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 ORDOEZ-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 Ordoez-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 ofquasi-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; 3hence, 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 aforecited 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. InCangco 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."
InAustro-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 nonto
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.
Melencio-Herrera, Paras, Regalado and Nocon, JJ., concur.

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 BangkokRome, 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". 16They 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 firstclass 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", "A1", "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)
xxx
xxx
xxx
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. 24Implicit 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 TouristClass accommodations from Bangkok to
Teheran and/or Casablanca, ... the plaintiff has been compelledby
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
xxx
xxx
xxx
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
xxx
xxx
xxx
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 oustedby 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 copassenger. 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
5. The responsibility of an employer for the tortious act of its employees
need not be essayed. It is well settled in law. 41 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. 43And 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.1awphl.nt
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 quasicontracts. 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.
Concepcion, C.J., Reyes, J.B.L., Barrera, Dizon, Regala, Makalintal, Zaldivar
and
Castro,
JJ.,
concur.
Bengzon, J.P., J., took no part.
Republic
of
the
Philippines
SUPREME
COURT
Manila
FIRST DIVISION
G.R. No. 147791
September 8, 2006
CONSTRUCTION
DEVELOPMENT
CORPORATION
OF
THE
PHILIPPINES, petitioner,
vs.
REBECCA G. ESTRELLA, RACHEL E. FLETCHER, PHILIPPINE PHOENIX SURETY &
INSURANCE INC., BATANGAS LAGUNA TAYABAS BUS CO., and WILFREDO
DATINGUINOO, respondents.
DECISION
YNARES-SANTIAGO, J.:
This petition for review assails the March 29, 2001 Decision1 of the Court of
Appeals in CA-G.R. CV No. 46896, which affirmed with modification the
February 9, 1993 Decision2 of the Regional Trial Court of Manila, Branch 13,
in Civil Case No. R-82-2137, finding Batangas Laguna Tayabas Bus Co. (BLTB)
and Construction Development Corporation of the Philippines (CDCP) liable
for damages.
The antecedent facts are as follows:
On December 29, 1978, respondents Rebecca G. Estrella and her
granddaughter, Rachel E. Fletcher, boarded in San Pablo City, a BLTB bus
bound for Pasay City. However, they never reached their destination because
their bus was rammed from behind by a tractor-truck of CDCP in the South
Expressway. The strong impact pushed forward their seats and pinned their
knees to the seats in front of them. They regained consciousness only when
rescuers created a hole in the bus and extricated their legs from under the
seats. They were brought to the Makati Medical Center where the doctors
diagnosed their injuries to be as follows:

Medical Certificate of Rebecca Estrella

Fracture,
left
tibia
mid
3rd
Lacerated
wound,
chin
Contusions
with
abrasions,
left
lower
leg
Fracture, 6th and 7th ribs, right3
Medical Certificate of Rachel Fletcher
Extensive lacerated wounds, right leg posterior aspect popliteal area
and antero-lateral aspect mid lower leg with severance of muscles.
Partial amputation BK left leg with severance of gastro-soleus and
antero-lateral
compartment
of
lower
leg.
Fracture, open comminuted, both tibial4
Thereafter, respondents filed a Complaint5 for damages against CDCP, BLTB,
Espiridion Payunan, Jr. and Wilfredo Datinguinoo before the Regional Trial
Court of Manila, Branch 13. They alleged (1) that Payunan, Jr. and
Datinguinoo, who were the drivers of CDCP and BLTB buses, respectively,
were negligent and did not obey traffic laws; (2) that BLTB and CDCP did not
exercise the diligence of a good father of a family in the selection and
supervision of their employees; (3) that BLTB allowed its bus to operate
knowing that it lacked proper maintenance thus exposing its passengers to
grave danger; (4) that they suffered actual damages amounting to
P250,000.00 for Estrella and P300,000.00 for Fletcher; (5) that they suffered
physical discomfort, serious anxiety, fright and mental anguish, besmirched
reputation and wounded feelings, moral shock, and lifelong social
humiliation; (6) that defendants failed to act with justice, give respondents
their due, observe honesty and good faith which entitles them to claim for
exemplary damage; and (7) that they are entitled to a reasonable amount of
attorney's fees and litigation expenses.
CDCP filed its Answer6 which was later amended to include a third-party
complaint against Philippine Phoenix Surety and Insurance, Inc. (Phoenix).7
On February 9, 1993, the trial court rendered a decision finding CDCP and
BLTB and their employees liable for damages, the dispositive portion of
which, states:
WHEREFORE, judgment is rendered:
In the Complaint
1. In favor of the plaintiffs and against the defendants BLTB, Wilfredo
Datinguinoo, Construction and Development Corporation of the Philippines
(now PNCC) and Espiridion Payunan, Jr., ordering said defendants, jointly and
severally to pay the plaintiffs the sum of P79,254.43 as actual damages and
to pay the sum of P10,000.00 as attorney's fees or a total of P89,254.43;

2. In addition, defendant Construction and Development Corporation of the

Philippines and defendant Espiridion Payunan, Jr., shall pay the plaintiffs the
amount of Fifty Thousand (P50,000.00) Pesos to plaintiff Rachel Fletcher and
Twenty Five Thousand (P25,000.00) Pesos to plaintiff Rebecca Estrella;
3. On the counterclaim of BLTB Co. and Wilfredo Datinguinoo
Dismissing the counterclaim;
4. On the crossclaim against Construction and Development Corporation of
the Philippines (now PNCC) and Espiridion Payunan, Jr.
Dismissing the crossclaim;
5. On the counterclaim of Construction and Development Corporation of the
Philippines (now PNCC)
Dismissing the counterclaim;
6. On the crossclaim against BLTB
Dismissing the crossclaim;
7. On the Third Party Complaint by Construction and Development
Corporation of the Philippines against Philippine Phoenix Surety and
Insurance, Incorporated
Dismissing the Third Party Complaint.
SO ORDERED.8
The trial court held that BLTB, as a common carrier, was bound to observe
extraordinary diligence in the vigilance over the safety of its passengers. It
must carry the passengers safely as far as human care and foresight provide,
using the utmost diligence of very cautious persons, with a due regard for all
the circumstances. Thus, where a passenger dies or is injured, the carrier is
presumed to have been at fault or has acted negligently. BLTB's inability to
carry respondents to their destination gave rise to an action for breach of
contract of carriage while its failure to rebut the presumption of negligence
made it liable to respondents for the breach.9
Regarding CDCP, the trial court found that the tractor-truck it owned bumped
the BLTB bus from behind. Evidence showed that CDCP's driver was reckless
and driving very fast at the time of the incident. The gross negligence of its
driver raised the presumption that CDCP was negligent either in the selection
or in the supervision of its employees which it failed to rebut thus making it
and its driver liable to respondents.10
Unsatisfied with the award of damages and attorney's fees by the trial court,
respondents moved that the decision be reconsidered but was denied.
Respondents elevated the case11 to the Court of Appeals which affirmed the
decision of the trial court but modified the amount of damages, the
dispositive portion of which provides:

WHEREFORE, the assailed decision dated October 7, 1993 of the Regional

Trial Court, Branch 13, Manila is hereby AFFIRMED with the following
MODIFICATION:
1. The interest of six (6) percent per annum on the actual damages of
P79,354.43 should commence to run from the time the judicial demand was
made or from the filing of the complaint on February 4, 1980;
2. Thirty (30) percent of the total amount recovered is hereby awarded as
attorney's fees;
3. Defendants-appellants Construction and Development Corporation of the
Philippines (now PNCC) and Espiridion Payunan, Jr. are ordered to pay
plaintiff-appellants Rebecca Estrella and Rachel Fletcher the amount of
Twenty Thousand (P20,000.00) each as exemplary damages and P80,000.00
by way of moral damages to Rachel Fletcher.
SO ORDERED.12
The Court of Appeals held that the actual or compensatory damage sought
by respondents for the injuries they sustained in the form of hospital bills
were already liquidated and were ascertained. Accordingly, the 6% interest
per annum should commence to run from the time the judicial demand was
made or from the filing of the complaint and not from the date of judgment.
The Court of Appeals also awarded attorney's fees equivalent to 30% of the
total amount recovered based on the retainer agreement of the parties. The
appellate court also held that respondents are entitled to exemplary and
moral damages. Finally, it affirmed the ruling of the trial court that the claim
of CDCP against Phoenix had already prescribed.
Hence, this petition raising the following issues:
I
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN NOT
HOLDING RESPONDENTS BLTB AND/OR ITS DRIVER WILFREDO DATINGUINOO
SOLELY LIABLE FOR THE DAMAGES SUSTAINED BY HEREIN RESPONDENTS
FLETCHER AND ESTRELLA.
II
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN AWARDING
EXCESSIVE OR UNFOUNDED DAMAGES, ATTORNEY'S FEES AND LEGAL
INTEREST TO RESPONDENTS FLETCHER AND ESTRELLA.
III
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN NOT
HOLDING RESPONDENT PHOENIX LIABLE UNDER ITS INSURANCE POLICY ON
THE GROUND OF PRESCRIPTION.
The issues for resolution are as follows: (1) whether BLTB and its driver
Wilfredo Datinguinoo are solely liable for the damages sustained by

respondents; (2) whether the damages, attorney's fees and legal interest
awarded by the CA are excessive and unfounded; (3) whether CDCP can
recover under its insurance policy from Phoenix.
Petitioner contends that since it was made solidarily liable with BLTB for
actual damages and attorney's fees in paragraph 1 of the trial court's
decision, then it should no longer be held liable to pay the amounts stated in
paragraph 2 of the same decision. Petitioner claims that the liability for
actual damages and attorney's fees is based on culpa contractual, thus, only
BLTB should be held liable. As regards paragraph 2 of the trial court's
decision, petitioner claims that it is ambiguous and arbitrary because the
dispositive portion did not state the basis and nature of such award.
Respondents, on the other hand, argue that petitioner is also at fault, hence,
it was properly joined as a party. There may be an action arising out of one
incident where questions of fact are common to all. Thus, the cause of action
based on culpa aquiliana in the civil suit they filed against it was valid.
The petition lacks merit.
The case filed by respondents against petitioner is an action for culpa
aquiliana or quasi-delict under Article 2176 of the Civil Code.13 In this
regard, Article 2180 provides that the obligation imposed by Article 2176 is
demandable for the acts or omissions of those persons for whom one is
responsible. Consequently, an action based on quasi-delict may be instituted
against the employer for an employee's act or omission. The liability for the
negligent conduct of the subordinate is direct and primary, but is subject to
the defense of due diligence in the selection and supervision of the
employee.14 In the instant case, the trial court found that petitioner failed to
prove that it exercised the diligence of a good father of a family in the
selection and supervision of Payunan, Jr.
The trial court and the Court of Appeals found petitioner solidarily liable with
BLTB for the actual damages suffered by respondents because of the injuries
they sustained. It was established that Payunan, Jr. was driving recklessly
because of the skid marks as shown in the sketch of the police investigator.
It is well-settled in Fabre, Jr. v. Court of Appeals,15 that the owner of the
other vehicle which collided with a common carrier is solidarily liable to the
injured passenger of the same. We held, thus:
The same rule of liability was applied in situations where the negligence of
the driver of the bus on which plaintiff was riding concurred with the
negligence of a third party who was the driver of another vehicle, thus
causing an accident. In Anuran v. Buo, Batangas Laguna Tayabas Bus Co. v.
Intermediate Appellate Court, and Metro Manila Transit Corporation v. Court
of Appeals, the bus company, its driver, the operator of the other vehicle and

the driver of the vehicle were jointly and severally held liable to the injured
passenger or the latter's heirs. The basis of this allocation of liability was
explained in Viluan v. Court of Appeals, thus:
Nor should it make any difference that the liability of petitioner [bus owner]
springs from contract while that of respondents [owner and driver of other
vehicle] arises from quasi-delict. As early as 1913, we already ruled in
Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of injury to a passenger due
to the negligence of the driver of the bus on which he was riding and of the
driver of another vehicle, the drivers as well as the owners of the two
vehicles are jointly and severally liable for damages. x x x
xxxx
As in the case of BLTB, private respondents in this case and her co-plaintiffs
did not stake out their claim against the carrier and the driver exclusively on
one theory, much less on that of breach of contract alone.After all, it was
permitted for them to allege alternative causes of action and join as many
parties as may be liable on such causes of action so long as private
respondent and her co-plaintiffs do not recover twice for the same
injury. What is clear from the cases is the intent of the plaintiff there to
recover from both the carrier and the driver, thus justifying the holding that
the carrier and the driver were jointly and severally liable because their
separate and distinct acts concurred to produce the same injury.16(Emphasis
supplied)
In a "joint" obligation, each obligor answers only for a part of the whole
liability; in a "solidary" or "joint and several" obligation, the relationship
between the active and the passive subjects is so close that each of them
must comply with or demand the fulfillment of the whole obligation.
In Lafarge Cement v. Continental Cement Corporation,17we reiterated that
joint tort feasors are jointly and severally liable for the tort which they
commit. Citing Worcester v. Ocampo,18 we held that:
x x x The difficulty in the contention of the appellants is that they fail to
recognize that the basis of the present action is tort. They fail to recognize
the universal doctrine that each joint tort feasor is not only individually liable
for the tort in which he participates, but is also jointly liable with his tort
feasors. x x x
It may be stated as a general rule that joint tort feasors are all the persons
who command, instigate, promote, encourage, advise, countenance,
cooperate in, aid or abet the commission of a tort, or who approve of it after
it is done, if done for their benefit. They are each liable as principals, to the
same extent and in the same manner as if they had performed the wrongful
act themselves. x x x

Joint tort feasors are jointly and severally liable for the tort which they
commit. The persons injured may sue all of them or any number less than all.
Each is liable for the whole damages caused by all, and all together are
jointly liable for the whole damage. It is no defense for one sued alone, that
the others who participated in the wrongful act are not joined with him as
defendants; nor is it any excuse for him that his participation in the tort was
insignificant as compared to that of the others. x x x
Joint tort feasors are not liable pro rata. The damages can not be apportioned
among them, except among themselves. They cannot insist upon an
apportionment, for the purpose of each paying an aliquot part. They are
jointly and severally liable for the whole amount. x x x
A payment in full for the damage done, by one of the joint tort feasors, of
course satisfies any claim which might exist against the others. There can be
but satisfaction. The release of one of the joint tort feasors by agreement
generally operates to discharge all. x x x
Of course the court during trial may find that some of the alleged tort feasors
are liable and that others are not liable. The courts may release some for
lack of evidence while condemning others of the alleged tort feasors. And
this is true even though they are charged jointly and severally.19
Petitioner's claim that paragraph 2 of the dispositive portion of the trial
court's decision is ambiguous and arbitrary and also entitles respondents to
recover twice is without basis. In the body of the trial court's decision, it was
clearly stated that petitioner and its driver Payunan, Jr., are jointly and
solidarily liable for moral damages in the amount of P50,000.00 to
respondent Fletcher and P25,000.00 to respondent Estrella.20 Moreover,
there could be no double recovery because the award in paragraph 2 is for
moral damages while the award in paragraph 1 is for actual damages and
attorney's fees.
Petitioner next claims that the damages, attorney's fees, and legal interest
awarded by the Court of Appeals are excessive.
Moral damages may be recovered in quasi-delicts causing physical
injuries.21 The award of moral damages in favor of Fletcher and Estrella in
the amount of P80,000.00 must be reduced since prevailing jurisprudence
fixed the same at P50,000.00.22 While moral damages are not intended to
enrich the plaintiff at the expense of the defendant, the award should
nonetheless be commensurate to the suffering inflicted.23
The Court of Appeals correctly awarded respondents exemplary damages in
the amount of P20,000.00 each. Exemplary damages may be awarded in
addition to moral and compensatory damages.24 Article 2231 of the Civil
Code also states that in quasi-delicts, exemplary damages may be granted if

the defendant acted with gross negligence.25 In this case, petitioner's driver
was driving recklessly at the time its truck rammed the BLTB bus. Petitioner,
who has direct and primary liability for the negligent conduct of its
subordinates, was also found negligent in the selection and supervision of its
employees. In Del Rosario v. Court of Appeals,26 we held, thus:
ART. 2229 of the Civil Code also provides that such damages may be
imposed, by way of example or correction for the public good. While
exemplary damages cannot be recovered as a matter of right, they need not
be proved, although plaintiff must show that he is entitled to moral,
temperate or compensatory damages before the court may consider the
question of whether or not exemplary damages should be awarded.
Exemplary Damages are imposed not to enrich one party or impoverish
another but to serve as a deterrent against or as a negative incentive to curb
socially deleterious actions.
Regarding attorney's fees, we held in Traders Royal Bank Employees UnionIndependent v. National Labor Relations Commission,27 that:
There are two commonly accepted concepts of attorney's fees, the so-called
ordinary and extraordinary. In its ordinary concept, an attorney's fee is the
reasonable compensation paid to a lawyer by his client for the legal services
he has rendered to the latter. The basis of this compensation is the fact of his
employment by and his agreement with the client.
In its extraordinary concept, an attorney's fee is an indemnity for damages
ordered by the court to be paid by the losing party in a litigation. The basis of
this is any of the cases provided by law where such award can be made,
such as those authorized in Article 2208, Civil Code, and is payable not to the
lawyer but to the client, unless they have agreed that the award shall pertain
to the lawyer as additional compensation or as part thereof.28 (Emphasis
supplied)
In the instant case, the Court of Appeals correctly awarded attorney's fees
and other expenses of litigation as they may be recovered as actual or
compensatory damages when exemplary damages are awarded; when the
defendant acted in gross and evident bad faith in refusing to satisfy the
plaintiff's valid, just and demandable claim; and in any other case where the
court deems it just and equitable that attorney's fees and expenses of
litigation should be recovered.29
Regarding the imposition of legal interest at the rate of 6% from the time of
the filing of the complaint, we held inEastern Shipping Lines, Inc. v. Court of
Appeals,30 that when an obligation, regardless of its source, i.e., law,
contracts, quasi-contracts, delicts or quasi-delicts is breached, the

contravenor can be held liable for payment of interest in the concept of

actual and compensatory damages,31 subject to the following rules, to wit
1. When the obligation is breached, and it consists in the payment of a sum
of money, i.e., a loan or forbearance of money, the interest due should be
that which may have been stipulated in writing. Furthermore, the interest
due shall itself earn legal interest from the time it is judicially demanded. In
the absence of stipulation, the rate of interest shall be 12% per annum to be
computed from default, i.e., from judicial or extrajudicial demand under and
subject to the provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of money, is
breached, an interest on the amount of damages awarded may be imposed
at the discretion of the court at the rate of 6% per annum.No interest,
however, shall be adjudged on unliquidated claims or damages except when
or until the demand can be established with reasonable certainty.
Accordingly, where the demand is established with reasonable certainty, the
interest shall begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be so
reasonably established at the time the demand is made, the interest shall
begin to run only from the date the judgment of the court is made (at which
time the quantification of damages may be deemed to have been reasonably
ascertained). The actual base for the computation of legal interest shall, in
any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money becomes final
and executory, the rate of legal interest, whether the case falls under
paragraph 1 or paragraph 2, above, shall be 12% per annum from such
finality until its satisfaction, this interim period being deemed to be by then
an equivalent to a forbearance of credit.32 (Emphasis supplied)
Accordingly, the legal interest of 6% shall begin to run on February 9, 1993
when the trial court rendered judgment and not on February 4, 1980 when
the complaint was filed. This is because at the time of the filing of the
complaint, the amount of the damages to which plaintiffs may be entitled
remains unliquidated and unknown, until it is definitely ascertained, assessed
and determined by the court and only upon presentation of proof
thereon.33 From the time the judgment becomes final and executory, the
interest rate shall be 12% until its satisfaction.
Anent the last issue of whether petitioner can recover under its insurance
policy from Phoenix, we affirm the findings of both the trial court and the
Court of Appeals, thus:

As regards the liability of Phoenix, the court a quo correctly ruled that
defendant-appellant CDCP's claim against Phoenix already prescribed
pursuant to Section 384 of P.D. 612, as amended, which provides:
Any person having any claim upon the policy issued pursuant to this chapter
shall, without any unnecessary delay, present to the insurance company
concerned a written notice of claim setting forth the nature, extent and
duration of the injuries sustained as certified by a duly licensed physician.
Notice of claim must be filed within six months from date of the accident,
otherwise, the claim shall be deemed waived. Action or suit for recovery of
damage due to loss or injury must be brought in proper cases, with the
Commissioner or Courts within one year from denial of the claim, otherwise,
the claimant's right of action shall prescribe. (As amended by PD 1814, BP
874.)34
The law is clear and leaves no room for interpretation. A written notice of
claim must be filed within six months from the date of the accident. Since
petitioner never made any claim within six months from the date of the
accident, its claim has already prescribed.
WHEREFORE, the instant petition is DENIED. The Decision of the Court of
Appeals in CA-G.R. CV No. 46896 dated March 29, 2001, which modified the
Decision of the Regional Trial Court of Manila, Branch 13, in Civil Case No. R82-2137, is AFFIRMED with the MODIFICATIONS that petitioner is held jointly
and severally liable to pay (1) actual damages in the amount of P79,354.43;
(2) moral damages in the amount of P50,000.00 each for Rachel Fletcher and
Rebecca Estrella; (3) exemplary damages in the amount of P20,000.00 each
for Rebecca Estrella and Rachel Fletcher; and (4) thirty percent (30%) of the
total amount recovered as attorney's fees. The total amount adjudged shall
earn interest at the rate of 6% per annum from the date of judgment of the
trial court until finality of this judgment. From the time this Decision becomes
final and executory and the judgment amount remains unsatisfied, the same
shall earn interest at the rate of 12% per annum until its satisfaction.
SO ORDERED.
Panganiban, C.J., Chairperson, Austria-Martinez, Callejo, Sr., Chico-Nazario,
J.J., concur.
Republic
of
the
Philippines
SUPREME
COURT
Manila
SECOND DIVISION
G.R. Nos. 74387-90 November 14, 1988
BATANGAS LAGUNA TAYABAS BUS COMPANY & ARMANDO PON, petitioners,
vs.

INTERMEDIATE APPELLATE COURT, THE HEIRS OF PAZ VDA. DE PAMFILO, THE

HEIRS OF NORMA NERI, and BAYLON SALES and NENA VDA. DE
ROSALES, respondents.
Sibal, Custodia, Santos & Nofuente for petitioners.
Restituto L. Opis for respondents Pamfilos and Rosaleses.
Citizens Legal Assistance Office for N. Neri and Baylon Sales.
PARAS, J.:
Before Us is a Petition to Review by Certiorari, the decision 1 of the
respondent appellate court which affirmed with modification the joint
decision of the trial court in four (4) cases involving similar facts and issues,
finding favorably for the plaintiffs (private respondents herein), the
dispositive portion of said appellate judgment reading as follows:
WHEREFORE, with the modification that the death indemnity is raised to
P30,000.00 to each set of the victims' heirs, the rest of the judgment
appealed from is hereby affirmed in toto. Costs against the defendantsappellants.
SO ORDERED. (p. 20, Rollo)
From the records of the case We have gathered the following antecedent
facts:
The collision between Bus No. 1046 of the Batangas Laguna Tayabas Bus
Company (BLTB, for brevity) driven by Armando Pon and Bus No. 404 of
Superlines Transportation Company (Superlines, for brevity) driven by Ruben
Dasco took place at the highway traversing Barangay Isabong, Tayabas,
Quezon in the afternoon of August 11, 1978, which collision resulted in the
death of Aniceto Rosales, Francisco Pamfilo and Romeo Neri and in several
injuries to Nena Rosales (wife of Anecito) and Baylon Sales, all passengers of
the BLTB Bus No. 1046. The evidence shows that as BLTB Bus No. 1046 was
negotiating the bend of the highway, it tried to overtake a Ford Fiera car just
as Bus No. 404 of Superlines was coming from the opposite direction. Seeing
thus, Armando Pon (driver of the BLTB Bus) made a belated attempt to
slacken the speed of his bus and tried to return to his proper lane. It was an
unsuccessful try as the two (2) buses collided with each other.
Nena Vda. de Rosales and Baylon Sales and the surviving heirs of the
deceased Francisco Pamfilo, Aniceto Rosales and Romeo Neri instituted
separate cases in the Court of First Instance of Marinduque against BLTB and
Superlines together with their respective drivers praying for damages,
attorney's fees and litigation expenses plus costs. Criminal cases against the
drivers of the two buses were filed in the Court of First Instance of Quezon.

Defendants BLTB and Superlines, together with their drivers Pon and Dasco,
denied liability by claiming that they exercised due care and diligence and
shifted the fault, against each other. They all interposed counterclaims
against the plaintiffs and crossclaims against each other.
After trial on the merits, the lower court exonerated defendants Superlines
and its driver Dasco from liability and attributed sole responsibility to
defendants BLTB and its driver Pon, and ordered them jointly and severally to
pay damages to the plaintiffs. Defendants BLTB and Armando Pon appealed
from the decision of the lower court to respondent appellate court which
affirmed with modification the judgment of the lower court as earlier stated.
Hence, this petition to review by certiorari of defendant BLTB assigning a
lone error, to wit:
THE INTERMEDIATE APPELLATE COURT ERRED IN ADJUDGING THAT THE
ACTIONS OF PRIVATE RESPONDENTS ARE BASED ON CULPA CONTRACTUAL.
(p. 12, Rollo)
It is argued by petitioners that if the intention of private respondents were to
file an action based on culpa contractual or breach of contract of carriage,
they could have done so by merely impleading BLTB and its driver Pon. As it
was in the trial court, private respondents filed an action against all the
defendants basing their action on culpa aquiliana or tort.
Petitioners' contentions deserve no merit. A reading of the respondent
court's decision shows that it anchored petitioners' liability both on culpa
contractual and culpa aquiliana, to wit:
The proximate cause of the collision resulting in the death of three and
injuries to two of the passengers of BLTB was the negligence of the driver of
the BLTB bus, who recklessly operated and drove said bus by overtaking a
Ford Fiera car as he was negotiating the ascending bend of the highway (tsn,
October 4, 1979, pp. 9-10, 35, 36, 61; Exhibit 6 Superlines, p. 47) which was
divided into two lanes by a continuous yellow strip (tsn, October 4, 1979, p.
36). The driver of the BLTB bus admitted in his cross-examination that the
continuous yellow line on the ascending bend of the highway signifies a noovertaking zone (tsn, October 4, 1979, p. 36). It is no surprise then that the
driver of the Superlines bus was exonerated by the lower court. He had a
valid reason to presuppose that no one would overtake in such a dangerous
situation. These facts show that patient imprudence of the BLTB driver.
It is well settled that a driver abandoning his proper lane for the purpose of
overtaking another vehicle in ordinary situation has the duty to see that the
road is clear and not to proceed if he can not do so in safety (People v.
Enriquez, 40 O.G. No. 5, 984).

... Before attempting to pass the vehicle ahead, the rear driver must see that
the road is clear and if there is no sufficient room for a safe passage, or the
driver ahead does not turn out so as to afford opportunity to pass, or if, after
attempting to pass, the driver of the overtaking vehicle finds that he cannot
make the passage in safety, the latter must slacken his speed so as to avoid
the danger of a collision, even bringing his car to a stop if necessary. (3-4
Huddy Encyclopedia of Automobile Law, Sec. 212, p. 195).
The above rule becomes more particularly applicable in this case when the
overtaking took place on an ascending curved highway divided into two
lanes by a continuous yellow line. Appellant Pon should have remembered
that:
When a motor vehicle is approaching or rounding a curve there is special
necessity for keeping to the right side of the road and the driver has not the
right to drive on the left hand side relying upon having time to turn to the
right if a car is approaching from the opposite direction comes into view. (42
C.J. 42 906).
Unless there is proof to the contrary, it is presumed that a person driving a
motor vehicle has been negligent if at the time of the mishap, he was
violating any traffic regulation. (Art. 2165, Civil Code).
In failing to observe these simple precautions, BLTB's driver undoubtedly
failed to act with the diligence demanded by the circumstances.
We now come to the subject of liability of the appellants.
For his own negligence in recklessly driving the truck owned by his employer,
appellant Armando Pon is primarily liable (Article 2176, Civil Code).<re||
an1w>
On the other hand the liability of Pon's employer, appellant BLTB, is also
primary, direct and immediate in view of the fact that the death of or injuries
to its passengers was through the negligence of its employee (Marahan v.
Mendoza, 24 SCRA 888, 894), and such liability does not cease even upon
proof that BLTB had exercised all the diligence of a good father of a family in
the selection and supervision of its employees (Article 1759, Civil Code).
The common carrier's liability for the death of or injuries to its passengers is
based on its contractual obligation to carry its passengers safely to their
destination. That obligation is so serious that the Civil Code requires "utmost
diligence of very cautious person (Article 1755, Civil Code). They are
presumed to have been at fault or to have acted negligently unless they
prove that they have observed extraordinary diligence" (Article 1756, Civil
Code). In the present case, the appellants have failed to prove extraordinary
diligence. Indeed, this legal presumption was confirmed by the fact that the

bus driver of BLTB was negligent. It must follow that both the driver and the
owner must answer for injuries or death to its passengers.
The liability of BLTB is also solidarily with its driver (Viluan v. Court of
Appeals, 16 SCRA 742, 747) even though the liability of the driver springs
from quasi delict while that of the bus company from contract. (pp. 17-19,
Rollo)
Conclusively therefore in consideration of the foregoing findings of the
respondent appellate court it is settled that the proximate cause of the
collision resulting in the death of three and injuries to two of the passengers
of BLTB was the sole negligence of the driver of the BLTB Bus, who recklessly
operated and drove said bus in a lane where overtaking is not allowed by
Traffic Rules and Regulations. Such negligence and recklessness is binding
against petitioner BLTB, more so when We consider the fact that in an action
based on a contract of carriage, the court need not make an express finding
of fault or negligence on the part of the carrier in order to hold it responsible
for the payment of the damages sought by the passenger. By the contract of
carriage, the carrier BLTB assumed the express obligation to transport the
passengers to their destination safely and to observe extraordinary diligence
with a due regard for all the circumstances, and any injury that might be
suffered by its passengers is right away attributable to the fault or
negligence of the carrier (Art. 1756, New Civil Code).
Petitioners also contend that "a common carrier is not an absolute insurer
against all risks of travel and are not liable for acts or accidents which cannot
be foreseen or inevitable and that responsibility of a common carrier for the
safety of its passenger prescribed in Articles 1733 and 1755 of the New Civil
Code is not susceptible of a precise and definite formulation." (p. 13, Rollo)
Petitioners' contention holds no water because they had totally failed to point
out any factual basis for their defense of force majeure in the light of the
undisputed fact that the cause of the collision was the sole
negligence and recklessness of petitioner Armando Pon. For the defense
offorce majeure or act of God to prosper the accident must be due to natural
causes and exclusively without human intervention.
WHEREFORE, premises considered, the appealed decision is hereby
AFFIRMED.
SO ORDERED.
Melencio-Herrera (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur.
G.R. No. 34840
NARCISO
vs.

September 23, 1931

GUTIERREZ, plaintiff-appellee,

BONIFACIO GUTIERREZ, MARIA V. DE GUTIERREZ, MANUEL GUTIERREZ,

ABELARDO VELASCO, and SATURNINO CORTEZ, defendants-appellants.
L.D.
Lockwood
for
appellants
Velasco
and
Cortez.
San
Agustin
and
Roxas
for
other
appellants.
Ramon Diokno for appellee.
MALCOLM, J.:
This is an action brought by the plaintiff in the Court of First Instance of
Manila against the five defendants, to recover damages in the amount of
P10,000, for physical injuries suffered as a result of an automobile accident.
On judgment being rendered as prayed for by the plaintiff, both sets of
defendants appealed.
On February 2, 1930, a passenger truck and an automobile of private
ownership collided while attempting to pass each other on the Talon bridge
on the Manila South Road in the municipality of Las Pias, Province of Rizal.
The truck was driven by the chauffeur Abelardo Velasco, and was owned by
Saturnino Cortez. The automobile was being operated by Bonifacio Gutierrez,
a lad 18 years of age, and was owned by Bonifacio's father and mother, Mr.
and Mrs. Manuel Gutierrez. At the time of the collision, the father was not in
the car, but the mother, together will several other members of the Gutierrez
family, seven in all, were accommodated therein. A passenger in the
autobus, by the name of Narciso Gutierrez, was en route from San Pablo,
Laguna, to Manila. The collision between the bus and the automobile
resulted in Narciso Gutierrez suffering a fracture right leg which required
medical attendance for a considerable period of time, and which even at the
date of the trial appears not to have healed properly.
It is conceded that the collision was caused by negligence pure and simple.
The difference between the parties is that, while the plaintiff blames both
sets of defendants, the owner of the passenger truck blames the automobile,
and the owner of the automobile, in turn, blames the truck. We have given
close attention to these highly debatable points, and having done so, a
majority of the court are of the opinion that the findings of the trial judge on
all controversial questions of fact find sufficient support in the record, and so
should be maintained. With this general statement set down, we turn to
consider the respective legal obligations of the defendants.
In amplification of so much of the above pronouncement as concerns the
Gutierrez family, it may be explained that the youth Bonifacio was in
incompetent chauffeur, that he was driving at an excessive rate of speed,
and that, on approaching the bridge and the truck, he lost his head and so
contributed by his negligence to the accident. The guaranty given by the
father at the time the son was granted a license to operate motor vehicles

made the father responsible for the acts of his son. Based on these facts,
pursuant to the provisions of article 1903 of the Civil Code, the father alone
and not the minor or the mother, would be liable for the damages caused by
the minor.
We are dealing with the civil law liability of parties for obligations which arise
from fault or negligence. At the same time, we believe that, as has been
done in other cases, we can take cognizance of the common law rule on the
same subject. In the United States, it is uniformly held that the head of a
house, the owner of an automobile, who maintains it for the general use of
his family is liable for its negligent operation by one of his children, whom he
designates or permits to run it, where the car is occupied and being used at
the time of the injury for the pleasure of other members of the owner's
family than the child driving it. The theory of the law is that the running of
the machine by a child to carry other members of the family is within the
scope of the owner's business, so that he is liable for the negligence of the
child because of the relationship of master and servant. (Huddy On
Automobiles, 6th ed., sec. 660; Missell vs. Hayes [1914], 91 Atl., 322.) The
liability of Saturnino Cortez, the owner of the truck, and of his chauffeur
Abelardo Velasco rests on a different basis, namely, that of contract which,
we think, has been sufficiently demonstrated by the allegations of the
complaint, not controverted, and the evidence. The reason for this conclusion
reaches to the findings of the trial court concerning the position of the truck
on the bridge, the speed in operating the machine, and the lack of care
employed by the chauffeur. While these facts are not as clearly evidenced as
are those which convict the other defendant, we nevertheless hesitate to
disregard the points emphasized by the trial judge. In its broader aspects,
the case is one of two drivers approaching a narrow bridge from opposite
directions, with neither being willing to slow up and give the right of way to
the other, with the inevitable result of a collision and an accident.
The defendants Velasco and Cortez further contend that there existed
contributory negligence on the part of the plaintiff, consisting principally of
his keeping his foot outside the truck, which occasioned his injury. In this
connection, it is sufficient to state that, aside from the fact that the defense
of contributory negligence was not pleaded, the evidence bearing out this
theory of the case is contradictory in the extreme and leads us far afield into
speculative matters.
The last subject for consideration relates to the amount of the award. The
appellee suggests that the amount could justly be raised to P16,517, but
naturally is not serious in asking for this sum, since no appeal was taken by
him from the judgment. The other parties unite in challenging the award of

P10,000, as excessive. All facts considered, including actual expenditures

and damages for the injury to the leg of the plaintiff, which may cause him
permanent lameness, in connection with other adjudications of this court,
lead us to conclude that a total sum for the plaintiff of P5,000 would be fair
and reasonable. The difficulty in approximating the damages by monetary
compensation is well elucidated by the divergence of opinion among the
members of the court, three of whom have inclined to the view that P3,000
would be amply sufficient, while a fourth member has argued that P7,500
would be none too much.
In consonance with the foregoing rulings, the judgment appealed from will be
modified, and the plaintiff will have judgment in his favor against the
defendants Manuel Gutierrez, Abelardo Velasco, and Saturnino Cortez, jointly
and severally, for the sum of P5,000, and the costs of both instances.
Avancea, C.J., Johnson, Street, Villamor, Ostrand, Romualdez, and Imperial,
JJ., concur.
G.R. No. L-41423 February 23, 1989
LUIS
JOSEPH, petitioner
vs.
HON. CRISPIN V. BAUTISTA, PATROCINIO PEREZ, ANTONIO SIOSON, JACINTO
PAGARIGAN, ALBERTO CARDENO and LAZARO VILLANUEVA, respondents.
Jose M. Castillo for petitioner.
Arturo Z. Sioson for private respondent, Patrocinio Perez.
Cipriano B. Farrales for private respondents except P. Perez.
REGALAD0, J.:
Petitioner prays in this appeal by certiorari for the annulment and setting
aside of the order, dated July 8, 1975, dismissing petitioner's complaint, as
well as the order, dated August 22, 1975, denying his motion for
reconsideration of said dismissal, both issued by respondent Judge Crispin V.
Bautista of the former Court of First Instance of Bulacan, Branch III.
Petitioner herein is the plaintiff in Civil Case No. 50-V-73 entitled "Luis Joseph
vs. Patrocinio Perez, Domingo Villa y de Jesus, Rosario Vargas, Antonio
Sioson, Lazaro Villanueva and Jacinto Pagarigan", filed before the Court of
First Instance of Bulacan, Branch III, and presided over by respondent Judge
Crispin V. Bautista; while private respondents Patrocinio Perez, Antonio
Sioson, Jacinto Pagarigan and Lazaro Villanueva are four of the defendants in
said case. Defendant Domingo Villa y de Jesus did not answer either the
original or the amended complaint, while defendant Rosario Vargas could not
be served with summons; and respondent Alberto Cardeno is included herein

as he was impleaded by defendant Patrocinio Perez, one of respondents

herein, in her cross-claim.
The generative facts of this case, as culled from the written submission of
the parties, are as follows:
Respondent Patrocinio Perez is the owner of a cargo truck with Plate No. 25-2
YT Phil. '73 for conveying cargoes and passengers for a consideration from
Dagupan City to Manila. On January 12, 1973, said cargo truck driven by
defendant Domingo Villa was on its way to Valenzuela, Bulacan from
Pangasinan. Petitioner, with a cargo of livestock, boarded the cargo truck at
Dagupan City after paying the sum of P 9.00 as one way fare to Valenzuela,
Bulacan. While said cargo truck was negotiating the National Highway
proceeding towards Manila, defendant Domingo Villa tried to overtake a
tricycle likewise proceeding in the same direction. At about the same time, a
pick-up truck with Plate No. 45-95 B, supposedly owned by respondents
Antonio Sioson and Jacinto Pagarigan, then driven by respondent Lazaro
Villanueva, tried to overtake the cargo truck which was then in the process of
overtaking the tricycle, thereby forcing the cargo truck to veer towards the
shoulder of the road and to ram a mango tree. As a result, petitioner
sustained a bone fracture in one of his legs. 1
The following proceedings thereafter took place: 2
Petitioner filed a complaint for damages against respondent Patrocinio Perez,
as owner of the cargo truck, based on a breach of contract of carriage and
against respondents Antonio Sioson and Lazaro Villanueva, as owner and
driver, respectively, of the pick-up truck, based on quasi-delict.
Respondent Sioson filed his answer alleging that he is not and never was an
owner of the pick-up truck and neither would he acquire ownership thereof in
the future.
On September 24, 1973, petitioner, with prior leave of court, filed his
amended complaint impleading respondents Jacinto Pagarigan and a certain
Rosario Vargas as additional alternative defendants. Petitioner apparently
could not ascertain who the real owner of said cargo truck was, whether
respondents Patrocinio Perez or Rosario Vargas, and who was the real owner
of said pick-up truck, whether respondents Antonio Sioson or Jacinto
Pagarigan.
Respondent Perez filed her amended answer with crossclaim against her codefendants for indemnity and subrogation in the event she is ordered to pay
petitioner's claim, and therein impleaded cross-defendant Alberto Cardeno as
additional alternative defendant.
On September 27, 1974, respondents Lazaro Villanueva, Alberto Cardeno,
Antonio Sioson and Jacinto Pagarigan, thru their insurer, Insurance

Corporation of the Philippines, paid petitioner's claim for injuries sustained in

the amount of P 1,300.00. By reason thereof, petitioner executed a release of
claim releasing from liability the following parties, viz: Insurance Corporation
of the Philippines, Alberto Cardeno, Lazaro Villanueva, Antonio Sioson and
Jacinto Pagarigan.
On December 2, 1974, respondents Lazaro Villanueva, Alberto Cardeno and
their insurer, the Insurance Corporation of the Philippines, paid respondent
Patrocinio Perez' claim for damages to her cargo truck in the amount of P
7,420.61.
Consequently, respondents Sioson, Pagarigan, Cardeno and Villanueva filed a
"Motion to Exonerate and Exclude Defs/ Cross defs. Alberto Cardeno, Lazaro
Villanueva, Antonio Sioson and Jacinto Pagarigan on the Instant Case",
alleging that respondents Cardeno and Villanueva already paid P 7,420.61 by
way of damages to respondent Perez, and alleging further that respondents
Cardeno, Villanueva, Sioson and Pagarigan paid P 1,300.00 to petitioner by
way of amicable settlement.
Thereafter, respondent Perez filed her "Opposition to Cross-defs.' motion
dated Dec. 2, 1974 and Counter Motion" to dismiss. The so-called counter
motion to dismiss was premised on the fact that the release of claim
executed by petitioner in favor of the other respondents inured to the benefit
of respondent Perez, considering that all the respondents are solidarity liable
to herein petitioner.
On July 8, 1975, respondent judge issued the questioned order dismissing
the case, and a motion for the reconsideration thereof was denied. Hence,
this appeal, petitioner contending that respondent judge erred in declaring
that the release of claim executed by petitioner in favor of respondents
Sioson, Villanueva and Pagarigan inured to the benefit of respondent Perez;
ergo, it likewise erred in dismissing the case.
We find the present recourse devoid of merit.
The argument that there are two causes of action embodied in petitioner's
complaint, hence the judgment on the compromise agreement under the
cause of action based on quasi-delict is not a bar to the cause of action for
breach of contract of carriage, is untenable.
A cause of action is understood to be the delict or wrongful act or omission
committed by the defendant in violation of the primary rights of the
plaintiff. 3 It is true that a single act or omission can be violative of various
rights at the same time, as when the act constitutes juridically a violation of
several separate and distinct legal obligations. However where there is only
one delict or wrong, there is but a single cause of action regardless of the
number of rights that may have been violated belonging to one person. 4

The singleness of a cause of action lies in the singleness of the- delict or

wrong violating the rights of one person. Nevertheless, if only one injury
resulted from several wrongful acts, only one cause of action arises. 5 In the
case at bar, there is no question that the petitioner sustained a single injury
on his person. That vested in him a single cause of action, albeit with the
correlative rights of action against the different respondents through the
appropriate remedies allowed by law.
The trial court was, therefore, correct in holding that there was only one
cause of action involved although the bases of recovery invoked by
petitioner against the defendants therein were not necessarily Identical since
the respondents were not identically circumstanced. However, a recovery by
the petitioner under one remedy necessarily bars recovery under the other.
This, in essence, is the rationale for the proscription in our law against
double recovery for the same act or omission which, obviously, stems from
the fundamental rule against unjust enrichment.
There is no question that the respondents herein are solidarily liable to
petitioner. On the evidence presented in the court below, the trial court
found them to be so liable. It is undisputed that petitioner, in his amended
complaint, prayed that the trial court hold respondents jointly and severally
liable. Furthermore, the allegations in the amended complaint clearly
impleaded respondents as solidary debtors. We cannot accept the vacuous
contention of petitioner that said allegations are intended to apply only in
the event that execution be issued in his favor. There is nothing in law or
jurisprudence which would countenance such a procedure.
The respondents having been found to be solidarity liable to petitioner, the
full payment made by some of the solidary debtors and their subsequent
release from any and all liability to petitioner inevitably resulted in the
extinguishment and release from liability of the other solidary debtors,
including herein respondent Patrocinio Perez.
The claim that there was an agreement entered into between the parties
during the pre-trial conference that, after such payment made by the other
respondents, the case shall proceed as against respondent Perez is both
incredible and unsubstantiated. There is nothing in the records to show,
either by way of a pre-trial order, minutes or a transcript of the notes of the
alleged pre-trial hearing, that there was indeed such as agreement.
WHEREFORE, the challenged orders of the respondent judge are hereby
AFFIRMED.
SO ORDERED.
Melencio-Herrera, (Chairperson), Paras, Padilla, and Sarmiento, JJ., concur.

[Synopsis/Syllabi]
THIRD DIVISION
[G.R. No. 115849. January 24, 1996]
FIRST PHILIPPINE INTERNATIONAL BANK (Formerly Producers Bank of the
Philippines) and MERCURIO RIVERA, petitioners, vs. COURT OF APPEALS,
CARLOS EJERCITO, in substitution of DEMETRIO DEMETRIA, and JOSE
JANOLO, respondents.
DECISION
PANGANIBAN, J.:
In the absence of a formal deed of sale, may commitments given by bank
officers in an exchange of letters and/or in a meeting with the buyers
constitute a perfected and enforceable contract of sale over 101 hectares of
land in Sta. Rosa, Laguna? Does the doctrine of apparent authority apply in
this case? If so, may the Central Bank-appointed conservator of Producers
Bank (now First Philippine International Bank) repudiate such apparent
authority after said contract has been deemed perfected? During the
pendency of a suit for specific performance, does the filing of a derivative
suit by the majority shareholders and directors of the distressed bank to
prevent the enforcement or implementation of the sale violate the ban
against forum-shopping?
Simply stated, these are the major questions brought before this Court in the
instant Petition for review on certiorari under Rule 45 of the Rules of Court, to
set aside the Decision promulgated January 14, 1994 of the respondent Court
of Appeals[1] in CA-G.R. CV No. 35756 and the Resolution promulgated June
14, 1994 denying the motion for reconsideration. The dispositive portion of
the said Decision reads:
WHEREFORE, the decision of the lower court is MODIFIED by the elimination
of the damages awarded under paragraphs 3, 4 and 6 of its dispositive
portion and the reduction of the award in paragraph 5 thereof to P75,000.00,
to be assessed against defendant bank. In all other aspects, said decision is
hereby AFFIRMED.
All references to the original plaintiffs in the decision and its dispositive
portion are deemed, herein and hereafter, to legally refer to the plaintiffappellee Carlos C. Ejercito.
Costs against appellant bank.
The dispositive portion of the trial courts[2] decision dated July 10, 1991, on
the other hand, is as follows:
WHEREFORE, premises considered, judgment is hereby rendered in favor of
the plaintiffs and against the defendants as follows:

1. Declaring the existence of a perfected contract to buy and sell over the six
(6) parcels of land situated at Don Jose, Sta. Rosa, Laguna with an area of
101 hectares, more or less, covered by and embraced in Transfer Certificates
of Title Nos. T-106932 to T-106937, inclusive, of the Land Records of Laguna,
between the plaintiffs as buyers and the defendant Producers Bank for an
agreed price of Five and One Half Million (P5,500,000.00) Pesos;
2. Ordering defendant Producers Bank of the Philippines, upon finality of this
decision and receipt from the plaintiffs the amount of P5.5 Million, to execute
in favor of said plaintiffs a deed of absolute sale over the aforementioned six
(6) parcels of land, and to immediately deliver to the plaintiffs the owners
copies of T.C.T. Nos. T-106932 to T-106937, inclusive, for purposes of
registration of the same deed and transfer of the six (6) titles in the names of
the plaintiffs;
3. Ordering the defendants, jointly and severally, to pay plaintiffs Jose A.
Janolo and Demetrio Demetria the sums of P 200,000.00 each in moral
damages;
4. Ordering the defendants, jointly and severally, to pay plaintiffs the sum of
P 100,000.00 as exemplary damages;
5. Ordering the defendants, jointly and severally, to pay the plaintiffs the
amount of P400,000.00 for and by way of attorneys fees;
6. Ordering the defendants to pay the plaintiffs, jointly and severally, actual
and moderate damages in the amount of P20,000.00;
With costs against the defendants.
After the parties filed their comment, reply, rejoinder, sur-rejoinder and reply
to sur-rejoinder, the petition was given due course in a Resolution
dated January 18, 1995. Thence, the parties filed their respective
memoranda and reply memoranda. The First Division transferred this case to
the Third Division per resolution dated October 23, 1995. After carefully
deliberating on the aforesaid submissions, the Court assigned the case to the
undersigned ponente for the writing of this Decision.
The Parties
Petitioner First Philippine International Bank (formerly Producers Bank of
the Philippines; petitioner Bank, for brevity) is a banking institution organized
and existing under the laws of the Republic of the Philippines. Petitioner
Mercurio Rivera (petitioner Rivera, for brevity) is of legal age and was, at all
times material to this case, Head Manager of the Property Management
Department of the petitioner Bank.
Respondent Carlos Ejercito (respondent Ejercito, for brevity) is of legal age
and is the assignee of original plaintiffs-appellees Demetrio Demetria and
Jose Janolo.

Respondent Court of Appeals is the court which issued the Decision and
Resolution sought to be set aside through this petition.
The Facts
The facts of this case are summarized in the respondent Courts Decision,
[3] as follows:
(1) In the course of its banking operations, the defendant Producer Bank of
the Philippines acquired six parcels of land with a total area of 101 hectares
located at Don Jose, Sta. Rosa, Laguna, and covered by Transfer Certificates
of Title Nos. T-106932 to T-106937. The property used to be owned by BYME
Investment and Development Corporation which had them mortgaged with
the bank as collateral fora loan. The original plaintiffs, Demetrio Demetria
and Jose O. Janolo, wanted to purchase the property and thus initiated
negotiations for that purpose.
(2) In the early part of August 1987 said plaintiffs, upon the suggestion of
BYME Investments legal counsel, Jose Fajardo, met with defendant Mercurio
Rivera, Manager of the Property Management Department of the defendant
bank. The meeting was held pursuant to plaintiffs plan to buy the property
(TSN of Jan. 16, 1990, pp. 7-10). After the meeting, plaintiff Janolo, following
the advice of defendant Rivera, made a formal purchase offer to the bank
through a letter dated August 30, 1987 (Exh. B), as follows:
August 30, 1987
The Producers Bank of the Philippines
Makati, Metro Manila
Attn. Mr. Mercurio Q. Rivera
Manager, Property Management Dept.
Gentlemen:
I have the honor to submit my formal offer to purchase your properties
covered by titles listed hereunder located at Sta. Rosa, Laguna, with a total
area of 101 hectares, more or less.
TCT NO. AREA
T-106932 113,580 sq.m.
T-106933 70,899 sq.m.
T-106934 52,246 sq.m.
T-106935 96,768 sq.m.
T-106936 187,114 sq.m.
T-106937 481,481 sq.m.
My offer is for PESOS: THREE MILLION FIVE HUNDRED THOUSAND
(P3,500,000.00) PESOS, in cash.
Kindly contact me at Telephone Number 921-1344.

(3) On September 1, 1987, defendant Rivera made on behalf of the bank a

formal reply by letter which is hereunder quoted (Exh. C):
September 1, 1987
J-P M-P GUTIERREZ ENTERPRISES
142 Charisma St., Doa Andres II
Rosario, Pasig, Metro Manila
Attention: JOSE O. JANOLO Dear Sir:
Dear Sir:
Thank you for your letter-offer to buy our six (6) parcels of acquired lots at
Sta. Rosa, Laguna (formerly owned by Byme industrial Corp.). Please be
informed however that the banks counter-offer is at P5.5 million for more
than 101 hectares on lot basis.
We shall be very glad to hear your position on the matter.
Best regards.
(4)On September 17, 1987, plaintiff Janolo, responding to Riveras
aforequoted reply, wrote (Exh.
September 17, 1987
Producers Bank
Paseo de Roxas
Makati, Metro Manila
Attention: Mr. Mercurio Rivera
Gentlemen:
In reply to your letter regarding my proposal to purchase your 101-hectare
lot located at Sta. Rosa Laguna, I would like to amend my previous offer and I
now propose to buy the said lot at P4.250 million in CASH.
Hoping that this proposal meets your satisfaction.
(5) There was no reply to Janolos foregoing letter of September 17, 1987.
What took place was a meeting on September 28, 1987 between the
plaintiffs and Luis Co, the Senior Vice-President of defendant bank. Rivera as
well as Fajardo, the BYME lawyer, attended the meeting. Two days later, or
on September 30, 1987, plaintiff Janolo sent to the bank, through Rivera, the
following letter (Exh. E):
The Producers Bank of the Philippines
Paseo de Roxas, Makati
Metro Manila
Attention: Mr. Mercurio Rivera
Re: 101 Hectares of Land in Sta. Rosa, Laguna
Gentlemen:
Pursuant to our discussion last 28 September 1987, we are pleased to inform
you that we are accepting your offer for us to purchase the property at Sta.

Rosa, Laguna, formerly owned by Byme In-vestment, for a total price of

PESOS: FIVE MILLION FIVE HUNDRED THOUSAND (P5,500,000.00).
Thank you.
(6) On October 12, 1987, the conservator of the bank (which has been placed
under conservatorship by the Central Bank since 1984) was replaced by an
Acting Conservator in the person of defendant Leonida T. Encarnacion.
On November 4, 1987, defendant Rivera wrote plaintiff Demetria the
following letter (Exh. F):
Attention: Atty. Demetrio Demetria
Dear Sir:
Your proposal to buy the properties the bank foreclosed from Byme
Investment Corp. located at Sta. Rosa, Laguna is under study yet as of this
time by the newly created committee for submission to the newly designated
Acting Conservator of the bank.
For your information.
(7) What thereafter transpired was a series of demands by the plaintiffs for
compliance by the bank with what plaintiff considered as a perfected
contract of sale, which demands were in one form or another refused by the
bank. As detailed by the trial court in its decision, on November 17, 1987,
plaintiffs through a letter to defendant Rivera (Exhibit G) tendered payment
of the amount of P5.5 million pursuant to (our) perfected sale agreement.
Defendants refused to receive both the payment and the letter. Instead, the
parcels of land involved in the transaction were advertised by the bank for
sale to any interested buyer (Exhs. H and H-1). Plaintiffs demanded the
execution by the bank of the documents on what was considered as a
perfected agreement. Thus:
Mr. Mercurio Rivera
Manager, Producers Bank
Paseo de Roxas, Makati
Metro Manila
Dear Mr. Rivera:
This is in connection with the offer of our client, Mr. Jose O. Janolo, to
purchase your 101-hectare lot located in Sta. Rosa, Laguna, and which are
covered by TCT No. T-106932 to 106937.
From the documents at hand, it appears that your counter-offer dated
September 1, 1987 of this same lot in the amount of P5.5 million was
accepted by our client thru a letter dated September 30, 1987 and was
received by you on October 5, 1987.
In view of the above circumstances, we believe that an agreement has been
perfected. We were also informed that despite repeated follow-up to

consummate the purchase, you now refuse to honor your commitment.

Instead, you have advertised for sale the same lot to others.
In behalf of our client, therefore, we are making this formal demand upon
you to consummate and execute the necessary actions/documentation
within three (3) days from your receipt hereof We are ready to remit the
agreed amount of P5.5 million at your advice. Otherwise, we shall be
constrained to file the necessary court action to protect the interest of our
client.
We trust that you will be guided accordingly.
(8) Defendant bank, through defendant Rivera, acknowledged receipt of the
foregoing letter and stated, in its communication of December 2, 1987 (Exh.
I), that said letter has been referred x x x to the office of our Conservator for
proper disposition. However, no response came from the Acting Conservator.
On December 14, 1987, the plaintiffs made a second tender of payment
(Exhs. L and L-1), this time through the Acting Conservator, defendant
Encarnacion. Plaintiffs letter reads:
PRODUCERS BANK OF
THE PHILIPPINES
Paseo de Roxas,
Makati, Metro Manila
Attn.: Atty. NIDA ENCARNACION Central Bank Conservator
Gentlemen:
We are sending you herewith, in-behalf of our client, Mr. JOSE O. JANOLO,
MBTC Check No. 258387 in the amount of P5.5 million as our agreed
purchase price of the 101-hectare lot covered by TCT Nos. 106932, 106933,
106934, 106935, 106936 and 106937 and registered under Producers Bank.
This is in connection with the perfected agreement consequent from your
offer of P5.5 Million as the purchase price of the said lots. Please inform us of
the date of documentation of the sale immediately.
Kindly acknowledge receipt of our payment.
(9) The foregoing letter drew no response for more than four months. Then,
on May 3, 1988, plaintiff, through counsel, made a final demand for
compliance by the bank with its obligations under the considered perfected
contract of sale (Exhibit N). As recounted by the trial court (Original Record,
p. 656), in a reply letter dated May 12, 1988 (Annex 4 of defendants answer
to amended complaint), the defendants through Acting Conservator
Encarnacion repudiated the authority of defendant Rivera and claimed that
his dealings with the plaintiffs, particularly his counter-offer of P5.5 Million
are unauthorized or illegal. On that basis, the defendants justified the refusal

of the tenders of payment and the non-compliance with the obligations

under what the plaintiffs considered to be a perfected contract of sale.
(10) On May 16, 1988, plaintiffs filed a suit for specific performance with
damages against the bank, its Manager Rivera and Acting Conservator
Encarnacion. The basis of the suit was that the transaction had with the bank
resulted in a perfected contract of sale. The defendants took the position
that there was no such perfected sale because the defendant Rivera is not
authorized to sell the property, and that there was no meeting of the minds
as to the price.
On March 14, 1991, Henry L. Co (the brother of Luis Co), through counsel
Sycip Salazar Hernandez and Gatmaitan, filed a motion to intervene in the
trial court, alleging that as owner of 80% of the Banks outstanding shares of
stock, he had a substantial interest in resisting the complaint. On July 8,
1991, the trial court issued an order denying the motion to intervene on the
ground that it was filed after trial had already been concluded. It also denied
a motion for reconsideration filed thereafter. From the trial courts decision,
the Bank, petitioner Rivera and conservator Encarnacion appealed to the
Court of Appeals which subsequently affirmed with modification the said
judgment. Henry Co did not appeal the denial of his motion for intervention.
In the course of the proceedings in the respondent Court, Carlos Ejercito was
substituted in place of Demetria and Janolo, in view of the assignment of the
latters rights in the matter in litigation to said private respondent.
On July 11, 1992, during the pendency of the proceedings in the Court of
Appeals, Henry Co and several other stockholders of the Bank, through
counsel Angara Abello Concepcion Regala and Cruz, filed an action
(hereafter, the Second Case) -purportedly a derivative suit - with the
Regional Trial Court of Makati, Branch 134, docketed as Civil Case No. 921606, against Encarnacion, Demetria and Janolo to declare any perfected
sale of the property as unenforceable and to stop Ejercito from enforcing or
implementing the sale.[4] In his answer, Janolo argued that the Second Case
was barred by litis pendentia by virtue of the case then pending in the Court
of Appeals. During the pre-trial conference in the Second Case, plaintiffs filed
a Motion for Leave of Court to Dismiss the Case Without Prejudice. Private
respondent opposed this motion on the ground, among others, that plaintiffs
act of forum shopping justifies the dismissal of both cases, with prejudice.
[5] Private respondent, in his memorandum, averred that this motion is still
pending in the Makati RTC.
In their Petition[6] and Memorandum,[7] petitioners summarized their
position as follows:
I.

The Court of Appeals erred in declaring that a contract of sale was perfected
between Ejercito (in substitution of Demetria and Janolo) and the bank.
II.
The Court of Appeals erred in declaring the existence of an enforceable
contract of sale between the parties.
III.
The Court of Appeals erred in declaring that the conservator does not have
the power to overrule or revoke acts of previous management.
IV.
The findings and conclusions of the Court of Appeals do not conform to the
evidence on record.
On the other hand, private respondents prayed for dismissal of the instant
suit on the ground[8] that:
I.
Petitioners have engaged in forum shopping.
II.
The factual findings and conclusions of the Court of Appeals are supported
by the evidence on record and may no longer be questioned in this case.
III.
The Court of Appeals correctly held that there was a perfected contract
between Demetria and Janolo (substituted by respondent Ejercito) and the
bank.
IV.
The Court of Appeals has correctly held that the conservator, apart from
being estopped from repudiating the agency and the contract, has no
authority to revoke the contract of sale.
The Issues
From the foregoing positions of the parties, the issues in this case may be
summed up as follows:
1) Was there forum-shopping on the part of petitioner Bank?
2) Was there a perfected contract of sale between the parties?
3) Assuming there was, was the said contract enforceable under the statute
of frauds?
4) Did the bank conservator have the unilateral power to repudiate the
authority of the bank officers and/or to revoke the said contract?
5) Did the respondent Court commit any reversible error in its findings of
facts?
The First Issue: Was There Forum-Shopping?
In order to prevent the vexations of multiple petitions and actions, the
Supreme Court promulgated Revised Circular No. 28-91 requiring that a party

must certify under oath x x x [that] (a) he has not (t)heretofore commenced
any other action or proceeding involving the same issues in the Supreme
Court, the Court of Appeals, or any other tribunal or agency; (b) to the best
of his knowledge, no such action or proceeding is pending in said courts or
agencies. A violation of the said circular entails sanctions that include the
summary dismissal of the multiple petitions or complaints. To be sure,
petitioners have included a VERIFICATION/CERTIFICATION in their Petition
stating for the record(,) the pendency of Civil Case No. 92-1606 before the
Regional Trial Court of Makati, Branch 134, involving a derivative suit filed by
stockholders of petitioner Bank against the conservator and other
defendants but which is the subject of a pending Motion to Dismiss Without
Prejudice.[9]
Private respondent Ejercito vigorously argues that in spite of this verification,
petitioners are guilty of actual forum shopping because the instant petition
pending before this Court involves identical parties or interests represented,
rights asserted and reliefs sought (as that) currently pending before the
Regional Trial Court, Makati Branch 134 in the Second Case. In fact, the
issues in the two cases are so intertwined that a judgment or resolution in
either case will constitute res judicata in the other.[10]
On the other hand, petitioners explain[11] that there is no forum-shopping
because:
1) In the earlier or First Case from which this proceeding arose, the Bank was
impleaded as a defendant, whereas in the Second Case (assuming the Bank
is the real party in interest in a derivative suit), it was the plaintiff;
2) The derivative suit is not properly a suit for and in behalf of the
corporation under the circumstances;
3) Although the CERTIFICATION/VERIFICATION (supra) signed by the Bank
president and attached to the Petition identifies the action as a derivative
suit, it does not mean that it is one and (t)hat is a legal question for the
courts to decide;
4) Petitioners did not hide the Second Case as they mentioned it in the said
VERIFICATION/CERTIFICATION.
We rule for private respondent.
To begin with, forum-shopping originated as a concept in private
international law,[12] where non-resident litigants are given the option to
choose the forum or place wherein to bring their suit for various reasons or
excuses, including to secure procedural advantages, to annoy and harass the
defendant, to avoid overcrowded dockets, or to select a more friendly venue.
To combat these less than honorable excuses, the principle of forum non
conveniens was developed whereby a court, in conflicts of law cases, may

refuse impositions on its jurisdiction where it is not the most convenient or

available forum and the parties are not precluded from seeking remedies
elsewhere.
In this light, Blacks Law Dictionary[13] says that forum-shopping occurs
when a party attempts to have his action tried in a particular court or
jurisdiction where he feels he will receive the most favorable judgment or
verdict. Hence, according to Words and Phrases,[14] a litigant is open to the
charge of forum shopping whenever he chooses a forum with slight
connection to factual circumstances surrounding his suit, and litigants should
be encouraged to attempt to settle their differences without imposing undue
expense and vexatious situations on the courts.
In the Philippines, forum-shopping has acquired a connotation encompassing
not only a choice of venues, as it was originally understood in conflicts of
laws, but also to a choice of remedies. As to the first (choice of venues), the
Rules of Court, for example, allow a plaintiff to commence personal actions
where the defendant or any of the defendants resides or may be found, or
where the plaintiff or any of the plaintiffs resides, at the election of the
plaintiff (Rule 4, Sec. 2 [b]). As to remedies, aggrieved parties, for example,
are given a choice of pursuing civil liabilities independently of the criminal,
arising from the same set of facts. A passenger of a public utility vehicle
involved in a vehicular accident may sue on culpa contractual, culpa
aquiliana or culpa criminal - each remedy being available independently of
the others - although he cannot recover more than once.
In either of these situations (choice of venue or choice of remedy), the
litigant actually shops for a forum of his action. This was the original concept
of the term forum shopping.
Eventually, however, instead of actually making a choice of the forum of
their actions, litigants, through the encouragement of their lawyers, file their
actions in all available courts, or invoke all relevant remedies simultaneously.
This practice had not only resulted to (sic) conflicting adjudications among
different courts and consequent confusion enimical (sic) to an orderly
administration of justice. It had created extreme inconvenience to some of
the parties to the action.
Thus, forum-shopping had acquired a different concept - which is unethical
professional legal practice. And this necessitated or had given rise to the
formulation of rules and canons discouraging or altogether prohibiting the
practice.[15]
What therefore originally started both in conflicts of laws and in our domestic
law as a legitimate device for solving problems has been abused and
misused to assure scheming litigants of dubious reliefs.

To avoid or minimize this unethical practice of subverting justice, the

Supreme Court, as already mentioned, promulgated Circular 28-91. And even
before that, the Court had proscribed it in the Interim Rules and Guidelines
issued on January 11, 1983 and had struck down in several cases[16] the
inveterate use of this insidious malpractice. Forum-shopping as the filing of
repetitious suits in different courts has been condemned by Justice Andres R.
Narvasa (now Chief Justice) in Minister of Natural Resources, et al. vs. Heirs
of Orval Hughes, et al., as a reprehensible manipulation of court processes
and proceedings x x x.[17] When does forum-shopping take place?
There is forum-shopping whenever, as a result of an adverse opinion in one
forum, a party seeks a favorable opinion (other than by appeal or certiorari)
in another. The principle applies not only with respect to suits filed in the
courts but also in connection with litigations commenced in the courts while
an administrative proceeding is pending, as in this case, in order to defeat
administrative processes and in anticipation of an unfavorable administrative
ruling and a favorable court ruling. This is specially so, as in this case, where
the court in which the second suit was brought, has no jurisdiction [18]
The test for determining whether a party violated the rule against forumshopping has been laid down in the 1986 case of Buan vs. Lopez,[19] also by
Chief Justice Narvasa, and that is, forum-shopping exists where the elements
of litis pendentia are present or where a final judgment in one case will
amount to res judicata in the other, as follows:
There thus exists between the action before this Court and RTC Case No. 8636563 identity of parties, or at least such parties as represent the same
interests in both actions, as well as identity of rights asserted and relief
prayed for, the relief being founded on the same facts, and the identity on
the two preceding particulars is such that any judgment rendered in the
other action, will, regardless of which party is successful, amount to res
adjudicata in the action under consideration: all the requisites, in fine,
of auter action pendant.
xxx xxx xxx
As already observed, there is between the action at bar and RTC Case No. 8636563, an identity as regards parties, or interests represented, rights
asserted and relief sought, as well as basis thereof, to a degree sufficient to
give rise to the ground for dismissal known as auter action pendant or lis
pendens. That same identity puts into operation the sanction of twin
dismissals just mentioned. The application of this sanction will prevent any
further delay in the settlement of the controversy which might ensue from
attempts to seek reconsideration of or to appeal from the Order of the

Regional Trial Court in Civil Case No. 86-36563 promulgated on July 15, 1986,
which dismissed the petition upon grounds which appear persuasive.
Consequently, where a litigant (or one representing the same interest or
person) sues the same party against whom another action or actions for the
alleged violation of the same right and the enforcement of the same relief
is/are still pending, the defense of litis pendencia in one case is a bar to the
others; and, a final judgment in one would constitute res judicata and thus
would cause the dismissal of the rest. In either case, forum shopping could
be cited by the other party as a ground to ask for summary dismissal of the
two[20] (or more) complaints or petitions, and for the imposition of the other
sanctions, which are direct contempt of court, criminal prosecution, and
disciplinary action against the erring lawyer.
Applying the foregoing principles in the case before us and comparing it with
the Second Case, it is obvious that there exist identity of parties or interests
represented, identity of rights or causes and identity of reliefs sought.
Very simply stated, the original complaint in the court a quo which gave rise
to the instant petition was filed by the buyer (herein private respondent and
his predecessors-in-interest) against the seller (herein petitioners) to enforce
the alleged perfected sale of real estate. On the other hand, the
complaint[21] in the Second Case seeks to declare such purported sale
involving the same real property as unenforceable as against the Bank,
which is the petitioner herein. In other words, in the Second Case, the
majority stockholders, in representation of the Bank, are seeking to
accomplish what the Bank itself failed to do in the original case in the trial
court. In brief, the objective or the relief being sought, though worded
differently, is the same, namely, to enable the petitioner Bank to escape
from the obligation to sell the property to respondent. In Danville Maritime,
Inc. vs. Commission on Audit,[22] this Court ruled that the filing by a party of
two apparently different actions, but with the same objective, constituted
forum shopping:
In the attempt to make the two actions appear to be different, petitioner
impleaded different respondents therein - PNOC in the case before the lower
court and the COA in the case before this Court and sought what seems to be
different reliefs. Petitioner asks this Court to set aside the questioned letterdirective of the COA dated October 10, 1988 and to direct said body to
approve the Memorandum of Agreement entered into by and between the
PNOC and petitioner, while in the complaint before the lower court petitioner
seeks to enjoin the PNOC from conducting a rebidding and from selling to
other parties the vessel T/T Andres Bonifacio, and for an extension of time for
it to comply with the paragraph 1 of the memorandum of agreement and

damages. One can see that although the relief prayed for in the two (2)
actions are ostensibly different, the ultimate objective in both actions is the
same, that is, the approval of the sale of vessel in favor of petitioner, and to
overturn the letter-directive of the COA ofOctober 10, 1988 disapproving the
sale. (italics supplied)
In an earlier case,[23] but with the same logic and vigor, we held:
In other words, the filing by the petitioners of the instant special civil action
for certiorari and prohibition in this Court despite the pendency of their
action in the Makati Regional Trial Court, is a species of forum-shopping. Both
actions unquestionably involve the same transactions, the same essential
facts and circumstances. The petitioners claim of absence of identity simply
because the PCGG had not been impleaded in the RTC suit, and the suit did
not involve certain acts which transpired after its commencement, is
specious. In the RTC action, as in the action before this Court, the validity of
the contract to purchase and sell of September 1, 1986, i.e., whether or not
it had been efficaciously rescinded, and the propriety of implementing the
same (by paying the pledgee banks the amount of their loans, obtaining the
release of the pledged shares, etc.) were the basic issues. So, too, the relief
was the same: the prevention of such implementation and/or the restoration
of the status quo ante. When the acts sought to be restrained took place
anyway despite the issuance by the Trial Court of a temporary restraining
order, the RTC suit did not become functus oflcio. It remained an effective
vehicle for obtention of relief; and petitioners remedy in the premises was
plain and patent: the filing of an amended and supplemental pleading in the
RTC suit, so as to include the PCGG as defendant and seek nullification of the
acts sought to be enjoined but nonetheless done. The remedy was certainly
not the institution of another action in another forum based on essentially
the same facts. The adoption of this latter recourse renders the petitioners
amenable to disciplinary action and both their actions, in this Court as well
as in the Court a quo, dismissible.
In the instant case before us, there is also identity of parties, or at least, of
interests represented. Although the plaintiffs in the Second Case (Henry L.
Co. et al.) are not name parties in the First Case, they represent the same
interest and entity, namely, petitioner Bank, because:
Firstly, they are not suing in their personal capacities, for they have no direct
personal interest in the matter in controversy. They are not principally or
even subsidiarily liable; much less are they direct parties in the assailed
contract of sale; and
Secondly, the allegations of the complaint in the Second Case show that the
stockholders are bringing a derivative suit. In the caption itself, petitioners

claim to have brought suit for and in behalf of the Producers Bank of
the Philippines.[24] Indeed, this is the very essence of a derivative suit:
An individual stockholder is permitted to institute a derivative suit on behalf
of the corporation wherein he holds stock in order to protect or vindicate
corporate rights, whenever the officials of the corporation refuse to sue, or
are the ones to be sued or hold the control of the corporation. In such
actions, the suing stockholder is regarded as a nominal party, with the
corporation as the real party in interest. (Gamboa v. Victoriano, 90 SCRA 40,
47 [1979]; italics supplied).
In the face of the damaging admissions taken from the complaint in the
Second Case, petitioners, quite strangely, sought to deny that the Second
Case was a derivative suit, reasoning that it was brought, not by the minority
shareholders, but by Henry Co et al., who not only own, hold or control over
80% of the outstanding capital stock, but also constitute the majority in the
Board of Directors of petitioner Bank. That being so, then they really
represent the Bank. So, whether they sued derivatively or directly, there is
undeniably an identity of interests/entity represented.
Petitioner also tried to seek refuge in the corporate fiction that the
personality of the Bank is separate and distinct from its shareholders. But the
rulings of this Court are consistent: When the fiction is urged as a means of
perpetrating a fraud or an illegal act or as a vehicle for the evasion of an
existing obligation, the circumvention of statutes, the achievement or
perfection of a monopoly or generally the perpetration of knavery or crime,
the veil with which the law covers and isolates the corporation from the
members or stockholders who compose it will be lifted to allow for its
consideration merely as an aggregation of individuals.[25]
In addition to the many cases[26] where the corporate fiction has been
disregarded, we now add the instant case, and declare herewith that the
corporate veil cannot be used to shield an otherwise blatant violation of the
prohibition against forum-shopping. Shareholders, whether suing as the
majority in direct actions or as the minority in a derivative suit, cannot be
allowed to trifle with court processes, particularly where, as in this case, the
corporation itself has not been remiss in vigorously prosecuting or defending
corporate causes and in using and applying remedies available to it. To rule
otherwise would be to encourage corporate litigants to use their
shareholders as fronts to circumvent the stringent rules against forum
shopping.
Finally, petitioner Bank argued that there cannot be any forum shopping,
even assuming arguendo that there is identity of parties, causes of action
and reliefs sought, because it (the Bank) was the defendant in the (first) case

while it was the plaintiff in the other (Second Case), citing as

authority Victronics Computers, Inc. vs. Regional Trial Court, Branch 63,
Makati, etc. et al.,[27] where the Court held:
The rule has not been extended to a defendant who, for reasons known only
to him, commences a new action against the plaintiff - instead of filing a
responsive pleading in the other case - setting forth therein, as causes of
action, specific denials, special and affirmative defenses or even
counterclaims. Thus, Velhagens and Kings motion to dismiss Civil Case No.
91-2069 by no means negates the charge of forum-shopping as such did not
exist in the first place. (italics supplied)
Petitioner pointed out that since it was merely the defendant in the original
case, it could not have chosen the forum in said case.
Respondent, on the other hand, replied that there is a difference in factual
setting between Victronics and the present suit. In the former, as
underscored in the above-quoted Court ruling, the defendants did not file
any responsive pleading in the first case. In other words, they did not make
any denial or raise any defense or counter-claim therein. In the case before
us however, petitioners filed a responsive pleading to the complaint - as a
result of which, the issues were joined.
Indeed, by praying for affirmative reliefs and interposing counter-claims in
their responsive pleadings, the petitioners became plaintiffs themselves in
the original case, giving unto themselves the very remedies they repeated in
the Second Case.
Ultimately, what is truly important to consider in determining whether forumshopping exists or not is the vexation caused the courts and parties-litigant
by a party who asks different courts and/or administrative agencies to rule
on the same or related causes and/or to grant the same or substantially the
same reliefs, in the process creating the possibility of conflicting decisions
being rendered by the different fora upon the same issue. In this case, this is
exactly the problem: a decision recognizing the perfection and directing the
enforcement of the contract of sale will directly conflict with a possible
decision in the Second Case barring the parties from enforcing or
implementing the said sale. Indeed, a final decision in one would
constitute res judicata in the other.[28]
The foregoing conclusion finding the existence of forum-shopping
notwithstanding, the only sanction possible now is the dismissal of both
cases with prejudice, as the other sanctions cannot be imposed because
petitioners present counsel entered their appearance only during the
proceedings in this Court, and the Petitions VERIFICATION/CERTIFICATION
contained sufficient allegations as to the pendency of the Second Case to

show good faith in observing Circular 28-91. The lawyers who filed the
Second Case are not before us; thus the rudiments of due process prevent us
from motu propio imposing disciplinary measures against them in this
Decision. However, petitioners themselves (and particularly Henry Co, et al.)
as litigants are admonished to strictly follow the rules against forumshopping and not to trifle with court proceedings and processes. They are
warned that a repetition of the same will be dealt with more severely.
Having said that, let it be emphasized that this petition should be dismissed
not merely because of forum-shopping but also because of the substantive
issues raised, as will be discussed shortly.
The Second Issue: Was The Contract Perfected?
The respondent Court correctly treated the question of whether or not there
was, on the basis of the facts established, a perfected contract of sale as the
ultimate issue. Holding that a valid contract has been established,
respondent Court stated:
There is no dispute that the object of the transaction is that property owned
by the defendant bank as acquired assets consisting of six (6) parcels of land
specifically identified under Transfer Certificates of Title Nos. T-106932 to T106937. It is likewise beyond cavil that the bank intended to sell the
property. As testified to by the Banks Deputy Conservator, Jose Entereso, the
bank was looking for buyers of the property. It is definite that the plaintiffs
wanted to purchase the property and it was precisely for this purpose that
they met with defendant Rivera, Manager of the Property Management
Department of the defendant bank, in early August 1987. The procedure in
the sale of acquired assets as well as the nature and scope of the authority
of Rivera on the matter is clearly delineated in the testimony of Rivera
himself, which testimony was relied upon by both the bank and by Rivera in
their appeal briefs. Thus (TSN of July 30, 1990. pp. 19-20):
A: The procedure runs this way: Acquired assets was turned over to me and
then I published it in the form of an inter-office memorandum distributed to
all branches that these are acquired assets for sale. I was instructed to
advertise acquired assets for sale so on that basis, I have to entertain offer;
to accept offer, formal offer and upon having been offered, I present it to the
Committee. I provide the Committee with necessary information about the
property such as original loan of the borrower, bid price during the
foreclosure, total claim of the bank, the appraised value at the time the
property is being offered for sale and then the information which are relative
to the evaluation of the bank to buy which the Committee considers and it is
the Committee that evaluate as against the exposure of the bank and it is
also the Committee that submit to the Conservator for final approval and

once approved, we have to execute the deed of sale and it is the Conservator
that sign the deed of sale, sir.
The plaintiffs, therefore, at that meeting of August 1987 regarding their
purpose of buying the property, dealt with and talked to the right person.
Necessarily, the agenda was the price of the property, and plaintiffs were
dealing with the bank official authorized to entertain offers, to accept offers
and to present the offer to the Committee before which the said official is
authorized to discuss information relative to price determination.
Necessarily, too, it being inherent in his authority, Rivera is the officer from
whom official information regarding the price, as determined by the
Committee and approved by the Conservator, can be had. And Rivera
confirmed his authority when he talked with the plaintiff in August 1987. The
testimony of plaintiff Demetria is clear on this point (TSN of May 31, 1990,
pp. 27-28):
Q: When you went to the Producers Bank and talked with Mr. Mercurio Rivera,
did you ask him point-blank his authority to sell any property?
A: No, sir. Not point blank although it came from him. (W)hen I asked him
how long it would take because he was saying that the matter of pricing will
be passed upon by the committee. And when I asked him how long it will
take for the committee to decide and he said the committee meets every
week. If I am not mistaken Wednesday and in about two weeks (sic) time, in
effect what he was saying he was not the one who was to decide. But he
would refer it to the committee and he would relay the decision of the
committee to me.
Q: Please answer the question.
A: He did not say that he had the authority(.) But he said he would refer the
matter to the committee and he would relay the decision to me and he did
just like that.
Parenthetically, the Committee referred to was the Past Due Committee of
which Luis Co was the Head, with Jose Entereso as one of the members.
What transpired after the meeting of early August 1987 are consistent with
the authority and the duties of Rivera and the banks internal procedure in
the matter of the sale of banks assets. As advised by Rivera, the plaintiffs
made a formal offer by a letter dated August 20, 1987 stating that they
would buy at the price of P3.5 Million in cash. The letter was for the attention
of Mercurio Rivera who was tasked to convey and accept such offers.
Considering an aspect of the official duty of Rivera as some sort of
intermediary between the plaintiffs-buyers with their proposed buying price
on one hand, and the bank Committee, the Conservator and ultimately the
bank itself with the set price on the other, and considering further the

discussion of price at the meeting of August resulting in a formal offer of P3.5

Million in cash, there can be no other logical conclusion than that when, on
September 1, 1987, Rivera informed plaintiffs by letter that the banks
counter-offer is at P5.5 Million for more than 101 hectares on lot basis, such
counter-offer price had been determined by the Past Due Committee and
approved by the Conservator after Rivera had duly presented plaintiffs offer
for discussion by the Committee of such matters as original loan of borrower,
bid price during foreclosure, total claim of the bank, and market value.
Tersely put, under the established facts, the price of P5.5 Million was, as
clearly worded in Riveras letter (Exh. E), the official and definitive price at
which the bank was selling the property.
There were averments by defendants below, as well as before this Court,
that the P5.5 Million price was not discussed by the Committee and that it
was merely quoted to start negotiations regarding the price. As correctly
characterized by the trial court, this is not credible. The testimonies of Luis
Co and Jose Entereso on this point are at best equivocal and considering the
gratuitous and self-serving character of these declarations, the banks
submission on this point does not inspire belief. Both Co and Entereso, as
members of the Past Due Committee of the bank, claim that the offer of the
plaintiff was never discussed by the Committee. In the same vein, both Co
and Entereso openly admit that they seldom attend the meetings of the
Committee. It is important to note that negotiations on the price had started
in early August and the plaintiffs had already offered an amount as purchase
price, having been made to understand by Rivera, the official in charge of
the negotiation, that the price will be submitted for approval by the bank and
that the banks decision will be relayed to plaintiffs. From the facts, the
amount of P5.5 Million has a definite significance. It is the official bank price.
At any rate, the bank placed its official, Rivera, in a position of authority to
accept offers to buy and negotiate the sale by having the offer officially
acted upon by the bank. The bank cannot turn around and later say, as it
now does, that what Rivera states as the banks action on the matter is not in
fact so. It is a familiar doctrine, the doctrine of ostensible authority, that if a
corporation knowingly permits one of its officers, or any other agent, to do
acts within the scope of an apparent authority, and thus holds him out to the
public as possessing power to do those acts, the corporation will, as against
any one who has in good faith dealt with the corporation through such agent,
he estopped from denying his authority (Francisco v. GSIS, 7 SCRA 577, 583584; PNB v. Court of Appeals, 94 SCRA 357, 369-370; Prudential Bank v.
Court of Appeals, G.R. No. 103957, June 14, 1993).[29]

Article 1318 of the Civil Code enumerates the requisites of a valid and
perfected contract as follows: (1) Consent of the contracting parties; (2)
Object certain which is the subject matterof the contract; (3) Cause of the
obligation which is established.
There is no dispute on requisite no. 2. The object of the questioned contract
consists of the six (6) parcels of land in Sta. Rosa, Laguna with an aggregate
area of about 101 hectares, more or less, and covered by Transfer
Certificates of Title Nos. T-106932 to T-106937. There is, however, a dispute
on the first and third requisites.
Petitioners allege that there is no counter-offer made by the Bank, and any
supposed counter-offer which Rivera (or Co) may have made is unauthorized.
Since there was no counter-offer by the Bank, there was nothing for Ejercito
(in substitution of Demetria and Janolo) to accept.[30] They disputed the
factual basis of the respondent Courts findings that there was an offer made
by Janolo for P3.5 million, to which the Bank counter-offered P5.5 million. We
have perused the evidence but cannot find fault with the said Courts findings
of fact. Verily, in a petition under Rule 45 such as this, errors of fact -if there
be any - are, as a rule, not reviewable. The mere fact that respondent Court
(and the trial court as well) chose to believe the evidence presented by
respondent more than that presented by petitioners is not by itself a
reversible error. in fact, such findings merit serious consideration by this
Court, particularly where, as in this case, said courts carefully and
meticulously discussed their findings. This is basic.
Be that as it may, and in addition to the foregoing disquisitions by the Court
of Appeals, let us review the question of Riveras authority to act and
petitioners allegations that the P5.5 million counter-offer was extinguished
by the P4.25 million revised offer of Janolo. Here, there are questions of law
which could be drawn from the factual findings of the respondent Court. They
also delve into the contractual elements of consent and cause.
The authority of a corporate officer in dealing with third persons may be
actual or apparent. The doctrine of apparent authority, with special reference
to banks, was laid out in Prudential Bank vs. Court of Appeals,[31] where it
was held that:
Conformably, we have declared in countless decisions that the principal is
liable for obligations contracted by the agent. The agents apparent
representation yields to the principals true representation and the contract is
considered as entered into between the principal and the third person (citing
National Food Authority vs. Intermediate Appellate Court, 184 SCRA 166).
A bank is liable for wrongful acts of its officers done in the interests of the
bank or in the course of dealings of the officers in their representative

capacity but not for acts outside the scope of their authority (9 C.J.S., p.
417). A bank holding out its officers and agents as worthy of confidence will
not be permitted to profit by the frauds they may thus be enabled to
perpetrate in the apparent scope of their employment; nor will it be
permitted to shirk its responsibility for such frauds, even though no benefit
may accrue to the bank therefrom (10 Am Jur 2d, p. 114). Accordingly, a
banking corporation is liable to innocent third persons where the
representation is made in the course of its business by an agent acting
within the general scope of his authority even though, in the particular case,
the agent is secretly abusing his authority and attempting to perpetrate a
fraud upon his principal or some other person, for his own ultimate benefit
(McIntosh v. Dakota Trust Co., 52 ND 752, 204 NW 818, 40 ALR 1021).
Application of these principles is especially necessary because banks have a
fiduciary relationship with the public and their stability depends on the
confidence of the people in their honesty and efficiency. Such faith will be
eroded where banks do not exercise strict care in the selection and
supervision of its employees, resulting in prejudice to their depositors.
From the evidence found by respondent Court, it is obvious that petitioner
Rivera has apparent or implied authority to act for the Bank in the matter of
selling its acquired assets. This evidence includes the following:
(a) The petition itself in par. II-1 (p. 3) states that Rivera was at all times
material to this case, Manager of the Property Management Department of
the Bank. By his own admission, Rivera was already the person in charge of
the Banks acquired assets (TSN, August 6, 1990, pp. 8-9);
(b) As observed by respondent Court, the land was definitely being sold by
the Bank. And during the initial meeting between the buyers and Rivera, the
latter suggested that the buyers offer should be no less than P3.3 million
(TSN, April 26, 1990, pp. 16-17);
(c) Rivera received the buyers letter dated August 30, 1987 offering P3.5
million (TSN, 30 July 1990, p. 11);
(d) Rivera signed the letter dated September 1, 1987 offering to sell the
property for P5.5 million (TSN, July 30, p. 11);
(e) Rivera received the letter dated September 17, 1987 containing the
buyers proposal to buy the property for P4.25 million (TSN, July 30, 1990, p.
12);
(f) Rivera, in a telephone conversation, confirmed that the P5.5 million was
the final price of the Bank (TSN, January 16, 1990, p. 18);
(g) Rivera arranged the meeting between the buyers and Luis Co
on September 28, 1987, during which the Banks offer of P5.5 million was
confirmed by Rivera (TSN, April 26, 1990, pp. 34-35). At said meeting, Co, a

major shareholder and officer of the Bank, confirmed Riveras statement as to

the finality of the Banks counter-offer of P5.5 million (TSN, January 16, 1990,
p. 21; TSN, April 26, 1990, p. 35);
(h) In its newspaper advertisements and announcements, the Bank referred
to Rivera as the officer acting for the Bank in relation to parties interested in
buying assets owned/acquired by the Bank. In fact, Rivera was the officer
mentioned in the Banks advertisements offering for sale the property in
question (cf. Exhs. S and S-I).
In the very recent case of Limketkai Sons Milling, Inc. vs. Court of Appeals, et
al.,[32] the Court, through Justice Jose A. R. Melo, affirmed the doctrine of
apparent authority as it held that the apparent authority of the officer of the
Bank of P.I. in charge of acquired assets is borne out by similar circumstances
surrounding his dealings with buyers.
To be sure, petitioners attempted to repudiate Riveras apparent authority
through
documents
and
testimony
which
seek
to
establish
Riveras actual authority. These pieces of evidence, however, are inherently
weak as they consist of Riveras self-serving testimony and various interoffice memoranda that purport to show his limited actual authority, of which
private respondent cannot be charged with knowledge. In any event, since
the issue is apparent authority, the existence of which is borne out by the
respondent Courts findings, the evidence of actual authority is immaterial
insofar as the liability of a corporation is concerned.[33]
Petitioners also argued that since Demetria and Janolo were experienced
lawyers and their law firm had once acted for the Bank in three criminal
cases, they should be charged with actual knowledge of Riveras limited
authority. But the Court of Appeals in its Decision (p. 12) had already made a
factual finding that the buyers had no notice of Riveras actual authority prior
to the sale. In fact, the Bank has not shown that they acted as its counsel in
respect to any acquired assets; on the other hand, respondent has proven
that Demetria and Janolo merely associated with a loose aggrupation of
lawyers (not a professional partnership), one of whose members (Atty.
Susana Parker) acted in said criminal cases.
Petitioners also alleged that Demetrias and Janolos P4.25 million counteroffer in the letter dated September 17, 1987 extinguished the Banks offer of
P5.5 million.[34] They disputed the respondent Courts finding that there was
a meeting of minds when on 30 September 1987 Demetria and Janolo
through Annex L (letter dated September 30, 1987) accepted Riveras
counter offer of P5.5 million under Annex J (letter dated September 17,
1987), citing the late Justice Paras,[35] Art. 1319 of the Civil Code[36] and
related Supreme Court rulings starting withBeaumont vs. Prieto.[37]

However, the above-cited authorities and precedents cannot apply in the

instant case because, as found by the respondent Court which reviewed the
testimonies on this point, what was accepted by Janolo in his letter dated
September 30, 1987 was the Banks offer of P5.5 million as confirmed and
reiterated to Demetria and Atty. Jose Fajardo by Rivera and Co during their
meeting on September 28, 1987. Note that the said letter of September 30,
1987 begins with (p)ursuant to our discussion last 28 September 1987 x x x.
Petitioners insist that the respondent Court should have believed the
testimonies of Rivera and Co that the September 28, 1987 meeting was
meant to have the offerors improve on their position of P5.5 million.
[38] However, both the trial court and the Court of Appeals found petitioners
testimonial evidence not credible, and we find no basis for changing this
finding of fact.
Indeed, we see no reason to disturb the lower courts (both the RTC and the
CA) common finding that private respondents evidence is more in keeping
with truth and logic - that during the meeting on September 28, 1987, Luis
Co and Rivera confirmed that the P5.5 million price has been passed upon by
the Committee and could no longer be lowered (TSN of April 27, 1990, pp.
34-35).[39] Hence, assuming arguendo that the counter-offer of P4.25 million
extinguished the offer of P5.5 million, Luis Cos reiteration of the said P5.5
million price during theSeptember 28, 1987 meeting revived the said offer.
And by virtue of the September 30, 1987 letter accepting this revived offer,
there was a meeting of the minds, as the acceptance in said letter was
absolute and unqualified.
We note that the Banks repudiation, through Conservator Encarnacion, of
Riveras authority and action, particularly the latters counter-offer of P5.5
million, as being unauthorized and illegal came only on May 12, 1988 or
more than seven (7) months after Janolos acceptance. Such delay, and the
absence of any circumstance which might have justifiably prevented the
Bank from acting earlier, clearly characterizes the repudiation as nothing
more than a last-minute attempt on the Banks part to get out of a binding
contractual obligation.
Taken together, the factual findings of the respondent Court point to an
implied admission on the part of the petitioners that the written offer made
on September 1, 1987 was carried through during the meeting of September
28, 1987. This is the conclusion consistent with human experience, truth and
good faith.
It also bears noting that this issue of extinguishment of the Banks offer of
P5.5 million was raised for the first time on appeal and should thus be
disregarded.

This Court in several decisions has repeatedly adhered to the principle that
points of law, theories, issues of fact and arguments not adequately brought
to the attention of the trial court need not be, and ordinarily will not be,
considered by a reviewing court, as they cannot be raised for the first time
on appeal (Santos vs. IAC, No. 74243, November 14, 1986, 145 SCRA 592).
[40]
xxx It is settled jurisprudence that an issue which was neither averred in the
complaint nor raised during the trial in the court below cannot be raised for
the first time on appeal as it would be offensive to the basic rules of fair play,
justice and due process (Dihiansan vs. CA, 153 SCRA 713 [1987]; Anchuelo
vs. IAC, 147 SCRA 434 [1987]; Dulos Realty & Development Corp. vs. CA, 157
SCRA 425 [1988];Ramos vs. IAC, 175 SCRA 70 [1989]; Gevero vs. IAC, G.R.
77029, August 30, 1990).[41]
Since the issue was not raised in the pleadings as an affirmative defense,
private respondent was not given an opportunity in the trial court to
controvert the same through opposing evidence. Indeed, this is a matter of
due process. But we passed upon the issue anyway, if only to avoid deciding
the case on purely procedural grounds, and we repeat that, on the basis of
the evidence already in the record and as appreciated by the lower courts,
the inevitable conclusion is simply that there was a perfected contract of
sale.
The Third Issue: Is the Contract Enforceable?
The petition alleged:[42]
Even assuming that Luis Co or Rivera did relay a verbal offer to sell at P5.5
million during the meeting of 28 September 1987, and it was this verbal offer
that Demetria and Janolo accepted with their letter of 30 September 1987,
the contract produced thereby would be unenforceable by action - there
being no note, memorandum or writing subscribed by the Bank to evidence
such contract. (Please see Article 1403[2], Civil Code.)
Upon the other hand, the respondent Court in its Decision (p. 14) stated:
x x x Of course, the banks letter of September 1, 1987 on the official price
and the plaintiffs acceptance of the price on September 30, 1987, are not, in
themselves, formal contracts of sale. They are however clear embodiments
of the fact that a contract of sale was perfected between the parties, such
contract being binding in whatever form it may have been entered into (case
citations omitted). Stated simply, the banks letter of September 1, 1987,
taken together with plaintiffs letter dated September 30, 1987, constitute in
law a sufficient memorandum of a perfected contract of sale.
The respondent Court could have added that the written communications
commenced not only from September 1, 1987 but from Janolos August 20,

1987 letter. We agree that, taken together, these letters constitute sufficient
memoranda - since they include the names of the parties, the terms and
conditions of the contract, the price and a description of the property as the
object of the contract.
But let it be assumed arguendo that the counter-offer during the meeting
on September 28, 1987 did constitute a new offer which was accepted by
Janolo on September 30, 1987. Still, the statute of frauds will not apply by
reason of the failure of petitioners to object to oral testimony proving
petitioner Banks counter-offer of P5.5 million. Hence, petitioners - by such
utter failure to object - are deemed to have waived any defects of the
contract under the statute of frauds, pursuant to Article 1405 of the Civil
Code:
Art. 1405. Contracts infringing the Statute of Frauds, referred to in No. 2 of
Article 1403, are ratified by the failure to object to the presentation of oral
evidence to prove the same, or by the acceptance of benefits under them.
As private respondent pointed out in his Memorandum, oral testimony on the
reaffirmation of the counter-offer of P5.5 million is aplenty -and the silence of
petitioners all throughout the presentation makes the evidence binding on
them thus:
A - Yes, sir. I think it was September 28, 1987 and I was again present
because Atty. Demetria told me to accompany him and we were able to meet
Luis Co at the Bank.
xxx xxx xxx
Q - Now, what transpired during this meeting with Luis Co of the Producers
Bank?
A - Atty. Demetria asked Mr. Luis Co whether the price could be reduced, sir.
Q - What price?
A - The 5.5 million pesos and Mr. Luis Co said that the amount cited by Mr.
Mercurio Rivera is the final price and that is the price they intends (sic) to
have, sir.
Q - What do you mean?
A - That is the amount they want, sir.
Q - What is the reaction of the plaintiff Demetria to Luis Cos statment (sic)
that the defendant Riveras counter-offer of 5.5 million was the defendants
bank (sic) final offer?
A - He said in a day or two, he will make final acceptance, sir.
Q - What is the response of Mr. Luis Co?
A - He said he will wait for the position of Atty. Demetria, sir.
[Direct testimony of Atty. Jose Fajardo, TSN, January 16, 1990, at pp. 18-21.]
----0----

Q - What transpired during that meeting between you and Mr. Luis Co of the
defendant Bank?
A - We went straight to the point because he being a busy person, I told him
if the amount of P5.5 million could still be reduced and he said that was
already passed upon by the committee. What the bank expects which was
contrary to what Mr. Rivera stated. And he told me that is the final offer of
the bank P5.5 million and we should indicate our position as soon as
possible.
Q - What was your response to the answer of Mr. Luis Co?
A - I said that we are going to give him our answer in a few days and he said
that was it. Atty. Fajardo and I and Mr. Mercurio [Rivera] was with us at the
time at his office.
Q - For the record, your Honor please, will you tell this Court who was with
Mr. Co in his Office in Producers Bank Building during this meeting?
A - Mr. Co himself, Mr. Rivera, Atty. Fajardo and I.
Q - By Mr. Co you are referring to?
A - Mr. Luis Co.
Q - After this meeting with Mr. Luis Co, did you and your partner accede on
(sic) the counter offer by the bank?
A - Yes, sir, we did. Two days thereafter we sent our acceptance to the bank
which offer we accepted, the offer of the bank which is P5.5 million.
[Direct testimony of Atty. Demetria, TSN, 26 April 1990, at pp. 34-36.]
---- 0 ---Q - According to Atty. Demetrio Demetria, the amount of P5.5 million was
reached by the Committee and it is not within his power to reduce this
amount. What can you say to that statement that the amount of P5.5 million
was reached by the Committee?
A - It was not discussed by the Committee but it was discussed initially by
Luis Co and the group of Atty. Demetrio Demetria and Atty. Pajardo (sic), in
that September 28, 1987 meeting, sir.
[Direct testimony of Mercurio Rivera, TSN, 30 July 1990, pp. 14-15.]
The
Fourth
Issue: May
the
Conservator
Revoke
the Perfected and Enforceable Contract?
It is not disputed that the petitioner Bank was under a conservator placed by
the Central Bank of the Philippines during the time that the negotiation and
perfection of the contract of sale took place. Petitioners energetically
contended that the conservator has the power to revoke or overrule actions
of the management or the board of directors of a bank, under Section 28-A of
Republic Act No. 265 (otherwise known as the Central Bank Act) as follows:

Whenever, on the basis of a report submitted by the appropriate supervising

or examining department, the Monetary Board finds that a bank or a nonbank financial intermediary performing quasi - banking functions is in a state
of continuing inability or unwillingness to maintain a state of liquidity
deemed adequate to protect the interest of depositors and creditors, the
Monetary Board may appoint a conservator to take charge of the assets,
liabilities, and the management of that institution, collect all monies and
debts due said institution and exercise all powers necessary to preserve the
assets of the institution, reorganize the management thereof, and restore its
viability. He shall have the power to overrule or revoke the actions of the
previous management and board of directors of the bank or non-bank
financial intermediary performing quasi-banking functions, any provision of
law to the contrary notwithstanding, and such other powers as the Monetary
Board shall deem necessary.
In the first place, this issue of the Conservators alleged authority to revoke or
repudiate the perfected contract of sale was raised for the first time in this
Petition - as this was not litigated in the trial court or Court of Appeals. As
already stated earlier, issues not raised and/or ventilated in the trial court,
let alone in the Court of Appeals, cannot be raised for the first time on appeal
as it would be offensive to the basic rules of fair play, justice and due
process.[43]
In the second place, there is absolutely no evidence that the Conservator, at
the time the contract was perfected, actually repudiated or overruled said
contract of sale. The Banks acting conservator at the time, Rodolfo Romey,
never objected to the sale of the property to Demetria and Janolo. What
petitioners are really referring to is the letter of Conservator Encarnacion,
who took over from Romey after the sale was perfected on September 30,
1987 (Annex V, petition) which unilaterally repudiated - not the contract - but
the authority of Rivera to make a binding offer - and which unarguably came
months after the perfection of the contract. Said letter dated May 12, 1988 is
reproduced hereunder:
May 12, 1988
Atty. Noe C. Zarate
Zarate Carandang Perlas & Ass.
Suite 323 Rufino Building
Ayala Avenue, Makati, Metro Manila
Dear Atty. Zarate:
This pertains to your letter dated May 5, 1988 on behalf of Attys. Janolo and
Demetria regarding the six (6) parcels of land located at Sta. Rosa, Laguna.

We deny that Producers Bank has ever made a legal counter-offer to any of
your clients nor perfected a contract to sell and buy with any of them for the
following reasons.
In the Inter-Office Memorandum dated April 25, 1986 addressed to and
approved by former Acting Conservator Mr. Andres I. Rustia, Producers Bank
Senior Manager Perfecto M. Pascua detailed the functions of Property
Management Department (PMD) staff and officers (Annex A), you will
immediately read that Manager Mr. Mercurio Rivera or any of his
subordinates has no authority, power or right to make any alleged counteroffer. In short, your lawyer-clients did not deal with the authorized officers of
the bank.
Moreover, under Secs. 23 and 36 of the Corporation Code of
the Philippines (Batas Pambansa Blg. 68) and Sec. 28-A of the Central Bank
Act (Rep. Act No. 265, as amended), only the Board of Directors/Conservator
may authorize the sale of any property of the corporation/bank.
Our records do not show that Mr. Rivera was authorized by the old board or
by any of the bank conservators (starting January, 1984) to sell the aforesaid
property to any of your clients. Apparently, what took place were just
preliminary discussions/ consultations between him and your clients, which
everyone knows cannot bind the Banks Board or Conservator.
We are, therefore, constrained to refuse any tender of payment by your
clients, as the same is patently violative of corporate and banking laws. We
believe that this is more than sufficient legal justification for refusing said
alleged tender.
Rest assured that we have nothing personal against your clients. All our acts
are official, legal and in accordance with law. We also have no personal
interest in any of the properties of the Bank.
Please be advised accordingly.
Very truly yours,
(Sgd.) Leonida T. Encarnacion
LEONIDA T. ENCARNACION
Acting Conservator
In the third place, while admittedly, the Central Bank law gives vast and farreaching powers to the conservator of a bank, it must be pointed out that
such powers must be related to the (preservation of) the assets of the bank,
(the reorganization of) the management thereof and (the restoration of) its
viability. Such powers, enormous and extensive as they are, cannot extend to
the post-facto repudiation of perfected transactions, otherwise they would
infringe against the non-impairment clause of the Constitution.[44] If the

legislature itself cannot revoke an existing valid contract, how can it delegate
such non-existent powers to the conservator under Section 28-A of said law?
Obviously, therefore, Section 28-A merely gives the conservator power to
revoke contracts that are, under existing law, deemed to be defective - i.e.,
void, voidable, unenforceable or rescissible. Hence, the conservator merely
takes the place of a banks board of directors. What the said board cannot
do - such as repudiating a contract validly entered into under the doctrine of
implied authority - the conservator cannot do either. Ineluctably, his power is
not unilateral and he cannot simply repudiate valid obligations of the Bank.
His authority would be only to bring court actions to assail such contracts as he has already done so in the instant case. A contrary understanding of
the law would simply not be permitted by the Constitution. Neither by
common sense. To rule otherwise would be to enable a failing bank to
become solvent, at the expense of third parties, by simply getting the
conservator to unilaterally revoke all previous dealings which had one way or
another come to be considered unfavorable to the Bank, yielding nothing to
perfected contractual rights nor vested interests of the third parties who had
dealt with the Bank.
The Fifth Issue: Were There Reversible Errors of Fact?
Basic is the doctrine that in petitions for review under Rule 45 of the Rules of
Court, findings of fact by the Court of Appeals are not reviewable by the
Supreme Court. In Andres vs. Manufacturers Hanover & Trust Corporation,
[45] we held:
x x x. The rule regarding questions of fact being raised with this Court in a
petition for certiorari under Rule 45 of the Revised Rules of Court has been
stated in Remalante vs. Tibe, G.R. No. 59514, February 25, 1988, 158 SCRA
138, thus:
The rule in this jurisdiction is that only questions of law may be raised in a
petition for certiorari under Rule 45 of the Revised Rules of Court. The
jurisdiction of the Supreme Court in cases brought to it from the Court of
Appeals is limited to reviewing and revising the errors of law imputed to it, its
findings of the fact being conclusive [Chan vs. Court of Appeals, G.R. No. L27488, June 30, 1970, 33 SCRA 737, reiterating a long line of decisions]. This
Court has emphatically declared that it is not the function of the Supreme
Court to analyze or weigh such evidence all over again, its jurisdiction being
limited to reviewing errors of law that might have been committed by the
lower court (Tiongco v. De la Merced, G.R. No. L-24426, July 25, 1974, 58
SCRA 89; Corona vs. Court of Appeals, G.R. No. L-62482, April 28, 1983, 121
SCRA 865; Baniqued vs. Court of Appeals, G.R. No. L-47531, February 20,
1984, 127 SCRA 596). Barring, therefore, a showing that the findings

complained of are totally devoid of support in the record, or that they are so
glaringly erroneous as to constitute serious abuse of discretion, such findings
must stand, for this Court is not expected or required to examine or contrast
the oral and documentary evidence submitted by the parties [Santa Ana, Jr.
vs. Hernandez, G.R. No. L-16394, December 17, 1966, 18 SCRA 973] [at pp.
144-145.]
Likewise, in Bernardo vs. Court of Appeals,[46] we held:
The resolution of this petition invites us to closely scrutinize the facts of the
case, relating to the sufficiency of evidence and the credibility of witnesses
presented. This Court so held that it is not the function of the Supreme Court
to analyze or weigh such evidence all over again. The Supreme Courts
jurisdiction is limited to reviewing errors of law that may have been
committed by the lower court. The Supreme Court is not a trier of facts. x x x
As held in the recent case of Chua Tiong Tay vs. Court of Appeals and
Goldrock Construction and Development Corp.:[47]
The Court has consistently held that the factual findings of the trial court, as
well as the Court of Appeals, are final and conclusive and may not be
reviewed on appeal. Among the exceptional circumstances where a
reassessment of facts found by the lower courts is allowed are when the
conclusion is a finding grounded entirely on speculation, surmises or
conjectures; when the inference made is manifestly absurd, mistaken or
impossible; when there is grave abuse of discretion in the appreciation of
facts; when the judgment is premised on a misapprehension of facts; when
the findings went beyond the issues of the case and the same are contrary to
the admissions of both appellant and appellee. After a careful study of the
case at bench, we find none of the above grounds present to justify the reevaluation of the findings of fact made by the courts below.
In the same vein, the ruling of this Court in the recent case of South Sea
Surety and Insurance Company, Inc. vs. Hon. Court of Appeals, et al.[48] is
equally applicable to the present case:
We see no valid reason to discard the factual conclusions of the appellate
court. x x x (I)t is not the function of this Court to assess and evaluate all
over again the evidence, testimonial and documentary, adduced by the
parties, particularly where, such as here, the findings of both the trial court
and the appellate court on the matter coincide. (italics supplied)
Petitioners, however, assailed the respondent Courts Decision as fraught with
findings and conclusions which were not only contrary to the evidence on
record but have no bases at all, specifically the findings that (1) the Banks
counter-offer price of P5.5 million had been determined by the past due
committee and approved by conservator Romey, after Rivera presented the

same for discussion and (2) the meeting with Co was not to scale down the
price and start negotiations anew, but a meeting on the already determined
price of P5.5 million. Hence, citing Philippine National Bank vs. Court of
Appeals,[49] petitioners are asking us to review and reverse such factual
findings.
The first point was clearly passed upon by the Court of Appeals,[50] thus:
There can be no other logical conclusion than that when, on September 1,
1987, Rivera informed plaintiffs by letter that the banks counter-offer is at
P5.5 Million for more than 101 hectares on lot basis, such counter-offer price
had been determined by the Past Due Committee and approved by the
Conservator after Rivera had duly presented plaintiffs offer for discussion by
the Committee x x x. Tersely put, under the established fact, the price of
P5.5 Million was, as clearly worded in Riveras letter (Exh. E), the official and
definitive price at which the bank was selling the property. (p. 11, CA
Decision)
xxx xxx xxx
xxx. The argument deserves scant consideration. As pointed out by plaintiff,
during the meeting of September 28, 1987 between the plaintiffs, Rivera and
Luis Co, the senior vice-president of the bank, where the topic was the
possible lowering of the price, the bank official refused it and confirmed that
the P5.5 Million price had been passed upon by the Committee and could no
longer be lowered (TSN of April 27, 1990, pp. 34-35) (p. 15, CA Decision).
The respondent Court did not believe the evidence of the petitioners on this
point, characterizing it as not credible and at best equivocal, and considering
the gratuitous and self-serving character of these declarations, the banks
submissions on this point do not inspire belief.
To become credible and unequivocal, petitioners should have presented then
Conservator Rodolfo Romey to testify on their behalf, as he would have been
in the best position to establish their thesis. Under the rules on evidence,
[51] such suppression gives rise to the presumption that his testimony would
have been adverse, if produced.
The second point was squarely raised in the Court of Appeals, but petitioners
evidence was deemed insufficient by both the trial court and the respondent
Court, and instead, it was respondents submissions that were believed and
became bases of the conclusions arrived at.
In fine, it is quite evident that the legal conclusions arrived at from the
findings of fact by the lower courts are valid and correct. But the petitioners
are now asking this Court to disturb these findings to fit the conclusion they
are espousing. This we cannot do.

To be sure, there are settled exceptions where the Supreme Court may
disregard findings of fact by the Court of Appeals.[52] We have studied both
the records and the CA Decision and we find no such exceptions in this case.
On the contrary, the findings of the said Court are supported by a
preponderance of competent and credible evidence. The inferences and
conclusions are reasonably based on evidence duly identified in the Decision.
Indeed, the appellate court patiently traversed and dissected the issues
presented before it, lending credibility and dependability to its findings. The
best that can be said in favor of petitioners on this point is that the factual
findings of respondent Court did not correspond to petitioners claims, but
were closer to the evidence as presented in the trial court by private
respondent. But this alone is no reason to reverse or ignore such factual
findings, particularly where, as in this case, the trial court and the appellate
court were in common agreement thereon. Indeed, conclusions of fact of a
trial judge - as affirmed by the Court of Appeals - are conclusive upon this
Court, absent any serious abuse or evident lack of basis or capriciousness of
any kind, because the trial court is in a better position to observe the
demeanor of the witnesses and their courtroom manner as well as to
examine the real evidence presented.
Epilogue
In summary, there are two procedural issues involved - forum-shopping and
the raising of issues for the first time on appeal [viz., the extinguishment of
the Banks offer of P5.5 million and the conservators powers to repudiate
contracts entered into by the Banks officers] - which per se could justify the
dismissal of the present case. We did not limit ourselves thereto, but delved
as well into the substantive issues - the perfection of the contract of sale and
its enforceability, which required the determination of questions of fact.
While the Supreme Court is not a trier of facts and as a rule we are not
required to look into the factual bases of respondent Courts decisions and
resolutions, we did so just the same, if only to find out whether there is
reason to disturb any of its factual findings, for we are only too aware of the
depth, magnitude and vigor by which the parties, through their respective
eloquent counsel, argued their positions before this Court.
We are not unmindful of the tenacious plea that the petitioner Bank is
operating abnormally under a government-appointed conservator and there
is need to rehabilitate the Bank in order to get it back on its feet x x x as
many people depend on (it) for investments, deposits and well as
employment. As of June 1987, the Banks overdraft with the Central Bank had
already reached P1.023 billion x x x and there were (other) offers to buy the
subject properties for a substantial amount of money.[53]

While we do not deny our sympathy for this distressed bank, at the same
time, the Court cannot emotionally close its eyes to overriding considerations
of substantive and procedural law, like respect for perfected contracts, nonimpairment of obligations and sanctions against forum-shopping, which must
be upheld under the rule of law and blind justice.
This Court cannot just gloss over private respondents submission that, while
the subject properties may currently command a much higher price, it is
equally true that at the time of the transaction in 1987, the price agreed
upon of P5.5 million was reasonable, considering that the Bank acquired
these properties at a foreclosure sale for no more than P 3.5 million.[54] That
the Bank procrastinated and refused to honor its commitment to sell cannot
now be used by it to promote its own advantage, to enable it to escape its
binding obligation and to reap the benefits of the increase in land values. To
rule in favor of the Bank simply because the property in question has
algebraically accelerated in price during the long period of litigation is to
reward lawlessness and delays in the fulfillment of binding contracts.
Certainly, the Court cannot stamp its imprimatur on such outrageous
proposition.
WHEREFORE, finding no reversible error in the questioned Decision and
Resolution, the Court hereby DENIES the petition. The assailed Decision is
AFFIRMED. Moreover, petitioner Bank is REPRIMANDED for engaging in
forum-shopping and WARNED that a repetition of the same or similar acts
will be dealt with more severely. Costs against petitioners.
SO ORDERED.
Narvasa, C.J. (Chairman), Davide, Jr., Melo, and Francisco, JJ., concur.

Republic
of
the
Philippines
SUPREME
COURT
Manila
EN BANC
G.R. No. L-44330 January 29, 1988
JULITA T. VDA. DE SEVERO, ANTONIETE SEVERO, BERNADIT SEVERO,
RICARDO
SEVERO,
JR.
and
MARISOL
SEVERO,
petitioners,
vs.
LUNINGNING FELICIANO GO AND JOAQUIN GO, and THE HONORABLE COURT
OF FIRST INSTANCE OF SAMAR, BRANCH V, respondents.
BIDIN, J.:

This case treated as a special civil action for certiorari was originally filed as
a petition for review by way of appeal on certiorari seeking to set aside the
order of the then Court of First Instance of Samar, Branch V, in Calbayog City
dated April 6, 1976 dismissing Civil Case No. 522-CC entitled "Julita T. Vda,
de Severo, et al., versus Luningning Feliciano Go, et al.' for lack of
jurisdiction.
The antecedents of the case are as follows:
The late Ricardo Severo was an employee of herein private respondents
Luningning Feliciano Go and Joaquin Go, first as baker of 'Joni's Cakes and
Pastries," an enterprise owned by respondents located at 1634 P. Guevarra
Street, Santa Cruz, Manila and finally, as driver-mechanic from 1961 up to
February 16, 1972. On the latter date, unidentified armed men forcibly took
away and/or carnapped the car owned by respondents and driven by Ricardo
Severo who, in his efforts to resist the carnappers, was shot and killed by the
latter. Up to now, the parties responsible for Severo's death have not been
Identified nor apprehended.
On September 18, 1974, herein petitioners, the widow and minor children of
Ricardo Severo, filed an action against respondents-employers before the
trial court for "Death Compensation and Damages" in the total amount of
P74,500.00 the complaint inter alia alleging:
IV
That sometime on February 16, 1972 whi le the said Ricardo Severo was in
the actual discharge of his duties as an employee of defendants that is, he
was driving the car of defendants, carnappers forcefully took away and/or
carnapped the said car of defendants and in his attempts to resist and
prevent the subject car from being taken away, the said carnappers shot and
killed the said Ricardo Severo, thus his death arose out of and in the course
of his employment with defendants;
V
That plaintiffs herein depend solely and rely completely upon the late
Ricardo Severo for their financial needs and means of living, and at the time
of his death the said Ricardo Severo was receiving monthly compensation by
defendants herein at the rate of P250.00;
VI
That for the loss of the life of said Ricardo Severo, plaintiffs herein are
entitled to indemnification or death compensation from defendants in the
least amount of P50,000.00 considering the fact that at the time of his death
the said Ricardo Severo was only 33 years and could have lived for many
years as he was in a very good physical condition;
VII

That because of the sudden and violent death which Ricardo Severo met in
the faithful service to his employers the defendants herein, the plaintiffs
herein suffered moral damages in the form of deep grief, lonesomeness,
mental anguish and shock which sufferings although not capable of
pecuniary estimation may be conservatively fixed at P20,000.00;
VIII
That defendants manifested bad faith when they willfully failed to comply
with their promise that they would properly compensate plaintiffs herein for
the death of Ricardo Severo and that they would help plaintiffs prosecute the
carnappers-killers of said Ricardo Severo, thereby plaintiffs were compelled
to institute this suit whereby they incur litigation expenses of at least
P500.00 and to contract the services of their counsel on a contingent basis of
P2,000.00.
On November 18, 1974, private respondents filed a motion to dismiss the
complaint on the ground that respondent Court has no jurisdiction over the
nature of the action but the same was denied by respondent Court in its
order dated January 9, 1975. Respondents' motion for reconsideration was
likewise denied by the trial court. On May 3, 1975, private respondents filed
their answer traversing the material allegations of the complaint and raised
as special affirmative defenses that the lower court has no jurisdiction over
the claim of the petitioner and that the complaint failed to state a sufficient
cause of action.
During the pre-trial on January 16, 1976, private respondents again filed a
motion to dismiss reiterating their allegation that the lower court has no
jurisdiction over the claim of petitioner and that the complaint failed to state
a cause of action. Petitioners filed a reply (opposition) dated February 5,
1976 contending that their claim is not for compensation under the
Workmen's Compensation Act but for damages under Article 1711 and Article
21 of the Civil Code, hence, cognizable by the regular courts.
The respondent court, acting on the latest motion to dismiss, issued an order
dated April 6, 1976 stating that petitioners' cause of action falls within the
purview of the Workmen's Compensation Act and the proper forum was the
Workmen's Compensation Commission. It declared itself without jurisdiction
following Our ruling in the case of Robles vs. Yap Wing, L-20442, October 4,
1971, 41 SCRA 267, to wit:
The Court after a careful consideration of the grounds in the defendants'
motion, and considering the allegation of the complaint describing their main
cause of action, which is a claim for death compensation and damages, is of
the opinion and so holds that this Court has no jurisdiction to hear and
decide the case. The plaintiffs' right to relief being derived on an accident

resulting in death of Ricardo Severo, an employee of the defendants, while

engaged in the performance of the task assigned to him, this Court is devoid
of statutory competence to pass upon the subject matter of the plaintiffs'
claim, as of the time the cause of action accrue, falls within the purview of
the Workmen's Compensation Act as amended and, therefore, the proper
form (sic) was the Workmen's Compensation Commission, thru its regional
offices under the Department of Labor, a body empowered to act upon all
claims for compensation for death, injury or sickness. Thus our Supreme
Court in the case of Ciriaco Robles vs. Yap Wing, No. L-20442, Oct. 4, 1971
ruled:
Before the enactment of Republic Act No. 722(Amending Act. No. 3228),
which took effect on June 20, 1952, claims for compensation under the
Workmen's Compensation Act were cognizable by the regular courts, but
since then, as provided in Section 46 thereof as amended, 'the Workmen's
Compensation shall have jurisdiction to hear and decide claims for
compensation under the Workmen's Compensation Act, subject to appeal to
the Supreme Court. ... In relation to this, Section 5 of the Act provides that
the rights and remedies granted by this Act to an employee by reason of a
personal injury entitling him to compensation shall exclude all other rights
and remedies accruing to an employee, his personal representatives,
dependents or nearest of kin against the employer under the Civil Code or
other laws, because of said injury.
The petition is impressed with merit. The ruling in the case of Robles vs. Yap
Wing, supra, that the action of the injured employee or that of his heirs in
case of his death is restricted to seeking the limited compensation provided
under the Workmen's Compensation Act relied upon by the trial court, no
longer controls. We have abandoned the same in the recent case of Ysmael
Maritime Corporation vs. Hon. Celso Avelino, G.R. No. L-43674, promulgated
on June 30, 1987, citing the case of Floresca vs. Philex Mining Company, L30642, April 30, 1985, 136 SCRA 141. We stated thus.
In the recent case of Floresca vs. Philex Mining Company, L-30642, April 30,
1985, 136 SCRA 141, involving a complaint for damages for the death of five
miners in a cave-in on June 28, 1967, this Court was confronted with three
divergent opinions on the exclusivity rule as presented by several amici
curiae. One view is that the injured employee or his heirs, in case of death,
may initiate an action to recover damages (not compensation under the
Workmen's Compensation Act) with the regular courts on the basis of
negligence of the employer pursuant to the Civil Code. Another view, as
enunciated in the Robles case, is that the remedy of an employee for work
connected injury or accident is exclusive in accordance with Section 5 of the

WCA. A third view is that the action is selective and the employee of his heirs
have a choice of availing themselves of the benefits under the WCA or of
suing in the regular courts under the Civil Code for higher damages from the
employer by reason of his negligence. But once the election has been
exercised, the employee or his heirs are no longer free to opt for the other
remedy. In other words, the employee cannot pursue both actions
simultaneously. This latter view was adopted by the majority in
the Floresca case, reiterating as main authority its earlier decision in Pacana
vs. Cebu Autobus Company, L-25382, April 30, 1982, 32 SCRA 442. In so
doing, the Court rejected the doctrine of exclusivity of the rights and
remedies granted by the WCA as laid down in the Robles case. Three justices
dissented.
As clarified by Mr. Chief Justice Claudio Teehankee in his concurring opinion
in Ysmael, "the employee or his heirs have the choice of cause of action and
corresponding relief, i.e., either an ordinary action for damages before the
regular courts or a special claim for limited compensation under the
Workmen's Compensation Act before the Workmen's Compensation
Commission ... However, tills right of choice is qualified in that the employee
should be held to the particular remedy in which he has staked his fortunes
and must pursue even his alternative claim for compensation exclusively in
the same regular courts once he has opted to seek his remedy there rather
than in the Workmen's Compensation Commission." This is what the
petitioners did in filing their complaint for "Death Compensation and
Damages" before respondent Court. Petitioners have opted to seek their
remedy before the regular court. Their demand for compensation is
predicated on the employer's liability for the death of their employee
(Ricardo Severo) imposed by Article 1711 of the Civil Code which reads:
Art. 1711. Owners of enterprises and other employers are obliged to pay
compensation for the death of or injuries to their laborers, workmen,
mechanics or other employees even though the event may have been purely
accidental or entirely due to fortuitous cause if the death or personal injury
arose out of and in the course of employment ...
Petitioner's claim for compensation based on the Civil Code pertain to the
jurisdiction of the regular courts (Pacana vs. Cebu Autobus Co., 32 SCRA
442).
WHEREFORE, the petition is Granted and the order dated April 6, 1976 of
respondent Court dismissing petitioner's complaint is hereby Set Aside and
the case Remanded to the trial court for further proceedings. No
pronouncement as to costs.
SO ORDERED.

Yap, Fernan Narvasa, Cruz, Paras, Feliciano, Gancayco, Padilla, Sarmiento and
Cortes, JJ., concur.
SECOND DIVISION
[G.R. No. 111127. July 26, 1996]
MR. & MRS. ENGRACIO FABRE, JR.* and PORFIRIO CABIL, petitioners,
vs. COURT OF APPEALS, THE WORD FOR THE WORLD CHRISTIAN
FELLOWSHIP, INC., AMYLINE ANTONIO, JOHN RICHARDS, GONZALO
GONZALES, VICENTE V. QUE, JR., ICLI CORDOVA, ARLENE GOJOCCO, ALBERTO
ROXAS CORDERO, RICHARD BAUTISTA, JOCELYN GARCIA, YOLANDA
CORDOVA, NOEL ROQUE, EDWARD TAN, ERNESTO NARCISO, ENRIQUETA
LOCSIN, FRANCIS NORMAN O. LOPEZ, JULIUS CAESAR GARCIA, ROSARIO MA.
V. ORTIZ, MARIETTA C. CLAVO, ELVIE SENIEL, ROSARIO MARA-MARA, TERESITA
REGALA, MELINDA TORRES, MARELLA MIJARES, JOSEFA CABATINGAN, MARA
NADOC, DIANE MAYO, TESS PLATA, MAYETTE JOCSON, ARLENE Y. MORTIZ,
LIZA MAYO, CARLOS RANARIO, ROSAMARIA T. RADOC and BERNADETTE
FERRER, respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari of the decision of the Court of
Appeals[1] in CA-GR No. 28245, dated September 30, 1992, which affirmed
with modification the decision of the Regional Trial Court of Makati, Branch
58, ordering petitioners jointly and severally to pay damages to private
respondent Amyline Antonio, and its resolution which denied petitioners
motion for reconsideration for lack of merit.
Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model
Mazda minibus. They used the bus principally in connection with a bus
service for school children which they operated in Manila. The couple had a
driver, Porfirio J. Cabil, whom they hired in 1981, after trying him out for two
weeks. His job was to take school children to and from the St. Scholasticas
College in Malate, Manila.
On November 2, 1984 private respondent Word for the World Christian
Fellowship Inc. (WWCF) arranged with petitioners for the transportation of 33
members of its Young Adults Ministry from Manila to La Union and back in
consideration of which private respondent paid petitioners the amount of
P3,000.00.
The group was scheduled to leave on November 2, 1984, at 5:00 oclock in
the afternoon. However, as several members of the party were late, the bus
did not leave the Tropical Hut at the corner of Ortigas Avenue and EDSA until
8:00 oclock in the evening. Petitioner Porfirio Cabil drove the minibus.

The
usual
route
to
Caba,
La
Union
was
through
Carmen,
Pangasinan. However, the bridge at Carmen was under repair, so that
petitioner Cabil, who was unfamiliar with the area (it being his first trip to La
Union), was forced to take a detour through the town of Ba-ay in Lingayen,
Pangasinan. At 11:30 that night, petitioner Cabil came upon a sharp curve on
the highway, running on a south to east direction, which he described as
siete. The road was slippery because it was raining, causing the bus, which
was running at the speed of 50 kilometers per hour, to skid to the left road
shoulder. The bus hit the left traffic steel brace and sign along the road and
rammed the fence of one Jesus Escano, then turned over and landed on its
left side, coming to a full stop only after a series of impacts. The bus came to
rest off the road. A coconut tree which it had hit fell on it and smashed its
front portion.
Several passengers were injured. Private respondent Amyline Antonio was
thrown on the floor of the bus and pinned down by a wooden seat which
came off after being unscrewed. It took three persons to safely remove her
from this position. She was in great pain and could not move.
The driver, petitioner Cabil, claimed he did not see the curve until it was too
late. He said he was not familiar with the area and he could not have seen
the curve despite the care he took in driving the bus, because it was dark
and there was no sign on the road. He said that he saw the curve when he
was already within 15 to 30 meters of it. He allegedly slowed down to 30
kilometers per hour, but it was too late.
The Lingayen police investigated the incident the next day, November 3,
1984. On the basis of their finding they filed a criminal complaint against the
driver, Porfirio Cabil. The case was later filed with the Lingayen Regional Trial
Court. Petitioners Fabre paid Jesus Escano P1,500.00 for the damage to the
latters fence. On the basis of Escanos affidavit of desistance the case against
petitioners Fabre was dismissed.
Amyline Antonio, who was seriously injured, brought this case in the RTC of
Makati, Metro Manila. As a result of the accident, she is now suffering from
paraplegia and is permanently paralyzed from the waist down. During the
trial she described the operations she underwent and adduced evidence
regarding the cost of her treatment and therapy. Immediately after the
accident, she was taken to the Nazareth Hospital in Ba-ay, Lingayen. As this
hospital was not adequately equipped, she was transferred to the Sto. Nio
Hospital, also in the town of Ba-ay, where she was given sedatives. An x-ray
was taken and the damage to her spine was determined to be too severe to
be treated there. She was therefore brought to Manila, first to the Philippine

General Hospital and later to the Makati Medical Center where she
underwent an operation to correct the dislocation of her spine.
In its decision dated April 17, 1989, the trial court found that:
No convincing evidence was shown that the minibus was properly checked
for travel to a long distance trip and that the driver was properly screened
and tested before being admitted for employment. Indeed, all the evidence
presented have shown the negligent act of the defendants which ultimately
resulted to the accident subject of this case.
Accordingly, it gave judgment for private respondents holding:
Considering that plaintiffs Word for the World Christian Fellowship, Inc. and
Ms. Amyline Antonio were the only ones who adduced evidence in support of
their claim for damages, the Court is therefore not in a position to award
damages to the other plaintiffs.
WHEREFORE, premises considered, the Court hereby renders judgment
against defendants Mr. & Mrs. Engracio Fabre, Jr. and Porfirio Cabil y Jamil
pursuant to articles 2176 and 2180 of the Civil Code of the Philippines and
said defendants are ordered to pay jointly and severally to the plaintiffs the
following amount:
1) P93,657.11 as compensatory and actual damages;
2) P500,000.00 as the reasonable amount of loss of earning capacity of
plaintiff Amyline Antonio;
3) P20,000.00 as moral damages;
4) P20,000.00 as exemplary damages; and
5) 25% of the recoverable amount as attorneys fees;
6) Costs of suit.
SO ORDERED.
The Court of Appeals affirmed the decision of the trial court with respect to
Amyline Antonio but dismissed it with respect to the other plaintiffs on the
ground that they failed to prove their respective claims. The Court of Appeals
modified the award of damages as follows:
1) P93,657.11 as actual damages;
2) P600,000.00 as compensatory damages;
3) P50,000.00 as moral damages;
4) P20,000.00 as exemplary damages;
5) P10,000.00 as attorneys fees; and
6) Costs of suit.
The Court of Appeals sustained the trial courts finding that petitioner Cabil
failed to exercise due care and precaution in the operation of his vehicle
considering the time and the place of the accident. The Court of Appeals held

that the Fabres were themselves presumptively negligent. Hence, this

petition. Petitioners raise the following issues:
I. WHETHER OR NOT PETITIONERS WERE NEGLIGENT.
II. WHETHER OR NOT PETITIONERS WERE LIABLE FOR THE INJURIES
SUFFERED BY PRIVATE RESPONDENTS.
III. WHETHER OR NOT DAMAGES CAN BE AWARDED AND IN THE POSITIVE, UP
TO WHAT EXTENT.
Petitioners challenge the propriety of the award of compensatory damages in
the amount of P600,000.00. It is insisted that, on the assumption that
petitioners are liable, an award of P600,000.00 is unconscionable and highly
speculative. Amyline Antonio testified that she was a casual employee of a
company called Suaco, earning P1,650.00 a month, and a dealer of Avon
products, earning an average of P1,000.00 monthly. Petitioners contend that
as casual employees do not have security of tenure, the award of
P600,000.00, considering Amyline Antonios earnings, is without factual basis
as there is no assurance that she would be regularly earning these amounts.
With the exception of the award of damages, the petition is devoid of merit.
First, it is unnecessary for our purpose to determine whether to decide this
case on the theory that petitioners are liable for breach of contract of
carriage or culpa contractual or on the theory of quasi delict or culpa
aquiliana as both the Regional Trial Court and the Court of Appeals held, for
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.
[2] In either case, the question is whether the bus driver, petitioner Porfirio
Cabil, was negligent.
The finding that Cabil drove his bus negligently, while his employer, the
Fabres, who owned the bus, failed to exercise the diligence of a good father
of the family in the selection and supervision of their employee is fully
supported by the evidence on record. These factual findings of the two
courts we regard as final and conclusive, supported as they are by the
evidence. Indeed, it was admitted by Cabil that on the night in question, it
was raining, and, as a consequence, the road was slippery, and it was
dark. He averred these facts to justify his failure to see that there lay a sharp
curve ahead. However, it is undisputed that Cabil drove his bus at the speed
of 50 kilometers per hour and only slowed down when he noticed the curve
some 15 to 30 meters ahead.[3] By then it was too late for him to avoid
falling off the road. Given the conditions of the road and considering that the
trip was Cabils first one outside of Manila, Cabil should have driven his
vehicle at a moderate speed. There is testimony[4] that the vehicles passing

on that portion of the road should only be running 20 kilometers per hour, so
that at 50 kilometers per hour, Cabil was running at a very high speed.
Considering the foregoing the fact that it was raining and the road was
slippery, that it was dark, that he drove his bus at 50 kilometers an hour
when even on a good day the normal speed was only 20 kilometers an hour,
and that he was unfamiliar with the terrain, Cabil was grossly negligent and
should be held liable for the injuries suffered by private respondent Amyline
Antonio.
Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to
the presumption that his employers, the Fabres, were themselves negligent
in the selection and supervision of their employee.
Due diligence in selection of employees is not satisfied by finding that the
applicant possessed a professional drivers license. The employer should also
examine the applicant for his qualifications, experience and record of
service.[5] Due diligence in supervision, on the other hand, requires the
formulation of rules and regulations for the guidance of employees and the
issuance of proper instructions as well as actual implementation and
monitoring of consistent compliance with the rules.[6]
In the case at bar, the Fabres, in allowing Cabil to drive the bus to La Union,
apparently did not consider the fact that Cabil had been driving for school
children only, from their homes to the St. Scholasticas College in Metro
Manila.[7] They had hired him only after a two-week apprenticeship. They
had tested him for certain matters, such as whether he could remember the
names of the children he would be taking to school, which were irrelevant to
his qualification to drive on a long distance travel, especially considering that
the trip to La Union was his first.The existence of hiring procedures and
supervisory policies cannot be casually invoked to overturn the presumption
of negligence on the part of an employer.[8]
Petitioners argue that they are not liable because (1) an earlier departure
(made impossible by the congregations delayed meeting) could have averted
the mishap and (2) under the contract, the WWCF was directly responsible
for the conduct of the trip. Neither of these contentions hold water. The hour
of departure had not been fixed. Even if it had been, the delay did not bear
directly on the cause of the accident. With respect to the second contention,
it was held in an early case that:
[A] person who hires a public automobile and gives the driver directions as to
the place to which he wishes to be conveyed, but exercises no other control
over the conduct of the driver, is not responsible for acts of negligence of the
latter or prevented from recovering for injuries suffered from a collision

between the automobile and a train, caused by the negligence either of the
locomotive engineer or the automobile driver.[9]
As already stated, this case actually involves a contract of
carriage. Petitioners, the Fabres, did not have to be engaged in the business
of public transportation for the provisions of the Civil Code on common
carriers to apply to them. As this Court has held:[10]
Art. 1732. Common carriers are persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or
both, by land, water, or air for compensation, offering their services to the
public.
The above article makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one who
does such carrying only as an ancillary activity (in local idiom, as a
sideline). Article 1732 also carefully avoids making any distinction between a
person or enterprise offering transportation service on a regular or scheduled
basis and one offering such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732 distinguish between a carrier
offering its services to the general public, i.e., the general community or
population, and one who offers services or solicits business only from a
narrow segment of the general population. We think that Article 1732
deliberately refrained from making such distinctions.
As common carriers, the Fabres were bound to exercise extraordinary
diligence for the safe transportation of the passengers to their
destination. This duty of care is not excused by proof that they exercised the
diligence of a good father of the family in the selection and supervision of
their employee. As Art. 1759 of the Code provides:
Common carriers are liable for the death of or injuries to passengers through
the negligence or wilful acts of the formers employees, although such
employees may have acted beyond the scope of their authority or in
violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they
exercised all the diligence of a good father of a family in the selection and
supervision of their employees.
The same circumstances detailed above, supporting the finding of the trial
court and of the appellate court that petitioners are liable under Arts. 2176
and 2180 for quasi delict, fully justify finding them guilty of breach of
contract of carriage under Arts. 1733, 1755 and 1759 of the Civil Code.
Secondly, we sustain the award of damages in favor of Amyline
Antonio. However, we think the Court of Appeals erred in increasing the
amount of compensatory damages because private respondents did not

question this award as inadequate.[11] To the contrary, the award of

P500,000.00 for compensatory damages which the Regional Trial Court made
is reasonable considering the contingent nature of her income as a casual
employee of a company and as distributor of beauty products and the fact
that the possibility that she might be able to work again has not been
foreclosed. In fact she testified that one of her previous employers had
expressed willingness to employ her again.
With respect to the other awards, while the decisions of the trial court and
the Court of Appeals do not sufficiently indicate the factual and legal basis
for them, we find that they are nevertheless supported by evidence in the
records of this case. Viewed as an action for quasi delict, this case falls
squarely within the purview of Art. 2219(2) providing for the payment of
moral damages in cases of quasi delict. On the theory that petitioners are
liable for breach of contract of carriage, the award of moral damages is
authorized by Art. 1764, in relation to Art. 2220, since Cabils gross
negligence amounted to bad faith.[12] Amyline Antonios testimony, as well
as the testimonies of her father and co-passengers, fully establish the
physical suffering and mental anguish she endured as a result of the injuries
caused by petitioners negligence.
The award of exemplary damages and attorneys fees was also properly
made. However, for the same reason that it was error for the appellate court
to increase the award of compensatory damages, we hold that it was also
error for it to increase the award of moral damages and reduce the award of
attorneys fees, inasmuch as private respondents, in whose favor the awards
were made, have not appealed.[13]
As above stated, the decision of the Court of Appeals can be sustained either
on the theory of quasi delict or on that of breach of contract. The question is
whether, as the two courts below held, petitioners, who are the owners and
driver of the bus, may be made to respond jointly and severally to private
respondent. We hold that they may be. In Dangwa Trans. Co. Inc. v. Court of
Appeals,[14] on facts similar to those in this case, this Court held the bus
company and the driver jointly and severally liable for damages for injuries
suffered by a passenger.Again, in Bachelor Express, Inc. v. Court of
Appeals[15] a driver found negligent in failing to stop the bus in order to let
off passengers when a fellow passenger ran amuck, as a result of which the
passengers jumped out of the speeding bus and suffered injuries, was held
also jointly and severally liable with the bus company to the injured
passengers.
The same rule of liability was applied in situations where the negligence of
the driver of the bus on which plaintiff was riding concurred with the

negligence of a third party who was the driver of another vehicle, thus
causing an accident. In Anuran v. Buo,[16] Batangas Laguna Tayabas Bus
Co. v. Intermediate Appellate Court,[17] and Metro Manila Transit Corporation
v. Court of Appeals,[18] the bus company, its driver, the operator of the
other vehicle and the driver of the vehicle were jointly and severally held
liable to the injured passenger or the latters heirs. The basis of this allocation
of liability was explained in Viluan v. Court of Appeals,[19] thus:
Nor should it make any difference that the liability of petitioner [bus owner]
springs from contract while that of respondents [owner and driver of other
vehicle] arises from quasi-delict. As early as 1913, we already ruled in
Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of injury to a passenger due
to the negligence of the driver of the bus on which he was riding and of the
driver of another vehicle, the drivers as well as the owners of the two
vehicles are jointly and severally liable for damages. Some members of the
Court, though, are of the view that under the circumstances they are liable
on quasi-delict.[20]
It is true that in Philippine Rabbit Bus Lines, Inc. v. Court of Appeals[21] this
Court exonerated the jeepney driver from liability to the injured passengers
and their families while holding the owners of the jeepney jointly and
severally liable, but that is because that case was expressly tried and
decided exclusively on the theory of culpa contractual. As this Court there
explained:
The trial court was therefore right in finding that Manalo [the driver] and
spouses
Mangune
and
Carreon
[the
jeepney
owners]
were
negligent. However, its ruling that spouses Mangune and Carreon are jointly
and severally liable with Manalo is erroneous. The driver cannot be held
jointly and severally liable with the carrier in case of breach of the contract of
carriage. The rationale behind this is readily discernible. Firstly, the contract
of carriage is between the carrier and the passenger, and in the event of
contractual liability, the carrier is exclusively responsible therefore to the
passenger, even if such breach be due to the negligence of his driver (see
Viluan v. The Court of Appeals, et al., G.R. Nos. L-21477-81, April 29, 1966,
16 SCRA 742) . . .[22]
As in the case of BLTB, private respondents in this case and her co-plaintiffs
did not stake out their claim against the carrier and the driver exclusively on
one theory, much less on that of breach of contract alone. After all, it was
permitted for them to allege alternative causes of action and join as many
parties as may be liable on such causes of action[23] so long as private
respondent and her co-plaintiffs do not recover twice for the same
injury. What is clear from the cases is the intent of the plaintiff there to

recover from both the carrier and the driver, thus justifying the holding that
the carrier and the driver were jointly and severally liable because their
separate and distinct acts concurred to produce the same injury.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with
MODIFICATION as to the award of damages. Petitioners are ORDERED to PAY
jointly and severally the private respondent Amyline Antonio the following
amounts:
1) P93,657.11 as actual damages;
2) P500,000.00 as the reasonable amount of loss of earning capacity of
plaintiff Amyline Antonio;
3) P20,000.00 as moral damages;
4) P20,000.00 as exemplary damages;
5) 25% of the recoverable amount as attorneys fees; and
6) costs of suit.
SO ORDERED.
Regalado, (Chairman), Romero, Puno, and Torres, Jr., JJ., concur.
EN BANC
[G.R. No. L-8194. July 11, 1956.]
EMERENCIANA M. VDA. DE MEDINA, ET AL., Plaintiffs-Appellees, vs.
GUILLERMO
CRESENCIA,
ET
AL., Defendants.
GUILLERMO
CRESENCIA, Appellant.
DECISION
REYES, J.B.L., J.:
Appeal by Defendant Guillermo Cresencia from the judgment of the Court of
First Instance of Manila in its civil case No. 19890, sentencing Appellant,
jointly and severally with his co-Defendant Brigido Avorque, to
pay Plaintiffs Emerencia M. Vda. de Medina and her minor children damages
in the total amount of P56,000, P5,000 attorneys fees, and costs.
It appears that on May 31, 1953, passenger jeepney bearing plate No. TPU2232 (Manila), driven by Brigido Avorque, smashed into a Meralco post on
Azcarraga Street, resulting in the death of Vicente Medina, one of its
passengers. A criminal case for homicide through reckless imprudence was
filed against Avorque (criminal case No. 22775 of the Court of First Instance
of Manila), to which he pleaded guilty on September 9, 1953. The heirs of the
deceased, however, reserved their right to file a separate action for
damages, and on June 16, 1953, brought suit against the driver Brigido
Avorque and Appellant Guillermo Cresencia, the registered owner and
operator of the jeepney in question. Defendant Brigido Avorque did not file

any answer; chan roblesvirtualawlibrarywhile DefendantCresencia answered,

disclaiming liability on the ground that he had sold the jeepney in question
on
October
14,
1950
to
one
Maria
A.
Cudiamat; chan
roblesvirtualawlibrarythat the jeepney had been repeatedly sold by one
buyer after another, until the vehicle was purchased on January 29, 1953 by
Rosario Avorque, the absolute owner thereof at the time of the accident. In
view of Cresencias answer,Plaintiffs filed leave, and was allowed, to amend
their
complaint
making
Rosario
Avorque
a
co-Defendant; chan
roblesvirtualawlibraryand the latter, by way of answer, admitted having
purchased the aforesaid jeepney on May 31, 1953, but alleged in defense
that she was never the public utility operator thereof. The case then
proceeded to trial, during which, after the Plaintiffs had presented their
evidence,Defendants Guillermo Cresencia and Rosario Avorque made
manifestations admitting that the former was still the registered operator of
the jeepney in question in the records of the Motor Vehicles Office and the
Public Service Commission, while the latter was the owner thereof at the
time of the accident; chan roblesvirtualawlibraryand submitted the case for
the decision on the question of who, as between the two, should be held
liable to Plaintiffs for damages. The lower court, by Judge Jose Zulueta, held
that as far as the public is concerned, Defendant Cresencia, in the eyes of
the law, continued to be the legal owner of the jeepney in question; chan
roblesvirtualawlibraryand rendered judgment against him, jointly and
severally with the driver Brigido Avorque, for P6,000 compensatory damages,
P30,000 moral damages, P10,000 exemplary damages, P10,000 nominal
damages, P5,000 attorneys fees, and costs, while Defendant Rosario Avorque
was absolved from liability. From this judgment, Defendant Cresencia
appealed.
We have already held in the case of Montoya vs. Ignacio, 94 Phil., 182
(December 29, 1953), which the court below cited, that the law (section 20
[g], C. A. No. 146 as amended) requires the approval of the Public Service
Commission in order that a franchise, or any privilege pertaining thereto,
may be sold or leased without infringing the certificate issued to the
grantee; chan roblesvirtualawlibraryand that if property covered by the
franchise is transferred or leased without this requisite approval, the transfer
is not binding against the public or the Service Commission; chan
roblesvirtualawlibraryand in contemplation of law, the grantee of record
continues to be responsible under the franchise in relation to the
Commission and to the public. There we gave the reason for this rule to be
as follows:chanroblesvirtuallawlibrary

 cralaw Since a franchise is personal in nature any transfer or lease thereof

should be notified to the Public Service Commission so that the latter may
take proper safeguards to protect the interest of the public. In fact, the law
requires that, before the approval is granted, there should be a public
hearing, with notice to all interested parties, in order that the Commission
may determine if there are good and reasonable grounds justifying the
transfer or lease of the property covered by the franchise, or if the sale or
lease is detrimental to public interest cralaw .
The above ruling was later reiterated in the cases of Timbol vs. Osias, L7547, April 30, 1955 and Roque vs. Malibay Transit Inc., L- 8561, November
18, 1955.
As the sale of the jeepney here in question was admittedly without the
approval of the Public Service Commission, Appellant herein, Guillermo
Cresencia, who is the registered owner and operator thereof, continued to be
liable to the Commission and the public for the consequences incident to its
operation. Wherefore, the lower court did not err in holding him, and not the
buyer Rosario Avorque, responsible for the damages sustained by Plaintiff by
reason of the death of Vicente Medina resulting from the reckless negligence
of the jeepneys driver, Brigido Avorque.
Appellant also argues that the basis of Plaintiffs action being the employers
subsidiary liability under the Revised Penal Code for damages arising from
his employees criminal acts, it isDefendant Rosario Avorque who should
answer subsidiarily for the damages sustained byPlaintiffs, since she admits
that she, and not Appellant, is the employer of the negligent driver Brigido
Avorque. The argument is untenable, because Plaintiffs action for damages
is independent of the criminal case filed against Brigido Avorque, and based,
not on the employers subsidiary liability under the Revised Penal Code, but
on a breach of the carriers contractual obligation to carry his passengers
safely to their destination (culpa contractual). And it is also for this reason
that there is no need of first proving the insolvency of the driver Brigido
Avorque before damages can be recovered from the carrier, for in culpa
contractual, the liability of the carrier is not merely subsidiary or secondary,
but direct and immediate (Articles 1755, 1756, and 1759, New Civil Code).
The propriety of the damages awarded has not been questioned,
Nevertheless, it is patent upon the record that the award of P10,000 by way
of nominal damages is untenable as a matter of law, since nominal damages
cannot co-exist with compensatory damages. The purpose of nominal
damages is to vindicate or recognize a right that has been violated, in order
to preclude further contest thereon; chan roblesvirtualawlibraryand not for
the purpose of indemnifying the Plaintiff for any loss suffered by him

(Articles 2221, 2223, new Civil Code.) Since the court below has already
awarded compensatory and exemplary damages that are in themselves a
judicial recognition thatPlaintiffs right was violated, the award of nominal
damages is unnecessary and improper. Anyway, ten thousand pesos cannot,
in common sense, be deemed nominal.
With the modification that the award of P10,000 nominal damages be
eliminated,
the
decision
appealed
from
is
affirmed.
Costs
against Appellant. SO ORDERED.
Paras, C.J., Bengzon, Padilla, Montemayor, Reyes, A., Bautista Angelo,
Labrador, Concepcion and Endencia, JJ., concur.
Republic
of
the
Philippines
SUPREME
COURT
Manila
SECOND DIVISION
G.R. No. 84458 November 6, 1989
ABOITIZ
SHIPPING
CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS, ELEVENTH DIVISION, LUCILA C. VIANA, SPS.
ANTONIO VIANA and GORGONIA VIANA, and PIONEER STEVEDORING
CORPORATION, respondents.
Herenio E. Martinez for petitioner.
M.R. Villaluz Law Office for private respondent.
REGALADO, J.:
In this appeal by certiorari, petitioner Aboitiz Shipping Corporation seeks a
review of the decision 1 of respondent Court of Appeals, dated July 29, 1988,
the decretal portion of which reads:
WHEREFORE, the judgment appealed from as modified by the order of
October 27, 1982, is hereby affirmed with the modification that appellant
Aboitiz Shipping is hereby ordered to pay plaintiff-appellees the amount of
P30,000.00 for the death of Anacleto Viana; actual damages of P9,800.00;
P150,000.00 for unearned income; P7,200.00 as support for deceased's
parents; P20,000.00 as moral damages; P10,000.00 as attorney's fees; and
to pay the costs.
The undisputed facts of the case, as found by the court a quo and adopted
by respondent court, are as follows: .
The evidence disclosed that on May 11, 1975, Anacleto Viana boarded the
vessel M/V Antonia, owned by defendant, at the port at San Jose, Occidental
Mindoro, bound for Manila, having purchased a ticket (No. 117392) in the

sum of P23.10 (Exh. 'B'). On May 12, 1975, said vessel arrived at Pier 4,
North Harbor, Manila, and the passengers therein disembarked, a gangplank
having been provided connecting the side of the vessel to the pier. Instead of
using said gangplank Anacleto Viana disembarked on the third deck which
was on the level with the pier. After said vessel had landed, the Pioneer
Stevedoring Corporation took over the exclusive control of the cargoes
loaded on said vessel pursuant to the Memorandum of Agreement dated July
26, 1975 (Exh. '2') between the third party defendant Pioneer Stevedoring
Corporation and defendant Aboitiz Shipping Corporation.
The crane owned by the third party defendant and operated by its crane
operator Alejo Figueroa was placed alongside the vessel and one (1) hour
after the passengers of said vessel had disembarked, it started operation by
unloading the cargoes from said vessel. While the crane was being operated,
Anacleto Viana who had already disembarked from said vessel obviously
remembering that some of his cargoes were still loaded in the vessel, went
back to the vessel, and it was while he was pointing to the crew of the said
vessel to the place where his cargoes were loaded that the crane hit him,
pinning him between the side of the vessel and the crane. He was thereafter
brought to the hospital where he later expired three (3) days thereafter, on
May 15, 1975, the cause of his death according to the Death Certificate (Exh.
"C") being "hypostatic pneumonia secondary to traumatic fracture of the
pubic bone lacerating the urinary bladder" (See also Exh. "B"). For his
hospitalization, medical, burial and other miscellaneous expenses, Anacleto's
wife, herein plaintiff, spent a total of P9,800.00 (Exhibits "E", "E-1", to "E-5").
Anacleto Viana who was only forty (40) years old when he met said fateful
accident (Exh. 'E') was in good health. His average annual income as a
farmer or a farm supervisor was 400 cavans of palay annually. His parents,
herein plaintiffs Antonio and Gorgonia Viana, prior to his death had been
recipient of twenty (20) cavans of palay as support or P120.00 monthly.
Because of Anacleto's death, plaintiffs suffered mental anguish and extreme
worry or moral damages. For the filing of the instant case, they had to hire a
lawyer for an agreed fee of ten thousand (P10,000.00) pesos. 2
Private respondents Vianas filed a complaint 3 for damages against
petitioner corporation (Aboitiz, for brevity) for breach of contract of carriage.
In its answer. 4 Aboitiz denied responsibility contending that at the time of
the accident, the vessel was completely under the control of respondent
Pioneer Stevedoring Corporation (Pioneer, for short) as the exclusive
stevedoring contractor of Aboitiz, which handled the unloading of cargoes
from the vessel of Aboitiz. It is also averred that since the crane operator was

not an employee of Aboitiz, the latter cannot be held liable under the fellowservant rule.
Thereafter,
Aboitiz,
as
third-party
plaintiff,
filed
a
third-party
complaint 5 against Pioneer imputing liability thereto for Anacleto Viana's
death as having been allegedly caused by the negligence of the crane
operator who was an employee of Pioneer under its exclusive control and
supervision.
Pioneer, in its answer to the third-party complaint, 6 raised the defenses that
Aboitiz had no cause of action against Pioneer considering that Aboitiz is
being sued by the Vianas for breach of contract of carriage to which Pioneer
is not a party; that Pioneer had observed the diligence of a good father of a
family both in the selection and supervision of its employees as well as in the
prevention of damage or injury to anyone including the victim Anacleto
Viana; that Anacleto Viana's gross negligence was the direct and proximate
cause of his death; and that the filing of the third-party complaint was
premature by reason of the pendency of the criminal case for homicide
through reckless imprudence filed against the crane operator, Alejo Figueroa.
In a decision rendered on April 17, 1980 by the trial court, 7 Aboitiz was
ordered to pay the Vianas for damages incurred, and Pioneer was ordered to
reimburse Aboitiz for whatever amount the latter paid the Vianas. The
dispositive portion of said decision provides:
WHEREFORE, judgment is hereby rendered in favor of the plantiffs:
(1) ordering defendant Aboitiz Shipping Corporation to pay to plaintiffs the
sum of P12,000.00 for the death of Anacleto Viana P9,800.00 as actual
damages; P533,200.00 value of the 10,664 cavans of palay computed at
P50.00 per cavan; P10,000.00 as attorney's fees; F 5,000.00, value of the
100 cavans of palay as support for five (5) years for deceased (sic) parents,
herein plaintiffs Antonio and Gorgonia Viana computed at P50.00 per cavan;
P7,200.00 as support for deceased's parents computed at P120.00 a month
for five years pursuant to Art. 2206, Par. 2, of the Civil Code; P20,000.00 as
moral damages, and costs; and
(2) ordering the third party defendant Pioneer Stevedoring Corporation to
reimburse defendant and third party plaintiff Aboitiz Shipping Corporation
the said amounts that it is ordered to pay to herein plaintiffs.
Both Aboitiz and Pioneer filed separate motions for reconsideration wherein
they similarly raised the trial court's failure to declare that Anacleto Viana
acted with gross negligence despite the overwhelming evidence presented in
support thereof. In addition, Aboitiz alleged, in opposition to Pioneer's
motion, that under the memorandum of agreement the liability of Pioneer as

contractor is automatic for any damages or losses whatsoever occasioned by

and arising from the operation of its arrastre and stevedoring service.
In an order dated October 27, 1982, 8 the trial court absolved Pioneer from
liability for failure of the Vianas and Aboitiz to preponderantly establish a
case of negligence against the crane operator which the court a quo ruled is
never presumed, aside from the fact that the memorandum of agreement
supposedly refers only to Pioneer's liability in case of loss or damage to
goods handled by it but not in the case of personal injuries, and, finally that
Aboitiz cannot properly invoke the fellow-servant rule simply because its
liability stems from a breach of contract of carriage. The dispositive portion
of said order reads:
WHEREFORE, judgment is hereby modified insofar as third party defendant
Pioneer Stevedoring Corporation is concerned rendered in favor of the
plaintiffs-,:
(1) Ordering defendant Aboitiz Shipping Corporation to pay the plaintiffs the
sum of P12,000.00 for the death of Anacleto Viana; P9,000.00 (sic) as actual
damages; P533,200.00 value of the 10,664 cavans of palay computed at
P50.00 per cavan; P10,000.00 as attorney's fees; P5,000.00 value of the 100
cavans of palay as support for five (5) years for deceased's parents, herein
plaintiffs Antonio and Gorgonia Viana,computed at P50.00 per cavan;
P7,200.00 as support for deceased's parents computed at P120.00 a month
for five years pursuant to Art. 2206, Par. 2, of the Civil Code; P20,000.00 as
moral damages, and costs; and
(2) Absolving third-party defendant Pioneer Stevedoring Corporation for (sic)
any liability for the death of Anacleto Viana the passenger of M/V Antonia
owned by defendant third party plaintiff Aboitiz Shipping Corporation it
appearing that the negligence of its crane operator has not been established
therein.
Not satisfied with the modified judgment of the trial court, Aboitiz appealed
the same to respondent Court of Appeals which affirmed the findings of of
the trial court except as to the amount of damages awarded to the Vianas.
Hence, this petition wherein petitioner Aboitiz postulates that respondent
court erred:
(A) In holding that the doctrine laid down by this honorable Court in La
Mallorca vs. Court of Appeals, et al. (17 SCRA 739, July 27, 1966) is
applicable to the case in the face of the undisputable fact that the factual
situation under the La Mallorca case is radically different from the facts
obtaining in this case;
(B) In holding petitioner liable for damages in the face of the finding of the
court a quo and confirmed by the Honorable respondent court of Appeals

that the deceased, Anacleto Viana was guilty of contributory negligence,

which, We respectfully submit contributory negligence was the proximate
cause of his death; specifically the honorable respondent Court of Appeals
failed to apply Art. 1762 of the New Civil Code;
(C) In the alternative assuming the holding of the Honorable respondent
Court of Appears that petitioner may be legally condemned to pay damages
to the private respondents we respectfully submit that it committed a
reversible error when it dismissed petitioner's third party complaint against
private respondent Pioneer Stevedoring Corporation instead of compelling
the latter to reimburse the petitioner for whatever damages it may be
compelled to pay to the private respondents Vianas. 9
At threshold, it is to be observed that both the trial court and respondent
Court of Appeals found the victim Anacleto Viana guilty of contributory
negligence, but holding that it was the negligence of Aboitiz in prematurely
turning over the vessel to the arrastre operator for the unloading of cargoes
which was the direct, immediate and proximate cause of the victim's death.
I. Petitioner contends that since one (1) hour had already elapsed from the
time Anacleto Viana disembarked from the vessel and that he was given
more than ample opportunity to unload his cargoes prior to the operation of
the crane, his presence on the vessel was no longer reasonable e and he
consequently ceased to be a passenger. Corollarily, it insists that the
doctrine in La Mallorca vs. Court of Appeals, et al. 10 is not applicable to the
case at bar.
The rule is that the relation of carrier and passenger continues until the
passenger has been landed at the port of destination and has left the vessel
owner's dock or premises. 11 Once created, the relationship will not
ordinarily terminate until the passenger has, after reaching his destination,
safely alighted from the carrier's conveyance or had a reasonable
opportunity to leave the carrier's premises. All persons who remain on the
premises a reasonable time after leaving the conveyance are to be deemed
passengers, and what is a reasonable time or a reasonable delay within this
rule is to be determined from all the circumstances, and includes a
reasonable time to see after his baggage and prepare for his
departure. 12 The carrier-passenger relationship is not terminated merely by
the fact that the person transported has been carried to his destination if, for
example, such person remains in the carrier's premises to claim his
baggage. 13
It was in accordance with this rationale that the doctrine in the aforesaid
case of La Mallorca was enunciated, to wit:

It has been recognized as a rule that the relation of carrier and passenger
does not cease at the moment the passenger alights from the carrier's
vehicle at a place selected by the carrier at the point of destination, but
continues until the passenger has had a reasonable time or a reasonable
opportunity to leave the carrier's premises. And, what is a reasonable time or
a reasonable delay within this rule is to be determined from all the
circumstances. Thus, a person who, after alighting from a train, walks along
the station platform is considered still a passenger. So also, where a
passenger has alighted at his destination and is proceeding by the usual way
to leave the company's premises, but before actually doing so is halted by
the report that his brother, a fellow passenger, has been shot, and he in good
faith and without intent of engaging in the difficulty, returns to relieve his
brother, he is deemed reasonably and necessarily delayed and thus
continues to be a passenger entitled as such to the protection of the railroad
company and its agents.
In the present case, the father returned to the bus to get one of his baggages
which was not unloaded when they alighted from the bus. Racquel, the child
that she was, must have followed the father. However, although the father
was still on the running board of the bus waiting for the conductor to hand
him the bag or bayong, the bus started to run, so that even he (the father)
had to jump down from the moving vehicle. It was at this instance that the
child, who must be near the bus, was run over and killed. In the
circumstances, it cannot be claimed that the carrier's agent had exercised
the 'utmost diligence' of a 'very cautious person' required by Article 1755 of
the Civil Code to be observed by a common carrier in the discharge of its
obligation to transport safely its passengers. ... The presence of said
passengers near the bus was not unreasonable and they are, therefore, to be
considered still as passengers of the carrier, entitled to the protection under
their contract of carriage. 14
It is apparent from the foregoing that what prompted the Court to rule as it
did in said case is the fact of the passenger's reasonable presence within the
carrier's premises. That reasonableness of time should be made to depend
on the attending circumstances of the case, such as the kind of common
carrier, the nature of its business, the customs of the place, and so forth, and
therefore precludes a consideration of the time element per se without
taking into account such other factors. It is thus of no moment whether in
the cited case of La Mallorcathere was no appreciable interregnum for the
passenger therein to leave the carrier's premises whereas in the case at bar,
an interval of one (1) hour had elapsed before the victim met the accident.
The primary factor to be considered is the existence of a reasonable cause as

will justify the presence of the victim on or near the petitioner's vessel. We
believe there exists such a justifiable cause.
It is of common knowledge that, by the very nature of petitioner's business
as a shipper, the passengers of vessels are allotted a longer period of time to
disembark from the ship than other common carriers such as a passenger
bus. With respect to the bulk of cargoes and the number of passengers it can
load, such vessels are capable of accommodating a bigger volume of both as
compared to the capacity of a regular commuter bus. Consequently, a ship
passenger will need at least an hour as is the usual practice, to disembark
from the vessel and claim his baggage whereas a bus passenger can easily
get off the bus and retrieve his luggage in a very short period of time. Verily,
petitioner cannot categorically claim, through the bare expedient of
comparing the period of time entailed in getting the passenger's cargoes,
that the ruling in La Mallorca is inapplicable to the case at bar. On the
contrary, if we are to apply the doctrine enunciated therein to the instant
petition, we cannot in reason doubt that the victim Anacleto Viana was still a
passenger at the time of the incident. When the accident occurred, the
victim was in the act of unloading his cargoes, which he had every right to
do, from petitioner's vessel. As earlier stated, a carrier is duty bound not only
to bring its passengers safely to their destination but also to afford them a
reasonable time to claim their baggage.
It is not definitely shown that one (1) hour prior to the incident, the victim
had already disembarked from the vessel. Petitioner failed to prove this.
What is clear to us is that at the time the victim was taking his cargoes, the
vessel had already docked an hour earlier. In consonance with common
shipping procedure as to the minimum time of one (1) hour allowed for the
passengers to disembark, it may be presumed that the victim had just gotten
off the vessel when he went to retrieve his baggage. Yet, even if he had
already disembarked an hour earlier, his presence in petitioner's premises
was not without cause. The victim had to claim his baggage which was
possible only one (1) hour after the vessel arrived since it was admittedly
standard procedure in the case of petitioner's vessels that the unloading
operations shall start only after that time. Consequently, under the foregoing
circumstances, the victim Anacleto Viana is still deemed a passenger of said
carrier at the time of his tragic death.
II. Under the law, common carriers are, from the nature of their business and
for reasons of public policy, bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the passengers transported by
them, according to all the circumstances of each case. 15 More particularly,
a common carrier is bound to carry the passengers safely as far as human

care and foresight can provide, using the utmost diligence of very cautious
persons, with a due regard for all the circumstances. 16 Thus, where a
passenger dies or is injured, the common carrier is presumed to have been
at fault or to have acted negligently. 17 This gives rise to an action for
breach of contract of carriage where all that is required of plaintiff is to prove
the existence of the contract of carriage and its non-performance by the
carrier, that is, the failure of the carrier to carry the passenger safely to his
destination, 18 which, in the instant case, necessarily includes its failure to
safeguard its passenger with extraordinary diligence while such relation
subsists.
The presumption is, therefore, established by law that in case of a
passenger's death or injury the operator of the vessel was at fault or
negligent, having failed to exercise extraordinary diligence, and it is
incumbent upon it to rebut the same. This is in consonance with the avowed
policy of the State to afford full protection to the passengers of common
carriers which can be carried out only by imposing a stringent statutory
obligation upon the latter. Concomitantly, this Court has likewise adopted a
rigid posture in the application of the law by exacting the highest degree of
care and diligence from common carriers, bearing utmost in mind the welfare
of the passengers who often become hapless victims of indifferent and profitoriented carriers. We cannot in reason deny that petitioner failed to rebut the
presumption against it. Under the facts obtaining in the present case, it
cannot be gainsaid that petitioner had inadequately complied with the
required degree of diligence to prevent the accident from happening.
As found by the Court of Appeals, the evidence does not show that there was
a cordon of drums around the perimeter of the crane, as claimed by
petitioner. It also adverted to the fact that the alleged presence of visible
warning signs in the vicinity was disputable and not indubitably established.
Thus, we are not inclined to accept petitioner's explanation that the victim
and other passengers were sufficiently warned that merely venturing into the
area in question was fraught with serious peril. Definitely, even assuming the
existence of the supposed cordon of drums loosely placed around the
unloading area and the guard's admonitions against entry therein, these
were at most insufficient precautions which pale into insignificance if
considered vis-a-vis the gravity of the danger to which the deceased was
exposed. There is no showing that petitioner was extraordinarily diligent in
requiring or seeing to it that said precautionary measures were strictly and
actually enforced to subserve their purpose of preventing entry into the
forbidden area. By no stretch of liberal evaluation can such perfunctory acts
approximate the "utmost diligence of very cautious persons" to be exercised

"as far as human care and foresight can provide" which is required by law of
common carriers with respect to their passengers.
While the victim was admittedly contributorily negligent, still petitioner's
aforesaid failure to exercise extraordinary diligence was the proximate and
direct cause of, because it could definitely have prevented, the former's
death. Moreover, in paragraph 5.6 of its petition, at bar, 19 petitioner has
expressly conceded the factual finding of respondent Court of Appeals that
petitioner did not present sufficient evidence in support of its submission
that the deceased Anacleto Viana was guilty of gross negligence. Petitioner
cannot now be heard to claim otherwise.
No excepting circumstance being present, we are likewise bound by
respondent court's declaration that there was no negligence on the part of
Pioneer Stevedoring Corporation, a confirmation of the trial court's finding to
that effect, hence our conformity to Pioneer's being absolved of any liability.
As correctly observed by both courts, Aboitiz joined Pioneer in proving the
alleged gross negligence of the victim, hence its present contention that the
death of the passenger was due to the negligence of the crane operator
cannot be sustained both on grounds, of estoppel and for lack of evidence on
its present theory. Even in its answer filed in the court below it readily
alleged that Pioneer had taken the necessary safeguards insofar as its
unloading operations were concerned, a fact which appears to have been
accepted by the plaintiff therein by not impleading Pioneer as a defendant,
and likewise inceptively by Aboitiz by filing its third-party complaint only
after ten (10) months from the institution of the suit against it.
Parenthetically, Pioneer is not within the ambit of the rule on extraordinary
diligence required of, and the corresponding presumption of negligence
foisted on, common carriers like Aboitiz. This, of course, does not detract
from what we have said that no negligence can be imputed to Pioneer but,
that on the contrary, the failure of Aboitiz to exercise extraordinary diligence
for the safety of its passenger is the rationale for our finding on its liability.
WHEREFORE, the petition is DENIED and the judgment appealed from is
hereby AFFIRMED in toto.
SO ORDERED.
Melencio-Herrera (Chairperson), Paras, Padilla and Sarmiento, JJ., concur.

SECOND DIVISION
[G.R. No. 122039. May 31, 2000]
VICENTE CALALAS, petitioner, vs. COURT OF APPEALS, ELIZA JUJEURCHE
SUNGA and FRANCISCO SALVA, respondents.

D E C I S I ON
MENDOZA, J.:
This is a petition for review on certiorari of the decision[1] of the Court of
Appeals, dated March 31, 1991, reversing the contrary decision of the
Regional Trial Court, Branch 36, Dumaguete City, and awarding damages
instead to private respondent Eliza Jujeurche Sunga as plaintiff in an action
for breach of contract of carriage.
The facts, as found by the Court of Appeals, are as follows:
At 10 oclock in the morning of August 23, 1989, private respondent Eliza
Jujeurche G. Sunga, then a college freshman majoring in Physical Education
at the Siliman University, took a passenger jeepney owned and operated by
petitioner Vicente Calalas. As the jeepney was filled to capacity of about 24
passengers, Sunga was given by the conductor an "extension seat," a
wooden stool at the back of the door at the rear end of the vehicle. Sclaw
On the way to Poblacion Sibulan, Negros Occidental, the jeepney stopped to
let a passenger off. As she was seated at the rear of the vehicle, Sunga gave
way to the outgoing passenger. Just as she was doing so, an Isuzu truck
driven by Iglecerio Verena and owned by Francisco Salva bumped the left
rear portion of the jeepney. As a result, Sunga was injured. She sustained a
fracture of the "distal third of the left tibia-fibula with severe necrosis of the
underlying skin." Closed reduction of the fracture, long leg circular casting,
and case wedging were done under sedation. Her confinement in the hospital
lasted from August 23 to September 7, 1989. Her attending physician, Dr.
Danilo V. Oligario, an orthopedic surgeon, certified she would remain on a
cast for a period of three months and would have to ambulate in crutches
during said period.
On October 9, 1989, Sunga filed a complaint for damages against Calalas,
alleging violation of the contract of carriage by the former in failing to
exercise the diligence required of him as a common carrier. Calalas, on the
other hand, filed a third-party complaint against Francisco Salva, the owner
of the Isuzu truck. Korte
The lower court rendered judgment against Salva as third-party defendant
and absolved Calalas of liability, holding that it was the driver of the Isuzu
truck who was responsible for the accident. It took cognizance of another
case (Civil Case No. 3490), filed by Calalas against Salva and Verena, for
quasi-delict, in which Branch 37 of the same court held Salva and his driver
Verena jointly liable to Calalas for the damage to his jeepney. Rtcspped
On appeal to the Court of Appeals, the ruling of the lower court was reversed
on the ground that Sungas cause of action was based on a contract of
carriage, not quasi-delict, and that the common carrier failed to exercise the

diligence required under the Civil Code. The appellate court dismissed the
third-party complaint against Salva and adjudged Calalas liable for damages
to Sunga. The dispositive portion of its decision reads:
WHEREFORE, the decision appealed from is hereby REVERSED and SET
ASIDE, and another one is entered ordering defendant-appellee Vicente
Calalas to pay plaintiff-appellant:
(1) P50,000.00 as actual and compensatory damages;
(2) P50,000.00 as moral damages;
(3) P10,000.00 as attorneys fees; and
(4) P1,000.00 as expenses of litigation; and
(5) to pay the costs.
SO ORDERED.
Hence, this petition. Petitioner contends that the ruling in Civil Case No. 3490
that the negligence of Verena was the proximate cause of the accident
negates his liability and that to rule otherwise would be to make the common
carrier an insurer of the safety of its passengers. He contends that the
bumping of the jeepney by the truck owned by Salva was a caso fortuito.
Petitioner further assails the award of moral damages to Sunga on the
ground that it is not supported by evidence. Sdaadsc
The petition has no merit.
The argument that Sunga is bound by the ruling in Civil Case No. 3490
finding the driver and the owner of the truck liable for quasi-delict ignores
the fact that she was never a party to that case and, therefore, the principle
of res judicata does not apply. Missdaa
Nor are the issues in Civil Case No. 3490 and in the present case the same.
The issue in Civil Case No. 3490 was whether Salva and his driver Verena
were liable for quasi-delict for the damage caused to petitioners jeepney. On
the other hand, the issue in this case is whether petitioner is liable on his
contract of carriage. The first, quasi-delict, also known as culpa
aquiliana or culpa extra contractual, has as its source the negligence of the
tortfeasor. The second, breach of contract or culpa contractual, is premised
upon the negligence in the performance of a contractual obligation.
Consequently, in quasi-delict, the negligence or fault should be clearly
established because it is the basis of the action, whereas in breach of
contract, the action can be prosecuted merely by proving the existence of
the contract and the fact that the obligor, in this case the common carrier,
failed to transport his passenger safely to his destination.[2] In case of death
or injuries to passengers, Art. 1756 of the Civil Code provides that common
carriers are presumed to have been at fault or to have acted negligently
unless they prove that they observed extraordinary diligence as defined in

Arts. 1733 and 1755 of the Code. This provision necessarily shifts to the
common carrier the burden of proof. Slxmis
There is, thus, no basis for the contention that the ruling in Civil Case No.
3490, finding Salva and his driver Verena liable for the damage to petitioners
jeepney, should be binding on Sunga. It is immaterial that the proximate
cause of the collision between the jeepney and the truck was the negligence
of the truck driver. The doctrine of proximate cause is applicable only in
actions for quasi-delict, not in actions involving breach of contract. The
doctrine is a device for imputing liability to a person where there is no
relation between him and another party. In such a case, the obligation is
created by law itself. But, where there is a pre-existing contractual relation
between the parties, it is the parties themselves who create the obligation,
and the function of the law is merely to regulate the relation thus created.
Insofar as contracts of carriage are concerned, some aspects regulated by
the Civil Code are those respecting the diligence required of common carriers
with regard to the safety of passengers as well as the presumption of
negligence in cases of death or injury to passengers. It provides: Slxsc
Art. 1733. Common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary diligence in the
vigilance over the goods and for the safety of the passengers transported by
them, according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further
expressed in articles 1734, 1735, and 1746, Nos. 5,6, and 7, while the
extraordinary diligence for the safety of the passengers is further set forth in
articles 1755 and 1756.
Art. 1755. A common carrier is bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence of very
cautious persons, with due regard for all the circumstances.
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 by articles
1733 and 1755.
In the case at bar, upon the happening of the accident, the presumption of
negligence at once arose, and it became the duty of petitioner to prove that
he had to observe extraordinary diligence in the care of his passengers. Scslx
Now, did the driver of jeepney carry Sunga "safely as far as human care and
foresight could provide, using the utmost diligence of very cautious persons,
with due regard for all the circumstances" as required by Art. 1755? We do
not think so. Several factors militate against petitioners contention. Slx

First, as found by the Court of Appeals, the jeepney was not properly parked,
its rear portion being exposed about two meters from the broad shoulders of
the highway, and facing the middle of the highway in a diagonal angle. This
is a violation of the R.A. No. 4136, as amended, or the Land Transportation
and Traffic Code, which provides:
Sec. 54. Obstruction of Traffic. - No person shall drive his motor vehicle in
such a manner as to obstruct or impede the passage of any vehicle, nor,
while discharging or taking on passengers or loading or unloading freight,
obstruct the free passage of other vehicles on the highway.
Second, it is undisputed that petitioners driver took in more passengers than
the allowed seating capacity of the jeepney, a violation of 32(a) of the same
law. It provides: Mesm
Exceeding registered capacity. - No person operating any motor vehicle shall
allow more passengers or more freight or cargo in his vehicle than its
registered capacity.
The fact that Sunga was seated in an "extension seat" placed her in a peril
greater than that to which the other passengers were exposed. Therefore,
not only was petitioner unable to overcome the presumption of negligence
imposed on him for the injury sustained by Sunga, but also, the evidence
shows he was actually negligent in transporting passengers. Calrky
We find it hard to give serious thought to petitioners contention that Sungas
taking an "extension seat" amounted to an implied assumption of risk. It is
akin to arguing that the injuries to the many victims of the tragedies in our
seas should not be compensated merely because those passengers assumed
a greater risk of drowning by boarding an overloaded ferry. This is also true
of petitioners contention that the jeepney being bumped while it was
improperly parked constitutes caso fortuito. A caso fortuito is an event which
could not be foreseen, or which, though foreseen, was inevitable.[3] This
requires that the following requirements be present: (a) the cause of the
breach is independent of the debtors will; (b) the event is unforeseeable or
unavoidable; (c) the event is such as to render it impossible for the debtor to
fulfill his obligation in a normal manner, and (d) the debtor did not take part
in causing the injury to the creditor.[4] Petitioner should have foreseen the
danger of parking his jeepney with its body protruding two meters into the
highway. Kycalr
Finally, petitioner challenges the award of moral damages alleging that it is
excessive and without basis in law. We find this contention well taken.
In awarding moral damages, the Court of Appeals stated: Kyle
Plaintiff-appellant at the time of the accident was a first-year college student
in that school year 1989-1990 at the Silliman University, majoring in Physical

Education. Because of the injury, she was not able to enroll in the second
semester of that school year. She testified that she had no more intention of
continuing with her schooling, because she could not walk and decided not
to pursue her degree, major in Physical Education "because of my leg which
has a defect already."
Plaintiff-appellant likewise testified that even while she was under
confinement, she cried in pain because of her injured left foot. As a result of
her injury, the Orthopedic Surgeon also certified that she has "residual
bowing of the fracture side." She likewise decided not to further pursue
Physical Education as her major subject, because "my left leg x x x has a
defect already."
Those are her physical pains and moral sufferings, the inevitable bedfellows
of the injuries that she suffered. Under Article 2219 of the Civil Code, she is
entitled to recover moral damages in the sum of P50,000.00, which is fair,
just and reasonable.
As a general rule, moral damages are not recoverable in actions for damages
predicated on a breach of contract for it is not one of the items enumerated
under Art. 2219 of the Civil Code.[5] As an exception, such damages are
recoverable: (1) in cases in which the mishap results in the death of a
passenger, as provided in Art. 1764, in relation to Art. 2206(3) of the Civil
Code; and (2) in the cases in which the carrier is guilty of fraud or bad faith,
as provided in Art. 2220.[6]
In this case, there is no legal basis for awarding moral damages since there
was no factual finding by the appellate court that petitioner acted in bad
faith in the performance of the contract of carriage. Sungas contention that
petitioners admission in open court that the driver of the jeepney failed to
assist her in going to a nearby hospital cannot be construed as an admission
of bad faith. The fact that it was the driver of the Isuzu truck who took her to
the hospital does not imply that petitioner was utterly indifferent to the
plight of his injured passenger. If at all, it is merely implied recognition by
Verena that he was the one at fault for the accident. Exsm
WHEREFORE, the decision of the Court of Appeals, dated March 31, 1995,
and its resolution, dated September 11, 1995, are AFFIRMED, with the
MODIFICATION that the award of moral damages is DELETED.
SO ORDERED.