I. INTRODUCTION II.

PRELIMINARIES

[G.R. No. 116123. March 13, 1997.]

SERGIO F. NAGUIAT, doing business under the name and style SERGIO F. NAGUIAT ENT., INC., & CLARK FIELD
TAXI, INC., Petitioners, v. NATIONAL LABOR RELATIONS COMMISSION (THIRD DIVISION), NATIONAL
ORGANIZATION OF WORKINGMEN and its members, LEONARDO T. GALANG, Et Al., Respondents.

Villanueva, De Leon, Hipolito & Associates Law Offices, for Petitioners.

The Solicitor General for Respondents.

SYLLABUS

1. REMEDIAL LAW; SPECIAL CIVIL ACTIONS; CERTIORARI; WHEN A LABOR CASE MAY REACH THE SUPREME
COURT; GROUNDS THEREOF. — Firmly, we reiterate the rule that in a petition for certiorari filed pursuant to Rule 65 of the
Rules of Court, which is the only way a labor case may reach the Supreme Court, the petitioner/s must clearly show that the
NLRC acted without or in excess of jurisdiction or with grave abuse of discretion.

2. ID.; EVIDENCE; FINDINGS OF FACTS OF AN ADMINISTRATE AGENCY OR A QUASI-JUDICIAL BODY; BINDING UPON
THE SUPREME COURT; EXCEPTION. — Long-standing and well-settled in Philippine jurisprudence is the judicial dictum that
findings of facts of administrative agencies and quasi-judicial bodies, which have acquired expertise because their jurisdiction
is confined to specific matters, are generally accorded not only great respect but even finality, and are binding upon this Court
unless there is a showing of grave abuse of discretion, or where it is clearly shown that they were arrived at arbitrarily or in
disregard of the evidence on record. Decisions, however concisely written, must distinctly and clearly set forth the facts and law
upon which they are based. This rule applies as well to dispositions by quasi- judicial and administrative bodies.

3. LABOR AND SOCIAL LEGISLATION; LABOR CODE; RETRENCHMENT; WHEN A COMPANY MAY BE EXEMPTED
FROM PAYMENT OF SEPARATION PAY; NOT APPLICABLE IN CASE AT BAR. — Well-settled is the rule that business
losses or financial reverses, in order to sustain retrenchment of personnel or closure of business and warrant exemption from
payment of separation pay, must be proved with clear and satisfactory evidence. The records, however, are devoid of such
evidence. The labor arbiter, as affirmed by NLRC, correctly found that petitioners stopped their taxi business within Clark Air
Base because of the phase-out of U.S. military presence thereat. It was not due to any great financial loss because petitioners’
taxi business was earning profitably at the time of its closure. With respect to the amount of separation pay
that should be granted, Article 283 of the Labor Code provides: ". . . In case of retrenchment to prevent losses and in case of
closures or cessation of operations of establishment or undertaking not due to serious business losses or financial reverses,
the separation pay shall be equivalent to one (1) month pay or at least one-half (1⁄2) month pay for every year of service,
whichever is higher. A fraction of at least six (6) months shall be-considered one (1) whole year."

4. ID.; ID.; EMPLOYMENT; LABOR-ONLY CONTRACTING AND INDEPENDENT CONTRACTORS, DISTINGUISHED. —

Labor-only contracting exists where: (1) the person supplying workers to an employer does not have substantial capital or
investment in the form of tools, equipment, machinery, and work premises, among others; and (2) the workers recruited and
placed by such person are performing activities which are directly related to the principal business of the employer.
Independent contractors, meanwhile, are those who exercise independent employment, contracting to do a piece of work
according to their own methods without being subject to control of their employer except as to the result of their work.

5. COMMERCIAL LAW; CORPORATION; WHEN A STOCKHOLDER MAY BE HELD LIABLE FOR CORPORATE TORT;
CASE AT BAR. — Our jurisprudence is wanting as to the definite scope of "corporate tort." Essentially, "tort" consists in the
violation of a right given or the omission of a duty imposed by law. Simply stated, tort is a breach of a legal duty. Article 283 of
the Labor Code mandates the employer to grant separation pay to employees in case of closure or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, which is the condition obtaining at bar.
CFTI failed to comply with this law-imposed duty or obligation. Consequently, its stockholder who was actively engaged in the
 management or operation of the business should be held personally liable. Furthermore, in MAM Realty Development v. NLRC
, 244 SCRA 797, June 2, 1995, the Court recognized that a director or officer may still be held solidarity liable with a
corporation by specific provision of law. thus: ". . . A corporation, being a juridical entity, may act only through its directors,
officers and employees. Obligations incurred by them, acting as such corporate agents, are not theirs but the direct
accountabilities of the corporation they represent. True, solidary liabilities may at times be incurred but only when exceptional
circumstances warrant such as, generally, in the following cases: . . . 4. When a director, trustee or officer is made, by specific
provision of law, personally liable for his corporate action." As pointed out earlier, the fifth paragraph of Section 100 of the
Corporation Code specifically imposes personal liability upon the stockholder actively managing or operating the business and
affairs of the close corporation. The Court here finds no application to the rule that a corporate officer cannot be held solidarity
liable with a corporation in the absence of evidence that he had acted in bad faith or with malice. In the present case,
Sergio Naguiat is held solidarily liable for corporate tort because he had actively engaged in the management and operation of
CFTI, a close corporation.

DECISION

PANGANIBAN, J.:

Are private respondent-employees of petitioner Clark Field Taxi, Inc., who were separated from service due to the closure of
Clark Air Base, entitled to separation pay and, if so, in what amount? Are officers of corporations ipso facto liable jointly and
severally with the companies they represent for the payment of separation pay?

These questions are answered by the Court in resolving this petition for certiorari under Rule 65 of the Rules of Court assailing
the Resolutions of the National Labor Relations Commission (Third Division) 1 promulgated on February 28, 1994, 2 and May
31, 1994. 3 The February 28, 1994 Resolution affirmed with modifications the decision 4 of Labor Arbiter Ariel C. Santos in
NLRC Case No. RAB-III-12-2477-91. The second Resolution denied the motion for reconsideration of herein petitioners.

The NLRC modified the decision of the labor arbiter by granting separation pay to herein individual respondents in the
increased amount of US$120.00 for every year of service or its peso equivalent, and holding Sergio F. Naguiat Enterprises,
Inc., Sergio F. Naguiat and Antolin T. Naguiat, jointly and severally liable with Clark Field Taxi, Inc. ("CFTI"). The Facts

The following facts are derived from the records of the case:

Petitioner CFTI held a concessionaire’s contract with the Army Air Force Exchange Services ("AAFES") for the operation of taxi
services within Clark Air Base. Sergio F. Naguiat was CFTI’s president, while Antolin T. Naguiat was its vice-president. Like
Sergio F. Naguiat Enterprises, Incorporated ("Naguiat Enterprises"), a trading firm, it was a family-owned corporation.

Individual respondents were previously employed by CFTI as taxicab drivers. During their employment, they were required to
pay a daily "boundary fee" in the amount of US$26.50 for those working from 1:00 a.m. to 12:00 noon, and US$27.00 for those
working from 12:00 noon to 12:00 midnight. All incidental expenses for the maintenance of the vehicles they were driving were
accounted against them, including gasoline expenses.

The drivers worked at least three to four times a week, depending on the availability of taxicabs. They earned not less than
US$15.00 daily. In excess of that amount, however, they were required to make cash deposits to the company, which they
could later withdraw every fifteen days.

Due to the phase-out of the US military bases in the

Philippines, from which Clark Air Base was not spared, the AAFES was dissolved, and the services of individual respondents
were officially terminated on November 26, 1991.

The AAFES Taxi Drivers Association ("drivers’ union"), through its local president, Eduardo Castillo, and CFTI held
negotiations as regards separation benefits that should be awarded in favor of the drivers. They arrived at an agreement that
the separated drivers will be given P500.00 for every year of service as severance pay. Most of the drivers accepted said
amount in December 1991 and January 1992. However, individual respondents herein refused to accept theirs.
 Instead, after disaffiliating themselves from the drivers’ union, individual respondents, through the National Organization of
Workingmen ("NOWM"), a labor organization which they subsequently joined, filed a complaint 5 against "Sergio F. Naguiat
doing business under the name and style Sergio F. Naguiat Enterprises, Inc., Army-Air Force Exchange Services (AAFES) with
Mark Hooper as Area Service Manager, Pacific Region, and AAFES Taxi Drivers Association with Eduardo Castillo as
President," for payment of separation pay due to termination/phase-out. Said complaint was later amended 6 to include
additional taxi drivers who were similarly situated as complainants, and CFTI with Antolin T. Naguiat as vice president and
general manager, as party Respondent.

In their complaint, herein private respondents alleged that they were regular employees of Naguiat Enterprises, although their
individual applications for employment were approved by CFTI. They claimed to have been assigned to Naguiat Enterprises
after having been hired by CFTI, and that the former thence managed, controlled and supervised their employment. They
averred further that they were entitled to separation pay based on their latest daily earnings of US$15.00 for working sixteen
(16) days a month.

In their position paper submitted to the labor arbiter, herein petitioners claimed that the cessation of business of CFTI on
November 26, 1991, was due to "great financial losses and lost business opportunity" resulting from the phase-out of Clark Air
Base brought about by the Mt. Pinatubo eruption and the expiration of the RP-US military bases agreement. They admitted that
CFTI had agreed with the drivers’ union, through its President Eduardo Castillo who claimed to have had blanket authority to
negotiate with CFTI in behalf of union members, to grant its taxi driver-employees separation pay equivalent to P500.00 for
every year of service.

The labor arbiter, finding the individual complainants to be regular workers of CFTI, ordered the latter to pay them P1,200.00
for every year of service "for humanitarian consideration," setting aside the earlier agreement between CFTI and the drivers’
union of P500.00 for every year of service. The labor arbiter rejected the allegation of CFTI that it was forced to close business
due to "great financial losses and lost business opportunity" since, at the time it ceased
operations, CFTI was profitably earning and the cessation of its business was due to the untimely closure of Clark Air Base. In
not awarding separation pay in accordance with the Labor Code, the labor- arbiter explained:

"To allow respondents exemption from its (sic) obligation to pay separation pay would be inhuman to complainants but to
impose a monetary obligation to an employer whose profitable business was abruptly shot (sic) down by force majeure would
be unfair and unjust to say the least." 7 and thus, simply awarded an amount for "humanitarian consideration."

Herein individual private respondents appealed to the NLRC. In its Resolution, the NLRC modified the decision of the labor
arbiter by granting separation pay to the private respondents. The concluding paragraphs of the NLRC Resolution read:

"The contention of complainant is partly correct. One- half month salary should be US$120.00 but this amount can not be paid
to the complainant in U.S. Dollar which is not the legal tender in the Philippines. Paras, in commenting on Art. 1249 of the New
Civil Code, defines legal tender as ‘that which a debtor may compel a creditor to accept in payment of the debt. The
complainants who are the creditors in this instance can be compelled to accept the Philippine peso which is the legal tender, in
which case, the table of conversion (exchange rate) at the time of payment or satisfaction of the judgment should be used.
However, since the choice is left to the debtor, (respondents) they may choose to pay in US dollar.’ (Phoenix Assurance Co. v.
Macondray & Co. Inc., L-25048, May 13, 1975)

In discharging the above obligations, Sergio F. Naguiat Enterprises, which is headed by Sergio F. Naguiat and Antolin Naguiat,
father and son at the same time the President and Vice-President and General Manager, respectively, should be joined as
indispensable party whose liability is joint and several. (Sec. 7, Rule 3, Rules of Court)" 8

As mentioned earlier, the motion for reconsideration of herein petitioners was denied by the NLRC. Hence, this petition with
prayer for issuance of a temporary restraining order. Upon posting by the petitioners of a surety bond, a temporary restraining
order 9 was issued by this Court enjoining execution of the assailed Resolutions.

Issues
The petitioners raise the following issues before this Court for resolution:

"I. Whether or not public respondent NLRC (3rd Div.) committed grave abuse of discretion amounting to lack of jurisdiction in
issuing the appealed resolution;

II. Whether or not Messrs. Teofilo Rafols and Romeo N. Lopez could validly represent herein private respondents; and,
III. Whether or not the resolution issued by public respondent is contrary to law." 10

Petitioners also submit two additional issues by way of a supplement 11 to their petition, to Wit: that Petitioners Sergio F.
Naguiat and Antolin Naguiat were denied due process; and that petitioners were not furnished copies of private respondents’
appeal to the NLRC. As to the procedural lapse of insufficient copies of the appeal, the proper forum before which petitioners
should have raised it is the NLRC. They, however, failed to question this in their motion for reconsideration. As a consequence,
they are deemed to have waived the same and voluntarily submitted themselves to the jurisdiction of the appellate body.

Anent the first issue raised in their original petition, petitioners contend that NLRC committed grave abuse of discretion
amounting to lack or excess of jurisdiction in unilaterally increasing the amount of severance pay granted by the labor arbiter.
They claim that this was not supported by substantial evidence since it was based simply on the self-serving allegation of
respondents that their monthly take-home pay was not lower than $240.00.

On the second issue, petitioners aver that NOWM cannot make legal representations in behalf of individual respondents who
should, instead, be bound by the decision of the union (AAFES Taxi Drivers Association) of which they were members.

As to the third issue, petitioners incessantly insist that Sergio F. Naguiat Enterprises, Inc. is a separate and distinct juridical
entity which cannot be held jointly and severally liable for the obligations of CFTI. And similarly, Sergio F. Naguiat and Antolin
Naguiat were merely officers and stockholders of CFTI and, thus, could not be held personally accountable for corporate debts.

Lastly, Sergio and Antolin Naguiat assail the Resolution of NLRC holding them solidarily liable despite not having been
impleaded as parties to the complaint.

Individual respondents filed a comment separate from that of NOWM. In sum, both aver that petitioners had the opportunity but
failed to refute, the taxi drivers’ claim of having an average monthly earning of $240.00; that individual respondents became
members of NOWM after disaffiliating themselves from the AAFES Taxi Drivers Association which, through the manipulations
of its President Eduardo Castillo, unconscionably compromised their separation pay; and that Naguiat Enterprises, being their
indirect employer, is solidarily liable under the law for violation of the Labor Code, in this case, for nonpayment of their
separation pay.

The Solicitor General unqualifiedly supports the allegations of private respondents. In addition, he submits that the separate
personalities of respondent corporations and their officers should be disregarded and considered one and the same as these
were used to perpetrate injustice to their employees.
The Court’s Ruling

As will be discussed below, the petition is partially meritorious.

First Issue: Amount of Separation Pay

Firmly, we reiterate the rule that in a petition for certiorari filed pursuant to Rule 65 of the Rules of Court, which is the only way
a labor case may reach the Supreme Court, the petitioner/s must clearly show that the NLRC acted without or in excess of
jurisdiction or with grave abuse of discretion. 12

Long-standing and well-settled in Philippine jurisprudence is the judicial dictum that findings of fact of administrative agencies
and quasi-judicial bodies, which have acquired expertise because their jurisdiction is confined to specific matters, are generally
accorded not only great respect but even finality; and are binding upon this Court unless there is a showing of grave abuse of
discretion, or where it is clearly shown that they were arrived at arbitrarily or in disregard of the evidence on record. 13
Nevertheless, this Court carefully perused the records of the instant case if only to determine whether public respondent
committed grave abuse of discretion, amounting to lack of jurisdiction, in granting the clamor of private respondents that their
separation pay should be based on the amount of $240.00, allegedly their minimum monthly earnings as taxi drivers of
petitioners.

In their amended complaint before the Regional Arbitration Branch in San Fernando, Pampanga, herein private respondents
set forth in detail the work schedule and financial arrangement they had with their employer. Therefrom they inferred that their
monthly take-home pay amounted to not less than $240.00. Herein petitioners did not bother to refute nor offer any evidence to
controvert said allegations. Remaining undisputed, the labor arbiter adopted such facts in his decision. Petitioners did not even
appeal from the decision of the labor arbiter nor manifest any error in his findings and conclusions. Thus, petitioners are in
estoppel for not having questioned such facts when they had all opportunity to do so. Private respondents, like petitioners, are
bound by the factual findings of Respondent Commission.

Petitioners also claim that the closure of their taxi business was due to great financial losses brought about by the eruption of
Mt. Pinatubo which made the roads practically impassable to their taxicabs. Likewise well-settled is the rule that business
losses or financial reverses, in order to sustain retrenchment of personnel or closure of business and warrant exemption from
payment of separation pay, must be proved with clear and satisfactory evidence. 14 The records, however, are devoid of such
evidence.

The labor arbiter; as affirmed by NLRC, correctly found that petitioners stopped their taxi business within Clark Air Base
because of the phase-out of U.S. military
presence thereat. It was not due to any great financial loss because petitioners’ taxi business was earning profitably at the time
of its closure.

With respect to the amount of separation pay that should be granted, Article 283 of the Labor Code provides:

". . . In case of retrenchment to prevent losses and in cases of closures or cessation of operations of establishment or
undertaking not due to serious business losses or financial reverses, the separation pay shall be equivalent to one (1) month
pay or at least one-half (1⁄2) month pay for every year of service, whichever is higher. A fraction of at least six (6) months shall
be considered one (1) whole year."

Considering the above, we find that NLRC did not commit grave abuse of discretion in ruling that individual respondents were
entitled to separation pay 15 in the amount $120.00 (one-half of $240.00 monthly pay) or its peso equivalent for every year of
service.

Second Issue: NOWM’s Personality to Represent Individual Respondents-Employees

On the question of NOWM’s authority to represent private respondents, we hold petitioners in estoppel for not having
seasonably raised this issue before the labor arbiter or the NLRC. NOWM was already a party- litigant as the organization
representing the taxi driver-complainants before the labor arbiter. But petitioners who were party-respondents in said complaint
did not assail the juridical personality of NOWM and the validity of its representations in behalf of the complaining taxi drivers
before the quasi-judicial bodies. Therefore, they are now estopped from raising such question before this Court. In any event,
petitioners acknowledged before this Court that the taxi drivers allegedly represented by NOWM, are themselves parties in this
case. 16

Third Issue: Liability of Petitioner- Corporations and Their Respective Officers

The resolution of this issue involves another factual finding that Naguiat Enterprises .actually managed, supervised and
controlled employment terms of the taxi drivers, making it their indirect employer. As adverted to earlier, factual findings of
quasi-judicial bodies are binding upon the court in the absence of a showing of grave abuse of discretion.

Unfortunately, the NLRC did not discuss or give any explanation for holding Naguiat Enterprises and its officers jointly and
severally liable in discharging CFTI’s liability for payment of separation pay. We again remind those concerned that decisions,
 however concisely written, must distinctly and clearly set forth the facts and law upon which they are based. 17 This rule
applies as well to dispositions by quasi-judicial and administrative bodies.

Naguiat Enterprises Not Liable

In impleading Naguiat Enterprises as solidarily liable for the obligations of CFTI, respondents rely on Articles 106, 18 107 19
and 109 20 of the Labor Code.

Based on factual submissions of the parties, the labor arbiter, however, found that individual respondents were regular
employees of CFTI who received wages on a boundary or commission basis.

We find no reason to make a contrary finding. Labor- only contracting exists where: (1) the person supplying workers to an
employer does not have substantial capital or investment in the form of tools, equipment, machinery, and work premises,
among others; and (2) the workers recruited and placed by such person are performing activities which are directly related to
the principal business of the employer. 21 Independent contractors, meanwhile, are those who exercise independent
employment, contracting to do a piece of work according to their own methods without being subject to control of their
employer except as to the result of their work. 22

From the evidence proffered by both parties, there is no substantial basis to hold that Naguiat Enterprises is an indirect
employer of individual respondents much less a labor only contractor. On the contrary, petitioners submitted documents such
as the drivers’ applications for employment with CFTI, 23 and social security remittances 24 and payroll 25 of Naguiat
Enterprises showing that none of the individual respondents were its employees. Moreover, in the contract 26 between CFTI
and AAFES, the former, as concessionaire, agreed to purchase from AAFES for a certain amount within a specified period a
fleet of vehicles to be "ke(pt) on the road" by CFTI, pursuant to their concessionaire’s contract. This indicates that CFTI
became the owner of the taxicabs which became the principal investment and asset of the company.

Private respondents failed to substantiate their claim that Naguiat Enterprises managed, supervised and controlled their
employment. It appears that they were confused on the personalities of Sergio F. Naguiat as an individual who was the
president of CFTI, and Sergio F. Naguiat Enterprises, Inc., as a separate corporate entity with a separate business. They
presumed that Sergio F. Naguiat, who was at the same time a stockholder and director 27 of Sergio F. Naguiat Enterprises,
Inc., was managing and controlling the taxi business on behalf of the latter. A closer scrutiny and analysis of the records,
however, evince the truth of the matter: that Sergio F. Naguiat, in supervising the-taxi drivers and determining their
employment terms, was rather carrying out his responsibilities as president of CFTI. Hence, Naguiat Enterprises as a separate
corporation does not appear to be involved at all in the taxi business.

To illustrate further, we refer to the testimony of a driver-claimant on cross examination.

"Atty. Suarez
Is it not true that you applied not with Sergio F. Naguiat but with Clark Field Taxi?

Witness

I applied for (sic) Sergio F. Naguiat

Atty. Suarez

Sergio F. Naguiat as an individual or the corporation?

Witness

‘Sergio F. Naguiat na tao.’

Atty. Suarez
 Who is Sergio F. Naguiat?

Witness

He is the one managing the Sergio F. Naguiat Enterprises and he is the one whom we believe as our employer.

Atty. Suarez

What is exactly the position of Sergio F. Naguiat with the Sergio F. Naguiat Enterprises?

Witness

He is the owner, sir.

Atty. Suarez

How about with Clark Field Taxi Incorporated what is the position of Mr. Naguiat?

Witness

What I know is that he is a concessionaire

xxx

Atty. Suarez

But do you also know that Sergio F. Naguiat is the President of Clark Field Taxi, Incorporated?

Witness

Yes. sir.

Atty. Suarez

How about Mr. Antolin Naguiat what is his role in the taxi services, the operation of the Clark Field Taxi, Incorporated?

Witness

He is the vice president." 28

And, although the witness insisted that Naguiat Enterprises was his employer, he could not deny that he received his salary
from the office of CFTI inside the base. 29

Another driver-claimant admitted, upon the prodding of counsel for the corporations, that Naguiat Enterprises was in the trading
business while CFTI was in taxi services. 30

In addition, the Constitution 31 of CFTI-AAFES Taxi Drivers Association which, admittedly, was the union of individual
respondents while still working at Clark Air Base, states that members thereof are the employees of CFTI and" (f)or collective
bargaining purposes, the definite employer is the Clark Field Taxi Inc."

From the foregoing, the ineludible conclusion is that CFTI was the actual and direct employer of individual respondents, and
that Naguiat Enterprises was neither their indirect employer nor labor-only contractor. It was not involved at all in the taxi
business.

CFTI president solidarily liable

Petitioner-corporations would likewise want to avoid the solidary liability of their officers. To bolster their position, Sergio F.
Naguiat and Antolin T. Naguiat specifically aver that they were denied due process since they were not parties to the complaint
below. 32 In the broader interest of justice, we, however, hold that Sergio F. Naguiat, in his capacity as president of CFTI,
cannot be exonerated from joint and several liability in the payment of separation pay to individual respondents.

A.C. Ransom Labor Union-CCLU v. NLRC 33 is the case in point. A.C. Ransom Corporation was a family corporation, the
stockholders of which were members of the Hernandez family. In 1973, it filed an application for clearance to close or cease
operations, which was duly granted by the Ministry of Labor and Employment, without prejudice to the right of employees to
seek redress of grievance, if any. Backwages of 22 employees, who engaged in a strike prior to the closure, were
subsequently computed at P164,984.00. Up to September 1976, the union filed about ten (10) motions for execution against
the corporation, but none could be implemented, presumably for failure to find leviable assets of said corporation. In its last
motion for execution, the union asked that officers and agents of the company be held personally liable for payment of the
backwages. This was granted by the labor arbiter. In the corporation’s appeal to the NLRC, one of the issues raised was: "Is
the judgment against a corporation to reinstate its dismissed employees with backwages, enforceable against its officer and
agents, in their individual, private and personal capacities, who were not parties in the case where the judgment was
rendered?" The NLRC answered in the negative, on the ground that officers of a corporation are not liable personally for official
acts unless they exceeded the scope of their authority.
On certiorari, this Court reversed the NLRC and upheld the labor arbiter. In imposing joint and several liability upon the
company president, the Court, speaking through Mme. Justice Ameurfina Melencio-Herrera, ratiocinated this wise:

"(b) How can the foregoing (Articles 265 and 273 of the Labor Code) provisions be implemented when the employer is a
corporation? The answer is found in Article 212(c) of the Labor Code which provides:

‘(c) ‘Employer’ includes any person acting in the interest of an employer, directly or indirectly. The term shall not include any
labor organization or any of its officers or agents except when acting as employer.’

The foregoing was culled from Section 2 of RA 602, the Minimum Wage Law. Since RANSOM is an artificial person, it must
have an officer who can be presumed to be the employer, being the ‘person acting in the interest of (the) employer’ RANSOM.
The corporation, only in the technical sense, is the employer.

The responsible officer of an employer corporation can be held personally, not to say even criminally, liable for nonpayment of
back wages. That is the policy of the law. . . .

(c) If the policy of the law were otherwise, the corporation employer can have devious ways for evading payment of back
wages. . . .

(d) The record does not clearly identify ‘the officer or officers’ of RANSOM directly responsible for failure to pay the back wages
of the 22 strikers. In the absence of definite proof in that regard, we believe it should be presumed that the responsible officer
is the President of the corporation who can be deemed the chief operation officer thereof . Thus, in RA 602, criminal
responsibility is with the ‘Manager or in his default, the person acting as such.’ In RANSOM, the President appears to be the
Manager." (Emphasis supplied.)

Sergio F. Naguiat, admittedly, was the president of CFTI who actively managed the business. Thus, applying the ruling in A. C.
Ransom, he falls within the meaning of an "employer" as contemplated by the Labor Code, who may be held jointly and
severally liable for the obligations of the corporation to its dismissed employees.

Moreover, petitioners also conceded that both CFTI and Naguiat Enterprises were "close family corporations" 34 owned by the
Naguiat family. Section 100, paragraph 5, (under Title XII on Close Corporations) of the Corporation Code, states:
 "(5) To the extent that the stockholders are actively engage(d) in the management or operation of the business and affairs of a
close corporation, the stockholders shall be held to strict fiduciary duties to each other and among themselves. Said
stockholders shall be personally liable for corporate torts unless the corporation has obtained reasonably adequate liability
insurance." (Emphasis supplied)
Nothing in the records show whether CFTI obtained "reasonably adequate liability insurance;" thus, what remains is to
determine whether there was corporate tort.

Our jurisprudence is wanting as to the definite scope of "corporate tort." Essentially, "tort" consists in the violation of a right
given or the omission of a duty imposed by law. 35 Simply stated, tort is a breach of a legal duty. 36 Article 283 of the Labor
Code mandates the employer to grant separation pay to employees in case of closure or cessation of operations of
establishment or undertaking not due to serious business losses or financial reverses, which is the condition obtaining at bar.
CFTI failed to comply with this law-imposed duty or obligation. Consequently, its stockholder who was actively engaged in the
management or operation of the business should be held personally liable.

Furthermore, in MAM Realty Development v. NLRC, 37 the Court recognized that a director or officer may still be held solidarily
liable with a corporation by specific provision of law. Thus:

". . . A corporation, being a juridical entity, may act only through its directors, officers and employees. Obligations incurred by
them, acting as such corporate agents, are not theirs but the direct accountabilities of the corporation they represent. True,
solidary liabilities may at times be incurred but only when exceptional circumstances warrant such as, generally, in the
following cases:

xxx

4. When a director, trustee or officer is made. by specific provision of law, personally liable for his corporate action." (footnotes
omitted)

As pointed out earlier, the fifth paragraph of Section 100 of the Corporation Code specifically imposes personal liability upon
the stockholder actively managing or operating the business and affairs of the close corporation.

In fact, in posting the surety bond required by this Court for the issuance of a temporary restraining order enjoining the
execution of the assailed NLRC Resolutions, only Sergio F. Naguiat, in his individual and personal capacity, principally bound
himself to comply with the obligation thereunder, i.e., "to guarantee the payment to private respondents of any damages which
they may incur by reason of the issuance of a temporary restraining order sought, if it should be finally adjudged that said
principals were not entitled thereto." 38

The Court here finds no application to the rule that a corporate officer cannot be held solidarily liable with a corporation in the
absence of evidence that he had acted in bad faith or with malice. 39 In the present case, Sergio Naguiat is held solidarily
liable for corporate tort because he had actively engaged in the
management and operation of CFTI, a close corporation.

Antolin Naguiat not personally liable

Antolin T. Naguiat was the vice president of the CFTI. Although he carried the title of "general manager" as well, it had not
been shown that he had acted in such capacity. Furthermore, no evidence on the extent of his participation in the management
or operation of the business was proffered. In this light, he cannot be held solidarily liable for the obligations of CFTI and Sergio
Naguiat to the private respondents.

Fourth Issue: No Denial of Due Process

Lastly, in petitioners’ Supplement to their original petition, they assail the NLRC Resolution holding Sergio F. Naguiat and
Antolin T. Naguiat jointly and severally liable with petitioner-corporations in the payment of separation pay, averring denial of
 due process since the individual Naguiats were not impleaded as parties to the complaint.

We advert to the case of A.C. Ransom once more. The officers of the corporation were not parties to the case when the
judgment in favor of the employees was rendered. The corporate officers raised this issue when the labor arbiter granted the
motion of the employees to enforce the judgment against them. In spite of this, the Court held the corporation president
solidarily liable with the corporation.

Furthermore, Sergio and Antolin Naguiat voluntarily submitted themselves to the jurisdiction of the labor arbiter when they, in
their individual capacities, filed a position paper 40 together with CFTI, before the arbiter. They cannot now claim to have been
denied due process since they availed of the opportunity to present their positions.

WHEREFORE, the foregoing premises considered, the petition is PARTLY GRANTED. The assailed February 28, 1994
Resolution of the NLRC is hereby MODIFIED as follows:

(1) Petitioner Clark Field Taxi, Incorporated, and Sergio F. Naguiat, president and co-owner thereof, are ORDERED to pay,
jointly and severally, the individual respondents their separation pay computed at US$120.00 for every year of service, or its
peso equivalent at the time of payment or satisfaction of the judgment;

(2) Petitioner Sergio F. Naguiat Enterprises, Incorporated, and Antolin T. Naguiat are ABSOLVED from liability in the payment
of separation pay to individual respondents.

SO ORDERED.
G.R. No. L-13505 February 4, 1919

GEO. W. DAYWALT, plaintiff-appellant, vs. LA CORPORACION DE LOS PADRES AGUSTINOS RECOLETOS, ET AL.,
defendants-appellees.

C. C. Cohn and Thos. D. Aitken for appellant. Crossfield & O'Brien for appellee.

STREET, J.:

In the year 1902, Teodorica Endencia, an unmarried woman, resident in the Province of Mindoro, executed a contract whereby
she obligated herself to convey to Geo. W. Daywalt, a tract of land situated in the barrio of Mangarin, municipality of Bulalacao,
now San Jose, in said province. It was agreed that a deed should be executed as soon as the title to the land should be
perfected by proceedings in the Court of Land Registration and a Torrens certificate should be produced therefore in the name
of Teodorica Endencia. A decree recognizing the right of Teodorica as owner was entered in said court in August 1906, but the
Torrens certificate was not issued until later. The parties, however, met immediately upon the entering of this decree and made
a new contract with a view to carrying their original agreement into effect. This new contract was executed in the form of a
deed of conveyance and bears date of August 16, 1906. The stipulated price was fixed at P4,000, and the area of the land
enclosed in the boundaries defined in the contract was stated to be 452 hectares and a fraction.

The second contract was not immediately carried into effect for the reason that the Torrens certificate was not yet obtainable
and in fact said certificate was not issued until the period of performance contemplated in the contract had expired.
Accordingly, upon October 3, 1908, the parties entered into still another agreement, superseding the old, by which Teodorica
Endencia agreed upon receiving the Torrens title to the land in question, to deliver the same to the Hongkong and Shanghai
Bank in Manila, to be forwarded to the Crocker National Bank in San Francisco, where it was to be delivered to the plaintiff
upon payment of a balance of P3,100.

The Torrens certificate was in time issued to Teodorica Endencia, but in the course of the proceedings relative to the
registration of the land, it was found by official survey that the area of the tract inclosed in the boundaries stated in the contract
was about 1.248 hectares of 452 hectares as stated in the contract. In view of this development Teodorica Endencia became
reluctant to transfer the whole tract to the purchaser, asserting that she never intended to sell so large an amount of land and
that she had been misinformed as to its area.

This attitude of hers led to litigation in which Daywalt finally succeeded, upon appeal to the Supreme Court, in obtaining a
decree for specific performance; and Teodorica Endencia was ordered to convey the entire tract of land to Daywalt pursuant to
the contract of October 3, 1908, which contract was declared to be in full force and effect. This decree appears to have
become finally effective in the early part of the year 1914.1

The defendant, La Corporacion de los Padres Recoletos, is a religious corporation, with its domicile in the city of Manila. Said
corporation was formerly the owner of a large tract of land,
known as the San Jose Estate, on the island of Mindoro, which was sold to the Government of the Philippine Islands in the
year 1909. The same corporation was at this time also the owner of another estate on the same island immediately adjacent to
the land which Teodorica Endencia had sold to Geo. W. Daywalt; and for many years the Recoletos Fathers had maintained
large herds of cattle on the farms referred to. Their representative, charged with management of these farms, was father
Isidoro Sanz, himself a members of the order. Father Sanz had long been well acquainted with Teodorica Endencia and
exerted over her an influence and ascendency due to his religious character as well as to the personal friendship which existed
between them. Teodorica appears to be a woman of little personal force, easily subject to influence, and upon all the important
matters of business was accustomed to seek, and was given, the advice of father Sanz and other members of his order with
whom she came in contact.

Father Sanz was fully aware of the existence of the contract of 1902 by which Teodorica Endencia agreed to sell her land to
the plaintiff as well as of the later important developments connected with the history of that contract and the contract
substituted successively for it; and in particular Father Sanz, as well as other members of the defendant corporation, knew of
the existence of the contract of October 3, 1908, which, as we have already seen finally fixed the rights of the parties to the
property in question. When the Torrens certificate was finally issued in 1909 in favor of Teodorica Endencia, she delivered it for
safekeeping to the defendant corporation, and it was then taken to Manila where it remained in the custody and under the
control of P. Juan Labarga the procurador and chief official of the defendant corporation, until the deliver thereof to the plaintiff
was made compulsory by reason of the decree of the Supreme Court in 1914.

When the defendant corporation sold the San Jose Estate, it was necessary to bring the cattle off of that property; and, in the
first half of 1909, some 2,368 head were removed to the estate of the corporation immediately adjacent to the property which
the plaintiff had purchased from Teodorica Endencia. As Teodorica still retained possession of said property Father Sanz
entered into an arrangement with her whereby large numbers of cattle belonging to the defendant corporation were pastured
upon said land during a period extending from June 1, 1909, to May 1, 1914.

Under the first cause stated in the complaint in the present action the plaintiff seeks to recover from the defendant corporation
the sum of P24,000, as damages for the use and occupation of the land in question by reason of the pasturing of cattle thereon
during the period stated. The trial court came to the conclusion that the defendant corporation was liable for damages by
reason of the use and occupation of the premises in the manner stated; and fixed the amount to be recovered at P2,497. The
plaintiff appealed and has assigned error to this part of the judgment of the court below, insisting that damages should have
been awarded in a much larger sum and at least to the full extent of P24,000, the amount claimed in the complaint.

As the defendant did not appeal, the property of allowing damages for the use and occupation of the land to the extent o
P2,497, the amount awarded, is not now in question an the only thing here to be considered, in connection with this branch of
the case, is whether the damages allowed under this head should be increased. The trial court rightly ignored the fact that the
defendant corporation had paid Teodorica Endencia of
ruse and occupation of the same land during the period in question at the rate of P425 per annum, inasmuch as the final
decree of this court in the action for specific performance is conclusive against her right, and as the defendant corporation had
notice of the rights of the plaintiff under this contract of purchase, it can not be permitted that the corporation should escape
liability in this action by proving payment of rent to a person other than the true owner.

With reference to the rate of which compensation should be estimated the trial court came to the following conclusion:
 As to the rate of the compensation, the plaintiff contends that the defendant corporation maintained at leas one thousand
head of cattle on the land and that the pasturage was of the value of forty centavos per head monthly, or P4,800 annually,
for the whole tract. The court can not accept this view. It is rather improbable that 1,248 hectares of wild Mindoro land
would furnish sufficient pasturage for one thousand head of cattle during the entire year, and, considering the locality, the
rate of forty centavos per head monthly seems too high. The evidence shows that after having recovered possession of
the land the plaintiff rented it to the defendant corporation for fifty centavos per hectares annually, the tenant to pay the
taxes on the land, and this appears to be a reasonable rent. There is no reason to suppose that the land was worth more
for grazing purposes during the period from 1909 to 1913, than it was at the later period. Upon this basis the plaintiff is
entitled to damages in the sum of p2,497, and is under no obligation to reimburse the defendants for the land taxes paid
by either of them during the period the land was occupied by the defendant corporation. It may be mentioned in this
connection that the Lontok tract adjoining the land in question and containing over three thousand hectares appears to
have been leased for only P1,000 a year, plus the taxes.

From this it will be seen that the trial court estimated the rental value of the land for grazing purposes at 50 centavos per
hectare per annum, and roughly adopted the period of four years as the time for which compensation at that rate should be
made. As the court had already found that the defendant was liable for these damages from June, 1, 1909, to May 1, 1914, or
a period of four years and eleven months, there seems some ground for the contention made in the appellant's first assignment
of error that the court's computation was erroneous, even accepting the rule upon which the damages were assessed, as it is
manifest that at the rate of 50 centavos per hectare per annum, the damages for four years and eleven months would be
P3,090.

Notwithstanding this circumstance, we are of the opinion that the damages assessed are sufficient to compensate the plaintiff
for the use and occupation of the land during the whole time it was used. There is evidence in the record strongly tending to
show that the wrongful use of the land by the defendant was not continuous throughout the year but was confined mostly to the
reason when the forage obtainable on the land of the defendant corporation was not sufficient to maintain its cattle, for which
reason it became necessary to allow them to go over to pasture on the land in question; and it is not clear that the whole of the
land was used for pasturage at any time. Considerations of this character probably led the trial court to adopt four years as
roughly being the period during which compensation should be allowed. But whether this was advertently done or not, we see
no sufficient reason, in the uncertainty of the record with reference to the number of
the cattle grazed and the period when the land was used, for substituting our guess for the estimate made by the trial court.

In the second cause of action stated in the complaint the plaintiff seeks to recover from the defendant corporation the sum of
P500,000, as damages, on the ground that said corporation, for its own selfish purposes, unlawfully induced Teodorica
Endencia to refrain from the performance of her contract for the sale of the land in question and to withhold delivery to the
plaintiff of the Torrens title, and further, maliciously and without reasonable cause, maintained her in her defense to the action
of specific performance which was finally decided in favor of the plaintiff in this court. The cause of action here stated is based
on liability derived from the wrongful interference of the defendant in the performance of the contract between the plaintiff and
Teodorica Endencia; and the large damages laid in the complaint were, according to the proof submitted by the plaintiff,
incurred as a result of a combination of circumstances of the following nature: In 1911, it appears, the plaintiff, as the owner of
the land which he had bought from Teodorica Endencia entered into a contract (Exhibit C) with S. B. Wakefield, of San
Francisco, for the sale and disposal of said lands to a sugar growing and milling enterprise, the successful launching of which
depended on the ability of Daywalt to get possession of the land and the Torrens certificate of title. In order to accomplish this
end, the plaintiff returned to the Philippine Islands, communicated his arrangement to the defendant,, and made repeated
efforts to secure the registered title for delivery in compliance with said agreement with Wakefield. Teodorica Endencia seems
to have yielded her consent to the consummation of her contract, but the Torrens title was then in the possession of Padre
Juan Labarga in Manila, who refused to deliver the document. Teodorica also was in the end contract with the plaintiff, with the
result that the plaintiff was kept out of possession until the Wakefield project for the establishment of a large sugar growing and
milling enterprise fell through. In the light of what has happened in recent years in the sugar industry, we feel justified in saying
that the project above referred to, if carried into effect, must inevitably have proved a great success.

The determination of the issue presented in this second cause of action requires a consideration of two points. The first is
whether a person who is not a party to a contract for the sale of land makes himself liable for damages to the vendee, beyond
the value of the use and occupation, by colluding with the vendor and maintaining him in the effort to resist an action for
 specific performance. The second is whether the damages which the plaintiff seeks to recover under this head are too remote
and speculative to be the subject of recovery.

As preliminary to a consideration of the first of these questions, we deem it well it dispose of the contention that the members
of the defendants corporation, in advising and prompting Teodorica Endencia not to comply with the contract of sale, were
actuated by improper and malicious motives. The trial court found that this contention was not sustained, observing that while it
was true that the circumstances pointed to an entire sympathy on the part of the defendant corporation with the efforts of
Teodorica Endencia to defeat the plaintiff's claim to the land, the fact that its officials may have advised her not to carry the
contract into effect would not constitute actionable interference with such contract. It may be added that when one considers
the hardship that the ultimate performance of that contract entailed on the vendor, and the doubt in which the issue was
involved — to the extent that the decision of the Court of the First Instance was unfavorable to the plaintiff and the Supreme
Court itself was divided — the attitude of the
defendant corporation, as exhibited in the conduct of its procurador, Juan Labarga, and other members of the order of the
Recollect Fathers, is not difficult to understand. To our mind a fair conclusion on this feature of the case is that father Juan
Labarga and his associates believed in good faith that the contract cold not be enforced and that Teodorica would be wronged
if it should be carried into effect. Any advice or assistance which they may have given was, therefore, prompted by no mean or
improper motive. It is not, in our opinion, to be denied that Teodorica would have surrendered the documents of title and given
possession of the land but for the influence and promptings of members of the defendants corporation. But we do not credit the
idea that they were in any degree influenced to the giving of such advice by the desire to secure to themselves the paltry
privilege of grazing their cattle upon the land in question to the prejudice of the just rights of the plaintiff.

The attorney for the plaintiff maintains that, by interfering in the performance of the contract in question and obstructing the
plaintiff in his efforts to secure the certificate of tittle to the land, the defendant corporation made itself a co-participant with
Teodorica Endencia in the breach of said contract; and inasmuch as father Juan Labarga, at the time of said unlawful
intervention between the contracting parties, was fully aware of the existence of the contract (Exhibit C) which the plaintiff had
made with S. B. Wakefield, of San Francisco, it is insisted that the defendant corporation is liable for the loss consequent upon
the failure of the project outlined in said contract.

In this connection reliance is placed by the plaintiff upon certain American and English decisions in which it is held that a
person who is a stranger to contract may, by an unjustifiable interference in the performance thereof, render himself liable for
the damages consequent upon non-performance. It is said that the doctrine of these cases was recognized by this court in
Gilchrist vs. Cuddy (29 Phil. Rep., 542); and we have been earnestly pressed to extend the rule there enunciated to the
situation here presente.

Somewhat more than half a century ago the English Court of the Queen's Bench saw its way clear to permit an action for
damages to be maintained against a stranger to a contract wrongfully interfering in its performance. The leading case on this
subject is Lumley vs. Gye ([1853], 2 El. & Bl., 216). It there appeared that the plaintiff, as manager of a theatre, had entered
into a contract with Miss Johanna Wagner, an opera singer,, whereby she bound herself for a period to sing in the plaintiff's
theatre and nowhere else. The defendant, knowing of the existence of this contract, and, as the declaration alleged,
"maliciously intending to injure the plaintiff," enticed and produced Miss Wagner to leave the plaintiff's employment. It was held
that the plaintiff was entitled to recover damages. The right which was here recognized had its origin in a rule, long familiar to
the courts of the common law, to the effect that any person who entices a servant from his employment is liable in damages to
the master. The master's interest in the service rendered by his employee is here considered as a distinct subject of juridical
right. It being thus accepted that it is a legal wrong to break up a relation of personal service, the question now arose whether it
is illegal for one person to interfere with any contract relation subsisting between others. Prior to the decision of Lumley vs. Gye
[supra] it had been supposed that the liability here under consideration was limited to the cases of the enticement of menial
servants, apprentices, and others to whom the English Statutes of Laborers were applicable. But in the case cited the majority
of the judges concurred in the opinion that the principle extended to all cases of hiring. This
doctrine was followed by the Court of Appeal in Bowen vs. Hall ([1881], 6 Q. B., Div., 333); and in Temperton vs. Russell
([1893], Q. B., 715), it was held that the right of action for maliciously procuring a breach of contract is not confined to contracts
for personal services, but extends to contracts in general. In that case the contract which the defendant had procured to be
breached was a contract for the supply of building material.
 Malice in some form is generally supposed to be an essential ingredient in cases of interference with contract relations. But
upon the authorities it is enough if the wrong-doer, having knowledge of the existence of the contract relations, in bad faith sets
about to break it up. Whether his motive is to benefit himself or gratify his spite by working mischief to the employer is
immaterial. Malice in the sense of ill-will or spite is not essential.

Upon the question as to what constitutes legal justification, a good illustration was put in the leading case. If a party enters into
contract to go for another upon a journey to a remote and unhealthful climate, and a third person, with a bona fide purpose of
benefiting the one who is under contract to go, dissuades him from the step, no action will lie. But if the advice is not
disinterested and the persuasion is used for "the indirect purpose of benefiting the defendant at the expense of the plaintiff,"
the intermedler is liable if his advice is taken and the contract broken.

The doctrine embodied in the cases just cited has sometimes been found useful, in the complicated relations of modern
industry, as a means of restraining the activities of labor unions and industrial societies when improperly engaged in the
promotion of strikes. An illustration of the application of the doctrine in question in a case of this kind is found in South Wales
Miners Federation vs. Glamorgan Coal Co. ([1905]), A. C., 239). It there appeared that certain miners employed in the
plaintiff's collieries, acting under the order of the executive council of the defendant federation, violated their contract with the
plaintiff by abstaining from work on certain days. The federation and council acted without any actual malice or ill-will towards
the plaintiff, and the only object of the order in question was that the price of coal might thereby be kept up, a factor which
affected the miner's wage scale. It was held that no sufficient justification was shown and that the federation was liable.

In the United States, the rule established in England by Lumley vs. Gye [supra] and subsequent cases is commonly accepted,
though in a few of the States the broad idea that a stranger to a contract can be held liable upon its is rejected, and in these
jurisdictions the doctrine, if accepted at all, is limited to the situation where the contract is strictly for personal service. (Boyson
vs. Thorn, 98 Cal., 578; Chambers & Marshall vs. Baldwin 91 Ky., 121; Bourlier vs. Macauley, 91 Ky., 135; Glencoe Land &
Gravel Co. vs. Hudson Bros. Com. Co., 138 Mo., 439.)

It should be observed in this connection that, according to the English and American authorities, no question can be made as
to the liability to one who interferes with a contract existing between others by means which, under known legal cannons, can
be denominated an unlawful means. Thus, if performance is prevented by force, intimidation, coercion, or threats, or by false or
defamatory statements, or by nuisance or riot, the person using such unlawful means is, under all the authorities, liable for the
damage which ensues. And in jurisdictions where
the doctrine of Lumley vs. Gye [supra] is rejected, no liability can arise from a meddlesome and malicious interference with a
contract relation unless some such unlawful means as those just indicated are used. (See cases last above cited.)

This brings us to the decision made by this court in Gilchrist vs. Cuddy (29 Phil. Rep., 542). It there appeared that one Cuddy,
the owner of a cinematographic film, let it under a rental contract to the plaintiff Gilchrist for a specified period of time. In
violation of the terms of this agreement, Cuddy proceeded to turn over the film also under a rental contract, to the defendants
Espejo and Zaldarriaga. Gilchrist thereupon restored to the Court of First Instance and produced an injunction restraining the
defendants from exhibiting the film in question in their theater during the period specified in the contract of Cuddy with Gilchrist.
Upon appeal to this court it was in effect held that the injunction was not improperly granted, although the defendants did not,
at the time their contract was made, know the identity of the plaintiff as the person holding the prior contract but did know of the
existence of a contract in favor of someone. It was also said arguendo, that the defendants would have been liable in damages
under article 1902 of the Civil Code, if the action had been brought by the plaintiff to recover damages. The force of the opinion
is, we think, somewhat weakened by the criticism contain in the concurring opinion, where it is said that the question of breach
of contract by inducement was not really involved in the case. Taking the decision upon the point which was rally decided, it is
authority for the proposition that one who buys something which he knows has been sold to some other person can be
restrained from using that thing to the prejudice of the person having the prior and better right.

Translated into terms applicable to the case at bar, the decision in Gilchrist vs. Cuddy (29 Phil. Rep., 542), indicates that the
defendant corporation, having notice of the sale of the land in question to Daywalt, might have been enjoined by the latter from
using the property for grazing its cattle thereon. That the defendant corporation is also liable in this action for the damage
resulting to the plaintiff from the wrongful use and occupation of the property has also been already determined. But it will be
observed that in order to sustain this liability it is not necessary to resort to any subtle exegesis relative to the liability of a
stranger to a contract for unlawful interference in the performance thereof. It is enough that defendant use the property with
notice that the plaintiff had a prior and better right.

Article 1902 of the Civil Code declares that any person who by an act or omission, characterized by fault or negligence, causes
damage to another shall be liable for the damage so done. Ignoring so much of this article as relates to liability for negligence,
we take the rule to be that a person is liable for damage done to another by any culpable act; and by "culpable act" we mean
any act which is blameworthy when judged by accepted legal standards. The idea thus expressed is undoubtedly broad
enough to include any rational conception of liability for the tortious acts likely to be developed in any society. Thus considered,
it cannot be said that the doctrine of Lumley vs. Gye [supra] and related cases is repugnant to the principles of the civil law.

Nevertheless, it must be admitted that the codes and jurisprudence of the civil law furnish a somewhat uncongenial field in
which to propagate the idea that a stranger to a contract may sued for the breach thereof. Article 1257 of the Civil Code
declares that contracts are binding only between the parties and their privies. In conformity with this it has been held that a
stranger to a contract has no right of action for the nonfulfillment of the contract except in the case especially contemplated in
the second paragraph of the same article. (Uy Tam and Uy Yet vs. Leonard, 30 Phil. Rep., 471.) As observed by this court in
Manila Railroad Co. vs. Compañia Transatlantica, R. G. No. 11318 (38 Phil. Rep., 875), a contract, when effectually entered
into between certain parties, determines not only the character and extent of the liability of the contracting parties but also the
person or entity by whom the obligation is exigible. The same idea should apparently be applicable with respect to the person
against whom the obligation of the contract may be enforced; for it is evident that there must be a certain mutuality in the
obligation, and if the stranger to a contract is not permitted to sue to enforce it, he cannot consistently be held liable upon it.

If the two antagonistic ideas which we have just brought into juxtaposition are capable of reconciliation, the process must be
accomplished by distinguishing clearly between the right of action arising from the improper interference with the contract by a
stranger thereto, considered as an independent act generate of civil liability, and the right of action ex contractu against a party
to the contract resulting from the breach thereof. However, we do not propose here to pursue the matter further, inasmuch as,
for reasons presently to be stated, we are of the opinion that neither the doctrine of Lumley vs. Gye [supra] nor the application
made of it by this court in Gilchrist vs. Cuddy (29 Phil. Rep., 542), affords any basis for the recovery of the damages which the
plaintiff is supposed to have suffered by reason of his inability to comply with the terms of the Wakefield contract.

Whatever may be the character of the liability which a stranger to a contract may incur by advising or assisting one of the
parties to evade performance, there is one proposition upon which all must agree. This is, that the stranger cannot become
more extensively liable in damages for the nonperformance of the contract than the party in whose behalf he intermeddles. To
hold the stranger liable for damages in excess of those that could be recovered against the immediate party to the contract
would lead to results at once grotesque and unjust. In the case at bar, as Teodorica Endencia was the party directly bound by
the contract, it is obvious that the liability of the defendant corporation, even admitting that it has made itself coparticipant in the
breach of the contract, can in no even exceed hers. This leads us to consider at this point the extent of the liability of Teodorica
Endencia to the plaintiff by reason of her failure to surrender the certificate of title and to place the plaintiff in possession.

It should in the first place be noted that the liability of Teodorica Endencia for damages resulting from the breach of her
contract with Daywalt was a proper subject for adjudication in the action for specific performance which Daywalt instituted
against her in 1909 and which was litigated by him to a successful conclusion in this court, but without obtaining any special
adjudication with reference to damages. Indemnification for damages resulting from the breach of a contract is a right
inseparably annexed to every action for the fulfillment of the obligation (art. 1124, Civil Code); and its is clear that if damages
are not sought or recovered in the action to enforce performance they cannot be recovered in an independent action. As to
Teodorica Endencia, therefore, it should be considered that the right of action to recover damages for the breach of the
contract in question was exhausted in the prior suit. However, her attorneys have not seen fit to interpose the defense of res
judicata in her behalf; and as the defendant corporation was not a party to that
action, and such defense could not in any event be of any avail to it, we proceed to consider the question of the liability of
Teodorica Endencia for damages without refernce to this point.

The most that can be said with refernce to the conduct of Teodorica Endencia is that she refused to carry out a contract for the
sale of certain land and resisted to the last an action for specific performance in court. The result was that the plaintiff was
prevented during a period of several years from exerting that control over the property which he was entitled to exert and was
meanwhile unable to dispose of the property advantageously. Now, what is the measure of damages for the wrongful detention
of real property by the vender after the time has come for him to place the purchaser in possession?

The damages ordinarily and normally recoverable against a vendor for failure to deliver land which he has contracted to deliver
is the value of the use and occupation of the land for the time during which it is wrongfully withheld. And of course where the
purchaser has not paid the purchaser money, a deduction may be made in respect to the interest on the money which
constitutes the purchase price. Substantially the same rule holds with respect to the liability of a landlord who fails to put his
tenant in possession pursuant to contract of lease. The measure of damages is the value of the leasehold interest, or use and
occupation, less the stipulated rent, where this has not been paid. The rule that the measure of damages for the wrongful
detention of land is normally to be found in the value of use and occupation is, we believe, one of the things that may be
considered certain in the law (39 cyc., 1630; 24 Cyc., 1052 Sedgewick on Damages, Ninth ed., sec. 185.) — almost as
wellsettled, indeed, as the rule that the measure of damages for the wrongful detention of money is to be found in the interest.

We recognize the possibility that more extensive damages may be recovered where, at the time of the creation of the
contractual obligation, the vendor, or lessor, is aware of the use to which the purchaser or lessee desires to put the property
which is the subject of the contract, and the contract is made with the eyes of the vendor or lessor open to the possibility of the
damage which may result to the other party from his own failure to give possession. The case before us is not this character,
inasmuch as at the time when the rights of the parties under the contract were determined, nothing was known to any to them
about the San Francisco capitalist who would be willing to back the project portrayed in Exhibit C.

The extent of the liability for the breach of a contract must be determined in the light of the situation in existence at the time the
contract is made; and the damages ordinarily recoverable are in all events limited to such as might be reasonable are in all
events limited to such as might be reasonably foreseen in the light of the facts then known to the contracting parties. Where the
purchaser desires to protect himself, in the contingency of the failure of the vendor promptly to give possession, from the
possibility of incurring other damages than such as the incident to the normal value of the use and occupation, he should cause
to be inserted in the contract a clause providing for stipulated amount to the paid upon failure of the vendor to give possession;
and not case has been called to our attention where, in the absence of such a stipulation, damages have been held to be
recoverable by the purchaser in excess of the normal value of use and occupation. On the contrary, the most fundamental
conceptions of the law relative to the assessment of damages are inconsistent with such idea.
The principles governing this branch of the law were profoundly considered in the case Hadley vs. Baxendale (9 Exch., 341),
decided in the English Court of Exchequer in 1854; and a few words relative to the principles governing will here be found
instructive. The decision in that case is considered a leading authority in the jurisprudence of the common law. The plaintiffs in
that case were proprietors of a mill in Gloucester, which was propelled by steam, and which was engaged in grinding and
supplying meal and flour to customers. The shaft of the engine got broken, and it became necessarily that the broken shaft be
sent to an engineer or foundry man at Greenwich, to serve as a model for casting or manufacturing another that would fit into
the machinery. The broken shaft could be delivered at Greenwich on the second day after its receipts by the carrier it. It was
delivered to the defendants, who were common carriers engaged in that business between these points, and who had told
plaintiffs it would be delivered at Greenwich on the second day after its delivery to them, if delivered at a given hour. The
carriers were informed that the mill was stopped, but were not informed of the special purpose for which the broken shaft was
desired to forwarded, They were not told the mill would remain idle until the new shaft would be returned, or that the new shaft
could not be manufactured at Greenwich until the broken one arrived to serve as a model. There was delay beyond the two
days in delivering the broken shaft at Greenwich, and a corresponding delay in starting the mill. No explanation of the delay
was offered by the carriers. The suit was brought to recover damages for the lost profits of the mill, cause by the delay in
delivering the broken shaft. It was held that the plaintiff could not recover.

The discussion contained in the opinion of the court in that case leads to the conclusion that the damages recoverable in case
of the breach of a contract are two sorts, namely, (1) the ordinary, natural, and in a sense necessary damage; and (2) special
damages.

Ordinary damages is found in all breaches of contract where the are no special circumstances to distinguish the case specially
from other contracts. The consideration paid for an unperformed promise is an instance of this sort of damage. In all such
 cases the damages recoverable are such as naturally and generally would result from such a breach, "according to the usual
course of things." In case involving only ordinary damage no discussion is ever indulged as to whether that damage was
contemplated or not. This is conclusively presumed from the immediateness and inevitableness of the damage, and the
recovery of such damage follows as a necessary legal consequence of the breach. Ordinary damage is assumed as a matter
of law to be within the contemplation of the parties.

Special damage, on the other hand, is such as follows less directly from the breach than ordinary damage. It is only found in
case where some external condition, apart from the actual terms to the contract exists or intervenes, as it were, to give a turn
to affairs and to increase damage in a way that the promisor, without actual notice of that external condition, could not
reasonably be expected to foresee. Concerning this sort of damage, Hadley vs. Baxendale (1854) [supra] lays down the
definite and just rule that before such damage can be recovered the plaintiff must show that the particular condition which
made the damage a possible and likely consequence of the breach was known to the defendant at the time the contract was
made.
The statement that special damages may be recovered where
the likelihood of such damages flowing from the breach of the
contract is contemplated and foreseen by the parties needs to
be supplemented by a proposition which, though not
enunciated in Hadley vs. Baxendale, is yet clearly to be drawn
from subsequent cases. This is that where the damage which a
plaintiff seeks to recover as special damage is so far
speculative as to be in contemplation of law remote, notification
of the special conditions which make that damage possible
cannot render the defendant liable therefor. To bring damages
which would ordinarily be treated as remote within the category
of recoverable special damages, it is necessary that the
condition should be made the subject of contract in such sense
as to become an express or implied term of the engagement.
Horne vs. Midland R. Co. (L. R., 8 C. P., 131) is a case where
the damage which was sought to be recovered as special
damage was really remote, and some of the judges rightly
places the disallowance of the damage on the ground that to
make such damage recoverable, it must so far have been
within the contemplation of the parties as to form at least an
implied term of the contract. But others proceeded on the idea
that the notice given to the defendant was not sufficiently full
and definite. The result was the same in either view. The facts
in that case were as follows: The plaintiffs, shoe manufacturers
at K, were under contract to supply by a certain day shoes to a
firm in London for the French government. They delivered the
shoes to a carrier in sufficient time for the goods to reach
London at the time stipulated in the contract and informed the
railroad agent that the shoes would be thrown back upon their
hands if they did not reach the destination in time. The
defendants negligently failed to forward the good in due
season. The sale was therefore lost, and the market having
fallen, the plaintiffs had to sell at a loss.

In the preceding discussion we have considered the plaintiff's

right chiefly against Teodorica Endencia; and what has been
said suffices in our opinion to demonstrate that the damages
laid under the second cause of action in the complaint could
not be recovered from her, first, because the damages laid
under the second cause of action in the complaint could not be
recovered from her, first, because the damages in question are
special damages which were not within contemplation of the
parties when the contract was made, and secondly, because
said damages are too remote to be the subject of recovery.
This conclusion is also necessarily fatal to the right of the
plaintiff to recover such damages from the defendant
corporation, for, as already suggested, by advising Teodorica
not to perform the contract, said corporation could in no event
render itself more extensively liable than the principle in the
contract.

Our conclusion is that the judgment of the trial court should be

affirmed, and it is so ordered, with costs against the appellant.
G.R. No. L-24803 May 26, 1977

PEDRO ELCANO and PATRICIA ELCANO, in their capacity as Ascendants of Agapito Elcano, deceased, plaintiffs-
appellants, vs. REGINALD HILL, minor, and MARVIN HILL, as father and Natural Guardian of said minor, defendants-
appellees.

Cruz & Avecilla for appellants.

Marvin R. Hill & Associates for appellees.

BARREDO, J.:

Appeal from the order of the Court of First Instance of Quezon City dated January 29, 1965 in Civil Case No. Q-8102, Pedro
Elcano et al. vs. Reginald Hill et al. dismissing, upon motion to dismiss of defendants, the complaint of plaintiffs for recovery of
damages from defendant Reginald Hill, a minor, married at the time of the occurrence, and his father, the defendant Marvin
Hill, with whom he was living and getting subsistence, for the killing by Reginald of the son of the plaintiffs, named Agapito
Elcano, of which, when criminally prosecuted, the said accused was acquitted on the ground that his act was not criminal,
because of "lack of intent to kill, coupled with mistake."

Actually, the motion to dismiss based on the following grounds:

1. The present action is not only against but a violation of section 1, Rule 107, which is now Rule III, of the Revised Rules of
Court;

2. The action is barred by a prior judgment which is now final and or in res-adjudicata;

3. The complaint had no cause of action against defendant Marvin Hill, because he was relieved as guardian of the other
defendant through emancipation by marriage.

(P. 23, Record [p. 4, Record on Appeal.])

was first denied by the trial court. It was only upon motion for reconsideration of the defendants of such denial, reiterating the
above grounds that the following order was issued:

Considering the motion for reconsideration filed by the defendants on January 14, 1965 and after thoroughly examining the
arguments therein contained, the Court finds the same to be meritorious and well-founded.

WHEREFORE, the Order of this Court on December 8, 1964 is hereby reconsidered by ordering the dismissal of the above
entitled case.
 SO ORDERED.

Quezon City, Philippines, January 29, 1965. (p. 40, Record [p. 21, Record on Appeal.)

Hence, this appeal where plaintiffs-appellants, the spouses Elcano, are presenting for Our resolution the following assignment
of errors:
THE LOWER COURT ERRED IN DISMISSING THE CASE BY UPHOLDING THE CLAIM OF DEFENDANTS THAT -

I THE PRESENT ACTION IS NOT ONLY AGAINST BUT ALSO A VIOLATION OF SECTION 1, RULE 107, NOW RULE
111, OF THE REVISED RULES OF COURT, AND THAT SECTION 3(c) OF RULE 111, RULES OF COURT IS
APPLICABLE;

II THE ACTION IS BARRED BY A PRIOR JUDGMENT WHICH IS NOW FINAL OR RES-ADJUDICTA;

III THE PRINCIPLES OF QUASI-DELICTS, ARTICLES 2176 TO 2194 OF THE CIVIL CODE, ARE INAPPLICABLE IN THE
INSTANT CASE; and

IV THAT THE COMPLAINT STATES NO CAUSE OF ACTION AGAINST DEFENDANT MARVIN HILL BECAUSE HE WAS
RELIEVED AS GUARDIAN OF THE OTHER DEFENDANT THROUGH EMANCIPATION BY MARRIAGE. (page 4,
Record.)

It appears that for the killing of the son, Agapito, of plaintiffs- appellants, defendant- appellee Reginald Hill was prosecuted
criminally in Criminal Case No. 5102 of the Court of First Instance of Quezon City. After due trial, he was acquitted on the
ground that his act was not criminal because of "lack of intent to kill, coupled with mistake." Parenthetically, none of the parties
has favored Us with a copy of the decision of acquittal, presumably because appellants do not dispute that such indeed was
the basis stated in the court's decision. And so, when appellants filed their complaint against appellees Reginald and his father,
Atty. Marvin Hill, on account of the death of their son, the appellees filed the motion to dismiss above-referred to.

As We view the foregoing background of this case, the two decisive issues presented for Our resolution are:

1. Is the present civil action for damages barred by the acquittal of Reginald in the criminal case wherein the action for civil
liability, was not reversed?

2. May Article 2180 (2nd and last paragraphs) of the Civil Code he applied against Atty. Hill, notwithstanding the undisputed
fact that at the time of the occurrence complained of. Reginald, though a minor, living with and getting subsistenee from his
father, was already legally married?

The first issue presents no more problem than the need for a reiteration and further clarification of the dual character, criminal
and civil, of fault or negligence as a source of obligation which was firmly established in this jurisdiction in Barredo vs. Garcia,
73 Phil. 607. In that case, this Court postulated, on the basis of a scholarly dissertation by Justice
Bocobo on the nature of culpa aquiliana in relation to culpa criminal or delito and mere culpa or fault, with pertinent citation of
decisions of the Supreme Court of Spain, the works of recognized civilians, and earlier jurisprudence of our own, that the same
given act can result in civil liability not only under the Penal Code but also under the Civil Code. Thus, the opinion holds: The,

above case is pertinent because it shows that the same act machinist. come under both the Penal Code and the Civil Code. In that case,
the action of the agent killeth unjustified and fraudulent and therefore could have been the subject of a criminal action. And yet, it was
held to be also a proper subject of a civil action under article 1902 of the Civil Code. It is also to be noted that it was the employer and
not the employee who was being sued. (pp. 615-616, 73 Phil.). 1
It will be noticed that the defendant in the above case could have been prosecuted in a criminal case because his negligence
causing the death of the child was punishable by the Penal Code. Here is therefore a clear instance of the same act of negligence
being a proper subject matter either of a criminal action with its consequent civil liability arising from a crime or of an entirely
separate and independent civil action for fault or negligence under article 1902 of the Civil Code. Thus, in this jurisdiction, the
separate individuality of a cuasi- delito or culpa aquiliana, under the Civil Code has been fully and clearly recognized, even with
regard to a negligent act for which the wrongdoer could have been prosecuted and convicted in a criminal case and for which,
after such a conviction, he could have been sued for this civil liability arising from his crime. (p. 617, 73 Phil.) 2

It is most significant that in the case just cited, this Court specifically applied article 1902 of the Civil Code. It is thus that although
J. V. House could have been criminally prosecuted for reckless or simple negligence and not only punished but also made civilly
liable because of his criminal negligence, nevertheless this Court awarded damages in an independent civil action for fault or
negligence under article 1902 of the Civil Code. (p. 618, 73 Phil.) 3

The legal provisions, authors, and cases already invoked should ordinarily be sufficient to dispose of this case. But inasmuch as
we are announcing doctrines that have been little understood, in the past, it might not he inappropriate to indicate their
foundations.

Firstly, the Revised Penal Code in articles 365 punishes not only reckless but also simple negligence. If we were to hold that
articles 1902 to 1910 of the Civil Code refer only to fault or negligence not punished by law, accordingly to the literal import of
article 1093 of the Civil Code, the legal institution of culpa aquiliana would have very little scope and application in actual life.
Death or injury to persons and damage to property- through any degree of negligence - even the slightest - would have to be
Idemnified only through the principle of civil liability arising from a crime. In such a state of affairs, what sphere would remain for
cuasi-delito or culpa aquiliana? We are loath to impute to the lawmaker any intention to bring about a situation so absurd and
anomalous. Nor are we, in the interpretation of the laws, disposed to uphold the letter that killeth rather than the spirit that giveth
life. We will not use the literal meaning of the law to smother and render almost lifeless a principle of such ancient origin and such
full-grown development as culpa aquiliana or cuasi- delito, which is conserved and made enduring in articles 1902 to 1910 of the
Spanish Civil Code.
Secondary, to find the accused guilty in a criminal case, proof of guilt beyond reasonable doubt is required, while in a civil case,
preponderance of evidence is sufficient to make the defendant pay in damages. There are numerous cases of criminal negligence
which can not be shown beyond reasonable doubt, but can be proved by a preponderance of evidence. In such cases, the
defendant can and should be made responsible in a civil action under articles 1902 to 1910 of the Civil Code. Otherwise. there
would be many instances of unvindicated civil wrongs. "Ubi jus Idemnified remedium." (p. 620,73 Phil.)

Fourthly, because of the broad sweep of the provisions of both the Penal Code and the Civil Code on this subject, which has
given rise to the overlapping or concurrence of spheres already discussed, and for lack of understanding of the character and
efficacy of the action for culpa aquiliana, there has grown up a common practice to seek damages only by virtue of the civil
responsibility arising from a crime, forgetting that there is another remedy, which is by invoking articles 1902-1910 of the Civil
Code. Although this habitual method is allowed by, our laws, it has nevertheless rendered practically useless and nugatory the
more expeditious and effective remedy based on culpa aquiliana or culpa extra-contractual. In the present case, we are asked to
help perpetuate this usual course. But we believe it is high time we pointed out to the harms done by such practice and to restore
the principle of responsibility for fault or negligence under articles 1902 et seq. of the Civil Code to its full rigor. It is high time we
caused the stream of quasi-delict or culpa aquiliana to flow on its own natural channel, so that its waters may no longer be
diverted into that of a crime under the Penal Code. This will, it is believed, make for the better safeguarding or private rights
because it realtor, an ancient and additional remedy, and for the further reason that an independent civil action, not depending on
the issues, limitations and results of a criminal prosecution, and entirely directed by the party wronged or his counsel, is more
likely to secure adequate and efficacious redress. (p. 621, 73 Phil.)

Contrary to an immediate impression one might get upon a reading of the foregoing excerpts from the opinion in Garcia that
the concurrence of the Penal Code and the Civil Code therein referred to contemplate only acts of negligence and not
intentional voluntary acts - deeper reflection would reveal that the thrust of the pronouncements therein is not so limited, but
that in fact it actually extends to fault or culpa. This can be seen in the reference made therein to the Sentence of the Supreme
Court of Spain of February 14, 1919, supra, which involved a case of fraud or estafa, not a negligent act. Indeed, Article 1093
of the Civil Code of Spain, in force here at the time of Garcia, provided textually that obligations "which are derived from acts or
omissions in which fault or negligence, not punishable by law, intervene shall be the subject of Chapter II, Title XV of this book
(which refers to quasi-delicts.)" And it is precisely the underline qualification, "not punishable by law", that Justice Bocobo
 emphasized could lead to an ultimo construction or interpretation of the letter of the law that "killeth, rather than the spirit that
giveth lift- hence, the ruling that "(W)e will not use the literal meaning of the law to smother and render almost lifeless a
principle of such ancient origin and such full-grown development as culpa aquiliana or quasi-delito, which is conserved and
made enduring in articles 1902 to 1910 of the Spanish Civil Code." And so, because Justice Bacobo was Chairman of the
Code Commission that drafted the original text of the new Civil Code, it is to be noted that the said Code, which was enacted
after the Garcia doctrine, no longer uses the term, 11 not punishable by law," thereby making it clear that the concept of culpa
aquiliana includes acts which are criminal in character or in violation of the penal law,
whether voluntary or matter. Thus, the corresponding provisions to said Article 1093 in the new code, which is Article 1162,
simply says, "Obligations derived from quasi-delicto shall be governed by the provisions of Chapter 2, Title XVII of this Book,
(on quasi-delicts) and by special laws." More precisely, a new provision, Article 2177 of the new code provides:

ART. 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the civil liability
arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the same act or omission of the
defendant.

According to the Code Commission: "The foregoing provision (Article 2177) through at first sight startling, is not so novel or
extraordinary when we consider the exact nature of criminal and civil negligence. The former is a violation of the criminal law,
while the latter is a "culpa aquiliana" or quasi-delict, of ancient origin, having always had its own foundation and individuality,
separate from criminal negligence. Such distinction between criminal negligence and "culpa extracontractual" or "cuasi-delito"
has been sustained by decision of the Supreme Court of Spain and maintained as clear, sound and perfectly tenable by Maura,
an outstanding Spanish jurist. Therefore, under the proposed Article 2177, acquittal from an accusation of criminal negligence,
whether on reasonable doubt or not, shall not be a bar to a subsequent civil action, not for civil liability arising from criminal
negligence, but for damages due to a quasi-delict or 'culpa aquiliana'. But said article forestalls a double recovery.", (Report of
the Code) Commission, p. 162.)

Although, again, this Article 2177 does seem to literally refer to only acts of negligence, the same argument of Justice Bacobo
about construction that upholds "the spirit that giveth lift- rather than that which is literal that killeth the intent of the lawmaker
should be observed in applying the same. And considering that the preliminary chapter on human relations of the new Civil
Code definitely establishes the separability and independence of liability in a civil action for acts criminal in character (under
Articles 29 to 32) from the civil responsibility arising from crime fixed by Article 100 of the Revised Penal Code, and, in a sense,
the Rules of Court, under Sections 2 and 3 (c), Rule 111, contemplate also the same separability, it is "more congruent with the
spirit of law, equity and justice, and more in harmony with modern progress"- to borrow the felicitous relevant language in
Rakes vs. Atlantic. Gulf and Pacific Co., 7 Phil. 359, to hold, as We do hold, that Article 2176, where it refers to "fault or
negligencia covers not only acts "not punishable by law" but also acts criminal in character, whether intentional and voluntary
or negligent. Consequently, a separate civil action lies against the offender in a criminal act, whether or not he is criminally
prosecuted and found guilty or acquitted, provided that the offended party is not allowed, if he is actually charged also
criminally, to recover damages on both scores, and would be entitled in such eventuality only to the bigger award of the two,
assuming the awards made in the two cases vary. In other words, the extinction of civil liability referred to in Par. (e) of Section
3, Rule 111, refers exclusively to civil liability founded on Article 100 of the Revised Penal Code, whereas the civil liability for
the same act considered as a quasi-delict only and not as a crime is not estinguished even by a declaration in the criminal case
that the criminal act charged has not happened or has not been committed by the accused. Briefly stated, We here hold, in
reiteration of Garcia, that culpa aquiliana includes voluntary and negligent acts which may be punishable by law.4
It results, therefore, that the acquittal of Reginal Hill in the criminal case has not extinguished his liability for quasi-delict, hence
that acquittal is not a bar to the instant action against him.

Coming now to the second issue about the effect of Reginald's emancipation by marriage on the possible civil liability of Atty.
Hill, his father, it is also Our considered opinion that the conclusion of appellees that Atty. Hill is already free from responsibility
cannot be upheld.

While it is true that parental authority is terminated upon emancipation of the child (Article 327, Civil Code), and under Article
397, emancipation takes place "by the marriage of the minor (child)", it is, however, also clear that pursuant to Article 399,
emancipation by marriage of the minor is not really full or absolute. Thus "(E)mancipation by marriage or by voluntary
concession shall terminate parental authority over the child's person. It shall enable the minor to administer his property as
 though he were of age, but he cannot borrow money or alienate or encumber real property without the consent of his father or
mother, or guardian. He can sue and be sued in court only with the assistance of his father, mother or guardian."

Now under Article 2180, "(T)he obligation imposed by article 2176 is demandable not only for one's own acts or omissions, but
also for those of persons for whom one is responsible. The father and, in case of his death or incapacity, the mother, are
responsible. The father and, in case of his death or incapacity, the mother, are responsible for the damages caused by the
minor children who live in their company." In the instant case, it is not controverted that Reginald, although married, was living
with his father and getting subsistence from him at the time of the occurrence in question. Factually, therefore, Reginald was
still subservient to and dependent on his father, a situation which is not unusual.

It must be borne in mind that, according to Manresa, the reason behind the joint and solidary liability of presuncion with their
offending child under Article 2180 is that is the obligation of the parent to supervise their minor children in order to prevent
them from causing damage to third persons. 5 On the other hand, the clear implication of Article 399, in providing that a minor
emancipated by marriage may not, nevertheless, sue or be sued without the assistance of the parents, is that such
emancipation does not carry with it freedom to enter into transactions or do any act that can give rise to judicial litigation. (See
Manresa, Id., Vol. II, pp. 766-767, 776.) And surely, killing someone else invites judicial action. Otherwise stated, the marriage
of a minor child does not relieve the parents of the duty to see to it that the child, while still a minor, does not give answerable
for the borrowings of money and alienation or encumbering of real property which cannot be done by their minor married child
without their consent. (Art. 399; Manresa, supra.)

Accordingly, in Our considered view, Article 2180 applies to Atty. Hill notwithstanding the emancipation by marriage of
Reginald. However, inasmuch as it is evident that Reginald is now of age, as a matter of equity, the liability of Atty. Hill has
become milling, subsidiary to that of his son.

WHEREFORE, the order appealed from is reversed and the trial court is ordered to proceed in accordance with the foregoing
opinion. Costs against appellees.
G.R. No. L-12191 October 14, 1918

JOSE CANGCO, Plaintiff-Appellant, vs. MANILA RAILROAD CO., Defendant-Appellee.

Ramon Sotelo for appellant. Kincaid & Hartigan for appellee.

FISHER, J.:

At the time of the occurrence which gave rise to this litigation the plaintiff, Jose Cangco, was in the employment of Manila
Railroad Company in the capacity of clerk, with a monthly wage of P25. He lived in the pueblo of San Mateo, in the province of
Rizal, which is located upon the line of the defendant railroad company; and in coming daily by train to the company's office in
the city of Manila where he worked, he used a pass, supplied by the company, which entitled him to ride upon the company's
trains free of charge. Upon the occasion in question, January 20, 1915, the plaintiff arose from his seat in the second class-car
where he was riding and, making, his exit through the door, took his position upon the steps of the coach, seizing the upright
guardrail with his right hand for support.

On the side of the train where passengers alight at the San Mateo station there is a cement platform which begins to rise with a
moderate gradient some distance away from the company's office and extends along in front of said office for a distance
sufficient to cover the length of several coaches. As the train slowed down another passenger, named Emilio Zuñiga, also an
employee of the railroad company, got off the same car, alighting safely at the point where the platform begins to rise from the
level of the ground. When the train had proceeded a little farther the plaintiff Jose Cangco stepped off also, but one or both of
his feet came in contact with a sack of watermelons with the result that his feet slipped from under him and he fell violently on
the platform. His body at once rolled from the platform and was drawn under the moving car, where his right arm was badly
crushed and lacerated. It appears that after the plaintiff alighted from the train the car moved forward possibly six meters
before it came to a full stop.
The accident occurred between 7 and 8 o'clock on a dark night, and as the railroad station was lighted dimly by a single light
located some distance away, objects on the platform where the accident occurred were difficult to discern especially to a
person emerging from a lighted car.

The explanation of the presence of a sack of melons on the platform where the plaintiff alighted is found in the fact that it was
the customary season for harvesting these melons and a large lot had been brought to the station for the shipment to the
market. They were contained in numerous sacks which has been piled on the platform in a row one upon another. The
testimony shows that this row of sacks was so placed of melons
and the edge of platform; and it is clear that the fall of the plaintiff was due to the fact that his foot alighted upon one of these
melons at the moment he stepped upon the platform. His statement that he failed to see these objects in the darkness is
readily to be credited.

The plaintiff was drawn from under the car in an unconscious condition, and it appeared that the injuries which he had received
were very serious. He was therefore brought at once to a certain hospital in the city of Manila where an examination was made
and his arm was amputated. The result of this operation was unsatisfactory, and the plaintiff was then carried to another
hospital where a second operation was performed and the member was again amputated higher up near the shoulder. It
appears in evidence that the plaintiff expended the sum of P790.25 in the form of medical and surgical fees and for other
expenses in connection with the process of his curation.

Upon August 31, 1915, he instituted this proceeding in the Court of First Instance of the city of Manila to recover damages of
the defendant company, founding his action upon the negligence of the servants and employees of the defendant in placing the
sacks of melons upon the platform and leaving them so placed as to be a menace to the security of passenger alighting from
the company's trains. At the hearing in the Court of First Instance, his Honor, the trial judge, found the facts substantially as
above stated, and drew therefrom his conclusion to the effect that, although negligence was attributable to the defendant by
reason of the fact that the sacks of melons were so placed as to obstruct passengers passing to and from the cars,
nevertheless, the plaintiff himself had failed to use due caution in alighting from the coach and was therefore precluded form
recovering. Judgment was accordingly entered in favor of the defendant company, and the plaintiff appealed.

It can not be doubted that the employees of the railroad company were guilty of negligence in piling these sacks on the
platform in the manner above stated; that their presence caused the plaintiff to fall as he alighted from the train; and that they
therefore constituted an effective legal cause of the injuries sustained by the plaintiff. It necessarily follows that the defendant
company is liable for the damage thereby occasioned unless recovery is barred by the plaintiff's own contributory negligence.
In resolving this problem it is necessary that each of these conceptions of liability, to-wit, the primary responsibility of the
defendant company and the contributory negligence of the plaintiff should be separately examined.

It is important to note that the foundation of the legal liability of the defendant is the contract of carriage, and that the obligation
to respond for the damage which plaintiff has suffered arises, if at all, from the breach of that contract by reason of the failure of
defendant to exercise due care in its performance. That is to say, its liability is direct and immediate,
differing essentially, in legal viewpoint from that presumptive responsibility for the negligence of its servants, imposed by article
1903 of the Civil Code, which can be rebutted by proof of the exercise of due care in their selection and supervision. Article
1903 of the Civil Code is not applicable to obligations arising ex contractu, but only to extra-contractual obligations - or to use
the technical form of expression, that article relates only to culpa aquiliana and not to culpa contractual.

Manresa (vol. 8, p. 67) in his commentaries upon articles 1103 and 1104 of the Civil Code, clearly points out this distinction,
which was also recognized by this Court in its decision in the case of Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil. rep., 359).
In commenting upon article 1093 Manresa clearly points out the difference between " culpa, substantive and independent,
which of itself constitutes the source of an obligation between persons not formerly connected by any legal tie" and culpa
considered as an accident in the performance of an obligation already existing . . . ."

In the Rakes case ( supra) the decision of this court was made to rest squarely upon the proposition that article 1903 of the
Civil Code is not applicable to acts of negligence which constitute the breach of a contract.
Upon this point the Court said:

The acts to which these articles [1902 and 1903 of the Civil Code] are applicable are understood to be those not growing out of
pre-existing duties of the parties to one another. But where relations already formed give rise to duties, whether springing from
contract or quasi-contract, then breaches of those duties are subject to article 1101, 1103, and 1104 of the same code. (Rakes
vs. Atlantic, Gulf and Pacific Co., 7 Phil. Rep., 359 at 365.)

This distinction is of the utmost importance. The liability, which, under the Spanish law, is, in certain cases imposed upon
employers with respect to damages occasioned by the negligence of their employees to persons to whom they are not bound
by contract, is not based, as in the English Common Law, upon the principle of respondeat superior - if it were, the master
would be liable in every case and unconditionally - but upon the principle announced in article 1902 of the Civil Code, which
imposes upon all persons who by their fault or negligence, do injury to another, the obligation of making good the damage
caused. One who places a powerful automobile in the hands of a servant whom he knows to be ignorant of the method of
managing such a vehicle, is himself guilty of an act of negligence which makes him liable for all the consequences of his
imprudence. The obligation to make good the damage arises at the very instant that the unskillful servant, while acting within
the scope of his employment causes the injury. The liability of the master is personal and direct. But, if the master has not been
guilty of any negligence whatever
in the selection and direction of the servant, he is not liable for the acts of the latter, whatever done within the scope of his
employment or not, if the damage done by the servant does not amount to a breach of the contract between the master and
the person injured.

It is not accurate to say that proof of diligence and care in the selection and control of the servant relieves the master from
liability for the latter's acts - on the contrary, that proof shows that the responsibility has never existed. As Manresa says (vol. 8,
p. 68) the liability arising from extra-contractual culpa is always based upon a voluntary act or omission which, without willful
intent, but by mere negligence or inattention, has caused damage to another. A master who exercises all possible care in the
selection of his servant, taking into consideration the qualifications they should possess for the discharge of the duties which it
is his purpose to confide to them, and directs them with equal diligence, thereby performs his duty to third persons to whom he
is bound by no contractual ties, and he incurs no liability whatever if, by reason of the negligence of his servants, even within
the scope of their employment, such third person suffer damage. True it is that under article 1903 of the Civil Code the law
creates a presumption that he has been negligent in the selection or direction of his servant, but the presumption is rebuttable
and yield to proof of due care and diligence in this respect.

The supreme court of Porto Rico, in interpreting identical provisions, as found in the Porto Rico Code, has held that these
articles are applicable to cases of extra-contractual culpa exclusively. (Carmona vs. Cuesta, 20 Porto Rico Reports, 215.)

This distinction was again made patent by this Court in its decision in the case of Bahia vs. Litonjua and Leynes, (30 Phil. rep.,
624), which was an action brought upon the theory of the extra-contractual liability of the defendant to respond for the damage
caused by the carelessness of his employee while acting within the scope of his employment. The Court, after citing the last
paragraph of article 1903 of the Civil Code, said:

From this article two things are apparent: (1) That when an injury is caused by the negligence of a servant or employee there
instantly arises a presumption of law that there was negligence on the part of the master or employer either in selection of the
servant or employee, or in supervision over him after the selection, or both; and (2) that that presumption is juris tantum and
not juris et de jure, and consequently, may be rebutted. It follows necessarily that if the employer shows to the satisfaction of
the court that in selection and supervision he has exercised the care and diligence of a good father of a family, the presumption
is overcome and he is relieved from liability.
This theory bases the responsibility of the master ultimately on his own negligence and not on that of his servant. This is the
notable peculiarity of the Spanish law of negligence. It is, of course, in striking contrast to the American doctrine that, in
relations with strangers, the negligence of the servant in conclusively the negligence of the master.

The opinion there expressed by this Court, to the effect that in case of extra-contractual culpa based upon negligence, it is
necessary that there shall have been some fault attributable to the defendant personally, and that the last paragraph of article
1903 merely establishes a rebuttable presumption, is in complete accord with the authoritative opinion of Manresa, who says
(vol. 12, p. 611) that the liability created by article 1903 is imposed by reason of the breach of the duties inherent in the special
relations of authority or superiority existing between the person called upon to repair the damage and the one who, by his act
or omission, was the cause of it.

On the other hand, the liability of masters and employers for the negligent acts or omissions of their servants or agents, when
such acts or omissions cause damages which amount to the breach of a contact, is not based upon a mere presumption of the
master's negligence in their selection or control, and proof of exercise of the utmost diligence and care in this regard does not
relieve the master of his liability for the breach of his contract.

Every legal obligation must of necessity be extra- contractual or contractual. Extra-contractual obligation has its source in the
breach or omission of those mutual duties which civilized society imposes upon it members, or which arise from these
relations, other than contractual, of certain members of society to others, generally embraced in the concept of status. The
legal rights of each member of society constitute the measure of the corresponding legal duties, mainly negative in character,
which the existence of those rights imposes upon all other members of society. The breach of these general duties whether
due to willful intent or to mere inattention, if productive of injury, give rise to an obligation to indemnify the injured party. The
fundamental distinction between obligations of this character and those which arise from contract, rests upon the fact that in
cases of non-contractual obligation it is the wrongful or negligent act or omission itself which creates the vinculum juris,
whereas in contractual relations the vinculum exists independently of the breach of the voluntary duty assumed by the parties
when entering into the contractual relation.

With respect to extra-contractual obligation arising from negligence, whether of act or omission, it is competent for the
legislature to elect - and our Legislature has so elected - whom such an obligation is imposed is morally culpable, or, on the
contrary, for reasons of public policy, to extend that liability, without regard to the lack of moral culpability, so as to include
responsibility for the negligence of those
person who acts or mission are imputable, by a legal fiction, to others who are in a position to exercise an absolute or limited
control over them. The legislature which adopted our Civil Code has elected to limit extra-contractual liability - with certain well-
defined exceptions - to cases in which moral culpability can be directly imputed to the persons to be charged. This moral
responsibility may consist in having failed to exercise due care in the selection and control of one's agents or servants, or in the
control of persons who, by reason of their status, occupy a position of dependency with respect to the person made liable for
their conduct.

The position of a natural or juridical person who has undertaken by contract to render service to another, is wholly different
from that to which article 1903 relates. When the sources of the obligation upon which plaintiff's cause of action depends is a
negligent act or omission, the burden of proof rests upon plaintiff to prove the negligence - if he does not his action fails. But
when the facts averred show a contractual undertaking by defendant for the benefit of plaintiff, and it is alleged that plaintiff has
failed or refused to perform the contract, it is not necessary for plaintiff to specify in his pleadings whether the breach of the
contract is due to willful fault or to negligence on the part of the defendant, or of his servants or agents. Proof of the contract
and of its nonperformance is sufficient prima facie to warrant a recovery.

As a general rule . . . it is logical that in case of extra- contractual culpa, a suing creditor should assume the burden of proof of
its existence, as the only fact upon which his action is based; while on the contrary, in a case of negligence which presupposes
the existence of a contractual obligation, if the creditor shows that it exists and that it has been broken, it is not necessary for
him to prove negligence. (Manresa, vol. 8, p. 71 [1907 ed., p. 76]).

As it is not necessary for the plaintiff in an action for the breach of a contract to show that the breach was due to the negligent
conduct of defendant or of his servants, even though such be in fact the actual cause of the breach, it is obvious that proof on
the part of defendant that the negligence or omission of his servants or agents caused the breach of the contract would not
constitute a defense to the action. If the negligence of servants or agents could be invoked as a means of discharging the
liability arising from contract, the anomalous result would be that person acting through the medium of agents or servants in the
performance of their contracts, would be in a better position than those acting in person. If one delivers a valuable watch to
watchmaker who contract to repair it, and the bailee, by a personal negligent act causes its destruction, he is unquestionably
 liable. Would it be logical to free him from his liability for the breach of his contract, which involves the duty to exercise due care
in the preservation of the watch, if he shows that it was his servant whose negligence caused the injury? If such a theory could
be accepted, juridical persons would enjoy practically complete immunity from
damages arising from the breach of their contracts if caused by negligent acts as such juridical persons can of necessity only
act through agents or servants, and it would no doubt be true in most instances that reasonable care had been taken in
selection and direction of such servants. If one delivers securities to a banking corporation as collateral, and they are lost by
reason of the negligence of some clerk employed by the bank, would it be just and reasonable to permit the bank to relieve
itself of liability for the breach of its contract to return the collateral upon the payment of the debt by proving that due care had
been exercised in the selection and direction of the clerk?

This distinction between culpa aquiliana, as the source of an obligation, and culpa contractual as a mere incident to the
performance of a contract has frequently been recognized by the supreme court of Spain. ( Sentencias of June 27, 1894;
November 20, 1896; and December 13, 1896.) In the decisions of November 20, 1896, it appeared that plaintiff's action arose
ex contractu, but that defendant sought to avail himself of the provisions of article 1902 of the Civil Code as a defense. The
Spanish Supreme Court rejected defendant's contention, saying:

These are not cases of injury caused, without any pre- existing obligation, by fault or negligence, such as those to which article
1902 of the Civil Code relates, but of damages caused by the defendant's failure to carry out the undertakings imposed by the

contracts . . . . A brief review of the earlier decision of this court involving the liability of employers for damage done by the
negligent acts of their servants will show that in no case has the court ever decided that the negligence of the defendant's
servants has been held to constitute a defense to an action for damages for breach of contract.

In the case of Johnson vs. David (5 Phil. Rep., 663), the court held that the owner of a carriage was not liable for the damages
caused by the negligence of his driver. In that case the court commented on the fact that no evidence had been adduced in the
trial court that the defendant had been negligent in the employment of the driver, or that he had any knowledge of his lack of
skill or carefulness.

In the case of Baer Senior & Co's Successors vs. Compania Maritima (6 Phil. Rep., 215), the plaintiff sued the defendant for
damages caused by the loss of a barge belonging to plaintiff which was allowed to get adrift by the negligence of defendant's
servants in the course of the performance of a contract of towage. The court held, citing Manresa (vol. 8, pp. 29, 69) that if the
"obligation of the defendant grew out of a contract made between it and the plaintiff . . . we do not think that the provisions of
articles 1902 and 1903 are applicable to the case."

In the case of Chapman vs. Underwood (27 Phil. Rep., 374), plaintiff sued the defendant to recover damages
for the personal injuries caused by the negligence of defendant's chauffeur while driving defendant's automobile in which
defendant was riding at the time. The court found that the damages were caused by the negligence of the driver of the
automobile, but held that the master was not liable, although he was present at the time, saying:

. . . unless the negligent acts of the driver are continued for a length of time as to give the owner a reasonable opportunity to
observe them and to direct the driver to desist therefrom. . . . The act complained of must be continued in the presence of the
owner for such length of time that the owner by his acquiescence, makes the driver's acts his own.

In the case of Yamada vs. Manila Railroad Co. and Bachrach Garage & Taxicab Co. (33 Phil. Rep., 8), it is true that the court
rested its conclusion as to the liability of the defendant upon article 1903, although the facts disclosed that the injury complaint
of by plaintiff constituted a breach of the duty to him arising out of the contract of transportation. The express ground of the
decision in this case was that article 1903, in dealing with the liability of a master for the negligent acts of his servants "makes
the distinction between private individuals and public enterprise;" that as to the latter the law creates a rebuttable presumption
of negligence in the selection or direction of servants; and that in the particular case the presumption of negligence had not
been overcome.

It is evident, therefore that in its decision Yamada case, the court treated plaintiff's action as though founded in tort rather than
 as based upon the breach of the contract of carriage, and an examination of the pleadings and of the briefs shows that the
questions of law were in fact discussed upon this theory. Viewed from the standpoint of the defendant the practical result must
have been the same in any event. The proof disclosed beyond doubt that the defendant's servant was grossly negligent and
that his negligence was the proximate cause of plaintiff's injury. It also affirmatively appeared that defendant had been guilty of
negligence in its failure to exercise proper discretion in the direction of the servant. Defendant was, therefore, liable for the
injury suffered by plaintiff, whether the breach of the duty were to be regarded as constituting culpa aquiliana or culpa
contractual. As Manresa points out (vol. 8, pp. 29 and 69) whether negligence occurs an incident in the course of the
performance of a contractual undertaking or its itself the source of an extra-contractual undertaking obligation, its essential
characteristics are identical. There is always an act or omission productive of damage due to carelessness or inattention on the
part of the defendant. Consequently, when the court holds that a defendant is liable in damages for having failed to exercise
due care, either directly, or in failing to exercise proper care in the selection and direction of his servants, the practical result is
identical in either case. Therefore, it follows that it is not to be inferred, because the court held in the Yamada case that
defendant was liable for the damages negligently
caused by its servants to a person to whom it was bound by contract, and made reference to the fact that the defendant was
negligent in the selection and control of its servants, that in such a case the court would have held that it would have been a
good defense to the action, if presented squarely upon the theory of the breach of the contract, for defendant to have proved
that it did in fact exercise care in the selection and control of the servant.

The true explanation of such cases is to be found by directing the attention to the relative spheres of contractual and extra-
contractual obligations. The field of non- contractual obligation is much more broader than that of contractual obligations,
comprising, as it does, the whole extent of juridical human relations. These two fields, figuratively speaking, concentric; that is
to say, the mere fact that a person is bound to another by contract does not relieve him from extra- contractual liability to such
person. When such a contractual relation exists the obligor may break the contract under such conditions that the same act
which constitutes the source of an extra-contractual obligation had no contract existed between the parties.

The contract of defendant to transport plaintiff carried with it, by implication, the duty to carry him in safety and to provide safe
means of entering and leaving its trains (civil code, article 1258). That duty, being contractual, was direct and immediate, and
its non- performance could not be excused by proof that the fault was morally imputable to defendant's servants.

The railroad company's defense involves the assumption that even granting that the negligent conduct of its servants in placing
an obstruction upon the platform was a breach of its contractual obligation to maintain safe means of approaching and leaving
its trains, the direct and proximate cause of the injury suffered by plaintiff was his own contributory negligence in failing to wait
until the train had come to a complete stop before alighting. Under the doctrine of comparative negligence announced in the
Rakes case ( supra), if the accident was caused by plaintiff's own negligence, no liability is imposed upon defendant's
negligence and plaintiff's negligence merely contributed to his injury, the damages should be apportioned. It is, therefore,
important to ascertain if defendant was in fact guilty of negligence.

It may be admitted that had plaintiff waited until the train had come to a full stop before alighting, the particular injury suffered
by him could not have occurred. Defendant contends, and cites many authorities in support of the contention, that it is
negligence per se for a passenger to alight from a moving train. We are not disposed to subscribe to this doctrine in its
absolute form. We are of the opinion that this proposition is too badly stated and is at variance with the experience of every-day
life. In this particular instance, that the train was barely moving when plaintiff alighted is shown conclusively by the fact that it
came to stop within six meters from the place where he stepped from it. Thousands of person
alight from trains under these conditions every day of the year, and sustain no injury where the company has kept its platform
free from dangerous obstructions. There is no reason to believe that plaintiff would have suffered any injury whatever in
alighting as he did had it not been for defendant's negligent failure to perform its duty to provide a safe alighting place.

We are of the opinion that the correct doctrine relating to this subject is that expressed in Thompson's work on Negligence (vol.
3, sec. 3010) as follows:

The test by which to determine whether the passenger has been guilty of negligence in attempting to alight from a moving
railway train, is that of ordinary or reasonable care. It is to be considered whether an ordinarily prudent person, of the age, sex
 and condition of the passenger, would have acted as the passenger acted under the circumstances disclosed by the evidence.
This care has been defined to be, not the care which may or should be used by the prudent man generally, but the care which
a man of ordinary prudence would use under similar circumstances, to avoid injury." (Thompson, Commentaries on
Negligence, vol. 3, sec. 3010.)

Or, it we prefer to adopt the mode of exposition used by this court in Picart vs. Smith (37 Phil. rep., 809), we may say that the
test is this; Was there anything in the circumstances surrounding the plaintiff at the time he alighted from the train which would
have admonished a person of average prudence that to get off the train under the conditions then existing was dangerous? If
so, the plaintiff should have desisted from alighting; and his failure so to desist was contributory negligence.

As the case now before us presents itself, the only fact from which a conclusion can be drawn to the effect that plaintiff was
guilty of contributory negligence is that he stepped off the car without being able to discern clearly the condition of the platform
and while the train was yet slowly moving. In considering the situation thus presented, it should not be overlooked that the
plaintiff was, as we find, ignorant of the fact that the obstruction which was caused by the sacks of melons piled on the platform
existed; and as the defendant was bound by reason of its duty as a public carrier to afford to its passengers facilities for safe
egress from its trains, the plaintiff had a right to assume, in the absence of some circumstance to warn him to the contrary, that
the platform was clear. The place, as we have already stated, was dark, or dimly lighted, and this also is proof of a failure upon
the part of the defendant in the performance of a duty owing by it to the plaintiff; for if it were by any possibility concede that it
had right to pile these sacks in the path of alighting passengers, the placing of them adequately so that their presence would
be revealed.

As pertinent to the question of contributory negligence on the part of the plaintiff in this case the following circumstances are to
be noted: The company's platform was constructed upon a level higher than that
of the roadbed and the surrounding ground. The distance from
the steps of the car to the spot where the alighting passenger
would place his feet on the platform was thus reduced, thereby
decreasing the risk incident to stepping off. The nature of the
platform, constructed as it was of cement material, also
assured to the passenger a stable and even surface on which
to alight. Furthermore, the plaintiff was possessed of the vigor
and agility of young manhood, and it was by no means so risky
for him to get off while the train was yet moving as the same
act would have been in an aged or feeble person. In
determining the question of contributory negligence in
performing such act - that is to say, whether the passenger
acted prudently or recklessly - the age, sex, and physical
condition of the passenger are circumstances necessarily
affecting the safety of the passenger, and should be
considered. Women, it has been observed, as a general rule
are less capable than men of alighting with safety under such
conditions, as the nature of their wearing apparel obstructs the
free movement of the limbs. Again, it may be noted that the
place was perfectly familiar to the plaintiff as it was his daily
custom to get on and of the train at this station. There could,
therefore, be no uncertainty in his mind with regard either to
the length of the step which he was required to take or the
character of the platform where he was alighting. Our
conclusion is that the conduct of the plaintiff in undertaking to
alight while the train was yet slightly under way was not
characterized by imprudence and that therefore he was not
guilty of contributory negligence.

The evidence shows that the plaintiff, at the time of the

accident, was earning P25 a month as a copyist clerk, and that
the injuries he has suffered have permanently disabled him
from continuing that employment. Defendant has not shown
that any other gainful occupation is open to plaintiff. His
expectancy of life, according to the standard mortality tables, is
approximately thirty-three years. We are of the opinion that a
fair compensation for the damage suffered by him for his
permanent disability is the sum of P2,500, and that he is also
entitled to recover of defendant the additional sum of P790.25
for medical attention, hospital services, and other incidental
expenditures connected with the treatment of his injuries.

The decision of lower court is reversed, and judgment is

hereby rendered plaintiff for the sum of P3,290.25, and for the
costs of both instances. So ordered.
G.R. No. L-48006 July 8, 1942

FAUSTO BARREDO, petitioner, vs. SEVERINO GARCIA and TIMOTEA ALMARIO, respondents.

Celedonio P. Gloria and Antonio Barredo for petitioner. Jose G. Advincula for respondents.

BOCOBO, J.:

This case comes up from the Court of Appeals which held the petitioner herein, Fausto Barredo, liable in damages for the
death of Faustino Garcia caused by the negligence of Pedro Fontanilla, a taxi driver employed by said Fausto Barredo.

At about half past one in the morning of May 3, 1936, on the road between Malabon and Navotas, Province of Rizal, there was
a head-on collision between a taxi of the Malate Taxicab driven by Pedro Fontanilla and a carretela guided by Pedro
Dimapalis. The carretela was overturned, and one of its passengers, 16-year-old boy Faustino Garcia, suffered injuries from
which he died two days later. A criminal action was filed against Fontanilla in the Court of First Instance of Rizal, and he was
convicted and sentenced to an indeterminate sentence of one year and one day to two years of prision correccional. The court
in the criminal case granted the petition that the right to bring a separate civil action be reserved. The Court of Appeals affirmed
the sentence of the lower court in the criminal case. Severino Garcia and Timotea Almario, parents of the deceased on March
7, 1939, brought an action in the Court of First Instance of Manila against Fausto Barredo as the sole proprietor of the Malate
Taxicab and employer of Pedro Fontanilla. On July 8, 1939, the Court of First Instance of Manila awarded damages in favor of
the plaintiffs for P2,000 plus legal interest from the date of the complaint. This decision was modified by the Court of Appeals
by reducing the damages to P1,000 with legal interest from the time the action was instituted. It is undisputed that Fontanilla 's
negligence was the cause of the mishap, as he was driving on the wrong side of the road, and at high speed. As to Barredo's
responsibility, the Court of Appeals found:

... It is admitted that defendant is Fontanilla's employer. There is proof that he exercised the diligence of a good father of a
family to prevent damage. (See p. 22, appellant's brief.) In fact it is shown he was careless in employing Fontanilla who
had been caught several times for violation of the Automobile Law and speeding (Exhibit A) — violation which appeared in
the records of the Bureau of Public Works available to be public and to himself. Therefore, he must indemnify plaintiffs
under the provisions of article 1903 of the Civil Code.

The main theory of the defense is that the liability of Fausto Barredo is governed by the Revised Penal Code; hence, his
liability is only subsidiary, and as there has been no civil action against Pedro Fontanilla, the person criminally liable, Barredo
cannot be held responsible in the case. The petitioner's brief states on page 10:

... The Court of Appeals holds that the petitioner is being sued for his failure to exercise all the diligence of a good father of
a family in the selection and supervision of Pedro Fontanilla to prevent damages suffered by the respondents. In other
words, The Court of Appeals insists
on applying in the case article 1903 of the Civil Code. Article 1903 of the Civil Code is found in Chapter II, Title 16, Book IV
of the Civil Code. This fact makes said article to a civil liability arising from a crime as in the case at bar simply because
Chapter II of Title 16 of Book IV of the Civil Code, in the precise words of article 1903 of the Civil Code itself, is applicable
only to "those (obligations) arising from wrongful or negligent acts or commission not punishable by law.

The gist of the decision of the Court of Appeals is expressed thus: ... We cannot agree to the defendant's contention. The liability
sought to be imposed upon him in this action is not a civil obligation arising from a felony or a misdemeanor (the crime of Pedro
Fontanilla,), but an obligation imposed in article 1903 of the Civil Code by reason of his negligence in the selection or
supervision of his servant or employee.

The pivotal question in this case is whether the plaintiffs may bring this separate civil action against Fausto Barredo, thus
making him primarily and directly, responsible under article 1903 of the Civil Code as an employer of Pedro Fontanilla. The
defendant maintains that Fontanilla's negligence being punishable by the Penal Code, his (defendant's) liability as an employer
is only subsidiary, according to said Penal code, but Fontanilla has not been sued in a civil action and his property has not
been exhausted. To decide the main issue, we must cut through the tangle that has, in the minds of many confused and
jumbled together delitos and cuasi delitos, or crimes under the Penal Code and fault or negligence under articles 1902- 1910 of
the Civil Code. This should be done, because justice may be lost in a labyrinth, unless principles and remedies are distinctly
envisaged. Fortunately, we are aided in our inquiry by the luminous presentation of the perplexing subject by renown jurists
and we are likewise guided by the decisions of this Court in previous cases as well as by the solemn clarity of the consideration
in several sentences of the Supreme Tribunal of Spain.

Authorities support the proposition that a quasi-delict or "culpa aquiliana " is a separate legal institution under the Civil Code
with a substantivity all its own, and individuality that is entirely apart and independent from delict or crime. Upon this principle
and on the wording and spirit article 1903 of the Civil Code, the primary and direct responsibility of employers may be safely
anchored.

The pertinent provisions of the Civil Code and Revised Penal Code are as follows:

CIVIL CODE

ART. 1089 Obligations arise from law, from contracts and quasi-contracts, and from acts and omissions which are
unlawful or in which any kind of fault or negligence intervenes.

ART. 1092. Civil obligations arising from felonies or misdemeanors shall be governed by the provisions of the Penal Code.
xxxxxxxxx
ART. 1093. Those which are derived from acts or omissions in which fault or negligence, not punishable by law,
intervenes shall be subject to the provisions of Chapter II, Title XVI of this book.

xxxxxxxxx

ART 1902. Any person who by an act or omission causes damage to another by his fault or negligence shall be liable for
the damage so done.

ART. 1903. The obligation imposed by the next preceding article is enforcible, not only for personal acts and omissions,
but also for those of persons for whom another is responsible.

The father and in, case of his death or incapacity, the mother, are liable for any damages caused by the minor children
 who live with them.

Guardians are liable for damages done by minors or incapacitated persons subject to their authority and living with them.

Owners or directors of an establishment or business are equally liable for any damages caused by their employees while
engaged in the branch of the service in which employed, or on occasion of the performance of their duties.

The State is subject to the same liability when it acts through a special agent, but not if the damage shall have been
caused by the official upon whom properly devolved the duty of doing the act performed, in which case the provisions of
the next preceding article shall be applicable.

Finally, teachers or directors of arts trades are liable for any damages caused by their pupils or apprentices while they are
under their custody.

The liability imposed by this article shall cease in case the persons mentioned therein prove that they are exercised all the
diligence of a good father of a family to prevent the damage.

ART. 1904. Any person who pays for damage caused by his employees may recover from the latter what he may have
paid.

REVISED PENAL CODE

ART. 100. Civil liability of a person guilty of felony. — Every person criminally liable for a felony is also civilly liable.

ART. 101. Rules regarding civil liability in certain cases. — The exemption from criminal liability established in subdivisions
1, 2, 3, 5, and 6 of article 12 and in subdivision 4 of article 11 of this Code does not include exemption from civil liability,
which shall be enforced to the following rules:

First. In cases of subdivision, 1, 2 and 3 of article 12 the civil liability for acts committed by any imbecile or insane
person, and by a person under nine years of age, or by one over nine but under fifteen years of age, who has acted
without discernment shall devolve upon those having such person under their legal authority or control, unless it appears
that there was no fault or negligence on their part.

Should there be no person having such insane, imbecile or minor under his authority, legal guardianship, or control, or if
such person be insolvent, said insane, imbecile, or minor shall respond with their own property, excepting property exempt
from execution, in accordance with the civil law.

Second. In cases falling within subdivision 4 of article 11, the person for whose benefit the harm has been prevented shall
be civilly liable in proportion to the benefit which they may have received.

The courts shall determine, in their sound discretion, the proportionate amount for which each one shall be liable.

When the respective shares can not be equitably determined, even approximately, or when the liability also attaches to the
Government, or to the majority of the inhabitants of the town, and, in all events, whenever the damage has been caused with
the consent of the authorities or their agents, indemnification shall be made in the manner prescribed by special laws or
regulations.

Third. In cases falling within subdivisions 5 and 6 of article 12, the persons using violence or causing the fear shall be primarily
liable and secondarily, or, if there be no such persons, those doing the act shall be liable, saving always to the latter that part of
their property exempt from execution.
 ART. 102. Subsidiary civil liability of innkeepers, tavern keepers and proprietors of establishment. — In default of persons
criminally liable, innkeepers, tavern keepers, and any other persons or corporation shall be civilly liable for crimes
committed in their establishments, in all cases where a violation of municipal ordinances or some general or special police
regulation shall have been committed by them or their employees.

Innkeepers are also subsidiarily liable for the restitution of goods taken by robbery or theft within their houses lodging
therein, or the person, or for the payment of the value thereof, provided that such guests shall have notified in advance the
innkeeper himself, or the person representing him, of the deposit of such goods within the inn; and shall furthermore have
followed the directions which such innkeeper or his representative may have given them with respect to the care of and
vigilance over such goods. No liability shall attach in case of robbery with violence against or intimidation against or
intimidation of persons unless committed by the innkeeper's employees.

ART. 103. Subsidiary civil liability of other persons. — The subsidiary liability established in the next preceding article shall
also apply to employers, teachers, persons, and corporations engaged in any kind of industry for felonies committed by
their servants, pupils, workmen, apprentices, or employees in the discharge of their duties.

xxxxxxxxx
ART. 365. Imprudence and negligence. — Any person who, by reckless imprudence, shall commit any act which, had it
been intentional, would constitute a grave felony, shall suffer the penalty of arresto mayor in its maximum period to prision
correccional in its minimum period; if it would have constituted a less grave felony, the penalty of arresto mayor in its
minimum and medium periods shall be imposed.

Any person who, by simple imprudence or negligence, shall commit an act which would otherwise constitute a grave
felony, shall suffer the penalty of arresto mayor in its medium and maximum periods; if it would have constituted a less
serious felony, the penalty of arresto mayor in its minimum period shall be imposed."

It will thus be seen that while the terms of articles 1902 of the Civil Code seem to be broad enough to cover the driver's
negligence in the instant case, nevertheless article 1093 limits cuasi-delitos to acts or omissions "not punishable by law." But
inasmuch as article 365 of the Revised Penal Code punishes not only reckless but even simple imprudence or negligence, the
fault or negligence under article 1902 of the Civil Code has apparently been crowded out. It is this overlapping that makes the
"confusion worse confounded." However, a closer study shows that such a concurrence of scope in regard to negligent acts
does not destroy the distinction between the civil liability arising from a crime and the responsibility for cuasi-delitos or culpa
extra-contractual. The same negligent act causing damages may produce civil liability arising from a crime under article 100 of
the Revised Penal Code, or create an action for cuasi-delito or culpa extra- contractual under articles 1902-1910 of the Civil
Code.

The individuality of cuasi-delito or culpa extra- contractual looms clear and unmistakable. This legal institution is of ancient
lineage, one of its early ancestors being the Lex Aquilia in the Roman Law. In fact, in Spanish legal terminology, this
responsibility is often referred to as culpa aquiliana. The Partidas also contributed to the genealogy of the present fault or
negligence under the Civil Code; for instance, Law 6, Title 15, of Partida 7, says: "Tenudo es de fazer emienda, porque, como
quier que el non fizo a sabiendas en daño al otro, pero acaescio por su culpa."

The distinctive nature of cuasi-delitos survives in the Civil Code. According to article 1089, one of the five sources of
obligations is this legal institution of cuasi-delito or culpa extra- contractual: "los actos . . . en que intervenga cualquier genero
de culpa o negligencia." Then article 1093 provides that this kind of obligation shall be governed by Chapter II of Title XVI of
Book IV, meaning articles 1902-0910. This portion of the Civil Code is exclusively devoted to the legal institution of culpa
aquiliana.

Some of the differences between crimes under the Penal Code and the culpa aquiliana or cuasi-delito under the Civil Code
are:

1. That crimes affect the public interest, while cuasi-delitos are only of private concern.
2. That, consequently, the Penal Code punishes or corrects the criminal act, while the Civil Code, by means of indemnification,
merely repairs the damage.
3. That delicts are not as broad as quasi-delicts, because the former are punished only if there is a penal law clearly covering
them, while the latter, cuasi-delitos, include all acts in which "any king of fault or negligence intervenes." However, it should be
noted that not all violations of the penal law produce civil responsibility, such as begging in contravention of ordinances,
violation of the game laws, infraction of the rules of traffic when nobody is hurt. (See Colin and Capitant, "Curso Elemental de
Derecho Civil," Vol. 3, p. 728.)

Let us now ascertain what some jurists say on the separate existence of quasi-delicts and the employer's primary and direct
liability under article 1903 of the Civil Code.

Dorado Montero in his essay on "Responsibilidad" in the "Enciclopedia Juridica Española" (Vol. XXVII, p. 414) says:

El concepto juridico de la responsabilidad civil abarca diversos aspectos y comprende a diferentes personas. Asi, existe
una responsabilidad civil propiamente dicha, que en ningun casl lleva aparejada responsabilidad criminal alguna, y otra
que es consecuencia indeclinable de la penal que nace de todo delito o falta."

The juridical concept of civil responsibility has various aspects and comprises different persons. Thus, there is a civil
responsibility, properly speaking, which in no case carries with it any criminal responsibility, and another which is a
necessary consequence of the penal liability as a result of every felony or misdemeanor."

Maura, an outstanding authority, was consulted on the following case: There had been a collision between two trains belonging
respectively to the Ferrocarril Cantabrico and the Ferrocarril del Norte. An employee of the latter had been prosecuted in a
criminal case, in which the company had been made a party as subsidiarily responsible in civil damages. The employee had
been acquitted in the criminal case, and the employer, the Ferrocarril del Norte, had also been exonerated. The question asked
was whether the Ferrocarril Cantabrico could still bring a civil action for damages against the Ferrocarril del Norte. Maura's
opinion was in the affirmative, stating in part (Maura, Dictamenes, Vol. 6, pp. 511-513):

Quedando las cosas asi, a proposito de la realidad pura y neta de los hechos, todavia menos parece sostenible que exista
cosa juzgada acerca de la obligacion civil de indemnizar los quebrantos y menoscabos inferidos por el choque de los
trenes. El titulo en que se funda la accion para demandar el resarcimiento, no puede confundirse con las
responsabilidades civiles nacidas de delito, siquiera exista en este, sea el cual sea, una culpa rodeada de notas
agravatorias que motivan sanciones penales, mas o menos severas. La lesion causada por delito o falta en los derechos
civiles, requiere restituciones, reparaciones o indemnizaciones, que cual la pena misma atañen al orden publico; por tal
motivo vienen encomendadas, de ordinario, al Ministerio Fiscal; y claro es que si por esta via se enmiendan los
quebrantos y menoscabos, el agraviado excusa procurar el ya conseguido desagravio; pero esta eventual coincidencia de
los efectos, no borra la diversidad originaria de las acciones civiles para pedir indemnizacion.

Estas, para el caso actual (prescindiendo de culpas contractuales, que no vendrian a cuento y que tiene otro regimen),
dimanan, segun el articulo 1902 del
Codigo Civil, de toda accion u omision, causante de daños o perjuicios, en que intervenga culpa o negligencia. Es trivial
que acciones semejantes son ejercitadas ante los Tribunales de lo civil cotidianamente, sin que la Justicia punitiva tenga
que mezclarse en los asuntos. Los articulos 18 al 21 y 121 al 128 del Codigo Penal, atentos al espiritu y a los fines
sociales y politicos del mismo, desenvuelven y ordenan la materia de responsabilidades civiles nacidas de delito, en
terminos separados del regimen por ley comun de la culpa que se denomina aquiliana, por alusion a precedentes
legislativos del Corpus Juris. Seria intempestivo un paralelo entre aquellas ordenaciones, y la de la obligacion de
indemnizar a titulo de culpa civil; pero viene al caso y es necesaria una de las diferenciaciones que en el tal paralelo se
notarian.

Los articulos 20 y 21 del Codigo Penal, despues de distribuir a su modo las responsabilidades civiles, entre los que sean
por diversos conceptos culpables del delito o falta, las hacen extensivas a las empresas y los establecimientos al servicio
de los cuales estan los delincuentes; pero con caracter subsidiario, o sea, segun el texto literal, en defecto de los que
sean responsables criminalmente. No coincide en ello el Codigo Civil, cuyo articulo 1903, dice; La obligacion que impone
el articulo anterior es exigible, no solo por los actos y omisiones propios, sino por los de aquellas personas de quienes se
debe responder; personas en la enumeracion de las cuales figuran los dependientes y empleados de los establecimientos
o empresas, sea por actos del servicio, sea con ocasion de sus funciones. Por esto acontece, y se observa en la
jurisprudencia, que las empresas, despues de intervenir en las causas criminales con el caracter subsidiario de su
responsabilidad civil por razon del delito, son demandadas y condenadas directa y aisladamente, cuando se trata de la
obligacion, ante los tribunales civiles.

Siendo como se ve, diverso el titulo de esta obligacion, y formando verdadero postulado de nuestro regimen judicial la
separacion entre justicia punitiva y tribunales de lo civil, de suerte que tienen unos y otros normas de fondo en distintos
cuerpos legales, y diferentes modos de proceder, habiendose, por añadidura, abstenido de asistir al juicio criminal la
Compañia del Ferrocarril Cantabrico, que se reservo ejercitar sus acciones, parece innegable que la de indemnizacion por
los daños y perjuicios que le irrogo el choque, no estuvo sub judice ante el Tribunal del Jurado, ni fue sentenciada, sino
que permanecio intacta, al pronunciarse el fallo de 21 de marzo. Aun cuando el veredicto no hubiese sido de
inculpabilidad, mostrose mas arriba, que tal accion quedaba legitimamente reservada para despues del proceso; pero al
declararse que no existio delito, ni responsabilidad dimanada de delito, materia unica sobre que tenian jurisdiccion
aquellos juzgadores, se redobla el motivo para la obligacion civil ex lege, y se patentiza mas y mas que la accion para
pedir su cumplimiento permanece incolume, extraña a la cosa juzgada.

As things are, apropos of the reality pure and simple of the facts, it seems less tenable that there should be res judicata
with regard to the civil obligation for damages on account of the losses caused by the collision of the trains. The title upon
which the action for reparation is based cannot be confused with the civil responsibilities born of a crime, because there
exists in the latter, whatever each nature, a culpa surrounded with aggravating aspects
which give rise to penal measures that are more or less severe. The injury caused by a felony or misdemeanor upon civil
rights requires restitutions, reparations, or indemnifications which, like the penalty itself, affect public order; for this reason,
they are ordinarily entrusted to the office of the prosecuting attorney; and it is clear that if by this means the losses and
damages are repaired, the injured party no longer desires to seek another relief; but this coincidence of effects does not
eliminate the peculiar nature of civil actions to ask for indemnity.

Such civil actions in the present case (without referring to contractual faults which are not pertinent and belong to another
scope) are derived, according to article 1902 of the Civil Code, from every act or omission causing losses and damages in
which culpa or negligence intervenes. It is unimportant that such actions are every day filed before the civil courts without
the criminal courts interfering therewith. Articles 18 to 21 and 121 to 128 of the Penal Code, bearing in mind the spirit and
the social and political purposes of that Code, develop and regulate the matter of civil responsibilities arising from a crime,
separately from the regime under common law, of culpa which is known as aquiliana, in accordance with legislative
precedent of the Corpus Juris. It would be unwarranted to make a detailed comparison between the former provisions and
that regarding the obligation to indemnify on account of civil culpa; but it is pertinent and necessary to point out to one of
such differences.

Articles 20 and 21 of the Penal Code, after distriburing in their own way the civil responsibilities among those who, for
different reasons, are guilty of felony or misdemeanor, make such civil responsibilities applicable to enterprises and
establishments for which the guilty parties render service, but with subsidiary character, that is to say, according to the
wording of the Penal Code, in default of those who are criminally responsible. In this regard, the Civil Code does not
coincide because article 1903 says: "The obligation imposed by the next preceding article is demandable, not only for
personal acts and omissions, but also for those of persons for whom another is responsible." Among the persons
enumerated are the subordinates and employees of establishments or enterprises, either for acts during their service or on
the occasion of their functions. It is for this reason that it happens, and it is so observed in judicial decisions, that the
companies or enterprises, after taking part in the criminal cases because of their subsidiary civil responsibility by reason of
the crime, are sued and sentenced directly and separately with regard to the obligation, before the civil courts.

Seeing that the title of this obligation is different, and the separation between punitive justice and the civil courts being a
true postulate of our judicial system, so that they have different fundamental norms in different codes, as well as different
modes of procedure, and inasmuch as the Compaña del Ferrocarril Cantabrico has abstained from taking part in the
 criminal case and has reserved the right to exercise its actions, it seems undeniable that the action for indemnification for
the losses and damages caused to it by the collision was not sub judice before the Tribunal del Jurado, nor was it the
subject of a sentence, but it remained intact when the decision of March 21 was rendered. Even if the verdict had not been
that of acquittal, it has already been shown that such action had been legitimately reserved till after the criminal
prosecution; but
because of the declaration of the non-existence of the felony and the non-existence of the responsibility arising from the
crime, which was the sole subject matter upon which the Tribunal del Jurado had jurisdiction, there is greater reason for
the civil obligation ex lege, and it becomes clearer that the action for its enforcement remain intact and is not res judicata.

Laurent, a jurist who has written a monumental work on the French Civil Code, on which the Spanish Civil Code is largely
based and whose provisions on cuasi-delito or culpa extra- contractual are similar to those of the Spanish Civil Code, says,
referring to article 1384 of the French Civil Code which corresponds to article 1903, Spanish Civil Code:

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. (Laurent, Principles of French Civil Law, Spanish translation, Vol. 20, pp. 734- 735.)

Amandi, in his "Cuestionario del Codigo Civil Reformado" (Vol. 4, pp. 429, 430), declares that the responsibility of the employer
is principal and not subsidiary. He writes:

Cuestion 1. La responsabilidad declarada en el articulo 1903 por las acciones u omisiones de aquellas personas por las
que se debe responder, es subsidiaria? es principal? Para contestar a esta pregunta es necesario saber, en primer lugar,
en que se funda el precepto legal. Es que realmente se impone una responsabilidad por una falta ajena? Asi parece a
primera vista; pero semejante afirmacion seria contraria a la justicia y a la maxima universal, segun la que las faltas son
personales, y cada uno responde de aquellas que le son imputables. La responsabilidad de que tratamos se impone con
ocasion de un delito o culpa, pero no por causa de ellos, sino por causa del causi delito, esto es, de la imprudencia o de la
negligencia del padre, del tutor, del dueño o director del establecimiento, del maestro, etc. Cuando cualquiera de las
personas que enumera el articulo citado (menores de edad, incapacitados, dependientes, aprendices) causan un daño, la
ley presume que el padre, el tutor, el maestro, etc., han cometido una falta de negligencia para prevenir o evitar el daño.
Esta falta es la que la ley castiga. No hay, pues, responsabilidad por un hecho ajeno, sino en la apariencia; en realidad la
responsabilidad se exige por un hecho propio. La idea de que esa responsabilidad sea subsidiaria es, por lo tanto,
completamente inadmisible.

Question No. 1. Is the responsibility declared in article 1903 for the acts or omissions of those persons for who one is
responsible, subsidiary or principal? In order to answer this question it is necessary to know, in the first place, on what the
legal provision is based. Is it true that there is a responsibility for the fault of another person? It seems so at first sight; but
such assertion would be contrary to justice and to the universal maxim that all faults are personal, and that everyone is
liable for those faults that can be imputed to him. The responsibility in question is imposed on the occasion of a crime or
fault, but not
because of the same, but because of the cuasi-delito, that is to say, the imprudence or negligence of the father, guardian,
proprietor or manager of the establishment, of the teacher, etc. Whenever anyone of the persons enumerated in the article
referred to (minors, incapacitated persons, employees, apprentices) causes any damage, the law presumes that the
father, guardian, teacher, etc. have committed an act of negligence in not preventing or avoiding the damage. It is this fault
that is condemned by the law. It is, therefore, only apparent that there is a responsibility for the act of another; in reality the
responsibility exacted is for one's own act. The idea that such responsibility is subsidiary is, therefore, completely
inadmissible.

Oyuelos, in his "Digesto: Principios, Doctrina y Jurisprudencia, Referentes al Codigo Civil Español," says in Vol. VII, p. 743:

Es decir, no responde de hechos ajenos, porque se responde solo de su propia culpa, doctrina del articulo 1902; mas por
 excepcion, se responde de la ajena respecto de aquellas personas con las que media algun nexo o vinculo, que motiva o
razona la responsabilidad. Esta responsabilidad, es directa o es subsidiaria? En el orden penal, el Codigo de esta clase
distingue entre menores e incapacitados y los demas, declarando directa la primera (articulo 19) y subsidiaria la segunda
(articulos 20 y 21); pero en el orden civil, en el caso del articulo 1903, ha de entenderse directa, por el tenor del articulo
que impone la responsabilidad precisamente "por los actos de aquellas personas de quienes se deba responder."

That is to say, one is not responsible for the acts of others, because one is liable only for his own faults, this being the
doctrine of article 1902; but, by exception, one is liable for the acts of those persons with whom there is a bond or tie which
gives rise to the responsibility. Is this responsibility direct or subsidiary? In the order of the penal law, the Penal Code
distinguishes between minors and incapacitated persons on the one hand, and other persons on the other, declaring that
the responsibility for the former is direct (article 19), and for the latter, subsidiary (articles 20 and 21); but in the scheme of
the civil law, in the case of article 1903, the responsibility should be understood as direct, according to the tenor of that
articles, for precisely it imposes responsibility "for the acts of those persons for whom one should be responsible."

Coming now to the sentences of the Supreme Tribunal of Spain, that court has upheld the principles above set forth: that a
quasi-delict or culpa extra-contractual is a separate and distinct legal institution, independent from the civil responsibility arising
from criminal liability, and that an employer is, under article 1903 of the Civil Code, primarily and directly responsible for the
negligent acts of his employee.

One of the most important of those Spanish decisions is that of October 21, 1910. In that case, Ramon Lafuente died as the
result of having been run over by a street car owned by the "compañia Electric Madrileña de Traccion." The conductor was
prosecuted in a criminal case but he was acquitted. Thereupon, the widow filed a civil action against the street car company,
paying for damages in the amount of 15,000 pesetas. The lower court awarded damages; so the company appealed to the
Supreme Tribunal, alleging violation of articles 1902 and 1903 of the Civil Code because by final judgment the
non-existence of fault or negligence had been declared. The Supreme Court of Spain dismissed the appeal, saying:

Considerando que el primer motivo del recurso se funda en el equivocado supuesto de que el Tribunal a quo, al condonar
a la compañia Electrica Madrileña al pago del daño causado con la muerte de Ramon La fuente Izquierdo, desconoce el
valor y efectos juridicos de la sentencia absolutoria deictada en la causa criminal que se siguio por el mismo hecho,
cuando es lo cierto que de este han conocido las dos jurisdicciones bajo diferentes as pectos, y como la de lo criminal
declrao dentro de los limites de su competencia que el hecho de que se trata no era constitutivo de delito por no haber
mediado descuido o negligencia graves, lo que no excluye, siendo este el unico fundamento del fallo absolutorio, el
concurso de la culpa o negligencia no califacadas, fuente de obligaciones civiles segun el articulo 1902 del Codigo, y que
alcanzan, segun el 1903, netre otras perosnas, a los Directores de establecimientos o empresas por los daños causados
por sus dependientes en determinadas condiciones, es manifesto que la de lo civil, al conocer del mismo hehco baho este
ultimo aspecto y al condenar a la compañia recurrente a la indemnizacion del daño causado por uno de sus empleados,
lejos de infringer los mencionados textos, en relacion con el articulo 116 de la Ley de Enjuciamiento Criminal, se ha
atenido estrictamente a ellos, sin invadir atribuciones ajenas a su jurisdiccion propia, ni contrariar en lo mas minimo el
fallo recaido en la causa.

Considering that the first ground of the appeal is based on the mistaken supposition that the trial court, in sentencing the
Compañia Madrileña to the payment of the damage caused by the death of Ramon Lafuente Izquierdo, disregards the
value and juridical effects of the sentence of acquittal rendered in the criminal case instituted on account of the same act,
when it is a fact that the two jurisdictions had taken cognizance of the same act in its different aspects, and as the criminal
jurisdiction declared within the limits of its authority that the act in question did not constitute a felony because there was
no grave carelessness or negligence, and this being the only basis of acquittal, it does no exclude the co-existence of fault
or negligence which is not qualified, and is a source of civil obligations according to article 1902 of the Civil Code,
affecting, in accordance with article 1903, among other persons, the managers of establishments or enterprises by reason
of the damages caused by employees under certain conditions, it is manifest that the civil jurisdiccion in taking cognizance
of the same act in this latter aspect and in ordering the company, appellant herein, to pay an indemnity for the damage
caused by one of its employees, far from violating said legal provisions, in relation with article 116 of the Law of Criminal
Procedure, strictly followed the same, without invading attributes which are beyond its own jurisdiction, and without in any
way contradicting the decision in that cause. (Emphasis supplied.)
It will be noted, as to the case just cited:

First. That the conductor was not sued in a civil case, either separately or with the street car company. This is precisely what
happens in the present case: the driver, Fontanilla, has not been sued in a civil action, either alone or with his employer.
Second. That the conductor had been acquitted of grave criminal negligence, but the Supreme Tribunal of Spain said that this
did not exclude the co-existence of fault or negligence, which is not qualified, on the part of the conductor, under article 1902 of
the Civil Code. In the present case, the taxi driver was found guilty of criminal negligence, so that if he had even sued for his
civil responsibility arising from the crime, he would have been held primarily liable for civil damages, and Barredo would have
been held subsidiarily liable for the same. But the plaintiffs are directly suing Barredo, on his primary responsibility because of
his own presumed negligence — which he did not overcome — under article 1903. Thus, there were two liabilities of Barredo:
first, the subsidiary one because of the civil liability of the taxi driver arising from the latter's criminal negligence; and, second,
Barredo's primary liability as an employer under article 1903. The plaintiffs were free to choose which course to take, and they
preferred the second remedy. In so doing, they were acting within their rights. It might be observed in passing, that the plaintiff
choose the more expeditious and effective method of relief, because Fontanilla was either in prison, or had just been released,
and besides, he was probably without property which might be seized in enforcing any judgment against him for damages.

Third. That inasmuch as in the above sentence of October 21, 1910, the employer was held liable civilly, notwithstanding the
acquittal of the employee (the conductor) in a previous criminal case, with greater reason should Barredo, the employer in the
case at bar, be held liable for damages in a civil suit filed against him because his taxi driver had been convicted. The degree
of negligence of the conductor in the Spanish case cited was less than that of the taxi driver, Fontanilla, because the former
was acquitted in the previous criminal case while the latter was found guilty of criminal negligence and was sentenced to an
indeterminate sentence of one year and one day to two years of prision correccional.

(See also Sentence of February 19, 1902, which is similar to the one above quoted.)

In the Sentence of the Supreme Court of Spain, dated February 14, 1919, an action was brought against a railroad company
for damages because the station agent, employed by the company, had unjustly and fraudulently, refused to deliver certain
articles consigned to the plaintiff. The Supreme Court of Spain held that this action was properly under article 1902 of the Civil
Code, the court saying:

Considerando que la sentencia discutida reconoce, en virtud de los hechos que consigna con relacion a las pruebas del
pleito: 1.o, que las expediciones facturadas por la compañia ferroviaria a la consignacion del actor de las vasijas vacias
que en su demanda relacionan tenian como fin el que este las devolviera a sus remitentes con vinos y alcoholes; 2.o, que
llegadas a su destino tales mercanias no se quisieron entregar a dicho consignatario por el jefe de la estacion sin motivo
justificado y con intencion dolosa, y 3.o, que la falta de entrega de estas expediciones al tiempo de reclamarlas el
demandante le originaron daños y perjuicios en cantidad de bastante importancia como expendedor al por mayor que era
de vinos y alcoholes por las ganancias que dejo de obtener al verse privado de servir los pedidos que se le habian hecho
por los remitentes en los envases:

Considerando que sobre esta base hay necesidad de estimar los cuatro motivos que integran este recurso,
porque la demanda inicial del pleito a que se contrae no contiene accion que nazca del incumplimiento del contrato de
transporte, toda vez que no se funda en el retraso de la llegada de las mercancias ni de ningun otro vinculo contractual
entre las partes contendientes, careciendo, por tanto, de aplicacion el articulo 371 del Codigo de Comercio, en que
principalmente descansa el fallo recurrido, sino que se limita a pedir la reparaction de los daños y perjuicios producidos en
el patrimonio del actor por la injustificada y dolosa negativa del porteador a la entrega de las mercancias a su nombre
consignadas, segun lo reconoce la sentencia, y cuya responsabilidad esta claramente sancionada en el articulo 1902 del
Codigo Civil, que obliga por el siguiente a la Compañia demandada como ligada con el causante de aquellos por
relaciones de caracter economico y de jurarquia administrativa.

Considering that the sentence, in question recognizes, in virtue of the facts which it declares, in relation to the evidence in
the case: (1) that the invoice issued by the railroad company in favor of the plaintiff contemplated that the empty
receptacles referred to in the complaint should be returned to the consignors with wines and liquors; (2) that when the said
 merchandise reached their destination, their delivery to the consignee was refused by the station agent without justification
and with fraudulent intent, and (3) that the lack of delivery of these goods when they were demanded by the plaintiff
caused him losses and damages of considerable importance, as he was a wholesale vendor of wines and liquors and he
failed to realize the profits when he was unable to fill the orders sent to him by the consignors of the receptacles:

Considering that upon this basis there is need of upholding the four assignments of error, as the original complaint did not
contain any cause of action arising from non-fulfillment of a contract of transportation, because the action was not based
on the delay of the goods nor on any contractual relation between the parties litigant and, therefore, article 371 of the
Code of Commerce, on which the decision appealed from is based, is not applicable; but it limits to asking for reparation
for losses and damages produced on the patrimony of the plaintiff on account of the unjustified and fraudulent refusal of
the carrier to deliver the goods consigned to the plaintiff as stated by the sentence, and the carrier's responsibility is
clearly laid down in article 1902 of the Civil Code which binds, in virtue of the next article, the defendant company,
because the latter is connected with the person who caused the damage by relations of economic character and by
administrative hierarchy. (Emphasis supplied.)

The above case is pertinent because it shows that the same act may come under both the Penal Code and the Civil Code. In
that case, the action of the agent was unjustified and fraudulent and therefore could have been the subject of a criminal action.
And yet, it was held to be also a proper subject of a civil action under article 1902 of the Civil Code. It is also to be noted that it
was the employer and not the employee who was being sued.

Let us now examine the cases previously decided by this Court.

In the leading case of Rakes vs. Atlantic Gulf and Pacific Co. (7 Phil., 359, 362-365 [year 1907]), the trial court awarded
damages to the plaintiff, a laborer of the defendant, because the latter had negligently failed to repair a tramway in
consequence of which the rails slid off while iron was being transported, and caught the plaintiff whose leg was broken. This
Court held:

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

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

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

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

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

xxxxxxxxx

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

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

As an answer to the argument urged in this particular action it may be sufficient to point out that nowhere in our general
statutes is the employer penalized for failure to provide or maintain safe appliances for his workmen. His obligation
therefore is one 'not punished by the laws' and falls under civil rather than criminal jurisprudence. But the answer may be a
broader one. We should be reluctant, under any conditions, to adopt a forced construction of these scientific codes, such
as is proposed by the defendant, that would rob some of these articles of effect, would shut out litigants against their will
from the civil courts, would make the assertion of their rights dependent upon the selection for prosecution of the proper
criminal offender, and render recovery doubtful by reason of the
strict rules of proof prevailing in criminal actions. Even if these articles had always stood alone, such a construction would
be unnecessary, but clear light is thrown upon their meaning by the provisions of the Law of Criminal Procedure of Spain
(Ley de Enjuiciamiento Criminal), which, though never in actual force in these Islands, was formerly given a suppletory or
explanatory effect. Under article 111 of this law, both classes of action, civil and criminal, might be prosecuted jointly or
separately, but while the penal action was pending the civil was suspended. According to article 112, the penal action
once started, the civil remedy should be sought therewith, unless it had been waived by the party injured or been
expressly reserved by him for civil proceedings for the future. If the civil action alone was prosecuted, arising out of a crime
that could be enforced only on private complaint, the penal action thereunder should be extinguished. These provisions
are in harmony with those of articles 23 and 133 of our Penal Code on the same subject.

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

Under article 20 of the Penal Code the responsibility of an employer may be regarded as subsidiary in respect of criminal
actions against his employees only while they are in process of prosecution, or in so far as they determine the existence of
the criminal act from which liability arises, and his obligation under the civil law and its enforcement in the civil courts is not
barred thereby unless by the election of the injured person. Inasmuch as no criminal proceeding had been instituted,
growing our of the accident in question, the provisions of the Penal Code can not affect this action. This construction
renders it unnecessary to finally determine here whether this subsidiary civil liability in penal actions has survived the laws
that fully regulated it or has been abrogated by the American civil and criminal procedure now in force in the Philippines.

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

In Manzanares vs. Moreta, 38 Phil., 821 (year 1918), the mother of the 8 of 9-year-old child Salvador Bona brought a civil
action against Moreta to recover damages resulting from the death of the child, who had been run over by an automobile
 driven and managed by the defendant. The trial court rendered judgment requiring the defendant to pay the plaintiff the sum of
P1,000 as indemnity: This Court in affirming the judgment, said in part:

If it were true that the defendant, in coming from the southern part of Solana Street, had to stop his auto before crossing
Real Street, because he had met vehicles which were going along the latter street or were coming from the opposite
direction along Solana Street, it is to be believed that, when he again started to run his auto across said Real Street and to
continue its way along Solana Street northward, he should have adjusted the speed of the auto which he was operating
until he had fully crossed Real Street and had completely reached a clear way on Solana Street. But, as the child was run
over by the auto precisely at the entrance of Solana Street, this accident could not have occurred if the auto had been
running at a slow speed, aside from the fact that the defendant, at the moment of crossing Real Street and entering
Solana Street, in a northward direction, could have seen the child in the act of crossing the latter street from the sidewalk
on the right to that on the left, and if the accident had occurred in such a way that after the automobile had run over the
body of the child, and the child's body had already been stretched out on the ground, the automobile still moved along a
distance of about 2 meters, this circumstance shows the fact that the automobile entered Solana Street from Real Street,
at a high speed without the defendant having blown the horn. If these precautions had been taken by the defendant, the
deplorable accident which caused the death of the child would not have occurred.

It will be noticed that the defendant in the above case could have been prosecuted in a criminal case because his negligence
causing the death of the child was punishable by the Penal Code. Here is therefore a clear instance of the same act of
negligence being a proper subject-matter either of a criminal action with its consequent civil liability arising from a crime or of
an entirely separate and independent civil action for fault or negligence under article 1902 of the Civil Code. Thus, in this
jurisdiction, the separate individually of a cuasi- delito or culpa aquiliana under the Civil Code has been fully and clearly
recognized, even with regard to a negligent act for which the wrongdoer could have been prosecuted and convicted in a
criminal case and for which, after such a conviction, he could have been sued for this civil liability arising from his crime.

Years later (in 1930) this Court had another occasion to apply the same doctrine. In Bernal and Enverso vs. House and
Tacloban Electric & Ice Plant, Ltd., 54 Phil., 327, the parents of the five-year-old child, Purificacion Bernal, brought a civil action
to recover damages for the child's death as a result of burns caused by the fault and negligence of the defendants. On the
evening of April 10, 1925, the Good Friday procession was held in Tacloban, Leyte. Fortunata Enverso with her
daughter Purificacion Bernal had come from another municipality to attend the same. After the procession the mother and the
daughter with two others were passing along Gran Capitan Street in front of the offices of the Tacloban Electric & Ice Plant,
Ltd., owned by defendants J. V. House, when an automobile appeared from the opposite direction. The little girl, who was
slightly ahead of the rest, was so frightened by the automobile that she turned to run, but unfortunately she fell into the street
gutter where hot water from the electric plant was flowing. The child died that same night from the burns. The trial courts
dismissed the action because of the contributory negligence of the plaintiffs. But this Court held, on appeal, that there was no
contributory negligence, and allowed the parents P1,000 in damages from J. V. House who at the time of the tragic occurrence
was the holder of the franchise for the electric plant. This Court said in part:

Although the trial judge made the findings of fact hereinbefore outlined, he nevertheless was led to order the dismissal of
the action because of the contributory negligence of the plaintiffs. It is from this point that a majority of the court depart
from the stand taken by the trial judge. The mother and her child had a perfect right to be on the principal street of
Tacloban, Leyte, on the evening when the religious procession was held. There was nothing abnormal in allowing the child
to run along a few paces in advance of the mother. No one could foresee the coincidence of an automobile appearing and
of a frightened child running and falling into a ditch filled with hot water. The doctrine announced in the much debated case
of Rakes vs. Atlantic Gulf and Pacific Co. ([1907]), 7 Phil., 359), still rule. Article 1902 of the Civil Code must again be
enforced. The contributory negligence of the child and her mother, if any, does not operate as a bar to recovery, but in its
strictest sense could only result in reduction of the damages.

It is most significant that in the case just cited, this Court specifically applied article 1902 of the Civil Code. It is thus that
although J. V. House could have been criminally prosecuted for reckless or simple negligence and not only punished but also
made civilly liable because of his criminal negligence, nevertheless this Court awarded damages in an independent civil action
for fault or negligence under article 1902 of the Civil Code.
In Bahia vs. Litonjua and Leynes (30 Phil., 624 [year 1915), the action was for damages for the death of the plaintiff's daughter
alleged to have been caused by the negligence of the servant in driving an automobile over the child. It appeared that the
cause of the mishap was a defect in the steering gear. The defendant Leynes had rented the automobile from the International
Garage of Manila, to be used by him in carrying passengers during the fiesta of Tuy, Batangas. Leynes was ordered by the
lower court to pay P1,000 as damages to the plaintiff. On appeal this Court reversed the judgment as to Leynes on the ground
that he had shown that the exercised the care of a good father of a family, thus overcoming the presumption of negligence
under article 1903. This Court said:

As to selection, the defendant has clearly shown that he exercised the care and diligence of a good father of a family. He
obtained the machine from a reputable garage and it was, so far as appeared, in good condition. The workmen were
likewise selected from a standard garage, were duly licensed by the Government in their particular calling, and apparently
thoroughly competent. The machine had been used but a few hours when the
accident occurred and it is clear from the evidence that the defendant had no notice, either actual or constructive, of the
defective condition of the steering gear.

The legal aspect of the case was discussed by this Court thus:

Article 1903 of the Civil Code not only establishes liability in cases of negligence, but also provides when the liability shall
cease. It says:

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

From this article two things are apparent: (1) That when an injury is caused by the negligence of a servant or employee
there instantly arises a presumption of law that there was negligence on the part of the matter or employer either in the
selection of the servant or employee, or in supervision over him after the selection, or both; and (2) that presumption is
juris tantum and not juris et de jure, and consequently, may be rebutted. It follows necessarily that if the employer shows
to the satisfaction of the court that in selection and supervision he has exercised the care and diligence of a good father of
a family, the presumption is overcome and he is relieve from liability.

This theory bases the responsibility of the master ultimately on his own negligence and not on that of his servant.

The doctrine of the case just cited was followed by this Court in Cerf vs. Medel (33 Phil., 37 [year 1915]). In the latter case, the
complaint alleged that the defendant's servant had so negligently driven an automobile, which was operated by defendant as a
public vehicle, that said automobile struck and damaged the plaintiff's motorcycle. This Court, applying article 1903 and
following the rule in Bahia vs. Litonjua and Leynes, said in part (p. 41) that:

The master is liable for the negligent acts of his servant where he is the owner or director of a business or enterprise and
the negligent acts are committed while the servant is engaged in his master's employment as such owner.

Another case which followed the decision in Bahia vs. Litonjua and Leynes was Cuison vs. Norton & Harrison Co., 55 Phil., 18
(year 1930). The latter case was an action for damages brought by Cuison for the death of his seven-year-old son Moises. The
little boy was on his way to school with his sister Marciana. Some large pieces of lumber fell from a truck and pinned the boy
underneath, instantly killing him. Two youths, Telesforo Binoya and Francisco Bautista, who were working for Ora, an
employee of defendant Norton & Harrison Co., pleaded guilty to the crime of homicide through reckless negligence and were
sentenced accordingly. This Court, applying articles 1902 and 1903, held:

The basis of civil law liability is not respondent superior but the relationship of pater familias. This theory bases the liability
of the master ultimately on his own negligence and not on that of his servant. (Bahia vs. Litonjua and Leynes [1915], 30
Phil., 624; Cangco vs. Manila Railroad Co. [1918], 38 Phil., 768.)
In Walter A. Smith & Co. vs. Cadwallader Gibson Lumber Co., 55 Phil., 517 (year 1930) the plaintiff brought an action for
damages for the demolition of its wharf, which had been struck by the steamer Helen C belonging to the defendant. This Court
held (p. 526):

The evidence shows that Captain Lasa at the time the plaintiff's wharf collapsed was a duly licensed captain, authorized to
navigate and direct a vessel of any tonnage, and that the appellee contracted his services because of his reputation as a
captain, according to F. C. Cadwallader. This being so, we are of the opinion that the presumption of liability against the
defendant has been overcome by the exercise of the care and diligence of a good father of a family in selecting Captain
Lasa, in accordance with the doctrines laid down by this court in the cases cited above, and the defendant is therefore
absolved from all liability.

It is, therefore, seen that the defendant's theory about his secondary liability is negatived by the six cases above set forth. He
is, on the authority of these cases, primarily and directly responsible in damages under article 1903, in relation to article 1902,
of the Civil Code.

Let us now take up the Philippine decisions relied upon by the defendant. We study first, City of Manila vs. Manila Electric Co.,
52 Phil., 586 (year 1928). A collision between a truck of the City of Manila and a street car of the Manila Electric Co. took place
on June 8, 1925. The truck was damaged in the amount of P1,788.27. Sixto Eustaquio, the motorman, was prosecuted for the
crime of damage to property and slight injuries through reckless imprudence. He was found guilty and sentenced to pay a fine
of P900, to indemnify the City of Manila for P1,788.27, with subsidiary imprisonment in case of insolvency. Unable to collect the
indemnity from Eustaquio, the City of Manila filed an action against the Manila Electric Company to obtain payment, claiming
that the defendant was subsidiarily liable. The main defense was that the defendant had exercised the diligence of a good
father of a family to prevent the damage. The lower court rendered judgment in favor of the plaintiff. This Court held, in part,
that this case was governed by the Penal Code, saying:

With this preliminary point out of the way, there is no escaping the conclusion that the provisions of the Penal Code
govern. The Penal Code in easily understandable language authorizes the determination of subsidiary liability. The Civil
Code negatives its application by providing that civil obligations arising from crimes or misdemeanors shall be governed by
the provisions of the Penal Code. The conviction of the motorman was a misdemeanor falling under article 604 of the
Penal Code. The act of the motorman was not a wrongful or negligent act or omission not punishable by law. Accordingly,
the civil obligation connected up with the Penal Code and not with article 1903 of the Civil Code. In other words, the Penal
Code affirms its jurisdiction while the Civil Code negatives its jurisdiction. This is a case of criminal negligence out of which
civil liability arises and not a case of civil negligence.

xxxxxxxxx

Our deduction, therefore, is that the case relates to the Penal Code and not to the Civil Code. Indeed, as pointed out by
the trial judge, any different ruling would permit the
master to escape scot-free by simply alleging and proving that the master had exercised all diligence in the selection and
training of its servants to prevent the damage. That would be a good defense to a strictly civil action, but might or might not
be to a civil action either as a part of or predicated on conviction for a crime or misdemeanor. (By way of parenthesis, it
may be said further that the statements here made are offered to meet the argument advanced during our deliberations to
the effect that article 0902 of the Civil Code should be disregarded and codal articles 1093 and 1903 applied.)

It is not clear how the above case could support the defendant's proposition, because the Court of Appeals based its decision
in the present case on the defendant's primary responsibility under article 1903 of the Civil Code and not on his subsidiary
liability arising from Fontanilla's criminal negligence. In other words, the case of City of Manila vs. Manila Electric Co., supra, is
predicated on an entirely different theory, which is the subsidiary liability of an employer arising from a criminal act of his
employee, whereas the foundation of the decision of the Court of Appeals in the present case is the employer's primary liability
under article 1903 of the Civil Code. We have already seen that this is a proper and independent remedy.

Arambulo vs. Manila Electric Co. (55 Phil., 75), is another case invoked by the defendant. A motorman in the employ of the
Manila Electric Company had been convicted o homicide by simple negligence and sentenced, among other things, to pay the
 heirs of the deceased the sum of P1,000. An action was then brought to enforce the subsidiary liability of the defendant as
employer under the Penal Code. The defendant attempted to show that it had exercised the diligence of a good father of a
family in selecting the motorman, and therefore claimed exemption from civil liability. But this Court held:

In view of the foregoing considerations, we are of opinion and so hold, (1) that the exemption from civil liability established
in article 1903 of the Civil Code for all who have acted with the diligence of a good father of a family, is not applicable to
the subsidiary civil liability provided in article 20 of the Penal Code.

The above case is also extraneous to the theory of the defendant in the instant case, because the action there had for its
purpose the enforcement of the defendant's subsidiary liability under the Penal Code, while in the case at bar, the plaintiff's
cause of action is based on the defendant's primary and direct responsibility under article 1903 of the Civil Code. In fact, the
above case destroys the defendant's contention because that decision illustrates the principle that the employer's primary
responsibility under article 1903 of the Civil Code is different in character from his subsidiary liability under the Penal Code.

In trying to apply the two cases just referred to, counsel for the defendant has failed to recognize the distinction between civil
liability arising from a crime, which is governed by the Penal Code, and the responsibility for cuasi-delito or culpa aquiliana
under the Civil Code, and has likewise failed to give the importance to the latter type of civil action.

The defendant-petitioner also cites Francisco vs. Onrubia (46 Phil., 327). That case need not be set forth. Suffice it to say that
the question involved was also civil liability arising from a
crime. Hence, it is as inapplicable as the two cases above discussed.

The foregoing authorities clearly demonstrate the separate individuality of cuasi-delitos or culpa aquiliana under the Civil Code.
Specifically they show that there is a distinction between civil liability arising from criminal negligence (governed by the Penal
Code) and responsibility for fault or negligence under articles 1902 to 1910 of the Civil Code, and that the same negligent act
may produce either a civil liability arising from a crime under the Penal Code, or a separate responsibility for fault or negligence
under articles 1902 to 1910 of the Civil Code. Still more concretely, the authorities above cited render it inescapable to
conclude that the employer — in this case the defendant-petitioner — is primarily and directly liable under article 1903 of the
Civil Code.

The legal provisions, authors, and cases already invoked should ordinarily be sufficient to dispose of this case. But inasmuch
as we are announcing doctrines that have been little understood in the past, it might not be inappropriate to indicate their
foundations.

Firstly, the Revised Penal Code in article 365 punishes not only reckless but also simple negligence. If we were to hold that
articles 1902 to 1910 of the Civil Code refer only to fault or negligence not punished by law, according to the literal import of
article 1093 of the Civil Code, the legal institution of culpa aquiliana would have very little scope and application in actual life.
Death or injury to persons and damage to property through any degree of negligence — even the slightest — would have to be
indemnified only through the principle of civil liability arising from a crime. In such a state of affairs, what sphere would remain
for cuasi-delito or culpa aquiliana? We are loath to impute to the lawmaker any intention to bring about a situation so absurd
and anomalous. Nor are we, in the interpretation of the laws, disposed to uphold the letter that killeth rather than the spirit that
giveth life. We will not use the literal meaning of the law to smother and render almost lifeless a principle of such ancient origin
and such full-grown development as culpa aquiliana or cuasi-delito, which is conserved and made enduring in articles 1902 to
1910 of the Spanish Civil Code.

Secondly, to find the accused guilty in a criminal case, proof of guilt beyond reasonable doubt is required, while in a civil case,
preponderance of evidence is sufficient to make the defendant pay in damages. There are numerous cases of criminal
negligence which can not be shown beyond reasonable doubt, but can be proved by a preponderance of evidence. In such
cases, the defendant can and should be made responsible in a civil action under articles 1902 to 1910 of the Civil Code.
Otherwise, there would be many instances of unvindicated civil wrongs. Ubi jus ibi remedium.

Thirdly, to hold that there is only one way to make defendant's liability effective, and that is, to sue the driver and exhaust his
(the latter's) property first, would be tantamount to compelling the plaintiff to follow a devious and cumbersome method of
obtaining relief. True, there is such a remedy under our laws, but there is also a more expeditious way, which is based on the
primary and direct responsibility of the defendant under article 1903 of the Civil Code. Our view of the law is more likely to
facilitate remedy for civil wrongs, because the procedure indicated by the defendant is wasteful and productive of delay, it
being a matter of common knowledge that professional drivers of taxis and similar public conveyance usually do not
have sufficient means with which to pay damages. Why, then, should the plaintiff be required in all cases to go through this
roundabout, unnecessary, and probably useless procedure? In construing the laws, courts have endeavored to shorten and
facilitate the pathways of right and justice.

At this juncture, it should be said that the primary and direct responsibility of employers and their presumed negligence are
principles calculated to protect society. Workmen and employees should be carefully chosen and supervised in order to avoid
injury to the public. It is the masters or employers who principally reap the profits resulting from the services of these servants
and employees. It is but right that they should guarantee the latter's careful conduct for the personnel and patrimonial safety of
others. As Theilhard has said, "they should reproach themselves, at least, some for their weakness, others for their poor
selection and all for their negligence." And according to Manresa, "It is much more equitable and just that such responsibility
should fall upon the principal or director who could have chosen a careful and prudent employee, and not upon the injured
person who could not exercise such selection and who used such employee because of his confidence in the principal or
director." (Vol. 12, p. 622, 2nd Ed.) Many jurists also base this primary responsibility of the employer on the principle of
representation of the principal by the agent. Thus, Oyuelos says in the work already cited (Vol. 7, p. 747) that before third
persons the employer and employee "vienen a ser como una sola personalidad, por refundicion de la del dependiente en la de
quien le emplea y utiliza." ("become as one personality by the merging of the person of the employee in that of him who
employs and utilizes him.") All these observations acquire a peculiar force and significance when it comes to motor accidents,
and there is need of stressing and accentuating the responsibility of owners of motor vehicles.

Fourthly, because of the broad sweep of the provisions of both the Penal Code and the Civil Code on this subject, which has
given rise to the overlapping or concurrence of spheres already discussed, and for lack of understanding of the character and
efficacy of the action for culpa aquiliana, there has grown up a common practice to seek damages only by virtue of the civil
responsibility arising from a crime, forgetting that there is another remedy, which is by invoking articles 1902-1910 of the Civil
Code. Although this habitual method is allowed by our laws, it has nevertheless rendered practically useless and nugatory the
more expeditious and effective remedy based on culpa aquiliana or culpa extra-contractual. In the present case, we are asked
to help perpetuate this usual course. But we believe it is high time we pointed out to the harm done by such practice and to
restore the principle of responsibility for fault or negligence under articles 1902 et seq. of the Civil Code to its full rigor. It is high
time we caused the stream of quasi- delict or culpa aquiliana to flow on its own natural channel, so that its waters may no
longer be diverted into that of a crime under the Penal Code. This will, it is believed, make for the better safeguarding of private
rights because it re-establishes an ancient and additional remedy, and for the further reason that an independent civil action,
not depending on the issues, limitations and results of a criminal prosecution, and entirely directed by the party wronged or his
counsel, is more likely to secure adequate and efficacious redress.

In view of the foregoing, the judgment of the Court of Appeals should be and is hereby affirmed, with costs against the
defendant-petitioner.
[G.R. No. 74761. November 6, 1990.]

NATIVIDAD V. ANDAMO and EMMANUEL R. ANDAMO, Petitioners, v. INTERMEDIATE APPELLATE COURT (First Civil
Cases Division) and MISSIONARIES OF OUR LADY OF LA SALETTE, INC., Respondents.

Lope E. Adriano, for Petitioners.

Padilla Law Office for Private Respondent.

SYLLABUS
1. REMEDIAL LAW; ACTIONS; NATURE AND PURPOSE THEREOF DETERMINED BY THE ALLEGATIONS IN THE
COMPLAINT. — It is axiomatic that the nature of an action filed in court is determined by the facts alleged in the complaint as
constituting the cause of action. The purpose of an action or suit and the law to govern it, including the period of prescription, is
to be determined not by the claim of the party filing the action, made in his argument or brief, but rather by the complaint itself,
its allegations and prayer for relief. (De Tavera v. Philippine Tuberculosis Society, Inc., G.R. No. L-48928, February 25, 1982,
112 SCRA 243.) The nature of an action is not necessarily determined or controlled by its title or heading but by the body of the
pleading or complaint itself. To avoid possible denial of substantial justice due to legal technicalities, pleadings as well as
remedial laws should be liberally construed so that the litigants may have ample opportunity to prove their respective claims.
(Dominguez v. Lee, G.R. No. 74960-61, November 27, 1987, 155 SCRA 703)

2. CIVIL LAW; QUASI-DELICTS; ELEMENTS THEREOF. — A careful examination of the aforequoted complaint shows that
the civil action is one under Articles 2176 and 2177 of the Civil Code on quasi-delicts. All the elements of a quasi-delict are
present, to wit: (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. (Taylor v. Manila Electric Company, 16 Phil. 8; Vergara v. Court of Appeals, G.R. No. 77679,
September 30, 1987, 154 SCRA 564)

3. ID; ID; "FAULT OR NEGLIGENCE," CONSTRUED. — Article 2176 of the Civil Code imposes a civil liability on a person for
damage caused by his act or omission constituting fault or negligence, and whenever Article 2176 refers to "fault or
negligence", it covers not only acts "not punishable by law" but also acts criminal in character, whether intentional and
voluntary or negligent. Consequently, a separate civil action lies against the offender in a criminal act, whether or not he is
criminally prosecuted and found guilty or acquitted, provided that the offended party is not allowed, (if the tortfeasor is actually
charged also criminally), to recover damages on both scores, and
would be entitled in such eventuality only to the bigger award of the two, assuming the awards made in the two cases vary.
(Virata v. Ochoa, G.R. No. L-46179, January 31, 1978, 81 SCRA 472)

4. ID; ID; DISTINGUISHED FROM CRIMINAL NEGLIGENCE. — According to the Report of the Code Commission, Article
2177 of the Civil Code though at first sight startling, is not so novel or extraordinary when we consider the exact nature of
criminal and civil negligence. The former is a violation of the criminal law, while the latter is a distinct and independent
negligence, which is a "culpa aquiliana" or quasi-delict, of ancient origin, having always had its own foundation and
individuality, separate from criminal negligence. Such distinction between criminal negligence and "culpa extra-contractual" or
"cuasi-delito" has been sustained by decisions of the Supreme Court of Spain . . .

5. ID; ID; CIVIL ACTION, ENTIRELY INDEPENDENT OF THE CRIMINAL CASE. — In Azucena v. Potenciano, (5 SCRA 468,
470-471), the Court declared that in quasi- delicts," (t)he civil action is entirely independent of the criminal case according to
Articles 33 and 2177 of the Civil Code. There can be no logical conclusion than this, for to subordinate the civil action
contemplated in the said articles to the result of the criminal prosecution — whether it be conviction or acquittal — would
render meaningless the independent character of the civil action and the clear injunction in Article 31, that his action may
proceed independently of the criminal proceedings and regardless of the result of the latter."

6. ID; ID; EFFECT OF ACQUITTAL OR CONVICTION IN THE CRIMINAL CASE. — In the case of Castillo v. Court of Appeals
(176 SCRA 591), this Court held that a quasi-delict or culpa aquiliana is a separate legal institution under the Civil Code with a
substantivity all its own, and individuality that is entirely apart and independent from a delict or crime — a distinction exists
between the civil liability arising from a crime and the responsibility for quasi-delicts or culpa extra- contractual. The same
negligence causing damages may produce civil liability arising from a crime under the Penal Code, or create an action for
quasi-delicts or culpa extra-contractual under the Civil Code. Therefore, the acquittal or conviction in the criminal case is
entirely irrelevant in the civil case, unless, of course, in the event of an acquittal where the court has declared that the fact from
which the civil action arose did not exist, in which case the extinction of the criminal liability would carry with it the extinction of
the civil liability.

7. ID; PROPERTY; USE THEREOF, NOT WITHOUT LIMITATIONS; RECIPROCAL DUTIES OF ADJOINING LANDOWNERS.
— It must be stressed that the use of one’s property is not without limitations. Article 431 of the Civil Code provides that "the
owner of a thing cannot make use thereof in such a manner as to injure the rights of a third person." SIC UTERE TUO UT
ALIENUM NON LAEDAS. Moreover, adjoining landowners have mutual and reciprocal duties which
require that each must use his own land in a reasonable manner so as not to infringe upon the rights and interests of others.
Although we recognize the right of an owner to build structures on his land, such structures must be so constructed and
maintained using all reasonable care so that they cannot be dangerous to adjoining landowners and can withstand the usual
and expected forces of nature. If the structures cause injury or damage to an adjoining landowner or a third person, the latter
can claim indemnification for the injury or damage suffered.

DECISION

FERNAN, J.:

The pivotal issue in this petition for certiorari, prohibition and mandamus is whether a corporation, which has built through its
agents, waterpaths, water conductors and contrivances within its land, thereby causing inundation and damage to an adjacent
land, can be held civilly liable for damages under Articles 2176 and 2177 of the Civil Code on quasi-delicts such that the
resulting civil case can proceed independently of the criminal case.

The antecedent facts are as follows:

Petitioner spouses Emmanuel and Natividad Andamo are the owners of a parcel of land situated in Biga (Biluso) Silang, Cavite
which is adjacent to that of private respondent, Missionaries of Our Lady of La Salette, Inc., a religious corporation.

Within the land of respondent corporation, waterpaths and contrivances, including an artificial lake, were constructed, which
allegedly inundated and eroded petitioners’ land, caused a young man to drown, damaged petitioners’ crops and plants,
washed away costly fences, endangered the lives of petitioners and their laborers during rainy and stormy seasons, and
exposed plants and other improvements to destruction.

In July 1982, petitioners instituted a criminal action, docketed as Criminal Case No. TG 907-82, before the Regional Trial Court
of Cavite, Branch 4 (Tagaytay City), against Efren Musngi, Orlando Sapuay and Rutillo Mallillin, officers and directors of herein
respondent corporation, for destruction by means of injunction under Article 324 of the Revised Penal Code.

Subsequently, on February 22, 1983, petitioners filed another action against respondent corporation, this time a civil case,
docketed as Civil Case No. TG-748, for damages with prayer for the issuance of a writ of preliminary injunction before the
same court. 1

On March 11, 1983, respondent corporation filed its answer to the complaint and opposition to the issuance of a writ of
preliminary injunction. Hearings were conducted including ocular inspections on the land.
However, on April 26, 1984, the trial court, acting on respondent corporation’s motion to dismiss or suspend the civil action,
issued an order suspending further hearings in Civil Case No. TG-748 until after judgment in the related Criminal Case No. TG-
907-82.

Resolving respondent corporation’s motion to dismiss filed on June 22, 1984, the trial court issued on August 27,1984 the
disputed order dismissing Civil Case No. TG-748 for lack of jurisdiction, as the criminal case which was instituted ahead of the
civil case was still unresolved. Said order was anchored on the provision of Section 3 (a), Rule III of the Rules of Court which
provides that "criminal and civil actions arising from the same offense may be instituted separately, but after the criminal action
has been commenced the civil action cannot be instituted until final judgment has been rendered in the criminal action." 2

Petitioners appealed from that order to the Intermediate Appellate Court.3

On February 17, 1986, respondent Appellate Court, First Civil Cases Division, promulgated a decision, 4 affirming the
questioned order of the trial court. 5 A motion for reconsideration filed by petitioners was denied by the Appellate Court in its
resolution dated May 19, 1986. 6
 Directly at issue is the propriety of the dismissal of Civil Case: No. TG-748 in accordance with Section 3 (a) of Rule 111 of the
Pules of Court. Petitioners contend that the trial court and the Appellate Court erred in dismissing Civil Case No. TG-748 since
it is predicated on a quasi-delict. Petitioners have raised a valid point.

It is axiomatic that the nature of an action filed in court is determined by the facts alleged in the complaint as constituting the
cause of action. 7 The purpose of an action or suit and the law to govern it, including the period of prescription, is to be
determined not by the claim of the party filing the action, made in his argument or brief, but rather by the complaint itself, its
allegations and prayer for relief. 8 The nature of an action is not necessarily determined or controlled by its title or heading but
by the body of the pleading or complaint itself. To avoid possible denial of substantial justice due to legal technicalities,
pleadings as well as remedial laws should be liberally construed so that the litigants may have ample opportunity to prove their
respective claims. 9

Quoted hereunder are the pertinent portions of petitioners’ complaint in Civil Case No. TG-748:

4) That within defendant’s land, likewise located at Biga (Biluso), Silang, Cavite, adjacent on the right side of the aforesaid land
of plaintiffs, defendant constructed waterpaths starting from the middle-right portion thereof leading to a big hole or opening,
also constructed by defendant, thru the lower portion of its concrete hollow-blocks fence situated on the right side of its
cemented gate fronting the provincial highway,
and connected by defendant to a man-height inter- connected cement culverts which were also constructed and lain by
defendant cross-wise beneath the tip of the said cemented gate, the left-end of the said inter-connected culverts again
connected by defendant to a big hole or opening thru the lower portion of the same concrete hollow-blocks fence on the left
side of the said cemented gate, which hole or opening is likewise connected by defendant to the cemented mouth of a big
canal, also constructed by defendant, which runs northward towards a big hole or opening which was also built by defendant
thru the lower portion of its concrete hollow-blocks fence which separates the land of plaintiffs from that of defendant (and
which serves as the exit-point of the floodwater coming from the land of defendant, and at the same time, the entrance-point of
the same floodwater to the land of plaintiffs, year after year, during rainy or stormy seasons.

"5) That moreover, on the middle-left portion of its land just beside the land of plaintiffs, defendant also constructed an artificial
lake, the base of which is soil, which utilizes the water being channeled thereto from its water system thru inter-connected
galvanized iron pipes (No. 2) and complimented by rain water during rainy or stormy seasons, so much so that the water below
it seeps into, and the excess water above it inundates, portions of the adjoining land of plaintiffs.

"6) That as a result of the inundation brought about by defendant’s aforementioned water conductors, contrivances and
manipulators, a young man was drowned to death, while herein plaintiffs suffered and will continue to suffer, as follows:

"a) Portions of the land of plaintiffs were eroded and converted to deep, wide and long canals, such that the same can no
longer be planted to any crop or plant.

"b) Costly fences constructed by plaintiffs were, on several occasions, washed away.

"c) during rainy and stormy seasons the lives of plaintiffs and their laborers are always in danger.

"d) Plants and other improvements on other portions of the land of plaintiffs are exposed to destruction. . . ." 10

A careful examination of the aforequoted complaint shows that the civil action is one under Articles 2176 and 2177 of the Civil
Code on quasi-delicts. All the elements of a quasi-delict are present, to wit: (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. 11 Clearly, from petitioners’

complaint, the waterpaths and contrivances built by respondent corporation are alleged to have inundated the land of
petitioners. There is therefore, an assertion of a causal connection
between the act of building these waterpaths and the damage sustained by petitioners. Such action if proven constitutes fault
or negligence which may be the basis for the recovery of damages.
 In the case of Samson v. Dionisio, 12 the Court applied Article 1902, now Article 2176 of the Civil Code and held that "any
person who without due authority constructs a bank or dike, stopping the flow or communication between a creek or a lake and
a river, thereby causing loss and damages to a third party who, like the rest of the residents, is entitled to the use and
enjoyment of the stream or lake, shall be liable to the payment of an indemnity for loss and damages to the injured party."

While the property involved in the cited case belonged to the public domain and the property subject of the instant case is
privately owned, the fact remains that petitioners’ complaint sufficiently alleges that petitioners have sustained and will continue
to sustain damage due to the waterpaths and contrivances built by respondent corporation. Indeed, the recitals of the
complaint, the alleged presence of damage to the petitioners, the act or omission of respondent corporation supposedly
constituting fault or negligence, and the causal connection between the act and the damage, with no pre-existing contractual
obligation between the parties make a clear case of a quasi-delict or culpa aquiliana.

It must be stressed that the use of one’s property is not without limitations. Article 431 of the Civil Code provides that "the
owner of a thing cannot make use thereof in such a manner as to injure the rights of a third person." SIC UTERE TUO UT
ALIENUM NON LAEDAS. Moreover, adjoining landowners have mutual and reciprocal duties which require that each must use
his own land in a reasonable manner so as not to infringe upon the rights and interests of others. Although we recognize the
right of an owner to build structures on his land, such structures must be so constructed and maintained using all reasonable
care so that they cannot be dangerous to adjoining landowners and can withstand the usual and expected forces of nature. If
the structures cause injury or damage to an adjoining landowner or a third person, the latter can claim indemnification for the
injury or damage suffered.

Article 2176 of the Civil Code imposes a civil liability on a person for damage caused by his act or omission constituting fault or
negligence, thus:

"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 is governed by the provisions of this chapter."

Article 2176, whenever it refers to "fault or negligence", covers not only acts "not punishable by law" but also acts criminal in
character, whether intentional and voluntary or negligent. Consequently, a
separate civil action lies against the offender in a criminal act, whether or not he is criminally prosecuted and found guilty or
acquitted, provided that the offended party is not allowed, (if the tortfeasor is actually charged also criminally), to recover
damages on both scores, and would be entitled in such eventuality only to the bigger award of the two, assuming the awards
made in the two cases vary. 13

The distinctness of quasi-delicts is shown in Article 2177 of the Civil Code, which states:

"Article 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the civil
liability arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the same act or
omission of the defendant."

According to the Report of the Code Commission "the foregoing provision though at first sight startling, is not so novel or
extraordinary when we consider the exact nature of criminal and civil negligence. The former is a violation of the criminal law,
while the latter is a distinct and independent negligence, which is a "culpa aquiliana" or quasi-delict, of ancient origin, having
always had its own foundation and individuality, separate from criminal negligence. Such distinction between criminal
negligence and "culpa extra- contractual" or "cuasi-delito" has been sustained by decisions of the Supreme Court of Spain . . ."
14

In the case of Castillo v. Court of Appeals, 15 this Court held that a quasi-delict or culpa aquiliana is a separate legal institution
under the Civil Code with a substantivity all its own, and individuality that is entirely apart and independent from a delict or
crime — a distinction exists between the civil liability arising from a crime and the responsibility for quasi-delicts or culpa extra-
contractual. The same negligence causing damages may produce civil liability arising from a crime under the Penal Code, or
create an action for quasi-delicts or culpa extra-contractual under the Civil Code. Therefore, the acquittal or conviction in the
criminal case is entirely irrelevant in the civil case, unless, of course, in the event of an acquittal where the court has declared
that the fact from which the civil action arose did not exist, in which case the extinction of the criminal liability would carry with it
the extinction of the civil liability.chanrobles.com.ph : virtual law

In Azucena v. Potenciano, 16 the Court declared that in quasi-delicts," (t)he civil action is entirely independent of the criminal
case according to Articles 33 and 2177 of the Civil Code. There can be no logical conclusion than this, for to subordinate the
civil action contemplated in the said articles to the result of the criminal prosecution — whether it be conviction or acquittal —
would render meaningless the independent character of the civil action and the clear injunction in Article 31, that his action may
proceed independently of the criminal proceedings and regardless of the result of the latter."
WHEREFORE, the assailed decision dated February 17, 1986 of the then Intermediate Appellate Court affirming the order of
dismissal of the Regional Trial Court of Cavite, Branch 18 (Tagaytay City) dated August 17, 1984 is hereby REVERSED and
SET ASIDE. The trial court is ordered to reinstate Civil Case No. TG-748 entitled "Natividad V. Andamo and Emmanuel R.
Andamo v. Missionaries of Our Lady of La Salette, Inc." and to proceed with the hearing of the case with dispatch. This
decision is immediately executory. Costs against respondent corporation.

SO ORDERED.
G.R. No. 108017 April 3, 1995

MARIA BENITA A. DULAY, in her own behalf and in behalf of the minor children KRIZTEEN ELIZABETH, BEVERLY
MARIE and NAPOLEON II, all surnamed DULAY, petitioners, vs. THE COURT OF APPEALS, Former Eighth Division,
HON. TEODORO P. REGINO, in his capacity as Presiding Judge of the Regional Trial Court National Capital Region,
Quezon City, Br. 84, SAFEGUARD INVESTIGATION AND SECURITY CO., INC., and SUPERGUARD SECURITY
CORPORATION, respondents.

BIDIN, J.:

This petition for certiorari prays for the reversal of the decision of the Court of Appeals dated October 29, 1991 in CA-G.R. CV
No. 24646 which affirmed the order of the Regional Trial Court dismissing Civil Case No. Q-89-1751, and its resolution dated
November 17, 1991 denying herein, petitioner's motion for reconsideration.

The antecedent facts of the case are as follows:

On December 7, 1988, an altercation between Benigno Torzuela and Atty. Napoleon Dulay occurred at the "Big Bang Sa
Alabang," Alabang Village, Muntinlupa as a result of which Benigno Torzuela, the security guard on duty at the said carnival,
shot and killed Atty. Napoleon Dulay.

Herein petitioner Maria Benita A. Dulay, widow of the deceased Napoleon Dulay, in her own behalf and in behalf of her minor
children, filed on February 8, 1989 an action for damages against Benigno Torzuela and herein private respondents Safeguard
Investigation and Security Co., Inc., ("SAFEGUARD") and/or Superguard Security Corp. ("SUPERGUARD"), alleged employers
of defendant Torzuela. The complaint, docketed as Civil Case No. Q-89-1751 among others alleges the following:

1. . . .

Defendants SAFEGUARD INVESTIGATION AND SECURITY CO., INC., (Defendant Safeguard) and SUPERGUARD
SECURITY CORPORATION (Defendant Superguard) are corporations duly organized and existing in accordance with
Philippine laws, with offices at 10th Floor, Manufacturers Building, Inc., Plaza Santa Cruz, Manila. They are impleaded as
alternative defendants for, while the former appears to be the employer of defendant BENIGNO TORZUELA (defendant
TORZUELA), the latter impliedly acknowledged responsibility for the acts of defendant TORZUELA by extending its
sympathies to plaintiffs.
Defendant BENIGNO TORZUELA is of legal age, an employee of defendant SAFEGUARD and/or defendant

SUPERGUARD and, at the time of the incident complained of, was under their control and supervision. . . . 3. On

December 7, 1988 at around 8:00 a.m., defendant TORZUELA, while he was on duty as security guard at the
"Big Bang sa Alabang," Alabang Village, Muntinlupa, Metro Manila shot and killed NAPOLEON V. DULAY with a .38
caliber revolver belonging to defendant SAFEGUARD, and/or SUPERGUARD (per Police Report dated January 7, 1989,
copy attached as Annex A);

4. The incident resulting in the death of NAPOLEON V. DULAY was due to the concurring negligence of the defendants.
Defendant TORZUELA'S wanton and reckless discharge of the firearm issued to him by defendant SAFEGUARD and/or
SUPERGUARD was the immediate and proximate cause of the injury, while the negligence of defendant SAFEGUARD
and/or SUPERGUARD consists in its having failed to exercise the diligence of a good father of a family in the supervision
and control of its employee to avoid the injury.

xxx xxx xxx

(Rollo, pp. 117-118)

Petitioners prayed for actual, compensatory, moral and exemplary damages, and attorney's fees. The said Civil Case No. Q-
89-1751 was raffled to Branch 84 of the Regional Trial Court of Quezon City, presided by respondent Judge Teodoro Regino.

On March 2, 1989, private respondent SUPERGUARD filed a Motion to Dismiss on the ground that the complaint does not
state a valid cause of action. SUPERGUARD claimed that Torzuela's act of shooting Dulay was beyond the scope of his duties,
and that since the alleged act of shooting was committed with deliberate intent (dolo), the civil liability therefor is governed by

Article 100 of the Revised Penal Code, which states: Art. 100. Civil liability of a person guilty of a felony. — Every person
criminally liable for a felony is also civilly liable.

Respondent SUPERGUARD further alleged that a complaint for damages based on negligence under Article 2176 of the New
Civil Code, such as the one filed by petitioners, cannot lie, since the civil liability under Article 2176 applies only to quasi-
offenses under Article 365 of the Revised Penal Code. In addition, the private respondent argued that petitioners' filing of the
complaint is premature considering that the conviction of Torzuela in a criminal case is a condition sine qua non for the
employer's subsidiary liability (Rollo, p. 55-59).

Respondent SAFEGUARD also filed a motion praying that it be excluded as defendant on the ground that defendant Torzuela
is not one of its employees (Rollo, p. 96).

Petitioners opposed both motions, stating that their cause of action against the private respondents is based on their liability
under Article 2180 of the New Civil Code, which provides:

Art. 2180. The obligation imposed by Article 2176 is demandable not only for one's own acts or omissions, but also for
those of persons for whom one is responsible.

xxx xxx xxx

Employers shall be liable for the damages 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 an industry.

xxx xxx xxx

(Emphasis supplied)
Petitioners contended that a suit against alternative defendants is allowed under Rule 3, Section 13 of the Rules of Court.
Therefore, the inclusion of private respondents as alternative defendants in the complaint is justified by the following: the Initial
Investigation Report prepared by Pat. Mario Tubon showing that Torzuela is an employee of SAFEGUARD; and through overt
acts, SUPERGUARD extended its sympathies to petitioners (Rollo, pp. 64 and 98).

Meanwhile, an Information dated March 21, 1989 charging Benigno Torzuela with homicide was filed before the Regional Trial
Court of Makati and was docketed as Criminal Case No. 89-1896.

On April 13, 1989, respondent Judge Regino issued an order granting SUPERGUARD'S motion to dismiss and
SAFEGUARD'S motion for exclusion as defendant. The respondent judge held that the complaint did not state facts necessary
or sufficient to constitute a quasi-delict since it does not mention any negligence on the part of Torzuela in shooting Napoleon
Dulay or that the same was done in the performance of his duties. Respondent judge ruled that mere allegations of the
concurring negligence of the defendants (private respondents herein) without stating the facts showing such negligence are
mere conclusions of law (Rollo, p. 106). Respondent judge also declared that the complaint was one for damages founded on
crimes punishable under Articles 100 and 103 of the Revised Penal Code as distinguished from those arising from, quasi-
delict. The dispositive portion of the order dated April 13, 1989 states:

WHEREFORE, this Court holds that in view of the material and ultimate facts alleged in the verified complaint and in
accordance with the applicable law on the matter as well as precedents laid down by the Supreme Court, the complaint
against the alternative defendants Superguard Security Corporation and Safeguard Investigation and Security Co., Inc.,
must be and (sic) it is hereby dismissed. (Rollo, p. 110)

The above order was affirmed by the respondent court and petitioners' motion for reconsideration thereof was denied.

Petitioners take exception to the assailed decision and insist that quasi-delicts are not limited to acts of negligence but also
cover acts that are intentional and voluntary, citing Andamo v. IAC (191 SCRA 195 [1990]). Thus, petitioners insist that
Torzuela' s act of shooting Napoleon Dulay constitutes a quasi- delict actionable under Article 2176 of the New Civil Code.

Petitioners further contend that under Article 2180 of the New Civil Code, private respondents are primarily liable for their
negligence either in the selection or supervision of their employees. This liability is independent of the employee's own liability
for fault or negligence and is distinct from the subsidiary civil liability under Article 103 of the Revised Penal Code. The civil
action against the employer may therefore proceed
independently of the criminal action pursuant to Rule 111 Section 3 of the Rules of Court. Petitioners submit that the question
of whether Torzuela is an employee of respondent SUPERGUARD or SAFEGUARD would be better resolved after trial.

Moreover, petitioners argue that Torzuela's act of shooting Dulay is also actionable under Article 33 of the New Civil Code, to
wit:

Art. 33. In cases of defamation, fraud, and physical injuries, a civil action for damages, entirely separate and
distinct from the criminal action, may be brought by the injured party. Such civil action shall proceed
independently of the criminal prosecution, and shall require only a preponderance of evidence. (Emphasis
supplied)

In the same vein, petitioners cite Section 3, Rule 111 of the Rules of Court which provides:

Rule 111. . . . .

Sec. 3. When civil action may proceed independently — In the cases provided for in Articles 32, 33, 34 and 2176 of the
Civil Code of the Philippines, the independent civil action which has been reserved may be brought by the offended party,
shall proceed independently of the criminal action, and shall require only a preponderance of evidence. (Emphasis
supplied)
 The term "physical injuries" under Article 33 has been held to include consummated, frustrated and attempted homicide. Thus,
petitioners maintain that Torzuela's prior conviction is unnecessary since the civil action can proceed independently of the
criminal action. On the other hand, it is the private respondents' argument that since the act was not committed with
negligence, the petitioners have no cause of action under Articles 2116 and 2177 of the New Civil Code. The civil action
contemplated in Article 2177 is not applicable to acts committed with deliberate intent, but only applies to quasi- offenses under
Article 365 of the Revised Penal Code. Torzuela's act of shooting Atty. Dulay to death, aside from being purely personal, was
done with deliberate intent and could not have been part of his duties as security guard. And since Article 2180 of the New Civil
Code covers only: acts done within the scope of the employee's assigned tasks, the private respondents cannot be held liable
for damages.

We find for petitioners.

It is undisputed that Benigno Torzuela is being prosecuted for homicide for the fatal shooting of Napoleon Dulay. Rule 111 of
the Rules on Criminal Procedure provides:

Sec. 1. Institution of criminal and civil actions. When a criminal action is instituted, the civil action for the recovery of civil
liability is impliedly instituted with the criminal action, unless the offended party waives the civil action , reserves his right to
institute it separately or institutes the civil action prior to the criminal action.

Such civil action includes recovery of indemnity under the Revised Penal Code, and damages under Articles 32, 33, 34,
and 2176 of the Civil Code of the Philippines arising
from the same act or omission of the accused. (Emphasis supplied)

It is well-settled that the filing of an independent civil action before the prosecution in the criminal action presents evidence is
even far better than a compliance with the requirement of express reservation (Yakult Philippines v. Court of Appeals, 190
SCRA 357 [1990]). This is precisely what the petitioners opted to do in this case. However, the private respondents opposed
the civil action on the ground that the same is founded on a delict and not on a quasi-delict as the shooting was not attended
by negligence. What is in dispute therefore is the nature of the petitioner's cause of action.

The nature of a cause of action is determined by the facts alleged in the complaint as constituting the cause of action (Republic
v. Estenzo, 158 SCRA 282 [1988]). The purpose of an action or suit and the law to govern it is to be determined not by the
claim of the party filing the action, made in his argument or brief, but rather by the complaint itself, its allegations and prayer for
relief. (De Tavera v. Philippine Tuberculosis Society, 112 SCRA 243 [1982]). An examination of the complaint in the present
case would show that the plaintiffs, petitioners herein, are invoking their right to recover damages against the private
respondents for their vicarious responsibility for the injury caused by Benigno Torzuela's act of shooting and killing Napoleon
Dulay, as stated in paragraphs 1 and 2 of the complaint.

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.

Contrary to the theory of private respondents, there is no justification for limiting the scope of Article 2176 of the Civil Code to
acts or omissions resulting from negligence. Well- entrenched is the doctrine that article 2176 covers not only acts committed
with negligence, but also acts which are voluntary and intentional. As far back as the definitive case of Elcano v. Hill (77 SCRA

98 [1977]), this Court already held that: . . . Article 2176, where it refers to "fault or negligence," covers not only acts "not
punishable by law" but also acts criminal in character; whether intentional and voluntary or negligent. Consequently, a separate
civil action against the offender in a criminal act, whether or not he is criminally prosecuted and found guilty or acquitted,
provided that the offended party is not allowed, if he is actually charged also criminally, to recover damages on both scores,
and would be entitled in such eventuality only to the bigger award of the two, assuming the awards made in the two cases vary.
 In other words, the extinction of civil liability referred to in Par. (e) of Section 3, Rule 111, refers exclusively to civil liability
founded on Article 100 of the Revised Penal Code, whereas the civil liability for the same act considered as quasi-delict only
and not as a crime is not extinguished even by a declaration in the criminal case that the criminal act charged has not
happened or has not been committed by the accused. Briefly stated, We here hold, in reiteration of Garcia,
that culpa aquiliana includes voluntary and negligent acts which may be punishable by law. (Emphasis supplied)

The same doctrine was echoed in the case of Andamo v. Intermediate Appellate Court (191 SCRA 195 [1990]), wherein the
Court held:

Article 2176, whenever it refers to "fault or negligence," covers not only acts criminal in character, whether intentional and
voluntary or negligent. Consequently, a civil action lies against the offender in a criminal act, whether or not he is
prosecuted or found guilty or acquitted, provided that the offended party is not allowed, (if the tortfeasor is actually also
charged criminally), to recover damages on both scores, and would be entitled in such eventuality only to the bigger award
of the two, assuming the awards made in the two cases vary. [citing Virata v. Ochoa, 81 SCRA 472] (Emphasis supplied)

Private respondents submit that the word "intentional" in the Andamo case is inaccurate obiter, and should be read as
"voluntary" since intent cannot be coupled with negligence as defined by Article 365 of the Revised Penal Code. In the
absence of more substantial reasons, this Court will not disturb the above doctrine on the coverage of Article 2176.

Private respondents further aver that Article 33 of the New Civil Code applies only to injuries intentionally committed pursuant
to the ruling in Marcia v. CA (120 SCRA 193 [1983]), and that the actions for damages allowed thereunder are ex-delicto.
However, the term "physical injuries" in Article 33 has already been construed to include bodily injuries causing death (Capuno
v. Pepsi-Cola Bottling Co. of the Philippines, 121 Phil. 638 [1965); Carandang v. Santiago, 97 Phil. 94 [1955]). It is not the
crime of physical injuries defined in the Revised Penal Code. It includes not only physical injuries but also consummated,
frustrated, and attempted homicide (Madeja v. Caro, 126 SCRA 293 [1983]). Although in the Marcia case (supra), it was held
that no independent civil action may be filed under Article 33 where the crime is the result of criminal negligence, it must be
noted however, that Torzuela, the accused in the case at bar, is charged with homicide, not with reckless imprudence, whereas
the defendant in Marcia was charged with reckless imprudence. Therefore, in this case, a civil action based on Article 33 lies.

Private respondents also contend that their liability is subsidiary under the Revised Penal Code; and that they are not liable for
Torzuela's act which is beyond the scope of his duties as a security guard. It having been established that the instant action is
not ex-delicto, petitioners may proceed directly against Torzuela and the private respondents. Under Article 2180 of the New
Civil Code as aforequoted, when an injury is caused by the negligence of the employee, there instantly arises a presumption of
law that there was negligence on the part of the master or employer either in the selection of the servant or employee, or in
supervision over him after selection or both (Layugan v. Intermediate Appellate Court, 167 SCRA 363 [1988]). The liability of
the employer under Article 2180 is direct and immediate; it is not conditioned upon prior recourse against the negligent
employee and a prior showing of the insolvency of such employee (Kapalaran Bus Lines v. Coronado, 176 SCRA 792 [1989]).
Therefore, it is incumbent upon the private respondents to prove that they exercised the diligence of a good father of a family in
the selection and supervision of their employee.
Since Article 2176 covers not only acts of negligence but also
acts which are intentional and voluntary, it was therefore
erroneous on the part of the trial court to dismiss petitioner's
complaint simply because it failed to make allegations of
attendant negligence attributable to private respondents.

With respect to the issue of whether the complaint at hand

states a sufficient cause of action, the general rule is that the
allegations in a complaint are sufficient to constitute a cause of
action against the defendants if, admitting the facts alleged, the
court can render a valid judgment upon the same in
accordance with the prayer therein. A cause of action exist if
the following elements are present, namely: (1) a right in favor
of the plaintiff by whatever means and under whatever law it
arises or is created; (2) an obligation on the part of the named
defendant to respect or not to violate such right; and (3) an act
or omission on the part of such defendant violative of the right
of the plaintiff or constituting a breach of the obligation of the
defendant to the plaintiff for which the latter may maintain an
action for recovery of damages (Del Bros Hotel Corporation v.
CA, 210 SCRA 33 [1992]); Development Bank of the
Philippines v. Pundogar, 218 SCRA 118 [1993])

This Court finds, under the foregoing premises, that the

complaint sufficiently alleged an actionable breach on the part
of the defendant Torzuela and respondents SUPERGUARD
and/or SAFEGUARD. It is enough that the complaint alleged
that Benigno Torzuela shot Napoleon Dulay resulting in the
latter's death; that the shooting occurred while Torzuela was on
duty; and that either SUPERGUARD and/or SAFEGUARD was
Torzuela's employer and responsible for his acts. This does not
operate however, to establish that the defendants below are
liable. Whether or not the shooting was actually reckless and
wanton or attended by negligence and whether it was actually
done within the scope of Torzuela's duties; whether the private
respondents SUPERGUARD and/or SAFEGUARD failed to
exercise the diligence of a good father of a family; and whether
the defendants are actually liable, are questions which can be
better resolved after trial on the merits where each party can
present evidence to prove their respective allegations and
defenses. In determining whether the allegations of a complaint
are sufficient to support a cause of action, it must be borne in
mind that the complaint does not have to establish or allege the
facts proving the existence of a cause of action at the outset;
this will have to be done at the trial on the merits of the case
(Del Bros Hotel Corporation v. CA, supra). If the allegations in
a complaint can furnish a sufficient basis by which the
complaint can be maintained, the same should not be
dismissed regardless of the defenses that may be assessed by
the defendants (Rava Dev't. Corp. v. CA, 211 SCRA 152
[1992] citing Consolidated Bank & Trust Corporation v. Court of
Appeals, 197 SCRA 663 [1991]). To sustain a motion to
dismiss for lack of cause of action, the complaint must show
that the claim for relief does not exist rather than that a claim
has been defectively stated, is ambiguous, indefinite or
uncertain (Azur v. Provincial Board, 27 SCRA 50 [1969]). Since
the petitioners clearly sustained an injury to their rights under
the law, it would be more just to allow them to present
evidence of such injury.

WHEREFORE, premises considered, the petition for review is

hereby GRANTED. The decision of the Court of Appeals as
well as the Order of the Regional Trial Court dated April 13,
1989 are hereby REVERSED and SET ASIDE. Civil Case No.
Q-89-1751 is remanded to the Regional Trial Court for trial on
the merits. This decision is immediately executory.
SO
ORDERED.
III. NEGLIGENCE
A. STATUTORY BASIS AND REQUISITES

[G.R. NO. 150920 November 25, 2005]

CHILD LEARNING CENTER, INC. and SPOUSES EDGARDO L. LIMON and SYLVIA S. LIMON, Petitioners, v. TIMOTHY
TAGARIO, assisted by his parents BASILIO TAGORIO and HERMINIA TAGORIO, Respondents.

DECISION

AZCUNA, J.:

This petition started with a tort case filed with the Regional Trial Court of Makati by Timothy Tagorio and his parents, Basilio R.
Tagorio and Herminia Tagorio, docketed as Civil Case No. 91-1389. The complaint 1 alleged that during the school year 1990-
1991, Timothy was a Grade IV student at Marymount School, an academic institution operated and maintained by Child

Learning Center, Inc. (CLC). In the afternoon of March 5, 1991, between 1 and 2 p.m., Timothy entered the boy's comfort room
at the third floor of the Marymount building to answer the call of nature. He, however, found himself locked inside and unable to
get out. Timothy started to panic and so he banged and kicked the door and yelled several times for help. When no help
arrived he decided to open the window to call for help. In the process of opening the window, Timothy went right through and
fell down three stories. Timothy was hospitalized and given medical treatment for serious multiple physical injuries.

An action under Article 2176 of the Civil Code was filed by respondents against the CLC, the members of its Board of
Directors, namely Spouses Edgardo and Sylvia Limon, Alfonso Cruz, Carmelo Narciso and Luningning Salvador, and the
Administrative Officer of Marymount School, Ricardo Pilao. In its defense, 2 CLC maintained that there was nothing defective
about the locking mechanism of the door and that the fall of Timothy was not due to its fault or negligence. CLC further
maintained that it had exercised the due care and diligence of a good father of a family to ensure the safety, well-being and
convenience of its students.

After trial, the court a quo found in favor of respondents and ordered petitioners CLC and Spouses Limon to pay respondents,
jointly and severally, P200,253.12 as actual and compensatory damages, P200,000 as moral damages, P50,000 as exemplary
damages, P100,000 as attorney's fees and the costs of the suit. The trial court disregarded the corporate fiction of CLC and
held the Spouses Limon personally liable because they were the ones who actually managed the affairs of the CLC.

Petitioners CLC and the Spouses Limon appealed the decision to the Court of Appeals.
On September 28, 2001, the Court of Appeals 3 affirmed the decision in toto. Petitioners elevated the case to this Court under
Rule 45 of the Rules of Court, after their motion for reconsideration was denied by Resolution of November 23, 2001.4

Petitioners question several factual findings of the trial court, which were affirmed by the Court of Appeals, namely:5

1. That respondent was allegedly trapped inside the boy's comfort room located at the third floor of the school building on
March 5, 1991;

2. That respondent allegedly banged and kicked the door of said comfort room several times to attract attention and that he
allegedly yelled thereat for help which never came;
 3. That respondent was allegedly forced to open the window of said comfort room to seek help;

4. That the lock set installed at the boy's comfort room located in the third floor of the school building on March 5, 1991 was
allegedly defective and that the same lock set was involved in previous incidents of alleged malfunctioning;

5. That petitioner Child Learning Center, Inc. allegedly failed to install iron grills in the window of the boy's comfort room at the
third floor of the school building;

6. That petitioner Child Learning Center, Inc. allegedly failed to exercise the due care of a good father of a family in the
selection and supervision of its employees;

7. That the proximate cause of respondent's accident was allegedly not due to his own contributory negligence;

8. That there was an alleged basis to apply the legal principle of "piercing the veil of corporate entity" in resolving the issue of
alleged liability of petitioners Edgardo L. Limon and Sylvia S. Limon;

9. That there was alleged basis for petitioners to pay respondent actual, moral and exemplary damages, plus attorney's fees;

10. That there was an alleged basis in not awarding petitioners' prayer for moral and exemplary damages, including attorney's
fees.

Generally, factual findings of the trial court, affirmed by the Court of Appeals, are final and conclusive and may not be reviewed
on appeal. The established exceptions are: (1) when the inference made is manifestly mistaken, absurd or impossible; (2)
when there is grave abuse of discretion; (3) when the findings are grounded entirely on speculations,
surmises or conjectures; (4) when the judgment of the Court of Appeals is based on misapprehension of facts; (5) when the
findings of fact are conflicting; (6) when the Court of Appeals, in making its findings, went beyond the issues of the case and
the same is contrary to the admissions of both appellant and appellee; (7) when the findings of fact are conclusions without
citation of specific evidence on which they are based; (8) when the Court of Appeals manifestly overlooked certain relevant
facts not disputed by the parties and which, if properly considered, would justify a different conclusion; and (9) when the
findings of fact of the Court of Appeals are premised on the absence of evidence and are contradicted by the evidence on
record.6

On the basis of the records of this case, this Court finds no justification to reverse the factual findings and consider this case as
an exception to the general rule.

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.7

Fault, in general, signifies a voluntary act or omission which causes damage to the right of another giving rise to an obligation
on the part of the actor to repair such damage. 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. Fault requires the execution of a
positive act which causes damage to another while negligence consists of the omission to do acts which result in damage to
another.8

In this tort case, respondents contend that CLC failed to provide precautionary measures to avoid harm and injury to its
students in two instances: (1) failure to fix a defective door knob despite having been notified of the problem; and (2) failure to
install safety grills on the window where Timothy fell from.
The trial court found that the lock was defective on March 5, 1991:9

The door knob was defective. After the incident of March 5, 1991, said door knob was taken off the door of the toilet where
Timothy was in. The architect who testified during the trial declared that although there were standard specifications for door
knobs for comfort room[s], and he designed them according to that requirement, he did not investigate whether the door knob
specified in his plans during the construction [was] actually put in place. This is so because he did not verify whether the door
knob he specified w[as] actually put in place at the particular comfort room where Timothy was barred from getting outside.
(TSN, pp. 19-20, December 8, 1994).
The Court of Appeals held that there was no reason to disturb the factual assessment:10

After having perused the records, We fail to see any indication of whim or arbitrariness on the part of the trial magistrate in his
assessment of the facts of the case. That said, We deem it not to be within Our business to recast the factual conclusions
reached by the court below.

Petitioners would make much of the point that no direct evidence was presented to prove that the door knob was indeed
defective on the date in question.

The fact, however, that Timothy fell out through the window shows that the door could not be opened from the inside. That
sufficiently points to the fact that something was wrong with the door, if not the door knob, under the principle of res ipsa
loquitor. The doctrine of res ipsa loquitor applies where (1) the accident was of such character as to warrant an inference that it
would not have happened except for the defendant's 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. 11 Petitioners are
clearly answerable for failure to see to it that the doors of their school toilets are at all times in working condition. The fact that a
student had to go through the window, instead of the door, shows that something was wrong with the door.

As to the absence of grills on the window, petitioners contend that there was no such requirement under the Building Code.
Nevertheless, the fact is that such window, as petitioners themselves point out, was approximately 1.5 meters from the floor, so
that it was within reach of a student who finds the regular exit, the door, not functioning. Petitioners, with the due diligence of a
good father of the family, should have anticipated that a student, locked in the toilet by a non-working door, would attempt to
use the window to call for help or even to get out. Considering all the circumstances, therefore, there is sufficient basis to
sustain a finding of liability on petitioners' part.

Petitioners' argument that CLC exercised the due diligence of a good father of a family in the selection and supervision of its
employees is not decisive. Due diligence in the selection and supervision of employees is applicable where the employer is
being held responsible for the acts or omissions of others under Article 2180 of the Civil Code. 12 In this case, CLC's liability is
under Article 2176 of the Civil Code, premised on the fact of its own negligence in not ensuring that all its doors are properly
maintained.

Our pronouncement that Timothy climbed out of the window because he could not get out using the door, negates petitioners'
other contention that the proximate cause of the accident was Timothy's own negligence. The injuries he sustained from the fall
were the product of a natural and continuous sequence,
unbroken by any intervening cause, that originated from CLC's
own negligence.

We, however, agree with petitioners that there was no basis to

pierce CLC's separate corporate personality. To disregard the
corporate existence, the plaintiff must prove: (1) Control by the
individual owners, not mere majority or complete stock
ownership, resulting in complete domination not only of
finances but of policy and business practice in respect to a
transaction so that the corporate entity as to this transaction
had at the time no separate mind, will or existence of its own;
(2) such control must have been used by the defendant to
commit fraud or wrong, to perpetuate the violation of a
statutory or other positive legal duty, or a dishonest and unjust
act in contravention of the plaintiff's legal right; and (3) the
control and breach of duty must proximately cause the injury or
unjust loss complained of. The absence of these elements
prevents piercing the corporate veil.13 The evidence on record
fails to show that these elements are present, especially given
the fact that plaintiffs' complaint had pleaded that CLC is a
corporation duly organized and existing under the laws of the
Philippines.

On 9th and 10th points raised concerning the award of

damages, the resolution would rest on factual determinations
by the trial court, affirmed by the Court of Appeals, and no
legal issue warrants our intervention.

WHEREFORE, the petition is partly granted and the Decision

and Resolution of the Court of Appeals in CA- G.R. CV No.
50961 dated September 28, 2001 and November 23, 2001,
respectively, are MODIFIED in that petitioners Spouses
Edgardo and Sylvia Limon are absolved from personal liability.
The Decision and Resolution are AFFIRMED in all other
respects. No pronouncement as to costs.

SO ORDERED.
[G.R. No. 411. April 23, 1902. ]

DONALDSON, SIM & Co., Plaintiffs-Appellants, v. SMITH, BELL, & Co., Defendants-Appellees.

F . de la Cantera for Appellants.

Alfredo Chicote for Appellees.

SYLLABUS

1. REAL PROPERTY; ILLEGAL DETENTION; ACTION BY LESSEE. — An action for damages against an occupant of
buildings who unlawfully detains the same will not lie in favor of a lessee of said buildings who has never entered into
possession under his lease, because there is no privity between the parties.

DECISION

LADD, J.:

This is an action to recover damages alleged to have been sustained by the plaintiff’s by reason of the defendants’ wrongful
occupancy of certain warehouses in Manila from the 2d to the 14th of May, 1900, inclusive. The buildings in question were the
property of Luis R. Yangco, and had been leased by him in July, 1899, to the military government of the United States, by
which they had been subject to the defendants under an arrangement the details ’of which it is not necessary to state. Yangco
objected to the occupancy of the buildings by the defendants, and on the 11th of April, 1900, the Chief Quartermaster of the
Army, acting apparently under a misapprehension as to the facts respecting the defendants’ arrangement with the
Government, addressed a letter to them, stating that the records of the office failed to show that they had any right to the
occupancy of the buildings, and requesting that they be vacated at once. On the 30th of April the lease from Yangco to the
Government was terminated by mutual consent. On the 1st of May, Yangco leased the buildings to the plaintiffs for one year.
On the same day the plaintiffs notified the defendants of the lease, and requested them to vacate the buildings within twenty-
four hours. This the defendants declined to do, and continued’ in the occupancy of the warehouses, or some of them, to the
exclusion of the plaintiffs, till subsequently to the 14th of May. The judgment in the court below was in favor of the defendants,
and the plaintiffs appealed.

The decision of this case does not involve the determination of the character of the defendants’ occupancy of the warehouses,
whether wrongful or otherwise, as between them and the Government, or as between them and Yangco. The only question is
whether the defendants have failed to perform any duty which they owed to the plaintiffs. Whatever rights the plaintiffs had in
the premises during the period in question, viz, from the 2d to the 14th of May, originated in and depended upon their contract
with Yangco for the lease of the buildings. Not having
entered into possession under their lease, they had acquired no rights in the leased property in the nature of rights in rem, and
which third persons were therefore bound not to infringe. Article 1560 of the Civil Code, which gives the lessee a direct action
against a trespasser, is confined to the case of an actual interference with the lessee’s use of the property. Here such use by
the plaintiffs had not begun when the alleged wrongs were committed.

Article 1902 of the Civil Code, relied upon by the plaintiffs, established the general principle of liability for damage caused by
fault or negligence, but there can be no fault or negligence where, as in the present case, there was no obligation resting upon
the person causing the damage to exercise diligence as respects the injured person.

The failure to establish any legal relation between the parties, giving rise to rights in the plaintiffs and corresponding duties on
the part of the defendants, as respects the occupancy of the buildings in question, is fatal to the plaintiffs’ recovery in this
action. Their remedy, if they have any, is against the lessor, under articles 1554 and 1556 of the Civil Code.

The judgment must be affirmed, with costs. So ordered.

G.R. No. L-22183 August 30, 1968

THE RECEIVER FOR NORTH NEGROS SUGAR COMPANY, INC., petitioner, vs. PEDRO V. YBAÑEZ ET AL., respondents.

Ross, Selph and Carrascoso for petitioner. Pedro V. Ibañez in his own behalf as respondent. Jose Ma. Lopez Vito for other
respondents.

ZALDIVAR, J.:

A petition for review of the decision of the Court of Appeal, rendered on October 14, 1963, in CA-G.R. No. 28608-R, entitled
"Pedro V. Ybañez, and Rosario V. Ybañez, represented by her legal guardian, Pedro V. Ybañez, plaintiffs- appellants, versus
North Negros Sugar Company, Inc., Primitivo Gustilo, and Loreto Perez, defendants-appellees."

Plaintiffs-appellants Pedro V. Ybañez and Rosario V. Ybañez, named respondents in the instant petition, 1 are the brother and
sister, respectively, and immediate heirs of Cesar V. Ybañez who was one of two persons who died as a result of the collision
between the car, where said Cesar V. Ybañez was riding and being driven by Gil Dominguez, and train No. 5, owned by the
North Negros Sugar Company, Inc., in the evening of August 31, 1937 in the railroad intersection at Hacienda Santa Teresa,
Manapla, Occidental Negros, while the car was on its way from Bacolod City to Cadiz. Criminal prosecution for double
homicide and serious physical injuries through reckless imprudence was instituted against Gil Dominguez, driver of the car,
and Primitivo Gustilo and Loreto Perez, operator and brakeman, respectively, of the locomotive. The offended parties reserved
their right to institute separate civil actions for damages. Primitivo Gustilo and Loreto Perez were tried together and acquitted of
the crime charged. Gil Dominguez was also acquitted in a separate trial.
Thereafter, a civil action based on culpa aquiliana was instituted, on May 15, 1940, in the Court of First Instance of Negros
Occidental by Pedro V. Ybañez and Rosario V. Ybañez against Primitivo Gustilo, Loreto Perez, and their employer, North
Negros Sugar Company, Inc., docketed as Civil Case No. 8367, seeking to recover damages for the death of the deceased. In
their answer, defendants interposed as special defense the previous acquittal of defendants Primitivo Gustilo and Loreto Perez
in the criminal case, and prayed for the dismissal of the complaint.

At the pre-trial, on August 5, 1940, the parties agreed to reproduce in the civil case all the evidence submitted in the criminal
case, as well as the decision in and the transcript of the stenographic notes taken during the trial of, the criminal case.
Defendants filed a motion for summary judgment, praying for the dismissal of the civil case. The trial court, without any further
hearing, considered the case submitted, and rendered a decision dismissing the case. Appeal was taken by the plaintiffs to the
Court of Appeals, but the appeal was certified to this Court on the ground that the appeal merely involved questions of law.
This Court, in G.R. No. L-6790, on March 28, 1955, reversed the decision of the lower court and remanded the case for further
proceedings.

During the pendency of the case in the lower court, plaintiff Rosario V. Ybañez died, leaving as her only heir, co-plaintiff
Pedro V. Ybañez, to continue the case. On the other hand, the North Negros Sugar Company, Inc. was dissolved and was
accordingly substituted by its receiver Dr. Claudio R. Luzurriaga. One of the defendants, Loreto Perez, also died in the interim
and the case against him was dismissed.

After having received additional evidence, the Court of First Instance of Negros Occidental rendered judgment, on July 23,
1958, dismissing the case anew. Appeal was taken by plaintiff Pedro V. Ybañez to this Court, docketed as G.R. No. L-14849,
but because questions of fact were involved, and the amount involved was less than P200,000, the case was certified, on
August 25, 1960, to the Court of Appeals and docketed in the latter court as Case No. 28608-R.

The Court of Appeals, on October 14, 1963, reversed the judgment of the lower court and held the North Negros Sugar
Company, Inc. liable for the death of Cesar V. Ybañez, ordering it to pay plaintiff-appellant Pedro V. Ybañez damages
consisting of P9,600.00 as compensatory damages for lost earnings of the deceased; P6,000.00 for death indemnity;
P1,000.00 for funeral expenses; P5,000.00 "as moral damages for the mental anguish suffered by the heir"; P5,000.00 "for
attorney's fees, considering the years and extensive work — the protracted litigation had taken;" 2 and costs. A motion for
reconsideration filed by defendant North Negros Sugar Company, Inc., upon the grounds, among others, that the awards of
moral damages and attorney's fees were not warranted under the law and the circumstances attending the litigation, was
denied. Hence this petition for review.

In this appeal, or petition for review petitioner limits itself to questioning the correctness of the decision of the Court of Appeals
in so far as it awards moral damages and attorney's fees. In its brief, petitioner contents that the Court of Appeals erred:

1. "in ordering petitioner to pay P5,000 "as moral damages for mental anguish suffered" by plaintiffs who were brother and
sister of the deceased"; and

2. "in awarding attorney's fees in the sum of P5,000 to the heirs of the deceased."3

1. In support of the first assignment of error, petitioner cites paragraph 3 of Article 2206 of the new Civil Code, which provides
that in case of death caused by a crime or quasi- delict, only 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.
Petitioner urges that in the instant case the heirs of the deceased Cesar V. Ybañez, being his brother, Pedro V. Ybañez, and
his sister, Rosario V. Ybañez (now deceased), are not among those entitled to moral damages; consequently, the award to
them of moral damages was not authorized by law.

Respondent Pedro V. Ybañez, on the contrary, contends that the law applicable is in the old Civil Code, and not Article 2206 of
the new Civil Code, because the accident that caused the death happened in 1937, and the case was filed in 1940. Said
respondent maintains that the award of moral damages is authorized particularly under Articles 1902, 1903, 1103, 1104, 1106
 and 1107 of the old Civil Code, and as ruled by this Court in the decisions in Lilius vs. Manila Railroad;4 Gutierrez vs.
Gutierrez;5 and Castro vs. Acro Taxicab Inc.6 Moral damages, respondent urges, should be paid to the injured person; but if
the injured person died as a consequence of the culpable act and the victim left no descendants or ascendants, the damages
must be paid — taking into consideration the principles of the general law on damages, of the law on succession, and the fact
that under the old Civil Code no specific persons are indicated to be the only ones entitled to recover moral damages — to the
heirs or next of kin of the victim. Respondent further cites the rulings of this Court in the cases of Bernal vs. House, et al.7;
Astudillo vs. Manila Electric Co.8; and Manzanares vs. Moreta9, wherein the fact of heirship, as viewed from the general
principle of succession of the deceased victim, was taken into consideration in determining who would be paid the indemnity
for damages.

In reply, petitioner points out that although the cases cited by respondent show that moral damages were awarded even before
the new Civil Code took effect, in none of the cases cited, however, were moral damages awarded to a brother or sister of the
deceased, but only to either the victim himself, the surviving spouses, the children or the parents.

To resolve the issue, we have to determine, what law is a applicable — whether the provisions of the old Civil Code or of the
new Civil Code. We believe that the old Civil Code is the law applicable to the case at bar, subject to such modifications as are
suggested, or are warranted, under the transitional provisions of the new Civil Code, as we may show at the later part of this
opinion. This is so, because the acts and events that gave rise to the instant action took place in 1937, and the action was
commenced in 1940. Article 2253 of the new Civil Code, provides:

The Civil Code of 1889 and other previous laws shall govern rights originating, under said laws, from acts done or events
which took place under their regime; even though this Code may regulate them in a different manner, or may not
recognize them . . . .

The pertinent provisions of the old Civil Code are Articles 1902 and 1903. The first article provides:

Art. 1902. Any person who by act or omission causes damage to another by his fault or negligence shall be liable for the
damage so done.

and the second article in part, provides:

Art. 1903. The obligation imposed by the next preceding article is enforcible not only for personal acts and omissions, but
also for those of persons for whom another is responsible.

xxxxxxxxx

Owners or directors of an establishment or business are equally liable for any damages caused by their employees while
engaged in the branch of the service in which employed, or on the occasion of the performance of their duties.

This Court said: "Article 1902 of the Civil Code declares that any person who by an act or omission, characterized by fault or
negligence, causes damage to another shall be liable for the damage done . . . a person is liable for damage done to another
by any culpable act; and by culpable act is meant any act which is blameworthy when judged by accepted legal
standards. The idea thus expressed is undoubtedly broad enough to include any rational conception of liability for the tortious
acts likely to be developed in any society." 10 The word "damage" in said article, comprehending as it does all that are
embraced in its meaning, includes any and all damages that a human being may suffer in any and all the manifestations of his
life: physical or material, moral or psychological, mental or spiritual, financial, economic, social, political, and religious. 11

It is particularly noticeable that Article 1902 stresses the passive subject of the obligation to pay damages caused by his fault
or negligence. The article does not limit or specify the active subjects, much less the relation that must exist between the victim
of the culpa aquiliana and the person who may recover damages, thus warranting the inference that, in principle, anybody who
 suffers any damage from culpa aquiliana whether a relative or not of the victim, may recover damages from the person
responsible therefor. This Court had granted moral damages not only to the person who himself was injured, 12 but also to the
legitimate children and heirs of the deceased. 13 Parents, even natural, have also been awarded damages for the death of their
children. 14

We have not come across, and herein respondent has not cited, any case in this jurisdiction where a brother and/or sister of
the victim of culpa aquiliana was awarded moral damages. In our search for persuasive authority, however, we came across
decisions by the courts of France whose Civil Code, in its article 1383, provides substantially the same as article 1902 of the
Civil Code of Spain, as follows:

Cada uno es responsable del daño que ha causado no solamente por su hecho, sino tambien por su negligencia o por su
imprudencia. (Ripert and Boulanger, Tratado de Derecho Civil, Vol. V, 2nd part, p. 50).

On the basis of the above-quoted article, in France, moral damages for mental anguish (sentimientos afectivos) have been
awarded not only to parents, children and spouse, of the victim of culpa aquiliana but also to brothers and sisters, natural
grandparents, and godchildren. 15

We thus see that a provision in the Civil Code of France which is substantially similar to the provision of the Civil Code of
Spain, relating to culpa aquiliana is so applied by the courts of France as to hold a person guilty of culpa aquiliana liable for
moral damages to the person injured, or to his spouse, children, parents, brothers and sisters, and even to godchildren. If the
provision of our old Civil Code — which was itself the Civil Code of Spain of 1889 — relating to culpa aquiliana were to be
applied as it had been applied in France, then the person guilty of culpa aquiliana under our old Civil Code would be liable for
moral damages to the person injured, or to his spouse, children, parents, brothers and sisters and even to his godchildren. This
would mean that under our old Civil Code the liability for moral damages for mental anguish due to culpa aquiliana was to more
persons than what our new Civil Code now provides in its Article 2206 which limits the liability for moral damages to the spouse
and legitimate and illegitimate descendants and ascendants of the deceased. And so, under the new Civil Code, a less severe
sanction — at least as regards the persons entitled to moral damages — is provided for, than under the old Civil Code.

Article 2257 of the new Civil Code — one of the transitional provisions — provides as follows:
Art. 2257. Provisions of this Code which attach a civil sanction or penalty or a deprivation of rights to acts or omissions
which were not penalized by the former laws, are not applicable to those who, when said laws were in force, may have
executed the act or incurred in the omission forbidden or condemned by this Code.

If the fault is also punished by the previous legislation, the less severe sanction shall be applied.

xxxxxxxxx

(Emphasis supplied.)

It may well be said that culpa aquiliana, or quasi-delict, is punished both by the old Civil Code — the previous legislation — and
by the new Civil Code. But, as we have pointed out, a less severe sanction, or penalty, for culpa aquiliana is provided for in the
new Civil Code. It follows, therefore, that Article 2206 of the new Civil Code — which provides that only the spouse, legitimate
and illegitimate descendants and ascendants may demand moral damages for mental anguish by reason of the death of the
deceased caused by quasi-delict — should be applied in the instant case. Hence, petitioner herein, who claims moral damages
for the death of his brother Cesar V. Ybañez caused by quasi-delict, is not entitled to, and should not have been awarded,
moral damages, by the Court of Appeals. 16

2. Regarding the second error assigned, petitioner argues that the Court of Appeals had no special reason for awarding
attorney's fees because the petitioner had not acted in gross and evident bad faith in resisting respondent's claims for
damages, and the claims of respondent herein could not be characterized as "plainly valid, just and demandable" claims as
contemplated under paragraph (5) of Article 2208 of the new Civil Code, considering that the two employees, for whose alleged
negligent acts herein petitioner is made to answer, were acquitted in the criminal case, and the civil case for damages was
dismissed by the trial court.

Respondent, on the other hand, argues that the Court of Appeals gave as reason for the award of attorney's fees: "considering
the years and extensive work — the protracted litigation had taken." Respondent also maintains that the award must have
been based by the Court of Appeals on Article 2208 (11) and Article 2253 of the new Civil Code.

But petitioner urges that the issue is whether or not attorney's fees might be recovered, and not the amount of attorney's fees
in the determination of which the long years of litigation given as reason by the Court of Appeals would be pertinent.

Respondent's argument that the award of attorney's fees was justified under Article 2208 (11) of the new Civil Code is
untenable, because the instant case was filed on May 15, 1940, or before the effectivity of the new Civil Code. This Court, in
the case of Bureau of Lands vs. Samia, et al., 17 held:

That portion of the decision which awards P10,000 to respondents as attorney's fees is untenable. Although courts have,
under paragraph (11) of Article 2208 of the Civil Code, authority to award attorney's fees whenever it may be "just and
equitable," said provision is inapplicable to the present case, the same having been instituted before the effectivity of the
said Code.
The refusal of herein petitioner to pay the damages asked, although the case was finally decided against it, cannot be said to
have been caused by bad faith. In the case of George Edward Koster Inc. vs. Zulueta, 18 this Court said:

At common law, the successful party usually has no right to have the fees of his attorney, as such, taxed against his
opponent (14 L. ed. 181). The Court will not ordinarily allow counsel fees to the successful party. Each party to the action
must pay his own lawyer . . . . Counsel fees paid in prior action have been allowed . . . (where) the conduct of the party
against whom they were allowed, so directly and certainly caused the expenditure for this purpose, that the loss of the
amount so paid was easily within such causal relations to the defendant's wrong as to warrant the assessment of the
damages in compensation for it (Sears vs. Inhabitants of Nahant, 102 N. E. 491.). Our rulings before the New Civil Code
took effect (the present case having arisen before) have been as follows:

"It is not sound public policy to place a penalty on the right to litigate. To compel the defeated party to pay the fees of
counsel for his successful opponent would throw wide the door of temptation to the opposing party and his counsel to
swell the fees to undue proportions, and to apportion them arbitrarily between those pertaining properly to one branch
of the case from the other.

"This Court has already placed itself on record as favoring the view taken by those courts which hold that attorney's
fees are not a proper element of damages." (Tan Ti vs. Alvear, 26 Phil. 566; The Borden Co. vs. Doctors
Pharmaceuticals, Inc., 90 Phil. 500).

". . . Counsel fees, other than those fixed in the rules as costs, are not an element of recoverable damages."
(Jesswani vs. Masaram Dialdas, G.R. No. L-4651, May 12, 1952)."

WHEREFORE, the decision of the Court of Appeals sought to be reviewed should be, as it is hereby, modified by eliminating
therefrom the award of P5,000.00 for moral damages for mental anguish suffered by the heir, and the award of P5,000.00 for
attorney's fees. No pronouncement as to costs. It is so ordered.
G.R. No. L-33171 May 31, 1979

PORFIRIO P. CINCO, petitioner-appellant, vs. HON. MATEO CANONOY, Presiding Judge of the Third Branch of the
Court of First Instance of Cebu, HON. LORENZO B. BARRIA City Judge of Mandaue City, Second Branch ROMEO
HILOT, VALERIANA PEPITO and CARLOS PEPITO, Respondents- Appellees.

Eriberto Seno for appellant. Jose M. Mesina for appellees.

MELENCIO-HERRERA, J.:

This is a Petition for Review on certiorari of the Decision of the Court of First Instance of Cebu rendered on November 5, 1970.

The background facts to the controversy may be set forth as follows:

Petitioner herein filed, on February 25, 1970, a Complaint in the City Court of Mandaue City, Cebu, Branch II, for the recovery of
damages on account of a vehicular accident involving his automobile and a jeepney driven by Romeo Hilot and operated by Valeriana
Pepito and Carlos Pepito, the last three being the private respondents in this suit. Subsequent thereto, a criminal case was filed
against the driver, Romeo Hilot, arising from the same accident. At the pre-trial in the civil case, counsel for private respondents
moved to suspend the civil action pending the final determination of the criminal suit, invoking Rule 111, Section 3 (b) of the Rules of
Court, which provides:

(b) After a criminal action has been commenced. no civil action arising from the same offense can be prosecuted, and the same shall
be suspended, in whatever stage it may be found, until final judgment in the criminal proceeding has been rendered;

The City Court of Mandaue City in an Order dated August 11, 1970, ordered the suspension of the civil case. Petitioner's Motion for
Reconsideration thereof, having been denied on August 25, 1970, 1 petitioner elevated the matter on certiorari to the Court of First
Instance of Cebu, respondent Judge presiding, on September 11, 1970, alleging that the City Judge had acted with grave abuse of
discretion in suspending the civil action for being contrary to law and jurisprudence. 2

On November 5, 1970, respondent Judge dismissed the Petition for certiorari on the ground that there was no grave abuse of
discretion on the part of the City Court in suspending the civil action inasmuch as damage to property is not one of the
instances when an independent civil action is proper; that petitioner has another plain, speedy, and adequate remedy under
the law, which is to submit his claim for damages in the criminal case; that the resolution of the City Court is interlocutory and,
therefore, certiorari is improper; and that the Petition is defective inasmuch as what petitioner actually desires is a Writ of
mandamus (Annex "R"). Petitioner's Motion for
Reconsideration was denied by respondent Judge in an Order dated November 14,1970 (Annex "S" and Annex "U").

Hence, this Petition for Review before this Tribunal, to which we gave due course on February 25, 1971. 3

Petitioner makes these:

ASSIGNMENTS OF ERROR

1. THE TRIAL COURT, RESPONDENT JUDGE MATEO CANONOY, ERRED IN HOLDING THAT THE TRIAL OF THE CIVIL
CASE NO. 189 FILED IN THE CITY COURT OF MANDAUE SHOULD BE SUSPENDED UNTIL AFTER A FINAL JUDGMENT
IS RENDERED IN THE CRIMINAL CASE.

2. THAT THE COURT ERRED IN HOLDING THAT IN ORDER TO AVOID DELAY THE OFFENDED PARTY MAY SUBMIT
HIS CLAIM FOR DAMAGES IN THE CRIMINAL CASE.

3. THAT THE COURT ERRED IN HOLDING THAT THE PETITION FOR certiorari IS NOT PROPER, BECAUSE THE
RESOLUTION IN QUESTION IS INTERLOCUTORY.

4
4. THAT THE COURT ERRED IN HOLDING THAT THE PETITION IS DEFECTIVE.

all of which can be synthesized into one decisive issue: whether or not there can be an independent civil action for damage to
property during the pendency of the criminal action.
 From the Complaint filed by petitioner before the City Court of Mandaue City, Cebu, it is evident that the nature and character
of his action was quasi- delictual predicated principally on Articles 2176 and 2180 of the Civil Code, which provide:

Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence is obliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is caned a quasi-
delict and is governed by the provisions of this Chapter. (1902a)

Art. 2180. The obligation imposed by article 2176 is demandable not only for one's own acts or omissions but also for those of
persons for whom one is responsible.

xxx xxx xxx

Employers shall be liable for the damages cause by their employees and household helpers acting within the scope of their
assigned tasks, even though the former are not engaged in any business or industry.

xxx xxx xxx

The responsibility treated of in this article shall cease when the persons herein mentioned prove that they observed all the
diligence of a good father of a family to prevent damage. (1903a)

Thus, plaintiff made the essential averments that it was the fault or negligence of the driver, Romeo Hilot, in the operation of
the jeepney owned by the Pepitos which caused the collision between his automobile and said jeepney; that damages were
sustained by petitioner because of the collision; that there was a direct causal connection between the damages he suffered
and the fault and negligence of private respondents.

Similarly, in the Answer, private respondents contended, among others, that defendant, Valeriana Pepito, observed due
diligence in the selection and supervision of her employees, particularly of her co- defendant Romeo Hilot, a defense peculiar
to actions based on quasi-delict. 5

Liability being predicated on quasi-delict the civil case may proceed as a separate and independent civil action, as specifically
provided for in Article 2177 of the Civil Code.

Art. 2177. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the civil liability
arising from negligence under the Penal Code. But the plaintiff cannot recover damages twice for the same act or omission of
the defendant. (n)

The crucial distinction between criminal negligence and quasi-delict, which is readily discernible from the foregoing codal
provision, has been expounded in Barredo vs. Garcia, et al., 73 Phil. 607, 620- 621, 6 thus:

Firstly, the Revised Penal Code in article 365 punishes not only reckless but also simple imprudence. if we were to hold that articles
1902 to 1910 of the Civil Code refer only to fault or negligence not punished by law, according to the literal import of article 1093 of the
Civil Code, the legal institution of culpa aquiliana would have very little scope and application in actual life. Death or injury to persons
and damage to property through any degree of negligence - even the slightest would have to be indemnified only through the principle
of civil hability arising from crime. In such a state of affairs, what sphere would remain for quasidelito or culpa aquiliana We are loath to
impute to the lawmaker any intention to bring about a situation so absurd and anomalous. Nor are we, in the interpretation of the laws,
disposed to uphold the letter that killeth rather than the spirit that giveth life. We will not use the literal meaning of the law to smother
and render almost lifeless a principle of such ancient origin and such full-grown development as culpa aquiliana or quasi-delito, which
is conserved and made enduring in articles 1902 to 11910 of the Spanish Civil Code.

Secondly, to find the accused guilty in a criminal case, proof of guilt beyond reasonable doubt is required, while in a civil case,
preponderance of evidence is sufficient to
make the defendant pay in damages. There are numerous cases of criminal negligence which cannot be shown beyond reasonable
 doubt, but can be proved by a preponderance of evidence. In such cases, the defendant can and should be made responsible in a civil
action under articles 1902 to 1910 of the Civil Code, otherwise, there would be many instances of unvindicated civil wrongs. Ubi jus ibi
remedium.

Thirdly, to hold that there is only one way to make defendants liability effective, and that is, to sue the driver and exhaust his (the
latter's) property first, would be tantamount to compelling the plaintiff to follow a devious and cumbersome method of obtaining a reliel
True, there is such a remedy under our laws, but there is also a more expeditious way, which is based on the primary and direct
responsibility of the defendant under article 1903 of the Civil Code. Our view of the law is more likely to facilitate remedy for civil
wrongs because the procedure indicated by the defendant is wasteful and productive of delay, it being a matter of common knowledge
that professional drivers of taxis and similar public conveyances usually do not have sufficient means with which to pay damages.
Why, then, should the plaintiff be required in all cases to go through this round-about, unnecessary, and probably useless procedure?
In construing the laws, courts have endeavored to shorten and facilitate the pathways of right and justice.

At this juncture, it should be said that the primary and direct responsibility of employers and their presumed negligence are principles
calculated to protect society. Workmen and employees should be carefully chosen and supervised in order to avoid injury to the public.
It is the masters or employers who principally reap the profits resulting from the services of these servants and employees. It is but
right that they should guarantee the latter's careful conduct for the personnel and patrimonial safety of others. As Theilhard has said,
"they should reproach themselves, at least, some for their weakness, others for their poor selection and all for their negligence." And
according to Manresa, "It is much more equitable and just that such responsibility should fail upon the principal or director who could
have chosen a careful and prudent employee, and not upon the such employee because of his confidence in the principal or director."
(Vol. 12, p. 622, 2nd Ed.) Many jurists also base this primary responsibility of the employer on the principle of representation of the
principal by the agent. Thus, Oyuelos says in the work already cited (Vol. 7, p. 747) that before third persons the employer and
employee vienen a ser como una sola personalidad, por refundicion de la del dependiente en la de quien la emplea y utihza (become
as one personality by the merging of the person of the employee in that of him who employs and utilizes him.) All these observations
acquire a peculiar force and significance when it comes to motor accidents, and there is need of stressing and accentuating the
responsibility of owners of motor vehicles.

Fourthly, because of the broad sweep of the provisions of both the Penal Code and the Civil Code on this subject, which has given rise
to overlapping or concurrence of spheres already discussed, and for lack of understanding of the character and efficacy of the action
for culpaaquiliana there has grown up a common practice to seek damages only by virtue of the Civil responsibility arising from crime,
forgetting that there is another
remedy, which is by invoking articles 1902-1910 of the Civil Code. Although this habitual method is allowed by our laws, it has
nevertheless rendered practically useless and nugatory the more expeditious and effective remedy based on culpa aquiliana or culpa
extra-contractual. In the present case, we are asked to help perpetuate this usual course. But we believe it is high time we pointed out
to the harm done by such practice and to restore the principle of responsibility for fault or negligence under articles 1902 et seq. of the
Civil Code to its full rigor. It is high time we cause the stream of quasi-delict or culpa aquiliana to flow on its own natural channel, so
that its waters may no longer be diverted into that of a crime under the Penal Code. This will, it is believed, make for the bet ter
safeguarding of private rights because it re- establishes an ancient and additional remedy, and for the further reason that an
independent civil action, not depending on the issues, stations and results of a criminal prosecution, and entirely directed by the party
wronged or his counsel is more likely to secure adequate and efficacious redress. (Garcia vs. Florida 52 SCRA 420, 424- 425, Aug.
31, 1973). (Emphasis supplied)

The separate and independent civil action for a quasi- delict is also clearly recognized in section 2, Rule 111 of the Rules of
Court, reading:

Sec. 2. Independent civil action. - In the cases provided for in Articles 31, 32, 33, 34 and 2177 of the Civil Code of the Philippines, Are
independent civil action entirely separate and distinct from the c action, may be brought by the injured party during the pendency of the
criminal case, provided the right is reserved as required in the preceding section. Such civil action shag proceed independently of the
criminal prosecution, and shall require only a preponderance of evidence.

Significant to note is the fact that the foregoing section categorically lists cases provided for in Article 2177 of the Civil Code,
supra, as allowing of an "independent civil action."

Tested by the hereinabove-quoted legal tenets, it has to be held that the City Court, in surrounding the civil action, erred in
placing reliance on section 3 (b) of Rule 111 of the Rules of Court, supra which refers to "other civil actions arising from cases
not included in the section just cited" (i.e., Section 2, Rule 111 above quoted), in which case 6 once the criminal action has
being commenced, no civil action arising from the same offense can be prosecuted and the same shall be suspended in
whatever stage it may be found, until final judgment in the criminal proceeding has been rendered." Stated otherwise, the civil
action referred to in Secs. 3(a) and 3(b) of Rule 111 of the Rules of Court, which should be suspended after the criminal action
has been instituted is that arising from the criminal offense not the civil action based on quasi- delict

Article 31 of the Civil Code then clearly assumes relevance when it provides:

Art. 31. When the civil action is based on an obligation not arising from the act or omission complained of as a felony, such civil action
may proceed independently of the
criminal proceedings and regardless of the result of the latter.

For obviously, the jural concept of a quasi-delict is that of an independent source of obligation "not arising from the act or
omission complained of as a felony." Article 1157 of the Civil Code bolsters this conclusion when it specifically recognizes that:

Art. 1157. Obligations arise from:

(1) Law;

(2) Contracts;

(3) Quasi-contracts;

(4) Acts or omissions punished by law; and

(5) Quasi-delicts. (1089a)

(Emphasis supplied)

It bears emphasizing that petitioner's cause of action is based on quasi-delict. The concept of quasidelica as enunciated in
Article 2176 of the Civil Code (supra), is so broad that it includes not only injuries to persons but also damage to property. 7 It
makes no distinction between "damage to persons" on the one hand and "damage to property" on the other. Indeed, the word
"damage" is used in two concepts: the "harm" done and "reparation" for the harm done. And with respect to harm it is plain that
it includes both injuries to person and property since "harm" is not limited to personal but also to property injuries. In fact,
examples of quasi-delict in the law itself include damage to property. An instance is Article 2191(2) of the Civil Code which
holds proprietors responsible for damages caused by excessive smoke which may be harmful to persons or property."

In the light of the foregoing disquisition, we are constrained to hold that respondent Judge gravely abused his discretion in
upholding the Decision of the City Court of Mandaue City, Cebu, suspending the civil action based on a quasi-delict until after
the criminal case is finally terminated. Having arrived at this conclusion, a discussion of the other errors assigned becomes
unnecessary.

WHEREFORE, granting the Writ of certiorari prayed for, the Decision of the Court of First Instance of Cebu sought to be
reviewed is hereby set aside, and the City Court of Mandaue City, Cebu, Branch 11, is hereby ordered to proceed with the
hearing of Civil Case No. 189 of that Court.

Without pronouncement as to costs.

SO ORDERED.
G.R. No. 101983 February 1, 1993

HONORIO BULAO, petitioner, vs. COURT OF APPEALS, RTC JUDGE FRANCISCO VILLARTA and SANTIAGO BELLEZA,
respondents.

Felix B. Claustro for petitioner. Public Attorney's Office for private respondent.

CRUZ, J.:

On April 25, 1983. respondent Santiago Belleza filed before the Municipal Circuit Trial Court of Tayum, Peñarrubia, Abra, 1 a
complaint against petitioner Honorio Bulao. It was docketed as "Civil Case No. 70-Damages." The petitioner moved to dismiss
the same on the ground of lack of jurisdiction. He argued that the said case was cognizable by the Regional Trial Court, the
real issue being one of ownership, possession of the land where the ditches are located, and real rights involving the use of
ditches. The court denied the motion and required him to answer the complaint.

The Petitioner failed to do so and was declared in default. He then moved for reconsideration and the lifting of the order of
default. This time he claimed that it was the National Water Resources Council that had jurisdiction over the case because it
involved rights on the utilization of water. The motion was also denied, and the court proceeded to receive the evidence of the
private respondent.

On October 4, 1984, the court handed down a judgment by default ordering the petitioner to pay the following amounts in favor
of the private respondent, plus the costs:

1. P6,000.00 representing the unrealized harvest of the private respondent on the land he was working on;

2. P2,625.00 representing his unrealized share from the harvest of his tenant; and

3. P2,000.00 representing attorney's fees.

The petitioner did not appeal the decision and the corresponding writ of execution was issued in due time. He moved to quash
the writ but to no avail.

On March 25, 1985, the petitioner lodged before the Regional Trial Court of Abra Branch I, 2 a petition for relief from
judgment/order in Civil Case 70. This was dismissed on the ground that the petitioner neither filed his answer to the complaint
nor later availed himself of his right to appeal from the judgment. His motion for reconsideration was denied.

The petitioner next came to this Court to seek certiorari with preliminary injunction. His petition was referred to the Court of
Appeals for consideration and adjudication on the merits. On July 5, 1991, the respondent court promulgated a decision
denying the petition.3 His motion for reconsideration having been likewise denied, the case is now before us for review.

The basic issue before us is the question of jurisdiction.

To resolve this, we have to determine first the true nature of the action filed with the court a quo. This can be ascertained from
the ultimate facts averred in the complaint as constituting the private respondent's cause of action. The settled principle is that
the allegations of the complaint determine the nature of the action and consequently the jurisdiction of the courts. 4 This rule
applies whether or not the plaintiff is entitled to recover upon all or some of the claims asserted therein as this is a matter that
can be resolved only after and as a result of the trial.5

The complaint in Civil Case No. 70 is quoted as follows:

 COMES undersigned counsel for the plaintiff and before this Honorable Court respectfully alleges:

1. That plaintiff is a Filipino Citizen, of legal age, married, resident of Lusuac, Peñarrubia. Abra, while defendant is also a
Filipino citizen, of legal age, married and a resident of Lusuac, Peñarruba, Abra, where he may be served with summons;

2. That the plaintiff is the owner of four parcels of land more particularly described as follows, to wit:

xxx xxx xxx

3. That the above described parcels of land give a yearly double crop yield in the amount of 75 cavans of clean rice for
each cropping season because of the presence of an irrigation system which has existed for more than 50 years already;

5. That defendant's property is located on a higher elevation in the vicinity of the above parcels and irrigation ditch which
supplies water to the above parcels must pass by the land of the defendant before it reaches the lands of plaintiff as
above-described;

6. That sometime during the first week of December, 1982, defendant Bulao maliciously constructed a dam and diverted
the flow of the water towards the west such that the lands of the plaintiff dried up and the rice plants withered and died;

7. That plaintiff used to harvest from the land above described 75 cavans of clean rice for every cropping season and he
used to sell his rice at P6.00 a ganta or P150.00 a cavan;

8. That for the 75 cavans of rice which plaintiff failed to realize because of the malicious acts of the defendant, plaintiff
failed to realize 75 cavans of clean rice or P11,250.00 by way of damages;

9. That because of the malicious acts of the defendant, plaintiff had to engage the services of counsel to protect his
interest paying the amount of P2,000.00;

WHEREFORE, it is respectfully prayed that after hearing, judgment be rendered ordering the defendant —

(a) To allow the water to flow unhampered to plaintiff's properties as

(b) To order defendant to pay damages to the plaintiff in the amount of P11,250.00 representing the value of the crops
which plaintiff failed to realize;

(c) To pay attorney's fees in the amount of P2,000.00; and

(d) Such other and further reliefs as this Honorable Court may deem just and equitable in the premises.

The petitioner submits that the allegations in paragraphs 4 and 5 as well as the prayer in paragraph (a) of the above-quoted
pleading show that the Civil Case 70 involves water and water rights and is thus a water dispute. The proper authority to try
and decide the case is the National Water Resources Council pursuant to Article 88 of Presidential Decree 1067 providing as
follows:

Art. 88. The council shall have original jurisdiction over all disputes relating to appropriation, utilization, exploitation,
development, control, conservation and protection of waters within the meaning and context of the provision of this Code

The petitioner invokes in this connection the cases of Abe-abe vs. Manta 6 and Tanjay Water District vs. Gabaton.7

In the first case, the petitioners sought a judicial confirmation of their prior vested right under Article 504 of the Civil Code to
use the water of Anibungan Albay and Tajong Creeks to irrigate their ricelands upstrean. They also wanted to enjoin the private
respondent from using the water of the creeks at night to irrigate his riceland located downstream.

In the second case, the court was asked to prevent the Municipality of Pamplona from interfering with the management of the
Tanjay Waterworks System.

It was held in both cases that jurisdiction pertained to the National Water Resources Council as the issues involved were the
appropriation, utilization and control of water.

But these cases have no application to the instant controversy. It is clear from a reading of the private respondent's complaint
in Civil Case 70 that it is an action for damages predicated on a quasi-delict.

A quasi-delict has the following elements: a) the damage suffered by the plaintiff; b) the act or omission of the defendant
supposedly constituting fault or negligence; and c) the causal connection between the act and the damage sustained by the
plaintiff.8

All these elements are set out in the private respondent's complaint, specifically in paragraphs 5, 7 and 8 thereof. The damage
claimed to have been sustained by private respondents consists of his loss of harvest and consequent loss of income. The act
constituting the fault is the alleged malicious construction of a dam and diversion of the flow of water by the petitioner. The said
acts allegedly caused the interruption of water passing through petitioner's land towards respondent's lands, resulting in the
destruction of the respondent's rice plants. The averments of the complaint plainly make out a case of quasi-delict that may be
the basis of an action for damages.
The Court also notes that the title of the complaint is "Civil Case No. 70 — Damages." Although not necessarily determinative
of the nature of the action, it would nevertheless indicate that what the private respondent contemplated was an action for
damages.

It is pointed out, however, that paragraph (a) of the prayer for relief seems to convey the impression that the private respondent
is asking for the right to use the irrigation water and for the recognition by the petitioner of an easement on his land. Would this
change the character of Civil Case 70?

We have consistently held that the allegations of fact set forth in the complaint and not the prayer for relief will determine the
nature of the action.9 In the case of De Tavera vs. Philippine Tuberculosis, Inc.,10 this Court declared:

While it is true that the complaint questions petitioner's removal from the position of Executive Secretary and seeks her
reinstatement thereto, the nature of the suit is not necessarily one of quo warranto. The nature of the instant suit is one
involving a violation of the rights of the plaintiff under the By-Laws of the Society, the Civil Code and the Constitution,
which allegedly renders the individuals responsible therefore, accountable for damages, as may be gleaned from the
following allegations in the complaint as constituting the plaintiff's causes of action.

Also worthy of note is the following pronouncement of this Court in Bagiuoro vs. Barrios and Tupas Vda. de Atas:11

It is an axiom in civil procedure that if the relief demanded is not the proper one which may be granted under the law, it
does not characterize or determine the nature of the plaintiff's action, and that the relief to which the plaintiff is entitled
based on the facts alleged by him in his complaint, although it is not the relief demanded, is what determines the nature of
the action. And that is the reason why it is generally added to prayers for relief, though not necessary, the words "and for
such other relief as the law warrants," or others to the same effect. So if a plaintiff alleges, for instance, that the defendant
owes the former a certain amount of money and did not pay it at the time stipulated, and prays that the defendant be
sentenced to return a certain personal property to the plaintiff, such prayer will not make or convert the action of recovery
of debt into one of recovery of personal property, and the court shall grant the proper relief, or sentence the defendant to
pay his debt to the plaintiff.
 In any case, the injury has been done and that is what the private respondent was suing about in his action for damages. The
relief he prayed for did not change Civil Case No. 70 into a water dispute coming under the jurisdiction of the National Water
Research Council.

It follows that since the court a quo had jurisdiction over the action instituted by the private respondent, its decision, which has
already become final and executory, can no longer be disturbed.

ACCORDINGLY, the petition is DENIED, with costs against the petitioner. It is so ordered.
G.R. No. 179799 September 11, 2009

ZENAIDA R. GREGORIO, Petitioner, vs. COURT OF APPEALS, SANSIO PHILIPPINES, INC., and EMMA J. DATUIN,
Respondents.

DECISION

NACHURA, J.:

This is a petition1 for certiorari under Rule 45 of the Rules of Court assailing the Decision 2 of the Court of Appeals (CA) dated
January 31, 2007 and its Resolution3 dated September 12, 2007 in CA-G.R. SP No. 63602, entitled "Sansio Philippines, Inc., et
al. v. Hon. Romulo SG. Villanueva, et al."

The case arose from the filing of an Affidavit of Complaint4 for violation of Batas Pambansa Bilang (B.P. Blg.) 22 (Bouncing
Checks Law) by respondent Emma J. Datuin (Datuin), as Officer-in-Charge of the Accounts Receivables Department, and
upon authority of petitioner Sansio Philippines, Inc. (Sansio), against petitioner Zenaida R. Gregorio (Gregorio) and one Vito
Belarmino, as proprietors of Alvi Marketing, allegedly for delivering insufficiently funded bank checks as payment for the
numerous appliances bought by Alvi Marketing from Sansio.

As the address stated in the complaint was incorrect, Gregorio was unable to controvert the charges against her.
Consequently, she was indicted for three (3) counts of violation of B.P. Blg. 22, docketed as Criminal Case Nos. 236544,
236545, and 236546, before the Metropolitan Trial Court (MeTC), Branch 3, Manila.

The MeTC issued a warrant 5 for her arrest, and it was served upon her by the armed operatives of the Public Assistance and
Reaction Against Crime (PARAC) of the Department of Interior and Local Government (DILG) on October 17, 1997, Friday, at
around 9:30 a.m. in Quezon City while she was visiting her husband and their two (2) daughters at their city residence.
Gregorio was brought to the PARAC-DILG Office where she was subjected to fingerprinting and mug shots, and was detained.
She was released in the afternoon of the same day when her husband posted a bond for her temporary liberty.

On December 5, 1997, Gregorio filed before the MeTC a Motion 6 for Deferment of Arraignment and Reinvestigation, alleging
that she could not have issued the bounced checks, since she did not even have a checking account with the bank on which
the checks were drawn, as certified by the branch manager of the Philippine National Bank, Sorsogon Branch. She also
alleged that her signature was patently and radically different from the signatures appearing on the bounced checks.

The MeTC granted the Motion and a reinvestigation was conducted. In the course of the reinvestigation, Datuin submitted an
Affidavit of Desistance7 dated August 18, 1998, stating, among others, that Gregorio was not one of the signatories of the
bounced checks subject of prosecution.

Subsequently, the assistant city prosecutor filed a Motion to Dismiss8 dated November 12, 1998 with respect to Criminal Case
Nos. 236544-46. The MeTC granted the motion and ordered the B.P. Blg. 22 cases dismissed.9
On August 18, 2000, Gregorio filed a complaint10 for damages against Sansio and Datuin before the Regional Trial Court
(RTC), Branch 12, Ligao, Albay. The complaint, in part, reads —
 4. That on or about December 15, 1995, defendant Emma J. Datuin filed with the Office of the City Prosecutor of Manila
an "Affidavit of Complaint" wherein, among others, she alleged under oath that as an Officer In-charge of the Accounts
Receivables Department of SANSIO PHILIPPINES, INC., she was duly authorized and empowered by said company to
file cases against debtors, customers and dealers of the company;

xxxx

5. That while acting under authority of her employer namely the defendant SANSIO PHILIPPINES, INC., defendant EMMA
J. DATUIN falsely stated in the "Affidavit of Complaint" (Annex "A"), among others, that plaintiff Zenaida R. Gregorio
issued and delivered to their office the following checks, to wit:

a. PNB Check No. C-347108 dated November 30, 1992 in the amount of ₱9,564.00;

b. PNB Check No. C-347109 dated November 30, 1992 in the amount of ₱19,194.48; and

c. PNB Check No. C-347104 dated December 2, 1992 in the amount of ₱10,000.00

and that the above-mentioned PNB Checks bounced when deposited upon maturity;

6. That as a result of the filing of the "Affidavit of Complaint" (Annex "A") wherein defendant Emma J. Datuin falsely
charged the plaintiff with offenses of Estafa and/or violation of B.P. Blg. 22 on three (3) counts, the Office of the City
Prosecutor of Manila issued a Resolution dated April 1, 1996 finding the existence of a probable cause against the plaintiff
for violation of Batas Pambansa Blg. 22 on three counts;

xxxx

7. That in the "MEMO OF PRELIMINARY INVESTIGATION" attached hereto as Annex "C," signed by defendant Emma J.
Datuin she falsely indicated the address of plaintiff to be at No. 76 Peñaranda Street, Legaspi City when the truth of the
matter is that the latter’s correct address is at Barangay Rizal, Oas, Albay;

8. That as a consequence of the aforegoing false and misleading indication of address, plaintiff was therefore not duly
notified of the charges filed against her by defendant Emma J. Datuin; and more, she was not able to controvert them
before the investigating prosecutor, finally resulting in the filing in court of three (3) informations accusing her of violating
B.P. 22;

xxxx
9. That as pernicious result of the unwarranted and baseless accusation by the defendants which culminated in the filing of
three (3) informations in the Metropolitan Trial Court of Manila, Branch 3 indicting the plaintiff on three counts of the
offense of violating B.P. 22, the said court issued a Warrant of Arrest on July 22, 1996 ordering the arrest of the plaintiff;

xxxx

10. That taking extra effort to expedite the apprehension of plaintiff, defendants’ retained private prosecutor managed to
obtain the Warrant for the Arrest of said plaintiff from the Court as evidenced by the copy of the letter of lawyer Alquin B.
Manguerra of Chua and Associates Law Office (Annex "H") so much so that in the morning of October 17, 1997, while
plaintiff was visiting her husband Jose Gregorio and their two daughters at their city residence at 78 K-2 Street, Kamuning,
Quezon City, and without the slightest premonition that she was wanted by the law, armed operatives of the Public
Assistance and Reaction Against Crime (PARAC) of DILG suddenly swooped down on their residence, arrested the
plaintiff and brought her to the PARAC DILG Office in Quezon City where she was fingerprinted and detained like an
ordinary criminal;
xxxx

11. That feeling distraught, helpless and hungry (not having eaten for a whole day) the plaintiff languished in her place of
confinement until the late afternoon of October 17, 1997 when her husband was able to post a bond for her temporary
liberty and secure an order of release (Annex "J") from the court. It was providential that a city judge was available in the
late afternoon of October 17, 1997 which was a Friday, otherwise plaintiff would have remained in confinement for the
entire weekend;

12. That because of her desire to prove and establish her innocence of the unjustified charges lodged against her by the
defendants, the plaintiff was thus compelled to retain the services of counsel resulting in the filing of a Motion for
Deferment of Arraignment and Reinvestigation (Annex "K") which was granted by the court; the filing of a Request for
Reinvestigation with the prosecutor’s office (Annex "L"); and the submission of a Counter-Affidavit to the investigating
prosecutor. All of these culminated in the filing by the investigating prosecutor of a Motion to Dismiss (Annex "M") the three
criminal cases as a consequence of which the Court issued an Order dated June 1, 1999 (Annex "N") dismissing Criminal
Cases No. 236544, No. 236545 and No. 236546, copy of which was received by plaintiff only on July 7, 2000;

13. That previous to the filing of the above-mentioned Motion to Dismiss by the prosecutor and having been faced with the
truth and righteousness of plaintiff’s avowal of innocence which was irrefutable, defendants had no recourse but to
concede and recognize the verity that they had wrongly accused an innocent person, in itself a brazen travesty of justice,
so much so that defendant Emma J. Datuin had to execute an Affidavit of Desistance (Annex "O") admitting that plaintiff is
not a signatory to the three bouncing checks in question, rationalizing, albeit lamely, that the filing of the cases against the
plaintiff was by virtue of an honest mistake or inadvertence on her (Datuin’s) part;
14. Be that as it may, incalculable damage has been inflicted on the plaintiff on account of the defendants’ wanton, callous
and reckless disregard of the fundamental legal precept that "every person shall respect the dignity, personality, privacy
and peace of mind of his neighbors and other persons" (Art. 26, Civil Code of the Philippines);

15. That the plaintiff, being completely innocent of the charges against her as adverted to in the preceding paragraphs,
was socially humiliated, embarrassed, suffered physical discomfort, mental anguish, fright, and serious anxiety as a
proximate result of her unjustified indictment, arrest and detention at the PARAC headquarters – all of these ordeals
having been exacerbated by the fact that plaintiff is a woman who comes from a respected family in Oas, Albay, being the
wife of an executive of the Philippine National Construction Corporation, the mother of two college students studying in
Manila, a pharmacist by profession, a businesswoman by occupation, and an incumbent Municipal Councilor (Kagawad) of
Oas, Albay, at the time of her arrest and detention; and that she previously held the following positions:

(a). President, Philippine Pharmaceutical Association (Albay Chapter);

(b). Chairman of the Board, Albay Pharmaceutical Marketing Cooperative (ALPHAMAC);

(c). Charter Secretary, Kiwanis Club of Oas;

(d). Chairman, Polangui Ladies Multi-Purpose Cooperative, Polangui, Albay;

(e). Vicarial Regent, Daughters of Mary Immaculate International, District IX;

(f). Chapter President and Municipal Coordinator, Albay Women Volunteers Association, Inc., Legaspi City;

(g). Regent, Daughters of Mary Immaculate International Virgo Clemens Circle, Oas, Albay;

(h). Secretary, Girl Scout of the Philippines District Association; and

 (i). Director, Albay Electric Cooperative (ALECO),

not to mention the undue aspersion cast upon her social, professional and business reputation because of defendants’
tortious act of accusing her of Estafa and/or issuing bouncing checks – even without a scintilla of evidence;

16. That to compound the aforegoing travails and sufferings of the plaintiff she had to devote and spend much of her time,
money and efforts trying to clear her tarnished name and reputation, including traveling to and from Manila to confer with
her lawyer, attend the hearings at the prosecutor’s office and at the Metropolitan Trial Court;
17. By and large, defendants’ fault or, at the very least, their reckless imprudence or negligence, in filing the three (3)
criminal cases against the plaintiff unequivocally caused damage to the latter and because of defendants’ baseless and
unjustified accusations, plaintiff was constrained to retain the services of a lawyer to represent her at the Metropolitan Trial
Court and at the Office of the City Prosecutor at Manila in order to establish her innocence and cause the dismissal of the
three (3) criminal cases filed against her, reason for which she spent ₱20,000.00; and in order to institute this instant
action for the redress of her grievances, plaintiff have to pay the sum of ₱50,000.00 as attorney’s fees and incur litigation
expenses in the amount of ₱35,000.00;

18. That by reason of all the aforegoing and pursuant to the provision of law that "whoever by act or omission causes
damage to another, there being fault or negligence, is obliged to pay for the damage done," (Article 2176, Civil Code of the
Philippines), the plaintiff is entitled to and hereby claims the following items of damages:

a. ₱3,000,000.00 as moral damages

b. ₱50,000.00 as actual damages

c. ₱50,000.00 as nominal damages

d. ₱70,000.00 as attorney’s fees

e. ₱35,000.00 as litigation expenses

19. That defendants herein are jointly and solidarily liable for the payment of the above items of damages being co-
tortfeasors. Moreover, defendant SANSIO PHILIPPINES, INC. is vicariously liable as the employer of defendant Emma J.
Datuin who patently acted within the scope of her assigned tasks (Vide: Art. 2180, Civil Code of the Philippines).11

Sansio and Datuin filed a Motion to Dismiss12 on the ground that the complaint, being one for damages arising from malicious
prosecution, failed to state a cause of action, as the ultimate facts constituting the elements thereof were not alleged in the
complaint. Gregorio opposed13 the Motion. Sansio and Datuin filed their Reply 14 to the Opposition. Gregorio, in turn, filed her
Rejoinder.15

On October 10, 2000, the RTC issued an Order16 denying the Motion to Dismiss. Sansio and Datuin filed a Motion for
Reconsideration17 of the October 10, 2000 Order, but the RTC denied the same in its Order18 dated January 5, 2001.

Sansio and Datuin went to the CA via a petition 19 for certiorari under Rule 65 of the Rules of Court alleging grave abuse of
discretion on the part of the presiding judge of the RTC in denying their motions to dismiss and for reconsideration.

Meanwhile, on March 20, 2003, the RTC rendered its Decision in the civil case for damages instituted by Gregorio, directing
Sansio and Datuin, jointly and solidarily, to pay Gregorio ₱200,000.00 as moral damages; ₱10,000.00 as nominal damages;
₱35,000.00 as litigation expenses; ₱30,000.00 as attorney’s fees; and costs of the suit. The RTC expressly
stated in its Decision that the complaint was one for damages based on quasi-delict and not on malicious prosecution.
 Aggrieved by the March 20, 2003 Decision, Sansio and Datuin appealed to the CA, and the same is now pending resolution.

On January 31, 2007, the CA rendered a Decision on the certiorari case granting the petition and ordering the dismissal of the
damage suit of Gregorio. The latter moved to reconsider the said Decision but the same was denied in the appellate court’s
Resolution dated September 12, 2007.

Hence, this petition.

The core issue to be resolved, as culled from the factual circumstances of this case, is whether the complaint, a civil suit filed
by Gregorio, is based on quasi-delict or malicious prosecution.

It is the position of Sansio and Datuin that the complaint for damages filed by Gregorio before the RTC was for malicious
prosecution, but it failed to allege the elements thereof, such that it was aptly dismissed on appeal by the CA on the ground of
lack of cause of action. In their comment, citing Albenson Enterprise Corporation v. Court of Appeals, 20 they posit that Article 26
of the Civil Code, cited by Gregorio as one of the bases for her complaint, and Articles 19, 20, and 21 of the same Code,
mentioned by the RTC as bases for sustaining the complaint, are the very same provisions upon which malicious prosecution
is grounded. And in order to further buttress their position that Gregorio’s complaint was indeed one for malicious prosecution,
they even pointed out the fact that Gregorio prayed for moral damages, which may be awarded only in case of malicious
prosecution or, if the case is for quasi-delict, only if physical injury results therefrom.

We disagree.

A perusal of the allegations of Gregorio’s complaint for damages readily shows that she filed a civil suit against Sansio and
Datuin for filing against her criminal charges for violation of B.P. Blg. 22; that respondents did not exercise diligent efforts to
ascertain the true identity of the person who delivered to them insufficiently funded checks as payment for the various
appliances purchased; and that respondents never gave her the opportunity to controvert the charges against her, because
they stated an incorrect address in the criminal complaint. Gregorio claimed damages for the embarrassment and humiliation
she suffered when she was suddenly arrested at her city residence in Quezon City while visiting her family. She was, at the
time of her arrest, a respected Kagawad in Oas, Albay. Gregorio anchored her civil complaint on Articles 26, 21 2176,22 and
218023 of the Civil Code. Noticeably, despite alleging either fault or negligence on the part of Sansio and Datuin, Gregorio
never imputed to them any bad faith in her complaint.

Basic is the legal principle that the nature of an action is determined by the material averments in the complaint and the
character of the relief sought.24 Undeniably, Gregorio’s civil complaint, read in its entirety, is a complaint based on quasi- delict
under Article 2176, in relation to Article 26 of the Civil Code, rather than on malicious prosecution.

In every tort case filed under Article 2176 of the Civil Code, the plaintiff has to prove by a preponderance of evidence: (1) the
damages suffered by him; (2) the fault or negligence of the defendant or some other person to whose act he must respond; (3)
the connection of cause and effect between the fault or negligence and the damages incurred; and (4) that there must be no
preexisting contractual relation between the parties.25

On the other hand, Article 26 of the Civil Code grants a cause of action for damages, prevention, and other relief in cases of
breach, though not necessarily constituting a criminal offense, of the following rights: (1) right to personal dignity; (2) right to
personal security; (3) right to family relations; (4) right to social intercourse; (5) right to privacy; and (6) right to peace of mind.26

A scrutiny of Gregorio’s civil complaint reveals that the averments thereof, taken together, fulfill the elements of Article 2176, in
relation to Article 26 of the Civil Code. It appears that Gregorio’s rights to personal dignity, personal security, privacy, and
peace of mind were infringed by Sansio and Datuin when they failed to exercise the requisite diligence in determining the
identity of the person they should rightfully accuse of tendering insufficiently funded checks. This fault was compounded when
they failed to ascertain the correct address of petitioner, thus depriving her of the opportunity to controvert the charges,
because she was not given proper notice. Because she was not able to refute the charges against her, petitioner was falsely
indicted for three (3) counts of violation of B.P. Blg. 22. Although she was never found at No. 76 Peñaranda St., Legaspi City,
the office address of Alvi Marketing as stated in the criminal complaint, Gregorio was conveniently arrested by armed
operatives of the PARAC-DILG at her city residence at 78 K-2 St., Kamuning, Quezon City, while visiting her family. She
suffered embarrassment and humiliation over her sudden arrest and detention and she had to spend time, effort, and money to
clear her tarnished name and reputation, considering that she had held several honorable positions in different organizations
and offices in the public service, particularly her being a Kagawad in Oas, Albay at the time of her arrest. There exists no
contractual relation between Gregorio and Sansio. On the other hand, Gregorio is prosecuting Sansio, under Article 2180 of
the Civil Code, for its vicarious liability, as employer, arising from the act or omission of its employee Datuin.

These allegations, assuming them to be true, sufficiently constituted a cause of action against Sansio and Datuin. Thus, the
RTC was correct when it denied respondents’ motion to dismiss.

Sansio and Datuin are in error when they insist that Gregorio’s complaint is based on malicious prosecution. In an action to
recover damages for malicious prosecution, it must be alleged and established that Sansio and Datuin were impelled by legal
malice or bad faith in deliberately initiating an action against Gregorio, knowing that the charges were false and groundless,
intending to vex and humiliate her. 27 As previously mentioned, Gregorio did not allege this in her complaint. Moreover, the fact
that she prayed for moral damages did not change the nature of her action based on quasi-delict. She might have acted on the
mistaken notion that she was entitled to moral damages, considering that she suffered physical suffering, mental anguish,
fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, and social humiliation on account of her
indictment and her sudden arrest.
Verily, Gregorio was only acting within her right when she instituted against Sansio and Datuin an action she perceived to be
proper, given the factual antecedents of the case.

WHEREFORE, the petition is GRANTED. The Decision dated January 31, 2007 and the Resolution dated September 12, 2007
are REVERSED and SET ASIDE. Costs against respondents.

SO ORDERED.
G.R. No. 160795 June 27, 2008

CORINTHIAN GARDENS ASSOCIATION, INC., petitioner, vs. SPOUSES REYNALDO and MARIA LUISA TANJANGCO,
and SPOUSES FRANK and TERESITA CUASO, respondent.

DECISION

NACHURA, J.:

Before this Court is a Petition for Review on Certiorari1 under Rule 45 of the Rules of Civil Procedure seeking the reversal of
the Court of Appeals (CA) Decision 2 dated January 31, 2003 in CA-G.R. CV No. 43217, which reversed and set aside the
Decision3 of the Regional Trial Court (RTC) of Quezon City, dated March 30, 1993.

The Antecedents:

Respondents-spouses Reynaldo and Maria Luisa Tanjangco (the Tanjangcos) own Lots 68 and 69 covered by Transfer
Certificates of Title (TCT) No. 242245 4 and 2829615 respectively, located at Corinthian Gardens Subdivision, Quezon City,
which is managed by petitioner Corinthian Gardens Association, Inc. (Corinthian). On the other hand, respondents-spouses
Frank and Teresita Cuaso (the Cuasos) own Lot 65 which is adjacent to the Tanjangcos’ lots.

Before the Cuasos constructed their house on Lot 65, a relocation survey was necessary. As Geodetic Engineer Democrito De
Dios (Engr. De Dios), operating under the business name D.M. De Dios Realty and Surveying, conducted all the previous
surveys for the subdivision's developer, Corinthian referred Engr. De Dios to the Cuasos. Before, during and after the
construction of the said house, Corinthian conducted periodic ocular inspections in order to determine compliance with the
approved plans pursuant to the Manual of Rules and Regulations of Corinthian.6 Unfortunately, after the Cuasos constructed
their house employing the services of C.B. Paraz & Construction Co., Inc. (C.B. Paraz) as builder, their perimeter fence
encroached on the Tanjangcos’ Lot 69 by 87 square meters.

No amicable settlement was reached between the parties. Thus, the Tanjangcos demanded that the Cuasos demolish the
perimeter fence but the latter failed and refused, prompting the Tanjangcos to file with the RTC a suit against the Cuasos for
Recovery of Possession with Damages.7

Eventually, the Cuasos filed a Third-Party Complaint8 against Corinthian, C.B. Paraz and Engr. De Dios. The Cuasos ascribed
negligence to C.B. Paraz for its failure to ascertain the proper specifications of their house, and to Engr. De Dios for his failure
to undertake an accurate relocation survey, thereby, exposing them to litigation. The Cuasos also faulted Corinthian for
approving their relocation survey and building plans without verifying their accuracy and in making representations as to Engr.
De Dios' integrity and competence. The Cuasos alleged that had Corinthian exercised diligence in performing its duty, they
would not have been involved in a boundary dispute with the Tanjangcos. Thus, the Cuasos opined that Corinthian should also
be held answerable for any damages that they might incur as a result of such construction.
On March 30, 1993, the RTC rendered a Decision in favor of the Tanjangcos. It ruled that the Cuasos’ perimeter wall
encroached on the land of the Tanjangos by 87 square meters. It, however, ruled that the Cuasos were builders in good faith,
and gave the Tanjangcos the option to sell and the Cuasos the option to buy the encroaching portion of the land, at a price to
be agreed upon by the parties within sixty (60) days from receipt of the said Decision. In the event that the Cuasos were unable
and unwilling to purchase the said portion, the perimeter wall should be demolished at the latter’s expense. The RTC also
ordered the Cuasos to pay monthly rentals of P2,000.00 commencing from the time of the filing of the complaint. The RTC
likewise held that C.B. Paraz was grossly negligent in not taking into account the correct boundaries of Cuasos’ lot when it
constructed the house. It, thus, ordered C.B. Paraz to pay moral and exemplary damages as well as attorney’s fees to the
Tanjangcos and the Cuasos. The third- party complaint against Corinthian and Engr. De Dios, on the other hand, was
dismissed for lack of cause of action.

The Tanjangcos filed a Motion for Reconsideration 9 of the said RTC Decision which the RTC, however, denied in its Order 10
dated June 28, 1993.

Dissatisfied with the RTC ruling, the Tanjangcos, the Cuasos, and C.B. Paraz all appealed to the CA.

On appeal, the CA reversed and set aside the RTC Decision. It held that the Cuasos acted in bad faith in land-grabbing the 87
square meter-portion of Lot 69 as of April 5, 1989. Correlatively, the CA allowed the Tanjangcos to exercise the rights granted
under Articles 449, 450, 451 and 549 of the New Civil Code, which include the right to demand the demolition of the offending
perimeter wall after reimbursing the Cuasos the necessary expenses for the preservation of the encroached area. The Cuasos
were ordered to pay monthly rentals of P10,000.00 for the use, enjoyment and occupancy of the lot from 1989 up to the time
they vacate the property considering the location and category of the same. They were, likewise, ordered to pay the
Tanjangcos P100,000.00, as moral damages, P50,000.00 as exemplary damages, and P150,000.00 as attorney’s fees. The
CA also imposed six percent (6%) interest per annum on all the awards. The Cuasos’ appeal against the Tanjangcos, on the
other hand, was dismissed for lack of merit. On the third-party complaints, Corinthian, C.B. Paraz and Engr. De Dios were all
found negligent in performing their respective duties and so they were ordered to contribute five percent (5%) each, or a total of
fifteen percent (15%) to all judgment sums and amounts that the Cuasos shall eventually pay under the decision, also with
interest of six percent (6%) per annum.

Only Corinthian filed a Motion for Reconsideration 11 of the CA Decision within the 15-day reglementary period. No motion for
reconsideration was filed by the Cuasos, C.B. Paraz and/or Engr. De Dios.

About six (6) months later, or on August 12, 2003, the Cuasos filed a Comment/Manifestation12 praying that they be allowed to
adopt Corinthian’s Motion for Reconsideration.
 In its Resolution13 dated November 14, 2003, the CA denied Corinthian’s Motion for Reconsideration.

Hence, Corinthian filed the instant Petition for Review on Certiorari assailing the CA Decision and Resolution, and
impleading the Cuasos as one of the respondents being the third-party plaintiffs in the RTC.

This Court gave due course to Corinthian’s petition and required the parties to submit their respective memorandum. 14 In
compliance, the Cuasos submitted their Memorandum15 and Supplement to Memorandum,16 which were both noted by this
Court in its Resolutions dated January 10, 200517 and February 2, 2005, 18 respectively.

In the meantime, the Tanjangcos moved for partial entry of judgment of the CA Decision which was granted by the CA in its
Resolution19 dated May 26, 2006, directing the issuance of an Entry of Judgment and a Certification that its Decision dated
January 31 2003 has become final and executory with respect to the Cuasos, C.B. Paraz and Engr. De Dios for their failure to
file an appeal assailing the said Decision before this Court.

The Tanjangcos then moved for the execution of the judgment against the Cuasos, specifically the demolition of the perimeter
fence,20 which was also granted by the RTC in its Order21 dated December 18, 2006.

Other than the filing of an Opposition 22 and a Motion for Reconsideration23 before the RTC, the Cuasos prayed for the issuance
of a temporary restraining order (TRO) and/or preliminary injunction before this Court to enjoin the demolition of the perimeter
fence. They averred that the premature demolition of the alleged encroaching perimeter wall and other improvements will
cause grave and irreparable damage to them, because what is sought to be demolished is part of their residence. They
claimed that no amount of money will compensate for the damage they stand to suffer should any demolition subsequently
prove to be wrongful. They argued that before any execution can be carried out, it is necessary to first determine whether or
not Corinthian was negligent in approving the building plan and whether or not it acted in good faith in doing so. Such
determination, according to the Cuasos, will in turn determine whether or not they were in good faith in constructing the
house.24

The Tanjangcos opposed the Cuasos' application for TRO. They countered that the only pending matter with this Court is the
appeal by Corinthian; hence, the implementation of the January 31, 2003 Decision of the CA against the Cuasos will not
preempt the outcome of the said pending incidents. Also, any action taken by this Court on Corinthian’s petition would not
benefit the Cuasos for they did not appeal the adverse decision against them. Accordingly, they cannot obtain affirmative relief
from this Court by reason or on account of the appeal taken by Corinthian. The appeal, they added, is personal to Corinthian.
Finally, they argued that the Cuasos are now estopped from questioning the enforcement of the CA Decision since they issued
a manager’s check to pay the money judgment.25

In this Court's Resolution dated July 18, 2007, we denied the Cuasos' application for TRO and/or writ of preliminary injunction
for lack of merit.

The denial was based on sound legal principles. It is axiomatic that to be entitled to the injunctive writ, one must show that
there exists a right to be protected which is directly threatened by the act sought to be enjoined. Furthermore, there must be a
showing that the invasion of the right is material and substantial, that the right of complainant is clear and unmistakable, and
that there is an urgent and paramount
necessity for the writ to issue in order to prevent serious damage.26

In the Cuasos’ case, their right to injunctive relief had not been clearly and unmistakably demonstrated. They failed to show
proof that there is material and substantial invasion of their right to warrant the issuance of an injunctive writ. Indeed, the
enforcement of the writ of execution, which would demolish the Cuasos’ perimeter fence, is manifestly prejudicial to their
interest. However, they possess no clear and unmistakable legal right that merits protection through the writ of preliminary
injunction.27 Their right to maintain the said fence had been declared inferior to the Tanjangcos’ right to the demolition of the
fence, after the CA judgment had become final and executory as to the Cuasos.
 It bears stressing that the Cuasos failed to appeal the ruling of the CA. This failure to contest the CA decision before this Court
was fatal to their cause. It had the effect of an admission that they indeed acted in bad faith, as they accepted the CA ruling.
The decision of the CA, therefore, became binding and final as to them. 28 As a matter of fact, the CA already issued a partial
entry of judgment against the Cuasos.

An injunction to stay a final and executory decision is unavailing except only after a showing that facts and circumstances exist
which would render execution unjust or inequitable, or that a change in the situation of the parties occurred. Here, no such
exception exists as shown by the facts earlier narrated.29

While it is true that this Court noted the Memorandum and Supplemental Memorandum filed by the Cuasos, such notation was
made only insofar as Corinthian made them respondents in this petition. This Court cannot grant to the Cuasos any affirmative
relief as they did not file a petition questioning the CA ruling. Consequently, the Decision of the CA holding that the Cuasos
acted in bad faith and that the perimeter fence may now be demolished cannot be put in issue by the Cuasos. It is a
fundamental principle that a party who does not appeal, or file a petition for certiorari, is not entitled to any affirmative relief. 30
An appellee who is not an appellant may assign errors in his brief where his purpose is to maintain the judgment, but he cannot
seek modification or reversal of the judgment or claim affirmative relief unless he has also appealed. 31 This applies to C.B.
Paraz and Engr. De Dios who likewise failed to assail the aforementioned CA Decision.

With this matter put to rest, we now go to the main issues raised by Corinthian, the sole petitioner in this case, to wit:

a) Whether or not there is legal basis for the Court of Appeals to hold petitioner Corinthian Gardens Association, Inc. liable to pay
5% of the judgment money to Sps. Tanjangco on account of the encroachment made by Sps. Cuaso[; and]

b) Whether or not the Court of Appeals has legal basis to increase unilaterally and without proof the amount prayed for in the
Complaint, i.e., P2,000.00, as reasonable compensation for the use and enjoyment of the portion of the lot encroached upon, to
P10,000.00.32

Corinthian claims that the approval of the building plan of the Cuasos was not tainted with negligence as it did not approve the
survey relocation plan but merely the architectural, structural and sanitary plans for Cuasos' house; that the purpose of the said
approval is not to ensure that the house to
be erected on a particular lot is constructed within its boundaries but only to ensure compliance with the Manual of Rules and
Regulations; that while Corinthian conducts actual site inspections, the inspection and approval of the building plans are limited
to "table inspection" only; that the survey relocation plan was never submitted for Corinthian's approval; that the acceptance of
the builder's bond did not make Corinthian automatically liable for the encroachment and for damages; and that Corinthian
approved the building plan with the good faith and due diligence required under the circumstances. It, thus, concludes that it
cannot be held liable to pay five

percent (5%) of the money judgment to the Tanjangcos on account of the encroachment made by the Cuasos. Likewise, it
finds no legal basis for the CA to unilaterally increase the amount of the adjudged rent from P2,000.00 to P10,000.00 which
was not prayed for by the Tanjangcos in their complaint and in the absence of evidence adduced by the parties.33

On the other hand, the Tanjangcos stand by the ruling of the CA and opine that Corinthian was negligent in approving the
building plan of the Cuasos. They submit that Corinthian's claim that it merely conducts "table inspections" of buildings further
bolsters their argument that Corinthian was negligent in conveniently and unilaterally restricting and limiting the coverage of its
approval, contrary to its own Manual of Rules and Regulations; that the acceptance of a builder's bond does not automatically
make Corinthian liable but the same affirms the fact that a homeowner can hold it liable for the consequences of the approval
of a building plan; and that Corinthian, by regularly demanding and accepting membership dues, must be wary of its
responsibility to protect the rights and interests of its members. Lastly, the Tanjangcos contend that a court can take judicial
notice of the general increase in the rentals of real estate, as in this case, where the CA considered the value of their lot in the
"posh-and-swank" Corinthian Gardens Subdivision and the fact that they were deprived of it for almost two decades. The
Tanjangcos pray that this Court sustain the ruling of the CA.34
The instant case is obviously one for tort, as governed by Article 2176 of the Civil Code, which 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.

In every tort case filed under this provision, 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.35

Undeniably, the perimeter fence of the Cuasos encroached on Lot 69 owned by the Tanjangcos by 87 square meters as duly
found by both the RTC and the CA in accordance with the evidence on record. As a result, the Tanjangcos suffered damage in
having been deprived of the use of that portion of their lot encroached upon. Thus, the primordial issue to be resolved in this
case is whether Corinthian was negligent under the circumstances and, if so, whether such negligence contributed to the injury
suffered by the Tanjangcos.
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 actor's 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.36

The test to determine the existence of negligence in a particular case may be stated as follows: Did the defendant in
committing the alleged negligent act use that reasonable care and caution which an ordinary person would have used in the
same situation? If not, then he is guilty of negligence. The law, in effect, adopts the standard supplied by the imaginary conduct
of the discreet paterfamilias in 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 a man of ordinary intelligence and prudence, and determines liability according to that standard.37

By this test, we find Corinthian negligent.

While the issue of Corinthian's alleged negligence is factual in character, 38 a review by this Court is proper because the CA's
factual findings differ from those of the RTC's.39 Thus, after a meticulous review of the evidence on record, we hold that the CA
committed no reversible error when it deviated from the findings of fact of the RTC. The CA's findings and conclusions are
substantiated by the evidence on record and are more in accord with law and reason. Indeed, it is clear that Corinthian failed to
exercise the requisite diligence in insuring that the Cuasos abide by its Manual of Rules and Regulations, thereby resulting in
the encroachment on the Tanjangcos’ property.

We agree with the CA when it aptly held:

Corinthian cannot and should not be allowed to justify or excuse its negligence by claiming that its approval of the Cuasos’
building plans was only limited to a so-called "table inspection;" and not actual site measurement. To accept some such postulate
is to put a premium on negligence. Corinthian was not organized solely for the defendants Cuasos. It is also the subdivision of the
plaintiffs-spouses Tanjangcos - and of all others who have their dwelling units or abodes therein. Pertinently, its Manual of Rules
and Regulations stipulates in Section 3 thereof (under the heading Construction), thus:

A. Rules and Regulations

No new construction can be started unless the building plans are approved by the Association and the appropriate
Builder’s cash bond and pre-construction fees are paid. The Association will not allow the entry of construction materials and
process identification cards for workers if the above conditions are not complied with. Likewise, all renovations, repairs,
additions and improvements to a finished house except electrical wiring, will have to be approved by the Association. Water
service connection of a homeowner who undertakes construction work without prior approval of the Association will be cut-off
 in addition to the sanctions previously mentioned.
It goes without saying that this Manual of Rules and Regulations applies to all - or it does not apply at all. To borrow a popular
expression, what is sauce for the gander is sauce for the goose - or ought to be. To put it matter-of-factly and bluntly, thus, its so-
called "table inspection" approval of the Cuasos’ building plans is no less of an approval, as approvals come and go. And since it
is an approval tainted with negligence, the necessary and inevitable consequences which law and justice attach to such
negligence must, as a matter of law and justice, also necessarily attach to Corinthian.

And then again third party defendant-appellee Corinthian Garden required the posting of a builder’s cash bond (Exh. 5-
Corinthian) from the defendants-appellants Cuasos and the third-party defendant C.B. Paraz Construction to secure the
performance of their undertaking. Surely, Corinthian does not imply that while it may take the benefits from the Builder’s cash
bond, it may, Pilate-like, wash its hands of any responsibility or liability that would or might arise from the construction or building
of the structure for which the cash bond was in the first place posted. That is not only unjust and immoral, but downright
unchristian and iniquitous.

Under the same parity of reasoning, the payment by the appellants-Cuasos to the appellee Corinthian of pre- construction and
membership fees in the Association must necessarily entail the creation of certain obligations on the part of Corinthian. For duties
and responsibilities always go hand in hand with rights and privileges. That is the law of life - and that is the law of every civilized
society. It is an axiom of equity that he who receives the benefits must share the burdens. 40

By its Manual of Rules and Regulations, it is reasonable to assume that Corinthian, through its representative, in the approval
of building plans, and in the conduct of periodic inspections of on-going construction projects within the subdivision, is
responsible in insuring compliance with the approved plans, inclusive of the construction of perimeter walls, which in this case
is the subject of dispute between the Tanjangcos and the Cuasos.41 It is not just or equitable to relieve Corinthian of any liability
when, by its very own rules, it imposes its authority over all its members to the end that "no new construction can be started
unless the plans are approved by the Association and the appropriate cash bond and pre- construction fees are paid."
Moreover, Corinthian can impose sanctions for violating these rules. Thus, the proposition that the inspection is merely a "table
inspection" and, therefore, should exempt Corinthian from liability, is unacceptable. After all, if the supposed inspection is
merely a "table inspection" and the approval granted to every member is a mere formality, then the purpose of the rules would
be defeated. Compliance therewith would not be mandatory, and sanctions imposed for violations could be disregarded.
Corinthian's imprimatur on the construction of the Cuasos' perimeter wall over the property of the Tanjangcos assured the
Cuasos that everything was in order.

In sum, Corinthian’s failure to prevent the encroachment of the Cuasos’ perimeter wall into Tanjangcos’ property – despite the
inspection conducted – constitutes negligence and, at the very least, contributed to the injury suffered by the Tanjangcos.

On the second issue, our ruling in Spouses Badillo v. Tayag42 is instructive:

Citing Sia v. Court of Appeals [272 SCRA 141, May 5, 1997], petitioners argue that the MTC may take judicial notice of the
reasonable rental or the general price increase of land in order to determine the amount of rent that may be awarded to them. In
that case, however, this Court relied on the CA's factual findings, which were based on the evidence presented before the trial
court. In determining reasonable rent,

the RTC therein took account of the following factors: 1) the realty assessment of the land, 2) the increase in realty taxes, and 3)
the prevailing rate of rentals in the vicinity. Clearly, the trial court relied, not on mere judicial notice, but on the evidence presented
before it.

Indeed, courts may fix the reasonable amount of rent for the use and occupation of a disputed property. However, petitioners
herein erred in assuming that courts, in determining the amount of rent, could simply rely on their own appreciation of land values
without considering any evidence. As we have said earlier, a court may fix the reasonable amount of rent, but it must still base its
action on the evidence adduced by the parties.

In Herrera v. Bollos [G.R. No. 138258, January 18, 2002], the trial court awarded rent to the defendants in a forcible entry case.
Reversing the RTC, this Court declared that the reasonable amount of rent could be determined not by mere judicial notice, but
 by supporting evidence:

x x x A court cannot take judicial notice of a factual matter in controversy. The court may take judicial notice of matters of
public knowledge, or which are capable of unquestionable demonstration, or ought to be known to judges because of their
judicial functions. Before taking such judicial notice, the court must "allow the parties to be heard thereon." Hence, there can
be no judicial notice on the rental value of the premises in question without supporting evidence.

Truly, mere judicial notice is inadequate, because evidence is required for a court to determine the proper rental value. But
contrary to Corinthian's arguments, both the RTC and the CA found that indeed rent was due the Tanjangcos because they
were deprived of possession and use of their property. This uniform factual finding of the RTC and the CA was based on the
evidence presented below. Moreover, in Spouses Catungal v. Hao, 43 we considered the increase in the award of rentals as
reasonable given the particular circumstances of each case. We noted therein that the respondent denied the petitioners the
benefits, including rightful possession, of their property for almost a decade.

Similarly, in the instant case, the Tanjangcos were deprived of possession and use of their property for more than two decades
through no fault of their own. Thus, we find no cogent reason to disturb the monthly rental fixed by the CA.

All told, the CA committed no reversible error.

WHEREFORE, the petition is DENIED. The Decision of the Court of Appeals is AFFIRMED. Costs against petitioner.

SO ORDERED.
G.R. No. 84698 February 4, 1992

PHILIPPINE SCHOOL OF BUSINESS ADMINISTRATION, JUAN D. LIM, BENJAMIN P. PAULINO, ANTONIO M.

MAGTALAS, COL. PEDRO SACRO and LT. M. SORIANO, petitioners, vs. COURT OF APPEALS, HON. REGINA
ORDOÑEZ-BENITEZ, in her capacity as Presiding Judge of Branch 47, Regional Trial Court, Manila, SEGUNDA R.
BAUTISTA and ARSENIA D. BAUTISTA, respondents.

Balgos and Perez for petitioners.

Collantes, Ramirez & Associates for private respondents.

PADILLA, J.:

A stabbing incident on 30 August 1985 which caused the death of Carlitos Bautista while on the second-floor premises of the
Philippine School of Business Administration (PSBA) prompted the parents of the deceased to file suit in the Regional Trial
Court of Manila (Branch 47) presided over by Judge (now Court of Appeals justice) Regina Ordoñez-Benitez, for damages
against the said PSBA and its corporate officers. At the time of his death, Carlitos was enrolled in the third year commerce
course at the PSBA. It was established that his assailants were not members of the school's academic community but were
elements from outside the school.

Specifically, the suit impleaded the PSBA and the following school authorities: Juan D. Lim (President), Benjamin P. Paulino
(Vice-President), Antonio M. Magtalas (Treasurer/Cashier), Col. Pedro Sacro (Chief of Security) and a Lt. M. Soriano
(Assistant Chief of Security). Substantially, the plaintiffs (now private respondents) sought to adjudge them liable for the
victim's untimely demise due to their alleged negligence, recklessness and lack of security precautions, means and methods
before, during and after the attack on the victim. During the proceedings a quo, Lt. M. Soriano terminated his relationship with
the other petitioners by resigning from his position in the school.
Defendants a quo (now petitioners) sought to have the suit dismissed, alleging that since they are presumably sued under
Article 2180 of the Civil Code, the complaint states no cause of action against them, as jurisprudence on the subject is to the
effect that academic institutions, such as the PSBA, are beyond the ambit of the rule in the afore-stated article.

The respondent trial court, however, overruled petitioners' contention and thru an order dated 8 December 1987, denied their
motion to dismiss. A subsequent motion for reconsideration was similarly dealt with by an order dated 25 January 1988.
Petitioners then assailed the trial court's disposition before the respondent appellate court which, in a decision * promulgated
on 10 June 1988, affirmed the trial court's orders. On 22 August 1988, the respondent appellate court resolved to deny the
petitioners' motion for reconsideration. Hence, this petition.

At the outset, it is to be observed that the respondent appellate court primarily anchored its decision on the law of quasi-
delicts, as enunciated in Articles 2176 and 2180 of the Civil
Code. 1 Pertinent portions of the appellate court's now assailed ruling state:

Article 2180 (formerly Article 1903) of the Civil Code is an adoption from the old Spanish Civil Code. The comments of
Manresa and learned authorities on its meaning should give way to present day changes. The law is not fixed and flexible
(sic); it must be dynamic. In fact, the greatest value and significance of law as a rule of conduct in ( sic) its flexibility to
adopt to changing social conditions and its capacity to meet the new challenges of progress.

Construed in the light of modern day educational system, Article 2180 cannot be construed in its narrow concept as held in
the old case of Exconde vs. Capuno 2 and Mercado vs. Court of Appeals; 3 hence, the ruling in the Palisoc 4 case that it
should apply to all kinds of educational institutions, academic or vocational.

At any rate, the law holds the teachers and heads of the school staff liable unless they relieve themselves of such liability
pursuant to the last paragraph of Article 2180 by "proving that they observed all the diligence to prevent damage." This
can only be done at a trial on the merits of the case. 5

While we agree with the respondent appellate court that the motion to dismiss the complaint was correctly denied and the
complaint should be tried on the merits, we do not however agree with the premises of the appellate court's ruling.

Article 2180, in conjunction with Article 2176 of the Civil Code, establishes the rule of in loco parentis. This Court discussed this
doctrine in the afore-cited cases of Exconde, Mendoza, Palisoc and, more recently, in Amadora vs. Court of Appeals. 6 In all
such cases, it had been stressed that the law (Article 2180) plainly provides that the damage should have been caused or
inflicted by pupils or students of he educational institution sought to be held liable for the acts of its pupils or students while in
its custody. However, this material situation does not exist in the present case for, as earlier indicated, the assailants of Carlitos
were not students of the PSBA, for whose acts the school could be made liable.

However, does the appellate court's failure to consider such material facts mean the exculpation of the petitioners from
liability? It does not necessarily follow.

When an academic institution accepts students for enrollment, there is established a contract between them, resulting in
bilateral obligations which both parties are bound to comply with. 7 For its part, the school undertakes to provide the student
with an education that would presumably suffice to equip him with the necessary tools and skills to pursue higher education or
a profession. On the other hand, the student covenants to abide by the school's academic requirements and observe its rules
and regulations.

Institutions of learning must also meet the implicit or "built-in" obligation of providing their students with an atmosphere that
promotes or assists in attaining its primary undertaking of imparting knowledge. Certainly, no student can absorb the intricacies
of physics or higher mathematics or explore the realm of the arts and other sciences when bullets are flying or grenades
exploding in the air or where there looms around the school premises a constant threat to life and limb. Necessarily,
the school must ensure that adequate steps are taken to maintain peace and order within the campus premises and to prevent
the breakdown thereof.

Because the circumstances of the present case evince a contractual relation between the PSBA and Carlitos Bautista, the
rules on quasi-delict do not really govern. 8 A perusal of Article 2176 shows that obligations arising from quasi-delicts or tort,
also known as extra-contractual obligations, arise only between parties not otherwise bound by contract, whether express or
implied. However, this impression has not prevented this Court from determining the existence of a tort even when there
obtains a contract. In Air France vs. Carrascoso (124 Phil. 722), the private respondent was awarded damages for his
unwarranted expulsion from a first- class seat aboard the petitioner airline. It is noted, however, that the Court referred to the
petitioner-airline's liability as one arising from tort, not one arising from a contract of carriage. In effect, Air France is authority
for the view that liability from tort may exist even if there is a contract, for the act that breaks the contract may be also a tort.
(Austro-America S.S. Co. vs. Thomas, 248 Fed. 231).

This view was not all that revolutionary, for even as early as 1918, this Court was already of a similar mind. In Cangco vs.
Manila Railroad (38 Phil. 780), Mr. Justice Fisher elucidated thus:

The field of non-contractual obligation is much broader than that of contractual obligation, comprising, as it does, the whole
extent of juridical human relations. These two fields, figuratively speaking, concentric; that is to say, the mere fact that a
person is bound to another by contract does not relieve him from extra-contractual liability to such person. When such a
contractual relation exists the obligor may break the contract under such conditions that the same act which constitutes a
breach of the contract would have constituted the source of an extra-contractual obligation had no contract existed
between the parties.

Immediately what comes to mind is the chapter of the Civil Code on Human Relations, particularly Article 21, which provides:

Any person who wilfully causes loss or injury to another in a manner that is contrary to morals, good custom or public
policy shall compensate the latter for the damage. (emphasis supplied).

Air France penalized the racist policy of the airline which emboldened the petitioner's employee to forcibly oust the private
respondent to cater to the comfort of a white man who allegedly "had a better right to the seat." In Austro- American, supra, the
public embarrassment caused to the passenger was the justification for the Circuit Court of Appeals, (Second Circuit), to award
damages to the latter. From the foregoing, it can be concluded that should the act which breaches a contract be done in bad
faith and be violative of Article 21, then there is a cause to view the act as constituting a quasi-delict.

In the circumstances obtaining in the case at bar, however, there is, as yet, no finding that the contract between the school and
Bautista had been breached thru the former's negligence in providing proper security measures. This would be for the trial
court to determine. And, even if there be a finding of negligence, the same could give rise generally to a breach of
contractual obligation only. Using the test of Cangco, supra, the negligence of the school would not be relevant absent a
contract. In fact, that negligence becomes material only because of the contractual relation between PSBA and Bautista. In
other words, a contractual relation is a condition sine qua non to the school's liability. The negligence of the school cannot exist
independently of the contract, unless the negligence occurs under the circumstances set out in Article 21 of the Civil Code.

This Court is not unmindful of the attendant difficulties posed by the obligation of schools, above-mentioned, for conceptually a
school, like a common carrier, cannot be an insurer of its students against all risks. This is specially true in the populous
student communities of the so-called "university belt" in Manila where there have been reported several incidents ranging from
gang wars to other forms of hooliganism. It would not be equitable to expect of schools to anticipate all types of violent
trespass upon their premises, for notwithstanding the security measures installed, the same may still fail against an individual
or group determined to carry out a nefarious deed inside school premises and environs. Should this be the case, the school
may still avoid liability by proving that the breach of its contractual obligation to the students was not due to its negligence, here
statutorily defined to be the omission of that degree of diligence which is required by the nature of the obligation and
corresponding to the circumstances of persons, time and place. 9
 As the proceedings a quo have yet to commence on the substance of the private respondents' complaint, the record is bereft of
all the material facts. Obviously, at this stage, only the trial court can make such a determination from the evidence still to
unfold.

WHEREFORE, the foregoing premises considered, the petition is DENIED. The court of origin (RTC, Manila, Br. 47) is hereby
ordered to continue proceedings consistent with this ruling of the Court. Costs against the petitioners.

SO ORDERED.
G.R. No. L-12163 March 4, 1959

PAZ FORES, petitioner, vs. IRENEO MIRANDA, respondent.

Alberto O. Villaraza for petitioner. Almazan and Ereneta for respondent.

REYES, J.B.L., J.:

Defendant-petitioner Paz Fores brings this petition for review of the decision of the Court of Appeals (C.A. Case No. 1437-R)
awarding to the plaintiff-respondent Ireneo Miranda the sums of P5,000 by way of actual damages and counsel fees, and
P10,000 as moral damages, with costs.

Respondent was one of the passengers on a jeepney driven by Eugenio Luga. While the vehicle was descending the Sta.
Mesa bridge at an excessive rate of speed, the driver lost control thereof, causing it to swerve and to his the bridge wall. The
accident occurred on the morning of March 22, 1953. Five of the passengers were injured, including the respondent who
suffered a fracture of the upper right humerus. He was taken to the National Orthopedic Hospital for treatment, and later was
subjected to a series of operations; the first on May 23, 1953, when wire loops were wound around the broken bones and
screwed into place; a second, effected to insert a metal splint, and a third one to remove such splint. At the time of the trial, it
appears that respondent had not yet recovered the use of his right arm.

The driver was charged with serious physical injuries through reckless imprudence, and upon interposing a plea of guilty was
sentenced accordingly.

The contention that the evidence did not sufficiently establish the identity of the vehicle as the belonging to the petitioner was
rejected by the appellate court which found, among other things, that is carried plate No. TPU-1163, SERIES OF 1952,
Quezon City, registered in the name of Paz Fores, (appellant herein) and that the vehicle even had the name of "Doña Paz"
painted below its wind shield. No evidence to the contrary was introduced by the petitioner, who relied on an attack upon the
credibility of the two policemen who went to the scene of the incident.

A point to be further remarked is petitioner's contention that on March 21, 1953, or one day before the accident happened, she
allegedly sold the passenger jeep that was involved therein to a certain Carmen Sackerman.

The initial problem raised by the petitioner in this appeal may be formulated thus — "Is the approval of the Public Service
Commission necessary for the sale of a public service vehicle even without conveying therewith the authority to operate the
same?" Assuming the dubious sale to be a fact, the court of Appeals answered the query in the affirmative. The ruling should
be upheld.

Section 20 of the Public Service Act (Commonwealth Act No. 146) provides:

Sec. 20. Subject to established limitations and exceptions and saving provisions to the contrary, it shall be unlawful
for any public service or for the owner, lessee or operator thereof, without the previous approval and authority of the
Commission previously had —
 xxxxxxxxx

(g) To sell, alienate, mortgage, encumber or lease its property, franchises, certificates, privileges, or rights, or any part
thereof; or merge or consolidate its property, franchises, privileges or rights, or any part thereof, with those of any other
public service. The approval herein required shall be given, after notice to the public and after hearing the persons
interested at a public hearing, if it be shown that there are just and reasonable grounds for making the mortgage or
encumbrance, for liabilities of more than one year maturity, or the sale, alienation, lease, merger, or consolidation to be
approved and that the same are not detrimental to the public interest, and in case of a sale, the date on which the same is
to be consummated shall be fixed in the order of approval: Provided, however, That nothing herein contained shall be
construed to prevent the transaction from being negotiated or completed before its approval or to prevent the sale,
alienation, or lease by any public service of any of its property in the ordinary course of its business.

Interpreting the effects of this particular provision of law, we have held in the recent cases of Montoya vs. Ignacio, * 50 Off.
Gaz. No. 1, p. 108; Timbol vs. Osias, et al., G. R. No. L-7547, April 30, 1955, and Medina vs. Cresencia, 99 Phil., 506; 52 Off.
Gaz. No. 10, p. 4606, that a transfer contemplated by the law, if made without the requisite approval of the Public Service
Commission, is not effective and binding in so far as the responsibility of the grantee under the franchise in relation to the
public is concerned. Petitioner assails, however, the applicability of these rulings to the instant case, contending that in those
cases, the operator did not convey, by lease or by sale, the vehicle independently of his rights under the franchise. This line of
reasoning does not find support in the law. The provisions of the statute are clear and prohibit the sale, alienation, lease, or
encumbrance of the property, franchise, certificate, privileges or rights, or any part thereof of the owner or operator of the
public service Commission. The law was designed primarily for the protection of the public interest; and until the approval of
the public Service Commission is obtained the vehicle is, in contemplation of law, still under the service of the owner or
operator standing in the records of the Commission which the public has a right to rely upon.

The proviso contained in the aforequoted law, to the effect that nothing therein shall be construed "to prevent the transaction
from being negotiated or complete before its approval", means only that the sale without the required approval is still valid and
binding between the parties (Montoya vs. Ignacio, supra). The phrase "in the ordinary course of its business" found in the other
proviso" or to prevent the sale, alienation, or lease by any public service of any of its property". As correctly observed by the
lower court, could not have been intended to include the sale of the vehicle itself, but at most may refer only to such property
that may be conceivably disposed or by the carrier in the ordinary course of its business, like junked equipment or spare parts.

The case of Indalecio de Torres vs. Vicente Ona (63 Phil., 594, 597) is enlightening; and there, it was held:
Under the law, the Public Service Commission has not only general supervision and regulation of, but also full jurisdiction
and control over all public utilities including the property, equipment and facilities used, and the property rights and
franchise enjoyed by every individual and company engaged i the performance of a public service in the sense this phrase
is used in the Public Service Act or Act No. 3108). By virtue of the provisions of said Act, motor vehicles used in the
performance of a service, as the transportation of freight from one point to another, have to this date been considered —
and they cannot but be so considered-public service property; and, by reason of its own nature, a TH truck, which means
that the operator thereof places it at the disposal of anybody who is willing to pay a rental of its use, when he desires to
transfer or carry his effects, merchandise or any other cargo from one place to another, is necessarily a public service
property. (Emphasis supplied)

Of course, this court has held in the case of Bachrach Motor co. vs. Zamboanga Transportation Co., 52 Phil., 244, that there
may be a nunc pro tunc authorization which has the effect of having the approval retroact to the date of the transfer; but such
outcome cannot prejudice rights intervening in the meantime. It appears that no such approval was given by the Commission
before the accident occurred.

The P10,000 actual damages awarded by the Court of First Instance of Manila were reduced by the Court of Appeals to only
P2,000, on the ground that a review of the records failed to disclose a sufficient basis for the trial court's appraisal, since the
only evidence presented on this point consisted of respondent's bare statement that his expenses and loss of income
amounted to P20,000. On the other hand, "it cannot be denied," the lower court said, "that appellee (respondent) did incur
expenses"' It is well to note further that respondent was a painter by profession and a professor of Fine Arts, so that the
amount of P2,000 awarded cannot be said to be excessive (see Arts. 2224 and 2225, Civil Code of the Philippines). The
attorney's fees in the sum of P3,000 also awarded to the respondent are assailed on the ground that the Court of First Instance
did not provided for the same, and since no appeal was interposed by said respondent, it was allegedly error for the Court of
Appeals to award them motu proprio. Petitioner fails to note that attorney's fees are included in the concept of actual damages
under the Civil Code and may be awarded whenever the court deems it is just and equitable (Art. 2208, Civil Code of the
Philippines). We see no reason to alter these awards.

Anent the moral damages ordered to be paid to the respondent, the same must be discarded. We have repeatedly ruled
(Cachero vs. Manila Yellow Taxicab Co. Inc., 101 Phil., 523; 54 Off. Gaz., [26], 6599; Necesito, et al vs. Paras, 104 Phil., 75;
56 Off. Gaz., [23] 4023, that moral damages are not recoverable in damage actions predicted on a breach of the contract of
transportation, in view of Articles 2219 and 2220 of the new Civil Code, which provide as follows:

Art. 2219. Moral damages may be recovered in the following and analogous cases:

(1) A criminal offense resulting in physical injuries;

(2) Quasi-delicts causing physical injuries;

xxxxxxxxx
Art. 2220. Willful injury to property may be a legal ground for awarding moral damages if the court should find that, under
circumstances, such damages are justify due. The same rule applies to breaches of contract where the defendant acted
fraudulently or in bad faith.

By contrasting the provisions of these two article it immediately becomes apparent that:

(a) In case of breach of contract (including one of transportation) proof of bad faith or fraud ( dolus), i.e., wanton or deliberately
injurious conduct, is essential to justify an award of moral damages; and

(b) That a breach of contract can not be considered included in the descriptive term "analogous cases" used in Art. 2219; not
only because Art. 2220 specifically provides for the damages that are caused by contractual breach, but because the definition
of quasi-delict in Art. 2176 of the Code expressly excludes the cases where there is a "preexisting contractual relation between
the parties."

Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the
damage dome. 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.

The exception to the basic rule of damages now under consideration is a mishap resulting in the death of a passenger, in
which case Article 1764 makes the common carrier expressly subject to the rule of Art. 2206, that entitles the deceased
passenger to "demand moral damages for mental anguish by reason of the death of the deceased" (Necesito vs. Paras, 104
Phil., 84, Resolution on motion to reconsider, September 11, 1958). But the exceptional rule of Art. 1764 makes it all the more
evident that where the injured passenger does not die, moral damages are not recoverable unless it is proved that the carrier
was guilty of malice or bad faith. We think it is clear that the mere carelessness of the carrier's driver does not per se constitute
of justify an inference of malice or bad faith on the part of the carrier; and in the case at bar there is no other evidence of such
malice to support the award of moral damages by the Court of Appeals. To award moral damages for breach of contract,
therefore, without proof of bad faith or malice on the part of the defendant, as required by Art. 220, would be to violate the clear
provisions of the law, and constitute unwarranted judicial legislation.

The Court of Appeals has invoked our rulings in Castro vs. Acro Taxicab Co., G.R. No. 49155, December 14, 1948 and Layda
vs. Court of Appeals, 90 Phil., 724; but these doctrines were predicated upon our former law of damages, before judicial
discretion in fixing them became limited by the express provisions of the new Civil Code (previously quoted). Hence, the
 aforesaid rulings are now inapplicable.

Upon the other hand, the advantageous position of a party suing a carrier for breach of the contract of transportations explains,
to some extent, the limitations imposed by the new Code on the amount of the recovery. The action for breach of contract
imposes on the defendant carrier a presumption of liability upon mere proof of injury to the passenger; that latter is relieved
from the duty to established the fault of the carrier, or of his employees, and the burden is placed on the carrier to prove that it
was due to an unforseen event or to force
majeure (Cangco vs. Manila Railroad Co., 38 Phil., 768, 777). Moreover, the carrier, unlike in suits for quasi-delict, may not
escape liability by proving that it has exercised due diligence in the selection and supervision of its employees (Art. 1759, new
civil code; Cangco vs. Manila Railroad Co., supra; Prado vs. Manila Electric Co., 51 Phil., 900).

The difference in conditions, defenses and proof, as well as the codal concept of quasi-delict as essentially extra contractual
negligence, compel us to differentiate between action ex contractu, and actions quasi ex delicto, and prevent us from viewing
the action for breach of contract as simultaneously embodying an action on tort. Neither can this action be taken as one to
enforce on employee's liability under Art. 103 of the Revised Penal Code, since the responsibility is not alleged to be
subsidiary, nor is there on record any averment or proof that the driver of appellant was insolvent. In fact, he is not even made
a party to the suit.

It is also suggested that a carrier's violation of its engagement to safety transport the passenger involves a breach of the
passenger's confidence, and therefore should be regarded as a breach of contract in bad faith, justifying recovery of moral
damages under Art. 2220. This theory is untenable, for under it the carrier would always be deemed in bad faith, in every case
its obligation to the passenger is infringed, and it would be never accountable for simple negligence; while under the law (Art.
1756). the presumption is that common carriers acted negligently (and not maliciously), and Art. 1762 speaks of negligence of
the common carrier.

ART. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have
acted negligently, unless they prove that they observed extraordinary diligence as prescribed in article 1733 and 1755.

ART. 1762. The contributory negligence of the passenger does not bar recovery of damages for his death or injuries, if the
proximate cause thereof is the negligence of the common carrier, but the amount of damages shall be equitably reduced.

The distinction between fraud, bad faith or malice in the sense of deliberate or wanton wrong doing and negligence (as mere
carelessness) is too fundamental in our law to be ignored (Arts. 1170-1172); their consequences being clearly differentiated by
the Code.

ART. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith is liable shall be
those that are the natural and probable consequences of the breach of the obligation, and which the parties have foreseen
or could have reasonably foreseen at the time the obligation was constituted.

In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for all damages which may be
reasonably attributed to the non-performance of the obligation.

It is to be presumed, in the absence of statutory provision to the contrary, that this difference was in the mind of the lawmakers
when in Art. 2220 they limited recovery of moral damages to breaches of contract in bad faith. It is true that
negligence may be occasionally so gross as to amount to malice; but that fact must be shown in evidence, and a carrier's bad
faith is not to be lightly inferred from a mere finding that the contract was breached through negligence of the carrier's
employees.

In view of the foregoing considerations, the decision of the Court of Appeals is modified by eliminating the award of P5,000.00
by way of moral damages. (Court of Appeals Resolution of May 5, 1957). In all other respects, the judgment is affirmed. No
costs in this instance. So ordered.
G.R. No. L-21438 September 28, 1966

AIR FRANCE, petitioner, vs. RAFAEL CARRASCOSO and the HONORABLE COURT OF APPEALS, respondents.

Lichauco, Picazo and Agcaoili for petitioner. Bengzon Villegas and Zarraga for respondent R. Carrascoso.

SANCHEZ, J.:

The Court of First Instance of Manila 1 sentenced petitioner to pay respondent Rafael Carrascoso P25,000.00 by way of moral
damages; P10,000.00 as exemplary damages; P393.20 representing the difference in fare between first class and tourist class
for the portion of the trip Bangkok-Rome, these various amounts with interest at the legal rate, from the date of the filing of the
complaint until paid; plus P3,000.00 for attorneys' fees; and the costs of suit.

On appeal,2 the Court of Appeals slightly reduced the amount of refund on Carrascoso's plane ticket from P393.20 to P383.10,
and voted to affirm the appealed decision "in all other respects", with costs against petitioner.

The case is now before us for review on certiorari.

The facts declared by the Court of Appeals as " fully supported by the evidence of record", are:

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

On March 28, 1958, the defendant, Air France, through its authorized agent, Philippine Air Lines, Inc., issued to plaintiff a
"first class" round trip airplane ticket from Manila to Rome. From Manila to Bangkok, plaintiff travelled in "first class", but at
Bangkok, the Manager of the defendant airline forced plaintiff to vacate the "first class" seat that he was occupying
because, in the words of the witness Ernesto G. Cuento, there was a "white man", who, the Manager alleged, had a
"better right" to the seat. When asked to vacate his "first class" seat, the plaintiff, as was to be expected, refused, and told
defendant's Manager that his seat would be taken over his dead body; a commotion ensued, and, according to said
Ernesto G. Cuento, "many of the Filipino passengers got nervous in the tourist class; when they found out that Mr.
Carrascoso was having a hot discussion with the white man [manager], they came all across to Mr. Carrascoso and
pacified Mr. Carrascoso to give his seat to the white man" (Transcript, p. 12, Hearing of May 26, 1959); and plaintiff
reluctantly gave his "first class" seat in the plane.3

1. The trust of the relief petitioner now seeks is that we review "all the findings" 4 of respondent Court of Appeals. Petitioner
charges that respondent court failed to make complete findings of fact on all the issues properly laid before it. We are asked to
consider facts favorable to petitioner, and then, to overturn the appellate court's decision.
Coming into focus is the constitutional mandate that "No decision shall be rendered by any court of record without expressing
therein clearly and distinctly the facts and the law on which it is based". 5 This is echoed in the statutory demand that a
judgment determining the merits of the case shall state "clearly and distinctly the facts and the law on which it is based"; 6 and
that "Every decision of the Court of Appeals shall contain complete findings of fact on all issues properly raised before it". 7

A decision with absolutely nothing to support it is a nullity. It is open to direct attack. 8 The law, however, solely insists that a
decision state the "essential ultimate facts" upon which the court's conclusion is drawn. 9 A court of justice is not hidebound to
write in its decision every bit and piece of evidence 10 presented by one party and the other upon the issues raised. Neither is it
to be burdened with the obligation "to specify in the sentence the facts" which a party "considered as proved". 11 This is but a
part of the mental process from which the Court draws the essential ultimate facts. A decision is not to be so clogged with
details such that prolixity, if not confusion, may result. So long as the decision of the Court of Appeals contains the necessary
 facts to warrant its conclusions, it is no error for said court to withhold therefrom "any specific finding of facts with respect to the
evidence for the defense". Because as this Court well observed, "There is no law that so requires". 12 Indeed, "the mere failure
to specify (in the decision) the contentions of the appellant and the reasons for refusing to believe them is not sufficient to hold
the same contrary to the requirements of the provisions of law and the Constitution". It is in this setting that in Manigque, it was
held that the mere fact that the findings "were based entirely on the evidence for the prosecution without taking into
consideration or even mentioning the appellant's side in the controversy as shown by his own testimony", would not vitiate the
judgment. 13 If the court did not recite in the decision the testimony of each witness for, or each item of evidence presented by,
the defeated party, it does not mean that the court has overlooked such testimony or such item of evidence. 14 At any rate, the
legal presumptions are that official duty has been regularly performed, and that all the matters within an issue in a case were
laid before the court and passed upon by it. 15

Findings of fact, which the Court of Appeals is required to make, maybe defined as "the written statement of the ultimate facts
as found by the court ... and essential to support the decision and judgment rendered thereon". 16 They consist of the court's
"conclusions" with respect to the determinative facts in issue". 17 A question of law, upon the other hand, has been declared as
"one which does not call for an examination of the probative value of the evidence presented by the parties." 18

2. By statute, "only questions of law may be raised" in an appeal by certiorari from a judgment of the Court of Appeals. 19 That
judgment is conclusive as to the facts. It is not appropriately the business of this Court to alter the facts or to review the
questions of fact. 20

With these guideposts, we now face the problem of whether the findings of fact of the Court of Appeals support its judgment.

3. Was Carrascoso entitled to the first class seat he claims?

It is conceded in all quarters that on March 28, 1958 he paid to and received from petitioner a first class ticket. But petitioner
asserts that said ticket did not represent the true and complete intent and agreement of the parties; that said respondent knew
that he did not have confirmed reservations for first class on any specific flight, although he had tourist class protection; that,
accordingly, the issuance of a first class ticket was no guarantee that he would have a first class ride, but that such would
depend upon the availability of first class seats.

These are matters which petitioner has thoroughly presented and discussed in its brief before the Court of Appeals under its
third assignment of error, which reads: "The trial court erred in finding that plaintiff had confirmed reservations for, and a right
to, first class seats on the "definite" segments of his journey, particularly that from Saigon to Beirut". 21

And, the Court of Appeals disposed of this contention thus:

Defendant seems to capitalize on the argument that the issuance of a first-class ticket was no guarantee that the
passenger to whom the same had been issued, would be accommodated in the first-class compartment, for as in the case
of plaintiff he had yet to make arrangements upon arrival at every station for the necessary first-class reservation. We are
not impressed by such a reasoning. We cannot understand how a reputable firm like defendant airplane company could
have the indiscretion to give out tickets it never meant to honor at all. It received the corresponding amount in payment of
first-class tickets and yet it allowed the passenger to be at the mercy of its employees. It is more in keeping with the
ordinary course of business that the company should know whether or riot the tickets it issues are to be honored or not.22

Not that the Court of Appeals is alone. The trial court similarly disposed of petitioner's contention, thus:

On the fact that plaintiff paid for, and was issued a "First class" ticket, there can be no question. Apart from his testimony, see
plaintiff's Exhibits "A", "A-1", "B", "B-1," "B-2", "C" and "C-1", and defendant's own witness, Rafael Altonaga, confirmed
plaintiff's testimony and testified as follows:
 Q. In these tickets there are marks "O.K." From what you know, what does this OK mean?

A. That the space is confirmed.

Q. Confirmed for first class?

A. Yes, "first class". (Transcript, p. 169)

xxxxxxxxx

Defendant tried to prove by the testimony of its witnesses Luis Zaldariaga and Rafael Altonaga that although plaintiff paid for,
and was issued a "first class" airplane ticket, the ticket was subject to confirmation in Hongkong. The court cannot give credit to
the testimony of said witnesses. Oral evidence cannot prevail over written evidence, and plaintiff's Exhibits "A", "A-l", "B", "B-l",
"C" and "C-1" belie the testimony of said witnesses, and clearly show that the plaintiff was issued, and paid for, a first class
ticket without any reservation whatever.

Furthermore, as hereinabove shown, defendant's own witness Rafael Altonaga testified that the reservation for a "first class"
accommodation for the plaintiff was confirmed. The court cannot believe that after such confirmation defendant had a verbal
understanding with plaintiff that the "first class" ticket issued to him by defendant would be subject to confirmation in Hongkong.
23

We have heretofore adverted to the fact that except for a slight difference of a few pesos in the amount refunded on
Carrascoso's ticket, the decision of the Court of First Instance was affirmed by the Court of Appeals in all other respects. We
hold the view that such a judgment of affirmance has merged the judgment of the lower court. 24 Implicit in that affirmance is a
determination by the Court of Appeals that the proceeding in the Court of First Instance was free from prejudicial error and "all
questions raised by the assignments of error and all questions that might have been raised are to be regarded as finally
adjudicated against the appellant". So also, the judgment affirmed "must be regarded as free from all error". 25 We reached this
policy construction because nothing in the decision of the Court of Appeals on this point would suggest that its findings of fact
are in any way at war with those of the trial court. Nor was said affirmance by the Court of Appeals upon a ground or grounds
different from those which were made the basis of the conclusions of the trial court. 26

If, as petitioner underscores, a first-class-ticket holder is not entitled to a first class seat, notwithstanding the fact that seat
availability in specific flights is therein confirmed, then an air passenger is placed in the hollow of the hands of an airline. What
security then can a passenger have? It will always be an easy matter for an airline aided by its employees, to strike out the
very stipulations in the ticket, and say that there was a verbal agreement to the contrary. What if the passenger had a schedule
to fulfill? We have long learned that, as a rule, a written document speaks a uniform language; that spoken word could be
notoriously unreliable. If only to achieve stability in the relations between passenger and air carrier, adherence to the ticket so
issued is desirable. Such is the case here. The lower courts refused to believe the oral evidence intended to defeat the
covenants in the ticket.

The foregoing are the considerations which point to the conclusion that there are facts upon which the Court of Appeals
predicated the finding that respondent Carrascoso had a first class ticket and was entitled to a first class seat at Bangkok,
which is a stopover in the Saigon to Beirut leg of the flight. 27 We perceive no "welter of distortions by the Court of Appeals of
petitioner's statement of its position", as charged by petitioner. 28 Nor do we subscribe to petitioner's accusation that respondent
Carrascoso "surreptitiously took a first class seat to provoke an issue". 29 And this because, as petitioner states, Carrascoso
went to see the Manager at his office in Bangkok "to confirm my seat and because from Saigon I was told again to see the
Manager". 30 Why, then, was he allowed to take a first class seat in the plane at Bangkok, if he had no seat? Or, if another had
a better right to the seat?

4. Petitioner assails respondent court's award of moral damages. Petitioner's trenchant claim is that Carrascoso's action is
 planted upon breach of contract; that to authorize an award for moral damages there must be an averment of fraud or bad
faith;31 and that the decision of the Court of Appeals fails to make a finding of bad faith. The pivotal allegations in the complaint
bearing on this issue are:

3. That ... plaintiff entered into a contract of air carriage with the Philippine Air Lines for a valuable consideration,
the latter acting as general agents for and in behalf of the defendant, under which said contract, plaintiff was entitled to, as
defendant agreed to furnish plaintiff, First Class passage on defendant's plane during the entire duration of plaintiff's tour
of Europe with Hongkong as starting point up to and until plaintiff's return trip to Manila, ... .

4. That, during the first two legs of the trip from Hongkong to Saigon and from Saigon to Bangkok, defendant furnished to
the plaintiff First Class accommodation but only after protestations, arguments and/or insistence were made by the plaintiff
with defendant's employees.

5. That finally, defendant failed to provide First Class passage, but instead furnished plaintiff only Tourist Class
accommodations from Bangkok to Teheran and/or Casablanca, ... the plaintiff has been compelled by defendant's
employees to leave the First Class accommodation berths at Bangkok after he was already seated.

6. That consequently, the plaintiff, desiring no repetition of the inconvenience and embarrassments brought by defendant's
breach of contract was forced to take a Pan American World Airways plane on his return trip from Madrid to Manila.32

xxxxxxxxx

2. That likewise, as a result of defendant's failure to furnish First Class accommodations aforesaid, plaintiff suffered
inconveniences, embarrassments, and humiliations, thereby causing plaintiff mental anguish, serious anxiety, wounded
feelings, social humiliation, and the like injury, resulting in moral damages in the amount of P30,000.00. 33

xxxxxxxxx

The foregoing, in our opinion, substantially aver: First, That there was a contract to furnish plaintiff a first class passage
covering, amongst others, the Bangkok-Teheran leg; Second, That said contract was breached when petitioner failed to furnish
first class transportation at Bangkok; and Third, that there was bad faith when petitioner's employee compelled Carrascoso to
leave his first class accommodation berth "after he was already, seated" and to take a seat in the tourist class, by reason of
which he suffered inconvenience, embarrassments and humiliations, thereby causing him mental anguish, serious anxiety,
wounded feelings and social humiliation, resulting in moral damages. It is true that there is no specific mention of the term bad
faith in the complaint. But, the inference of bad faith is there, it may be drawn from the facts and circumstances set forth
therein. 34 The contract was averred to establish the relation between the parties. But the stress of the action is put on wrongful
expulsion.

Quite apart from the foregoing is that (a) right the start of the trial, respondent's counsel placed petitioner on guard on what
Carrascoso intended to prove: That while sitting in the plane in Bangkok, Carrascoso was ousted by petitioner's manager who
gave his seat to a white man; 35 and (b) evidence of bad faith in the fulfillment of the contract was presented without objection
on the part of the petitioner. It is, therefore, unnecessary to inquire as to whether or not there is sufficient averment in the
complaint to justify an award for moral damages. Deficiency in the complaint, if any, was cured by the evidence. An
amendment thereof to conform to the evidence is not even required. 36 On the question of bad faith, the Court of Appeals
declared:

That the plaintiff was forced out of his seat in the first class compartment of the plane belonging to the defendant Air
France while at Bangkok, and was transferred to the tourist class not only without his consent but against his will, has
been sufficiently established by plaintiff in his testimony before the court, corroborated by the corresponding entry made by
the purser of the plane in his notebook which notation reads as follows:
 "First-class passenger was forced to go to the tourist class against his will, and that the captain refused to intervene",

and by the testimony of an eye-witness, Ernesto G. Cuento, who was a co-passenger. The captain of the plane who was
asked by the manager of defendant company at Bangkok to intervene even refused to do so. It is noteworthy that no one
on behalf of defendant ever contradicted or denied this evidence for the plaintiff. It could have been easy for defendant to
present its manager at Bangkok to testify at the trial of the case, or yet to secure his disposition; but defendant did neither.
37

The Court of appeals further stated —

Neither is there evidence as to whether or not a prior reservation was made by the white man. Hence, if the employees of
the defendant at Bangkok sold a first-class ticket to him when all the seats had already been taken, surely the plaintiff
should not have been picked out as the one to suffer the consequences and to be subjected to the humiliation and
indignity of being ejected from his seat in the presence of others. Instead of explaining to the white man the improvidence
committed by defendant's employees, the manager adopted the more drastic step of ousting the plaintiff who was then
safely ensconsced in his rightful seat. We are strengthened in our belief that this probably was what happened there, by
the testimony of defendant's witness Rafael Altonaga who, when asked to explain the meaning of the letters "O.K."
appearing on the tickets of plaintiff, said "that the space is confirmed for first class. Likewise, Zenaida Faustino, another
witness for defendant, who was the chief of the Reservation Office of defendant, testified as follows:

"Q How does the person in the ticket-issuing office know what reservation the passenger has arranged with you?

A They call us up by phone and ask for the confirmation." (t.s.n., p. 247, June 19, 1959)

In this connection, we quote with approval what the trial Judge has said on this point:

Why did the, using the words of witness Ernesto G. Cuento, "white man" have a "better right" to the seat occupied by
Mr. Carrascoso? The record is silent. The defendant airline did not prove "any better", nay, any right on the part of the
"white man" to the "First class" seat that the plaintiff was occupying and for
which he paid and was issued a corresponding "first class" ticket.

If there was a justified reason for the action of the defendant's Manager in Bangkok, the defendant could have easily
proven it by having taken the testimony of the said Manager by deposition, but defendant did not do so; the
presumption is that evidence willfully suppressed would be adverse if produced [Sec. 69, par (e), Rules of Court]; and,
under the circumstances, the Court is constrained to find, as it does find, that the Manager of the defendant airline in
Bangkok not merely asked but threatened the plaintiff to throw him out of the plane if he did not give up his "first class"
seat because the said Manager wanted to accommodate, using the words of the witness Ernesto G. Cuento, the
"white man".38

It is really correct to say that the Court of Appeals in the quoted portion first transcribed did not use the term "bad faith".
But can it be doubted that the recital of facts therein points to bad faith? The manager not only prevented Carrascoso from
enjoying his right to a first class seat; worse, he imposed his arbitrary will; he forcibly ejected him from his seat, made him
suffer the humiliation of having to go to the tourist class compartment - just to give way to another passenger whose right
thereto has not been established. Certainly, this is bad faith. Unless, of course, bad faith has assumed a meaning different
from what is understood in law. For, "bad faith" contemplates a "state of mind affirmatively operating with furtive design or
with some motive of self-interest or will or for ulterior purpose." 39

And if the foregoing were not yet sufficient, there is the express finding of bad faith in the judgment of the Court of First
Instance, thus:

The evidence shows that the defendant violated its contract of transportation with plaintiff in bad faith, with the
 aggravating circumstances that defendant's Manager in Bangkok went to the extent of threatening the plaintiff in the
presence of many passengers to have him thrown out of the airplane to give the "first class" seat that he was
occupying to, again using the words of the witness Ernesto G. Cuento, a "white man" whom he (defendant's Manager)
wished to accommodate, and the defendant has not proven that this "white man" had any "better right" to occupy the
"first class" seat that the plaintiff was occupying, duly paid for, and for which the corresponding "first class" ticket was
issued by the defendant to him.40

41
5. The responsibility of an employer for the tortious act of its employees need not be essayed. It is well settled in law. For the
willful malevolent act of petitioner's manager, petitioner, his employer, must answer. Article 21 of the Civil Code says:

ART. 21. Any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or
public policy shall compensate the latter for the damage.

In parallel circumstances, we applied the foregoing legal precept; and, we held that upon the provisions of Article 2219 (10),
Civil Code, moral damages are recoverable. 42
6. A contract to transport passengers is quite different in kind and degree from any other contractual relation. 43 And this,
because of the relation which an air-carrier sustains with the public. Its business is mainly with the travelling public. It invites
people to avail of the comforts and advantages it offers. The contract of air carriage, therefore, generates a relation attended
with a public duty. Neglect or malfeasance of the carrier's employees, naturally, could give ground for an action for damages.

Passengers do not contract merely for transportation. They have a right to be treated by the carrier's employees with kindness,
respect, courtesy and due consideration. They are entitled to be protected against personal misconduct, injurious language,
indignities and abuses from such employees. So it is, that any rule or discourteous conduct on the part of employees towards a
passenger gives the latter an action for damages against the carrier. 44

Thus, "Where a steamship company 45 had accepted a passenger's check, it was a breach of contract and a tort, giving a right
of action for its agent in the presence of third persons to falsely notify her that the check was worthless and demand payment
under threat of ejection, though the language used was not insulting and she was not ejected." 46 And this, because, although
the relation of passenger and carrier is "contractual both in origin and nature" nevertheless "the act that breaks the contract
may be also a tort". 47 And in another case, "Where a passenger on a railroad train, when the conductor came to collect his fare
tendered him the cash fare to a point where the train was scheduled not to stop, and told him that as soon as the train reached
such point he would pay the cash fare from that point to destination, there was nothing in the conduct of the passenger which
justified the conductor in using insulting language to him, as by calling him a lunatic," 48 and the Supreme Court of South
Carolina there held the carrier liable for the mental suffering of said passenger.1awphîl.nèt

Petitioner's contract with Carrascoso is one attended with public duty. The stress of Carrascoso's action as we have said, is
placed upon his wrongful expulsion. This is a violation of public duty by the petitioner air carrier — a case of quasi-delict.
Damages are proper.

7. Petitioner draws our attention to respondent Carrascoso's testimony, thus —

Q You mentioned about an attendant. Who is that attendant and purser?

A When we left already — that was already in the trip — I could not help it. So one of the flight attendants approached me
and requested from me my ticket and I said, What for? and she said, "We will note that you transferred to the tourist
class". I said, "Nothing of that kind. That is tantamount to accepting my transfer." And I also said, "You are not going to
note anything there because I am protesting to this transfer".

Q Was she able to note it?

 A No, because I did not give my ticket.

Q About that purser?

A Well, the seats there are so close that you feel uncomfortable and you don't have enough leg room, I stood up and I
went to the pantry that was next to me and the purser was there. He told me, "I have recorded the incident in my
notebook." He read it and translated it to me — because it was recorded in French — "First class passenger was forced to
go to the tourist class against his will, and that the captain refused to intervene."

Mr. VALTE —

I move to strike out the last part of the testimony of the witness because the best evidence would be the notes. Your
Honor.

COURT —

I will allow that as part of his testimony. 49

Petitioner charges that the finding of the Court of Appeals that the purser made an entry in his notebook reading "First class
passenger was forced to go to the tourist class against his will, and that the captain refused to intervene" is predicated upon
evidence [Carrascoso's testimony above] which is incompetent. We do not think so. The subject of inquiry is not the entry, but
the ouster incident. Testimony on the entry does not come within the proscription of the best evidence rule. Such testimony is
admissible. 49a

Besides, from a reading of the transcript just quoted, when the dialogue happened, the impact of the startling occurrence was
still fresh and continued to be felt. The excitement had not as yet died down. Statements then, in this environment, are
admissible as part of the res gestae. 50 For, they grow "out of the nervous excitement and mental and physical condition of the
declarant". 51 The utterance of the purser regarding his entry in the notebook was spontaneous, and related to the
circumstances of the ouster incident. Its trustworthiness has been guaranteed. 52 It thus escapes the operation of the hearsay
rule. It forms part of the res gestae.

At all events, the entry was made outside the Philippines. And, by an employee of petitioner. It would have been an easy
matter for petitioner to have contradicted Carrascoso's testimony. If it were really true that no such entry was made, the
deposition of the purser could have cleared up the matter.

We, therefore, hold that the transcribed testimony of Carrascoso is admissible in evidence.

8. Exemplary damages are well awarded. The Civil Code gives the court ample power to grant exemplary damages — in
contracts and quasi- contracts. The only condition is that defendant should have "acted in a wanton, fraudulent, reckless,
oppressive, or malevolent manner." 53 The manner of ejectment of respondent Carrascoso from his first class seat fits into this
legal precept. And this, in addition to moral damages.54

9. The right to attorney's fees is fully established. The grant of exemplary damages justifies a similar judgment for attorneys'
fees. The least that can be said is that the courts below felt that it is but just and equitable that attorneys' fees be given. 55 We
do not intend to break faith with the tradition that discretion well exercised — as it was here — should not be disturbed.
10. Questioned as excessive are the amounts decreed by both the trial court and the Court of Appeals, thus: P25,000.00 as
moral damages; P10,000.00, by way of exemplary damages, and P3,000.00 as attorneys' fees. The task of fixing these
amounts is primarily with the trial court. 56 The Court of Appeals did not interfere with the same. The dictates of good sense
suggest that we give our imprimatur thereto. Because, the facts and circumstances point to the reasonableness thereof.57

On balance, we say that the judgment of the Court of Appeals does not suffer from reversible error. We accordingly vote to
 affirm the same. Costs against petitioner. So ordered.
[G.R. No. 138569. September 11, 2003.]

THE CONSOLIDATED BANK and TRUST CORPORATION, Petitioner, v. COURT OF APPEALS and L.C. DIAZ and
COMPANY, CPA’s, Respondents.

DECISION

CARPIO, J.:

The Case

Before us is a petition for review of the Decision 1 of the Court of Appeals dated 27 October 1998 and its Resolution dated 11
May 1999. The assailed decision reversed the Decision 2 of the Regional Trial Court of Manila, Branch 8, absolving petitioner
Consolidated. Bank and Trust Corporation, now known as Solidbank Corporation ("Solidbank"), of any liability. The questioned
resolution of the appellate court denied the motion for reconsideration of Solidbank but modified the decision by deleting the
award of exemplary damages, attorney’s fees, expenses of litigation and cost of suit.

The Facts

Solidbank is a domestic banking corporation organized and existing under Philippine laws. Private respondent L.C. Diaz and
Company, CPA’s ("L.C. Diaz"), is a professional partnership engaged in the practice of accounting.

Sometime in March 1976, L.C. Diaz opened a savings account with Solidbank, designated as Savings Account No. S/A 200-
16872-6.

On 14 August 1991, L.C. Diaz through its cashier, Mercedes Macaraya ("Macaraya"), filled up a savings (cash) deposit slip for
P990 and a savings (checks) deposit slip for P50. Macaraya instructed the messenger of L.C. Diaz, Ismael Calapre
("Calapre"), to deposit the money with Solidbank. Macaraya also gave Calapre the Solidbank passbook.

Calapre went to Solidbank and presented to Teller No. 6 the two deposit slips and the passbook. The teller acknowledged
receipt of the deposit by returning to Calapre the duplicate copies of the two deposit slips. Teller No. 6 stamped the deposit
slips with the words "DUPLICATE" and "SAVING TELLER 6 SOLIDBANK HEAD OFFICE." Since the transaction took time and
Calapre had to make another deposit for L.C. Diaz with Allied Bank, he left the passbook with Solidbank. Calapre then went to
Allied Bank. When Calapre returned to Solidbank to retrieve the passbook, Teller No. 6 informed him that "somebody got the
passbook. 3 Calapre went back to L.C. Diaz and reported the incident to Macaraya.
Macaraya immediately prepared a deposit slip in duplicate copies with a check of P200,000. Macaraya, together with Calapre,
went to Solidbank and presented to Teller No. 6 the deposit slip and check. The teller stamped the words "DUPLICATE" and
"SAVING TELLER 6 SOLIDBANK HEAD OFFICE" on the duplicate copy of the deposit slip. When Macaraya asked for the
passbook, Teller No. 6 told Macaraya that someone got the passbook but she could not remember to whom she gave the
passbook. When Macaraya asked Teller No. 6 if Calapre got the passbook, Teller No. 6 answered that someone shorter than
Calapre got the passbook. Calapre was then standing beside Macaraya.

Teller No. 6 handed to Macaraya a deposit slip dated 14 August 1991 for the deposit of a check for P90,000 drawn on
Philippine Banking Corporation ("PBC"). This PBC check of L.C. Diaz was a check that it had "long closed." 4 PBC
subsequently dishonored the check because of insufficient funds and because the signature in the check differed from PBC’s
specimen signature. Failing to get back the passbook, Macaraya went back to her office and reported the matter to the
Personnel Manager of L.C. Diaz, Emmanuel Alvarez.

The following day, 15 August 1991, L.C. Diaz through its Chief Executive Officer, Luis C. Diaz ("Diaz"), called up Solidbank to
 stop any transaction using the same passbook until L.C. Diaz could open a new account. 5 On the same day, Diaz formally
wrote Solidbank to make the same request. It was also on the same day that L.C. Diaz learned of the unauthorized withdrawal
the day before, 14 August 1991, of P300,000 from its savings account. The withdrawal slip for the P300,000 bore the
signatures of the authorized signatories of L.C. Diaz, namely Diaz and Rustico L. Murillo. The signatories, however, denied
signing the withdrawal slip. A certain Noel Tamayo received the P300,000.: red

In an Information 6 dated 5 September 1991, L.C. Diaz charged its messenger, Emerano Ilagan ("Ilagan") and one Roscon
Verdazola with Estafa through Falsification of Commercial Document. The Regional Trial Court of Manila dismissed the
criminal case after the City Prosecutor filed a Motion to Dismiss on 4 August 1992.

On 24 August 1992, L.C. Diaz through its counsel demanded from Solidbank the return of its money. Solidbank refused.

On 25 August 1992, L.C. Diaz filed a Complaint 7 for Recovery of a Sum of Money against Solidbank with the Regional Trial
Court of Manila, Branch 8. After trial, the trial court rendered on 28 December 1994 a decision absolving Solidbank and
dismissing the complaint.

L.C. Diaz then appealed 8 to the Court of Appeals. On 27 October 1998, the Court of Appeals issued its Decision reversing the
decision of the trial court.

On 11 May 1999, the Court of Appeals issued its

Resolution denying the motion for reconsideration of Solidbank. The appellate court, however, modified its decision by deleting
the award of exemplary damages and attorney’s fees.

The Ruling of the Trial Court

In absolving Solidbank, the trial court applied the rules on savings account written on the passbook. The rules state that
"possession of this book shall raise the presumption of ownership and any payment or payments made by the bank upon the
production of the said book and entry therein of the withdrawal shall have the same effect as if made to the depositor
personally." 9

At the time of the withdrawal, a certain Noel Tamayo was not only in possession of the passbook, he also presented a
withdrawal slip with the signatures of the authorized signatories of L.C. Diaz. The specimen signatures of these persons were
in the signature cards. The teller stamped the withdrawal slip with the words "Saving Teller No. 5." The teller then passed on
the withdrawal slip to Genere Manuel ("Manuel") for authentication. Manuel verified the signatures on the withdrawal slip. The
withdrawal slip was then given to another officer who compared the signatures on the withdrawal slip with the specimen on the
signature cards. The trial court concluded that Solidbank acted with care and observed the rules on savings account when it
allowed the withdrawal of P300,000 from the savings account of L.C. Diaz.

The trial court pointed out that the burden of proof now shifted to L.C. Diaz to prove that the signatures on the withdrawal slip
were forged. The trial court admonished L.C. Diaz for not offering in evidence the National Bureau of Investigation ("NBI")
report on the authenticity of the signatures on the withdrawal slip for P300,000. The trial court believed that L.C. Diaz did not
offer this evidence because it is derogatory to its action.

Another provision of the rules on savings account states that the depositor must keep the passbook "under lock and key." 10
When another person presents the passbook for withdrawal prior to Solidbank’s receipt of the notice of loss of the passbook,
that person is considered as the owner of the passbook. The trial court ruled that the passbook presented during the
questioned transaction was "now out of the lock and key and presumptively ready for a business transaction." 11

Solidbank did not have any participation in the custody and care of the passbook. The trial court believed that Solidbank’s act
of allowing the withdrawal of P300,000 was not the direct and proximate cause of the loss. The trial court held that L.C. Diaz’s
negligence caused the unauthorized withdrawal. Three facts establish L.C. Diaz’s negligence: (1) the possession of the
passbook by a person other than the depositor L.C. Diaz; (2) the presentation of a signed withdrawal receipt by an
unauthorized person; and (3) the possession by an unauthorized person of a PBC check "long closed" by
 L.C. Diaz, which check was deposited on the day of the fraudulent withdrawal.

The trial court debunked L.C. Diaz’s contention that Solidbank did not follow the precautionary procedures observed by the two
parties whenever L.C. Diaz withdrew significant amounts from its account. L.C. Diaz claimed that a letter must accompany
withdrawals of more than P20,000. The letter must request Solidbank to allow the withdrawal and convert the amount to a
manager’s check. The bearer must also have a letter authorizing him to withdraw the same amount. Another person driving a
car must accompany the bearer so that he would not walk from Solidbank to the office in making the withdrawal. The trial court
pointed out that L.C. Diaz disregarded these precautions in its past withdrawal. On 16 July 1991, L.C. Diaz withdrew P82,554
without any separate letter of authorization or any communication with Solidbank that the money be converted into a
manager’s check.

The trial court further justified the dismissal of the complaint by holding that the case was a last ditch effort of L.C. Diaz to
recover P300,000 after the dismissal of the criminal case against Ilagan.

The dispositive portion of the decision of the trial court reads:

IN VIEW OF THE FOREGOING, judgment is hereby rendered DISMISSING the complaint.

The Court further renders judgment in favor of defendant bank pursuant to its counterclaim the amount of Thirty Thousand
Pesos (P30,000.00) as attorney’s fees.

With costs against plaintiff.

SO ORDERED. 12

The Ruling of the Court of Appeals

The Court of Appeals ruled that Solidbank’s negligence was the proximate cause of the unauthorized withdrawal of P300,000
from the savings account of L.C. Diaz. The appellate court reached this conclusion after applying the provision of the Civil
Code on quasi- delict, to wit:

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.

The appellate court held that the three elements of a quasi-delict are present in this case, namely: (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 damage incurred by the plaintiff.
The Court of Appeals pointed out that the teller of Solidbank who received the withdrawal slip for P300,000 allowed the
withdrawal without making the necessary inquiry. The appellate court stated that the teller, who was not presented by
Solidbank during trial, should have called up the depositor because the money to be withdrawn was a significant amount. Had
the teller called up L.C. Diaz, Solidbank would have known that the withdrawal was unauthorized. The teller did not even verify
the identity of the impostor who made the withdrawal. Thus, the appellate court found Solidbank liable for its negligence in the
selection and supervision of its employees.

The appellate court ruled that while L.C. Diaz was also negligent in entrusting its deposits to its messenger and its messenger
in leaving the passbook with the teller, Solidbank could not escape liability because of the doctrine of "last clear chance."
Solidbank could have averted the injury suffered by L.C. Diaz had it called up L.C. Diaz to verify the withdrawal.

The appellate court ruled that the degree of diligence required from Solidbank is more than that of a good father of a family.
The business and functions of banks are affected with public interest. Banks are obligated to treat the accounts of their
depositors with meticulous care, always having in mind the fiduciary nature of their relationship with their clients. The Court of
Appeals found Solidbank remiss in its duty, violating its fiduciary relationship with L.C. Diaz.
The dispositive portion of the decision of the Court of Appeals reads:

WHEREFORE, premises considered, the decision appealed from is hereby REVERSED and a new one entered.

1. Ordering defendant-appellee Consolidated Bank and Trust Corporation. to pay plaintiff-appellant the sum of Three Hundred
Thousand Pesos (P300,000.00), with interest thereon at the rate of 12% per annum from the date of filing of the complaint until
paid, the sum of P20,000.00 as exemplary damages, and P20,000.00 as attorney’s fees and expenses of litigation as well as
the cost of suit; and

2. Ordering the dismissal of defendant-appellee’s counterclaim in the amount of P30,000.00 as attorney’s fees.

SO ORDERED. 13

Acting on the motion for reconsideration of Solidbank, the appellate court affirmed its decision but modified the award of
damages. The appellate court deleted the award of exemplary damages and attorney’s fees. Invoking Article 2231 14 of the
Civil Code, the appellate court ruled that exemplary damages could be granted if the defendant acted with gross negligence.
Since Solidbank was guilty of simple negligence only, the award of exemplary damages was not justified. Consequently, the
award of attorney’s fees was also disallowed pursuant to Article 2208 of the Civil Code.
The expenses of litigation and cost of suit were also not imposed on Solidbank.

The dispositive portion of the Resolution reads as follows:

WHEREFORE, foregoing considered, our decision dated October 27, 1998 is affirmed with modification by deleting the award
of exemplary damages and attorney’s fees, expenses of litigation and cost of suit.

SO ORDERED. 15

Hence, this petition.

The Issues

Solidbank seeks the review of the decision and resolution of the Court of Appeals on these grounds:

I. THE COURT OF APPEALS ERRED IN HOLDING THAT PETITIONER BANK SHOULD SUFFER THE LOSS BECAUSE ITS
TELLER SHOULD HAVE FIRST CALLED PRIVATE RESPONDENT BY TELEPHONE BEFORE IT ALLOWED THE
WITHDRAWAL OF P300,000.00 TO RESPONDENT’S MESSENGER EMERANO ILAGAN, SINCE THERE IS NO
AGREEMENT BETWEEN THE PARTIES IN THE OPERATION OF THE SAVINGS ACCOUNT, NOR IS THERE ANY
BANKING LAW, WHICH MANDATES THAT A BANK TELLER SHOULD FIRST CALL UP THE DEPOSITOR BEFORE
ALLOWING A WITHDRAWAL OF A BIG AMOUNT IN A SAVINGS ACCOUNT.

II. THE COURT OF APPEALS ERRED IN APPLYING THE DOCTRINE OF LAST CLEAR CHANCE AND IN HOLDING THAT
PETITIONER BANK’S TELLER HAD THE LAST OPPORTUNITY TO WITHHOLD THE WITHDRAWAL WHEN IT IS
UNDISPUTED THAT THE TWO SIGNATURES OF RESPONDENT ON THE WITHDRAWAL SLIP ARE GENUINE AND
PRIVATE RESPONDENT’S PASSBOOK WAS DULY PRESENTED, AND CONTRARIWISE RESPONDENT WAS
NEGLIGENT IN THE SELECTION AND SUPERVISION OF ITS MESSENGER EMERANO ILAGAN, AND IN THE
SAFEKEEPING OF ITS CHECKS AND OTHER FINANCIAL DOCUMENTS.

III. THE COURT OF APPEALS ERRED IN NOT FINDING THAT THE INSTANT CASE IS A LAST DITCH EFFORT OF
PRIVATE RESPONDENT TO RECOVER ITS P300,000.00 AFTER FAILING IN ITS EFFORTS TO RECOVER THE SAME
FROM ITS EMPLOYEE EMERANO ILAGAN.
 IV. THE COURT OF APPEALS ERRED IN NOT MITIGATING THE DAMAGES AWARDED AGAINST PETITIONER UNDER
ARTICLE 2197 OF THE CIVIL CODE, NOTWITHSTANDING ITS FINDING THAT PETITIONER BANK’S NEGLIGENCE WAS
ONLY CONTRIBUTORY. 16

The Ruling of the Court

The petition is partly meritorious.

Solidbank’s Fiduciary Duty under the Law

The rulings of the trial court and the Court of Appeals conflict on the application of the law. The trial court pinned the liability on
L.C. Diaz based on the provisions of the rules on savings account, a recognition of the contractual relationship between
Solidbank and L.C. Diaz, the latter being a depositor of the former. On the other hand, the Court of Appeals applied the law on
quasi-delict to determine who between the two parties was ultimately negligent. The law on quasi-delict or culpa aquiliana is
generally applicable when there is no pre-existing contractual relationship between the parties.

We hold that Solidbank is liable for breach of contract due to negligence, or culpa contractual.

The contract between the bank and its depositor is governed by the provisions of the Civil Code on simple loan. 17 Article 1980
of the Civil Code expressly provides that." . . savings . . . deposits of money in banks and similar institutions shall be governed
by the provisions concerning simple loan." There is a debtor- creditor relationship between the bank and its depositor. The
bank is the debtor and the depositor is the creditor. The depositor lends the bank money and the bank agrees to pay the
depositor on demand. The savings deposit agreement between the bank and the depositor is the contract that determines the
rights and obligations of the parties.

The law imposes on banks high standards in view of the fiduciary nature of banking. Section 2 of Republic Act No. 8791 ("RA
8791"), 18 which took effect on 13 June 2000, declares that the State recognizes the "fiduciary nature of banking that requires
high standards of integrity and performance." 19 This new provision in the general banking law, introduced in 2000, is a
statutory affirmation of Supreme Court decisions, starting with the 1990 case of Simex International v. Court of Appeals, 20
holding that "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. 21

This fiduciary relationship means that the bank’s obligation to observe "high standards of integrity and performance" is deemed
written into every deposit agreement between a bank and its depositor. The fiduciary nature of banking requires banks to
assume a degree of diligence higher than that of a good father of a family. Article 1172 of the Civil Code states that the degree
of diligence required of an obligor is that prescribed by law or contract, and absent such stipulation then the diligence of a good
father of a family. 22 Section 2 of RA 8791 prescribes the statutory diligence required from banks — that banks must observe
"high standards of integrity and performance" in servicing their depositors. Although RA 8791 took effect almost nine years
after the unauthorized withdrawal of the P300,000 from L.C. Diaz’s savings account, jurisprudence 23 at the time of the
withdrawal already imposed on banks the same high standard of diligence required under RA No. 8791.
However, the fiduciary nature of a bank-depositor relationship does not convert the contract between the bank and its
depositors from a simple loan to a trust agreement, whether express or implied. Failure by the bank to pay the depositor is
failure to pay a simple loan, and not a breach of trust. 24 The law simply imposes on the bank a higher standard of integrity
and performance in complying with its obligations under the contract of simple loan, beyond those required of non-bank
debtors under a similar contract of simple loan.

The fiduciary nature of banking does not convert a simple loan into a trust agreement because banks do not accept deposits to
enrich depositors but to earn money for themselves. The law allows banks to offer the lowest possible interest rate to
depositors while charging the highest possible interest rate on their own borrowers. The interest spread or differential belongs
to the bank and not to the depositors who are not cestui que trust of banks. If depositors are cestui que trust of banks, then the
interest spread or income belongs to the depositors, a situation that Congress certainly did not intend in enacting Section 2 of
RA 8791.

Solidbank’s Breach of its Contractual Obligation

 Article 1172 of the Civil Code provides that "responsibility arising from negligence in the performance of every kind of obligation
is demandable." For breach of the savings deposit agreement due to negligence, or culpa contractual, the bank is liable to its
depositor.

Calapre left the passbook with Solidbank because the "transaction took time" and he had to go to Allied Bank for another
transaction. The passbook was still in the hands of the employees of Solidbank for the processing of the deposit when Calapre
left Solidbank. Solidbank’s rules on savings account require that the "deposit book should be carefully guarded by the
depositor and kept under lock and key, if possible." When the passbook is in the possession of Solidbank’s tellers during
withdrawals, the law imposes on Solidbank and its tellers an even higher degree of diligence in safeguarding the passbook.

Likewise, Solidbank’s tellers must exercise a high degree of diligence in insuring that they return the passbook only to the
depositor or his authorized representative. The tellers know, or should know, that the rules on savings account provide that any
person in possession of the passbook is presumptively its owner. If the tellers give the passbook to the wrong person, they
would be clothing that person presumptive ownership of the passbook, facilitating unauthorized withdrawals by that person. For
failing to return the passbook to Calapre, the authorized representative of L.C. Diaz, Solidbank and Teller No. 6 presumptively
failed to observe such high degree of diligence in safeguarding the passbook, and in insuring its return to the party authorized
to receive the same.
In culpa contractual, once the plaintiff proves a breach of contract, there is a presumption that the defendant was at fault or
negligent. The burden is on the defendant to prove that he was not at fault or negligent. In contrast, in culpa aquiliana the
plaintiff has the burden of proving that the defendant was negligent. In the present case, L.C. Diaz has established that
Solidbank breached its contractual obligation to return the passbook only to the authorized representative of L.C. Diaz. There is
thus a presumption that Solidbank was at fault and its teller was negligent in not returning the passbook to Calapre. The
burden was on Solidbank to prove that there was no negligence on its part or its employees.

Solidbank failed to discharge its burden. Solidbank did not present to the trial court Teller No. 6, the teller with whom Calapre
left the passbook and who was supposed to return the passbook to him. The record does not indicate that Teller No. 6 verified
the identity of the person who retrieved the passbook. Solidbank also failed to adduce in evidence its standard procedure in
verifying the identity of the person retrieving the passbook, if there is such a procedure, and that Teller No. 6 implemented this
procedure in the present case.

Solidbank is bound by the negligence of its employees under the principle of respondeat superior or command responsibility.
The defense of exercising the required diligence in the selection and supervision of employees is not a complete defense in
culpa contractual, unlike in culpa aquiliana.25

The bank must not only exercise "high standards of integrity and performance," it must also insure that its employees do
likewise because this is the only way to insure that the bank will comply with its fiduciary duty. Solidbank failed to present the
teller who had the duty to return to Calapre the passbook, and thus failed to prove that this teller exercised the "high standards
of integrity and performance" required of Solidbank’s employees.

Proximate Cause of the Unauthorized Withdrawal

Another point of disagreement between the trial and appellate courts is the proximate cause of the unauthorized withdrawal.
The trial court believed that L.C. Diaz’s negligence in not securing its passbook under lock and key was the proximate cause
that allowed the impostor to withdraw the P300,000. For the appellate court, the proximate cause was the teller’s negligence in
processing the withdrawal without first verifying with L.C. Diaz. We do not agree with either court.

Proximate cause is that cause which, in natural and continuous sequence, unbroken by any efficient intervening cause,
produces the injury and without which the result would not have occurred. 26 Proximate cause is determined by the facts of
each case upon mixed considerations of logic, common sense, policy and precedent. 27
L.C. Diaz was not at fault that the passbook landed in the hands of the impostor. Solidbank was in possession of the passbook
while it was processing the deposit. After completion of the transaction, Solidbank had the contractual obligation to return the
passbook only to Calapre, the authorized representative of L.C. Diaz. Solidbank failed to fulfill its contractual obligation
because it gave the passbook to another person.
 Solidbank’s failure to return the passbook to Calapre made possible the withdrawal of the P300,000 by the impostor who took
possession of the passbook. Under Solidbank’s rules on savings account, mere possession of the passbook raises the
presumption of ownership. It was the negligent act of Solidbank’s Teller No. 6 that gave the impostor presumptive ownership of
the passbook. Had the passbook not fallen into the hands of the impostor, the loss of P300,000 would not have happened.
Thus, the proximate cause of the unauthorized withdrawal was Solidbank’s negligence in not returning the passbook to
Calapre.

We do not subscribe to the appellate court’s theory that the proximate cause of the unauthorized withdrawal was the teller’s
failure to call up L.C. Diaz to verify the withdrawal. Solidbank did not have the duty to call up L.C. Diaz to confirm the
withdrawal. There is no arrangement between Solidbank and L.C. Diaz to this effect. Even the agreement between Solidbank
and L.C. Diaz pertaining to measures that the parties must observe whenever withdrawals of large amounts are made does not
direct Solidbank to call up L.C. Diaz.

There is no law mandating banks to call up their clients whenever their representatives withdraw significant amounts from their
accounts. L.C. Diaz therefore had the burden to prove that it is the usual practice of Solidbank to call up its clients to verify a
withdrawal of a large amount of money. L.C. Diaz failed to do so.

Teller No. 5 who processed the withdrawal could not have been put on guard to verify the withdrawal. Prior to the withdrawal of
P300,000, the impostor deposited with Teller No. 6 the P90,000 PBC check, which later bounced. The impostor apparently
deposited a large amount of money to deflect suspicion from the withdrawal of a much bigger amount of money. The appellate
court thus erred when it imposed on Solidbank the duty to call up L.C. Diaz to confirm the withdrawal when no law requires this
from banks and when the teller had no reason to be suspicious of the transaction.

Solidbank continues to foist the defense that Ilagan made the withdrawal. Solidbank claims that since Ilagan was also a
messenger of L.C. Diaz, he was familiar with its teller so that there was no more need for the teller to verify the withdrawal.
Solidbank relies on the following statements in the Booking and Information Sheet of Emerano Ilagan:

. . . Ilagan also had with him (before the withdrawal) a forged check of PBC and indicated the amount of P90,000 which he
deposited in favor of L.C. Diaz and
Company. After successfully withdrawing this large sum of money, Accused Ilagan gave alias Rey (Noel Tamayo) his share of
the loot. Ilagan then hired a taxicab in the amount of P1,000 to transport him (Ilagan) to his home province at Bauan, Batangas.
Ilagan extravagantly and lavishly spent his money but a big part of his loot was wasted in cockfight and horse racing. Ilagan
was apprehended and meekly admitted his guilt. 28 (Emphasis supplied.)

L.C. Diaz refutes Solidbank’s contention by pointing out that the person who withdrew the P300,000 was a certain Noel
Tamayo. Both the trial and appellate courts stated that this Noel Tamayo presented the passbook with the withdrawal slip.

We uphold the finding of the trial and appellate courts that a certain Noel Tamayo withdrew the P300,000. The Court is not a
trier of facts. We find no justifiable reason to reverse the factual finding of the trial court and the Court of Appeals. The tellers
who processed the deposit of the P90,000 check and the withdrawal of the P300,000 were not presented during trial to
substantiate Solidbank’s claim that Ilagan deposited the check and made the questioned withdrawal. Moreover, the entry
quoted by Solidbank does not categorically state that Ilagan presented the withdrawal slip and the passbook.

Doctrine of Last Clear Chance

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. 29 Stated differently, the antecedent
negligence of the plaintiff does not preclude him from recovering damages caused by the supervening negligence of the
defendant, who had the last fair chance to prevent the impending harm by the exercise of due diligence. 30

We do not apply the doctrine of last clear chance to the present case. Solidbank is liable for breach of contract due to
negligence in the performance of its contractual obligation to L.C. Diaz. This is a case of culpa contractual, where neither the
contributory negligence of the plaintiff nor his last clear chance to avoid the loss, would exonerate the defendant from liability.
31 Such contributory negligence or last clear chance by the plaintiff merely serves to reduce the recovery of damages by the

plaintiff but does not exculpate the defendant from his breach of contract. 32 Mitigated Damages

Under Article 1172, "liability (for culpa contractual) may be regulated by the courts, according to the circumstances." This
means that if the defendant exercised the proper diligence in the selection and supervision of its employee, or if the plaintiff
was guilty of contributory negligence, then the courts may
reduce the award of damages. In this case, L.C. Diaz was guilty of contributory negligence in allowing a withdrawal slip signed
by its authorized signatories to fall into the hands of an impostor. Thus, the liability of Solidbank should be reduced.

In Philippine Bank of Commerce v. Court of Appeals, 33 where the Court held the depositor guilty of contributory negligence,
we allocated the damages between the depositor and the bank on a 40-60 ratio. Applying the same ruling to this case, we hold
that L.C. Diaz must shoulder 40% of the actual damages awarded by the appellate court. Solidbank must pay he other 60% of
the actual damages.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED with MODIFICATION. Petitioner Solidbank Corporation shall
pay private respondent L.C. Diaz and Company, CPA’s only 60% of the actual damages awarded by the Court of Appeals. The
remaining 40% of the actual damages shall be borne by private respondent L.C. Diaz and Company, CPA’s. Proportionate
costs.

SO ORDERED.
G.R. No. 138550 October 14, 2005

AMERICAN EXPRESS INTERNATIONAL, INC., Petitioner, vs. NOEL CORDERO, Defendant.

DECISION

SANDOVAL-GUTIERREZ, J.:

This is a petition for review on certiorari of the Decision1 of the Court of Appeals dated April 30, 1999 in CA-G.R. CV No.
51671, entitled, "Noel Cordero, Plaintiff- Appellee versus American Express International, Inc., Defendant-Appellant."

Petitioner is a foreign corporation that issues charge cards to its customers, which the latter then use to purchase goods
and services at accredited merchants worldwide. Sometime in 1988, Nilda Cordero, wife of respondent Noel Cordero,
applied for and was issued an American Express charge card with No. 3769-895901- 010020. The issuance of the
charge card was covered by an Amex Cardmember Agreement. As cardholder, Nilda, upon signing the back portion of
the card, manifested her acceptance of the terms of the Agreement.

An extension charge card, with No. 3769-895901-01010, was likewise issued to respondent Noel Cordero which he also
signed.2

On November 29, 1991, respondent, together with his wife, Nilda, daughter, sisters-in-law and uncle-in-law, went on a
three-day holiday trip to Hong Kong. In the early evening of November 30, 1991, at about 7:00 o’clock, the group went to
the Watson’s Chemist Shop located at 277C Ocean Gallery, Kowloon, Hong Kong. Noel picked up some chocolate
candies and handed to the sales clerk his American Express extension charge card to pay for his purchases. The sales
clerk verified the card by making a telephone call to the American Express Office in Hong Kong. Moments later, Susan
Chong, the store manager, emerged from behind the counter and informed respondent that she had to confiscate the
card. Thereupon, she cut respondent’s American Express card in half with a pair of scissors. This, according to
respondent, caused him embarrassment and humiliation considering that it was done in front of his family and the other
customers lined up at the check-out counter. Hence, Nilda had to pay for the purchases using her own American
Express charge card.3

When they returned to the Excelsior Hotel, Nilda called up petitioner’s Office in Hong Kong. She was able to talk to
Senior Authorizer Johnny Chen, who informed her that on November 1, 1991, a person in Hong Kong attempted to use
a charge card with the same number
as respondent’s card. The Hong Kong American Express Office called up respondent and after determining that he was
in Manila and not in Hong Kong, placed his card in the "Inspect Airwarn Support System." This is the system utilized by
petitioner as a protection both for the company and the cardholders against the fraudulent use of their charge cards.
Once a card suspected of unauthorized use is placed in the system, the person to whom the card is tendered must
verify the identity of the holder. If the true identity of the card owner is established, the card is honored and the charges
are approved. Otherwise, the card is revoked or confiscated. 4

When the Watson’s sales clerk called up petitioner’s Hong Kong Office, its representative said he wants to talk to
respondent in order to verify the latter’s identity, pursuant to the procedure observed under the "Inspect Airwarn Support
System." However, respondent refused. Consequently, petitioner’s representative was unable to establish the identity of
the cardholder.5 This led to the confiscation of respondent’s card.

On March 31, 1992, respondent filed with the Regional Trial Court, Branch V, Manila, a complaint for damages against
petitioner, docketed as Civil Case No. 92-60807. He prayed for the award of moral damages and exemplary damages,
as well as attorney’s fees as a result of the humiliation he suffered.

The trial court found that "the inexcusable failure of defendant (petitioner herein) to inform plaintiff (respondent herein) of
the November 1, 1991 incident despite sufficient time was the proximate cause of the confiscation and cutting of
plaintiff’s extension card which exposed the latter to public humiliation for which defendant should be held liable." 6 On
February 20, 1995, the trial court promulgated its Decision, the dispositive portion of which reads:

"WHEREFORE, judgment is hereby rendered in favor of the plaintiff and against the defendant, ordering the latter to pay
the former the following amounts, namely:

a) The sum of ₱300,000.00 as and by way of moral damages;

b) The sum of ₱200,000.00 as exemplary damages;

c) The sum of ₱100,000.00 as and for reasonable attorney’s fees; and

d) The costs of the suit.

SO ORDERED."7

Upon appeal, the Court of Appeals rendered the assailed Decision affirming the trial court’s Decision with modification in
the sense that the amounts of damages awarded were reduced, thus:
"WHEREFORE, in view of the foregoing, the appealed decision dated February 20, 1995 of the Regional Trial Court of
Manila, Branch V, in Civil Case No. 92-60807 is hereby AFFIRMED, subject to modifications with respect to the amount
of damages awarded, which are reduced as follows:

(a) Moral damages from ₱300,000.00 to ₱150,000.00; and

(b) Exemplary damages from ₱200,000.00 to ₱100,000.00.

No pronouncement as to costs.

SO ORDERED."

Hence, the instant petition raising the following issues:

"A. Whether the lower courts gravely erred in attributing the ‘public humiliation’ allegedly suffered by Cordero to Amex.

B. Whether the lower courts gravely erred in holding Amex liable to Cordero for moral damages, exemplary damages
and attorney’s fees."8

Respondent filed his comment contending in the main that the petition raises questions of fact beyond this Court’s
domain.

While it is true that under Rule 45 of the 1997 Rules of Civil Procedure, as amended, this Court may review only errors
of law, however, this rule admits of well-known recognized exceptions, thus:

". . . (1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture; (2) the inference made is
manifestly mistaken; (3) there is grave abuse of discretion; (4) the judgment is based on a misapprehension of facts; (5)
the findings of fact are conflicting; (6) the Court of Appeals went beyond the issues of the case and its findings are
contrary to the admissions of both parties; (7) the findings of fact of the Court of Appeals are contrary to those of the trial
court; (8) said findings of fact are conclusions without citation of specific evidence on which they are based; (9) the facts
set forth in the petition are not disputed by the respondents; and (10) the findings of fact of the Court of Appeals are
premised on the supposed absence of evidence and contradicted by the evidence on record." 9

In this case, the inference made by the courts below is manifestly mistaken. Therefore, we are justified in reviewing the
records of this case and rendering judgment based on our own findings.

In his complaint, respondent claimed that he suffered embarrassment and humiliation because his card was
unceremoniously confiscated and cut in half by Susan Chong of Watson’s Chemist Shop.

Respondent anchors his cause of action on the following provision of the Civil Code:

"Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for
the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a
quasi-delict and is governed by the provisions of this Chapter." 10

In order that an obligation based on quasi-delict may arise, there must be no pre-existing contractual relation between
the parties. But there are exceptions. There may be an action for quasi-delict notwithstanding that there is a subsisting
contract between the parties. A liability for tort may arise even under a contract, where tort is that which breaches the
contract. Stated differently, when an act which constitutes a breach of contract would have itself constituted the source
of a quasi-delictual liability, the contract can be said to have been breached by tort, thereby allowing the rules on tort to
apply.11

Furthermore, to constitute quasi-delict, the fault or negligence must be the proximate cause of the damage or injury
suffered by the plaintiff. Proximate cause is that cause which, in natural and continuous sequence, unbroken by any
efficient intervening cause, produces the injury and without which the result would not have occurred. Proximate cause
is determined by the facts of each case upon mixed considerations of logic, common sense, policy and precedent. 12
 According to the trial court, petitioner should have informed respondent that on November 1, 1991, a person in Hong
Kong attempted to use a charge card bearing similar number to that of respondent’s card; and that petitioner’s
inexcusable failure to do so is the proximate cause of the "confiscation and cutting of [respondent’s] extension card
which exposed the latter to public humiliation for which [petitioner] should be held liable." 13

We cannot sustain the trial court’s conclusion.

As explained by respondent himself, he could have used his card upon verification by the sales clerk of Watson that
indeed he is the authorized cardholder. This could have been accomplished had respondent talked to petitioner’s
representative, enabling the latter to determine that respondent is indeed the true holder of the card. Clearly, no
negligence which breaches the contract can be attributed to petitioner. If at all, the cause of respondent’s humiliation
and embarrassment was his refusal to talk to petitioner’s representative.
That respondent refused to talk to petitioner’s representative can be gleaned from the testimony of Mr. Chen Heng Kun
a.k.a. Johnny Chen during the deposition in Hong Kong,14 thus:

"Question No 9 : Was AEII required under its existing policies and/or membership agreement with its cardholders to
advise said cardholders of their card have been put under the support INSPECT – Strictly Question (for identification)
cardmembers before approving any charge?

Mr. Johnny Chen : Under the existing policies of AEII, we don’t have to inform the cardholders if they have to pass the
INSPECT –Strictly Questions (for identification).

Question No 10 : If the answer to Q9 is in the negative, please explain why not?

Mr. Johnny Chen : The reason why we don’t have to are because, first, we are not terminating the service to the
cardholder. Second, it doesn’t mean that we are going to limit the service to the cardholder. Third, as long as the
cardholder can present an identification card of his membership, we allow him to use the card. He can show this by
telephoning the company or by presenting us his passport or travel document. When Watson Company called AEII for
authorization, AEII representative requested that he talk to Mr. Cordero but he refused to talk to any
representative of AEII. AEII could not prove then that he is really the real card holder."

Mr. Chen Heng Kun was briefly cross-examined by respondent’s counsel, thus:

"Question No 10 : Question 9 is objected to since the best evidence would be the membership agreement between
plaintiffs and AEII."

Significantly, paragraph 16 of the Cardmember Agreement signed by respondent provides:

"16. THE CARD REMAINS OUR PROPERTY

"The Card remains our property and we can revoke your right and the right of ay Additional Cardmember to use it at any
time, we can do this with or without giving you notice. If we have revoked the Card without cause, we will refund a
proportion of your annual Card Account fee. We may list revoked Cards in our "Cancellation Bulletin", or otherwise
inform Establishments that the Card issued to you and, if you are the basic Cardmember, any Additional Cards have
been revoked or cancelled.

"If we revoke the card or it expires, you must return it to us if we request. Also, if any Establishment asks you to
surrender an expired or revoked Card, you must do so. You may not use the Card after it has expired or after it has
been revoked.
"The revocation, repossession or request for the return of the Card is not, and shall not constitute any reflection of your
character or credit-worthiness and we shall not be liable in any way for any statement made by any person requesting
the return or surrender of the Card."15

To be sure, pursuant to the above stipulation, petitioner can revoke respondent’s card without notice, as was done here.
It bears reiterating that the subject card would not have been confiscated and cut had respondent talked to petitioner’s
representative and identified himself as the genuine cardholder. It is thus safe to conclude that there was no negligence
on the part of petitioner and that, therefore, it cannot be held liable to respondent for damages.

WHEREFORE, the petition is GRANTED. The assailed Decision of the Court of Appeals in CA-G.R. CV No. 51671 is
REVERSED.

SO ORDERED.