty. Paguirigan filed an Answer and Pre-trial Brief for petitioner.
Although initially declared as in default, Atty. Paguirigan successfully moved for the setting aside of the order of default. In fact, petitioner was

represented by Atty. Paguirigan at the pre-trial who proposed settlement for P50,000.00. Although Atty. Paguirigan failed to file motions for
reconsideration of the orders declaring petitioner to have waived the right to cross-examine respondents witness and to present evidence, he
nevertheless, filed a timely appeal with the Court of Appeals assailing the decision of the trial court. Hence, petitioners claim that it was denied due
process lacks basis.
Petitioner too is not entirely blameless. Prior to the issuance of the order declaring it as in default for not appearing at the pre-trial, three notices (dated
October 23, 1996,25 January 30, 1997,26 and March 26, 1997,27) requiring attendance at the pre-trial were sent and duly received by petitioner.
However, it was only on April 27, 1997, after the issuance of the April 10, 1997 order of default for failure to appear at the pre-trial when petitioner,
through its finance and administrative manager, executed a special power of attorney28 authorizing Atty. Paguirigan or any member of his law firm to
represent petitioner at the pre-trial. Petitioner is guilty, at the least, of contributory negligence and fault cannot be imputed solely on previous counsel.
The case of APEX Mining, Inc., invoked by petitioner is not on all fours with the case at bar. In APEX, the negligent counsel not only allowed the
adverse decision against his client to become final and executory, but deliberately misrepresented in the progress report that the case was still
pending with the Court of Appeals when the same was dismissed 16 months ago.29 These circumstances are absent in this case because Atty.
Paguirigan timely filed an appeal from the decision of the trial court with the Court of Appeals.
In Gold Line Transit, Inc. v. Ramos,30 the Court was similarly confronted with the issue of whether or not the client should bear the adverse
consequences of its counsels negligence. In that case, Gold Line Transit, Inc. (Gold Line) and its lawyer failed to appear at the pre-trial despite notice
and was declared as in default. After the plaintiffs presentation of evidence ex parte, the trial court rendered decision ordering Gold Line to pay
damages to the heirs of its deceased passenger. The decision became final and executory because counsel of Gold Line did not file any appeal.
Finding that Goldline was not denied due process of law and is thus bound by the negligence of its lawyer, the Court held as follows
This leads us to the question of whether the negligence of counsel was so gross and reckless that petitioner was deprived of its right to due
process of law. We do not believe so. It cannot be denied that the requirements of due process were observed in the instant case. Petitioner
was never deprived of its day in court, as in fact it was afforded every opportunity to be heard. Thus, it is of record that notices were sent to
petitioner and that its counsel was able to file a motion to dismiss the complaint, an answer to the complaint, and even a pre-trial brief. What
was irretrievably lost by petitioner was its opportunity to participate in the trial of the case and to adduce evidence in its behalf because of
negligence.
In the application of the principle of due process, what is sought to be safeguarded against is not the lack of previous notice but the denial of
the opportunity to be heard. The question is not whether petitioner succeeded in defending its rights and interests, but simply, whether it had
the opportunity to present its side of the controversy. Verily, as petitioner retained the services of counsel of its choice, it should, as far as this
suit is concerned, bear the consequences of its choice of a faulty option. Its plea that it was deprived of due process echoes on hollow ground
and certainly cannot elicit approval nor sympathy.
To cater to petitioners arguments and reinstate its petition for relief from judgment would put a premium on the negligence of its former counsel
and encourage the non-termination of this case by reason thereof. This is one case where petitioner has to bear the adverse consequences of

its counsels act, for a client is bound by the action of his counsel in the conduct of a case and he cannot thereafter be heard to complain that
the result might have been different had his counsel proceeded differently. The rationale for the rule is easily discernible. If the negligence of
counsel be admitted as a reason for opening cases, there would never be an end to a suit so long as a new counsel could be hired every time
it is shown that the prior counsel had not been sufficiently diligent, experienced or learned.31
Similarly, in Macalalag v. Ombudsman,32 a Philippine Postal Corporation employee charged with dishonesty was not able to file an answer and
position paper. He was found guilty solely on the basis of complainants evidence and was dismissed with forfeiture of all benefits and disqualification
from government service. Challenging the decision of the Ombudsman, the employee contended that the gross negligence of his counsel deprived
him of due process of law. In debunking his contention, the Court said
Neither can he claim that he is not bound by his lawyers actions; it is only in case of gross or palpable negligence of counsel when the courts
can step in and accord relief to a client who would have suffered thereby. If every perceived mistake, failure of diligence, lack of experience or
insufficient legal knowledge of the lawyer would be admitted as a reason for the reopening of a case, there would be no end to controversy.
Fundamental to our judicial system is the principle that every litigation must come to an end. It would be a clear mockery if it were otherwise.
Access to the courts is guaranteed, but there must be a limit to it.
Viewed vis--vis the foregoing jurisprudence, to sustain petitioners argument that it was denied due process of law due to negligence of its counsel
would set a dangerous precedent. It would enable every party to render inutile any adverse order or decision through the simple expedient of alleging
gross negligence on the part of its counsel. The Court will not countenance such a farce which contradicts long-settled doctrines of trial and
procedure.33
Anent the second issue, petitioner was correctly found liable for breach of contract of carriage. A common carrier is bound to carry its passengers
safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with due regard to all the circumstances.
In a contract of carriage, it is presumed that the common carrier was at fault or was negligent when a passenger dies or is injured. Unless the
presumption is rebutted, the court need not even make an express finding of fault or negligence on the part of the common carrier. This statutory
presumption may only be overcome by evidence that the carrier exercised extraordinary diligence.34
In the instant case, there is no evidence to rebut the statutory presumption that the proximate cause of Marie Graces death was the negligence of
petitioner. Hence, the courts below correctly ruled that petitioner was guilty of breach of contract of carriage.
Nevertheless, the award of damages should be modified.
Article 176435 in relation to Article 220636 of the Civil Code, holds the common carrier in breach of its contract of carriage that results in the death of a
passenger liable to pay the following: (1) indemnity for death, (2) indemnity for loss of earning capacity, and (3) moral damages.
In the present case, respondent heirs of the deceased are entitled to indemnity for the death of Marie Grace which under current jurisprudence is fixed
at P50,000.00.37

The award of compensatory damages for the loss of the deceaseds earning capacity should be deleted for lack of basis. As a rule, documentary
evidence should be presented to substantiate the claim for damages for loss of earning capacity. By way of exception, damages for loss of earning
capacity may be awarded despite the absence of documentary evidence when (1) the deceased is self-employed earning less than the minimum
wage under current labor laws, and judicial notice may be taken of the fact that in the deceaseds line of work no documentary evidence is available;
or (2) the deceased is employed as a daily wage worker earning less than the minimum wage under current labor laws.38
In People v. Oco,39 the evidence presented by the prosecution to recover damages for loss of earning capacity was the bare testimony of the
deceaseds wife that her husband was earning P8,000.00 monthly as a legal researcher of a private corporation. Finding that the deceased was
neither self-employed nor employed as a daily-wage worker earning less than the minimum wage under the labor laws existing at the time of his
death, the Court held that testimonial evidence alone is insufficient to justify an award for loss of earning capacity.
Likewise, in People v. Caraig,40 damages for loss of earning capacity was not awarded because the circumstances of the 3 deceased did not fall
within the recognized exceptions, and except for the testimony of their wives, no documentary proof about their income was presented by the
prosecution. Thus
The testimonial evidence shows that Placido Agustin, Roberto Raagas, and Melencio Castro Jr. were not self-employed or employed as dailywage workers earning less than the minimum wage under the labor laws existing at the time of their death. Placido Agustin was a Social
Security System employee who received a monthly salary of P5,000. Roberto Raagas was the President of Sinclair Security and Allied
Services, a family owned corporation, with a monthly compensation of P30,000. Melencio Castro Jr. was a taxi driver of New Rocalex with an
average daily earning of P500 or a monthly earning of P7,500. Clearly, these cases do not fall under the exceptions where indemnity for loss of
earning capacity can be given despite lack of documentary evidence. Therefore, for lack of documentary proof, no indemnity for loss of earning
capacity can be given in these cases. (Emphasis supplied)
Here, the trial court and the Court of Appeals computed the award of compensatory damages for loss of earning capacity only on the basis of the
testimony of respondent Rosalito that the deceased was 39 years of age and a Section Chief of the Bureau of Internal Revenue, Tuguergarao District
Office with a salary of P83,088.00 per annum when she died.41 No other evidence was presented. The award is clearly erroneous because the
deceaseds earnings does not fall within the exceptions.
However, the fact of loss having been established, temperate damages in the amount of P500,000.00 should be awarded to respondents. Under
Article 2224 of the Civil Code, 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.
In Pleno v. Court of Appeals,42 the Court sustained the trial courts award of P200,000.00 as temperate damages in lieu of actual damages for loss of
earning capacity because the income of the victim was not sufficiently proven, thus
The trial court based the amounts of damages awarded to the petitioner on the following circumstances:

...
"As to the loss or impairment of earning capacity, there is no doubt that Pleno is an ent[re]preneur and the founder of his own corporation, the
Mayon Ceramics Corporation. It appears also that he is an industrious and resourceful person with several projects in line, and were it not for
the incident, might have pushed them through. On the day of the incident, Pleno was driving homeward with geologist Longley after an ocular
inspection of the site of the Mayon Ceramics Corporation. His actual income however has not been sufficiently established so that this Court
cannot award actual damages, but, an award of temperate or moderate damages may still be made on loss or impairment of earning capacity.
That Pleno sustained a permanent deformity due to a shortened left leg and that he also suffers from double vision in his left eye is also
established. Because of this, he suffers from some inferiority complex and is no longer active in business as well as in social life. In similar
cases as in Borromeo v. Manila Electric Railroad Co., 44 Phil 165; Coriage, et al. v. LTB Co., et al., L-11037, Dec. 29, 1960, and in Araneta, et
al. v. Arreglado, et al., L-11394, Sept. 9, 1958, the proper award of damages were given."
...
We rule that the lower courts awards of damages are more consonant with the factual circumstances of the instant case. The trial courts
findings of facts are clear and well-developed. Each item of damages is adequately supported by evidence on record.
Article 2224 of the Civil Code was likewise applied in the recent cases of People v. Singh43 and People v. Almedilla,44 to justify the award of temperate
damages in lieu of damages for loss of earning capacity which was not substantiated by the required documentary proof.
Anent the award of moral damages, the same cannot be lumped with exemplary damages because they are based on different jural
foundations.45 These damages are different in nature and require separate determination.46 In culpa contractual or breach of contract, moral damages
may be recovered when the defendant acted in bad faith or was guilty of gross negligence (amounting to bad faith) or in wanton disregard of
contractual obligations and, as in this case, when the act of breach of contract itself constitutes the tort that results in physical injuries. By special rule
in Article 1764 in relation to Article 2206 of the Civil Code, moral damages may also be awarded in case the death of a passenger results from a
breach of carriage.47 On the other hand, exemplary damages, which are awarded by way of example or correction for the public good may be
recovered in contractual obligations if the defendant acted in wanton, fraudulent, reckless, oppressive, or malevolent manner.48
Respondents in the instant case should be awarded moral damages to compensate for the grief caused by the death of the deceased resulting from
the petitioners breach of contract of carriage. Furthermore, the petitioner failed to prove that it exercised the extraordinary diligence required for
common carriers, it is presumed to have acted recklessly.49 Thus, the award of exemplary damages is proper. Under the circumstances, we find it
reasonable to award respondents the amount of P100,000.00 as moral damages and P100,000.00 as exemplary damages. These amounts are not
excessive.50
The actual damages awarded by the trial court reduced by the Court of Appeals should be further reduced. In People v. Duban, 51 it was held that only
substantiated and proven expenses or those that appear to have been genuinely incurred in connection with the death, wake or burial of the victim will
be recognized. A list of expenses (Exhibit "J"),52 and the contract/receipt for the construction of the tomb (Exhibit "F")53 in this case, cannot be

considered competent proof and cannot replace the official receipts necessary to justify the award. Hence, actual damages should be further reduced
to P78,160.00,54 which was the amount supported by official receipts.
Pursuant to Article 220855 of the Civil Code, attorneys fees may also be recovered in the case at bar where exemplary damages are awarded. The
Court finds the award of attorneys fees equivalent to 10% of the total amount adjudged against petitioner reasonable.
Finally, in Eastern Shipping Lines, Inc. v. Court of Appeals,56 it was held that when an obligation, regardless of its source, i.e., law, contracts, quasicontracts, delicts or quasi-delicts is breached, the contravenor can be held liable for payment of interest in the concept of actual and compensatory
damages, subject to the following rules, to wit
1. When the obligation is breached, and it consists in the payment of a sum of money, i.e., a loan or forbearance of money, the interest due
should be that which may have been stipulated in writing. Furthermore, the interest due shall itself earn legal interest from the time it is
judicially demanded. In the absence of stipulation, the rate of interest shall be 12% per annum to be computed from default, i.e., from judicial or
extrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is breached, an interest on the amount of damages awarded may be
imposed at the discretion of the court at the rate of 6% per annum. No interest, however, shall be adjudged on unliquidated claims or damages
except when or until the demand can be established with reasonable certainty. Accordingly, where the demand is established with reasonable
certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code) but when such
certainty cannot be so reasonably established at the time the demand is made, the interest shall begin to run only from the date the judgment
of the court is made (at which time the quantification of damages may be deemed to have been reasonably ascertained). The actual base for
the computation of legal interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the case falls
under paragraph 1 or paragraph 2, above, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to
be by then an equivalent to a forbearance of credit. (Emphasis supplied).
In the instant case, petitioner should be held liable for payment of interest as damages for breach of contract of carriage. Considering that the
amounts payable by petitioner has been determined with certainty only in the instant petition, the interest due shall be computed upon the finality of
this decision at the rate of 12% per annum until satisfaction, per paragraph 3 of the aforecited rule.57
WHEREFORE, in view of all the foregoing, the petition is partially granted. The April 11, 2003 decision of the Court of Appeals in CA-G.R. CV No.
63290, which modified the decision of the Regional Trial Court of Tuguegarao, Cagayan in Civil Case No. 5023, is AFFIRMED with MODIFICATION.
As modified, petitioner Victory Liner, Inc., is ordered to pay respondents the following: (1) P50,000.00 as indemnity for the death of Marie Grace
Pagulayan-Gammad; (2) P100,000.00 as moral damages; (3) P100,000.00 as exemplary damages; (4) P78,160.00 as actual damages; (5)
P500,000.00 as temperate damages; (6) 10% of the total amount as attorneys fees; and the costs of suit.

Furthermore, the total amount adjudged against petitioner shall earn interest at the rate of 12% per annum computed from the finality of this decision
until fully paid.
G.R. No. 160709

February 23, 2005

NELEN LAMBERT, assisted by her husband, GLENROY ALOYSUIS LAMBERT, petitioners,

vs.
HEIRS OF RAY CASTILLON, Represented by MARILOU T. CASTILLON and SERGIO LABANG,respondents.
DECISION
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 October 21, 2002
in CA-G.R. CV No. 43734, which affirmed the June 29, 1993 decision of the Regional Trial Court of Iligan City, Branch 06, in Civil Case No. 06-2086.
In the evening of January 13, 1991, Ray Castillon visited the house of his brother Joel Castillon at Tambo, Iligan City and borrowed his motorcycle. He
then invited his friend, Sergio Labang, to roam around Iligan City. Ray drove the motorcycle with Sergio as the backrider.2
At around past 10:00 p.m., after eating supper at Honas Restaurant and imbibing a bottle of beer, they traversed the highway towards Tambo at a
high speed. Upon reaching Brgy. Sto. Rosario, they figured in an accident with a Tamaraw jeepney, owned by petitioner Nelen Lambert and driven by
Reynaldo Gamot, which was traveling on the same direction but made a sudden left turn. The incident resulted in the instantaneous death of Ray and
injuries to Sergio.3
Respondents, the heirs of Ray Castillon, thus filed an action for damages with prayer for preliminary attachment against the petitioner Nelen Lambert.
The complaint was docketed as Civil Case No. 06-2086 of the RTC of Iligan City, Branch 06.4 The complaint was subsequently amended to include
the claim by Joel Castillon for the damages caused to the motorcycle.51vvphi1.nt
On June 29, 1993, after a full-blown trial, the court a quo rendered a decision in favor of herein private respondents but reduced petitioners liability by
20% in view of the contributory negligence of Ray. The dispositive portion of the decision reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants, directing the latter, jointly and severally, to pay the
former the following:
1. The sum of SIX HUNDRED THIRTY-THREE THOUSAND AND NINETY-ONE (P633,091) PESOS, representing loss of support, death
indemnity, funeral and related expenses, moral damages and attorneys fees and

2. Costs of the suit.

For lack of merit, defendants counterclaim is dismissed.
On the claim of Joel Castillon, the evidence shows that he is not the real owner of the motorcycle. He is not the real party in interest. Accordingly, his
complaint is dismissed.
On the third-party complaint, the third-party defendant Zenith Insurance Corporation is ordered to pay the sum of P16,500.00 directly to the plaintiffs.
This sum, if paid, should be deducted from the amount adjudged in par. 1 above.
SO ORDERED.6
The Court of Appeals affirmed the decision of the trial court.7 Hence the present petition, based on the following arguments:
1. The Honorable Court of Appeals committed serious error of law and grave abuse of discretion when it did not apply the ruling of this
Honorable Court in the case of Philippine Rabbit Bus Lines vs. The Honorable Intermediate Appellate Court and Casiano Pascua, Et. Al., [189
SCRA 168, August 30, 1990], as reiterated recently in the case of Edna A. Raynera vs. Freddie Hiceta and Jimmy Orpilla [306 SCRA 102, April
21, 1999], in which this Honorable Court enunciated that drivers of vehicles "who bump the rear of another vehicle" are presumed to be the
cause of the accident.
2. The erroneous conclusion of the Honorable Trial Court as affirmed by the Honorable Court of Appeals that the act of tailgating, at high
speed, constitutes contributory negligence only, is contrary to the rulings of this Honorable Court in the case of Sanitary Steam Laundry, INC.
vs. The Honorable Court of Appeals[300 SCRA 20, December 10, 1998] and the case of Edna A. Raynera vs. Freddie Hiceta and Jimmy
Orpilla [306 SCRA 102, April 21, 1999].
3. The Honorable Court of Appeals grossly erred in its conclusion that petitioners driver was negligent, without taking into consideration the
presumptions enunciated by this Honorable Court in the case of Philippine Rabbit Bus Lines vs. The Honorable Intermediate Appellate Court
and Casiano Pascua, Et. Al., [189 SCRA 168, August 30, 1990], and the case of Edna A. Raynera vs. Freddie Hiceta and Jimmy Orpilla [306
SCRA 102, April 21, 1999].
4. As an alternative relief, petitioner most respectfully assigns as error the Honorable Trial Courts computation as to the loss of earning
capacity of Ray Castillon. Such computation is contrary to the formula enunciated by this Honorable Court in the case of Villa Rey Transit, Inc.
vs. The Honorable Court of Appeals [31 SCRA 511 (1970)].
5. The Honorable Trial Courts award of moral damages is contrary to the pronunciation of this Honorable Court in the case of Ace Haulers
Corporation vs. The Honorable Court of Appeals and Abiva [338 SCRA 572, August 23, 2000], wherein the award of moral damages was
disallowed absent any evidence of bad faith or ill-motive.8

Petitioner insists that the negligence of Ray Castillon was the proximate cause of his unfortunate death and therefore she is not liable for damages.
In petitions for review on certiorari under Rule 45 of the Rules of Court, only questions of law may be put into issue. Questions of fact cannot be
entertained. The finding of negligence by the Court of Appeals is a question of fact which we cannot pass upon as it would entail going into factual
matters on which the finding of negligence was based. As a rule, factual findings of the trial court, especially those affirmed by the Court of Appeals,
are conclusive on this Court when supported by the evidence on record.9
Our examination of the records shows that both the trial court and the Court of Appeals carefully considered the factual backdrop of the case. No
cogent reason exists for disturbing the following findings of the trial court, which the Court of Appeals affirmed:
To the mind of the court, this is exactly what happened. When Reynaldo Gamot was approaching the side road, he slightly veered to the right for
his allowance. Ray Castillon, who was following closely behind, instinctively veered to the left but it was also the moment when Reynaldo Gamot
sharply turned to the left towards the side road. At this juncture both were moving obliquely to the left.l^vvphi1.net Thus the motorcycle sliced into the
side of the jeepney throwing the driver forward so that his forehead hit the angle bar on the left front door of the jeepney even as the motorcycle shot
forward and the jeepney veered back to the right and sped away.

The testimonies of the witnesses Frias, Opada, Labang and Sumile show that he did not stop even for a second, or less before making the left turn.
On the contrary, he slightly veered to the right immediately followed by the abrupt and sudden turn to the left in order to enter the side road. It is
apparent that Reynaldo Gamot did not keep a lookout for vehicles or persons following him before proceeding to turn left. He failed to take into
account the possibility that others may be following him. He did not employ the necessary precaution to see to it that the road was clear.10
Clearly, the abrupt and sudden left turn by Reynaldo, without first establishing his right of way, was the proximate cause of the mishap which claimed
the life of Ray and injured Sergio. Proximate cause is defined as that which, in the natural and continuous sequence, unbroken by any efficient,
intervening cause, produces the injury, and without which the result would not have occurred.11 The cause of the collision is traceable to the negligent
act of Reynaldo for, as the trial court correctly held, without that left turn executed with no precaution, the mishap in all probability would not have
happened.12
Petitioner misunderstood our ruling in Raynera v. Hiceta.13 That case also involved a motorcycle crashing into the left rear portion of another vehicle,
and we declared therein that drivers of vehicles "who bump the rear of another vehicle" are presumed to be "the cause of the accident, unless
contradicted by other evidence".14 InRaynera, the death of the victim was solely attributable to his own negligence in bumping the rear of the trailer
truck which was traveling ahead of him at 20 to 30 kilometers per hour. Raynera, being the driver of the rear vehicle, had full control of the situation as
he was in a position to observe the vehicle in front of him. The trailer truck therein did not make a sudden left turn as in the case at bar. Thus, the
theory that drivers of vehicles "who bump the rear of another vehicle" are presumed to be the cause of the accident is, as in this case, sufficiently
contradicted by evidence, which is the sudden left turn made by Reynaldo which proximately caused the collision.

While we agree with the trial court that Ray was likewise guilty of contributory negligence as defined under Article 2179 of the Civil Code, we find it
equitable to increase the ratio of apportionment of damages on account of the victims negligence.
Article 2179 reads as follows:
When the plaintiffs negligence was the immediate and proximate cause of his injury, he cannot recover damages. But if his negligence was only
contributory, the immediate and proximate cause of the injury being the defendants lack of due care, the plaintiff may recover damages, but the courts
shall mitigate the damages to be awarded.
The underlying precept on contributory negligence is that a plaintiff who is partly responsible for his own injury should not be entitled to recover
damages in full but must bear the consequences of his own negligence. The defendant must thus be held liable only for the damages actually caused
by his negligence.15 The determination of the mitigation of the defendants liability varies depending on the circumstances of each case. The Court had
sustained a mitigation of 50% in Rakes v. AG & P;1620% in Phoenix Construction, Inc. v. Intermediate Appellate Court17 and LBC Air Cargo, Inc. v.
Court of Appeals;18 and 40% in Bank of the Philippine Islands v. Court of Appeals19 and Philippine Bank of Commerce v. Court of
Appeals.201awphi1.nt
In the case at bar, it was established that Ray, at the time of the mishap: (1) was driving the motorcycle at a high speed; (2) was tailgating the
Tamaraw jeepney; (3) has imbibed one or two bottles of beer; and (4) was not wearing a protective helmet.21 These circumstances, although not
constituting the proximate cause of his demise and injury to Sergio, contributed to the same result. The contribution of these circumstances are all
considered and determined in terms of percentages of the total cause. Hence, pursuant to Rakes v. AG & P, the heirs of Ray Castillon shall recover
damages only up to 50% of the award. In other words, 50% of the damage shall be borne by the private respondents; the remaining 50% shall be paid
by the petitioner.
Anent the award of loss of earning capacity, we agree with the petitioner that the trial court erred in the computation of the net earnings.
In considering the earning capacity of the victim as an element of damages, the following factors are considered in determining the compensable
amount of lost earnings: (1) the number of years for which the victim would otherwise have lived; and (2) the rate of loss sustained by the heirs of the
deceased. Jurisprudence provides that the first factor, i.e., life expectancy, is computed by applying the formula (2/3 x [80 - age at death]) adopted in
the American Expectancy Table of Mortality or the Actuarial Combined Experience Table of Mortality. As to the second factor, it is computed by
multiplying the life expectancy by the net earnings of the deceased, i.e., the total earnings less expenses necessary in the creation of such earnings or
income and less living and other incidental expenses. The net earning is ordinarily computed at fifty percent (50%) of the gross earnings.Thus,
the formula used by this Court in computing loss of earning capacity is: Net Earning Capacity = [2/3 x (80 age at time of death) x (gross annual
income reasonable and necessary living expenses)].22
It was established that Ray was 35 at the time of his death and was earning a gross annual income of P31,876.00 as a driver at the Mindanao State
University. In arriving at the net earnings, the trial court deducted from the gross annual income the annual living expenses in the amount of
P9,672.00, broken down as follows: P20.00 a day for travel or P520.00 per month; P60.00 a month for cigarettes; P26.00 for drinks; and other

personal expenses like clothing, toiletries, etc. estimated at P200.00 per month.23 The amount of P9,672.00, however, appears unrealistic, and
constitutes only 30.34% of the gross earnings. It even includes expenses for cigarettes which by no means can be classified as a necessary expense.
Using the cited formula with the net earnings computed at 50% of the gross earnings, a detailed computation is as follows:
1vvphi1.nt
NET EARNING CAPACITY = LIFE EXPECTANCY [2/3 (80-age at the time of x GROSS ANNUAL INCOME - LIVING EXPENSES (50% of
(X)
death)]
(GAI)
GAI)
X

= [2/3 (80-35)]

x [P31,876.00

-50% x P31,876.00]

= [2/3 (45)]

x [P31,876.00

- P15,938.00]

= 30

x 15,938.00

= P478,140.00

We sustain the awards of P33,215.00 as funeral and burial expenses being supported with receipts;24P50,000.00 as death indemnity; and P50,000.00
as moral damages. However, the award of P20,000.00 as attorneys fees must be deleted for lack of basis.
The indemnity for death caused by a quasi-delict used to be pegged at P3,000.00,25 based on Article 2206 of the Civil Code, which reads:
ART. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though there may have
been mitigating circumstances. In addition:
(1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter;
such indemnity shall in every case be assessed and awarded by the court, unless the deceased on account of permanent physical disability
not caused by the defendant, had no earning capacity at the time of his death;
(2) If the deceased was obliged to give support according to the provisions of article 291, the recipient who is not an heir called to the
decedents inheritance by the law of testate or intestate succession, may demand support from the person causing the death, for a period of
not exceeding five years, the exact duration to be fixed by the court;
(3) 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.
However, the amount has been gradually increased through the years. At present, prevailing jurisprudence fixes the amount at P50,000.00.26
Paragraph 3 of the same provision also serves as the basis for the award of moral damages in quasi-delict. 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.27
While it is true that there can be no exact or uniform rule for measuring the value of human life and the measure of damages cannot be arrived at by a
precise mathematical calculation,28 we hold that the trial courts award of moral damages of P50,000.00 for the death of Ray Castillon is in accord with
the prevailing jurisprudence.29
With respect to attorneys fees, it is well settled that the same should not be awarded in the absence of stipulation except under the instances
enumerated in Article 2208 of the Civil Code. The trial court did not indicate the basis for its award. As we have held in Rizal Surety and Insurance
Company v. Court of Appeals:30
"Article 2208 of the Civil Code allows attorneys fess 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.l^vvphi1.net While judicial discretion is
here extant, an award thereof demands, nevertheless, a factual, legal or equitable justification.1a\^/phi1.net 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 attorneys fees and to adjudge its payment by petitioner"
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 attorneys fees must be stated in the text of the courts decision, otherwise, if it is stated only in the dispositive portion of the decision, the
same must be disallowed on appeal. 1awphi1.nt
WHEREFORE, in view of the foregoing, the petition is DENIED. The assailed decision of the Court of Appeals is AFFIRMED with the MODIFICATION
that the net earnings is computed at 50% of the gross annual income to conform with the prevailing jurisprudence, and the FURTHER
MODIFICATION that petitioner NELEN LAMBERT is ordered to pay the heirs of Ray Castillon only 50% of the damages herein awarded, except
attorneys fees which is DELETED for lack of basis.
G.R. No. 148737

June 16, 2004

ERNESTO PLEYTO and PHILIPPINE RABBIT BUS LINES, INC., petitioners,

vs.
MARIA D. LOMBOY and CARMELA LOMBOY, respondents.
DECISION

QUISUMBING, J.:
For review on certiorari is the Decision1 dated October 31, 2000 of the Court of Appeals in CA-G.R. CV No. 61300, which affirmed with modification
the Decision2 dated June 26, 1998 of the Regional Trial Court (RTC) of Dagupan City, Branch 42, in Civil Case No. 95-00724-D. The RTC ordered
herein petitioners to solidarily pay damages to respondents. Petitioners likewise assail the Resolution3 dated June 21, 2001 of the appellate court,
which denied their Motion for Reconsideration.
Petitioner Philippine Rabbit Bus Lines, Inc. (PRBL), with principal office at Tarlac City, Tarlac, is a public carrier, engaged in carrying passengers and
goods for a fare. It serviced various routes in Central and Northern Luzon. Petitioner Ernesto Pleyto was a bus driver employed by PRBL at the time of
the incident in question.
Respondent Maria D. Lomboy of Calasiao, Pangasinan, is the surviving spouse of the late Ricardo Lomboy, who died in Pasolingan, Gerona, Tarlac,
in a vehicular accident at around 11:30 a.m. of May 16, 1995. The accident was a head-on collision between the PRBL bus driven by petitioner Pleyto
and the car where Ricardo was a passenger. Respondent Carmela Lomboy is the eldest daughter of Ricardo and Maria Lomboy. Carmela suffered
injuries requiring hospitalization in the same accident which resulted in her fathers death.
On November 29, 1995, herein respondents, as pauper-litigants, filed an action for damages against PRBL and its driver, Pleyto, with the RTC of
Dagupan City. In their complaint, which was docketed as Civil Case No. 95-00724-D, the Lomboys prayed that they be indemnified for the untimely
death of Ricardo Lomboy, his lost earnings, the medical and hospitalization expenses of Carmela, and moral damages.
The facts, established during trial and affirmed by the appellate court, are as follows:
At approximately 11:30 a.m. of May 16, 1995, PRBL Bus No. 1539, with Plate No. CVD 556, driven by petitioner Pleyto, was traveling along
MacArthur Highway in Gerona, Tarlac bound for Vigan, Ilocos Sur. It was drizzling that morning and the macadam road was wet. Right in front
of the bus, headed north, was the tricycle with Plate No. CX 7844, owned and driven by one Rodolfo Esguerra.
According to Rolly Orpilla, a witness and one of the bus passengers, Pleyto tried to overtake Esguerras tricycle but hit it instead. Pleyto then swerved
into the left opposite lane. Coming down the lane, some fifty meters away, was a southbound Mitsubishi Lancer car, with Plate No. PRS 941, driven by
Arnulfo Asuncion. The car was headed for Manila with some passengers. Seated beside Arnulfo was his brother-in-law, Ricardo Lomboy, while in the
back seat were Ricardos 18-year old daughter Carmela and her friend, one Rhino Daba. PRBL Bus No. 1539 smashed head-on the car, killing
Arnulfo and Ricardo instantly. Carmela and Rhino suffered injuries, but only Carmela required hospitalization.
In their Answer, petitioners PRBL and Ernesto Pleyto both claimed that the bus was running slowly at the time of the accident. They pointed out that
Bus No. 1539 had been inspected by driver Pleyto and examined by a mechanic prior to the trip, in accordance with the companys standard operating
procedure. It was found in good working condition. Pleyto claimed that while cruising along the highway at Gerona, Tarlac, he noticed Esguerras
tricycle and followed it at a safe distance after he was unable to overtake it. Suddenly and without warning, the tricycle stopped in the middle of the

road. Pleyto stepped on the brakes and the bus lost speed. But, since it skidded towards the direction of the tricycle, he swerved the bus to the other
lane to avoid hitting it, only to collide with the Manila-bound Mitsubishi car.
On June 26, 1998, the trial court decided Civil Case No. 95-00724-D as follows:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and against the defendants ordering the defendants
to pay solidarily the plaintiffs the following amounts:
1) P50,000.00 as indemnification for the death of Ricardo Lomboy;
2) P1,642,521.00 for lost earnings of Ricardo Lomboy;
3) P59,550.00 as actual damages for the funeral, wake, religious services and prayer for the soul of the departed;
4) P52,000.00 for the medical treatment and medicine of Carmela Lomboy;
5) P500,000.00 as moral damages for the wife and children excluding Carmela Lomboy;
6) P50,000.00 as moral damages for Carmela Lomboy; and
7) To pay costs.
The filing fee the plaintiffs should have paid is hereby ordered to be paid by the plaintiffs to the Clerk of Court of this Court upon satisfaction of
the foregoing amounts to the plaintiffs by the defendants.
SO ORDERED.4
In ruling for respondents, the RTC found Pleyto negligent and lacking in precaution when he overtook the tricycle with complete disregard of the
approaching car in the other lane. It found the testimony of Rolly Orpilla credible and persuasive as against Pleytos self-serving and unbelievable
testimony. The court found that Pleyto should have been more prudent in overtaking a tricycle, considering that it was drizzling, the road was slippery,
and another vehicle was approaching from the opposite direction. The RTC found that Pleyto had clearly violated traffic rules and regulations, and
thus was negligent under Article 21855 of the Civil Code of the Philippines because petitioner Pleyto failed to present any proof to rebut the
presumption. The lower court likewise held co-petitioner PRBL equally liable under Article 21806 of the Civil Code for its failure to show that it had
maintained proper supervision of its employees notwithstanding strict standards in employee selection.
Petitioners appealed the judgment of the trial court to the Court of Appeals in CA-G.R. CV No. 61300. The appellate court, however, affirmed the
decision of the trial court, with modification in the award of damages, thus:

Wherefore, with the MODIFICATION that the award for actual damages is reduced to P39,550.00 for funeral and religious services
and P27,000.00 for medical expenses of Carmela Lomboy; and the award for loss of earning capacity is accordingly corrected
to P1,152,000.00, the appealed decision is AFFIRMED.
SO ORDERED.7
The Court of Appeals affirmed the findings of the RTC with respect to Pleytos fault and negligence. The appellate court noted that this was evident in
his overtaking Esguerras tricycle despite the drizzle, the slippery road, and an oncoming car a mere fifty meters away. The court reasoned that the
bus must have been speeding since despite braking, the bus still hit the tricycle, and then rammed the car in the opposite lane with such force as to
throw the car off the road. The appellate court also found petitioner PRBL liable as owner of the bus and as employer of Pleyto pursuant to Article
2180 of the Civil Code, for its failure to observe the required diligence in its supervision of its employees and the safe maintenance of its buses. In
modifying the award of damages, the appellate court took note of the amounts that were duly supported by receipts only.
Petitioners then moved for reconsideration, but the appellate court denied it.
Hence, the instant petition, premised on the following grounds:
A. THE SUPREME COURT MAY REVIEW THE CONCLUSION DRAWN BY THE COURT OF APPEALS, NAMELY, THAT THE PRBL BUS
OVERTOOK A TRICYCLE THUS CAUSING THE ACCIDENT, SINCE IT WAS MADE IN DISREGARD OF FACTS UNDISPUTED BY THE
PARTIES.
B. THE COURT OF APPEALS DISREGARDED THE DOCTRINE LAID DOWN IN VILLA REY TRANSIT, INC. v. COURT OF APPEALS, G.R.
NO. L-25499, FEBRUARY 18, 1970, 31 SCRA 511, WHEN IT ARBITRARILY PEGGED THE MONTHLY LIVING EXPENSES AT 50% OF
GROSS EARNINGS.8
At the outset, it appears that petitioners call for this Court to review the factual findings and conclusions of the Court of Appeals. Petitioners assail the
appellate courts affirmance of the finding by the trial court that Pleyto was negligent. The issue of negligence is factual and, in quasi-delicts, crucial in
the award of damages.9 But it is well established that under Rule 45 of the 1997 Rules of Civil Procedure, only questions of law, not of fact, may be
raised before the Supreme Court. It must be stressed that this Court is not a trier of facts, and it is not its function to re-examine and weigh anew the
respective evidence of the parties.10 Factual findings of the trial court, especially those affirmed by the Court of Appeals, are conclusive on this Court
when supported by the evidence on record.11 In the present petition, no compelling reason is shown by petitioners whatsoever for this Court to reverse
those findings. Our examination of the records shows that the evidence clearly supports the following findings of the appellate court:
The negligence and fault of appellant driver is manifest. He overtook the tricycle despite the oncoming car only fifty (50) meters away from him.
Defendant-appellants claim that he was driving at a mere 30 to 35 kilometers per hour does not deserve credence as it would have been easy to stop
or properly maneuver the bus at this speed. The speed of the bus, the drizzle that made the road slippery, and the proximity of the car coming from
the opposite direction were duly established by the evidence. The speed at which the bus traveled, inappropriate in the light of the aforementioned

circumstances, is evident from the fact despite the application of the brakes, the bus still bumped the tricycle, and then proceeded to collide with the
incoming car with such force that the car was pushed beyond the edge of the road to the ricefield (Paragraph 8, Affidavit of Rolly Orpilla marked Exh.
"D" and Traffic Report marked Exh. "E", Folder of Exhibits)....12
Indeed, petitioner Pleyto violated traffic rules and regulations when he overtook the tricycle despite the presence of an oncoming car in the other lane.
Article 2185 of the Civil Code lays down the presumption that a person driving a motor vehicle has been negligent if at the time of the mishap, he was
violating any traffic regulation. As found by both the Court of Appeals and the trial court, petitioners failed to present any convincing proof rebutting
such presumption.
A driver abandoning his proper lane for the purpose of overtaking another vehicle in an ordinary situation has the duty to see to it that the road is clear
and not to proceed if he cannot do so in safety. When a motor vehicle is approaching or rounding a curve, there is special necessity for keeping to the
right side of the road and the driver does not have the right to drive on the left hand side relying upon having time to turn to the right if a car
approaching from the opposite direction comes into view.13
The Court of Appeals found PRBL liable for Pleytos negligence pursuant to Article 2180 in relation to Article 217614 of the Civil Code. Under Article
2180, 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.15
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. 16 Thus, in the selection of prospective
employees, employers are required to examine them as to their qualifications, experience and service records. With respect to the supervision of
employees, employers must formulate standard operating procedures, monitor their implementation and impose disciplinary measures for breaches
thereof. These facts must be shown by concrete proof, including documentary evidence.17
In the present case, petitioners presented several documents18 in evidence to show the various tests and pre-qualification requirements imposed upon
petitioner Pleyto before his hiring as a driver by PRBL. However, no documentary evidence was presented to prove that petitioner PRBL exercised
due diligence in the supervision of its employees, including Pleyto. Citing precedents, the Court of Appeals opined,
"in order that the defense of due diligence in the selection and supervision of employees may be deemed sufficient and plausible, it is not
enough for the employer to emptily invoke the existence of company guidelines and policies on hiring and supervision. As the negligence of the
employee gives rise to the presumption of negligence on the part of the employer, the latter has the burden of proving that it has been diligent
not only in the selection of employees but also in the actual supervision of their work. The mere allegation of the existence of hiring procedures
and supervisory policies without anything more is decidedly not sufficient to overcome such presumption. (Metro Manila Transit Corp. vs.
CA (223 SCRA 521). The trial court ratiocinated:
...

Indeed, the testimony of the said two witnesses of the PRBL would impress one to believe that the PRBL has always exercised the
strictest standard of selecting its employees and of maintaining its vehicles to avoid injury or damage to the life and limb of people on
the road whether of its own passengers or pedestrians or occupants or other vehicles. It has not however, shown to the satisfaction of
the Court that it has maintained proper supervision of its employees, especially drivers while in the actual operation of its buses. While it
has a list of procedures and testing when it comes to recruitment and another list of what should be done with its buses before they are
allowed to run on the road, it has no list of procedures and duties to be followed by a driver while he is operating a vehicle to prevent
injury to persons and damage to property. Neither has it proved to the Court that there are people employed by it to supervise its drivers
so that it can be seen to it that all the safety procedures to prevent accident or damage to property or injury to people on the road have
been in place. It is in this aspect of supervising its employees where this Court has found the defendant PRBL deficient." (Decision p.
29, Rollo)19
In our view, no reversible error was committed by the Court of Appeals when it sustained what the trial court found after trial that PRBL had failed to
rebut the presumption of negligence on its part. Said finding binds us now in this review on certiorari.
Hence, the only remaining issue relevant for our resolution concerns the award to herein respondents for damages as well as the loss of earning
capacity of the victim, Ricardo Lomboy.
Petitioners argue that the award of loss of earning capacity to respondents is devoid of legal basis. They fault the appellate court for pegging the
monthly living expenses at 50% of gross earnings since, they claim, this runs contrary to Villa Rey Transit, Inc. v. Court of Appeals,20 which held that
"the amount recoverable is not loss of the entire earning, but rather the loss of that portion of the earnings which the beneficiary would have received."
Petitioners also point out that respondents failed to prove the gross income of the deceased Ricardo Lomboy, thus, making the computations of the
appellate court doubtful, to say the least.
Respondents counter that the deduction of 50% of the gross income as reasonable and necessary living expenses by the appellate court is in accord
with established jurisprudence, pointing to our decision in Negros Navigation Co., Inc. v. Court of Appeals.21
Petitioners, in our view, misread the Villa Rey Transit case, where we emphasized that:
"Thus, it has been consistently held that earning capacity, as an element of damages to ones estate for his death by wrongful act is
necessarily his net earning capacity or his capacity to acquire money, "less the necessary expense for his own living". Stated otherwise, the
amount recoverable is not loss of theentire earning, but rather the loss of that portion of the earnings which the beneficiary would have
received. In other words, only net earnings, not gross earning, are to be considered that is, the total of the earningsless expenses necessary in
the creation of such earnings or income and less living and other incidental expenses."22
In considering the earning capacity of the victim as an element of damages, the net earnings, which is computed by deducting necessary expenses
from the gross earnings, and not the gross earnings, is to be utilized in the computation. Note that in the present case, both the Court of Appeals and
the trial court used net earnings, not gross earnings in computing loss of earning capacity. The amount of net earnings was arrived at after deducting

the necessary expenses (pegged at 50% of gross income) from the gross annual income. This computation is in accord with settled jurisprudence,
including the Villa Rey case.
Petitioners claim that no substantial proof was presented to prove Ricardo Lomboys gross income lacks merit. Failure to present documentary
evidence to support a claim for loss of earning capacity of the deceased need not be fatal to its cause. Testimonial evidence suffices to establish a
basis for which the court can make a fair and reasonable estimate of the loss of earning capacity.23 Hence, the testimony of respondent Maria
Lomboy, Ricardos widow, that her husband was earning a monthly income of P8,000 is sufficient to establish a basis for an estimate of damages for
loss of earning capacity.
It is well-settled in jurisprudence that the factors that should be taken into account in determining the compensable amount of lost earnings are: (1) the
number of years for which the victim would otherwise have lived; and (2) the rate of loss sustained by the heirs of the deceased. Jurisprudence
provides that the first factor,i.e., life expectancy, is computed by applying the formula (2/3 x [80 - age at death]) adopted in the American Expectancy
Table of Mortality or the Actuarial Combined Experience Table of Mortality. As to the second factor, it is computed by multiplying the life expectancy
by the net earnings of the deceased, i.e., the total earnings less expenses necessary in the creation of such earnings or income and less living and
other incidental expenses. The net earning is ordinarily computed at fifty percent (50%) of the gross earnings.24 Thus, the formula used by this Court
in computing loss of earning capacity is: Net Earning Capacity = [2/3 x (80 age at time of death) x (gross annual income reasonable and
necessary living expenses)].25
It was established that Ricardo Lomboy was 44 years old at the time of his death and is earning a monthly income of P8,000 or a gross annual income
(GAI) of P96,000.26 Using the cited formula, the Court of Appeals correctly computed the Loss of Net Earning Capacity as P1,152,000, net of and after
considering a reasonable and necessary living expenses of 50% of the gross annual income or P48,000. A detailed computation is as follows:
NET
EARNING
CAPACITY
(X)

LIFE
GROSS
EXPECTANCY
ANNUAL
=
x
[2/3 (80-age at the
INCOME
time of death)]
(GAI)

LIVING
EXPENSES
(50% of GAI)

= [2/3 (80-44)]

x [P96,000

= [2/3 (36)]

x [P96,000

48,000]

= 24

x 48,000

= P 1,152,000.00

(50%
xP96,000)

Thus, no reversible error may be attributed to the court a quo in fixing the loss of earning capacity at said amount.

We likewise sustain the reduction of the award of actual damages from P59,550 for funeral and burial expenses of Ricardo and P52,000 for medical
expenses of Carmela Lomboy to P39,55027 and P27,000, respectively, as only these latter amounts were duly supported by receipts.28 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.29
However, while the award of P50,000 as moral damages to Carmela Lomboy is sustained, the award for moral damages of P500,000 to the heirs of
Ricardo Lomboy should be reduced for being excessive.
Under Article 2206 of the Civil Code, the spouse, legitimate children and illegitimate descendants and ascendants of the deceased may demand moral
damages for mental anguish by reason of the death of the deceased.30 However, we must stress that moral damages, though incapable of pecuniary
estimation, are in the category of an award designed to compensate the claimant for actual injury and are not meant to enrich complainant at the
expense of defendant.31 Moral damages are awarded to enable the injured party to obtain means, diversions or amusements that will serve to
alleviate the moral suffering he/she has undergone, by reason of the defendants culpable action. Its award is aimed at restoration, as much as
possible, of the spiritualstatus quo ante; thus it must be proportionate to the suffering inflicted.32 Under the circumstances of this case, an award
of P100,000 to the heirs of Ricardo Lomboy would be justified and in keeping with the purpose of the law and jurisprudence in allowing moral
damages.33
The indemnification award of P50,000 is also sustained.
WHEREFORE, the assailed Decision of the Court of Appeals in CA-G.R. CV No. 61300 is AFFIRMED, with the sole MODIFICATION that the award
of moral damages to the heirs of Ricardo Lomboy is reduced fromP500,000.00 to P100,000.00. No pronouncement as to costs.
G.R. No. 152720

February 17, 2005

SOLIDBANK CORPORATION, petitioner,

vs.
Spouses TEODULFO and CARMEN ARRIETA, respondents.
DECISION
PANGANIBAN, J.:
A banks gross negligence in dishonoring a well-funded check, aggravated by its unreasonable delay in repairing the error, calls for an award of moral
and exemplary damages. The resulting injury to the check writers reputation and peace of mind needs to be recognized and compensated.
The Case

Before us is a Petition for Review1 under Rule 45 of the Rules of Court, seeking to reverse and set aside the March 28, 2001 Decision2 and the
February 5, 2002 Resolution3 of the Court of Appeals (CA) in CA-GR CV No. 55002. The assailed Decision disposed as follows:
"WHEREFORE, the appeal is DISMISSED, with costs against defendant-appellant."4
The CA denied reconsideration in its February 5, 2002 Resolution.
The Facts
The facts are summarized by the CA as follows:
"Carmen Arrieta is a bank depositor of Solidbank Corporation under Checking Account No. 123-1996. On March 1990, Carmen issued SBC Check
No. 0293984 (Exh. A) in the amount of P330.00 in the name of Lopues Department Store in payment of her purchases from said store. When the
check was deposited by the store to its account, the same was dishonored due to Account Closed (Exh. B) despite the fact that at the time the
check was presented for payment, Carmens checking account was still active and backed up by a deposit ofP1,275.20.
"As a consequence of the checks dishonor, Lopues Department Store sent a demand letter to Carmen (Exh. C) threatening her with criminal
prosecution unless she redeemed the check within five (5) days. To avoid criminal prosecution, Carmen paid P330.00 in cash to the store, plus a
surcharge of P33.00 for the bouncing check, or a total of P363.00 (Exh. F).
"Thereupon, Carmen filed a complaint against Solidbank Corporation for damages alleging that the bank, by its carelessness and recklessness in
certifying that her account was closed despite the fact that it was still very much active and sufficiently funded, had destroyed her good name and
reputation and prejudiced not only herself but also her family in the form of mental anguish, sleepless nights, wounded feelings and social humiliation.
She prayed that she be awarded moral and exemplary damages as well as attorneys fees.
"In its answer, the bank claimed that Carmen, contrary to her undertaking as a depositor, failed to maintain the required balance of at least P1,000.00
on any day of the month. Moreover, she did not handle her account in a manner satisfactory to the bank. In view of her violations of the general terms
and conditions governing the establishment and operation of a current account, Carmens account was recommended for closure. In any event, the
bank claimed good faith in declaring her account closed since one of the clerks, who substituted for the regular clerk, committed an honest mistake
when he thought that the subject account was already closed when the ledger containing the said account could not be found.1awphi1.nt
"After trial, the lower court rendered its decision holding that Solidbank Corporation was grossly negligent in failing to check whether or not Carmens
account was still open and viable at the time the transaction in question was made. Hence, the bank was liable to Carmen for moral and exemplary
damages, as well as attorneys fees. It held that the bank was remiss in its duty to treat Carmens account with the highest degree of care, considering
the fiduciary nature of their relationship. The dispositive portion of the decision reads:

"WHEREFORE, the Court hereby renders judgment in favor of the plaintiff as against the defendant-bank, and defendant-bank is ordered to pay moral
damages of P150,000.00; exemplary damages of P50,000.00; and attorneys fees of P20,000.00, plus costs.
SO ORDERED."5
Ruling of the Court of Appeals
The CA debunked the contention of the bank that the latter was not liable. According to petitioner, the dishonor of the check by reason of "Account
Closed" was an honest mistake of its employee. The appellate court held that the error committed by the bank employee was imputable to the bank.
Banks are obliged to treat the accounts of their depositors with meticulous care, regardless of the amount of the deposit. Failing in this duty, petitioner
was found grossly negligent. The failure of the bank to immediately notify Respondent Carmen Arrieta of its unilateral closure of her account
manifested bad faith, added the CA.1awphi1.nt
The appellate court likewise affirmed the award of moral damages. It held that the banks wrongful act was the proximate cause of Carmens moral
suffering. The CA ruled that the lack of malice and bad faith on the part of petitioner did not suffice to exculpate the latter from liability; the banks
gross negligence amounted to a wilful act. The trial courts award of exemplary damages and attorneys fees was sustained in view of respondents
entitlement to moral damages.
Hence, this Petition.6
Issues
Petitioner raises the following issues for our consideration:
"I.
Whether or not x x x respondents are entitled to recovery of moral and exemplary damages and attorneys fees.
"II.
Whether or not the award of moral and exemplary damages and attorneys fees is excessive, arbitrary and contrary to prevailing jurisprudence."7
The Courts Ruling
The Petition is partly meritorious.
Main Issue:

Petitioners Liability for Damages

Petitioner contends that the award of moral damages was erroneous because of the failure of Respondent Carmen to establish that the dishonor of
Check No. 0293984 on March 30, 1990 was the direct and only cause of the "social humiliation, extreme mental anguish, sleepless nights, and
wounded feelings suffered by [her]." It referred to an occasion fifteen days before, on March 15, 1990, during which another check (Check No.
0293983) she had issued had likewise been dishonored.
According to petitioner, highly illogical was her claim that extreme mental anguish and social humiliation resulted from the dishonor of Check No.
0293984, as she claimed none from that of her prior Check No. 0293983, which had allegedly been deposited by mistake by the payees wife. Given
the circumstances, petitioner adds that the dishonor of the check -- subject of the present case -- did not really cause respondent mental anguish,
sleepless nights and besmirched reputation; and that her institution of this case was clearly motivated by opportunism.
We are not persuaded.
The fact that another check Carmen had issued was previously dishonored does not necessarily imply that the dishonor of a succeeding check can no
longer cause moral injury and personal hurt for which the aggrieved party may claim damages. Such prior occurrence does not prove that respondent
does not have a good reputation that can be besmirched.8
The reasons for and the circumstances surrounding the previous issuance and eventual dishonor of Check No. 0293983 are totally separate -- the
payee of the prior check was different -- from that of Check No. 0293984, subject of present case. Carmen had issued the earlier check to
accommodate a relative,9 and the succeeding one to pay for goods purchased from Lopues Department Store. That she might not have suffered
damages as a result of the first dishonored check does not necessarily hold true for the second. In the light of sufficient evidence showing that she
indeed suffered damages as a result of the dishonor of Check No. 0293984, petitioner may not be exonerated from liability.
Case law10 lays out the following conditions for the award of moral damages: (1) there is an injury -- whether physical, mental or psychological -clearly sustained by the claimant; (2) the culpable act or omission is factually established; (3) the wrongful act or omission of the defendant is the
proximate cause of the injury sustained by the claimant; and (4) the award of damages is predicated on any of the cases stated in Article 221911 of the
Civil Code.
In the instant case, all four requisites have been established.l^vvphi1.net First, these were the findings of the appellate court: "Carmen Arrieta is a
bank depositor of Solidbank Corporation of long standing. She works with the Central Negros Electric Cooperative, Inc. (CENECO), as an executive
secretary and later as department secretary. She is a deaconess of the Christian Alliance Church in Bacolod City. These are positions which no doubt
elevate her social standing in the community." Understandably -- and as sufficiently proven by her testimony -- she suffered mental anguish, serious
anxiety, besmirched reputation, wounded feelings and social humiliation; and she suffered thus when the people she worked with -- her friends, her
family and even her daughters classmates -- learned and talked about her bounced check.
Second, it is undisputed that the subject check was adequately funded, but that petitioner wrongfully dishonored it.

Third, Respondent Carmen was able to prove that petitioners wrongful dishonor of her check was the proximate cause of her embarrassment and
humiliation in her workplace, in her own home, and in the church where she served as deaconess.
Proximate cause has been defined as "any cause which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces
the result complained of and without which would not have occurred x x x."12 It is determined from the facts of each case upon combined
considerations of logic, common sense, policy and precedent.13 Clearly, had the bank accepted and honored the check, Carmen would not have had
to face the questions of -- and explain her predicament to -- her office mates, her daughters, and the leaders and members of her church.
Furthermore, the CA was in agreement with the trial court in ruling that her injury arose from the gross negligence of petitioner in dishonoring her wellfunded check.
Unanimity of the CA and the trial court in their factual ascertainment of this point bars us from supplanting their finding and substituting it with our own.
Settled is the doctrine that the factual determinations of the lower courts are conclusive and binding upon this Court. 14 Verily, the review of cases
brought before the Supreme Court from the Court of Appeals is limited to errors of law.15 None of the recognized exceptions to this principle has been
shown to exist.
Fourth, treating Carmens account as closed, merely because the ledger could not be found was a reckless act that could not simply be brushed off as
an honest mistake. We have repeatedly emphasized that the banking industry is impressed with public interest. Consequently, the highest degree of
diligence is expected, and high standards of integrity and performance are even required of it. By the nature of its functions, a bank is under obligation
to treat the accounts of its depositors with meticulous care and always to have in mind the fiduciary nature of its relationship with them. 16
Petitioners negligence here was so gross as to amount to a wilful injury to Respondent Carmen. Article 21 of the Civil Code states that "any person
who wilfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the
damage." Further, Article 2219 provides for the recovery of moral damages for acts referred to in the aforementioned Article 21. Hence, the bank is
liable for moral damages to respondent.17
The foregoing notwithstanding, we find the sum of P150,000 awarded by the lower courts excessive. Moral damages are not intended to enrich the
complainant at the expense of the defendant.18 Rather, these are awarded only to enable the injured party to obtain "means, diversions or
amusements" that will serve to alleviate the moral suffering that resulted by reason of the defendants culpable action.19 The purpose of such damages
is essentially indemnity or reparation, not punishment or correction.20 In other words, the award thereof is aimed at a restoration within the limits of the
possible, of the spiritual status quo ante;21 therefore, it must always reasonably approximate the extent of injury and be proportional to the wrong
committed.22
Accordingly, the award of moral damages must be reduced to P20,000,23 an amount commensurate with the alleviation of the suffering caused by the
dishonored check that was issued for the amount of P330.

The law allows the grant of exemplary damages to set an example for the public good.24 The business of a bank is affected with public interest; thus, it
makes a sworn profession of diligence and meticulousness in giving irreproachable service.25 For this reason, the bank should guard against injury
attributable to negligence or bad faith on its part.26 The banking sector must at all times maintain a high level of meticulousness. The grant of
exemplary damages is justified27 by the initial carelessness of petitioner, aggravated by its lack of promptness in repairing its error. It was only on
August 30, 1990, or a period of five months from the erroneous dishonor of the check, when it wrote Lopues Department Store a letter acknowledging
the banks mistake.28 In our view, however, the award of P50,000 is excessive and should accordingly be reduced to P20,000.29
The award of attorneys fees in the amount of P20,000 is proper, for respondents were compelled to litigate to protect their rights.30
WHEREFORE, the Petition is PARTLY GRANTED and the assailed Decision MODIFIED. Petitioners areORDERED to pay respondents P20,000 as
moral damages, P20,000 as exemplary damages, and P20,000 as attorneys fees.
G.R. No. 129792 December 21, 1999
JARCO MARKETING CORPORATION, LEONARDO KONG, JOSE TIOPE and ELISA PANELO, petitioners,
vs.
HONORABLE COURT OF APPEALS, CONRADO C. AGUILAR and CRISELDA R. AGUILAR, respondents.
DAVIDE, JR., J.:
In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioners seek the reversal of the 17 June 1996 decision 1 of the Court of
Appeals in C.A. G.R. No. CV 37937 and the resolution 2 denying their motion for reconsideration. The assailed decision set aside the 15 January 1992
judgment of the Regional Trial Court (RTC), Makati City, Branch 60 in Civil Case No. 7119 and ordered petitioners to pay damages and attorney's
fees to private respondents Conrado and Criselda (CRISELDA) Aguilar.
Petitioner Jarco Marketing Corporation is the owner of Syvel's Department Store, Makati City. Petitioners Leonardo Kong, Jose Tiope and Elisa
Panelo are the store's branch manager, operations manager, and supervisor, respectively. Private respondents are spouses and the parents of
Zhieneth Aguilar (ZHIENETH).
In the afternoon of 9 May 1983, CRISELDA and ZHIENETH were at the 2nd floor of Syvel's Department Store, Makati City. CRISELDA was signing
her credit card slip at the payment and verification counter when she felt a sudden gust of wind and heard a loud thud. She looked behind her. She
then beheld her daughter ZHIENETH on the floor, her young body pinned by the bulk of the store's gift-wrapping counter/structure. ZHIENETH was
crying and screaming for help. Although shocked, CRISELDA was quick to ask the assistance of the people around in lifting the counter and retrieving
ZHIENETH from the floor. 3

ZHIENETH was quickly rushed to the Makati Medical Center where she was operated on. The next day ZHIENETH lost her speech and thereafter
communicated with CRISELDA by writing on a magic slate. The injuries she sustained took their toil on her young body. She died fourteen (14) days
after the accident or on 22 May 1983, on the hospital bed. She was six years old. 4
The cause of her death was attributed to the injuries she sustained. The provisional medical certificate 5 issued by ZHIENETH's attending doctor
described the extent of her injuries:
Diagnoses:
1. Shock, severe, sec. to intra-abdominal injuries due to blunt injury
2. Hemorrhage, massive, intraperitoneal sec. to laceration, (L) lobe liver
3. Rupture, stomach, anterior & posterior walls
4. Complete transection, 4th position, duodenum
5. Hematoma, extensive, retroperitoneal
6. Contusion, lungs, severe
CRITICAL
After the burial of their daughter, private respondents demanded upon petitioners the reimbursement of the hospitalization, medical bills and wake and
funeral expenses 6 which they had incurred. Petitioners refused to pay. Consequently, private respondents filed a complaint for damages, docketed as
Civil Case No. 7119 wherein they sought the payment of P157,522.86 for actual damages, P300,000 for moral damages, P20,000 for attorney's fees
and an unspecified amount for loss of income and exemplary damages.
In their answer with counterclaim, petitioners denied any liability for the injuries and consequent death of ZHIENETH. They claimed that CRISELDA
was negligent in exercising care and diligence over her daughter by allowing her to freely roam around in a store filled with glassware and appliances.
ZHIENETH too, was guilty of contributory negligence since she climbed the counter, triggering its eventual collapse on her. Petitioners also
emphasized that the counter was made of sturdy wood with a strong support; it never fell nor collapsed for the past fifteen years since its construction.
Additionally, petitioner Jarco Marketing Corporation maintained that it observed the diligence of a good father of a family in the selection, supervision
and control of its employees. The other petitioners likewise raised due care and diligence in the performance of their duties and countered that the
complaint was malicious for which they suffered besmirched reputation and mental anguish. They sought the dismissal of the complaint and an award
of moral and exemplary damages and attorney's fees in their favor.

In its decision 7 the trial court dismissed the complaint and counterclaim after finding that the preponderance of the evidence favored petitioners. It
ruled that the proximate cause of the fall of the counter on ZHIENETH was her act of clinging to it. It believed petitioners' witnesses who testified that
ZHIENETH clung to the counter, afterwhich the structure and the girl fell with the structure falling on top of her, pinning her stomach. In contrast, none
of private respondents' witnesses testified on how the counter fell. The trial court also held that CRISELDA's negligence contributed to ZHIENETH's
accident.
In absolving petitioners from any liability, the trial court reasoned that the counter was situated at the end or corner of the 2nd floor as a precautionary
measure hence, it could not be considered as an attractive nuisance. 8The counter was higher than ZHIENETH. It has been in existence for fifteen
years. Its structure was safe and well-balanced. ZHIENETH, therefore, had no business climbing on and clinging to it.
Private respondents appealed the decision, attributing as errors of the trial court its findings that: (1) the proximate cause of the fall of the counter was
ZHIENETH's misbehavior; (2) CRISELDA was negligent in her care of ZHIENETH; (3) petitioners were not negligent in the maintenance of the
counter; and (4) petitioners were not liable for the death of ZHIENETH.
Further, private respondents asserted that ZHIENETH should be entitled to the conclusive presumption that a child below nine (9) years is incapable
of contributory negligence. And even if ZHIENETH, at six (6) years old, was already capable of contributory negligence, still it was physically
impossible for her to have propped herself on the counter. She had a small frame (four feet high and seventy pounds) and the counter was much
higher and heavier than she was. Also, the testimony of one of the store's former employees, Gerardo Gonzales, who accompanied ZHIENETH when
she was brought to the emergency room of the Makati Medical Center belied petitioners' theory that ZHIENETH climbed the counter. Gonzales
claimed that when ZHIENETH was asked by the doctor what she did, ZHIENETH replied, "[N]othing, I did not come near the counter and the counter
just fell on me." 9 Accordingly, Gonzales' testimony on ZHIENETH's spontaneous declaration should not only be considered as part of res gestae but
also accorded credit.
Moreover, negligence could not be imputed to CRISELDA for it was reasonable for her to have let go of ZHIENETH at the precise moment that she
was signing the credit card slip.
Finally, private respondents vigorously maintained that the proximate cause of ZHIENETH's death, was petitioners' negligence in failing to institute
measures to have the counter permanently nailed.
On the other hand, petitioners argued that private respondents raised purely factual issues which could no longer be disturbed. They explained that
ZHIENETH's death while unfortunate and tragic, was an accident for which neither CRISELDA nor even ZHIENETH could entirely be held faultless
and blameless. Further, petitioners adverted to the trial court's rejection of Gonzales' testimony as unworthy of credence.
As to private respondent's claim that the counter should have been nailed to the ground, petitioners justified that it was not necessary. The counter
had been in existence for several years without any prior accident and was deliberately placed at a corner to avoid such accidents. Truth to tell, they
acted without fault or negligence for they had exercised due diligence on the matter. In fact, the criminal case 10 for homicide through simple
negligence filed by private respondents against the individual petitioners was dismissed; a verdict of acquittal was rendered in their favor.

The Court of Appeals, however, decided in favor of private respondents and reversed the appealed judgment. It found that petitioners were negligent
in maintaining a structurally dangerous counter. The counter was shaped like an inverted "L" 11 with a top wider than the base. It was top heavy and
the weight of the upper portion was neither evenly distributed nor supported by its narrow base. Thus, the counter was defective, unstable and
dangerous; a downward pressure on the overhanging portion or a push from the front could cause the counter to fall. Two former employees of
petitioners had already previously brought to the attention of the management the danger the counter could cause. But the latter ignored their
concern. The Court of Appeals faulted the petitioners for this omission, and concluded that the incident that befell ZHIENETH could have been
avoided had petitioners repaired the defective counter. It was inconsequential that the counter had been in use for some time without a prior incident.
The Court of Appeals declared that ZHIENETH, who was below seven (7) years old at the time of the incident, was absolutely incapable of negligence
or other tort. It reasoned that since a child under nine (9) years could not be held liable even for an intentional wrong, then the six-year old ZHIENETH
could not be made to account for a mere mischief or reckless act. It also absolved CRISELDA of any negligence, finding nothing wrong or out of the
ordinary in momentarily allowing ZHIENETH to walk while she signed the document at the nearby counter.
The Court of Appeals also rejected the testimonies of the witnesses of petitioners. It found them biased and prejudiced. It instead gave credit to the
testimony of disinterested witness Gonzales. The Court of Appeals then awarded P99,420.86 as actual damages, the amount representing the
hospitalization expenses incurred by private respondents as evidenced by the hospital's statement of account. 12 It denied an award for funeral
expenses for lack of proof to substantiate the same. Instead, a compensatory damage of P50,000 was awarded for the death of ZHIENETH.
We quote the dispositive portion of the assailed decision, 13 thus:
WHEREFORE, premises considered, the judgment of the lower court is SET ASIDE and another one is entered against [petitioners],
ordering them to pay jointly and severally unto [private respondents] the following:
1. P50,000.00 by way of compensatory damages for the death of Zhieneth Aguilar, with legal interest (6%
p.a.) from 27 April 1984;
2. P99,420.86 as reimbursement for hospitalization expenses incurred; with legal interest (6% p.a.) from 27
April 1984;
3. P100,000.00 as moral and exemplary damages;
4. P20,000.00 in the concept of attorney's fees; and
5. Costs.
Private respondents sought a reconsideration of the decision but the same was denied in the Court of Appeals' resolution 14 of 16 July 1997.

Petitioners now seek the reversal of the Court of Appeals' decision and the reinstatement of the judgment of the trial court. Petitioners primarily argue
that the Court of Appeals erred in disregarding the factual findings and conclusions of the trial court. They stress that since the action was based on
tort, any finding of negligence on the part of the private respondents would necessarily negate their claim for damages, where said negligence was the
proximate cause of the injury sustained. The injury in the instant case was the death of ZHIENETH. The proximate cause was ZHIENETH's act of
clinging to the counter. This act in turn caused the counter to fall on her. This and CRISELDA's contributory negligence, through her failure to provide
the proper care and attention to her child while inside the store, nullified private respondents' claim for damages. It is also for these reasons that
parents are made accountable for the damage or injury inflicted on others by their minor children. Under these circumstances, petitioners could not be
held responsible for the accident that befell ZHIENETH.
Petitioners also assail the credibility of Gonzales who was already separated from Syvel's at the time he testified; hence, his testimony might have
been tarnished by ill-feelings against them.
For their part, private respondents principally reiterated their arguments that neither ZHIENETH nor CRISELDA was negligent at any time while inside
the store; the findings and conclusions of the Court of Appeals are substantiated by the evidence on record; the testimony of Gonzales, who heard
ZHIENETH comment on the incident while she was in the hospital's emergency room should receive credence; and finally, ZHIENETH's part of the res
gestae declaration "that she did nothing to cause the heavy structure to fall on her" should be considered as the correct version of the gruesome
events.
We deny the petition.
The two issues to be resolved are: (1) whether the death of ZHIENETH was accidental or attributable to negligence; and (2) in case of a finding of
negligence, whether the same was attributable to private respondents for maintaining a defective counter or to CRISELDA and ZHIENETH for failing
to exercise due and reasonable care while inside the store premises.
An accident pertains to an unforeseen event in which no fault or negligence attaches to the defendant. 15 It is "a fortuitous circumstance, event or
happening; an event happening without any human agency, or if happening wholly or partly through human agency, an event which under the
circumstances is unusual or unexpected by the person to whom it happens." 16
On the other hand, negligence is the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the
conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would not do. 17 Negligence is "the failure to
observe, for the protection of the interest of another person, that degree of care, precaution and vigilance which the circumstances justly demand,
whereby such other person suffers injury." 18
Accident and negligence are intrinsically contradictory; one cannot exist with the other. Accident occurs when the person concerned is exercising
ordinary care, which is not caused by fault of any person and which could not have been prevented by any means suggested by common prudence. 19

The test in determining the existence of negligence is enunciated in the landmark case of Plicart v. Smith, 20thus: Did the defendant in doing the
alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he
is guilty of negligence. 21
We rule that the tragedy which befell ZHIENETH was no accident and that ZHIENETH's death could only be attributed to negligence.
We quote the testimony of Gerardo Gonzales who was at the scene of the incident and accompanied CRISELDA and ZHIENETH to the hospital:
Q While at the Makati Medical Center, did you hear or notice anything while the child was being treated?
A At the emergency room we were all surrounding the child. And when the doctor asked the child "what did you do," the
child said "nothing, I did not come near the counter and the counter just fell on me."
Q (COURT TO ATTY. BELTRAN)
You want the words in Tagalog to be translated?
ATTY. BELTRAN
Yes, your Honor.
COURT
Granted. Intercalate "wala po, hindi po ako lumapit doon. Basta bumagsak." 22
This testimony of Gonzales pertaining to ZHIENETH's statement formed (and should be admitted as) part of theres gestae under Section 42, Rule 130
of the Rules of Court, thus:
Part of res gestae. Statements made by a person while a startling occurrence is taking place or immediately prior or subsequent thereto
with respect to the circumstances thereof, may be given in evidence as part of the res gestae. So, also, statements accompanying an
equivocal act material to the issue, and giving it a legal significance, may be received as part of the res gestae.
It is axiomatic that matters relating to declarations of pain or suffering and statements made to a physician are generally considered declarations and
admissions. 23 All that is required for their admissibility as part of the res gestae is that they be made or uttered under the influence of a startling event
before the declarant had the time to think and concoct a falsehood as witnessed by the person who testified in court. Under the circumstances thus
described, it is unthinkable for ZHIENETH, a child of such tender age and in extreme pain, to have lied to a doctor whom she trusted with her life. We

therefore accord credence to Gonzales' testimony on the matter, i.e., ZHIENETH performed no act that facilitated her tragic death. Sadly, petitioners
did, through their negligence or omission to secure or make stable the counter's base.
Gonzales' earlier testimony on petitioners' insistence to keep and maintain the structurally unstable gift-wrapping counter proved their negligence,
thus:
Q When you assumed the position as gift wrapper at the second floor, will you please describe the gift wrapping counter,
were you able to examine?
A Because every morning before I start working I used to clean that counter and since not nailed and it was only standing
on the floor, it was shaky.
xxx xxx xxx
Q Will you please describe the counter at 5:00 o'clock [sic] in the afternoon on [sic] May 9 1983?
A At that hour on May 9, 1983, that counter was standing beside the verification counter. And since the top of it was
heavy and considering that it was not nailed, it can collapse at anytime, since the top is heavy.
xxx xxx xxx
Q And what did you do?
A I informed Mr. Maat about that counter which is [sic] shaky and since Mr. Maat is fond of putting display decorations on
tables, he even told me that I would put some decorations. But since I told him that it not [sic] nailed and it is shaky he told
me "better inform also the company about it." And since the company did not do anything about the counter, so I also did
not do anything about the counter. 24 [Emphasis supplied]
Ramon Guevarra, another former employee, corroborated the testimony of Gonzales, thus:
Q Will you please described [sic] to the honorable Court the counter where you were assigned in January 1983?
xxx xxx xxx
A That counter assigned to me was when my supervisor ordered me to carry that counter to another place. I told him that
the counter needs nailing and it has to be nailed because it might cause injury or accident to another since it was shaky.

Q When that gift wrapping counter was transferred at the second floor on February 12, 1983, will you please describe that
to the honorable Court?
A I told her that the counter wrapper [sic] is really in good [sic] condition; it was shaky. I told her that we had to nail it.
Q When you said she, to whom are you referring to [sic]?
A I am referring to Ms. Panelo, sir.
Q And what was the answer of Ms. Panelo when you told her that the counter was shaky?
A She told me "Why do you have to teach me. You are only my subordinate and you are to teach me?" And she even got
angry at me when I told her that.
xxx xxx xxx
Q From February 12, 1983 up to May 9, 1983, what if any, did Ms. Panelo or any employee of the management do to that
(sic)
xxx xxx xxx
Witness:
None, sir. They never nailed the counter. They only nailed the counter after the accident happened. 25 [Emphasis
supplied]
Without doubt, petitioner Panelo and another store supervisor were personally informed of the danger posed by the unstable counter. Yet, neither
initiated any concrete action to remedy the situation nor ensure the safety of the store's employees and patrons as a reasonable and ordinary prudent
man would have done. Thus, as confronted by the situation petitioners miserably failed to discharge the due diligence required of a good father of a
family.
On the issue of the credibility of Gonzales and Guevarra, petitioners failed to establish that the former's testimonies were biased and tainted with
partiality. Therefore, the allegation that Gonzales and Guevarra's testimonies were blemished by "ill feelings" against petitioners since they
(Gonzales and Guevarra) were already separated from the company at the time their testimonies were offered in court was but mere speculation
and deserved scant consideration.

It is settled that when the issue concerns the credibility of witnesses, the appellate courts will not as a general rule disturb the findings of the trial court,
which is in a better position to determine the same. The trial court has the distinct advantage of actually hearing the testimony of and observing the
deportment of the witnesses. 26However, the rule admits of exceptions such as when its evaluation was reached arbitrarily or it overlooked or failed to
appreciate some facts or circumstances of weight and substance which could affect the result of the case. 27 In the instant case, petitioners failed to
bring their claim within the exception.
Anent the negligence imputed to ZHIENETH, we apply the conclusive presumption that favors children below nine (9) years old in that they are
incapable of contributory negligence. In his book, 28 former Judge Cezar S. Sangco stated:
In our jurisdiction, a person under nine years of age is conclusively presumed to have acted without discernment, and is, on that
account, exempt from criminal liability. The same presumption and a like exemption from criminal liability obtains in a case of a person
over nine and under fifteen years of age, unless it is shown that he has acted with discernment. Since negligence may be a felony and
a quasi-delict and required discernment as a condition of liability, either criminal or civil, a child under nine years of age is, by analogy,
conclusively presumed to be incapable of negligence; and that the presumption of lack of discernment or incapacity for negligence in
the case of a child over nine but under fifteen years of age is a rebuttable one, under our law. The rule, therefore, is that a child under
nine years of age must be conclusively presumed incapable of contributory negligence as a matter of law. [Emphasis supplied]
Even if we attribute contributory negligence to ZHIENETH and assume that she climbed over the counter, no injury should have occurred if we accept
petitioners' theory that the counter was stable and sturdy. For if that was the truth, a frail six-year old could not have caused the counter to collapse.
The physical analysis of the counter by both the trial court and Court of Appeals and a scrutiny of the evidence 29 on record reveal otherwise,i.e., it
was not durable after all. Shaped like an inverted "L," the counter was heavy, huge, and its top laden with formica. It protruded towards the customer
waiting area and its base was not secured. 30
CRISELDA too, should be absolved from any contributory negligence. Initially, ZHIENETH held on to CRISELDA's waist, later to the latter's
hand. 31 CRISELDA momentarily released the child's hand from her clutch when she signed her credit card slip. At this precise moment, it was
reasonable and usual for CRISELDA to let go of her child. Further, at the time ZHIENETH was pinned down by the counter, she was just a foot away
from her mother; and the gift-wrapping counter was just four meters away from CRISELDA. 32 The time and distance were both significant. ZHIENETH
was near her mother and did not loiter as petitioners would want to impress upon us. She even admitted to the doctor who treated her at the hospital
that she did not do anything; the counter just fell on her.
WHEREFORE, in view of all the foregoing, the instant petition is DENIED and the challenged decision of the Court of Appeals of 17 June 1996 in C.A.
G.R. No. CV 37937 is hereby AFFIRMED. Costs against petitioners.
G.R. No. 125536

March 16, 2000

PRUDENTIAL BANK, petitioner,

vs.
COURT OF APPEALS and LETICIA TUPASI-VALENZULA joined by husband Francisco Valenzuela,respondents.
QUISUMBING, J.:
This appeal by certiorari under Rule 45 of the Rules of Court seeks to annul and set aside the Decision dated January 31, 1996, and the Resolution
dated July 2, 1997, of the Court of Appeals in CA G.R. CV No. 35532, which reversed the judgment of the Regional Trial Court of Valenzuela, Metro
Manila, Branch 171, in Civil Case No. 2913-V-88, dismissing the private respondent's complaint for damages.1
In setting aside the trial court's decision, the Court of Appeals disposed as follows:
WHEREFORE, the appealed decision is hereby REVERSED and SET ASIDE and, another rendered ordering the appellee bank to pay
appellant the sum of P100,000.00 by way of moral damages; P50,000.00 by way of exemplary damages, P50,000.00 for and as attorney's
fees; and to pay the costs.
SO ORDERED.2
The facts of the case on record are as follows:
Private respondent Leticia Tupasi-Valenzuela opened Savings Account No. 5744 and Current Account No. 01016-3 in the Valenzuela Branch of
petitioner Prudential Bank, with automatic transfer of funds from the savings account to the current account.
On June 1, 1988, herein private respondent deposited in her savings account Check No. 666B (104561 of even date) the amount of P35,271.60,
drawn against the Philippine Commercial International Bank (PCIB). Taking into account that deposit and a series of withdrawals, private respondent
as of June 21, 1988 had a balance of P35,993.48 in her savings account and P776.93 in her current account, or total deposits of P36,770.41, with
petitioner.
Thereafter, private respondent issued Prudential Bank Check No. 983395 in the amount of P11,500.00 post-dated June 20, 1988, in favor of one
Belen Legaspi. It was issued to Legaspi as payment for jewelry which private respondent had purchased. Legaspi, who was in jewelry trade, endorsed
the check to one Philip Lhuillier, a businessman also in the jewelry business. When Lhuillier deposited the check in his account with the PCIB, Pasay
Branch, it was dishonored for being drawn against insufficient funds. Lhuillier's secretary informed the secretary of Legaspi of the dishonor. The latter
told the former to redeposit the check, Legaspi's secretary tried to contact private respondent but to no avail.
Upon her return from the province, private respondent was surprised to learn of the dishonor of the check. She went to the Valenzuela Branch of
Prudential Bank on July 4, 1988, to inquire why her check was dishonored. She approached one Albert Angeles Reyes, the officer in charge of current
account, and requested him for the ledger of her current account. Private respondent discovered a debit of P300.00 penalty for the dishonor of her

Prudential Check No. 983395. She asked why her check was dishonored when there were sufficient funds in her account as reflected in her
passbook. Reyes told her that there was no need to review the passbook because the bank ledger was the best proof that she did not have sufficient
funds. Then, he abruptly faced his typewriter and started typing.
Later, it was found out that the check in the amount of P35,271.60 deposited by private respondent on June 1, 1988, was credited in her savings
account only on June 24, 1988, or after a period of 23 days. Thus the P11,500.00 check was redeposited by Lhuillier on June 24, 1988, and properly
cleared on June 27, 1988.
Because of this incident, the bank tried to mollify private respondent by explaining to Legaspi and Lhuillier that the bank was at fault. Since this was
not the first incident private respondent had experienced with the bank, private respondent was unmoved by the bank's apologies and she
commenced the present suit for damages before the RTC of Valenzuela.
After trial, the court rendered a decision on August 30, 1991, dismissing the complaint of private respondent, as well as the counterclaim filed by the
defendant, now petitioner.
Undeterred, private respondent appealed to the Court of Appeals. On January 31, 1996, respondent appellate court rendered a decision in her favor,
setting aside the trial court's decision and ordering herein petitioner to pay private respondent the sum of P100,000.00 by way of moral damages;
P50,000.00 exemplary damages; P50,000.00 for and as attorney's fees; and to pay the costs.3
Petitioner filed a timely motion for reconsideration but it was denied. Hence, this petition, raising the following issues:
I. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OF JURISDICTION IN DEVIATING FROM ESTABLISHED JURISPRUDENCE IN REVERSING THE DISMISSAL JUDGMENT OF THE TRIAL
COURT AND INSTEAD AWARDED MORAL DAMAGES, EXEMPLARY DAMAGES AND ATTORNEY'S FEES.
II. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK OF
JURISDICTION WHERE, EVEN IN THE ABSENCE OF EVIDENCE AS FOUND BY THE TRIAL COURT, AWARDED MORAL DAMAGES IN
THE AMOUNT OF P100,000.00.
III. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS ACTED IN GRAVE ABUSE OF DISCRETION AMOUNTING TO LACK
OF JURISDICTION, WHERE, EVEN IN THE ABSENCE OF EVIDENCE AS FOUND BY THE TRIAL COURT, AWARDED P50,000.00 BY
WAY OF EXEMPLARY DAMAGES.
IV. WHETHER OR NOT THE RESPONDENT COURT OF APPEALS ACTED WITH GRAVE ABUSE OF DISCRETION WHERE EVEN IN THE
ABSENCE OF EVIDENCE, AWARDED ATTORNEY'S FEES.

Simply stated, the issue is whether the respondent court erred and gravely abused its discretion in awarding moral and exemplary damages and
attorney's fees to be paid by petitioner to private respondent.
Petitioner claims that generally the factual findings of the lower courts are final and binding upon this Court. However, there are exceptions to this rule.
One is where the trial court and the Court of Appeals had arrived at diverse factual findings. 4 Petitioner faults the respondent court from deviating from
the basic rule that finding of facts by the trial court is entitled to great weight, because the trial court had the opportunity to observe the deportment of
witness and the evaluation of evidence presented during the trial. Petitioner contends that the appellate court gravely abused its discretion when it
awarded damages to the plaintiff, even in the face of lack of evidence to prove such damages, as found by the trial court.
Firstly, petitioner questions the award of moral damages. It claims that private respondent did not suffer any damage upon the dishonor of the check.
Petitioner avers it acted in good faith. It was an honest mistake on its part, according to petitioner, when misposting of private respondent's deposit on
June 1, 1988, happened. Further, petitioner contends that private respondent may not "claim" damages because the petitioner's manager and other
employees had profusely apologized to private respondent for the error. They offered to make restitution and apology to the payee of the check,
Legaspi, as well as the alleged endorsee, Lhuillier. Regrettably, it was private respondent who declined the offer and allegedly said, that there was
nothing more to it, and that the matter had been put to rest.5
Admittedly, as found by both the respondent appellate court and the trial court, petitioner bank had committed a mistake.1wphi1.nt It misposted
private respondent's check deposit to another account and delayed the posting of the same to the proper account of the private respondent. The
mistake resulted to the dishonor of the private respondent's check. The trial court found "that the misposting of plaintiff's check deposit to another
account and the delayed posting of the same to the account of the plaintiff is a clear proof of lack of supervision on the part of the defendant
bank."6 Similarly, the appellate court also found that "while it may be true that the bank's negligence in dishonoring the properly funded check of
appellant might not have been attended with malice and bad faith, as appellee [bank] submits, nevertheless, it is the result of lack of due care and
caution expected of an employee of a firm engaged in so sensitive and accurately demanding task as banking."7
In Simex International (Manila), Inc. vs. Court of Appeals, 183 SCRA 360, 367 (1990), and Bank of Philippine Islands vs. IAC, et al., 206 SCRA 408,
412-413 (1992), this Court had occasion to stress the fiduciary nature of the relationship between a bank and its depositors and the extent of diligence
expected of the former in handling the accounts entrusted to its care, thus:
In every case, the depositor expects the bank to treat his account with the utmost fidelity, whether such account consists only of a few hundred
pesos or of millions. The bank must record every single transaction accurately, down to the last centavo, and as promptly as possible. This has
to be done if the account is to reflect at any given time the amount of money the depositor can dispose of as he sees fit, confident that the bank
will deliver it as and to whomever he directs. A blunder on the part of bank, such as the dishonor of a check without good reason, can cause
the depositor not a little embarrassment if not also financial loss and perhaps even civil and criminal litigation.
The paint is that as a business affected with public interest and because of the nature of its functions, the bank is under obligation to treat the
accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their relationship. . . .

In the recent case of Philippine National Bank vs. Court of Appeals,8 we held that "a bank is under obligation to treat the accounts of its depositors
with meticulous care whether such account consists only of a few hundred pesos or of millions of pesos. Responsibility arising from negligence in the
performance of every kind of obligation is demandable. While petitioner's negligence in this case may not have been attended with malice and bad
faith, nevertheless, it caused serious anxiety, embarrassment and humiliation". Hence we ruled that the offended party in said case was entitled to
recover reasonable moral damages.
Even if malice or bad faith was not sufficiently proved in the instant case, the fact remains that petitioner has committed a serious mistake. It
dishonored the check issued by the private respondent who turned out to have sufficient funds with petitioner. The bank's negligence was the result of
lack of due care and caution required of managers and employees of a firm engaged in so sensitive and demanding business as banking.
Accordingly, the award of moral damages by the respondent Court of Appeals could not be said to be in error nor in grave abuse of its discretion.
There is no hard-and-fast rule in the determination of what would be a fair amount of moral damages since each case must be governed by its own
peculiar facts. The yardstick should be that it is not palpably and scandalously excessive. In our view, the award of P100,000.00 is reasonable,
considering the reputation and social standing of private respondent Leticia T. Valenzuela.9
The law allows the grant of exemplary damages by way of example for the public good. 10 The public relies on the banks' sworn profession of diligence
and meticulousness in giving irreproachable service. The level of meticulousness must be maintained at all times by the banking sector. Hence, the
Court of Appeals did not err in awarding exemplary damages. In our view, however, the reduced amount of P20,000.00 is more appropriate.
The award of attorney's fees is also proper when exemplary damages are awarded and since private respondent was compelled to engage the
services of a lawyer and incurred expenses to protect her interest. 11 The standards in fixing attorney's fees are: (1) the amount and the character of
the services rendered; (2) labor, time and trouble involved; (3) the nature and importance of the litigation and business in which the services were
rendered; (4) the responsibility imposed; (5) the amount of money and the value of the property affected by the controversy or involved in the
employment; (6) the skill and the experience called for in the performance of the services; (7) the professional character and the social standing of the
attorney; (8) the results secured, it being a recognized rule that an attorney may properly charge a much larger fee when it is contingent than when it
is not.12 In this case, all the aforementioned weighed, and considering that the amount involved in the controversy is only P36,770.41, the total deposit
of private respondent which was misposted by the bank, we find the award of respondent court of P50,000.00 for attorney's fees, excessive and
reduce the same to P30,000.00.
WHEREFORE, the assailed DECISION of the Court of Appeals is hereby AFFIRMED, with MODIFICATION. The petitioner is ordered to pay
P100,000.00 by way of moral damages in favor of private respondent Leticia T. Valenzuela. It is further ordered to pay her exemplary damages in the
amount of P20,000.00 and P30,000.00, attorney's fees. Costs against petitioner.
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
Osmea 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 Osmea 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 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 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 quoand 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 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 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 Osmea, 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 Osmea 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.
G.R. No. 141538

March 23, 2004

HERMANA R. CEREZO, petitioner,

vs.
DAVID TUAZON, respondent.
DECISION
CARPIO, J.:
The Case
This is a petition for review on certiorari1 to annul the Resolution2 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
Decision3 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 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 Tuazons 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 Tuazons 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 familys 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 Tuazons testimonial and documentary evidence, the trial court ruled in Tuazons favor. The trial court made no
pronouncement on Forondas 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. Cerezos business benefited the family, pursuant to Article 121(3) of the Family Code. The trial court held Mrs. Cerezo solely
liable for the damages sustained by Tuazon arising from the negligence of Mrs. Cerezos employee, pursuant to Article 2180 of the Civil Code. The
dispositive portion of the trial courts decision reads:
WHEREFORE, judgment is hereby rendered ordering the defendant Hermana Cerezo to pay the plaintiff:
a) For Actual Damages
- P69,485.35
1) Expenses for operation and medical
Treatment
2) Cost of repair of the tricycle
b) For loss of earnings
- 39,921.00
c) For moral damages
- 43,300.00
d) And to pay the cost of the suit.
- 20,000.00
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
Exhibit 1-A
Exhibit 2
Exhibit 3
Exhibit 3-A

Sheriffs return and summons;

Alias summons dated April 20, 1994;
Comment with Motion;
Minutes of the hearing held on August 1, 1994;
Signature of defendants counsel;

Exhibit 4
Exhibit 4-A
Exhibit 5
Exhibit 6
Exhibit 6-A
Exhibit 7
Exhibit 7-A
Exhibit 7-B

Exhibit 8
Exhibit 8-A
Exhibit 8-B

Exhibit 9
Exhibit 9-A
Exhibit 9-B
Exhibit 9-C
Exhibit 9-D
and
Exhibit 9-E

Minutes of the hearing held on August 30, 1994;

Signature of the defendants counsel;
Appearance and Urgent Ex-Parte Motion;
Order dated November 14, 1994;
Postal certification dated January 13, 1995;
Order dated February [illegible];
Courts return slip addressed to Atty. Elpidio Valera;
Courts return slip addressed to Spouses Juan and Hermana
Cerezo;
Decision dated May [30], 1995
Courts return slip addressed to defendant Hermana Cerezo;
Courts return slip addressed to defendants counsel, Atty. Elpidio
Valera;
Order dated September 21, 1995;
Second Page of Exhibit 9;
Third page of Exhibit 9;
Fourth page of Exhibit 9;
Courts return slip addressed to Atty. Elpidio Valera;

- Courts return slip addressed to plaintiffs counsel, Atty. Norman

Dick de Guzman.12

On 4 March 1998, the trial court issued an order13 denying the petition for relief from judgment. The trial court stated that having received the decision
on 25 June 1995, the Cerezo spouses should 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 resolution15 dated 21 January 1999, the Court of Appeals
denied the petition for certiorari and affirmed the trial courts 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 Courts 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 courts 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 courts 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.
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 plaintiffs 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.
xxx
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 courts 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 action, the petitioner cannot now raise such issue and question the lower courts
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 Courts 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. Cerezos 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. Cerezos 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. Cerezos petition. On 24 February 1999, the appellate court denied Mrs. Cerezos motion for reconsideration. On 11 March 1999, Mrs.
Cerezo filed before this Court a petition for review oncertiorari 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. Cerezos 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 Appeals22 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 apetition 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
Mrs. Cerezo admitted that she received a copy of the trial courts 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 4124 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 3726 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 6528 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 availableonly 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 Appeals31 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. Cerezos 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. Cerezos 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 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. Cerezos Liability and the Trial Courts 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. Cerezos 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
Forondas "recklessness, gross negligence and imprudence," aggravated by Mrs. Cerezos "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. Cerezos assertion, Foronda is not an indispensable party to the case. An indispensable party is one whose interest is affected by the
courts action in the litigation, and without whom no final resolution of the case is possible.39 However, Mrs. Cerezos 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 Tuazons 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 Mrs. Cerezo alone.

Moreover, an employers liability based on a quasi-delict is primary and direct, while the employers liability based on a delict is merely
subsidiary.43 The words "primary and direct," as contrasted 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 employees 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 employers 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 courts 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 employees delict and corresponding primary liability are established.47 If the present action proceeds from a delict, then the
trial courts 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 courts 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. Cerezos 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 defendants liability effective, and that is, to sue the driver and exhaust his (the latters)
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 legal interest at 6% per annum computed from 30 May 1995, the date of the trial courts 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.