Case Citation: Jai Ailai Corp. vs.

BPI, 66 SCRA 29
Date: August 6,1975

Petitioners:
JAI-ALAI CORPORATION OF THE PHILIPPINES

Respondents:
BANK OF THE PHILIPPINE ISLAND

Doctrine: When the petitioner deposited the checks with the respondent, the nature of
the relationship created at that stage was one of agency, that is, the bank
was to collect from the drawees of the checks the corresponding proceeds.

Antecedent Facts: Ten checks with a total face value of P8,030.58 were deposited by the
petitioner in its current account with the respondent bank.

All the foregoing checks, which were acquired by the petitioner from one
Antonio J. Ramirez, a sales agent of the Inter-Island Gas and a regular bettor
at jai-alai games, were, upon deposit, temporarily credited to the petitioner's
account in accordance with the clause printed on the deposit slips issued by
the respondent.

After Ramirez had resigned from the Inter-Island Gas and after the checks
had been submitted to inter-bank clearing, the Inter-Island Gas discovered
that all the indorsements made on the checks purportedly by its cashiers
were forged.

Meanwhile, the drawers of the checks, having been notified of the forgeries,
demanded reimbursement to their respective accounts from the drawee-
banks, which in turn demanded from the respondent, as collecting bank, the
return of the amounts they had paid on account thereof. When the drawee-
banks returned the checks to the respondent, the latter paid their value
which the former in turn paid to the Inter-Island Gas. The respondent, for its
part, debited the petitioner's current account and forwarded to the latter the
checks containing the forged indorsements, which the petitioner, however,
refused to accept.

On October 8, 1959 the petitioner drew against its current account with the
respondent a check for P135,000 payable to the order of the Mariano Olondriz
y Cia. in payment of certain shares of stock. The check was, however,
dishonored by the respondent as its records showed that as of October 8,
1959 the current account of the petitioner, after netting out the value of the
checks P8,030.58) with the forged indorsements, had a balance of only
P128,257.65.

Petitioner’s the former asking for more damages

Contention:
Respondent’s insisting on non-liability
Contention:
relies solely on the ruling enunciated in Gillaco vs. Manila Railroad Co., 97 Phil. 884,
that the carrier is under no absolute liability for assaults of its employees upon the
passengers. 

MTC/RTC Ruling: The petitioner then filed a complaint against the respondent with the Court of
First Instance of Manila, which was however dismissed by the trial court after
due trial

CA Ruling: The CA affirmed the judgment of the CFI.

Issue: Whether the respondent had the right to debit the petitioner's current
account in the amount corresponding to the total value of the checks in
question after more than three months had elapsed from the date their value
was credited to the petitioner's account

SC Ruling:
In the Gillaco case, the passenger was killed outside the scope and the course of
duty of the guilty employee. Now here, the killing was perpetrated by the driver of the
very cab transporting the passenger, in whose hands the carrier had entrusted the
duty of executing the contract of carriage. In other words, unlike the Gillaco case, the
killing of the passenger here took place in the course of duty of the guilty employee
and when the employee was acting within the scope of his duties. 

Moreover, the Gillaco case was decided under the provisions of the Civil Code of
1889 which, unlike the present Civil Code, did not impose upon common carriers
absolute liability for the safety of passengers against wilful assaults or negligent acts
committed by their employees. The death of the passenger in the Gillaco case was
truly a fortuitous event which exempted the carrier from liability.

It is true that Art. 1105 of the old Civil Code on fortuitous events has been
substantially reproduced in Art. 1174 of the Civil Code of the Philippines but both
articles clearly remove from their exempting effect the case where the law expressly
provides for liability inspite of the occurrence of force majeure. And herein
significantly lies the statutory difference between the old and present Civil Codes

Unlike the old Civil Code, the New Civil Code expressly makes the common carrier
liable for intentional assaults committed by its employees upon its passengers (Art.
1759). This rule was adopted from Anglo-American law, where the majority view, as
distinguished from the minority view based on respondent superior, is that the carrier
is liable as long as the assault occurs within the course of the performance of the
employee's duty. It is no defense for the carrier that the act was done in excess of
authority or in disobedience of the carrier's orders. The carrier's liability is absolute in
the sense that it practically secures the passengers from assaults committed by its
own employees.

As can be gleaned from Art. 1759, the Civil Code of the Philippines evidently follows
the rule based on the second view. At least three very cogent reasons underlie this
 rule

1. The special undertaking of the carrier requires that it furnish its passengers
that full measure of protection afforded by the exercise of the high degree of
care prescribed by law, inter alia, from violence and insults at the hands of
strangers and other passengers, but above all from the acts of the carrier's
own servants charged with the passenger's safety.
2. 2. The performance of that undertaking is confided by the carrier to its
employees.
3. As between the carrier and the passenger, the former must bear the risk of
wrongful acts of the former's employees against passengers, since the
carrier, not the passengers, has the power to select and remove them,

Accordingly, it is the carrier's strict obligation to select its drivers and similar
employees with due regard not only to their technical competence and physical
ability, but also, no less important, to their total personality, including their patterns of
behavior, moral fibers, and social attitude. 

Applying this stringent norm to the facts in this case, therefore, the lower court rightly
adjudged the defendant carrier liable pursuant to Art. 1759 of the Civil Code. The
dismissal of the claim against the defendant driver was also correct. Plaintiff's action
was predicated on breach of contract of carriage 7 and the cab driver was not a party
thereto. His civil liability is covered in the criminal case wherein he was convicted by
final judgment. 

Dispositive Portion:
Wherefore, with the modification increasing the award of actual damages in plaintiff's favor to
P6,000, plus P3,000 moral damages, with legal interest on both from the filing of the complaint on
December 6, 1961 until the whole amount is paid, the judgment appealed from is affirmed in all
other respects. No costs. So ordered.

Others Where a passenger in a taxicab was killed by the driver, the cab owner is liable to
the heir of the deceased passenger for damages on the basis of breach of the
contract of carriage. The driver is not liable to the heir because the driver was not a
party to the contract of carriage. His civil liability is covered by the judgment of
conviction in the criminal case.

The minimum amount of compensatory damages, which a common carrier should

pay for the intentional killing of a passenger committed by its driver while transporting
the passenger, is P6,000. Moral damages may also be awarded. Interest is due on
said damages.