B.
TO FELIX OLEDAN
EQUITABLE LEASING CORPORATION, petitioner,
vs. LUCITA SUYOM, MARISSA ENANO,
MYRNA TAMAYO and FELIX
OLEDAN, respondents.
DECISION
PANGANIBAN, J.:
In an action based on quasi delict, the registered
owner of a motor vehicle is solidarily liable for the
injuries and damages caused by the negligence of the
driver, in spite of the fact that the vehicle may have
already been the subject of an unregistered Deed of
Sale in favor of another person. Unless registered with
the Land Transportation Office, the sale -- while valid
and binding between the parties -- does not affect third
parties, especially the victims of accidents involving the
said transport equipment. Thus, in the present case,
petitioner, which is the registered owner, is liable for the
acts of the driver employed by its former lessee who has
become the owner of that vehicle by virtue of an
unregistered Deed of Sale.
Statement of the Case
Before us is a Petition for Review under Rule 45 of
the Rules of Court, assailing the May 12, 2000
Decision[1] of the Court of Appeals[2] (CA) in CA-GR CV
No. 55474.The decretal portion of the Decision reads as
follows:
WHEREFORE, premises considered, the instant appeal is
hereby DISMISSED for lack of merit. The assailed decision,
dated May 5, 1997, of the Regional Trial Court of Manila,
Branch 14, in Civil Case No. 95-73522, is
hereby AFFIRMED with MODIFICATION that the award
of attorneys fees is DELETED.[3]
On the other hand, in Civil Case No. 95-73522, the
Regional Trial Court (RTC) of Manila (Branch 14) had
earlier disposed in this wise:
WHEREFORE, judgment is hereby rendered in favor of the
plaintiffs and against the defendant Equitable Leasing
Corporation ordering said defendant to pay to the plaintiffs the
following:
A. TO MYRNA TAMAYO
1. the sum of P50,000.00 for the death of Reniel Tamayo;
2. P50,000.00 as moral damages; and
3. P56,000.00 for the damage to the store and its contents, and
funeral expenses.
1. the sum of P50,000.00 for the death of Felmarie Oledan;
2. P50,000.00 as moral damages; and
3. P30,000.00 for medical expenses, and funeral expenses.
C. TO MARISSA ENANO
1. P7,000.00 as actual damages
D. TO LUCITA SUYOM
1. The sum of P5,000.00 for the medical treatment of her two
sons.
The sum of P120,000.00 as and for attorneys fees.[4]
The Facts
On July 17, 1994, a Fuso Road Tractor driven by
Raul Tutor rammed into the house cum store of Myrna
Tamayo located at Pier 18, Vitas, Tondo, Manila. A
portion of the house was destroyed. Pinned to death
under the engine of the tractor were Respondent Myrna
Tamayos son, Reniel Tamayo, and Respondent Felix
Oledans daughter, Felmarie Oledan. Injured were
Respondent Oledan himself, Respondent Marissa
Enano, and two sons of Respondent Lucita Suyom.
Tutor was charged with and later convicted of
reckless imprudence resulting in multiple homicide and
multiple physical injuries in Criminal Case No. 296094-
SA, Metropolitan Trial Court of Manila, Branch 12.[5]
Upon verification with the Land Transportation
Office, respondents were furnished a copy of Official
Receipt No. 62204139[6] and Certificate of Registration
No. 08262797,[7] showing that the registered owner of
the tractor was Equitable Leasing Corporation/leased to
Edwin Lim. On April 15, 1995, respondents filed against
Raul Tutor, Ecatine Corporation (Ecatine) and Equitable
Leasing Corporation (Equitable) a Complaint[8] for
damages docketed as Civil Case No. 95-73522 in the
RTC of Manila, Branch 14.
The trial court, upon motion of plaintiffs counsel,
issued an Order dropping Raul Tutor, Ecatine and Edwin
Lim from the Complaint, because they could not be
located and served with summonses.[9] On the other
hand, in its Answer with Counterclaim,[10] petitioner
alleged that the vehicle had already been sold to Ecatine
and that the former was no longer in possession and
control thereof at the time of the incident. It also claimed
that Tutor was an employee, not of Equitable, but of
Ecatine.
 After trial on the merits, the RTC rendered its
Decision ordering petitioner to pay actual and moral
damages and attorneys fees to respondents. It held that
since the Deed of Sale between petitioner and Ecatine
had not been registered with the Land Transportation
Office (LTO), the legal owner was still Equitable.[11] Thus,
petitioner was liable to respondents.[12]
Ruling of the Court of Appeals
Sustaining the RTC, the CA held that petitioner was
still to be legally deemed the owner/operator of the
tractor, even if that vehicle had been the subject of a
Deed of Sale in favor of Ecatine on December 9,
1992. The reason cited by the CA was that the
Certificate of Registration on file with the LTO still
remained in petitioners name.[13] In order that a transfer
of ownership of a motor vehicle can bind third persons, it
must be duly recorded in the LTO.[14]
The CA likewise upheld respondents claim for moral
damages against petitioner because the appellate court
considered Tutor, the driver of the tractor, to be an agent
of the registered owner/operator.[15]
Hence, this Petition.[16]
Issues
In its Memorandum, petitioner raises the following
issues for the Courts consideration:
I or negligence of the defendant, and (c) connection of
Whether or not the Court of Appeals and the trial court
gravely erred when they decided and held that petitioner [was]
liable for damages suffered by private respondents in an action
based on quasi delict for the negligent acts of a driver who
[was] not the employee of the petitioner.
II
Whether or not the Court of Appeals and the trial court
gravely erred when they awarded moral damages to private
respondents despite their failure to prove that the injuries they
suffered were brought by petitioners wrongful act.[17]
This Courts Ruling
The Petition has no merit.
First Issue:
Liability for Wrongful Acts
Petitioner contends that it should not be held liable
for the damages sustained by respondents and that
arose from the negligence of the driver of the Fuso Road
Tractor, which it had already sold to Ecatine at the time
of the accident. Not having employed Raul Tutor, the
driver of the vehicle, it could not have controlled or
supervised him.[18]
We are not persuaded. In negligence cases, the
aggrieved party may sue the negligent party under (1)
Article 100[19] of the Revised Penal Code, for civil
liability ex delicto; or (2) under Article 2176[20] of the Civil
Code, for civil liability ex quasi delicto.[21]
Furthermore, under Article 103 of the Revised
Penal Code, employers may be held subsidiarily
liable for felonies committed by their employees in the
discharge of the latters duties.[22] This liability attaches
when the employees who are convicted of crimes
committed in the performance of their work are found to
be insolvent and are thus unable to satisfy the civil
liability adjudged.[23]
On the other hand, under Article 2176 in relation to
Article 2180[24] of the Civil Code, an action predicated on
quasi delict may be instituted against the employer for
an employees act or omission. The liability for the
negligent conduct of the subordinate
is direct and primary, but is subject to the defense of due
diligence in the selection and supervision of the
employee.[25] The enforcement of the judgment against
the employer for an action based on Article 2176 does
not require the employee to be insolvent, since the
liability of the former is solidary -- the latter being
statutorily considered a joint tortfeasor.[26] To sustain a
claim based on quasi delict, the following requisites must
be proven: (a) damage suffered by the plaintiff, (b) fault
cause and effect between the fault or negligence of the
defendant and the damage incurred by the plaintiff.[27]
These two causes of action (ex delicto or ex quasi
delicto) may be availed of, subject to the caveat[28] that
the offended party cannot recover damages twice for the
same act or omission or under both causes.[29] Since
these two civil liabilities are distinct and independent of
each other, the failure to recover in one will not
necessarily preclude recovery in the other.[30]
In the instant case, respondents -- having failed to
recover anything in the criminal case -- elected to file a
separate civil action for damages, based on quasi delict
under Article 2176 of the Civil Code.[31] The evidence is
clear that the deaths and the injuries suffered by
respondents and their kins were due to the fault of the
driver of the Fuso tractor.
Dated June 4, 1991, the Lease
Agreement[32] between petitioner and Edwin Lim
stipulated that it is the intention of the parties to enter
into a FINANCE LEASE AGREEMENT.[33] Under such
scheme, ownership of the subject tractor was to be
registered in the name of petitioner, until the value of the
vehicle has been fully paid by Edwin Lim.[34] Further, in
the Lease Schedule,[35] the monthly rental for the tractor
was stipulated, and the term of the Lease was scheduled
to expire on December 4, 1992. After a few months, Lim
completed the payments to cover the full price of the
tractor.[36] Thus, on December 9, 1992, a Deed of
Sale[37] over the tractor was executed by petitioner in
favor of Ecatine represented by Edwin Lim. However,
the Deed was not registered with the LTO.
We hold petitioner liable for the deaths and the
injuries complained of, because it was the registered
owner of the tractor at the time of the accident on July
17, 1994.[38]The Court has consistently ruled that,
regardless of sales made of a motor vehicle, the
registered owner is the lawful operator insofar as the
public and third persons are concerned; consequently, it
is directly and primarily responsible for the
consequences of its operation.[39] In contemplation of
law, the owner/operator of record is the employer of the
driver, the actual operator and employer being
considered as merely its agent.[40] The same principle
applies even if the registered owner of any vehicle does
not use it for public service.[41]
Since Equitable remained the registered owner of
the tractor, it could not escape primary liability for the
deaths and the injuries arising from the negligence of the
driver.[42]
The finance-lease agreement between Equitable on
the one hand and Lim or Ecatine on the other has
already been superseded by the sale. In any event, it
does not bind third persons. The rationale for this rule
has been aptly explained in Erezo v. Jepte,[43] which we
quote hereunder:
x x x. The main aim of motor vehicle registration is to identify
the owner so that if any accident happens, or that any damage
or injury is caused by the vehicle on the public highways,
responsibility therefor can be fixed on a definite individual,
the registered owner. Instances are numerous where vehicles
running on public highways caused accidents or injuries to
pedestrians or other vehicles without positive identification of
the owner or drivers, or with very scant means of
identification. It is to forestall these circumstances, so
inconvenient or prejudicial to the public, that the motor
vehicle registration is primarily ordained, in the interest of the
determination of persons responsible for damages or injuries
caused on public highways.[44]
Further, petitioners insistence on FGU Insurance
Corp. v. Court of Appeals is misplaced.[45] First, in FGU
Insurance, the registered vehicle owner, which was
engaged in a rent-a-car business, rented out the car. In
this case, the registered owner of the truck, which is
engaged in the business of financing motor vehicle
acquisitions, has actually sold the truck to Ecatine, which
in turn employed Tutor. Second, in FGU Insurance, the
registered owner of the vehicle was not held responsible
for the negligent acts of the person who rented one of its
cars, because Article 2180 of the Civil Code was not
applicable. We held that no vinculum juris as employer
and employee existed between the owner and the
driver.[46] In this case, the registered owner of the tractor
is considered under the law to be the employer of the
driver, while the actual operator is deemed to be
its agent.[47] Thus, Equitable, the registered owner of the
tractor, is -- for purposes of the law on quasi delict -- the
employer of Raul Tutor, the driver of the tractor. Ecatine,
Tutors actual employer, is deemed as merely an agent
of Equitable.[48]
True, the LTO Certificate of Registration, dated
5/31/91, qualifies the name of the registered owner as
EQUITABLE LEASING CORPORATION/Leased to
Edwin Lim. But the lease agreement between Equitable
and Lim has been overtaken by the Deed of Sale on
December 9, 1992, between petitioner and
Ecatine. While this Deed does not affect respondents in
this quasi delict suit, it definitely binds petitioner
because, unlike them, it is a party to it.
We must stress that the failure of Equitable and/or
Ecatine to register the sale with the LTO should not
prejudice respondents, who have the legal right to rely
on the legal principle that the registered vehicle owner is
liable for the damages caused by the negligence of the
driver. Petitioner cannot hide behind its allegation that
Tutor was the employee of Ecatine. This will effectively
prevent respondents from recovering their losses on the
basis of the inaction or fault of petitioner in failing to
register the sale.The non-registration is the fault of
petitioner, which should thus face the legal
consequences thereof.
Second Issue:
Moral Damages
Petitioner further claims that it is not liable for moral
damages, because respondents failed to establish or
show the causal connection or relation between the
factual basis of their claim and their wrongful act or
omission, if any. [49]
Moral damages are not punitive in nature, but are
designed to compensate[50] and alleviate in some way
the physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral
shock, social humiliation, and similar injury unjustly
caused a person.[51] Although incapable of pecuniary
computation, moral damages must nevertheless be
somehow proportional to and in approximation of the
suffering inflicted.[52] This is so because moral damages
are in the category of an award designed to compensate
the claimant for actual injury suffered, not to impose a
penalty on the wrongdoer.[53]
Viewed as an action for quasi delict, the present
case falls squarely within the purview of Article 2219
(2),[54] which provides for the payment of moral damages
in cases of quasi delict.[55] Having established the liability
of petitioner as the registered owner of the
vehicle,[56] respondents have satisfactorily shown the
existence of the factual basis for the award[57] and its
causal connection to the acts of Raul Tutor, who is
deemed as petitioners employee.[58] Indeed, the
damages and injuries suffered by respondents were the
proximate result of petitioners tortious act or omission. [59]
Further, no proof of pecuniary loss is necessary in
order that moral damages may be awarded, the amount
of indemnity being left to the discretion of the
court.[60] The evidence gives no ground for doubt that
such discretion was properly and judiciously exercised
by the trial court.[61] The award is in fact consistent with
the rule that moral damages are not intended to enrich
the injured party, but to alleviate the moral suffering
undergone by that party by reason of the defendants
culpable action.[62]
WHEREFORE, the Petition is DENIED and the
assailed Decision AFFIRMED. Costs against petitioner.
SO ORDERED.
GAID VS PEOPLE
DECISION
TINGA, J.:
Before the Court is a petition for review
certiorari[1] assailing the 12 July 2005 Decision[2] of the Court
of Appeals and its subsequent Resolution[3]denying petitioners
motion for reconsideration.
attending physician
of Northern Mindanao Medical Center Hosp
ital, Cagayan de Oro City.
CONTRARY TO LAW.[4]
Petitioner entered a not guilty plea. Thereafter, trial
ensued.
The antecedent facts are undisputed.
At around 12:00 noon on 25 October 2001, petitioner
was driving his passenger jeepney along a two-lane road
where the Laguindingan National High School is located
toward the direction of Moog in Misamis Oriental. His
jeepney was filled to seating capacity.[5] At the time several
students were coming out of the school
premises.[6] Meanwhile, a fourteen year-old student, Michael
Dayata (Dayata), was seen by eyewitness Artman Bongolto
(Bongolto) sitting near a store on the left side of the
road. From where he was at the left side of the road, Dayata
raised his left hand to flag down petitioners jeepney[7] which
on
was traveling on the right lane of the road.[8] However, neither
did petitioner nor the conductor, Dennis Mellalos (Mellalos),
saw anybody flagging down the jeepney to ride at that point. [9]

The next thing Bongalto saw, Dayatas feet was

pinned to the rear wheel of the jeepney, after which, he laid
flat on the ground behind the jeepney.[10]Another prosecution
witness, Usaffe Actub (Actub), who was also situated on the
Petitioner Norman A. Gaid was charged with the crime of
left side of the street but directly in front of the school gate,
reckless imprudence resulting in homicide in an information
heard a strong impact coming from the jeep sounding as if the
which reads as follow:
driver forced to accelerate in order to hurdle an
That on or about 12:00 high noon of
obstacle.[11] Dayata was then seen lying on the ground[12] and
October 25, 2001, infront of the
Laguindingan National High School, caught in between the rear tires.[13] Petitioner felt that the left
Poblacion, Laguindingan, Misamis Oriental,
Philippines and within the jurisdiction of rear tire of the jeepney had bounced and the vehicle tilted to
this Honorable Court, the said accused the right side.[14]
mentioned above while driving a passengers
jeepney color white bearing plate no. KVG-
771 owned by barangay captain Levy Etom Mellalos heard a shout that a boy was run over,
has no precautionary measure to preempt the
accident, did then and there willfully, prompting him to jump off the jeepney to help the victim.
unlawfully and feloniously ran [sic] over
Petitioner stopped and saw Mellalos carrying the body of the
Michael Dayata resulting of [sic] his
untimely death as pronounced by the victim.[15] Mellalos loaded the victim on a motorcycle and
brought him to the hospital. Dayata was first brought to
the Laguindingan HealthCenter, but it was closed. Mellalos
then proceeded to the El Salvador Hospital. Upon advice of its
doctors, however, Dayata was brought to
the NorthernMindanao Medical Center where he was
pronounced dead on arrival.[16]
Dr. Tammy Uy issued an autopsy report stating
cranio-cerebral injuries as the cause of death.[17] She testified
that the head injuries of Dayata could have been caused by
having run over by the jeepney.[18]
The Municipal Circuit Trial Court (MCTC) of
Laguindingan[19] found petitioner guilty beyond reasonable
doubt of the crime charged. The lower court held petitioner
negligent in his driving considering that the victim was
dragged to a distance of 5.70 meters from the point of
impact. He was also scored for not stopping his vehicle after
noticing that the jeepneys left rear tire jolted causing the
vehicle to tilt towards the right.[20] On appeal, the Regional
Trial Court (RTC)[21] affirmed in toto the decision of the
MCTC.
The Court of Appeals affirmed the trial courts
judgment with modification in that it found petitioner guilty
only of simple negligence resulting in homicide.
The Court of Appeals exonerated petitioner from the
charge of reckless imprudence resulting to homicide on the
ground that he was not driving recklessly at the time of the
accident. However, the appellate court still found him to be
negligent when he failed to promptly stop his vehicle to check
what caused the sudden jotting of its rear tire.[22]
In its 6 February 2006 Resolution, the Court of
Appeals denied petitioners motion for reconsideration. [23]
Hence, the instant petition.
Petitioner submits that the Court of Appeals erred in
finding that there is (sic) absolutely lack of precaution on the
part of the petitioner when he continued even after he had
noticed that the left rear tire and the jeep tilted to its right
side.[24] Petitioner stressed that he, in fact, stopped his jeep
when its left rear tire bounced and upon hearing that
somebody had been ran over.
Moreover, petitioner asserts that the Court of Appeals
committed a grave abuse of discretion in convicting him of the
offense of simple negligence resulting in homicide.
Assuming arguendo that he failed to promptly stop his
vehicle, petitioner maintains that no prudent man placed in the
same situation could have foreseen the vehicular accident or
could have stopped his vehicle in time when its left rear tire
bounced due to the following reasons: (1) the victim was only
a trespasser; (2) petitioners attention was focused on the road
and the students outside the schools gate; and (3) the jeepney
was fully loaded with passengers and cargoes and it was
impossible for the petitioner to promptly stop his vehicle.[25]
The Office of the Solicitor-General (OSG)
maintained that petitioner was negligent when he continued to
run towards the direction of Moog, Laguindingan, dragging
the victim a few meters from the point of impact, despite
hearing that a child had been run over.[26]
The presence or absence of negligence on the part of
petitioner is determined by the operative events leading to the
death of Dayata which actually comprised of two phases or
stages. The first stage began when Dayata flagged down the
jeepney while positioned on the left side of the road and ended
when he was run over by the jeepney. The second stage
covered the span between the moment immediately after the
victim was run over and the point when petitioner put the
jeepney to a halt.
During the first stage, petitioner was not shown to be
negligent.
 Reckless imprudence consists of voluntarily doing or
failing to do, without malice, an act from which material
damage results by reason of an inexcusable lack of precaution
on the part of the person performing or failing to perform such
act.[27]
In Manzanares v. People,[28] this Court convicted
petitioner of the crime of reckless imprudence resulting in
multiple homicide and serious physical injuries when he was
found driving the Isuzu truck very fast before it smashed into a
jeepney.[29] Likewise, in Pangonorom v. People,[30] a public
utility driver, who was driving very fast, failed to slow down
and hit a swerving car. He was found negligent by this Court.
In the instant case, petitioner was driving slowly at
the time of the accident, as testified to by
eyewitnesses. Prosecution witness Actub affirmed this fact on
cross-examination, thus:
ATTY. MACUA:
(to the witness)
Q Mr. Witness, when the passenger jeepney
passed by the gate of
the Laguindingan National High
School, is it running slowly, am I
correct?
A Yes, he was running slowly.[31]
The slow pace of the jeepney was seconded by
Mellalos:
Q You testified that you heard somebody
outside from the vehicle shouting
that a boy was ran over, am I
correct?
A Yes, Sir.
Q Now, before you heard that shouting, did
you observe any motion from the
vehicle?
A The jeep was moving slowly and I noticed
that there was something that
[sic] the jeep a little bit bounced up
as if a hump thats the time I heard a
shout from outside.[32]
Petitioner stated that he was driving at no more than 15
kilometers per hour.[33]
It appears from the evidence Dayata came from the
left side of the street. Petitioner, who was driving the jeepney
on the right lane, did not see the victim flag him down. He
also failed to see him go near the jeepney at the left side.
Understandably, petitioner was focused on the road ahead. In
Dayatas haste to board the jeep which was then running, his
feet somehow got pinned to the left rear tire, as narrated by
Bongolto. Actub only saw Dayata after he heard a strong
impact coming from the jeep.
With the foregoing facts, petitioner can not be held
liable during the first stage. Specifically, he cannot be held
two liable for reckless imprudence resulting in homicide, as found
by the trial court. The proximate cause of the accident and the
death of the victim was definitely his own negligence in trying
to catch up with the moving jeepney to get a ride.
In the instant case, petitioner had exercised extreme
precaution as he drove slowly upon reaching the vicinity of the
school. He cannot be faulted for not having seen the victim
who came from behind on the left side.
However, the Court of Appeals found petitioner
guilty of simple negligence resulting in homicide for failing to
stop driving at the time when he noticed the bouncing of his
vehicle. Verily, the appellate court was referring to the second
stage of the incident.
Negligence has been defined as the failure to observe
for the protection of the interests of another person that degree
of care, precaution, and vigilance which the circumstances
justly demand, whereby such other person suffers injury. [34]
 The elements of simple negligence: are (1) that there child ran into the street and was struck by the drivers
is lack of precaution on the part of the offender; and (2) that vehicle. Clearly, this was an emergency situation thrust upon
the damage impending to be caused is not immediate or the the driver too suddenly to avoid.
danger is not clearly manifest.[35]

In this case, the courts below zeroed in on the fact

The standard test in determining whether a person is
that petitioner did not stop the jeepney when he felt the
negligent in doing an act whereby injury or damage results to
bouncing of his vehicle, a
the person or property of another is this: could a prudent man,
circumstance which the appellate court equates with
in the position of the person to whom negligence is attributed,
negligence. Petitioner contends that he did not immediately
foresee harm to the person injured as a reasonable
stop because he did not see anybody go near his vehicle at the
consequence of the course actually pursued? If so, the law
time of the incident.[40]
imposes a duty on the actor to refrain from that course or to
take precautions to guard against its mischievous results, and
Assuming arguendo that petitioner had been
the failure to do so constitutes negligence. Reasonable
negligent, it must be shown that his negligence was the
foresight of harm, followed by the ignoring of the admonition
proximate cause of the accident. Proximate cause is defined as
born of this provision, is always necessary before negligence
that which, in the natural and continuous sequence, unbroken
can be held to exist.[36]
by any efficient, intervening cause,
produces the injury, and without which the result would not
In Philippine National Construction Corporation v. have
Court of Appeals,[37] the petitioner was the franchisee that occurred.[41] In order to establish a motorist's liability for the
operates and maintains the toll facilities in the North and negligent operation of a vehicle, it must be shown that there
South Luzon Toll Expressways. It failed to exercise the was a direct causal connection between such negligence and
requisite diligence in maintaining the NLEX safe for the injuries or damages complained of. Thus, negligence that
motorists. The lighted cans and lane dividers on the highway is not a substantial contributing factor in the causation of the
were removed even as flattened sugarcanes lay scattered on accident is not the proximate cause of an injury.[42]
the ground. The highway was still wet from the juice and sap
The head injuries sustained by Dayata at the point of
of the flattened sugarcanes. The petitioner should have
impact proved to be the immediate cause of his death, as
foreseen that the wet condition of the highway would
indicated in the post-mortem findings.[43]His skull was crushed
endanger motorists passing by at night or in the wee hours of
as a result of the accident. Had petitioner immediately stopped
the morning.[38] Consequently, it was held liable for damages.
the jeepney, it would still not have saved the life of the victim
as the injuries he suffered were fatal.
[39]
In an American case, Hernandez v. Lukas, a
motorist traveling within the speed limit and did all was
The evidence on record do not show that the jeepney
possible to avoid striking a child who was then six years old
dragged the victim after he was hit and run over by the
only. The place of the incident was a neighborhood where
jeepney. Quite the contrary, the evidence discloses that the
children were playing in the parkways on prior occasions. The
victim was not dragged at all. In fact, it is the other way
court ruled that it must be still proven that the driver did not
around. Bongolto narrated that after the impact, he saw Dayata
exercise due care. The evidence showed that the driver was
left behind the jeepney.[44] Actub saw Dayata in a prone
proceeding in lawful manner within the speed limit when the
position and bleeding within seconds after impact. [45] Right
after the impact, Mellalos immediately jumped out of the
jeepney and saw the victim lying on the ground.[46] The
distance of 5.70 meters is the length of space between the spot
where the victim fell to the ground and the spot where the
jeepney stopped as observed by the trial judge during the
ocular inspection at the scene of the accident.[47]
Moreover, mere suspicions and speculations that the
victim could have lived had petitioner stopped can never be
the basis of a conviction in a criminal case.[48] The Court must
be satisfied that the guilt of the accused had been proven
beyond reasonable doubt.[49] Conviction must rest on nothing
less than a moral certainty of the guilt of the accused. The
overriding consideration is not whether the court doubts the
innocence of the accused but whether it entertains doubt as to
his guilt.[50]
Clearly then, the prosecution was not able to establish
that the proximate cause of the victims death was petitioners
alleged negligence, if at all, even during the second stage of
the incident.
If at all again, petitioners failure to render assistance
to the victim would constitute abandonment of ones victim
punishable under Article 275 of the Revised Penal
Code. However, the omission is not covered by the
information. Thus, to hold petitioner criminally liable under
the provision would be tantamount to a denial of due process.
Therefore, petitioner must be acquitted at least on
reasonable doubt. The award of damages must also be deleted
pursuant to Article 2179 of the Civil Code which states that
when the plaintiffs own negligence was the immediate and
proximate cause of his injury, he cannot recover damages.
WHEREFORE, the petition is GRANTED. The
decision of the Court of Appeals dated 12 July
2005 is REVERSED and SET ASIDE. Petitioner Norman A.
Gaid is ACQUITTED of the crime of Simple Negligence
Resulting in Homicide as found by the Court of Appeals and
of the charge of Reckless Imprudence Resulting in Homicide
in Criminal Case No. 1937 of the MCTC of Laguindingan,
Misamis Oriental.
SO ORDERED.
ASSOCIATED BANK (Now WESTMONT
BANK), petitioner, vs. VICENTE HENRY
TAN, respondent.
DECISION
PANGANIBAN, J.:
While banks are granted by law the right to debit the
value of a dishonored check from a depositors account,
they must do so with the highest degree of care, so as
not to prejudice the depositor unduly.
The Case
Before us is a Petition for Review[1] under Rule 45
of the Rules of Court, assailing the January 27, 2003
Decision[2] of the Court of Appeals (CA) in CA-GR CV
No. 56292. The CA disposed as follows:
WHEREFORE, premises considered, the Decision
dated December 3, 1996, of
the Regional Trial Court of Cabanatuan City, Third Judicial
Region, Branch 26, in Civil Case No. 892-AF is
hereby AFFIRMED. Costs against the [petitioner].[3]
The Facts
The CA narrated the antecedents as follows:
Vicente Henry Tan (hereafter TAN) is a businessman and a
regular depositor-creditor of the Associated Bank (hereinafter
referred to as the BANK). Sometime in September 1990, he
deposited a postdated UCPB check with the said BANK in the
amount of P101,000.00 issued to him by a certain Willy
Cheng from Tarlac. The check was duly entered in his bank
record thereby making his balance in the amount
of P297,000.00, as of October 1, 1990, from his original
deposit of P196,000.00. Allegedly, upon advice and
instruction of the BANK that the P101,000.00 check was
already cleared and backed up by sufficient funds, TAN, on
the same date, withdrew the sum of P240,000.00, leaving a
balance of P57,793.45. A day after, TAN deposited the
amount of P50,000.00 making his existing balance in the
amount of P107,793.45, because he has issued several checks
to his business partners, to wit:
CHECK NUMBERS DATE AMOUNT
a. 138814 Sept. 29, 1990 P9,000.00
b. 138804 Oct. 8, 1990 9,350.00
c. 138787 Sept. 30, 1990 6,360.00
d. 138847 Sept. 29, 1990 21,850.00
e. 167054 Sept. 29, 1990 4,093.40
f. 138792 ` Sept. 29, 1990 3,546.00
g. 138774 Oct. 2, 1990 6,600.00
h. 167072 Oct. 10, 1990 9,908.00
i. 168802 Oct. 10, 1990 3,650.00
However, his suppliers and business partners went back to him
alleging that the checks he issued bounced for insufficiency of
funds. Thereafter, TAN, thru his lawyer, informed the BANK
to take positive steps regarding the matter for he has adequate
and sufficient funds to pay the amount of the subject
checks. Nonetheless, the BANK did not bother nor offer any
apology regarding the incident. Consequently, TAN, as
plaintiff, filed a Complaint for Damages on December 19,
1990, with the Regional Trial Court of Cabanatuan City, Third
Judicial Region, docketed as Civil Case No. 892-AF, against
the BANK, as defendant.
In his [C]omplaint, [respondent] maintained that he ha[d]
sufficient funds to pay the subject checks and alleged that his
suppliers decreased in number for lack of trust. As he has been
in the business community for quite a time and has established
a good record of reputation and probity, plaintiff claimed that
he suffered embarrassment, humiliation, besmirched
reputation, mental anxieties and sleepless nights because of
the said unfortunate incident. [Respondent] further averred
that he continuously lost profits in the amount
of P250,000.00. [Respondent] therefore prayed for exemplary
damages and that [petitioner] be ordered to pay him the sum
of P1,000,000.00 by way of moral damages, P250,000.00 as
lost profits, P50,000.00 as attorneys fees plus 25% of the
amount claimed including P1,000.00 per court appearance.
Meanwhile, [petitioner] filed a Motion to Dismiss on February
7, 1991, but the same was denied for lack of merit in an Order
dated March 7, 1991. Thereafter, [petitioner] BANK on March
20, 1991 filed its Answer denying, among others, the
allegations of [respondent] and alleged that no banking
institution would give an assurance to any of its
client/depositor that the check deposited by him had already
been cleared and backed up by sufficient funds but it could
only presume that the same has been honored by the drawee
bank in view of the lapse of time that ordinarily takes for a
check to be cleared. For its part, [petitioner] alleged that
on October 2, 1990, it gave notice to the [respondent] as to the
return of his UCPB check deposit in the amount
of P101,000.00, hence, on even date, [respondent] deposited
the amount of P50,000.00 to cover the returned check.
By way of affirmative defense, [petitioner] averred that
[respondent] had no cause of action against it and argued that
it has all the right to debit the account of the [respondent] by
reason of the dishonor of the check deposited by the
[respondent] which was withdrawn by him prior to its
clearing. [Petitioner] further averred that it has no liability
with respect to the clearing of deposited checks as the clearing
is being undertaken by the Central Bank and in accepting [the]
check deposit, it merely obligates itself as depositors
collecting agent subject to actual payment by the drawee
bank. [Petitioner] therefore prayed that [respondent] be
ordered to pay it the amount of P1,000,000.00 by way of loss
of goodwill, P7,000.00 as acceptance fee plus P500.00 per
appearance and by way of attorneys fees.
Considering that Westmont Bank has taken over the
management of the affairs/properties of the BANK,
[respondent] on October 10, 1996, filed an Amended
Complaint reiterating substantially his allegations in the
original complaint, except that the name of the previous
defendant ASSOCIATED BANK is now WESTMONT
BANK.
Trial ensured and thereafter, the court rendered its Decision
dated December 3, 1996 in favor of the [respondent] and
against the [petitioner], ordering the latter to pay the
[respondent] the sum of P100,000.00 by way of moral
damages, P75,000.00 as exemplary damages, P25,000.00 as
attorneys fees, plus the costs of this suit. In making said ruling,
it was shown that [respondent] was not officially informed
about the debiting of the P101,000.00 [from] his existing
balance and that the BANK merely allowed the [respondent]
to use the fund prior to clearing merely for accommodation
because the BANK considered him as one of its valued
clients. The trial court ruled that the bank manager was
negligent in handling the particular checking account of the
[respondent] stating that such lapses caused all the
inconveniences to the [respondent]. The trial court also took
into consideration that [respondents] mother was originally
maintaining with the x x x BANK [a] current account as well
as [a] time deposit, but [o]n one occasion, although his mother
made a deposit, the same was not credited in her favor but in
the name of another.[4]
Petitioner appealed to the CA on the issues of
whether it was within its rights, as collecting bank, to
debit the account of its client for a dishonored check;
and whether it had informed respondent about the
dishonor prior to debiting his account.
Ruling of the Court of Appeals
Affirming the trial court, the CA ruled that the bank
should not have authorized the withdrawal of the value
of the deposited check prior to its clearing. Having done
so, contrary to its obligation to treat respondents account
with meticulous care, the bank violated its own policy. It
thereby took upon itself the obligation to officially inform
respondent of the status of his account before
unilaterally debiting the amount of P101,000. Without
such notice, it is estopped from blaming him for failing to
fund his account.
The CA opined that, had the P101,000 not been
debited, respondent would have had sufficient funds for
the postdated checks he had issued. Thus, the
supposed accommodation accorded by petitioner to him
is the proximate cause of his business woes and shame,
for which it is liable for damages.
Because of the banks negligence, the CA awarded
respondent moral damages of P100,000. It also granted
him exemplary damages of P75,000 and attorneys fees
of P25,000.
Hence this Petition.[5]
Issue
In its Memorandum, petitioner raises the sole issue
of whether or not the petitioner, which is acting as a
collecting bank, has the right to debit the account of its
client for a check deposit which was dishonored by the
drawee bank.[6]
The Courts Ruling
The Petition has no merit.
Sole Issue:
Debit of Depositors Account
Petitioner-bank contends that its rights and
obligations under the present set of facts were
misappreciated by the CA. It insists that its right to debit
the amount of the dishonored check from the account of
respondent is clear and unmistakable. Even assuming
that it did not give him notice that the check had been
dishonored, such right remains immediately enforceable.
In particular, petitioner argues that the check
deposit slip accomplished by respondent on September
17, 1990, expressly stipulated that the bank was
obligating itself merely as the depositors collecting agent
and -- until such time as actual payment would be made
to it -- it was reserving the right to charge against the
depositors account any amount previously
credited. Respondent was allowed to withdraw the
amount of the check prior to clearing, merely as an act of
accommodation, it added.
At the outset, we stress that the trial courts factual
findings that were affirmed by the CA are not subject to
review by this Court.[7] As petitioner itself takes no issue
with those findings, we need only to determine the legal
consequence, based on the established facts.
Right of Setoff
A bank generally has a right of setoff over the
deposits therein for the payment of any withdrawals on
the part of a depositor.[8] The right of a collecting bank to
debit a clients account for the value of a dishonored
check that has previously been credited has fairly been
established by jurisprudence. To begin with, Article 1980
of the Civil Code provides that [f]ixed, savings, and
current deposits of money in banks and similar
institutions shall be governed by the provisions
concerning simple loan.
Hence, the relationship between banks and
depositors has been held to be that of creditor and
debtor.[9] Thus, legal compensation under Article
1278[10] of the Civil Code may take place when all the
requisites mentioned in Article 1279 are present,[11] as
follows:
(1) That each one of the obligors be bound principally, and
that he be at the same time a principal creditor of the other;
(2) That both debts consist in a sum of money, or if
the things due are consumable, they be of the same
kind, and also of the same quality if the latter has
been stated;
(3) That the two debts be due;
(4) That they be liquidated and demandable;
(5) That over neither of them there be any retention or
controversy, commenced by third persons and communicated
in due time to the debtor.[12]
Nonetheless, the real issue here is not so much the
right of petitioner to debit respondents account but,
rather, the manner in which it exercised such right. The
Court has held that even while the right of setoff is
conceded, separate is the question of whether that
remedy has properly been exercised.[13]
The liability of petitioner in this case ultimately
revolves around the issue of whether it properly
exercised its right of setoff. The determination thereof
hinges, in turn, on the banks role and obligations, first,
as respondents depositary bank; and second, as
collecting agent for the check in question.
Obligation as
Depositary Bank
In BPI v. Casa Montessori,[14] the Court has
emphasized that the banking business is impressed with
public interest. Consequently, the highest degree of
diligence is expected, and high standards of integrity and
performance are even required of it. By the nature of its
functions, a bank is under obligation to treat the
accounts of its depositors with meticulous care.[15]
Also affirming this long standing doctrine, Philippine
Bank of Commerce v. Court of Appeals[16] has held that
the degree of diligence required of banks is more than
that of a good father of a family where the fiduciary
nature of their relationship with their depositors is
concerned.[17] Indeed, the banking business is vested
with the trust and confidence of the public; hence the
appropriate standard of diligence must be very high, if
not the highest, degree of diligence.[18] The standard
applies, regardless of whether the account consists of
only a few hundred pesos or of millions.[19]
The fiduciary nature of banking, previously imposed
by case law,[20] is now enshrined in Republic Act No.
8791 or the General Banking Law of 2000. Section 2 of
the law specifically says that the State recognizes the
fiduciary nature of banking that requires high standards
of integrity and performance.
Did petitioner treat respondents account with the
highest degree of care? From all indications, it did not.
It is undisputed -- nay, even admitted -- that
purportedly as an act of accommodation to a valued
client, petitioner allowed the withdrawal of the face value
of the deposited check prior to its clearing. That act
certainly disregarded the clearance requirement of the
banking system. Such a practice is unusual, because a
check is not legal tender or money;[21] and its value can
properly be transferred to a depositors account only after
the check has been cleared by the drawee bank.[22]
Under ordinary banking practice, after receiving a
check deposit, a bank either immediately credit the
amount to a depositors account; or infuse value to that
account only after the drawee bank shall have paid such
amount.[23] Before the check shall have been cleared for
deposit, the collecting bank can only assume at its own
risk -- as herein petitioner did -- that the check would be
cleared and paid out.
Reasonable business practice and prudence,
moreover, dictated that petitioner should not have
authorized the withdrawal by respondent of P240,000
on October 1, 1990, as this amount was over and above
his outstanding cleared balance
of P196,793.45.[24] Hence, the lower courts correctly
appreciated the evidence in his favor.
Obligation as
Collecting Agent
Indeed, the bank deposit slip expressed this
reservation:
In receiving items on deposit, this Bank obligates itself only as
the Depositors Collecting agent, assuming no responsibility
beyond carefulness in selecting correspondents, and until such
time as actual payments shall have come to its possession, this
Bank reserves the right to charge back to the Depositors
account any amounts previously credited whether or not the
deposited item is returned. x x x." [25]
However, this reservation is not enough to insulate
the bank from any liability. In the past, we have
expressed doubt about the binding force of such
conditions unilaterally imposed by a bank without the
consent of the depositor.[26] It is indeed arguable that in
signing the deposit slip, the depositor does so only to
identify himself and not to agree to the conditions set
forth at the back of the deposit slip.[27]
Further, by the express terms of the stipulation,
petitioner took upon itself certain obligations as
respondents agent, consonant with the well-settled rule
that the relationship between the payee or holder of a
commercial paper and the collecting bank is that of
principal and agent.[28] Under Article 1909[29] of the Civil
Code, such bank could be held liable not only for fraud,
but also for negligence.
As a general rule, a bank is liable for the wrongful or
tortuous acts and declarations of its officers or agents
within the course and scope of their employment.[30] Due
to the very nature of their business, banks are expected
to exercise the highest degree of diligence in the
selection and supervision of their
employees.[31] Jurisprudence has established that the
lack of diligence of a servant is imputed to the
negligence of the employer, when the negligent or
wrongful act of the former proximately results in an injury
to a third person;[32] in this case, the depositor.
The manager of the banks Cabanatuan branch,
Consorcia Santiago, categorically admitted that she and
the employees under her control had breached bank
policies.They admittedly breached those policies when,
without clearance from the drawee bank in Baguio, they
allowed respondent to withdraw on October 1, 1990, the
amount of the check deposited. Santiago testified that
respondent was not officially informed about the debiting
of the P101,000 from his existing balance of P170,000
on October 2, 1990 x x x.[33]
Being the branch manager, Santiago clearly acted
within the scope of her authority in authorizing the
withdrawal and the subsequent debiting without
notice. Accordingly, what remains to be determined is
whether her actions proximately caused respondents
injury. Proximate cause is that which -- in a natural and
continuous sequence, unbroken by any efficient
intervening cause --produces the injury, and without
which the result would not have occurred.[34]
Let us go back to the facts as they unfolded. It is
undeniable that the banks premature authorization of the
withdrawal by respondent on October 1, 1990, triggered
-- in rapid succession and in a natural sequence -- the
debiting of his account, the fall of his account balance to
insufficient levels, and the subsequent dishonor of his
own checks for lack of funds. The CA correctly noted different, and notice should actually have been given him in
thus: order that he might protect his interests.[40]

x x x [T]he depositor x x x withdrew his money upon the
advice by [petitioner] that his money was already
cleared. Without such advice, [respondent] would not have
withdrawn the sum of P240,000.00. Therefore, it cannot be
denied that it was [petitioners] fault which allowed
[respondent] to withdraw a huge sum which he believed was
already his.
Third, regarding the deposit of P50,000 made by
respondent on October 2, 1990, we fully subscribe to the
CAs observations that it was not unusual for a well-
reputed businessman like him, who ordinarily takes note
of the amount of money he takes and releases, to
immediately deposit money in his current account to
answer for the postdated checks he had issued.[41]

To emphasize, it is beyond cavil that [respondent] had

sufficient funds for the check. Had the P101,000.00 not [been] Damages
debited, the subject checks would not have been
dishonored. Hence, we can say that [respondents] injury arose
from the dishonor of his well-funded checks. x x x.[35] Inasmuch as petitioner does not contest the basis
for the award of damages and attorneys fees, we will no
Aggravating matters, petitioner failed to show that it longer address these matters.
had immediately and duly informed respondent of the
debiting of his account. Nonetheless, it argues that the
giving of notice was discernible from his act of WHEREFORE, the Petition is DENIED and the
depositing P50,000 on October 2, 1990, to augment his assailed Decision AFFIRMED. Costs against petitioner.
account and allow the debiting. This argument deserves
short shrift. SO ORDERED.

First, notice was proper and ought to be

expected. By the bank managers account, respondent
was considered a valued client whose checks had
always been sufficiently funded from 1987 to
1990,[36] until the October imbroglio. Thus, he deserved
nothing less than an official notice of the precarious
condition of his account.
Second, under the provisions of the Negotiable
Instruments Law regarding the liability of a general
indorser[37] and the procedure for a notice of
dishonor,[38] it was incumbent on the bank to give proper
notice to respondent. In Gullas v. National Bank,[39] the
Court emphasized:

x x x [A] general indorser of a negotiable instrument engages

that if the instrument the check in this case is dishonored and
the necessary proceedings for its dishonor are duly taken, he
will pay the amount thereof to the holder (Sec. 66) It has been
held by a long line of authorities that notice of dishonor is
necessary to charge an indorser and that the right of action
against him does not accrue until the notice is given.

x x x. The fact we believe is undeniable that prior to the

mailing of notice of dishonor, and without waiting for any
action by Gullas, the bank made use of the money standing in
his account to make good for the treasury warrant. At this
point recall that Gullas was merely an indorser and had
issued checks in good faith. As to a depositor who has funds
sufficient to meet payment of a check drawn by him in favor of
a third party, it has been held that he has a right of action
against the bank for its refusal to pay such a check in the
absence of notice to him that the bank has applied the funds so
deposited in extinguishment of past due claims held against
him. (Callahan vs. Bank of Anderson [1904], 2 Ann. Cas.,
203.) However this may be, as to an indorser the situation is