harm caused by the defendant.
The jury, in determining damages, considers the present as well as
TORTS & DAMAGES OUTLINE
DEFINITION OF TERMS
Tort - a wrongful act or an infringement of a right (other than under contract) leading to civil legal
liability
Damages - In law, damages are an award, typically of money, to be paid to a person as compensation
for loss or injury. The rules for damages can and frequently do vary based on the type of claim which is
presented (e.g., breach of contract versus a tort claim) and the jurisdiction.
Monetary compensation that is awarded by a court in a civil action to an individual who has been
injured through the wrongful conduct of another party.
Damages attempt to measure in financial terms the extent of harm a plaintiff has suffered because of a
defendant's actions.Damages are distinguishable from costs, which are the expenses incurred as a
result of bringing a lawsuit and which the court may order the losing party to pay. Damages also differ
from the verdict, which is the final decision issued by a jury.
The purpose of damages is to restore an injured party to the position the party was in before being
harmed. As a result,damages are generally regarded as remedial rather than preventive or punitive.
However, Punitive Damages may be awarded for particular types of wrongful conduct. Before an
individual can recover damages, the injury suffered must be one recognized by law as warranting
redress, and must have actually been sustained by the individual.
The law recognizes three major categories of damages: Compensatory Damages, which are intended
to restore what a plaintiff has lost as a result of a defendant's wrongful conduct; nominal damages,
which consist of a small sum awarded to a plaintiff who has suffered no substantial loss or injury but
has nevertheless experienced an invasion of rights; and punitive damages, which are awarded not to
compensate a plaintiff for injury suffered but to penalize a defendant for particularly egregious,
wrongful conduct. In specific situations, two other forms of damages may be awarded: treble and
liquidated.
Compensatory Damages - With respect to compensatory damages, a defendant is liable to a plaintiff
for all the natural and direct consequences of the defendant's wrongful act. Remote consequences of a
defendant's act or omission cannot form the basis for an award of compensatory damages.
Consequential damages, a type of compensatory damages, may be awarded when the loss suffered by
a plaintiff is not caused directly or immediately by the wrongful conduct of a defendant, but results
from the defendant's action instead. For example, if a defendant carried a ladder and negligently
walked into a plaintiff who was a professional model, injuring the plaintiff's face, the plaintiff could
recover consequential damages for the loss of income resulting from the injury. These consequential
damages are based on the resulting harm to the plaintiff's career. They are not based on the injury
itself,which was the direct result of the defendant's conduct.
The measure of compensatory damages must be real and tangible, although it can be difficult to fix
the amount with certainty, especially in cases involving claims such as pain and suffering or emotional
distress. In assessing the amount of compensatory damages to be awarded, a trier of fact (the jury or, if
no jury exists, the judge) must exercise good judgment and common sense, based on general
experience and knowledge of economics and social affairs. Within these broad guidelines, the jury or
judge has wide discretion to award damages in whatever amount is deemed appropriate, so long as
the amount is supported by the evidence in the case.
A plaintiff can recover damages for a number of different injuries suffered as a result of another
person's wrongful conduct.The plaintiff can recover for a physical impairment if it results directly from a
long-range effects of the disease or injury on the physical well-being of the plaintiff, who must
demonstrate the disability with reasonable certainty. Compensatory damages can be awarded for
mental impairment, such as a loss of memory or a reduction in intellectual capacity suffered as a result
of a defendant's wrongful conduct.
A plaintiff may recover compensatory damages for both present and future physical pain and suffering.
Compensation for future pain is permitted when there is a reasonable likelihood that the plaintiff will
experience it; the plaintiff is not permitted to recover for future pain and suffering that is speculative.
The jury has broad discretion to award damages for pain and suffering, and its judgment will be
overturned only if it appears that the jury abused its discretion in reaching the decision.
Mental pain and suffering can be considered in assessing compensatory damages. Mental pain and
suffering includes fright,nervousness, grief, emotional trauma, anxiety, humiliation, and indignity.
Historically, a plaintiff could not recover damages for mental pain and suffering without an
accompanying physical injury. Today, most jurisdictions have modified this rule,allowing recovery for
mental anguish alone where the act precipitating the anguish was willful or intentional, or done with
extreme care-less ness or recklessness. Ordinarily, mental distress brought on by sympathy for the
injury of another will not warrant an award of damages, although some jurisdictions may allow
recovery if the injury was caused by the willful or malicious conduct of the defendant. For instance, if
an individual wrongfully and intentionally injures a child in the presence of the child's mother, and the
mother suffers psychological trauma as a result, the defendant can be liable for the mother's mental
suffering. In some jurisdictions, a bystander can recover damages for mental distress caused by
observing an event in which another person negligently, but not intentionally, causes harm to a family
member.
Compensatory damages of an economic nature may also be recovered by an injured party. A plaintiff
may recover for loss of earnings resulting from an injury. The measure of lost earnings is the amount of
money that the plaintiff might reasonably have earned by working in her or his profession during the
time the plaintiff was incapacitated because of the injury. In the case of a permanent disability, this
amount can be determined by calculating the earnings that the injured party actually lost and
multiplying that figure out to the age of retirementwith adjustments. If the amount of earnings
actually lost cannot be determined with certainty, as in the case of a salesperson paid by commission,
the plaintiff's average earnings or general qualities and qualifications for the occupation in which she
or he has been employed are considered. Evidence of past earnings can also be used to determine loss
of future earnings. As a general rule, lost earnings that are speculative are not recoverable, although
each case must be examined individually to determine whether damages can be established with
reasonable certainty. For example, a plaintiff who bought a restaurant immediately before suffering an
injury could not recover damages for the profits he might have made running it, because such profits
would be speculative. A plaintiff who is unable to accept a promotion to another job because of an
injury would stand a better chance of recovering damages for loss of earnings, because the amount
lost could be established with more certainty.
Individuals injured by the wrongful conduct of another may also recover damages for impairment of
earning capacity, so longas that impairment is a direct and foreseeable consequence of a disabling
injury of a permanent or lingering nature. The amount of damages is determined by calculating the
difference between the amount of money the injured person had the capacity to earn prior to the
injury and the amount he or she is capable of earning after the injury, in view of his or her life
expectancy.
Loss of profit is another element of compensatory damages, allowing an individual to recover if such a
loss can be established with sufficient certainty and is a direct and probable result of the defendant's
wrongful actions. Expected profits that are uncertain or contingent upon fluctuating conditions would
not be recoverable, nor would they be awarded if no evidence existed from which they could be
reasonably determined.
A plaintiff can recover all reasonable and necessary expenses brought about by an injury caused by
the wrongful acts of a defendant. In a contract action, for example, the party who has been injured by
another's breach can recover compensatory damages that include the reasonable expenses that result
from reliance on the contract, such as the cost of transporting perishable goods wrongfully refused by
the other contracting party. In other actions, expenses awarded as part of compensatory damages may
include medical, nursing, and prescription drug costs; the costs of future medical treatment, if
necessary; or the costs of restoring a damaged vehicle and of renting another vehicle while repairs are
performed.
Interest can be awarded to compensate an injured party for money wrongfully withheld from her or
him, as when an individual defaults on an obligation to pay money owed under a contract. Interest is
ordinarily awarded from the date of default, which is set by the time stated in the contract for payment,
the date a demand for payment is made, or the date the lawsuit alleging the breach of the contract is
initiated.
Nominal Damages - Nominal damages are generally recoverable by a plaintiff who successfully
establishes that he or she has suffered an injury caused by the wrongful conduct of a defendant, but
cannot offer proof of a loss that can be compensated. For example, an injured plaintiff who proves that
a defendant's actions caused the injury but fails to submit medical records to show the extent of the
injury may be awarded only nominal damages. The amount awarded is generally a small, symbolic
sum, such as one dollar, although in some jurisdictions it may equal the costs of bringing the lawsuit.
Punitive Damages - Punitive damages, also known as exemplary damages, may be awarded to a
plaintiff in addition to compensatory damages when a defendant's conduct is particularly willful,
wanton, malicious, vindictive, or oppressive. Punitive damages are awarded not as compensation, but
to punish the wrongdoer and to act as a deterrent to others who might engage in similar conduct.
The amount of punitive damages to be awarded lies within the discretion of the trier of fact, which
must consider the nature of the wrongdoer's behavior, the extent of the plain-tiff's loss or injury, and
the degree to which the defendant's conduct is repugnant to a societal sense of justice and decency.
An award of punitive damages will usually not be disturbed on the grounds that it is excessive, unless it
can be shown that the jury or judge was influenced by prejudice, bias, passion,partiality, or corruption.
Treble Damages - In some situations, where provided by statute, treble damages may be awarded. In
such situations, a statute will authorize a judge to multiply the amount of monetary damages awarded
by a jury by three, and to order that a plaintiff receive the tripled amount. The Clayton Act of 1914 (15
U.S.C.A. 12 et seq.), for example, directs that treble damages be awarded for violations of federal
ANTITRUST LAWS.
Liquidated Damages - constitute compensation agreed upon by the parties entering into a contract, to
be paid by a party who breaches the contract to a non breaching party. Liquidated damages may be
used when it would be difficult to prove the actual harm or loss caused by a breach. The amount of
liquidated damages must represent a reasonable estimate of the actual damages that a breach would
cause. A contract term fixing unreasonably large or disproportionate liquidated damages may be void
because it constitutes a penalty, or punishment for default. Furthermore, if it appears that the parties
have made no attempt to calculate the amount of actual damages that might be sustained in the event
of a breach, a liquidated damages provision will be deemed unenforceable. In determining whether a
particular contract provision constitutes liquidated damages or an unenforceable penalty, a court will
look to the intention of the parties, even if the terms liquidated damages and penalty are specifically
used and defined in the contract.
a. Damage - The loss caused by one person to another, or to his property, either with the design of
injuring him, with negligence and carelessness, or by inevitable accident. He who has caused the
damage is bound to repair it and, if he has done it maliciously, he may be. compelled to pay
beyond the actual loss. When damage occurs by accident, without blame to anyone, the loss is
borne by the owner of the thing injured; as, if a horse run away with his rider, without any fault of
the latter, and injure the property of another person,the injury is the loss of the owner of the
thing. When the damage happens by the act of God, or inevitable accident, as by tempest,
earthquake or other natural cause, the loss must be borne by the owner.
Quasi-Delict v. Torts
QD is known as culpa-aquiliana is a civil law concept while Torts is Anglo-American or common law
concept. Torts is broader than culpa-aquiliana because it includes not only negligence, but intentional
criminal acts as well. However, Article 21 with Art 19 and 20, greatly broadened the scope of the law on
civil wrongs; it has become more supple and adaptable than the Anglo-American law on torts.
CASES: Concept of quasi-delict (Requisites Art. 1162 & 2176)
G.R. No. 118889 March 23, 1998
FGU INSURANCE CORPORATION, petitioner, vs.COURT OF APPEALS, FILCAR TRANSPORT, INC., and
FORTUNE INSURANCE CORPORATION, respondents.
For damages suffered by a third party, may an action based on quasi-delict prosper against a
rent-a-car company and, consequently, its insurer for fault or negligence of the car lessee in driving
the rented vehicle? This was a two-car collision at dawn. At around 3 o'clock of 21 April 1987, two (2)
vehicles, both Mitsubishi Colt Lancers, cruising northward along Epifanio de los Santos Avenue,
Mandaluyong City, figured in a traffic accident. The car bearing Plate No. PDG 435 owned by Lydia F.
Soriano was being driven at the outer lane of the highway by Benjamin Jacildone, while the other car,
with Plate No. PCT 792, owned by respondent FILCAR Transport, Inc. (FILCAR), and driven by Peter
Dahl-Jensen as lessee, was at the center lane, left of the other vehicle. Upon approaching the corner of
Pioneer Street, the car owned by FILCAR swerved to the right hitting the left side of the car of Soriano.
At that time Dahl-Jensen, a Danish tourist, did not possess a Philippine driver's license. 1 As a
consequence, petitioner FGU Insurance Corporation, in view of its insurance contract with Soriano,
paid the latter P25,382.20. By way of subrogation,2 it sued Dahl-Jensen and respondent FILCAR as well
as respondent Fortune Insurance Corporation (FORTUNE) as insurer of FILCAR for quasi-delict before
the Regional Trial Court of Makati City. Unfortunately, summons was not served on Dahl-Jensen since
he was no longer staying at his given address; in fact, upon motion of petitioner, he was dropped from
the complaint. On 30 July 1991 the trial court dismissed the case for failure of petitioner to substantiate
its claim of subrogation.3 On 31 January 1995 respondent Court of Appeals affirmed the ruling of the
trial court although based on another ground, i.e., only the fault or negligence of Dahl-Jensen was
sufficiently proved but not that of respondent FILCAR.4 In other words, petitioner failed to establish its
cause of action for sum of money based on quasi-delict. In this appeal, petitioner insists that
respondents are liable on the strength of the ruling in MYC-Agro-Industrial Corporation v. Vda. de
Caldo5 that the registered owner of a vehicle is liable for damages suffered by third persons although
the vehicle is leased to another.
We find no reversible error committed by respondent court in upholding the dismissal of petitioner's
complaint. The pertinent provision is Art. 2176 of the Civil Code which states: "Whoever by act or
omission causes damage to another, there being fault or negligence, is obliged to pay for the damage
done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is
called a quasi-delict . . . . "
To sustain a claim based thereon, the following requisites must concur: (a) damage suffered by the
plaintiff; (b) fault or negligence of the defendant; and, (c) connection of cause and effect between the
fault or negligence of the defendant and the damage incurred by the plaintiff.6
We agree with respondent court that petitioner failed to prove the existence of the second requisite,
i.e., fault or negligence of defendant FILCAR, because only the fault or negligence of Dahl-Jensen was
sufficiently established, not that of FILCAR. It should be noted that the damage caused on the vehicle
of Soriano was brought about by the circumstance that Dahl-Jensen swerved to the right while the
vehicle that he was driving was at the center lane. It is plain that the negligence was solely attributable
to Dahl-Jensen thus making the damage suffered by the other vehicle his personal liability.
Respondent FILCAR did not have any participation therein.
Article 2180 of the same Code which deals also with quasi-delict provides: The obligation imposed by
article 2176 is demandable not only for one's own acts or omissions, but also for those of persons for
whom one is responsible.
The father and, in case of his death or incapacity, the mother, are responsible for the damages caused
by the minor children who live in their company. Guardians are liable for damages caused by the
minors or incapacitated persons who are under their authority and live in their company. The owners
and managers of an establishment or enterprise are likewise responsible for damages caused by their
employees in the service of the branches in which the latter are employed or on the occasion of their
functions. Employers shall be liable for the damages caused by their employees and household helpers
acting within the scope of their assigned tasks, even though the former are not engaged in any
business or industry. The State is responsible in like manner when it acts through a special agent; but
not when the damage has been caused by the official to whom the task done properly pertains, in
which case what is provided in article 2176 shall be applicable. Lastly, teachers or heads of
establishments of arts and trades shall be liable for damages caused by their pupils and students or
apprentices, so long as they remain in their custody. The responsibility treated of in this article shall
cease when the persons herein mentioned prove that they observed all the diligence of a good father
of a family to prevent damage.
The liability imposed by Art. 2180 arises by virtue of a presumption juris tantum of negligence on the
part of the persons made responsible thereunder, derived from their failure to exercise due care and
vigilance over the acts of subordinates to prevent them from causing damage.7 Yet, as correctly
observed by respondent court, Art. 2180 is hardly applicable because none of the circumstances
mentioned therein obtains in the case under consideration. Respondent FILCAR being engaged in a
rent-a-car business was only the owner of the car leased to Dahl-Jensen. As such, there was no
vinculum juris between them as employer and employee. Respondent FILCAR cannot in any way be
responsible for the negligent act of Dahl-Jensen, the former not being an employer of the latter.
We now correlate par. 5 of Art. 2180 with Art. 2184 of the same Code which provides: "In motor vehicle
mishap, the owner is solidarily liable with his driver, if the former, who was in the vehicle, could have by
the use of due diligence, prevented the misfortune . . . . If the owner was not in the motor vehicle, the
provisions of article 2180 are applicable." Obviously, this provision of Art. 2184 is neither applicable
because of the absence of master-driver relationship between respondent FILCAR and Dahl-Jensen.
Clearly, petitioner has no cause of action against respondent FILCAR on the basis of quasi-delict;
logically, its claim against respondent FORTUNE can neither prosper.
Petitioner's insistence on MYC-Agro-Industrial Corporation is rooted in a misapprehension of our
ruling therein. In that case, the negligent and reckless operation of the truck owned by petitioner
corporation caused injuries to several persons and damage to property. Intending to exculpate itself
from liability, the corporation raised the defense that at the time of the collision it had no more control
over the vehicle as it was leased to another; and, that the driver was not its employee but of the lessee.
The trial court was not persuaded as it found that the true nature of the alleged lease contract was
nothing more than a disguise effected by the corporation to relieve itself of the burdens and
responsibilities of an employer. We upheld this finding and affirmed the declaration of joint and several
liability of the corporation with its driver. WHEREFORE, the petition is DENIED. The decision of
respondent Court of Appeals dated 31 January 1995 sustaining the dismissal of petitioner's complaint
by the trial court is AFFIRMED. Costs against petitioner.
Distinctions between Culpa Aquilina and Delict
Article 365 Revised Penal Code. Imprudence and negligence. Any person who, by reckless
imprudence, shall commit any act which, had it been intentional, would constitute a grave felony, shall
suffer the penalty of arresto mayor in its maximum period to prision correccional in its medium period;
if it would have constituted a less grave felony, the penalty of arresto mayor in its minimum and
medium periods shall be imposed; if it would have constituted a light felony, the penalty of arresto
menor in its maximum period shall be imposed.
Any person who, by simple imprudence or negligence, shall commit an act which would otherwise
constitute a grave felony, shall suffer the penalty of arresto mayor in its medium and maximum periods;
if it would have constituted a less serious felony, the penalty of arresto mayor in its minimum period
shall be imposed.
When the execution of the act covered by this article shall have only resulted in damage to the
property of another, the offender shall be punished by a fine ranging from an amount equal to the
value of said damages to three times such value, but which shall in no case be less than twenty-five
pesos.
A fine not exceeding two hundred pesos and censure shall be imposed upon any person who, by
simple imprudence or negligence, shall cause some wrong which, if done maliciously, would have
constituted a light felony.
In the imposition of these penalties, the court shall exercise their sound discretion, without regard to
the rules prescribed in Article sixty-four.
The provisions contained in this article shall not be applicable:
1. When the penalty provided for the offense is equal to or lower than those provided in the first two
paragraphs of this article, in which case the court shall impose the penalty next lower in degree than
that which should be imposed in the period which they may deem proper to apply.
2. When, by imprudence or negligence and with violation of the Automobile Law, to death of a person
shall be caused, in which case the defendant shall be punished by prision correccional in its medium
and maximum periods.
Reckless imprudence consists in voluntary, but without malice, doing or falling to do an act from which
material damage results by reason of inexcusable lack of precaution on the part of the person
performing of failing to perform such act, taking into consideration his employment or occupation,
degree of intelligence, physical condition and other circumstances regarding persons, time and place.
Simple imprudence consists in the lack of precaution displayed in those cases in which the damage
impending to be caused is not immediate nor the danger clearly manifest.chanrobles virtual law library
The penalty next higher in degree to those provided for in this article shall be imposed upon the
offender who fails to lend on the spot to the injured parties such help as may be in this hand to give.
G.R. No. 122445 November 18, 1997
DR. NINEVETCH CRUZ, petitioner, vs. COURT OF APPEALS and LYDIA UMALI, respondents.
Doctors are protected by a special rule of law. They are not guarantors of care. They do not even
warrant a good result. They are not insurers against mishaps or unusual consequences. Furthermore
they are not liable for honest mistakes of judgment . . . 1
The present case against petitioner is in the nature of a medical malpractice suit, which in simplest
terms is the type of claim which a victim has available to him or her to redress a wrong committed by a
medical professional which has caused bodily harm. 2 In this jurisdiction, however, such claims are most
often brought as a civil action for damages under Article 2176 of the Civil Code, 3 and in some
instances, as a criminal case under Article 365 of the Revised Penal Code 4 with which the civil action
for damages is impliedly instituted. It is via the latter type of action that the heirs of the deceased
sought redress for the petitioner's alleged imprudence and negligence in treating the deceased
thereby causing her death. The petitioner and one Dr. Lina Ercillo who was the attending
anaesthesiologist during the operation of the deceased were charged with "reckless imprudence and
negligence resulting to (sic) homicide" in an information which reads: That on or about March 23, 1991,
in the City of San Pablo, Republic of the Philippines and within the jurisdiction of this Honorable Court,
the accused above named, being then the attending anaesthesiologist and surgeon, respectively, did
then and there, in a negligence (sic), careless, imprudent, and incompetent manner, and failing to
supply or store sufficient provisions and facilities necessary to meet any and all exigencies apt to arise
before, during and/or after a surgical operation causing by such negligence, carelessness, imprudence,
and incompetence, and causing by such failure, including the lack of preparation and foresight needed
to avert a tragedy, the untimely death of said Lydia Umali on the day following said surgical operation.
5 San Pablo District Hospital was without the prior consent of Rowena nor of the other relatives present
Trial ensued after both the petitioner and Dr. Lina Ercillo pleaded not guilty to the above-mentioned
charge. On March 4, 1994, the Municipal Trial Court in Cities (MTCC) of San Pablo City rendered a
decision, the dispositive portion of which is hereunder quoted as follows: WHEREFORE, the court finds
the accused Dra. Lina Ercillo not guilty of the offense charged for insufficiency of evidence while her
co-accused Dra. Ninevetch Cruz is hereby held responsible for the death of Lydia Umali on March 24,
1991, and therefore guilty under Art. 365 of the Revised Penal Code, and she is hereby sentenced to
suffer the penalty of 2 months and 1 day imprisonment of arresto mayor with costs. 6
The petitioner appealed her conviction to the Regional Trial Court (RTC) which affirmed in toto the
decision of the MTCC 7 prompting the petitioner to file a petition for review with the Court of Appeals
but to no avail. Hence this petition for review on certiorari assailing the decision promulgated by the
Court of Appeals on October 24, 1995 affirming petitioner's conviction with modification that she is
further directed to pay the heirs of Lydia Umali P50,000.00 as indemnity for her death. 8
In substance, the petition brought before this Court raises the issue of whether or not petitioner's
conviction of the crime of reckless imprudence resulting in homicide, arising from an alleged medical
malpractice, is supported by the evidence on record.
First the antecedent facts. On March 22, 1991, prosecution witness, Rowena Umali De Ocampo,
accompanied her mother to the Perpetual Help Clinic and General Hospital situated in Balagtas Street,
San Pablo City, Laguna. They arrived at the said hospital at around 4:30 in the afternoon of the same
day. 9 Prior to
March 22, 1991, Lydia was examined by the petitioner who found a "myoma" 10 in her uterus, and
scheduled her for a hysterectomy operation on March 23, 1991. 11 Rowena and her mother slept in the
clinic on the evening of March 22, 1991 as the latter was to be operated on the next day at 1:00 o'clock
in the afternoon. 12 According to Rowena, she noticed that the clinic was untidy and the window and
the floor were very dusty prompting her to ask the attendant for a rag to wipe the window and the
floor with. 13 Because of the untidy state of the clinic, Rowena tried to persuade her mother not to
proceed with the operation. 14 The following day, before her mother was wheeled into the operating
room, Rowena asked the petitioner if the operation could be postponed. The petitioner called Lydia
into her office and the two had a conversation. Lydia then informed Rowena that the petitioner told
her that she must be operated on as scheduled. 15
Rowena and her other relatives, namely her husband, her sister and two aunts waited outside the
operating room while Lydia underwent operation. While they were waiting, Dr. Ercillo went out of the
operating room and instructed them to buy tagamet ampules which Rowena's sister immediately
bought. About one hour had passed when Dr. Ercillo came out again this time to ask them to buy
blood for Lydia. They bought type "A" blood from the St. Gerald Blood Bank and the same was
brought by the attendant into the operating room. After the lapse of a few hours, the petitioner
informed them that the operation was finished. The operating staff then went inside the petitioner's
clinic to take their snacks. Some thirty minutes after, Lydia was brought out of the operating room in a
stretcher and the petitioner asked Rowena and the other relatives to buy additional blood for Lydia.
Unfortunately, they were not able to comply with petitioner's order as there was no more type "A"
blood available in the blood bank. Thereafter, a person arrived to donate blood which was later
transfused to Lydia. Rowena then noticed her mother, who was attached to an oxygen tank, gasping
for breath. Apparently the oxygen supply had run out and Rowena's husband together with the driver
of the accused had to go to the San Pablo District Hospital to get oxygen. Lydia was given the fresh
supply of oxygen as soon as it arrived. 16 But at around 10:00 o'clock P.M. she went into shock and her
blood pressure dropped to 60/50. Lydia's unstable condition necessitated her transfer to the San Pablo
District Hospital so she could be connected to a respirator and further examined. 17 The transfer to the
who found out about the intended transfer only when an ambulance arrived to take Lydia to the San
Pablo District Hospital. Rowena and her other relatives then boarded a tricycle and followed the
ambulance. 18
Upon Lydia's arrival at the San Pablo District Hospital, she was wheeled into the operating room and
the petitioner and Dr. Ercillo re-operated on her because there was blood oozing from the abdominal
incision. 19 The attending physicians summoned Dr. Bartolome Angeles, head of the Obstetrics and
Gynecology Department of the San Pablo District Hospital. However, when Dr. Angeles arrived, Lydia
was already in shock and possibly dead as her blood pressure was already 0/0. Dr. Angeles then
informed petitioner and Dr. Ercillo that there was nothing he could do to help save the patient. 20 While
the petitioner was closing the abdominal wall, the patient died. 21 Thus, on March 24, 1991, at 3:00
o'clock in the morning, Lydia Umali was pronounced dead. Her death certificate states "shock" as the
immediate cause of death and "Disseminated Intravascular Coagulation (DIC)" as the antecedent cause.
22
In convicting the petitioner, the MTCC found the following circumstances as sufficient basis to
conclude that she was indeed negligent in the performance of the operation: the clinic was untidy,
there was lack of provision like blood and oxygen to prepare for any contingency that might happen
during the operation. The manner and the fact that the patient was brought to the San Pablo District
Hospital for reoperation indicates that there was something wrong in the manner in which Dra. Cruz
conducted the operation. There was no showing that before the operation, accused Dra. Cruz had
conducted a cardio pulmonary clearance or any typing of the blood of the patient. It was (sic) said in
medical parlance that the "the abdomen of the person is a temple of surprises" because you do not
know the whole thing the moment it was open (sic) and surgeon must be prepared for any eventuality
thereof. The patient (sic) chart which is a public document was not presented because it is only there
that we could determine the condition of the patient before the surgery. The court also noticed in Exh.
"F-1" that the sister of the deceased wished to postpone the operation but the patient was prevailed
upon by Dra. Cruz to proceed with the surgery. The court finds that Lydia Umali died because of the
negligence and carelessness of the surgeon Dra. Ninevetch Cruz because of loss of blood during the
operation of the deceased for evident unpreparedness and for lack of skill, the reason why the patient
was brought for operation at the San Pablo City District Hospital. As such, the surgeon should answer
for such negligence. With respect to Dra. Lina Ercillo, the anaesthesiologist, there is no evidence to
indicate that she should be held jointly liable with Dra. Cruz who actually did the operation. 23The RTC
reiterated the abovementioned findings of the MTCC and upheld the latter's declaration of
"incompetency, negligence and lack of foresight and skill of appellant (herein petitioner) in handling
the subject patient before and after the operation." 24 And likewise affirming the petitioner's conviction,
the Court of Appeals echoed similar observations, thus: While we may grant that the untidiness and
filthiness of the clinic may not by itself indicate negligence, it nevertheless shows the absence of due
care and supervision over her subordinate employees. Did this unsanitary condition permeate the
operating room? Were the surgical instruments properly sterilized? Could the conditions in the OR
have contributed to the infection of the patient? Only the petitioner could answer these, but she opted
not to testify. This could only give rise to the presumption that she has nothing good to testify on her
defense. Anyway, the alleged "unverified statement of the prosecution witness" remains unchallenged
and unrebutted.
Likewise undisputed is the prosecution's version indicating the following facts: that the accused asked
the patient's relatives to buy Tagamet capsules while the operation was already in progress; that after
an hour, they were also asked to buy type "A" blood for the patient; that after the surgery, they were
again asked to procure more type "A" blood, but such was not anymore available from the source; that
the oxygen given to the patient was empty; and that the son-in-law of the patient, together with a
driver of the petitioner, had to rush to the San Pablo City District Hospital to get the much-needed
oxygen. All these conclusively show that the petitioner had not prepared for any unforeseen
circumstances before going into the first surgery, which was not emergency in nature, but was elective
or pre-scheduled; she had no ready antibiotics, no prepared blood, properly typed and cross-matched,
and no sufficient oxygen supply.
Moreover, there are a lot of questions that keep nagging Us. Was the patient given any
cardio-pulmonary clearance, or at least a clearance by an internist, which are standard requirements
before a patient is subjected to surgery. Did the petitioner determine as part of the pre-operative
evaluation, the bleeding parameters of the patient, such as bleeding time and clotting time? There is
no showing that these were done. The petitioner just appears to have been in a hurry to perform the
operation, even as the family wanted a postponement to April 6, 1991. Obviously, she did not prepare
the patient; neither did she get the family's consent to the operation. Moreover, she did not prepare a
medical chart with instructions for the patient's care. If she did all these, proof thereof should have
been offered. But there is none. Indeed, these are overwhelming evidence of recklessness and
imprudence. 25
This Court, however, holds differently and finds the foregoing circumstances insufficient to sustain a
judgment of conviction against the petitioner for the crime of reckless imprudence resulting in
homicide. The elements of reckless imprudence are: (1) that the offender does or fails to do an act; (2)
that the doing or the failure to do that act is voluntary; (3) that it be without malice; (4) that material
damage results from the reckless imprudence; and (5) that there is inexcusable lack of precaution on
the part of the offender, taking into consideration his employment or occupation, degree of
intelligence, physical condition, and other circumstances regarding persons, time and place. Whether
or not a physician has committed an "inexcusable lack of precaution" in the treatment of his patient is
to be determined according to the standard of care observed by other members of the profession in
good standing under similar circumstances bearing in mind the advanced state of the profession at the
time of treatment or the present state of medical science. 26 In the recent case of Leonila Garcia-Rueda
v. Wilfred L. Pascasio, et al., 27 this Court stated that in accepting a case, a doctor in effect represents
that, having the needed training and skill possessed by physicians and surgeons practicing in the same
field, he will employ such training, care and skill in the treatment of his patients. He therefore has a
duty to use at least the same level of care that any other reasonably competent doctor would use to
treat a condition under the same circumstances. It is in this aspect of medical malpractice that expert
testimony is essential to establish not only the standard of care of the profession but also that the
physician's conduct in the treatment and care falls below such standard. 28 Further, inasmuch as the
causes of the injuries involved in malpractice actions are determinable only in the light of scientific
knowledge, it has been recognized that expert testimony is usually necessary to support the
conclusion as to causation. 29 Immediately apparent from a review of the records of this case is the
absence of any expert testimony on the matter of the standard of care employed by other physicians
of good standing in the conduct of similar operations. The prosecution's expert witnesses in the
persons of Dr. Floresto Arizala and Dr. Nieto Salvador, Jr. of the National Bureau of Investigation (NBI)
only testified as to the possible cause of death but did not venture to illuminate the court on the
matter of the standard of care that petitioner should have exercised.
All three courts below bewail the inadequacy of the facilities of the clinic and its untidiness; the lack of
provisions such as blood, oxygen, and certain medicines; the failure to subject the patient to a
cardio-pulmonary test prior to the operation; the omission of any form of blood typing before
transfusion; and even the subsequent transfer of Lydia to the San Pablo Hospital and the reoperation
performed on her by the petitioner. But while it may be true that the circumstances pointed out by the
courts below seemed beyond cavil to constitute reckless imprudence on the part of the surgeon, this
conclusion is still best arrived at not through the educated surmises nor conjectures of laymen,
including judges, but by the unquestionable knowledge of expert witnesses. For whether a physician
or surgeon has exercised the requisite degree of skill and care in the treatment of his patient is, in the
generality of cases, a matter of expert opinion. 30 The deference of courts to the expert opinion of
qualified physicians stems from its realization that the latter possess unusual technical skills which
laymen in most instances are incapable of intelligently evaluating. 31 Expert testimony should have
been offered to prove that the circumstances cited by the courts below are constitutive of conduct
falling below the standard of care employed by other physicians in good standing when performing
the same operation. It must be remembered that when the qualifications of a physician are admitted,
as in the instant case, there is an inevitable presumption that in proper cases he takes the necessary
precaution and employs the best of his knowledge and skill in attending to his clients, unless the
contrary is sufficiently established. 32 This presumption is rebuttable by expert opinion which is so sadly
lacking in the case at bench.
Even granting arguendo that the inadequacy of the facilities and untidiness of the clinic; the lack of
provisions; the failure to conduct pre-operation tests on the patient; and the subsequent transfer of
Lydia to the San Pablo Hospital and the reoperation performed on her by the petitioner do indicate,
even without expert testimony, that petitioner was recklessly imprudent in the exercise of her duties as
a surgeon, no cogent proof exists that any of these circumstances caused petitioner's death. Thus, the
absence of the fourth element of reckless imprudence: that the injury to the person or property was a
consequence of the reckless imprudence. In litigations involving medical negligence, the plaintiff has
the burden of establishing appellant's negligence and for a reasonable conclusion of negligence, there
must be proof of breach of duty on the part of the surgeon as well as a causal connection of such
breach and the resulting death of his patient. 33 In Chan Lugay v. St. Luke's Hospital, Inc., 34 where the
attending physician was absolved of liability for the death of the complainant's wife and newborn baby,
this Court held that: In order that there may be a recovery for an injury, however, it must be shown that
the "injury for which recovery is sought must be the legitimate consequence of the wrong done; the
connection between the negligence and the injury must be a direct and natural sequence of events,
unbroken by intervening efficient causes." In other words, the negligence must be the proximate cause
of the injury. For, "negligence, no matter in what it consists, cannot create a right of action unless it is
the proximate cause of the injury complained of ." And "the proximate cause of an injury is that cause,
which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the
injury, and without which the result would not have occurred." 35
Dr. Arizala who conducted an autopsy on the body of the deceased summarized his findings. The
testimonies of both doctors establish hemorrhage or hemorrhagic shock as the cause of death.
However, as likewise testified to by the expert witnesses in open court, hemorrhage or hemorrhagic
shock during surgery may be caused by several different factors. Thus, Dr. Salvador's elaboration on
the matter
According to both doctors, the possible causes of hemorrhage during an operation are: (1) the failure
of the surgeon to tie or suture a cut blood vessel; (2) allowing a cut blood vessel to get out of control;
(3) the subsequent loosening of the tie or suture applied to a cut blood vessel; and (4) and a clotting
defect known as DIC. It is significant to state at this juncture that the autopsy conducted by Dr. Arizala
on the body of Lydia did not reveal any untied or unsutured cut blood vessel nor was there any
indication that the tie or suture of a cut blood vessel had become loose thereby causing the
hemorrhage. 40 Hence the following pertinent portion of Dr. Arizala's testimony.
On the other hand, the findings of all three doctors do not preclude the probability that DIC caused
the hemorrhage and consequently, Lydia's death. DIC which is a clotting defect creates a serious
bleeding tendency and when massive DIC occurs as a complication of surgery leaving raw surface,
major hemorrhage occurs. 42And as testified to by defense witness, Dr. Bu C. Castro, hemorrhage due
to DIC "cannot be prevented, it will happen to anyone, anytime." 43
This Court has no recourse but to rely on the expert testimonies rendered by both prosecution and
defense witnesses that substantiate rather than contradict petitioner's allegation that the cause of
Lydia's death was DIC which, as attested to by an expert witness, cannot be attributed to the
petitioner's fault or negligence. The probability that Lydia's death was caused by DIC was unrebutted
during trial and has engendered in the mind of this Court a reasonable doubt as to the petitioner's
guilt. Thus, her acquittal of the crime of reckless imprudence resulting in homicide. While we condole
with the family of Lydia Umali, our hands are bound by the dictates of justice and fair dealing which
hold inviolable the right of an accused to be presumed innocent until proven guilty beyond reasonable
doubt. Nevertheless, this Court finds the petitioner civilly liable for the death of Lydia Umali, for while a
conviction of a crime requires proof beyond reasonable doubt, only a preponderance of evidence is
required to establish civil liability. 45 The petitioner is a doctor in whose hands a patient puts his life and
limb. For insufficiency of evidence this Court was not able to render a sentence of conviction but it is
not blind to the reckless and imprudent manner in which the petitioner carried out her duties. A
precious life has been lost and the circumstances leading thereto exacerbated the grief of those left
behind. The heirs of the deceased continue to feel the loss of their mother up to the present time 46
and this Court is aware that no amount of compassion and commiseration nor words of bereavement
can suffice to assuage the sorrow felt for the loss of a loved one. Certainly, the award of moral and
exemplary damages in favor of the heirs of Lydia Umali are proper in the instant case. WHEREFORE,
premises considered, petitioner DR. NINEVETCH CRUZ is hereby ACQUITTED of the crime of reckless
imprudence resulting in homicide but is ordered to pay the heirs of the deceased Lydia Umali the
amount of FIFTY THOUSAND PESOS (P50,000.00) as civil liability, ONE HUNDRED THOUSAND PESOS
(P100,000.00) as moral damages, and FIFTY THOUSAND PESOS (P50,000.00) as exemplary damages.
Let a copy of this decision be furnished to the Professional Regulation Commission (PRC) for
appropriate action.SO ORDERED.
DISTINCTIONS BETWEEN CULPA AQUILINA AND CULPA CONTRACTUAL
G.R. No. 164601 September 27, 2006
SPOUSES ERLINDA BATAL AND FRANK BATAL, petitioners, vs. SPOUSES LUZ SAN PEDRO AND
KENICHIRO TOMINAGA, respondents.
Before the Court is a Petition for Review on Certiorari under Rule 45 of the Rules of Court questioning
the Decision1 dated September 29, 2003 promulgated by the Court of Appeals (CA) in CA-G.R. CV No.
71758, which affirmed the Decision dated May 31, 2004 of the Regional Trial Court, Branch 7, Malolos,
Bulacan (RTC); and the CA Resolution2 dated July 19, 2004.
This case originated from an action for damages filed with the RTC by Spouses Luz San Pedro and
Kenichiro Tominaga (respondents) against Spouses Erlinda Batal and Frank Batal (petitioners) for failure
to exercise due care and diligence by the latter in the preparation of a survey which formed the basis
for the construction of a perimeter fence that was later discovered to have encroached on a right of
way.
The facts of the case, as found by the RTC and summarized by the CA, are as follows: The spouses Luz
San Pedro (Luz) and Kenichiro Tominaga (Kenichiro) are the owners of a parcel of land, on which their
house was erected, described as Lot 1509-C-3 with an area of 700 square meters situated in Barangay
Malis, Guiguinto, Bulacan. Said property was acquired by them from one Guillermo Narciso as
evidenced by a "Bilihan ng Bahagi ng Lupa" dated March 18, 1992. The spouses Luz and Kenichiro then
contracted the services of Frank Batal (Frank) who represented himself as a surveyor to conduct a
survey of their lot for the sum of P6,500.00. As Luz and Kenichiro wanted to enclose their property,
they again procured the services of Frank for an additional fee of P1,500.00 in order to determine the
exact boundaries of the same by which they will base the construction of their perimeter fence.
Consequently, Frank placed concrete monuments marked P.S. on all corners of the lot which were used
as guides by Luz and Kenichiro in erecting a concrete fence measuring about eight (8) feet in height
and cost them P250,000.00 to build. Sometime in 1996, a complaint was lodged against Luz and
Kenichiro before the barangay on the ground that the northern portion of their fence allegedly
encroached upon a designated right-of-way known as Lot 1509-D. Upon verification with another
surveyor, Luz and Kenichiro found that their wall indeed overlapped the adjoining lot. They also
discovered that it was not Frank but his wife Erlinda Batal (Erlinda), who is a licensed geodetic engineer.
During their confrontations before the barangay, Frank admitted that he made a mistake and offered
to share in the expenses for the demolition and reconstruction of the questioned portion of Luz and
Kenichiro's fence. He however failed to deliver on his word, thus the filing of the instant suit. In their
defense, the defendants-spouses Frank and Erlinda Batal submitted that Frank never represented
himself to be a licensed geodetic engineer. It was Erlinda who supervised her husband's work [and
t]hat the house and lot of plaintiffs, Luz and Kenichiro, were already fenced even before they were
contracted to do a resurvey of the same and the laying out of the concrete monuments. The spouses
Frank and Erlinda also refuted the spouses Luz's and Kenichiro's allegation of negligence and averred
that the subject complaint was instituted to harass them. On May 31, 2001, the RTC rendered its
Decision, the dispositive portion of which reads: WHEREFORE, judgment is hereby rendered in favor of
plaintiffs and against defendants, as follows:
1. Ordering the defendants [petitioners] to pay to plaintiffs [respondents] the sum of P6,500.00 as
refund for their professional fees by reason of the erroneous relocation survey of the property in
question; 2. Ordering the defendants to pay to plaintiffs the sum of Three Hundred Thousand Pesos
(P300,000.00) as actual damages; 3. Ordering the defendants to pay to plaintiffs the sum of P50,000.00
as attorney's fees; and 4. Ordering the defendants to pay to plaintiffs the costs of this suit. O
ORDERED.4
Regarding the issue whether the petitioners failed to exercise due care and diligence in the conduct of
the resurvey which eventually caused damage to the respondents, the RTC held: As against the bare
and self-serving denials of the [petitioners], the testimony of [respondent] Luz San Pedro that she
constructed the encroaching perimeter fence in question using as guide the cyclone concrete
monuments marked P.S. that were installed by [petitioner] Frank Batal and his survey team, is more
credible. As testified to by [respondent] Luz San Pedro, she proceeded with the construction of the
perimeter fence in question upon assurance given by [petitioner] Frank Batal that she could already do
so as there were already concrete monuments placed on the boundaries of her property.
It does not matter that the location plan dated May 3, 1992 (Exhibit "B") was later approved by the
DENR, as it is quite apparent that the mistake committed by [petitioner] Frank Batal pertains to the
wrong locations of the concrete monuments that he placed on the subject property and which were
used or relied upon by the [respondents] in putting up the fence in question. Such mistake or
negligence happened because quite obviously the installation of said concrete monuments was
without the needed supervision of [respondent] Erlinda Batal, the one truly qualified to supervise the
same. The RTC found that indeed the perimeter fence constructed by the respondents encroached on
the right-of-way in question; that the preponderance of evidence supports the finding that the
encroachment was caused by the negligence of the petitioners; that, in particular, respondents
constructed the fence based on the concrete cyclone monuments that were installed by petitioner
Frank Batal and after he gave his assurance that they can proceed accordingly; that the negligence in
the installation of the monuments was due to the fact that petitioner Erlinda Batal, the one truly
qualified, did not provide the needed supervision over the work; and, lastly, that the testimonies of the
petitioners on the whole were not credible.
The petitioners appealed to the CA. On September 29, 2003, the CA rendered its Decision affirming
the RTC decision in its entirety.6
In concurring with the findings of the RTC, the CA in addition held that the petitioners cannot claim
that the error of the construction of the fence was due to the unilateral act of respondents in building
the same without their consent, since the former gave their word that the arrangement of the
monuments of title accurately reflected the boundaries of the lot; and that, as a result, the northern
portion of the fence had to be demolished and rebuilt in order to correct the error.
Hence, the instant Petition assigning the following errors:
I. The Court of Appeals erred in ruling for the Respondents and basing its decision [o]n the
following jurisprudence:
(a) "[A] party, having performed affirmative acts upon which another person based his
subsequent actions, cannot thereafter refute his acts or renege on the effects of the same, to the
prejudice of the latter. (Pureza vs. Court of Appeals, 290 SCRA 110)"; and
(b) "Findings of fact made by the trial court [are] entitled to great weight and respect. (Lopez vs.
Court of Appeals, 322 SCRA 686).
II. The Court of Appeals erred in ruling in favor of Respondents by premising its Decision on [a]
misapprehension of facts amounting to grave abuse of discretion . . . which is also a ground for a
Petition for Review.7
The petition must fail. The petitioners insist that there had been no error in their resurvey, but rather,
the error occurred in respondents' fencing; that the proximate cause of the damage had been
respondents' own negligence such that the fencing was done unilaterally and solely by them without
the prior approval and supervision of the petitioners. And to justify their case, the petitioners argue
that the courts a quo misapprehended the facts. Accordingly, they ask this Court to review findings of
fact.
A review of the factual findings of the CA and the RTC are matters not ordinarily reviewable in a
petition for review on certiorari.8 Well-established is the rule that factual findings of the trial court and
the CA are entitled to great weight and respect9 and will not be disturbed on appeal save in
exceptional circumstances,10 none of which obtains in the present case. This Court must stress that the
findings of fact of the CA are conclusive on the parties and carry even more weight when these
coincide with the factual findings of the trial court,11 as in this case. The Court will not weigh the
evidence all over again unless there is a showing that the findings of the lower court are totally devoid
of support or are clearly erroneous so as to constitute serious abuse of discretion.12 The petitioners
failed to demonstrate this point. On the contrary, the finding of the courts a quo that the damage
caused to the respondents was due to petitioners' negligence is sufficiently supported by the evidence
on record. For these reasons, the petitioner's contentions bear no import.
Culpa, or negligence, may be understood in two different senses: either as culpa aquiliana, which is the
wrongful or negligent act or omission which creates a vinculum juris and gives rise to an obligation
between two persons not formally bound by any other obligation, or as culpa contractual, which is the
fault or negligence incident in the performance of an obligation which already existed, and which
increases the liability from such already existing obligation.13 Culpa aquiliana is governed by Article
2176 of the Civil Code and the immediately following Articles; while culpa contractual is governed by
Articles 1170 to 1174 of the same Code.14
Articles 1170 and 1173 provide: ART. 1170. Those who in the performance of their obligations are guilty
of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable
for damages.
ART. 1173. The fault or negligence of the obligor consists in the omission of that diligence which is
required by the nature of the obligation and corresponds with the circumstances of the persons, of the
time and of the place. When negligence shows bad faith, the provisions of articles 1171 and 2202,
paragraph 2, shall apply. If the law or contract does not state the diligence which is to be observed in
the performance, that which is expected of a good father of a family shall be required.
In the present case, it is clear that the petitioners, in carrying out their contractual obligations, failed to
exercise the requisite diligence in the placement of the markings for the concrete perimeter fence that
was later constructed. The placement of the markings had been done solely by petitioner Frank Batal
who is not a geodetic engineer. It was later discovered that it was not he but his wife, petitioner Erlinda
Batal, who is the licensed geodetic engineer and who is, therefore, the one qualified to do the work.
Petitioner Frank Batal's installation of the concrete cyclone monuments had been done without the
adequate supervision of his wife, Erlinda. As a result, the placement of the monuments did not
accurately reflect the dimensions of the lot. The respondents, upon assurance given by petitioner Frank
Batal that they could proceed with the construction of the perimeter fence by relying on the purported
accuracy of the placement of the monuments, erected their fence which turned out to encroach on an
adjacent easement. Because of the encroachment, the respondents had to demolish and reconstruct
the fence and, thus, suffered damages.
The Court affirms and adopts the findings of the CA, to wit: Records show that the services of the
[petitioners] Frank and Erlinda were initially contracted to segregate Luz and Kenichiro's property from
its adjoining lots. When the [respondent] spouses Luz and Kenichiro planned to fence the segregated
lot, they again commissioned [petitioners] Frank and Erlinda to conduct a resurvey in order to
determine the precise boundaries of their property upon which they will base the construction of their
fence. It was also shown that in the course of the resurvey, Frank caused the installation of monuments
of title on the four (4) corners of Luz and Kenichiro's property and that he instructed them to just
follow the same in building their fence. [Petitioners] Frank and Erlinda cannot thus validly claim that the
error in the construction of the northern portion of the fence was due to the spouses Luz and
Kenichiro's act of building the same without their consent. This is considering that the former led the
latter to believe the purported accuracy of the resurvey and exactness of the lot's boundaries based on
the monuments of title which they installed.
It has been ruled that "[A] party, having performed affirmative acts upon which another person based
his subsequent actions, cannot thereafter refute his acts or renege on the effects of the same, to the
prejudice of the latter." (Pureza v. Court of Appeals, 290 SCRA 110) The foregoing clearly supports the
findings of the RTC that the spouses Batal committed a mistake in the conduct of their business that
led to the encroachment of plaintiffs-appellees' fence on the adjoining alley-lot. As a result, the
northern portion ha[d] to be torn down and rebuilt in order to correct the error in its original
construction. The defendants-appellants cannot be excused from the effects of their actions in the
survey of plaintiffs-appellees' lot. We therefore concur with the findings of the RTC holding
defendants-appellants liable for damages in the case at bar. "Findings of fact made by the trial court is
entitled to great weight and respect." (Lopez v. Court of Appeals, 322 SCRA 686)15
Being guilty of a breach of their contract, petitioners are liable for damages suffered by the
respondents in accordance with Articles 1170 and 2201 of the Civil Code,16 which state: Art. 1170. Those
who in the performance of their obligations are guilty of fraud, negligence, or delay and those who in
any manner contravene the tenor thereof are liable for damages
Art. 2201. In contracts and quasi-contracts, the damages for which the obligor who acted in good faith
is liable shall be those that are the natural and probable consequences of the breach of the obligation,
and which the parties have foreseen or could have reasonably foreseen at the time the obligation was
constituted. In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible for
all damages which may be reasonably attributed to the non-performance of the obligation.
Thus, the Court agrees with the CA's affirmance of the findings of the RTC on the matter of damages,
to wit: Going now to the claims for damages, Engr. Arnold Martin testified on his computation and
estimate (Exhibits "G" and "G-1) that the total cost for the demolition and reconstruction of the
perimeter fence in question would be in the total amount of P428,163.90, and this was not at all
disputed by the defendants, whose counsel waived cross-examination. This estimate is practically
double the amount of the cost of constructing said fence as testified to by plaintiff Luz San Pedro as
she was told that it is much costlier to demolish and reconstruct a fence than to simply erect one
because of the added expense involved in tearing it down and hauling its debris. On the other hand,
said plaintiff stated that the iron decorative grills of the fence, which is re-usable, cost her P50,000.00,
and it is only proper to deduct said amount from the total cost of reconstructing the fence in question.
At the same time, some figures in the said estimate appear to be quite excessive, such as the estimated
cost for demolition which was quoted at P25,000.00 in addition to the amount of excavation priced at
P30,000.00 and the cost of hauling of scrap materials at P10,000.00. The court believes that the sum of
P300,000.00 for the demolition and reconstruction of the fence in question would be reasonable
considering that the original cost for its construction was only about P200,000.00, and considering
further that its iron grills are re-usable.
The plaintiffs are likewise entitled to recover attorney's fees considering that they were compelled by
the defendants to resort to court action in order to protect their rights and interest, as defendants,
particularly defendant Frank Batal, failed and refused repeatedly to even attend the confrontation of
conciliation meetings arranged between him and the plaintiffs by the barangay authorities concerned,
and to honor his promise to help in shouldering the cost of reconstructing the fence in question.
On the other hand, there is no legal or factual bases for the claim of the plaintiffs for moral or
exemplary damages as there was no showing at all that defendants acted with malice or in bad faith. In
a long line of cases, we have consistently ruled that in the absence of a wrongful act or omission or of
fraud or bad faith, moral damages cannot be awarded. (R & B Surety Insurance Co. v. Intermediate
Court of Appeals, 129 SCRA 736; Guita v. Court of Appeals, 139 SCRA 576).17
WHEREFORE, the instant petition is DENIED and the assailed Decision and Resolution of the Court of
Appeals are AFFIRMED. Costs against petitioners. SO ORDERED.
G.R. No. 179337 April 30, 2008
JOSEPH SALUDAGA, petitioner, vs. FAR EASTERN UNIVERSITY and EDILBERTO C. DE JESUS in his
capacity as President of FEU,respondents.This Petition for Review on Certiorari1 under Rule 45 of the
Rules of Court assails the June 29, 2007 Decision2 of the Court of Appeals in CA-G.R. CV No. 87050,
nullifying and setting aside the November 10, 2004 Decision3 of the Regional Trial Court of Manila,
Branch 2, in Civil Case No. 98-89483 and dismissing the complaint filed by petitioner; as well as its
August 23, 2007 Resolution4 denying the Motion for Reconsideration.5
The antecedent facts are as follows: Petitioner Joseph Saludaga was a sophomore law student of
respondent Far Eastern University (FEU) when he was shot by Alejandro Rosete (Rosete), one of the
security guards on duty at the school premises on August 18, 1996. Petitioner was rushed to FEU-Dr.
Nicanor Reyes Medical Foundation (FEU-NRMF) due to the wound he sustained.6 Meanwhile, Rosete
was brought to the police station where he explained that the shooting was accidental. He was
eventually released considering that no formal complaint was filed against him. Petitioner thereafter
filed a complaint for damages against respondents on the ground that they breached their obligation
to provide students with a safe and secure environment and an atmosphere conducive to learning.
Respondents, in turn, filed a Third-Party Complaint7 against Galaxy Development and Management
Corporation (Galaxy), the agency contracted by respondent FEU to provide security services within its
premises and Mariano D. Imperial (Imperial), Galaxy's President, to indemnify them for whatever would
be adjudged in favor of petitioner, if any; and to pay attorney's fees and cost of the suit. On the other
hand, Galaxy and Imperial filed a Fourth-Party Complaint against AFP General Insurance.8
On November 10, 2004, the trial court rendered a decision in favor of petitioner, the dispositive portion
of which reads: WHEREFORE, from the foregoing, judgment is hereby rendered ordering:
1. FEU and Edilberto de Jesus, in his capacity as president of FEU to pay jointly and severally Joseph
Saludaga the amount of P35,298.25 for actual damages with 12% interest per annum from the filing of
the complaint until fully paid; moral damages of P300,000.00, exemplary damages of P500,000.00,
attorney's fees of P100,000.00 and cost of the suit; 2. Galaxy Management and Development Corp. and
its president, Col. Mariano Imperial to indemnify jointly and severally 3rd party plaintiffs (FEU and
Edilberto de Jesus in his capacity as President of FEU) for the above-mentioned amounts; 3. And the
4th party complaint is dismissed for lack of cause of action. No pronouncement as to costs. SO
ORDERED.9
Respondents appealed to the Court of Appeals which rendered the assailed Decision, the decretal
portion of which provides, viz: WHEREFORE, the appeal is hereby GRANTED. The Decision dated
November 10, 2004 is hereby REVERSED and SET ASIDE. The complaint filed by Joseph Saludaga
against appellant Far Eastern University and its President in Civil Case No. 98-89483 is DISMISSED. SO
ORDERED.10
Petitioner filed a Motion for Reconsideration which was denied; hence, the instant petition based on
the following grounds: THE COURT OF APPEALS SERIOUSLY ERRED IN MANNER CONTRARY TO LAW
AND JURISPRUDENCE IN RULING THAT:
5.1. THE SHOOTING INCIDENT IS A FORTUITOUS EVENT; 5.2. RESPONDENTS ARE NOT LIABLE FOR
DAMAGES FOR THE INJURY RESULTING FROM A GUNSHOT WOUND SUFFERED BY THE PETITIONER
FROM THE HANDS OF NO LESS THAN THEIR OWN SECURITY GUARD IN VIOLATION OF THEIR
BUILT-IN CONTRACTUAL OBLIGATION TO PETITIONER, BEING THEIR LAW STUDENT AT THAT TIME,
TO PROVIDE HIM WITH A SAFE AND SECURE EDUCATIONAL ENVIRONMENT; 5.3. SECURITY GAURD,
ALEJANDRO ROSETE, WHO SHOT PETITIONER WHILE HE WAS WALKING ON HIS WAY TO THE LAW
LIBRARY OF RESPONDENT FEU IS NOT THEIR EMPLOYEE BY VIRTUE OF THE CONTRACT FOR
SECURITY SERVICES BETWEEN GALAXY AND FEU NOTWITHSTANDING THE FACT THAT PETITIONER,
NOT BEING A PARTY TO IT, IS NOT BOUND BY THE SAME UNDER THE PRINCIPLE OF RELATIVITY OF
CONTRACTS; and 5.4. RESPONDENT EXERCISED DUE DILIGENCE IN SELECTING GALAXY AS THE
AGENCY WHICH WOULD PROVIDE SECURITY SERVICES WITHIN THE PREMISES OF RESPONDENT
FEU.11
Petitioner is suing respondents for damages based on the alleged breach of student-school contract
for a safe learning environment. The pertinent portions of petitioner's Complaint read: 6.0. At the time
of plaintiff's confinement, the defendants or any of their representative did not bother to visit and
inquire about his condition. This abject indifference on the part of the defendants continued even after
plaintiff was discharged from the hospital when not even a word of consolation was heard from them.
Plaintiff waited for more than one (1) year for the defendants to perform their moral obligation but the
wait was fruitless. This indifference and total lack of concern of defendants served to exacerbate
plaintiff's miserable condition.
11.0. Defendants are responsible for ensuring the safety of its students while the latter are within the
University premises. And that should anything untoward happens to any of its students while they are
within the University's premises shall be the responsibility of the defendants. In this case, defendants,
despite being legally and morally bound, miserably failed to protect plaintiff from injury and thereafter,
to mitigate and compensate plaintiff for said injury;
12.0. When plaintiff enrolled with defendant FEU, a contract was entered into between them. Under
this contract, defendants are supposed to ensure that adequate steps are taken to provide an
atmosphere conducive to study and ensure the safety of the plaintiff while inside defendant FEU's
premises. In the instant case, the latter breached this contract when defendant allowed harm to befall
upon the plaintiff when he was shot at by, of all people, their security guard who was tasked to
maintain peace inside the campus.12
In Philippine School of Business Administration v. Court of Appeals,13 we held that: 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. 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.14
It is undisputed that petitioner was enrolled as a sophomore law student in respondent FEU. As such,
there was created a contractual obligation between the two parties. On petitioner's part, he was
obliged to comply with the rules and regulations of the school. On the other hand, respondent FEU, as
a learning institution is mandated to impart knowledge and equip its students with the necessary skills
to pursue higher education or a profession. At the same time, it is obliged to ensure and take adequate
steps to maintain peace and order within the campus.
It is settled that in culpa contractual, the mere proof of the existence of the contract and the failure of
its compliance justify, prima facie, a corresponding right of relief.15 In the instant case, we find that,
when petitioner was shot inside the campus by no less the security guard who was hired to maintain
peace and secure the premises, there is a prima facie showing that respondents failed to comply with
its obligation to provide a safe and secure environment to its students.
In order to avoid liability, however, respondents aver that the shooting incident was a fortuitous event
because they could not have reasonably foreseen nor avoided the accident caused by Rosete as he
was not their employee;16 and that they complied with their obligation to ensure a safe learning
environment for their students by having exercised due diligence in selecting the security services of
Galaxy.
After a thorough review of the records, we find that respondents failed to discharge the burden of
proving that they exercised due diligence in providing a safe learning environment for their students.
They failed to prove that they ensured that the guards assigned in the campus met the requirements
stipulated in the Security Service Agreement. Indeed, certain documents about Galaxy were presented
during trial; however, no evidence as to the qualifications of Rosete as a security guard for the
university was offered.
Respondents also failed to show that they undertook steps to ascertain and confirm that the security
guards assigned to them actually possess the qualifications required in the Security Service Agreement.
It was not proven that they examined the clearances, psychiatric test results, 201 files, and other vital
documents enumerated in its contract with Galaxy. Total reliance on the security agency about these
matters or failure to check the papers stating the qualifications of the guards is negligence on the part
of respondents. A learning institution should not be allowed to completely relinquish or abdicate
security matters in its premises to the security agency it hired. To do so would result to contracting
away its inherent obligation to ensure a safe learning environment for its students.
Consequently, respondents' defense of force majeure must fail. In order for force majeure to be
considered, respondents must show that no negligence or misconduct was committed that may have
occasioned the loss. An act of God cannot be invoked to protect a person who has failed to take steps
to forestall the possible adverse consequences of such a loss. One's negligence may have concurred
with an act of God in producing damage and injury to another; nonetheless, showing that the
immediate or proximate cause of the damage or injury was a fortuitous event would not exempt one
from liability. When the effect is found to be partly the result of a person's participation - whether by
active intervention, neglect or failure to act - the whole occurrence is humanized and removed from
the rules applicable to acts of God.17
Article 1170 of the Civil Code provides that those who are negligent in the performance of their
obligations are liable for damages. Accordingly, for breach of contract due to negligence in providing a
safe learning environment, respondent FEU is liable to petitioner for damages. It is essential in the
award of damages that the claimant must have satisfactorily proven during the trial the existence of
the factual basis of the damages and its causal connection to defendant's acts.18
In the instant case, it was established that petitioner spent P35,298.25 for his hospitalization and other
medical expenses.19 While the trial court correctly imposed interest on said amount, however, the case
at bar involves an obligation arising from a contract and not a loan or forbearance of money. As such,
the proper rate of legal interest is six percent (6%) per annum of the amount demanded. Such interest
shall continue to run from the filing of the complaint until the finality of this Decision.20 After this
Decision becomes final and executory, the applicable rate shall be twelve percent (12%) per annum
until its satisfaction.
The other expenses being claimed by petitioner, such as transportation expenses and those incurred in
hiring a personal assistant while recuperating were however not duly supported by receipts.21 In the
absence thereof, no actual damages may be awarded. Nonetheless, temperate damages under Art.
2224 of the Civil Code may be recovered where it has been shown that the claimant suffered some latter was employed by Galaxy. The instructions issued by respondents' Security Consultant to Galaxy
pecuniary loss but the amount thereof cannot be proved with certainty. Hence, the amount of and its security guards are ordinarily no more than requests commonly envisaged in the contract for
P20,000.00 as temperate damages is awarded to petitioner. services entered into by a principal and a security agency. They cannot be construed as the element of
control as to treat respondents as the employers of Rosete.28
As regards the award of moral damages, there is no hard and fast rule in the determination of what
would be a fair amount of moral damages since each case must be governed by its own peculiar As held in Mercury Drug Corporation v. Libunao:29
circumstances.22 The testimony of petitioner about his physical suffering, mental anguish, fright,
In Soliman, Jr. v. Tuazon,30 we held that where the security agency recruits, hires and assigns the works
serious anxiety, and moral shock resulting from the shooting incident23 justify the award of moral
of its watchmen or security guards to a client, the employer of such guards or watchmen is such
damages. However, moral damages are in the category of an award designed to compensate the
agency, and not the client, since the latter has no hand in selecting the security guards. Thus, the duty
claimant for actual injury suffered and not to impose a penalty on the wrongdoer. The award is not
to observe the diligence of a good father of a family cannot be demanded from the said client: [I]t is
meant to enrich the complainant at the expense of the defendant, but to enable the injured party to
settled in our jurisdiction that where the security agency, as here, recruits, hires and assigns the work of
obtain means, diversion, or amusements that will serve to obviate the moral suffering he has
its watchmen or security guards, the agency is the employer of such guards or watchmen. Liability for
undergone. It is aimed at the restoration, within the limits of the possible, of the spiritual status quo
illegal or harmful acts committed by the security guards attaches to the employer agency, and not to
ante, and should be proportionate to the suffering inflicted. Trial courts must then guard against the
the clients or customers of such agency. As a general rule, a client or customer of a security agency has
award of exorbitant damages; they should exercise balanced restrained and measured objectivity to
no hand in selecting who among the pool of security guards or watchmen employed by the agency
avoid suspicion that it was due to passion, prejudice, or corruption on the part of the trial court.24 We
shall be assigned to it; the duty to observe the diligence of a good father of a family in the selection of
deem it just and reasonable under the circumstances to award petitioner moral damages in the
the guards cannot, in the ordinary course of events, be demanded from the client whose premises or
amount of P100,000.00.
property are protected by the security guards.
Likewise, attorney's fees and litigation expenses in the amount of P50,000.00 as part of damages is
The fact that a client company may give instructions or directions to the security guards assigned to it,
reasonable in view of Article 2208 of the Civil Code.25 However, the award of exemplary damages is
does not, by itself, render the client responsible as an employer of the security guards concerned and
deleted considering the absence of proof that respondents acted in a wanton, fraudulent, reckless,
liable for their wrongful acts or omissions.31
oppressive, or malevolent manner.
We now come to respondents' Third Party Claim against Galaxy. In Firestone Tire and Rubber
We note that the trial court held respondent De Jesus solidarily liable with respondent FEU. In Powton
Company of the Philippines v. Tempengko,32 we held that: The third-party complaint is, therefore, a
Conglomerate, Inc. v. Agcolicol,26 we held that: [A] corporation is invested by law with a personality
procedural device whereby a 'third party' who is neither a party nor privy to the act or deed
separate and distinct from those of the persons composing it, such that, save for certain exceptions,
complained of by the plaintiff, may be brought into the case with leave of court, by the defendant, who
corporate officers who entered into contracts in behalf of the corporation cannot be held personally
acts as third-party plaintiff to enforce against such third-party defendant a right for contribution,
liable for the liabilities of the latter. Personal liability of a corporate director, trustee or officer along
indemnity, subrogation or any other relief, in respect of the plaintiff's claim. The third-party complaint
(although not necessarily) with the corporation may so validly attach, as a rule, only when - (1) he
is actually independent of and separate and distinct from the plaintiff's complaint. Were it not for this
assents to a patently unlawful act of the corporation, or when he is guilty of bad faith or gross
provision of the Rules of Court, it would have to be filed independently and separately from the
negligence in directing its affairs, or when there is a conflict of interest resulting in damages to the
original complaint by the defendant against the third-party. But the Rules permit defendant to bring in
corporation, its stockholders or other persons; (2) he consents to the issuance of watered down stocks
a third-party defendant or so to speak, to litigate his separate cause of action in respect of plaintiff's
or who, having knowledge thereof, does not forthwith file with the corporate secretary his written
claim against a third-party in the original and principal case with the object of avoiding circuitry of
objection thereto; (3) he agrees to hold himself personally and solidarily liable with the corporation; or
action and unnecessary proliferation of law suits and of disposing expeditiously in one litigation the
(4) he is made by a specific provision of law personally answerable for his corporate action.27
entire subject matter arising from one particular set of facts.33
None of the foregoing exceptions was established in the instant case; hence, respondent De Jesus
Respondents and Galaxy were able to litigate their respective claims and defenses in the course of the
should not be held solidarily liable with respondent FEU.
trial of petitioner's complaint. Evidence duly supports the findings of the trial court that Galaxy is
Incidentally, although the main cause of action in the instant case is the breach of the school-student negligent not only in the selection of its employees but also in their supervision. Indeed, no
contract, petitioner, in the alternative, also holds respondents vicariously liable under Article 2180 of administrative sanction was imposed against Rosete despite the shooting incident; moreover, he was
the Civil Code, which provides: Art. 2180. The obligation imposed by Article 2176 is demandable not even allowed to go on leave of absence which led eventually to his disappearance.34 Galaxy also failed
only for one's own acts or omissions, but also for those of persons for whom one is responsible. to monitor petitioner's condition or extend the necessary assistance, other than the P5,000.00 initially
given to petitioner. Galaxy and Imperial failed to make good their pledge to reimburse petitioner's
Employers shall be liable for the damages caused by their employees and household helpers acting
medical expenses. For these acts of negligence and for having supplied respondent FEU with an
within the scope of their assigned tasks, even though the former are not engaged in any business or
unqualified security guard, which resulted to the latter's breach of obligation to petitioner, it is proper
industry.
to hold Galaxy liable to respondent FEU for such damages equivalent to the above-mentioned
The responsibility treated of in this article shall cease when the persons herein mentioned prove that amounts awarded to petitioner. Unlike respondent De Jesus, we deem Imperial to be solidarily liable
they observed all the diligence of a good father of a family to prevent damage. with Galaxy for being grossly negligent in directing the affairs of the security agency. It was Imperial
who assured petitioner that his medical expenses will be shouldered by Galaxy but said
We agree with the findings of the Court of Appeals that respondents cannot be held liable for representations were not fulfilled because they presumed that petitioner and his family were no longer
damages under Art. 2180 of the Civil Code because respondents are not the employers of Rosete. The
interested in filing a formal complaint against them.35
WHEREFORE, the petition is GRANTED. The June 29, 2007 Decision of the Court of Appeals in CA-G.R.
CV No. 87050 nullifying the Decision of the trial court and dismissing the complaint as well as the
August 23, 2007 Resolution denying the Motion for Reconsideration are REVERSED and SET ASIDE.
The Decision of the Regional Trial Court of Manila, Branch 2, in Civil Case No. 98-89483 finding
respondent FEU liable for damages for breach of its obligation to provide students with a safe and
secure learning atmosphere, is AFFIRMED with the following MODIFICATIONS: a. respondent Far
Eastern University (FEU) is ORDERED to pay petitioner actual damages in the amount of P35,298.25,
plus 6% interest per annum from the filing of the complaint until the finality of this Decision. After this
decision becomes final and executory, the applicable rate shall be twelve percent (12%) per annum
until its satisfaction; b. respondent FEU is also ORDERED to pay petitioner temperate damages in the
amount of P20,000.00; moral damages in the amount of P100,000.00; and attorney's fees and litigation
expenses in the amount of P50,000.00; c. the award of exemplary damages is DELETED.
The Complaint against respondent Edilberto C. De Jesus is DISMISSED. The counterclaims of
respondents are likewise DISMISSED. Galaxy Development and Management Corporation (Galaxy) and
its president, Mariano D. Imperial are ORDERED to jointly and severally pay respondent FEU damages
equivalent to the above-mentioned amounts awarded to petitioner.
G.R. No. 188288 January 16, 2012
SPOUSES FERNANDO and LOURDES VILORIA, Petitioners, vs. CONTINENTAL AIRLINES, INC.,
This is a petition for review under Rule 45 of the Rules of Court from the January 30, 2009 Decision1 of
the Special Thirteenth Division of the Court of Appeals (CA) in CA-G.R. CV No. 88586 entitled "Spouses
Fernando and Lourdes Viloria v. Continental Airlines, Inc.," the dispositive portion of which states:
WHEREFORE, the Decision of the Regional Trial Court, Branch 74, dated 03 April 2006, awarding
US$800.00 or its peso equivalent at the time of payment, plus legal rate of interest from 21 July 1997
until fully paid, [P]100,000.00 as moral damages, [P]50,000.00 as exemplary damages, [P]40,000.00 as
attorneys fees and costs of suit to plaintiffs-appellees is hereby REVERSED and SET ASIDE.
Defendant-appellants counterclaim is DENIED. Costs against plaintiffs-appellees. SO ORDERED.2
On April 3, 2006, the Regional Trial Court of Antipolo City, Branch 74 (RTC) rendered a Decision, giving
due course to the complaint for sum of money and damages filed by petitioners Fernando Viloria
(Fernando) and Lourdes Viloria (Lourdes), collectively called Spouses Viloria, against respondent
Continental Airlines, Inc. (CAI). As culled from the records, below are the facts giving rise to such
complaint.
On or about July 21, 1997 and while in the United States, Fernando purchased for himself and his wife,
Lourdes, two (2) round trip airline tickets from San Diego, California to Newark, New Jersey on board
Continental Airlines. Fernando purchased the tickets at US$400.00 each from a travel agency called
"Holiday Travel" and was attended to by a certain Margaret Mager (Mager). According to Spouses
Viloria, Fernando agreed to buy the said tickets after Mager informed them that there were no
available seats at Amtrak, an intercity passenger train service provider in the United States. Per the
tickets, Spouses Viloria were scheduled to leave for Newark on August 13, 1997 and return to San
Diego on August 21, 1997. Subsequently, Fernando requested Mager to reschedule their flight to
Newark to an earlier date or August 6, 1997. Mager informed him that flights to Newark via Continental
Airlines were already fully booked and offered the alternative of a round trip flight via Frontier Air.
Since flying with Frontier Air called for a higher fare of US$526.00 per passenger and would mean
traveling by night, Fernando opted to request for a refund. Mager, however, denied his request as the
subject tickets are non-refundable and the only option that Continental Airlines can offer is the
re-issuance of new tickets within one (1) year from the date the subject tickets were issued. Fernando
decided to reserve two (2) seats with Frontier Air.
As he was having second thoughts on traveling via Frontier Air, Fernando went to the Greyhound
Station where he saw an Amtrak station nearby. Fernando made inquiries and was told that there are
seats available and he can travel on Amtrak anytime and any day he pleased. Fernando then
purchased two (2) tickets for Washington, D.C. From Amtrak, Fernando went to Holiday Travel and
confronted Mager with the Amtrak tickets, telling her that she had misled them into buying the
Continental Airlines tickets by misrepresenting that Amtrak was already fully booked. Fernando
reiterated his demand for a refund but Mager was firm in her position that the subject tickets are
non-refundable.
Upon returning to the Philippines, Fernando sent a letter to CAI on February 11, 1998, demanding a
refund and alleging that Mager had deluded them into purchasing the subject tickets.3 In a letter dated
February 24, 1998, Continental Micronesia informed Fernando that his complaint had been referred to
the Customer Refund Services of Continental Airlines at Houston, Texas.4 In a letter dated March 24,
1998, Continental Micronesia denied Fernandos request for a refund and advised him that he may take
the subject tickets to any Continental ticketing location for the re-issuance of new tickets within two (2)
years from the date they were issued. Continental Micronesia informed Fernando that the subject
tickets may be used as a form of payment for the purchase of another Continental ticket, albeit with a
re-issuance fee.5
On June 17, 1999, Fernando went to Continentals ticketing office at Ayala Avenue, Makati City to have
the subject tickets replaced by a single round trip ticket to Los Angeles, California under his name.
Therein, Fernando was informed that Lourdes ticket was non-transferable, thus, cannot be used for
the purchase of a ticket in his favor. He was also informed that a round trip ticket to Los Angeles was
US$1,867.40 so he would have to pay what will not be covered by the value of his San Diego to Newark
round trip ticket.
In a letter dated June 21, 1999, Fernando demanded for the refund of the subject tickets as he no
longer wished to have them replaced. In addition to the dubious circumstances under which the
subject tickets were issued, Fernando claimed that CAIs act of charging him with US$1,867.40 for a
round trip ticket to Los Angeles, which other airlines priced at US$856.00, and refusal to allow him to
use Lourdes ticket, breached its undertaking under its March 24, 1998 letter.6 On September 8, 2000,
Spouses Viloria filed a complaint against CAI, praying that CAI be ordered to refund the money they
used in the purchase of the subject tickets with legal interest from July 21, 1997 and to pay
P1,000,000.00 as moral damages, P500,000.00 as exemplary damages and P250,000.00 as attorneys
fees.7
CAI interposed the following defenses: (a) Spouses Viloria have no right to ask for a refund as the
subject tickets are non-refundable; (b) Fernando cannot insist on using the ticket in Lourdes name for
the purchase of a round trip ticket to Los Angeles since the same is non-transferable; (c) as Mager is
not a CAI employee, CAI is not liable for any of her acts; (d) CAI, its employees and agents did not act
in bad faith as to entitle Spouses Viloria to moral and exemplary damages and attorneys fees. CAI also
invoked the following clause printed on the subject tickets: 3. To the extent not in conflict with the
foregoing carriage and other services performed by each carrier are subject to: (i) provisions contained
in this ticket, (ii) applicable tariffs, (iii) carriers conditions of carriage and related regulations which are
made part hereof (and are available on application at the offices of carrier), except in transportation
between a place in the United States or Canada and any place outside thereof to which tariffs in force
in those countries apply.8 According to CAI, one of the conditions attached to their contract of carriage
is the non-transferability and non-refundability of the subject tickets.
The RTCs Ruling
Following a full-blown trial, the RTC rendered its April 3, 2006 Decision, holding that Spouses Viloria
are entitled to a refund in view of Magers misrepresentation in obtaining their consent in the purchase
of the subject tickets.9The relevant portion of the April 3, 2006 Decision states:
Continental Airlines agent Ms. Mager was in bad faith when she was less candid and diligent in
presenting to plaintiffs spouses their booking options. Plaintiff Fernando clearly wanted to travel via
AMTRAK, but defendants agent misled him into purchasing Continental Airlines tickets instead on the
fraudulent misrepresentation that Amtrak was fully booked. In fact, defendant Airline did not
specifically denied (sic) this allegation.
Plainly, plaintiffs spouses, particularly plaintiff Fernando, were tricked into buying Continental Airline
tickets on Ms. Magers misleading misrepresentations. Continental Airlines agent Ms. Mager further
relied on and exploited plaintiff Fernandos need and told him that they must book a flight immediately
or risk not being able to travel at all on the couples preferred date. Unfortunately, plaintiffs spouses fell
prey to the airlines and its agents unethical tactics for baiting trusting customers."10
Citing Articles 1868 and 1869 of the Civil Code, the RTC ruled that Mager is CAIs agent, hence, bound
by her bad faith and misrepresentation. As far as the RTC is concerned, there is no issue as to whether
Mager was CAIs agent in view of CAIs implied recognition of her status as such in its March 24, 1998
letter.
The act of a travel agent or agency being involved here, the following are the pertinent New Civil Code
provisions on agency: Art. 1868. By the contract of agency a person binds himself to render some
service or to do something in representation or on behalf of another, with the consent or authority of
the latter. Art. 1869. Agency may be express, or implied from the acts of the principal, from his silence
or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his
behalf without authority.
Agency may be oral, unless the law requires a specific form. As its very name implies, a travel agency
binds itself to render some service or to do something in representation or on behalf of another, with
the consent or authority of the latter. This court takes judicial notice of the common services rendered
by travel agencies that represent themselves as such, specifically the reservation and booking of local
and foreign tours as well as the issuance of airline tickets for a commission or fee.
The services rendered by Ms. Mager of Holiday Travel agency to the plaintiff spouses on July 21, 1997
were no different from those offered in any other travel agency. Defendant airline impliedly if not
expressly acknowledged its principal-agent relationship with Ms. Mager by its offer in the letter dated
March 24, 1998 an obvious attempt to assuage plaintiffs spouses hurt feelings.11
Furthermore, the RTC ruled that CAI acted in bad faith in reneging on its undertaking to replace the
subject tickets within two (2) years from their date of issue when it charged Fernando with the amount
of US$1,867.40 for a round trip ticket to Los Angeles and when it refused to allow Fernando to use
Lourdes ticket. Specifically: Tickets may be reissued for up to two years from the original date of issue.
When defendant airline still charged plaintiffs spouses US$1,867.40 or more than double the then
going rate of US$856.00 for the unused tickets when the same were presented within two (2) years
from date of issue, defendant airline exhibited callous treatment of passengers.12
The Appellate Courts Ruling
On appeal, the CA reversed the RTCs April 3, 2006 Decision, holding that CAI cannot be held liable for
Magers act in the absence of any proof that a principal-agent relationship existed between CAI and
Holiday Travel. According to the CA, Spouses Viloria, who have the burden of proof to establish the
fact of agency, failed to present evidence demonstrating that Holiday Travel is CAIs agent.
Furthermore, contrary to Spouses Vilorias claim, the contractual relationship between Holiday Travel
and CAI is not an agency but that of a sale.
Plaintiffs-appellees assert that Mager was a sub-agent of Holiday Travel who was in turn a ticketing
agent of Holiday Travel who was in turn a ticketing agent of Continental Airlines. Proceeding from this
premise, they contend that Continental Airlines should be held liable for the acts of Mager. The trial
court held the same view.
We do not agree. By the contract of agency, a person binds him/herself to render some service or to
do something in representation or on behalf of another, with the consent or authority of the latter. The
elements of agency are: (1) consent, express or implied, of the parties to establish the relationship; (2)
the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a
representative and not for him/herself; and (4) the agent acts within the scope of his/her authority. As
the basis of agency is representation, there must be, on the part of the principal, an actual intention to
appoint, an intention naturally inferable from the principals words or actions. In the same manner,
there must be an intention on the part of the agent to accept the appointment and act upon it. Absent
such mutual intent, there is generally no agency. It is likewise a settled rule that persons dealing with
an assumed agent are bound at their peril, if they would hold the principal liable, to ascertain not only
the fact of agency but also the nature and extent of authority, and in case either is controverted, the
burden of proof is upon them to establish it. Agency is never presumed, neither is it created by the
mere use of the word in a trade or business name. We have perused the evidence and documents so
far presented. We find nothing except bare allegations of plaintiffs-appellees that Mager/Holiday
Travel was acting in behalf of Continental Airlines. From all sides of legal prism, the transaction in issue
was simply a contract of sale, wherein Holiday Travel buys airline tickets from Continental Airlines and
then, through its employees, Mager included, sells it at a premium to clients.13
The CA also ruled that refund is not available to Spouses Viloria as the word "non-refundable" was
clearly printed on the face of the subject tickets, which constitute their contract with CAI. Therefore, the
grant of their prayer for a refund would violate the proscription against impairment of contracts.
Finally, the CA held that CAI did not act in bad faith when they charged Spouses Viloria with the higher
amount of US$1,867.40 for a round trip ticket to Los Angeles. According to the CA, there is no
compulsion for CAI to charge the lower amount of US$856.00, which Spouses Viloria claim to be the
fee charged by other airlines. The matter of fixing the prices for its services is CAIs prerogative, which
Spouses Viloria cannot intervene. In particular:
It is within the respective rights of persons owning and/or operating business entities to peg the
premium of the services and items which they provide at a price which they deem fit, no matter how
expensive or exhorbitant said price may seem vis--vis those of the competing companies. The
Spouses Viloria may not intervene with the business judgment of Continental Airlines.14
The Petitioners Case
In this Petition, this Court is being asked to review the findings and conclusions of the CA, as the
latters reversal of the RTCs April 3, 2006 Decision allegedly lacks factual and legal bases. Spouses
Viloria claim that CAI acted in bad faith when it required them to pay a higher amount for a round trip
ticket to Los Angeles considering CAIs undertaking to re-issue new tickets to them within the period
stated in their March 24, 1998 letter. CAI likewise acted in bad faith when it disallowed Fernando to use
Lourdes ticket to purchase a round trip to Los Angeles given that there is nothing in Lourdes ticket
indicating that it is non-transferable. As a common carrier, it is CAIs duty to inform its passengers of
the terms and conditions of their contract and passengers cannot be bound by such terms and
conditions which they are not made aware of. Also, the subject contract of carriage is a contract of
adhesion; therefore, any ambiguities should be construed against CAI. Notably, the petitioners are no
longer questioning the validity of the subject contracts and limited its claim for a refund on CAIs
alleged breach of its undertaking in its March 24, 1998 letter.
The Respondents Case
In its Comment, CAI claimed that Spouses Vilorias allegation of bad faith is negated by its willingness
to issue new tickets to them and to credit the value of the subject tickets against the value of the new
ticket Fernando requested. CAI argued that Spouses Vilorias sole basis to claim that the price at which
CAI was willing to issue the new tickets is unconscionable is a piece of hearsay evidence an
advertisement appearing on a newspaper stating that airfares from Manila to Los Angeles or San
Francisco cost US$818.00.15 Also, the advertisement pertains to airfares in September 2000 and not to
airfares prevailing in June 1999, the time when Fernando asked CAI to apply the value of the subject
tickets for the purchase of a new one.16 CAI likewise argued that it did not undertake to protect
Spouses Viloria from any changes or fluctuations in the prices of airline tickets and its only obligation
was to apply the value of the subject tickets to the purchase of the newly issued tickets.
With respect to Spouses Vilorias claim that they are not aware of CAIs restrictions on the subject
tickets and that the terms and conditions that are printed on them are ambiguous, CAI denies any
ambiguity and alleged that its representative informed Fernando that the subject tickets are
non-transferable when he applied for the issuance of a new ticket. On the other hand, the word
"non-refundable" clearly appears on the face of the subject tickets.
CAI also denies that it is bound by the acts of Holiday Travel and Mager and that no principal-agency
relationship exists between them. As an independent contractor, Holiday Travel was without capacity to
bind CAI.
Issues: To determine the propriety of disturbing the CAs January 30, 2009 Decision and whether
Spouses Viloria have the right to the reliefs they prayed for, this Court deems it necessary to resolve
the following issues:
a. Does a principal-agent relationship exist between CAI and Holiday Travel?
b. Assuming that an agency relationship exists between CAI and Holiday Travel, is CAI bound by
the acts of Holiday Travels agents and employees such as Mager?
c. Assuming that CAI is bound by the acts of Holiday Travels agents and employees, can the
representation of Mager as to unavailability of seats at Amtrak be considered fraudulent as to
vitiate the consent of Spouse Viloria in the purchase of the subject tickets?
d. Is CAI justified in insisting that the subject tickets are non-transferable and non-refundable?
e. Is CAI justified in pegging a different price for the round trip ticket to Los Angeles requested
by Fernando?
f. Alternatively, did CAI act in bad faith or renege its obligation to Spouses Viloria to apply the
value of the subject tickets in the purchase of new ones when it refused to allow Fernando to use
Lourdes ticket and in charging a higher price for a round trip ticket to Los Angeles?
This Courts Ruling
I. A principal-agent relationship exists between CAI and Holiday Travel.
With respect to the first issue, which is a question of fact that would require this Court to review and
re-examine the evidence presented by the parties below, this Court takes exception to the general rule
that the CAs findings of fact are conclusive upon Us and our jurisdiction is limited to the review of
questions of law. It is well-settled to the point of being axiomatic that this Court is authorized to
resolve questions of fact if confronted with contrasting factual findings of the trial court and appellate
court and if the findings of the CA are contradicted by the evidence on record.17
According to the CA, agency is never presumed and that he who alleges that it exists has the burden
of proof. Spouses Viloria, on whose shoulders such burden rests, presented evidence that fell short of
indubitably demonstrating the existence of such agency.
We disagree. The CA failed to consider undisputed facts, discrediting CAIs denial that Holiday Travel is
one of its agents. Furthermore, in erroneously characterizing the contractual relationship between CAI
and Holiday Travel as a contract of sale, the CA failed to apply the fundamental civil law principles
governing agency and differentiating it from sale.
In Rallos v. Felix Go Chan & Sons Realty Corporation,18 this Court explained the nature of an agency
and spelled out the essential elements thereof:
Out of the above given principles, sprung the creation and acceptance of the relationship of
agencywhereby one party, called the principal (mandante), authorizes another, called the agent
(mandatario), to act for and in his behalf in transactions with third persons. The essential elements of
agency are: (1) there is consent, express or implied of the parties to establish the relationship; (2) the
object is the execution of a juridical act in relation to a third person; (3) the agent acts as a
representative and not for himself, and (4) the agent acts within the scope of his authority.1avvphi1
Agency is basically personal, representative, and derivative in nature. The authority of the agent to act
emanates from the powers granted to him by his principal; his act is the act of the principal if done
within the scope of the authority. Qui facit per alium facit se. "He who acts through another acts
himself."19
Contrary to the findings of the CA, all the elements of an agency exist in this case. The first and second
elements are present as CAI does not deny that it concluded an agreement with Holiday Travel,
whereby Holiday Travel would enter into contracts of carriage with third persons on CAIs behalf. The
third element is also present as it is undisputed that Holiday Travel merely acted in a representative
capacity and it is CAI and not Holiday Travel who is bound by the contracts of carriage entered into by
Holiday Travel on its behalf. The fourth element is also present considering that CAI has not made any
allegation that Holiday Travel exceeded the authority that was granted to it. In fact, CAI consistently
maintains the validity of the contracts of carriage that Holiday Travel executed with Spouses Viloria and
that Mager was not guilty of any fraudulent misrepresentation. That CAI admits the authority of
Holiday Travel to enter into contracts of carriage on its behalf is easily discernible from its February 24,
1998 and March 24, 1998 letters, where it impliedly recognized the validity of the contracts entered into
by Holiday Travel with Spouses Viloria. When Fernando informed CAI that it was Holiday Travel who
issued to them the subject tickets, CAI did not deny that Holiday Travel is its authorized agent.
Prior to Spouses Vilorias filing of a complaint against it, CAI never refuted that it gave Holiday Travel
the power and authority to conclude contracts of carriage on its behalf. As clearly extant from the
records, CAI recognized the validity of the contracts of carriage that Holiday Travel entered into with
Spouses Viloria and considered itself bound with Spouses Viloria by the terms and conditions thereof;
and this constitutes an unequivocal testament to Holiday Travels authority to act as its agent. This
Court cannot therefore allow CAI to take an altogether different position and deny that Holiday Travel
is its agent without condoning or giving imprimatur to whatever damage or prejudice that may result
from such denial or retraction to Spouses Viloria, who relied on good faith on CAIs acts in recognition
of Holiday Travels authority. Estoppel is primarily based on the doctrine of good faith and the
avoidance of harm that will befall an innocent party due to its injurious reliance, the failure to apply it
in this case would result in gross travesty of justice.20 Estoppel bars CAI from making such denial.
As categorically provided under Article 1869 of the Civil Code, "[a]gency may be express, or implied
from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency,
knowing that another person is acting on his behalf without authority."
Considering that the fundamental hallmarks of an agency are present, this Court finds it rather peculiar
that the CA had branded the contractual relationship between CAI and Holiday Travel as one of sale.
The distinctions between a sale and an agency are not difficult to discern and this Court, as early as
1970, had already formulated the guidelines that would aid in differentiating the two (2) contracts. In
Commissioner of Internal Revenue v. Constantino,21 this Court extrapolated that the primordial
differentiating consideration between the two (2) contracts is the transfer of ownership or title over the
property subject of the contract. In an agency, the principal retains ownership and control over the
property and the agent merely acts on the principals behalf and under his instructions in furtherance
of the objectives for which the agency was established. On the other hand, the contract is clearly a sale
if the parties intended that the delivery of the property will effect a relinquishment of title, control and
ownership in such a way that the recipient may do with the property as he pleases.
Since the company retained ownership of the goods, even as it delivered possession unto the dealer
for resale to customers, the price and terms of which were subject to the company's control, the
relationship between the company and the dealer is one of agency, tested under the following
criterion:
"The difficulty in distinguishing between contracts of sale and the creation of an agency to sell has led
to the establishment of rules by the application of which this difficulty may be solved. The decisions say
the transfer of title or agreement to transfer it for a price paid or promised is the essence of sale. If
such transfer puts the transferee in the attitude or position of an owner and makes him liable to the
transferor as a debtor for the agreed price, and not merely as an agent who must account for the
proceeds of a resale, the transaction is a sale; while the essence of an agency to sell is the delivery to
an agent, not as his property, but as the property of the principal, who remains the owner and has the
right to control sales, fix the price, and terms, demand and receive the proceeds less the agent's
commission upon sales made. 1 Mechem on Sales, Sec. 43; 1 Mechem on Agency, Sec. 48; Williston on
Sales, 1; Tiedeman on Sales, 1." (Salisbury v. Brooks, 94 SE 117, 118-119)22
As to how the CA have arrived at the conclusion that the contract between CAI and Holiday Travel is a
sale is certainly confounding, considering that CAI is the one bound by the contracts of carriage
embodied by the tickets being sold by Holiday Travel on its behalf. It is undisputed that CAI and not
Holiday Travel who is the party to the contracts of carriage executed by Holiday Travel with third
persons who desire to travel via Continental Airlines, and this conclusively indicates the existence of a
principal-agent relationship. That the principal is bound by all the obligations contracted by the agent
within the scope of the authority granted to him is clearly provided under Article 1910 of the Civil Code
and this constitutes the very notion of agency.
II. In actions based on quasi-delict, a principal can only be held liable for the tort committed by its
agents employees if it has been established by preponderance of evidence that the principal was also
at fault or negligent or that the principal exercise control and supervision over them.
Considering that Holiday Travel is CAIs agent, does it necessarily follow that CAI is liable for the fault or
negligence of Holiday Travels employees? Citing China Air Lines, Ltd. v. Court of Appeals, et al.,23 CAI
argues that it cannot be held liable for the actions of the employee of its ticketing agent in the absence
of an employer-employee relationship.
An examination of this Courts pronouncements in China Air Lines will reveal that an airline company is
not completely exonerated from any liability for the tort committed by its agents employees. A prior
determination of the nature of the passengers cause of action is necessary. If the passengers cause of
action against the airline company is premised on culpa aquiliana or quasi-delict for a tort committed
by the employee of the airline companys agent, there must be an independent showing that the
airline company was at fault or negligent or has contributed to the negligence or tortuous conduct
committed by the employee of its agent. The mere fact that the employee of the airline companys
agent has committed a tort is not sufficient to hold the airline company liable. There is no vinculum
juris between the airline company and its agents employees and the contractual relationship between
the airline company and its agent does not operate to create a juridical tie between the airline
company and its agents employees. Article 2180 of the Civil Code does not make the principal
vicariously liable for the tort committed by its agents employees and the principal-agency relationship
per se does not make the principal a party to such tort; hence, the need to prove the principals own
fault or negligence.
On the other hand, if the passengers cause of action for damages against the airline company is based
on contractual breach or culpa contractual, it is not necessary that there be evidence of the airline
companys fault or negligence. As this Court previously stated in China Air Lines and reiterated in Air
France vs. Gillego,24 "in an action based on a breach of contract of carriage, the aggrieved party does
not have to prove that the common carrier was at fault or was negligent. All that he has to prove is the
existence of the contract and the fact of its non-performance by the carrier."
Spouses Vilorias cause of action on the basis of Magers alleged fraudulent misrepresentation is clearly
one of tort or quasi-delict, there being no pre-existing contractual relationship between them.
Therefore, it was incumbent upon Spouses Viloria to prove that CAI was equally at fault.
However, the records are devoid of any evidence by which CAIs alleged liability can be substantiated.
Apart from their claim that CAI must be held liable for Magers supposed fraud because Holiday Travel
is CAIs agent, Spouses Viloria did not present evidence that CAI was a party or had contributed to
Magers complained act either by instructing or authorizing Holiday Travel and Mager to issue the said
misrepresentation.
It may seem unjust at first glance that CAI would consider Spouses Viloria bound by the terms and
conditions of the subject contracts, which Mager entered into with them on CAIs behalf, in order to
deny Spouses Vilorias request for a refund or Fernandos use of Lourdes ticket for the re-issuance of a
new one, and simultaneously claim that they are not bound by Magers supposed misrepresentation
for purposes of avoiding Spouses Vilorias claim for damages and maintaining the validity of the
subject contracts. It may likewise be argued that CAI cannot deny liability as it benefited from Magers
acts, which were performed in compliance with Holiday Travels obligations as CAIs agent.
However, a persons vicarious liability is anchored on his possession of control, whether absolute or
limited, on the tortfeasor. Without such control, there is nothing which could justify extending the
liability to a person other than the one who committed the tort. As this Court explained in Cangco v.
Manila Railroad Co.:25
With respect to extra-contractual obligation arising from negligence, whether of act or omission, it is
competent for the legislature to elect and our Legislature has so elected to limit such liability to
cases in which the person upon whom such an obligation is imposed is morally culpable or, on the
contrary, for reasons of public policy, to extend that liability, without regard to the lack of moral
culpability, so as to include responsibility for the negligence of those persons whose acts or omissions
are imputable, by a legal fiction, to others who are in a position to exercise an absolute or limited
control over them. The legislature which adopted our Civil Code has elected to limit extra-contractual
liability with certain well-defined exceptions to cases in which moral culpability can be directly
imputed to the persons to be charged. This moral responsibility may consist in having failed to exercise
due care in one's own acts, or in having failed to exercise due care in the selection and control of one's
agent or servants, or in the control of persons who, by reasons of their status, occupy a position of
dependency with respect to the person made liable for their conduct.26 (emphasis supplied)
It is incumbent upon Spouses Viloria to prove that CAI exercised control or supervision over Mager by
preponderant evidence. The existence of control or supervision cannot be presumed and CAI is under
no obligation to prove its denial or nugatory assertion. Citing Belen v. Belen,27 this Court ruled in
Jayme v. Apostol,28 that:
In Belen v. Belen, this Court ruled that it was enough for defendant to deny an alleged employment
relationship. The defendant is under no obligation to prove the negative averment. This Court said:
"It is an old and well-settled rule of the courts that the burden of proving the action is upon the
plaintiff, and that if he fails satisfactorily to show the facts upon which he bases his claim, the defendant
is under no obligation to prove his exceptions. This [rule] is in harmony with the provisions of Section
297 of the Code of Civil Procedure holding that each party must prove his own affirmative allegations,
etc."29 (citations omitted)
Therefore, without a modicum of evidence that CAI exercised control over Holiday Travels employees
or that CAI was equally at fault, no liability can be imposed on CAI for Magers supposed
misrepresentation.
III. Even on the assumption that CAI may be held liable for the acts of Mager, still, Spouses Viloria are
not entitled to a refund. Magers statement cannot be considered a causal fraud that would justify the
annulment of the subject contracts that would oblige CAI to indemnify Spouses Viloria and return the
money they paid for the subject tickets.
Article 1390, in relation to Article 1391 of the Civil Code, provides that if the consent of the contracting
parties was obtained through fraud, the contract is considered voidable and may be annulled within
four (4) years from the time of the discovery of the fraud. Once a contract is annulled, the parties are
obliged under Article 1398 of the same Code to restore to each other the things subject matter of the
contract, including their fruits and interest.
On the basis of the foregoing and given the allegation of Spouses Viloria that Fernandos consent to
the subject contracts was supposedly secured by Mager through fraudulent means, it is plainly
apparent that their demand for a refund is tantamount to seeking for an annulment of the subject
contracts on the ground of vitiated consent.
Whether the subject contracts are annullable, this Court is required to determine whether Magers
alleged misrepresentation constitutes causal fraud. Similar to the dispute on the existence of an agency,
whether fraud attended the execution of a contract is factual in nature and this Court, as discussed
above, may scrutinize the records if the findings of the CA are contrary to those of the RTC.
Under Article 1338 of the Civil Code, there is fraud when, through insidious words or machinations of
one of the contracting parties, the other is induced to enter into a contract which, without them, he
would not have agreed to. In order that fraud may vitiate consent, it must be the causal (dolo
causante), not merely the incidental (dolo incidente), inducement to the making of the contract.30 In
Samson v. Court of Appeals,31 causal fraud was defined as "a deception employed by one party prior to
or simultaneous to the contract in order to secure the consent of the other."32
Also, fraud must be serious and its existence must be established by clear and convincing evidence. As
ruled by this Court in Sierra v. Hon. Court of Appeals, et al.,33 mere preponderance of evidence is not
adequate:
Fraud must also be discounted, for according to the Civil Code:
Art. 1338. There is fraud when, through insidious words or machinations of one of the contracting
parties, the other is induced to enter into a contract which without them, he would not have agreed to.
Art. 1344. In order that fraud may make a contract voidable, it should be serious and should not have
been employed by both contracting parties.
To quote Tolentino again, the "misrepresentation constituting the fraud must be established by full,
clear, and convincing evidence, and not merely by a preponderance thereof. The deceit must be
serious. The fraud is serious when it is sufficient to impress, or to lead an ordinarily prudent person into
error; that which cannot deceive a prudent person cannot be a ground for nullity. The circumstances of
each case should be considered, taking into account the personal conditions of the victim."34
After meticulously poring over the records, this Court finds that the fraud alleged by Spouses Viloria
has not been satisfactorily established as causal in nature to warrant the annulment of the subject
contracts. In fact, Spouses Viloria failed to prove by clear and convincing evidence that Magers
statement was fraudulent. Specifically, Spouses Viloria failed to prove that (a) there were indeed
available seats at Amtrak for a trip to New Jersey on August 13, 1997 at the time they spoke with Mager
on July 21, 1997; (b) Mager knew about this; and (c) that she purposely informed them otherwise.
This Court finds the only proof of Magers alleged fraud, which is Fernandos testimony that an Amtrak
had assured him of the perennial availability of seats at Amtrak, to be wanting. As CAI correctly
pointed out and as Fernando admitted, it was possible that during the intervening period of three (3)
weeks from the time Fernando purchased the subject tickets to the time he talked to said Amtrak
employee, other passengers may have cancelled their bookings and reservations with Amtrak, making
it possible for Amtrak to accommodate them. Indeed, the existence of fraud cannot be proved by mere
speculations and conjectures. Fraud is never lightly inferred; it is good faith that is. Under the Rules of
Court, it is presumed that "a person is innocent of crime or wrong" and that "private transactions have
been fair and regular."35 Spouses Viloria failed to overcome this presumption.
IV. Assuming the contrary, Spouses Viloria are nevertheless deemed to have ratified the subject
contracts.
Even assuming that Magers representation is causal fraud, the subject contracts have been impliedly
ratified when Spouses Viloria decided to exercise their right to use the subject tickets for the purchase
of new ones. Under Article 1392 of the Civil Code, "ratification extinguishes the action to annul a
voidable contract."
Ratification of a voidable contract is defined under Article 1393 of the Civil Code as follows:
Art. 1393. Ratification may be effected expressly or tacitly. It is understood that there is a tacit
ratification if, with knowledge of the reason which renders the contract voidable and such reason
having ceased, the person who has a right to invoke it should execute an act which necessarily implies
an intention to waive his right.
Implied ratification may take diverse forms, such as by silence or acquiescence; by acts showing
approval or adoption of the contract; or by acceptance and retention of benefits flowing therefrom.36
Simultaneous with their demand for a refund on the ground of Fernandos vitiated consent, Spouses
Viloria likewise asked for a refund based on CAIs supposed bad faith in reneging on its undertaking to
replace the subject tickets with a round trip ticket from Manila to Los Angeles.
In doing so, Spouses Viloria are actually asking for a rescission of the subject contracts based on
contractual breach. Resolution, the action referred to in Article 1191, is based on the defendants breach
of faith, a violation of the reciprocity between the parties37 and in Solar Harvest, Inc. v. Davao
Corrugated Carton Corporation,38 this Court ruled that a claim for a reimbursement in view of the
other partys failure to comply with his obligations under the contract is one for rescission or
resolution.
However, annulment under Article 1390 of the Civil Code and rescission under Article 1191 are two (2)
inconsistent remedies. In resolution, all the elements to make the contract valid are present; in
annulment, one of the essential elements to a formation of a contract, which is consent, is absent. In
resolution, the defect is in the consummation stage of the contract when the parties are in the process
of performing their respective obligations; in annulment, the defect is already present at the time of
the negotiation and perfection stages of the contract. Accordingly, by pursuing the remedy of
rescission under Article 1191, the Vilorias had impliedly admitted the validity of the subject contracts,
forfeiting their right to demand their annulment. A party cannot rely on the contract and claim rights
or obligations under it and at the same time impugn its existence or validity. Indeed, litigants are
enjoined from taking inconsistent positions.39
V. Contracts cannot be rescinded for a slight or casual breach.
CAI cannot insist on the non-transferability of the subject tickets.
Considering that the subject contracts are not annullable on the ground of vitiated consent, the next
question is: "Do Spouses Viloria have the right to rescind the contract on the ground of CAIs supposed
breach of its undertaking to issue new tickets upon surrender of the subject tickets?"
Article 1191, as presently worded, states:
The power to rescind obligations is implied in reciprocal ones, in case one of the obligors should not
comply with what is incumbent upon him.
The injured party may choose between the fulfilment and the rescission of the obligation, with the
payment of damages in either case. He may also seek rescission, even after he has chosen fulfillment, if
the latter should become impossible.
The court shall decree the rescission claimed, unless there be just cause authorizing the fixing of a
period.
This is understood to be without prejudice to the rights of third persons who have acquired the thing,
in accordance with articles 1385 and 1388 and the Mortgage Law.
According to Spouses Viloria, CAI acted in bad faith and breached the subject contracts when it
refused to apply the value of Lourdes ticket for Fernandos purchase of a round trip ticket to Los
Angeles and in requiring him to pay an amount higher than the price fixed by other airline companies.
In its March 24, 1998 letter, CAI stated that "non-refundable tickets may be used as a form of payment
toward the purchase of another Continental ticket for $75.00, per ticket, reissue fee ($50.00, per ticket,
for tickets purchased prior to October 30, 1997)."
Clearly, there is nothing in the above-quoted section of CAIs letter from which the restriction on the
non-transferability of the subject tickets can be inferred. In fact, the words used by CAI in its letter
supports the position of Spouses Viloria, that each of them can use the ticket under their name for the
purchase of new tickets whether for themselves or for some other person.
Moreover, as CAI admitted, it was only when Fernando had expressed his interest to use the subject
tickets for the purchase of a round trip ticket between Manila and Los Angeles that he was informed
that he cannot use the ticket in Lourdes name as payment.
Contrary to CAIs claim, that the subject tickets are non-transferable cannot be implied from a plain
reading of the provision printed on the subject tickets stating that "[t]o the extent not in conflict with
the foregoing carriage and other services performed by each carrier are subject to: (a) provisions
contained in this ticket, x x x (iii) carriers conditions of carriage and related regulations which are made
part hereof (and are available on application at the offices of carrier) x x x." As a common carrier whose
business is imbued with public interest, the exercise of extraordinary diligence requires CAI to inform
Spouses Viloria, or all of its passengers for that matter, of all the terms and conditions governing their
contract of carriage. CAI is proscribed from taking advantage of any ambiguity in the contract of
carriage to impute knowledge on its passengers of and demand compliance with a certain condition
or undertaking that is not clearly stipulated. Since the prohibition on transferability is not written on
the face of the subject tickets and CAI failed to inform Spouses Viloria thereof, CAI cannot refuse to
apply the value of Lourdes ticket as payment for Fernandos purchase of a new ticket.
CAIs refusal to accept Lourdes ticket for the purchase of a new ticket for Fernando is only a casual
breach.
Nonetheless, the right to rescind a contract for non-performance of its stipulations is not absolute. The
general rule is that rescission of a contract will not be permitted for a slight or casual breach, but only
for such substantial and fundamental violations as would defeat the very object of the parties in
making the agreement.40 Whether a breach is substantial is largely determined by the attendant
circumstances.41
While CAIs refusal to allow Fernando to use the value of Lourdes ticket as payment for the purchase of
a new ticket is unjustified as the non-transferability of the subject tickets was not clearly stipulated, it
cannot, however be considered substantial. The endorsability of the subject tickets is not an essential
part of the underlying contracts and CAIs failure to comply is not essential to its fulfillment of its
undertaking to issue new tickets upon Spouses Vilorias surrender of the subject tickets. This Court
takes note of CAIs willingness to perform its principal obligation and this is to apply the price of the
ticket in Fernandos name to the price of the round trip ticket between Manila and Los Angeles. CAI
was likewise willing to accept the ticket in Lourdes name as full or partial payment as the case may be
for the purchase of any ticket, albeit under her name and for her exclusive use. In other words, CAIs
willingness to comply with its undertaking under its March 24, 1998 cannot be doubted, albeit tainted
with its erroneous insistence that Lourdes ticket is non-transferable.
Moreover, Spouses Vilorias demand for rescission cannot prosper as CAI cannot be solely faulted for
the fact that their agreement failed to consummate and no new ticket was issued to Fernando.
Spouses Viloria have no right to insist that a single round trip ticket between Manila and Los Angeles
should be priced at around $856.00 and refuse to pay the difference between the price of the subject
tickets and the amount fixed by CAI. The petitioners failed to allege, much less prove, that CAI had
obliged itself to issue to them tickets for any flight anywhere in the world upon their surrender of the
subject tickets. In its March 24, 1998 letter, it was clearly stated that "[n]on-refundable tickets may be
used as a form of payment toward the purchase of another Continental ticket"42 and there is nothing in
it suggesting that CAI had obliged itself to protect Spouses Viloria from any fluctuation in the prices of
tickets or that the surrender of the subject tickets will be considered as full payment for any ticket that
the petitioners intend to buy regardless of actual price and destination. The CA was correct in holding
that it is CAIs right and exclusive prerogative to fix the prices for its services and it may not be
compelled to observe and maintain the prices of other airline companies.43
The conflict as to the endorsability of the subject tickets is an altogether different matter, which does
not preclude CAI from fixing the price of a round trip ticket between Manila and Los Angeles in an
amount it deems proper and which does not provide Spouses Viloria an excuse not to pay such price,
albeit subject to a reduction coming from the value of the subject tickets. It cannot be denied that
Spouses Viloria had the concomitant obligation to pay whatever is not covered by the value of the
subject tickets whether or not the subject tickets are transferable or not.1avvphi1
There is also no showing that Spouses Viloria were discriminated against in bad faith by being charged
with a higher rate. The only evidence the petitioners presented to prove that the price of a round trip
ticket between Manila and Los Angeles at that time was only $856.00 is a newspaper advertisement for
another airline company, which is inadmissible for being "hearsay evidence, twice removed."
Newspaper clippings are hearsay if they were offered for the purpose of proving the truth of the
matter alleged. As ruled in Feria v. Court of Appeals,:44

[N]ewspaper articles amount to "hearsay evidence, twice removed" and are therefore not only
inadmissible but without any probative value at all whether objected to or not, unless offered for a
purpose other than proving the truth of the matter asserted. In this case, the news article is admissible
only as evidence that such publication does exist with the tenor of the news therein stated.45 (citations
omitted)

The records of this case demonstrate that both parties were equally in default; hence, none of them
can seek judicial redress for the cancellation or resolution of the subject contracts and they are
therefore bound to their respective obligations thereunder. As the 1st sentence of Article 1192 provides:

Art. 1192. In case both parties have committed a breach of the obligation, the liability of the first
infractor shall be equitably tempered by the courts. If it cannot be determined which of the parties first
violated the contract, the same shall be deemed extinguished, and each shall bear his own damages.
(emphasis supplied)

Therefore, CAIs liability for damages for its refusal to accept Lourdes ticket for the purchase of
Fernandos round trip ticket is offset by Spouses Vilorias liability for their refusal to pay the amount,
which is not covered by the subject tickets. Moreover, the contract between them remains, hence, CAI
is duty bound to issue new tickets for a destination chosen by Spouses Viloria upon their surrender of
the subject tickets and Spouses Viloria are obliged to pay whatever amount is not covered by the value
of the subject tickets.

This Court made a similar ruling in Central Bank of the Philippines v. Court of Appeals.46 Thus: Since
both parties were in default in the performance of their respective reciprocal obligations, that is, Island
Savings Bank failed to comply with its obligation to furnish the entire loan and Sulpicio M. Tolentino
failed to comply with his obligation to pay his P17,000.00 debt within 3 years as stipulated, they are
both liable for damages.

Article 1192 of the Civil Code provides that in case both parties have committed a breach of their
reciprocal obligations, the liability of the first infractor shall be equitably tempered by the courts. WE
rule that the liability of Island Savings Bank for damages in not furnishing the entire loan is offset by
the liability of Sulpicio M. Tolentino for damages, in the form of penalties and surcharges, for not
paying his overdue P17,000.00 debt. x x x.47

Another consideration that militates against the propriety of holding CAI liable for moral damages is
the absence of a showing that the latter acted fraudulently and in bad faith. Article 2220 of the Civil
Code requires evidence of bad faith and fraud and moral damages are generally not recoverable in
culpa contractual except when bad faith had been proven.48 The award of exemplary damages is
likewise not warranted. Apart from the requirement that the defendant acted in a wanton, oppressive
and malevolent manner, the claimant must prove his entitlement to moral damages.49 WHEREFORE,
premises considered, the instant Petition is DENIED. SO ORDERED.