THIRD DIVISION [G.R. No. 112160. February 28, 2000] OSMUNDO S. CANLAS and ANGELINA CANLAS, petitioner, vs.

COURT OF APPEALS, ASIAN SAVINGS BANK, MAXIMO C. CONTRERAS and VICENTE MAOSCA, respondents. DECISION PURISIMA, J.: Mi-so At bar is a Petition for Review on Certiorari under Rule 45 of the Rules of Court, seeking to review and set aside the Decision[1] of the Court of Appeals in CA-G.R. CV No. 25242, which reversed the Decision[2] of Branch 59 of the Regional Trial Court of Makati City in Civil Case No. M-028; the dispositive portion of which reads: "WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE and a new one is hereby entered DISMISSING the complaint of the spouses Osmundo and Angelina Canlas. On the counterclaim of defendant Asian Savings Bank, the plaintiffs Canlas spouses are hereby ordered to pay the defendant Asian Savings Bank the amount of P50,000.00 as moral and exemplary damages plus P15,000.00 as and for attorney's fees. With costs against appellees. SO ORDERED."[3] The facts that matter: Sometime in August, 1982, the petitioner, Osmundo S. Canlas, and private respondent, Vicente Maosca, decided to venture in business and to raise the capital needed therefor. The former then executed a Special Power of Attorney authorizing the latter to mortgage two parcels of land situated in San Dionisio, (BF Homes) Paranaque, Metro Manila, each lot with semi-concrete residential house existing thereon, and respectively covered by Transfer Certificate of Title No. 54366 in his (Osmundo's) name and Transfer Certificate of Title No. S-78498 in the name of his wife Angelina Canlas. Subsequently, Osmundo Canlas agreed to sell the said parcels of land to Vicente Manosca, for and in consideration of P850,000.00, P500,000.00 of which payable within one week, and the balance of P350,000.00 to serve as his (Osmundo's) investment in the business. Thus, Osmundo Canlas delivered to Vicente Maosca the transfer certificates of title of the parcels of land involved. Vicente Maosca, as his part of the transaction, issued two postdated checks in favor of Osmundo Canlas in the amounts of P40,000.00 and P460,000.00, respectively, but it turned out that the check covering the bigger amount was not sufficiently funded.[4]Ne-xold On September 3, 1982, Vicente Maosca was able to mortgage the same parcels of land for P100,000.00 to a certain Attorney Manuel Magno, with the help of impostors who misrepresented themselves as the spouses, Osmundo Canlas and Angelina Canlas.[5]

On September 29, 1982, private respondent Vicente Maosca was granted a loan by the respondent Asian Savings Bank (ASB) in the amount of P500,000.00, with the use of subject parcels of land as security, and with the involvement of the same impostors who again introduced themselves as the Canlas spouses.[6] When the loan it extended was not paid, respondent bank extrajudicially foreclosed the mortgaged. On January 15, 1983, Osmundo Canlas wrote a letter informing the respondent bank that the execution of subject mortgage over the two parcels of land in question was without their (Canlas spouses) authority, and request that steps be taken to annul and/or revoke the questioned mortgage. On January 18, 1983, petitioner Osmundo Canlas also wrote the office of Sheriff Maximo C. Contreras, asking that the auction sale scheduled on February 3, 1983 be cancelled or held in abeyance. But respondents Maximo C. Contreras and Asian Savings Bank refused to heed petitioner Canlas' stance and proceeded with the scheduled auction sale.[7] Consequently, on February 3, 1983 the herein petitioners instituted the present case for annulment of deed of real estate mortgage with prayer for the issuance of a writ of preliminary injunction; and on May 23, 1983, the trial court issued an Order restraining the respondent sheriff from issuing the corresponding Certificate of Sheriffs Sale.[8] For failure to file his answer, despite several motions for extension of time for the filing thereof, Vicente Maosca was declared in default.[9] On June 1, 1989, the lower court a quo came out with a decision annulling subject deed of mortgage and disposing, thus: "Premises considered, judgment is hereby rendered as follows: 1. Declaring the deed of real estate mortgage (Exhibit 'L) involving the properties of the plaintiffs as null and void; Man-ikx 2. Declaring the public auction sale conducted by the defendant Sheriff, involving the same properties as illegal and without binding effect; 3. Ordering the defendants, jointly and severally, to pay the plaintiffs the sum of P20,000.00 representing attorney's fees; 4. On defendant ASB's crossclaim: ordering the cross-defendant Vicente Maosca to pay the defendant ASB the sum of P350,000.00, representing the amount which he received as proceeds of the loan secured by the void mortgage, plus interest at the legal rate, starting February 3, 1983, the date when the original complaint was filed, until the amount is fully paid; 5. With costs against the defendants. SO ORDERED."[10] From such Decision below, Asian Savings Bank appealed to the Court of Appeals, which handed down the assailed judgment of reversal, dated September 30, 1983, in CA-G.R. CV No. 25242. Dissatisfied therewith, the petitioners found their way to this Court via the present Petition; theorizing that:

"I RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT THE MORTGAGE OF THE PROPERTIES SUBJECT OF THIS CASE WAS VALID. II RESPONDENT COURT OF APPEALS ERRED IN HIOLDING THAT PETITIONERS ARE NOT ENTITLED TO RELIEF BECAUSE THEY WERE NEGLIGENT AND THEREFORE MUST BEAR THE LOSS. III RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT ASB EXERCISED DUE DILIGENCE IN GRANTING THE LOAN APPLICATION OF RESPONDENT. Manik-s IV RESPONDENT COURT OF APPEALS ERRED IN HOLDING THAT RESPONDENT ASB DID NOT ACT WITH BAD FAITH IN PROCEEDING WITH THE FORECLOSURE SALE OF THE PROPERTIES. V RESPONDENT COURT OF APPEALS ERRED IN AWARDING RESPONDENT ASB MORAL DAMAGES."[11] The Petition is impressed with merit. Article 1173 of the Civil Code, provides: "Article 1173. The fault or negligence of the obligor consist 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 2201, 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. (1104)" The degree of diligence required of banks is more than that of a good father of a family;[12] in keeping with their responsibility to exercise the necessary care and prudence in dealing even on a register or titled property. The business of a bank is affected with public interest, holding in trust the money of the depositors, which bank deposits the bank should guard against loss due to negligence or bad faith, by reason of which the bank would be denied the protective mantle of the land registration law, accorded only to purchases or mortgagees for value and in good faith.[13]Man-ikan

In the case under consideration, from the evidence on hand it can be gleaned unerringly that respondent bank did not observe the requisite diligence in ascertaining or verifying the real identity of the couple who introduced themselves as the spouses Osmundo Canlas and Angelina Canlas. It is worthy to note that not even a single identification card was exhibited by the said impostors to show their true identity; and yet, the bank acted on their representations simply on the basis of the residence certificates bearing signatures which tended to match the signatures affixed on a previous deed of mortgage to a certain Atty. Magno, covering the same parcels of land in question. Felizado Mangubat, Assistant Vice President of Asian Savings Bank, thus testified inter alia: "x x x Q:.....According to you, the basis for your having recommended for the approval of MANASCO's (sic) loan particularly that one involving the property of plaintiff in this case, the spouses OSMUNDO CANLAS and ANGELINA CANLAS, the basis for such approval was that according to you all the signatures and other things taken into account matches with that of the document previously executed by the spouses CANLAS? A:.....That is the only basis for accepting the signature on the mortgage, the basis for the recommendation of the approval of the loan are the financial statement of MAOSCA? A:.....Yes, among others the signature and TAX Account Number, Residence Certificate appearing on the previous loan executed by the spouses CANLAS, I am referring to EXHIBIT 5, mortgage to ATTY. MAGNO, those were made the basis. A:.....That is just the basis of accepting the signature, because at that time the loan have been approved already on the basis of the financial statement of the client the Bank Statement. Wneh (sic) it was approved we have to base it on the Financial statement of the client, the signatures were accepted only for the purpose of signing the mortgage not for the approval, we don't (sic) approve loans on the signature. ATTY. CLAROS: .....Would you agree that as part of ascertaining the identify of the parties particularly the mortgage, you don't consider also the signature, the Residence Certificate, the particular address of the parties involved. A:.....I think the question defers (sic) from what you asked a while ago. Q:.....Among others? A:.....We have to accept the signature on the basis of the other signatures given to us it being a public instrument. Ol-dmiso ATTY. CARLOS:

.....You mean to say the criteria of ascertaining the identity of the mortgagor does not depend so much on the signature on the residence certificate they have presented. A:.....We have to accept that xxx.....xxx.....xxx A:.....We accepted the signature on the basis of the mortgage in favor of ATTY. MAGNO duly notarized which I have been reiterrting (sic) entitled to full faith considering that it is a public instrument. ATTY. CARLOS: .....What other requirement did you take into account in ascertaining the identification of the parties particularly the mortgagor in this case. A:.....Residence Certificate. Q:.....Is that all, is that the only requirement? A:.....We requested for others but they could not produce, and because they presented to us the Residence Certificate which matches on the signature on the Residence Certificate in favor of Atty. Magno."[14]M-isjuris Evidently, the efforts exerted by the bank to verify the identity of the couple posing as Osmundo Canlas and Angelina Canlas fell short of the responsibility of the bank to observe more than the diligence of a good father of a family. The negligence of respondent bank was magnified by the fact that the previous deed of mortgage (which was used as the basis for checking the genuineness of the signatures of the suppose Canlas spouses) did not bear the tax account number of the spouses,[15] as well as the Community Tax Certificate of Angelina Canlas.[16] But such fact notwithstanding, the bank did not require the impostors to submit additional proof of their true identity. Under the doctrine of last clear chance, which is applicable here, the respondent bank must suffer the resulting loss. In essence, the doctrine of last clear chance is to the effect that where both parties are negligent but the negligent act of one is appreciably later in point of time than that of the other, or where it is impossible to determine whose fault or negligence brought about the occurrence of the incident, the one who had the last clear opportunity to avoid the impending harm but failed to do so, is chargeable with the consequences arising therefrom. Stated differently, the rule is that the antecedent negligence of a person does not preclude recovery of damages caused by the supervening negligence of the latter, who had the last fair chance to prevent the impending harm by the exercise of due diligence.[17] Assuming that Osmundo Canlas was negligent in giving Vicente Maosca the opportunity to perpetrate the fraud, by entrusting to latter the owner's copy of the transfer certificates of title of subject parcels of land, it cannot be denied that the bank had the last clear chance to prevent the fraud, by the simple expedient of faithfully complying with the requirements for banks to ascertain the identity of the persons transacting with them. For not observing the degree of diligence required of banking institutions, whose business is impressed with public interest, respondent Asian Savings Bank has to bear the loss sued upon.

In ruling for respondent bank, the Court of Appeals concluded that the petitioner Osmundo Canlas was a party to the fraudulent scheme of Maosca and therefore, estopped from impugning the validity of subject deed of mortgage; ratiocinating thus: Sd-aamiso "x x x Thus, armed with the titles and the special power of attorney, Manosca went to the defendant bank and applied for a loan. And when Maosca came over to the bank to submit additional documents pertinent to his loan application, Osmundo Canlas was with him, together with a certain Rogelio Viray. At that time, Osmundo Canlas was introduced to the bank personnel as 'Leonardo Rey. When he was introduced as 'Leonardo Rey for the first time Osmundo should have corrected Maosca right away. But he did not. Instead, he even allowed Maosca to avail of his (Osmundo's) membership privileges at the Metropolitan Club when Maosca invited two officers of the defendant bank to a luncheon meeting which Osmundo also attended. And during that meeting, Osmundo did not say who he really is, but even let Maosca introduced him again as 'Leonardo Rey, which all the more indicates that he connived with Maosca in deceiving the defendant bank. Finally after the loan was finally approved, Osmundo accompanied Maosca to the bank when the loan was released. At that time a manger's check for P200,000.00 was issued in the name of Oscar Motorworks, which Osmundo admits he owns and operates. Collectively, the foregoing circumstances cannot but conjure to a single conclusion that Osmundo actively participated in the loan application of defendant Asian Savings Bank, which culminated in his receiving a portion of the process thereof."[18] A meticulous and painstaking scrutiny of the Records on hand, reveals, however, that the findings arrived at by the Court of Appeals are barren of any sustainable basis. For instance, the execution of the deeds of mortgages constituted by Maosca on subject pieces of property of petitioners were made possible not by the Special Power of Attorney executed by Osmundo Canlas in favor of Maosca but through the use of impostors who misrepresented themselves as the spouses Angelina Canlas and Osmundo Canlas. It cannot be said therefore, that the petitioners authorized Vicente Maosca to constitute the mortgage on their parcels of land. What is more, Osmundo Canlas was introduced as "Leonardo Rey" by Vicente Maosca, only on the occasion of the luncheon meeting at the Metropolitan Club.[19] Thereat, the failure of Osmundo Canlas to rectify Maosca's misrepresentations could not be taken as a fraudulent act. As well explained by the former, he just did not want to embarrass Maosca, so that he waited for the end of the meeting to correct Maosca.[20] Then, too, Osmundo Canlas recounted that during the said luncheon meeting, they did not talk about the security or collateral for the loan of Maosca with ASB.[21] So also, Mrs. Josefina Rojo, who was the Account Officer of Asian Savings Bank when Maosca applied for subject loan, corroborated the testimony of Osmundo Canlas, she testified: S-daad

"xxx.....xxx.....xxx QUESTION:.....Now could you please describe out the lunch conference at the Metro Club in Makati? ANSWER:.....Mr. Mangubat, Mr. Maosca and I did not discuss with respect to the loan application and discuss primarily his business. xxx.....xxx.....xxx xxx.....xxx.....xxx QUESTION:..... So, what is the main topic of your discussion during the meeting? ANSWER:..... The main topic was then, about his business although, Mr, Leonardo Rey, who actually turned out as Mr. Canlas, supplier of Mr. Maosca. QUESTION:..... I see ... other than the business of Mr. Maosca, were there any other topic discussed? ANSWER:..... YES. QUESTION:..... And what was the topic? ANSWER:..... General Economy then. x x x"[22] Verily, Osmundo Canlas was left unaware of the illicit plan of Maosca, explaining thus why he (Osmundo) did not bother to correct what Maosca misrepresented and to assert ownership over the two parcels of land in question. Scs-daad Not only that; while it is true that Osmundo Canlas was with Vicente Maosca when the latter submitted the documents needed for his loan application, and when the check of P200,000.000 was released, the former did not know that the collateral used by Maosca for the said loan were their (Canlas spouses) properties. Osmundo happened to be with Maosca at the time because he wanted to make sure that Maosca would make good his promise to pay the balance of the purchase price of the said lots out of the proceeds of the loan.[23] The receipt by Osmundo Canlas of the P200,000.00 check from ASB could not estop him from assailing the validity of the mortgage because the said amount was in payment of the parcels of land he sold to Maosca.[24] What is decisively clear on record is that Maosca managed to keep Osmundo Canlas uninformed of his (Maosca's) intention to use the parcels of land of the Canlas spouses as security for the loan obtained from Asian Savings Bank. Since Vicente Maosca showed Osmundo Canlas several certificates of title of lots which, according to Maosca were the collaterals, Osmundo Canlas was confident that their

(Canlases) parcels of land were not involved in the loan transaction with the Asian Savings Bank.[25] Under the attendant facts and circumstances, Osmundo Canlas was undoubtedly negligent, which negligence made them (petitioners) undeserving of an award of Attorneys fees. Settled is the rule that a contract of mortgage must be constituted only by the absolute owner on the property mortgaged;[26] a mortgage, constituted by an impostor is void.[27] Considering that it was established indubitably that the contract of mortgage sued upon was entered into and signed by impostors who misrepresented themselves as the spouses Osmundo Canlas and Angelina Canlas, the Court is of the ineluctible conclusion and finding that subject contract of mortgage is a complete nullity. WHEREFORE, the Petition is GRANTED and the Decision of the Court of Appeals, dated September 30, 1993, in CA-G.R. CV No. 25242 SET ASIDE. The Decision of Branch 59 of the Regional Trial Court of Makati City in Civil Case No. M-028 is hereby REINSTATED. No pronouncement as to costs. SO ORDERED. Melo, (Chairman), Vitug, and Gonzaga-Reyes, JJ., concur. Panganiban, J., in the result.

SECOND DIVISION [G.R. No. 130003. October 20, 2004]

JONAS AONUEVO, petitioner vs. HON. COURT OF APPEALS and JEROME VILLAGRACIA, respondent DECISION TINGA, J.: The bicycle provides considerable speed and freedom of movement to the rider. It derives a certain charm from being unencumbered by any enclosure, affording the cyclist the perception of relative liberty. It also carries some obvious risks on the part of the user and has become the subject of regulation, if not by the government, then by parental proscription. The present petition seeks to bar recovery by an injured cyclist of damages from the driver of the car which had struck him. The argument is hinged on the cyclists failure to install safety devices on his bicycle. However, the lower courts agreed that the motorist himself caused the collision with his own negligence. The facts are deceptively simple, but the resolution entails thorough consideration of fundamental precepts on negligence. The present petition raises little issue with the factual findings of the Regional Trial Court (RTC), Branch 160, of Pasig City, as affirmed by the Court of Appeals. Both courts adjudged petitioner, Jonas Aonuevo ( Aonuevo ), liable for the damages for the injuries sustained by the cyclist, Jerome Villagracia (Villagracia). Instead, the petition hinges on a sole legal question, characterized as novel by the petitioner: whether Article 2185 of the New Civil Code, which presumes the driver of a motor vehicle negligent if he was violating a traffic regulation at the time of the mishap, should apply by analogy to nonmotorized vehicles.[1] As found by the RTC, and affirmed by the Court of Appeals, the accident in question occurred on 8 February 1989, at around nine in the evening, at the intersection of Boni Avenue and Barangka Drive in Mandaluyong (now a city). Villagracia was traveling along Boni Avenue on his bicycle, while Aonuevo, traversing the opposite lane was driving his Lancer car with plate number PJJ 359. The car was owned by Procter and Gamble Inc., the employer of Aonuevos brother, Jonathan. Aonuevo was in the course of making a left turn towards Libertad Street when the collision occurred. Villagracia sustained serious injuries as a result, which necessitated his hospitalization several times in 1989, and forced him to undergo four (4) operations. On 26 October 1989, Villagracia instituted an action for damages against Procter and Gamble Phils., Inc. and Aonuevo before the RTC.[2] He had also filed a criminal complaint against Aonuevo before the Metropolitan Trial Court of Mandaluyong, but the latter was subsequently acquitted of the criminal charge.[3] Trial on the civil action ensued, and in a Decision dated 9 March 1990, the RTC rendered judgment against Procter and Gamble and Aonuevo, ordering them to pay Villagracia the amounts of One Hundred Fifty Thousand Pesos (P150, 000.00). for actual damages, Ten Thousand Pesos (P10,000.00) for moral damages, and Twenty Thousand Pesos (P20,000.00) for attorneys fees, as well as legal costs.[4] Both defendants appealed to the Court of Appeals. In a Decision[5] dated 8 May 1997, the Court of Appeals Fourth Division affirmed the RTC Decision in toto[6]. After the Court of Appeals denied the Motion for Reconsideration in a Resolution[7] dated 22 July 1997, Procter and Gamble and Aonuevo filed their respective petitions for review with this Court. Procter and Gambles petition was denied by this Court in a Resolution dated 24 November 1997. Aonuevos petition,[8] on the other hand, was given due course,[9] and is the subject of this Decision.

In arriving at the assailed Decision, the Court of Appeals affirmed the factual findings of the RTC. Among them: that it was Aonuevos vehicle which had struck Villagracia;[10] that Aonuevos vehicle had actually hit Villagracias left mid-thigh, thus causing a comminuted fracture;[11] that as testified by eyewitness Alfredo Sorsano, witness for Villagracia, Aonuevo was umaarangkada, or speeding as he made the left turn into Libertad;[12] that considering Aonuevos claim that a passenger jeepney was obstructing his path as he made the turn. Aonuevo had enough warning to control his speed;[13] and that Aonuevo failed to exercise the ordinary precaution, care and diligence required of him in order that the accident could have been avoided.[14] Notably, Aonuevo, in his current petition, does not dispute the findings of tortious conduct on his part made by the lower courts, hinging his appeal instead on the alleged negligence of Villagracia. Aonuevo proffers no exculpatory version of facts on his part, nor does he dispute the conclusions made by the RTC and the Court of Appeals. Accordingly, the Court, which is not a trier of facts,[15] is not compelled to review the factual findings of the lower courts, which following jurisprudence have to be received with respect and are in fact generally binding.[16] Notwithstanding, the present petition presents interesting questions for resolution. Aonuevos arguments are especially fixated on a particular question of law: whether Article 2185 of the New Civil Code should apply by analogy to non-motorized vehicles.[17] In the same vein, Aonuevo insists that Villagracias own fault and negligence serves to absolve the former of any liability for damages. Its is easy to discern why Aonuevo chooses to employ this line of argument. Aonuevo points out that Villagracias bicycle had no safety gadgets such as a horn or bell, or headlights, as invoked by a 1948 municipal ordinance.[18] Nor was it duly registered with the Office of the Municipal Treasurer, as required by the same ordinance. Finally, as admitted by Villagracia, his bicycle did not have foot brakes. [19] Before this Court, Villagracia does not dispute these allegations, which he admitted during the trial, but directs our attention instead to the findings of Aonuevos own negligence.[20] Villagracia also contends that, assuming there was contributory negligence on his part, such would not exonerate Aonuevo from payment of damages. The Court of Appeals likewise acknowledged the lack of safety gadgets on Villagracias bicycle, but characterized the contention as off-tangent and insufficient to obviate the fact that it was Aonuevos own negligence that caused the accident.[21] Aonuevo claims that Villagracia violated traffic regulations when he failed to register his bicycle or install safety gadgets thereon. He posits that Article 2185 of the New Civil Code applies by analogy. The provision reads: Article 2185. Unless there is proof to the contrary, it is presumed that a person driving a motor vehicle has been negligent if at the time of the mishap he was violating any traffic regulation. The provision was introduced for the first time in this jurisdiction with the adoption in 1950 of the New Civil Code.[22] Its applicability is expressly qualified to motor vehicles only, and there is no ground to presume that the law intended a broader coverage. Still, Aonuevo hypothesizes that Article 2185 should apply by analogy to all types of vehicles [23]. He points out that modern-day travel is more complex now than when the Code was enacted, the number and types of vehicles now in use far more numerous than as of then. He even suggests that at the time of the enactment of the Code, the legislators must have seen that only motor vehicles were of such public concern that they had to be specifically mentioned, yet today, the interaction of vehicles of all types and nature has inescapably become matter of public concern so as to expand the application of the law to be more responsive to the times.[24] What Aonuevo seeks is for the Court to amend the explicit command of the legislature, as embodied in Article 2185, a task beyond the pale of judicial power. The Court interprets, and not creates, the law. However, since the Court is being asked to consider the matter, it might as well examine whether Article 2185 could be interpreted to include non-motorized vehicles. At the time Article 2185 was formulated, there existed a whole array of non-motorized vehicles ranging from human-powered contraptions on wheels such as bicycles, scooters, and animal-drawn carts such as calesas and carromata. These modes of transport were even more prevalent on the roads of

the 1940s and 1950s than they are today, yet the framers of the New Civil Code chose then to exclude these alternative modes from the scope of Article 2185 with the use of the term motorized vehicles. If Aonuevo seriously contends that the application of Article 2185 be expanded due to the greater interaction today of all types of vehicles, such argument contradicts historical experience. The ratio of motorized vehicles as to non-motorized vehicles, as it stood in 1950, was significantly lower than as it stands today. This will be certainly affirmed by statistical data, assuming such has been compiled, much less confirmed by persons over sixty. Aonuevos characterization of a vibrant intra-road dynamic between motorized and non-motorized vehicles is more apropos to the past than to the present. There is a fundamental flaw in Aonuevos analysis of Art. 2185, as applicable today. He premises that the need for the distinction between motorized and non-motorized vehicles arises from the relative mass of number of these vehicles. The more pertinent basis for the segregate classification is the difference in type of these vehicles. A motorized vehicle operates by reason of a motor engine unlike a non-motorized vehicle, which runs as a result of a direct exertion by man or beast of burden of direct physical force. A motorized vehicle, unimpeded by the limitations in physical exertion. is capable of greater speeds and acceleration than non-motorized vehicles. At the same time, motorized vehicles are more capable in inflicting greater injury or damage in the event of an accident or collision. This is due to a combination of factors peculiar to the motor vehicle, such as the greater speed, its relative greater bulk of mass, and greater combustability due to the fuels that they use. There long has been judicial recognition of the peculiar dangers posed by the motor vehicle. As far back as 1912, in the U.S. v. Juanillo[25], the Court has recognized that an automobile is capable of great speed, greater than that of ordinary vehicles hauled by animals, and beyond doubt it is highly dangerous when used on country roads, putting to great hazard the safety and lives of the mass of the people who travel on such roads.[26] In the same case, the Court emphasized: A driver of an automobile, under such circumstances, is required to use a greater degree of care than drivers of animals, for the reason that the machine is capable of greater destruction, and furthermore, it is absolutely under the power and control of the driver; whereas, a horse or other animal can and does to some extent aid in averting an accident. It is not pleasant to be obliged to slow down automobiles to accommodate persons riding, driving, or walking. It is probably more agreeable to send the machine along and let the horse or person get out of the way in the best manner possible; but it is well to understand, if this course is adopted and an accident occurs, that the automobile driver will be called upon to account for his acts. An automobile driver must at all times use all the care and caution which a careful and prudent driver would have exercised under the circumstances.[27] American jurisprudence has had occasion to explicitly rule on the relationship between the motorist and the cyclist. Motorists are required to exercise ordinary or reasonable care to avoid collision with bicyclists.[28] While the duty of using ordinary care falls alike on the motorist and the rider or driver of a bicycle, it is obvious, for reasons growing out of the inherent differences in the two vehicles, that more is required from the former to fully discharge the duty than from the latter.[29] The Code Commission was cognizant of the difference in the natures and attached responsibilities of motorized and non-motorized vehicles. Art. 2185 was not formulated to compel or ensure obeisance by all to traffic rules and regulations. If such were indeed the evil sought to be remedied or guarded against, then the framers of the Code would have expanded the provision to include non-motorized vehicles or for that matter, pedestrians. Yet, that was not the case; thus the need arises to ascertain the peculiarities attaching to a motorized vehicle within the dynamics of road travel. The fact that there has long existed a higher degree of diligence and care imposed on motorized vehicles, arising from the special nature of motor vehicle, leads to the inescapable conclusion that the qualification under Article 2185 exists precisely to recognize such higher standard. Simply put, the standards applicable to motor vehicle are not on equal footing with other types of vehicles. Thus, we cannot sustain the contention that Art. 2185 should apply to non-motorized vehicles, even if by analogy. There is factual and legal basis that necessitates the distinction under Art. 2185, and to adopt Aonuevos thesis would unwisely obviate this distinction.

Even if the legal presumption under Article 2185 should not apply to Villagracia, this should not preclude any possible finding of negligence on his part. While the legal argument as formulated by Aonuevo is erroneous, his core contention that Villagracia was negligent for failure to comply with traffic regulations warrants serious consideration, especially since the imputed negligent acts were admitted by Villagracia himself. The Civil Code characterizes negligence as 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.[30] However, the existence of negligence in a given case is not determined by the personal judgment of the actor in a given situation, but rather, it is the law which determines what would be reckless or negligent.[31] Aonuevo, asserts that Villagracia was negligent as the latter had transgressed a municipal ordinance requiring the registration of bicycles and the installation of safety devices thereon. This view finds some support if anchored on the long standing principle of negligence per se. The generally accepted view is that the violation of a statutory duty constitutes negligence, negligence as a matter of law, or negligence per se.[32] In Teague vs. Fernandez,[33] the Court cited with approval American authorities elucidating on the rule: The mere fact of violation of a statute is not sufficient basis for an inference that such violation was the proximate cause of the injury complained. However, if the very injury has happened which was intended to be prevented by the statute, it has been held that violation of the statute will be deemed to be the proximate cause of the injury. (65 C.J.S. 1156) The generally accepted view is that violation of a statutory duty constitutes negligence, negligence as a matter of law, or, according to the decisions on the question, negligence per se, for the reason that non-observance of what the legislature has prescribed as a suitable precaution is failure to observe that care which an ordinarily prudent man would observe, and, when the state regards certain acts as so liable to injure others as to justify their absolute prohibition, doing the forbidden act is a breach of duty with respect to those who may be injured thereby; or, as it has been otherwise expressed, when the standard of care is fixed by law, failure to conform to such standard is negligence, negligence per se or negligence in and of itself, in the absence of a legal excuse. According to this view it is immaterial, where a statute has been violated, whether the act or omission constituting such violation would have been regarded as negligence in the absence of any statute on the subject or whether there was, as a matter of fact, any reason to anticipate that injury would result from such violation. x x x. (65 C.J.S. pp.623-628) But the existence of an ordinance changes the situation. If a driver causes an accident by exceeding the speed limit, for example, we do not inquire whether his prohibited conduct was unreasonably dangerous. It is enough that it was prohibited. Violation of an ordinance intended to promote safety is negligence. If by creating the hazard which the ordinance was intended to avoid it brings about the harm which the ordinance was intended to prevent, it is a legal cause of the harm. This comes only to saying that in such circumstances the law has no reason to ignore the causal relation which obviously exists in fact. The law has excellent reason to recognize it, since it is the very relation which the makers of the ordinance anticipated. This court has applied these principles to speed limits and other regulations of the manner of driving. (Ross vs. Hartman, 139 Fed. 2d 14 at 15). x x x However, the fact that other happenings causing or contributing toward an injury intervened between the violation of a statute or ordinance and the injury does not necessarily make the result so remote that no action can be maintained. The test is to be found not in the number of intervening events or agents, but in their character and in the natural and probable connection between the wrong done and the injurious consequence. The general principle is that the violation of a statute or ordinance is not rendered remote as the cause of an injury by the intervention of another agency if the occurrence of the accident, in the manner in which it happened, was the very thing which the statute or ordinance was intended to prevent. (38 Am Jur 841)[34]

In Teague, the owner of a vocational school stricken by a fire resulting in fatalities was found negligent, base on her failure to provide adequate fire exits in contravention of a Manila city ordinance. [35] In F.F. Cruz and Co., Inc. v. Court of Appeals[36], the failure of the petitioner to construct a firewall in accordance with city ordinances sufficed to support a finding of negligence.[37] In Cipriano v. Court of Appeals, [38]the Court found that the failure of the petitioner to register and insure his auto rustproofing shop in accordance with the statute constituted negligence per se, thus holding him liable for the damages for the destruction by fire of a customers vehicle garaged therein. Should the doctrine of negligence per se apply to Villagracia, resulting from his violation of an ordinance? It cannot be denied that the statutory purpose for requiring bicycles to be equipped with headlights or horns is to promote road safety and to minimize the occurrence of road accidents involving bicycles. At face value, Villagracias mishap was precisely the danger sought to be guarded against by the ordinance he violated. Aonuevo argues that Villagracias violation should bar the latters recovery of damages, and a simplistic interpretation of negligence per se might vindicate such an argument. But this is by no means a simple case. There is the fact which we consider as proven, that Aonuevo was speeding as he made the left turn, and such negligent act was the proximate cause of the accident. This reckless behavior would have imperiled anyone unlucky enough within the path of Aonuevos car as it turned into the intersection, whether they are fellow motorists, pedestrians, or cyclists. We are hard put to conclude that Villagracia would have avoided injury had his bicycle been up to par with safety regulations, especially considering that Aonuevo was already speeding as he made the turn, or before he had seen Villagracia. Even assuming that Aonuevo had failed to see Villagracia because the bicycle was not equipped with headlights, such lapse on the cyclists part would not have acquitted the driver of his duty to slow down as he proceeded to make the left turn. This court has appreciated that negligence per se, arising from the mere violation of a traffic statute, need not be sufficient in itself in establishing liability for damages. In Sanitary Steam Laundry, Inc. v. Court of Appeals,[39] a collision between a truck and a privately-owned Cimarron van caused the death of three of the vans passengers. The petitioner therein, the owner of the truck, argued that the driver of the Cimarron was committing multiple violations of the Land Transportation and Traffic Code[40] at the time of the accident. Among these violations: the Cimarron was overloaded at the time of the accident; the front seat of the van was occupied by four adults, including the driver; and the van had only one functioning headlight. Similar as in this case, petitioner therein invoked Article 2185 and argued that the driver of the Cimarron should be presumed negligent. The Court, speaking through Justice Mendoza, dismissed these arguments: [It] has not been shown how the alleged negligence of the Cimarron driver contributed to the collision between the vehicles. Indeed, petitioner has the burden of showing a causal connection between the injury received and the violation of the Land Transportation and Traffic Code. He must show that the violation of the statute was the proximate or legal cause of the injury or that it substantially contributed thereto. Negligence consisting in whole or in part, of violation of law, like any other negligence, is without legal consequence unless it is a contributing cause of the injury. Petitioner says that driving an overloaded vehicle with only one functioning headlight during nighttime certainly increases the risk of accident, that because the Cimarron had only one headlight, there was decreased visibility, and that the fact that the vehicle was overloaded and its front seat overcrowded decreased its maneuverability. However, mere allegations such as these are not sufficient to discharge its burden of proving clearly that such alleged negligence was the contributing cause of the injury.[41] Sanitary Steam[42] is controlling in this case. The bare fact that Villagracia was violating a municipal ordinance at the time of the accident may have sufficiently established some degree of negligence on his part, but such negligence is without legal consequence unless it is shown that it was a contributing cause of the injury. If anything at all, it is but indicative of Villagracias failure in fulfilling his obligation to the municipal government, which would then be the proper party to initiate corrective action as a result. But such failure alone is not determinative of Villagracias negligence in relation to the accident. Negligence is relative or comparative, dependent upon the situation of the parties and the degree of care and vigilance which the particular circumstances reasonably require.[43] To determine if Villagracia was negligent, it is not sufficient to rely solely on the violations of the municipal ordinance, but

imperative to examine Villagracias behavior in relation to the contemporaneous circumstances of the accident. The rule on negligence per se must admit qualifications that may arise from the logical consequences of the facts leading to the mishap. The doctrine (and Article 2185, for that matter) is undeniably useful as a judicial guide in adjudging liability, for it seeks to impute culpability arising from the failure of the actor to perform up to a standard established by a legal fiat. But the doctrine should not be rendered inflexible so as to deny relief when in fact there is no causal relation between the statutory violation and the injury sustained. Presumptions in law, while convenient, are not intractable so as to forbid rebuttal rooted in fact. After all, tort law is remunerative in spirit, aiming to provide compensation for the harm suffered by those whose interests have been invaded owing to the conduct of others.[44] Under American case law, the failures imputed on Villagracia are not grievous enough so as to negate monetary relief. In the absence of statutory requirement, one is not negligent as a matter of law for failing to equip a horn, bell, or other warning devise onto a bicycle.[45] In most cases, the absence of proper lights on a bicycle does not constitute negligence as a matter of law[46] but is a question for the jury whether the absence of proper lights played a causal part in producing a collision with a motorist. [47] The absence of proper lights on a bicycle at night, as required by statute or ordinance, may constitute negligence barring or diminishing recovery if the bicyclist is struck by a motorist as long as the absence of such lights was a proximate cause of the collision;[48] however, the absence of such lights will not preclude or diminish recovery if the scene of the accident was well illuminated by street lights, [49] if substitute lights were present which clearly rendered the bicyclist visible,[50] if the motorist saw the bicycle in spite of the absence of lights thereon,[51] or if the motorist would have been unable to see the bicycle even if it had been equipped with lights.[52] A bicycle equipped with defective or ineffective brakes may support a finding of negligence barring or diminishing recovery by an injured bicyclist where such condition was a contributing cause of the accident.[53] The above doctrines reveal a common thread. The failure of the bicycle owner to comply with accepted safety practices, whether or not imposed by ordinance or statute, is not sufficient to negate or mitigate recovery unless a causal connection is established between such failure and the injury sustained. The principle likewise finds affirmation in Sanitary Steam, wherein we declared that the violation of a traffic statute must be shown as the proximate cause of the injury, or that it substantially contributed thereto.[54] Aonuevo had the burden of clearly proving that the alleged negligence of Villagracia was the proximate or contributory cause of the latters injury. On this point, the findings of the Court of Appeals are well-worth citing: [As] admitted by appellant Aonuevo, he first saw appellee Villagracia at a distance of about ten (10) meters before the accident. Corrolarily, therefore, he could have avoided the accident had he [stopped] alongside with an earlier (sic) jeep which was already at a full stop giving way to appellee. But according to [eyewitness] Sorsano, he saw appellant Aonuevo umaarangkada and hit the leg of Villagracia (TSN March 14, 1990 p. 30). This earlier (sic) jeep at a full stop gave way to Villagracia to proceed but Aonuevo at an unexpected motion (umarangkada) came out hitting Villagracia (TSN March 9, 1990 p. 49). Appellant Aonuevo admitted that he did not blow his horn when he crossed Boni Avenue (TSN March 21, 1990 p. 47).[55] By Aonuevos own admission, he had seen Villagracia at a good distance of ten (10) meters. Had he been decelerating, as he should, as he made the turn, Aonuevo would have had ample opportunity to avoid hitting Villagracia. Moreover, the fact that Aonuevo had sighted Villagracia before the accident would negate any possibility that the absence of lights on the bike contributed to the cause of the accident.[56] A motorist has been held liable for injury to or death of a bicyclist where the motorist turned suddenly into the bicyclist so as to cause a collision.[57] Neither does Aonuevo attempt before this Court to establish a causal connection between the safety violations imputed to Villagracia and the accident itself. Instead, he relied on a putative presumption that these violations in themselves sufficiently established negligence appreciable against Villagracia. Since the onus on Aonuevo is to conclusively prove the link between the violations and the

accident, we can deem him as having failed to discharge his necessary burden of proving Villagracias own liability. Neither can we can adjudge Villagracia with contributory negligence. The leading case in contributory negligence, Rakes v. Atlantic Gulf[58] clarifies that damages may be mitigated if the claimant in conjunction with the occurrence, [contributes] only to his injury.[59] To hold a person as having contributed to his injuries, it must be shown that he performed an act that brought about his injuries in disregard of warnings or signs of an impending danger to health and body.[60] To prove contributory negligence, it is still necessary to establish a causal link, although not proximate, between the negligence of the party and the succeeding injury. In a legal sense, negligence is contributory only when it contributes proximately to the injury, and not simply a condition for its occurrence.[61] As between Aonuevo and Villagracia, the lower courts adjudged Aonuevo as solely responsible for the accident. The petition does not demonstrate why this finding should be reversed. It is hard to imagine that the same result would not have occurred even if Villagracias bicycle had been equipped with safety equipment. Aonuevo himself admitted having seen Villagracia from ten (10) meters away, thus he could no longer claim not having been sufficiently warned either by headlights or safety horns. The fact that Aonuevo was recklessly speeding as he made the turn likewise leads us to believe that even if Villagracias bicycle had been equipped with the proper brakes, the cyclist would not have had opportunity to brake in time to avoid the speeding car. Moreover, it was incumbent on Aonuevo to have established that Villagracias failure to have installed the proper brakes contributed to his own injury. The fact that Aonuevo failed to adduce proof to that effect leads us to consider such causal connection as not proven. All told, there is no reason to disturb the assailed judgment. WHEREFORE, the Petition is DENIED. The Decision of the Court of Appeals is AFFIRMED. Costs against petitioner. SO ORDERED. Puno, (Chairman), Austria-Martinez, Callejo, Sr. and Chico-Nazario, JJ., concur.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. L-44264 September 19, 1988 HEDY GAN y YU, petitioner, vs. THE HONORABLE COURT OF APPEALS and the PEOPLE OF THE PHILIPPINES, respondents. Pacis, Baluyot, Reyes & De Leon for petitioner. The Solicitor General for respondents.

FERNAN, C.J.: Petitioner Hedy Gan was convicted of the crime of Homicide thru Reckless Imprudence in Criminal Case No. 10201 of the then Court of First Instance of Manila, Branch XXII presided by Judge Federico C. Alikpala. She was sentenced to an indeterminate penalty of four (4) months and one (1) day of arresto mayor as minimum and two (2) years, four (4) months and one (1) day of prision correccional as maximum and was made to indemnify the heirs of the victim the sum of P12,000.00 without any subsidiary imprisonment in case of insolvency and to pay the costs. On appeal, the trial court's decision was modified and petitioner was convicted only of Homicide thru Simple Imprudence. Still unsatisfied with the decision of the Court of Appeals, 1 petitioner has come to this Court for a complete reversal of the judgment below. The facts of the case as found by the appellate court are as follows: In the morning of July 4, 1972 at about 8:00 o'clock, the accused Hedy Gan was driving a Toyota car along North Bay Boulevard, Tondo, Manila. While in front of house no. 694 of North Bay Boulevard, there were two vehicles, a truck and a jeepney parked on one side of the road, one following the other about two to three meters from each other. As the car driven by the accused approached the place where the two vehicles were parked, there was a vehicle coming from the opposite direction, followed by another which tried to overtake and bypass the one in front of it and thereby encroached the lane of the car driven by the accused. To avoid a head-on collision with the oncoming vehicle, the defendant swerved to the right and as a consequence, the front bumper of the Toyota Crown Sedan hit an old man who was about to cross the boulevard from south to north, pinning him against the rear of the parked jeepney. The force of the impact caused the parked jeepney to move forward hitting the rear of the parts truck ahead of it. The pedestrian was injured, the Toyota Sedan was damaged on its front, the jeep suffered damages on its rear and front paints, and the truck sustained scratches at the wooden portion of its rear. The body of the old man who was later Identified as Isidoro Casino was immediately brought to the Jose Reyes Memorial Hospital but was (pronounced) dead on arrival. 2

An information for Homicide thru Reckless Imprudence was filed against petitioner in view of the above incident. She entered a plea of not guilty upon arraignment and the case was set for trial. Meanwhile, petitioner sought and was granted a re-investigation by the City Fiscal, as a result of which the trial fiscal moved for the dismissal of the case against petitioner during the resumption of hearing on September 7, 1972. The grounds cited therefor were lack of interest on the part of the complaining witness to prosecute the case as evidenced by an affidavit of desistance submitted to the trial court and lack of eyewitness to sustain the charge. The motion to dismiss filed by the fiscal was never resolved. The Court instead ordered the prosecution to present its evidence. After the prosecution rested its case, the petitioner filed a motion to dismiss the case on the ground of insufficiency of evidence. On December 22, 1972, the trial court rendered judgment finding petitioner guilty beyond reasonable doubt of the of- offense charged. Petitioner appealed to the Court of Appeals in CA-G.R. No. 14472-CR. On May 3, 1976, the Court of Appeals rendered a decision, the dispositive portion of which reads as follows: Wherefore, as modified, the accused Hedy Gan is guilty beyond reasonable doubt of the crime of homicide thru simple imprudence and, pursuant to paragraph 2, Article 365 of the Revised Penal Code, she is hereby sentenced to the indeterminate penalty of three (3) months and eleven (11) days of arresto mayor and to indemnify the heirs of Isidoro Casino in the sum of Twelve Thousand Pesos (Pl2,000.00) without, however, any subsidiary imprisonment in case of insolvency, and to pay the costs. 3 Petitioner now appeals to this Court on the following assignments of errors: I The Court of Appeals erred in holding that when the petitioner saw a car travelling directly towards her, she should have stepped on the brakes immediately or in swerving her vehicle to the right should have also stepped on the brakes or lessened her speed, to avoid the death of a pedestrian. II The Court of Appeals erred in convicting the petitioner of the crime of Homicide thru Simple Imprudence. III The Court of Appeals erred in adjudging the petitioner liable to indemnify the deceased in the sum of P12,000.00. 4 We reverse. The test for determining whether or not a person is negligent in doing an act whereby injury or damage results to the person or property of another is this: Would a prudent man in the position of the person to whom negligence is attributed foresee harm to the person injured as a reasonable consequence of the course about to be pursued? If so, the law imposes the duty oil the doer to take precaution against its mischievous results and the failure to do so constitutes negligence. 5 A corollary rule is what is known in the law as the emergency rule. "Under that rule, one who suddenly finds himself in a place of danger, and is required to act without time to consider the best means that may

be adopted to avoid the impending danger, is not guilty of negligence, if he fails to adopt what subsequently and upon reflection may appear to have been a better method, unless the emergency in which he finds himself is brought about by his own negligence." 6 Applying the above test to the case at bar, we find the petitioner not guilty of the crime of Simple Imprudence resulting in Homicide. The appellate court in finding the petitioner guilty said: The accused should have stepped on the brakes when she saw the car going in the opposite direction followed by another which overtook the first by passing towards its left. She should not only have swerved the car she was driving to the right but should have also tried to stop or lessen her speed so that she would not bump into the pedestrian who was crossing at the time but also the jeepney which was then parked along the street. 7 The course of action suggested by the appellate court would seem reasonable were it not for the fact that such suggestion did not take into account the amount of time afforded petitioner to react to the situation she was in. For it is undeniable that the suggested course of action presupposes sufficient time for appellant to analyze the situation confronting her and to ponder on which of the different courses of action would result in the least possible harm to herself and to others. Due to the lack of eyewitnesses, no evidence was presented by the prosecution with respect to the relative distances of petitioner to the parked jeepney and the oncoming overtaking vehicle that would tend to prove that petitioner did have sufficient time to reflect on the consequences of her instant decision to swerve her car to the light without stepping on her brakes. In fact, the evidence presented by the prosecution on this point is the petitioner's statement to the police 8 stating:: And masasabi ko lang ho umiwas ho ako sa isang sasakyan na biglang nagovertake sa sasakyan na aking kasalubong kung kaya ay aking kinabig sa kanan ang akin kotse subalit siya naman biglang pagtawid ng tao o victim at hindi ko na ho naiwasan at ako ay wala ng magawa . Iyan ho ang buong pangyayari nang nasabing aksidente. 9 (Emphasis supplied) The prosecution having presented this exhibit as its own evidence, we cannot but deem its veracity to have been admitted by it. Thus, under the circumstances narrated by petitioner, we find that the appellate court is asking too much from a mere mortal like the petitioner who in the blink of an eye had to exercise her best judgment to extricate herself from a difficult and dangerous situation caused by the driver of the overtaking vehicle. Petitioner certainly could not be expected to act with all the coolness of a person under normal conditions. 10 The danger confronting petitioner was real and imminent, threatening her very existence. She had no opportunity for rational thinking but only enough time to heed the very powerfull instinct of self-preservation. Also, the respondent court itself pronounced that the petitioner was driving her car within the legal limits. We therefore rule that the "emergency rule" enunciated above applies with full force to the case at bar and consequently absolve petitioner from any criminal negligence in connection with the incident under consideration. We further set aside the award of damages to the heirs of the victim, who by executing a release of the claim due them, had effectively and clearly waived their right thereto. WHEREFORE, judgment is hereby rendered acquitting petitioner HEDY GAN y YU of the crime of Homicide thru Simple Imprudence. She is no longer liable for the P12,000.00 civil indemnity awarded by the appellate court to the heirs of the victim.

SO ORDERED. Feliciano, Bidin and Cortes, JJ., concur. Gutierrez, Jr., J., is on leave.

SECOND DIVISION [G.R. No. 148737. June 16, 2004]

ERNESTO PLEYTO and PHILIPPINE RABBIT BUS LINES, INC., petitioners, vs. MARIA D. LOMBOY and CARMELA LOMBOY, respondents. DECISION QUISUMBING, J.: For review on certiorari is the Decision[1] dated October 31, 2000 of the Court of Appeals in CAG.R. CV No. 61300, which affirmed with modification the Decision[2] dated June 26, 1998 of the Regional Trial Court (RTC) of Dagupan City, Branch 42, in Civil Case No. 95-00724-D. The RTC ordered herein petitioners to solidarily pay damages to respondents. Petitioners likewise assail the Resolution[3] dated June 21, 2001 of the appellate court, which denied their Motion for Reconsideration. Petitioner Philippine Rabbit Bus Lines, Inc. (PRBL), with principal office at Tarlac City, Tarlac, is a public carrier, engaged in carrying passengers and goods for a fare. It serviced various routes in Central and Northern Luzon. Petitioner Ernesto Pleyto was a bus driver employed by PRBL at the time of the incident in question. Respondent Maria D. Lomboy of Calasiao, Pangasinan, is the surviving spouse of the late Ricardo Lomboy, who died in Pasolingan, Gerona, Tarlac, in a vehicular accident at around 11:30 a.m. of May 16, 1995. The accident was a head-on collision between the PRBL bus driven by petitioner Pleyto and the car where Ricardo was a passenger. Respondent Carmela Lomboy is the eldest daughter of Ricardo and Maria Lomboy. Carmela suffered injuries requiring hospitalization in the same accident which resulted in her fathers death. On November 29, 1995, herein respondents, as pauper-litigants, filed an action for damages against PRBL and its driver, Pleyto, with the RTC of Dagupan City. In their complaint, which was docketed as Civil Case No. 95-00724-D, the Lomboys prayed that they be indemnified for the untimely death of Ricardo Lomboy, his lost earnings, the medical and hospitalization expenses of Carmela, and moral damages. The facts, established during trial and affirmed by the appellate court, are as follows: At approximately 11:30 a.m. of May 16, 1995, PRBL Bus No. 1539, with Plate No. CVD 556, driven by petitioner Pleyto, was traveling along MacArthur Highway in Gerona, Tarlac bound for Vigan, Ilocos Sur. It was drizzling that morning and the macadam road was wet. Right in front of the bus, headed north, was the tricycle with Plate No. CX 7844, owned and driven by one Rodolfo Esguerra. According to Rolly Orpilla, a witness and one of the bus passengers, Pleyto tried to overtake Esguerras tricycle but hit it instead. Pleyto then swerved into the left opposite lane. Coming down the lane, some fifty meters away, was a southbound Mitsubishi Lancer car, with Plate No. PRS 941, driven by Arnulfo Asuncion. The car was headed for Manila with some passengers. Seated beside Arnulfo was his brother-in-law, Ricardo Lomboy, while in the back seat were Ricardos 18-year old daughter Carmela and her friend, one Rhino Daba. PRBL Bus No. 1539 smashed head-on the car, killing Arnulfo and Ricardo instantly. Carmela and Rhino suffered injuries, but only Carmela required hospitalization. In their Answer, petitioners PRBL and Ernesto Pleyto both claimed that the bus was running slowly at the time of the accident. They pointed out that Bus No. 1539 had been inspected by driver Pleyto and examined by a mechanic prior to the trip, in accordance with the companys standard operating procedure. It was found in good working condition. Pleyto claimed that while cruising along the highway

at Gerona, Tarlac, he noticed Esguerras tricycle and followed it at a safe distance after he was unable to overtake it. Suddenly and without warning, the tricycle stopped in the middle of the road. Pleyto stepped on the brakes and the bus lost speed. But, since it skidded towards the direction of the tricycle, he swerved the bus to the other lane to avoid hitting it, only to collide with the Manila-bound Mitsubishi car. On June 26, 1998, the trial court decided Civil Case No. 95-00724-D as follows: WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiffs and against the defendants ordering the defendants to pay solidarily the plaintiffs the following amounts: 1) P50,000.00 as indemnification for the death of Ricardo Lomboy; 2) P1,642,521.00 for lost earnings of Ricardo Lomboy; 3) P59,550.00 as actual damages for the funeral, wake, religious services and prayer for the soul of the departed; 4) P52,000.00 for the medical treatment and medicine of Carmela Lomboy; 5) P500,000.00 as moral damages for the wife and children excluding Carmela Lomboy; 6) P50,000.00 as moral damages for Carmela Lomboy; and 7) To pay costs. The filing fee the plaintiffs should have paid is hereby ordered to be paid by the plaintiffs to the Clerk of Court of this Court upon satisfaction of the foregoing amounts to the plaintiffs by the defendants. SO ORDERED.[4] In ruling for respondents, the RTC found Pleyto negligent and lacking in precaution when he overtook the tricycle with complete disregard of the approaching car in the other lane. It found the testimony of Rolly Orpilla credible and persuasive as against Pleytos self-serving and unbelievable testimony. The court found that Pleyto should have been more prudent in overtaking a tricycle, considering that it was drizzling, the road was slippery, and another vehicle was approaching from the opposite direction. The RTC found that Pleyto had clearly violated traffic rules and regulations, and thus was negligent under Article 2185[5] of the Civil Code of the Philippines because petitioner Pleyto failed to present any proof to rebut the presumption. The lower court likewise held co-petitioner PRBL equally liable under Article 2180[6] of the Civil Code for its failure to show that it had maintained proper supervision of its employees notwithstanding strict standards in employee selection. Petitioners appealed the judgment of the trial court to the Court of Appeals in CA-G.R. CV No. 61300. The appellate court, however, affirmed the decision of the trial court, with modification in the award of damages, thus: Wherefore, with the MODIFICATION that the award for actual damages is reduced to P39,550.00 for funeral and religious services and P27,000.00 for medical expenses of Carmela Lomboy; and the award for loss of earning capacity is accordingly corrected to P1,152,000.00, the appealed decision is AFFIRMED. SO ORDERED.[7] The Court of Appeals affirmed the findings of the RTC with respect to Pleytos fault and negligence. The appellate court noted that this was evident in his overtaking Esguerras tricycle despite the drizzle, the slippery road, and an oncoming car a mere fifty meters away. The court reasoned that the bus must have been speeding since despite braking, the bus still hit the tricycle, and then rammed the car

in the opposite lane with such force as to throw the car off the road. The appellate court also found petitioner PRBL liable as owner of the bus and as employer of Pleyto pursuant to Article 2180 of the Civil Code, for its failure to observe the required diligence in its supervision of its employees and the safe maintenance of its buses. In modifying the award of damages, the appellate court took note of the amounts that were duly supported by receipts only. Petitioners then moved for reconsideration, but the appellate court denied it. Hence, the instant petition, premised on the following grounds: A. THE SUPREME COURT MAY REVIEW THE CONCLUSION DRAWN BY THE COURT OF APPEALS, NAMELY, THAT THE PRBL BUS OVERTOOK A TRICYCLE THUS CAUSING THE ACCIDENT, SINCE IT WAS MADE IN DISREGARD OF FACTS UNDISPUTED BY THE PARTIES. B. THE COURT OF APPEALS DISREGARDED THE DOCTRINE LAID DOWN IN VILLA REY TRANSIT, INC. v. COURT OF APPEALS, G.R. NO. L-25499, FEBRUARY 18, 1970, 31 SCRA 511, WHEN IT ARBITRARILY PEGGED THE MONTHLY LIVING EXPENSES AT 50% OF GROSS EARNINGS.[8] At the outset, it appears that petitioners call for this Court to review the factual findings and conclusions of the Court of Appeals. Petitioners assail the appellate courts affirmance of the finding by the trial court that Pleyto was negligent. The issue of negligence is factual and, in quasi-delicts, crucial in the award of damages.[9] But it is well established that under Rule 45 of the 1997 Rules of Civil Procedure, only questions of law, not of fact, may be raised before the Supreme Court. It must be stressed that this Court is not a trier of facts, and it is not its function to re-examine and weigh anew the respective evidence of the parties.[10] Factual findings of the trial court, especially those affirmed by the Court of Appeals, are conclusive on this Court when supported by the evidence on record. [11] In the present petition, no compelling reason is shown by petitioners whatsoever for this Court to reverse those findings. Our examination of the records shows that the evidence clearly supports the following findings of the appellate court: The negligence and fault of appellant driver is manifest. He overtook the tricycle despite the oncoming car only fifty (50) meters away from him. Defendant-appellants claim that he was driving at a mere 30 to 35 kilometers per hour does not deserve credence as it would have been easy to stop or properly maneuver the bus at this speed. The speed of the bus, the drizzle that made the road slippery, and the proximity of the car coming from the opposite direction were duly established by the evidence. The speed at which the bus traveled, inappropriate in the light of the aforementioned circumstances, is evident from the fact despite the application of the brakes, the bus still bumped the tricycle, and then proceeded to collide with the incoming car with such force that the car was pushed beyond the edge of the road to the ricefield (Paragraph 8, Affidavit of Rolly Orpilla marked Exh. D and Traffic Report marked Exh. E, Folder of Exhibits).[12] Indeed, petitioner Pleyto violated traffic rules and regulations when he overtook the tricycle despite the presence of an oncoming car in the other lane. Article 2185 of the Civil Code lays down the presumption that a person driving a motor vehicle has been negligent if at the time of the mishap, he was violating any traffic regulation. As found by both the Court of Appeals and the trial court, petitioners failed to present any convincing proof rebutting such presumption. A driver abandoning his proper lane for the purpose of overtaking another vehicle in an ordinary situation has the duty to see to it that the road is clear and not to proceed if he cannot do so in safety. When a motor vehicle is approaching or rounding a curve, there is special necessity for keeping to the right side of the road and the driver does not have the right to drive on the left hand side relying upon having time to turn to the right if a car approaching from the opposite direction comes into view.[13] The Court of Appeals found PRBL liable for Pleytos negligence pursuant to Article 2180 in relation to Article 2176[14] of the Civil Code. Under Article 2180, when an injury is caused by the negligence of a servant or an employee, the master or employer is presumed to be negligent either in the selection or in

the supervision of that employee. This presumption may be overcome only by satisfactorily showing that the employer exercised the care and the diligence of a good father of a family in the selection and the supervision of its employee.[15] In fine, when the employee causes damage due to his own negligence while performing his own duties, there arises the juris tantum presumption that the employer is negligent, rebuttable only by proof of observance of the diligence of a good father of a family.[16] Thus, in the selection of prospective employees, employers are required to examine them as to their qualifications, experience and service records. With respect to the supervision of employees, employers must formulate standard operating procedures, monitor their implementation and impose disciplinary measures for breaches thereof. These facts must be shown by concrete proof, including documentary evidence.[17] In the present case, petitioners presented several documents[18] in evidence to show the various tests and pre-qualification requirements imposed upon petitioner Pleyto before his hiring as a driver by PRBL. However, no documentary evidence was presented to prove that petitioner PRBL exercised due diligence in the supervision of its employees, including Pleyto. Citing precedents, the Court of Appeals opined, in order that the defense of due diligence in the selection and supervision of employees may be deemed sufficient and plausible, it is not enough for the employer to emptily invoke the existence of company guidelines and policies on hiring and supervision. As the negligence of the employee gives rise to the presumption of negligence on the part of the employer, the latter has the burden of proving that it has been diligent not only in the selection of employees but also in the actual supervision of their work. The mere allegation of the existence of hiring procedures and supervisory policies without anything more is decidedly not sufficient to overcome such presumption. (Metro Manila Transit Corp. vs. CA (223 SCRA 521). The trial court ratiocinated: ... Indeed, the testimony of the said two witnesses of the PRBL would impress one to believe that the PRBL has always exercised the strictest standard of selecting its employees and of maintaining its vehicles to avoid injury or damage to the life and limb of people on the road whether of its own passengers or pedestrians or occupants or other vehicles. It has not however, shown to the satisfaction of the Court that it has maintained proper supervision of its employees, especially drivers while in the actual operation of its buses. While it has a list of procedures and testing when it comes to recruitment and another list of what should be done with its buses before they are allowed to run on the road, it has no list of procedures and duties to be followed by a driver while he is operating a vehicle to prevent injury to persons and damage to property. Neither has it proved to the Court that there are people employed by it to supervise its drivers so that it can be seen to it that all the safety procedures to prevent accident or damage to property or injury to people on the road have been in place. It is in this aspect of supervising its employees where this Court has found the defendant PRBL deficient. (Decision p. 29, Rollo)[19] In our view, no reversible error was committed by the Court of Appeals when it sustained what the trial court found after trial that PRBL had failed to rebut the presumption of negligence on its part. Said finding binds us now in this review on certiorari. Hence, the only remaining issue relevant for our resolution concerns the award to herein respondents for damages as well as the loss of earning capacity of the victim, Ricardo Lomboy. Petitioners argue that the award of loss of earning capacity to respondents is devoid of legal basis. They fault the appellate court for pegging the monthly living expenses at 50% of gross earnings since, they claim, this runs contrary to Villa Rey Transit, Inc. v. Court of Appeals,[20] which held that the amount recoverable is not loss of the entire earning, but rather the loss of that portion of the earnings which the beneficiary would have received. Petitioners also point out that respondents failed to prove the gross income of the deceased Ricardo Lomboy, thus, making the computations of the appellate court doubtful, to say the least.

Respondents counter that the deduction of 50% of the gross income as reasonable and necessary living expenses by the appellate court is in accord with established jurisprudence, pointing to our decision in Negros Navigation Co., Inc. v. Court of Appeals.[21] Petitioners, in our view, misread the Villa Rey Transit case, where we emphasized that: Thus, it has been consistently held that earning capacity, as an element of damages to ones estate for his death by wrongful act is necessarily his net earning capacity or his capacity to acquire money, less the necessary expense for his own living. Stated otherwise, the amount recoverable is not loss of the entire earning, but rather the loss of that portion of the earnings which the beneficiary would have received. In other words, only net earnings, not gross earning, are to be considered that is, the total of the earnings less expenses necessary in the creation of such earnings or income and less living and other incidental expenses.[22] In considering the earning capacity of the victim as an element of damages, the net earnings, which is computed by deducting necessary expenses from the gross earnings, and not the gross earnings, is to be utilized in the computation. Note that in the present case, both the Court of Appeals and the trial court used net earnings, not gross earnings in computing loss of earning capacity. The amount of net earnings was arrived at after deducting the necessary expenses (pegged at 50% of gross income) from the gross annual income. This computation is in accord with settled jurisprudence, including the Villa Rey case. Petitioners claim that no substantial proof was presented to prove Ricardo Lomboys gross income lacks merit. Failure to present documentary evidence to support a claim for loss of earning capacity of the deceased need not be fatal to its cause. Testimonial evidence suffices to establish a basis for which the court can make a fair and reasonable estimate of the loss of earning capacity.[23] Hence, the testimony of respondent Maria Lomboy, Ricardos widow, that her husband was earning a monthly income of P8,000 is sufficient to establish a basis for an estimate of damages for loss of earning capacity. It is well-settled in jurisprudence that the factors that should be taken into account in determining the compensable amount of lost earnings are: (1) the number of years for which the victim would otherwise have lived; and (2) the rate of loss sustained by the heirs of the deceased. Jurisprudence provides that the first factor, i.e., life expectancy, is computed by applying the formula (2/3 x [80 - age at death]) adopted in the American Expectancy Table of Mortality or the Actuarial Combined Experience Table of Mortality. As to the second factor, it is computed by multiplying the life expectancy by the net earnings of the deceased, i.e., the total earnings less expenses necessary in the creation of such earnings or income and less living and other incidental expenses. The net earning is ordinarily computed at fifty percent (50%) of the gross earnings.[24] Thus, the formula used by this Court in computing loss of earning capacity is: Net Earning Capacity = [2/3 x (80 age at time of death) x (gross annual income reasonable and necessary living expenses)].[25] It was established that Ricardo Lomboy was 44 years old at the time of his death and is earning a monthly income of P8,000 or a gross annual income (GAI) of P96,000.[26] Using the cited formula, the Court of Appeals correctly computed the Loss of Net Earning Capacity as P1,152,000, net of and after considering a reasonable and necessary living expenses of 50% of the gross annual income or P48,000. A detailed computation is as follows: NET = LIFE EXPECTANCY x GROSS LIVING EARNING [2/3 (80-age at the time ANNUAL EXPENSES CAPACITY (X) of death) INCOME (GAI) (50% OF GAI) X = [2/3 (80-44)] x [P96,000 (50% x P96,000) X X = = [2/3 (36)] 24 x x [P96,000 48,000] 48,000

P 1,152,000.00

Thus, no reversible error may be attributed to the court a quo in fixing the loss of earning capacity at said amount. We likewise sustain the reduction of the award of actual damages from P59,550 for funeral and burial expenses of Ricardo and P52,000 for medical expenses of Carmela Lomboy to P39,550[27] and P27,000, respectively, as only these latter amounts were duly supported by receipts.[28] To justify an award of actual damages, there must be competent proof of the actual amount of loss, credence can be given only to claims which are duly supported by receipts.[29] However, while the award of P50,000 as moral damages to Carmela Lomboy is sustained, the award for moral damages of P500,000 to the heirs of Ricardo Lomboy should be reduced for being excessive. Under Article 2206 of the Civil Code, the spouse, legitimate children and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased.[30] However, we must stress that moral damages, though incapable of pecuniary estimation, are in the category of an award designed to compensate the claimant for actual injury and are not meant to enrich complainant at the expense of defendant.[31] Moral damages are awarded to enable the injured party to obtain means, diversions or amusements that will serve to alleviate the moral suffering he/she has undergone, by reason of the defendants culpable action. Its award is aimed at restoration, as much as possible, of the spiritual status quo ante; thus it must be proportionate to the suffering inflicted. [32] Under the circumstances of this case, an award of P100,000 to the heirs of Ricardo Lomboy would be justified and in keeping with the purpose of the law and jurisprudence in allowing moral damages.[33] The indemnification award of P50,000 is also sustained. WHEREFORE, the assailed Decision of the Court of Appeals in CA-G.R. CV No. 61300 is AFFIRMED, with the sole MODIFICATION that the award of moral damages to the heirs of Ricardo Lomboy is reduced from P500,000.00 to P100,000.00. No pronouncement as to costs. SO ORDERED. Puno, (Chairman), Austria-Martinez, Callejo, Sr., and Tinga, JJ., concur.

FIRST DIVISION [G.R. No. 124354. December 29, 1999]

ROGELIO E. RAMOS and ERLINDA RAMOS, in their own behalf and as natural guardians of the minors, ROMMEL RAMOS, ROY RODERICK RAMOS and RON RAYMOND RAMOS, petitioners, vs. COURT OF APPEALS, DELOS SANTOS MEDICAL CENTER, DR. ORLINO HOSAKA and DRA. PERFECTA GUTIERREZ, respondents. DECISION KAPUNAN, J.: The Hippocratic Oath mandates physicians to give primordial consideration to the health and welfare of their patients. If a doctor fails to live up to this precept, he is made accountable for his acts. A mistake, through gross negligence or incompetence or plain human error, may spell the difference between life and death. In this sense, the doctor plays God on his patients fate.[1] In the case at bar, the Court is called upon to rule whether a surgeon, an anesthesiologist and a hospital should be made liable for the unfortunate comatose condition of a patient scheduled for cholecystectomy.[2] Petitioners seek the reversal of the decision[3] of the Court of Appeals, dated 29 May 1995, which overturned the decision[4]of the Regional Trial Court, dated 30 January 1992, finding private respondents liable for damages arising from negligence in the performance of their professional duties towards petitioner Erlinda Ramos resulting in her comatose condition. The antecedent facts as summarized by the trial court are reproduced hereunder: Plaintiff Erlinda Ramos was, until the afternoon of June 17, 1985, a 47-year old (Exh. A) robust woman (TSN, October 19, 1989, p. 10). Except for occasional complaints of discomfort due to pains allegedly caused by the presence of a stone in her gall bladder (TSN, January 13, 1988, pp. 4-5), she was as normal as any other woman. Married to Rogelio E. Ramos, an executive of Philippine Long Distance Telephone Company, she has three children whose names are Rommel Ramos, Roy Roderick Ramos and Ron Raymond Ramos (TSN, October 19, 1989, pp. 56). Because the discomforts somehow interfered with her normal ways, she sought professional advice. She was advised to undergo an operation for the removal of a stone in her gall bladder (TSN, January 13, 1988, p. 5). She underwent a series of examinations which included blood and urine tests (Exhs. A and C) which indicated she was fit for surgery. Through the intercession of a mutual friend, Dr. Buenviaje (TSN, January 13, 1988, p. 7), she and her husband Rogelio met for the first time Dr. Orlino Hozaka (should be Hosaka; see TSN, February 20, 1990, p. 3), one of the defendants in this case, on June 10, 1985. They agreed that their date at the operating table at the DLSMC (another defendant), would be on June 17, 1985 at 9:00 A.M.. Dr. Hosaka decided that she should undergo a cholecystectomy operation after examining the documents (findings from the Capitol Medical Center, FEU Hospital and DLSMC) presented to him. Rogelio E. Ramos, however, asked Dr. Hosaka to look for a good anesthesiologist. Dr. Hosaka, in turn, assured Rogelio that he will get a good anesthesiologist. Dr. Hosaka charged a fee of P16,000.00, which was to include the anesthesiologists fee and which was to be paid after the operation (TSN, October 19, 1989, pp. 14-15, 22-23, 31-33; TSN, February 27, 1990, p. 13; and TSN, November 9, 1989, pp. 3-4, 10, 17).

A day before the scheduled date of operation, she was admitted at one of the rooms of the DLSMC, located along E. Rodriguez Avenue, Quezon City (TSN, October 19, 1989, p. 11). At around 7:30 A.M. of June 17, 1985 and while still in her room, she was prepared for the operation by the hospital staff. Her sister-in-law, Herminda Cruz, who was the Dean of the College of Nursing at the Capitol Medical Center, was also there for moral support. She reiterated her previous request for Herminda to be with her even during the operation. After praying, she was given injections. Her hands were held by Herminda as they went down from her room to the operating room (TSN, January 13, 1988, pp. 9-11). Her husband, Rogelio, was also with her (TSN, October 19, 1989, p. 18). At the operating room, Herminda saw about two or three nurses and Dr. Perfecta Gutierrez, the other defendant, who was to administer anesthesia. Although not a member of the hospital staff, Herminda introduced herself as Dean of the College of Nursing at the Capitol Medical Center who was to provide moral support to the patient, to them. Herminda was allowed to stay inside the operating room. At around 9:30 A.M., Dr. Gutierrez reached a nearby phone to look for Dr. Hosaka who was not yet in (TSN, January 13, 1988, pp. 11-12). Dr. Gutierrez thereafter informed Herminda Cruz about the prospect of a delay in the arrival of Dr. Hosaka. Herminda then went back to the patient who asked, Mindy, wala pa ba ang Doctor? The former replied, Huwag kang mag-alaala, darating na iyon (ibid.). Thereafter, Herminda went out of the operating room and informed the patients husband, Rogelio, that the doctor was not yet around (id., p. 13). When she returned to the operating room, the patient told her, Mindy, inip na inip na ako, ikuha mo ako ng ibang Doctor. So, she went out again and told Rogelio about what the patient said (id., p. 15). Thereafter, she returned to the operating room. At around 10:00 A.M., Rogelio E. Ramos was already dying [and] waiting for the arrival of the doctor even as he did his best to find somebody who will allow him to pull out his wife from the operating room (TSN, October 19, 1989, pp. 19-20). He also thought of the feeling of his wife, who was inside the operating room waiting for the doctor to arrive (ibid.). At almost 12:00 noon, he met Dr. Garcia who remarked that he (Dr. Garcia) was also tired of waiting for Dr. Hosaka to arrive (id., p. 21). While talking to Dr. Garcia at around 12:10 P.M., he came to know that Dr. Hosaka arrived as a nurse remarked, Nandiyan na si Dr. Hosaka, dumating na raw. Upon hearing those words, he went down to the lobby and waited for the operation to be completed (id., pp. 16, 29-30). At about 12:15 P.M., Herminda Cruz, who was inside the operating room with the patient, heard somebody say that Dr. Hosaka is already here. She then saw people inside the operating room moving, doing this and that, [and] preparing the patient for the operation (TSN, January 13, 1988, p. 16). As she held the hand of Erlinda Ramos, she then saw Dr. Gutierrez intubating the hapless patient. She thereafter heard Dr. Gutierrez say, ang hirap ma-intubate nito, mali yata ang pagkakapasok. O lumalaki ang tiyan (id., p. 17). Because of the remarks of Dra. Gutierrez, she focused her attention on what Dr. Gutierrez was doing. She thereafter noticed bluish discoloration of the nailbeds of the left hand of the hapless Erlinda even as Dr. Hosaka approached her. She then heard Dr. Hosaka issue an order for someone to call Dr. Calderon, another anesthesiologist (id., p. 19). After Dr. Calderon arrived at the operating room, she saw this anesthesiologist trying to intubate the patient. The patients nailbed became bluish and the patient was placed in a trendelenburg position - a position where the head of the patient is placed in a position lower than her feet which is an indication that there is a decrease of blood supply to the patients brain (Id., pp. 19-20). Immediately thereafter, she went out of the operating room, and she told Rogelio E. Ramos that something wrong was x x x happening (Ibid.). Dr. Calderon was then able to intubate the patient (TSN, July 25, 1991, p. 9). Meanwhile, Rogelio, who was outside the operating room, saw a respiratory machine being rushed towards the door of the operating room. He also saw several doctors rushing towards the operating room. When informed by Herminda Cruz that something wrong was happening, he told her (Herminda) to be back with the patient inside the operating room (TSN, October 19, 1989, pp. 25-28).

Herminda Cruz immediately rushed back, and saw that the patient was still in trendelenburg position (TSN, January 13, 1988, p. 20). At almost 3:00 P.M. of that fateful day, she saw the patient taken to the Intensive Care Unit (ICU). About two days thereafter, Rogelio E. Ramos was able to talk to Dr. Hosaka. The latter informed the former that something went wrong during the intubation. Reacting to what was told to him, Rogelio reminded the doctor that the condition of his wife would not have happened, had he (Dr. Hosaka) looked for a good anesthesiologist (TSN, October 19, 1989, p. 31). Doctors Gutierrez and Hosaka were also asked by the hospital to explain what happened to the patient. The doctors explained that the patient had bronchospasm (TSN, November 15, 1990, pp. 26-27). Erlinda Ramos stayed at the ICU for a month. About four months thereafter or on November 15, 1985, the patient was released from the hospital. During the whole period of her confinement, she incurred hospital bills amounting to P93,542.25 which is the subject of a promissory note and affidavit of undertaking executed by Rogelio E. Ramos in favor of DLSMC. Since that fateful afternoon of June 17, 1985, she has been in a comatose condition. She cannot do anything. She cannot move any part of her body. She cannot see or hear. She is living on mechanical means. She suffered brain damage as a result of the absence of oxygen in her brain for four to five minutes (TSN, November 9, 1989, pp. 21-22). After being discharged from the hospital, she has been staying in their residence, still needing constant medical attention, with her husband Rogelio incurring a monthly expense ranging from P8,000.00 to P10,000.00 (TSN, October 19, 1989, pp. 32-34). She was also diagnosed to be suffering from diffuse cerebral parenchymal damage (Exh. G; see also TSN, December 21, 1989, p. 6).[5] Thus, on 8 January 1986, petitioners filed a civil case[6] for damages with the Regional Trial Court of Quezon City against herein private respondents alleging negligence in the management and care of Erlinda Ramos. During the trial, both parties presented evidence as to the possible cause of Erlindas injury. Plaintiff presented the testimonies of Dean Herminda Cruz and Dr. Mariano Gavino to prove that the damage sustained by Erlinda was due to lack of oxygen in her brain caused by the faulty management of her airway by private respondents during the anesthesia phase. On the other hand, private respondents primarily relied on the expert testimony of Dr. Eduardo Jamora, a pulmonologist, to the effect that the cause of brain damage was Erlindas allergic reaction to the anesthetic agent, Thiopental Sodium (Pentothal). After considering the evidence from both sides, the Regional Trial Court rendered judgment in favor of petitioners, to wit: After evaluating the evidence as shown in the finding of facts set forth earlier, and applying the aforecited provisions of law and jurisprudence to the case at bar, this Court finds and so holds that defendants are liable to plaintiffs for damages. The defendants were guilty of, at the very least, negligence in the performance of their duty to plaintiffpatient Erlinda Ramos. On the part of Dr. Perfecta Gutierrez, this Court finds that she omitted to exercise reasonable care in not only intubating the patient, but also in not repeating the administration of atropine (TSN, August 20, 1991, pp. 5-10), without due regard to the fact that the patient was inside the operating room for almost three (3) hours. For after she committed a mistake in intubating [the] patient, the patient's nailbed became bluish and the patient, thereafter, was placed in trendelenburg position, because of the decrease of blood supply to the patient's brain. The evidence further shows that the hapless patient suffered brain damage because of the absence of oxygen in her (patient's) brain for approximately four to five minutes which, in turn, caused the patient to become comatose.

On the part of Dr. Orlino Hosaka, this Court finds that he is liable for the acts of Dr. Perfecta Gutierrez whom he had chosen to administer anesthesia on the patient as part of his obligation to provide the patient a `good anesthesiologist', and for arriving for the scheduled operation almost three (3) hours late. On the part of DLSMC (the hospital), this Court finds that it is liable for the acts of negligence of the doctors in their `practice of medicine' in the operating room. Moreover, the hospital is liable for failing through its responsible officials, to cancel the scheduled operation after Dr. Hosaka inexcusably failed to arrive on time. In having held thus, this Court rejects the defense raised by defendants that they have acted with due care and prudence in rendering medical services to plaintiff-patient. For if the patient was properly intubated as claimed by them, the patient would not have become comatose. And, the fact that another anesthesiologist was called to try to intubate the patient after her (the patient's) nailbed turned bluish, belie their claim. Furthermore, the defendants should have rescheduled the operation to a later date. This, they should have done, if defendants acted with due care and prudence as the patient's case was an elective, not an emergency case. xxx WHEREFORE, and in view of the foregoing, judgment is rendered in favor of the plaintiffs and against the defendants. Accordingly, the latter are ordered to pay, jointly and severally, the former the following sums of money, to wit: 1) the sum of P8,000.00 as actual monthly expenses for the plaintiff Erlinda Ramos reckoned from November 15, 1985 or in the total sum of P632,000.00 as of April 15, 1992, subject to its being updated; 2) the sum of P100,000.00 as reasonable attorney's fees; 3) the sum of P800,000.00 by way of moral damages and the further sum of P200,000.00 by way of exemplary damages; and, 4) the costs of the suit. SO ORDERED.[7] Private respondents seasonably interposed an appeal to the Court of Appeals. The appellate court rendered a Decision, dated 29 May 1995, reversing the findings of the trial court. The decretal portion of the decision of the appellate court reads: WHEREFORE, for the foregoing premises the appealed decision is hereby REVERSED, and the complaint below against the appellants is hereby ordered DISMISSED. The counterclaim of appellant De Los Santos Medical Center is GRANTED but only insofar as appellees are hereby ordered to pay the unpaid hospital bills amounting to P93,542.25, plus legal interest for justice must be tempered with mercy. SO ORDERED.[8] The decision of the Court of Appeals was received on 9 June 1995 by petitioner Rogelio Ramos who was mistakenly addressed as Atty. Rogelio Ramos. No copy of the decision, however, was sent nor received by the Coronel Law Office, then counsel on record of petitioners. Rogelio referred the decision of the appellate court to a new lawyer, Atty. Ligsay, only on 20 June 1995, or four (4) days before the expiration of the reglementary period for filing a motion for reconsideration. On the same day, Atty. Ligsay, filed with the appellate court a motion for extension of time to file a motion for reconsideration. The motion for reconsideration was submitted on 4 July 1995. However, the appellate court denied the motion for extension of time in its Resolution dated 25 July 1995. [9]

Meanwhile petitioners engaged the services of another counsel, Atty. Sillano, to replace Atty. Ligsay. Atty. Sillano filed on 7 August 1995 a motion to admit the motion for reconsideration contending that the period to file the appropriate pleading on the assailed decision had not yet commenced to run as the Division Clerk of Court of the Court of Appeals had not yet served a copy thereof to the counsel on record. Despite this explanation, the appellate court still denied the motion to admit the motion for reconsideration of petitioners in its Resolution, dated 29 March 1996, primarily on the ground that the fifteen-day (15) period for filing a motion for reconsideration had already expired, to wit: We said in our Resolution on July 25, 1995, that the filing of a Motion for Reconsideration cannot be extended; precisely, the Motion for Extension (Rollo, p. 12) was denied. It is, on the other hand, admitted in the latter Motion that plaintiffs/appellees received a copy of the decision as early as June 9, 1995. Computation wise, the period to file a Motion for Reconsideration expired on June 24. The Motion for Reconsideration, in turn, was received by the Court of Appeals already on July 4, necessarily, the 15-day period already passed. For that alone, the latter should be denied. Even assuming admissibility of the Motion for Reconsideration, but after considering the Comment/Opposition, the former, for lack of merit, is hereby DENIED. SO ORDERED.[10] A copy of the above resolution was received by Atty. Sillano on 11 April 1996. The next day, or on 12 April 1996, Atty. Sillano filed before this Court a motion for extension of time to file the present petition for certiorari under Rule 45. The Court granted the motion for extension of time and gave petitioners additional thirty (30) days after the expiration of the fifteen-day (15) period counted from the receipt of the resolution of the Court of Appeals within which to submit the petition. The due date fell on 27 May 1996. The petition was filed on 9 May 1996, well within the extended period given by the Court. Petitioners assail the decision of the Court of Appeals on the following grounds: I IN PUTTING MUCH RELIANCE ON THE TESTIMONIES OF RESPONDENTS DRA. GUTIERREZ, DRA. CALDERON AND DR. JAMORA; II IN FINDING THAT THE NEGLIGENCE OF THE RESPONDENTS DID NOT CAUSE THE UNFORTUNATE COMATOSE CONDITION OF PETITIONER ERLINDA RAMOS; III IN NOT APPLYING THE DOCTRINE OF RES IPSA LOQUITUR.[11] Before we discuss the merits of the case, we shall first dispose of the procedural issue on the timeliness of the petition in relation to the motion for reconsideration filed by petitioners with the Court of Appeals. In their Comment,[12] private respondents contend that the petition should not be given due course since the motion for reconsideration of the petitioners on the decision of the Court of Appeals was validly dismissed by the appellate court for having been filed beyond the reglementary period. We do not agree. A careful review of the records reveals that the reason behind the delay in filing the motion for reconsideration is attributable to the fact that the decision of the Court of Appeals was not sent to then counsel on record of petitioners, the Coronel Law Office. In fact, a copy of the decision of the appellate court was instead sent to and received by petitioner Rogelio Ramos on 9 June 1995 wherein he was mistakenly addressed as Atty. Rogelio Ramos. Based on the other communications received by petitioner Rogelio Ramos, the appellate court apparently

mistook him for the counsel on record. Thus, no copy of the decision of the appellate court was furnished to the counsel on record. Petitioner, not being a lawyer and unaware of the prescriptive period for filing a motion for reconsideration, referred the same to a legal counsel only on 20 June 1995. It is elementary that when a party is represented by counsel, all notices should be sent to the partys lawyer at his given address. With a few exceptions, notice to a litigant without notice to his counsel on record is no notice at all. In the present case, since a copy of the decision of the appellate court was not sent to the counsel on record of petitioner, there can be no sufficient notice to speak of. Hence, the delay in the filing of the motion for reconsideration cannot be taken against petitioner. Moreover, since the Court of Appeals already issued a second Resolution, dated 29 March 1996, which superseded the earlier resolution issued on 25 July 1995, and denied the motion for reconsideration of petitioner, we believe that the receipt of the former should be considered in determining the timeliness of the filing of the present petition. Based on this, the petition before us was submitted on time. After resolving the foregoing procedural issue, we shall now look into the merits of the case. For a more logical presentation of the discussion we shall first consider the issue on the applicability of the doctrine of res ipsa loquitur to the instant case. Thereafter, the first two assigned errors shall be tackled in relation to the res ipsa loquitur doctrine. Res ipsa loquitur is a Latin phrase which literally means the thing or the transaction speaks for itself. The phrase res ipsa loquitur is a maxim for the rule that the fact of the occurrence of an injury, taken with the surrounding circumstances, may permit an inference or raise a presumption of negligence, or make out a plaintiffs prima facie case, and present a question of fact for defendant to meet with an explanation.[13] Where the thing which caused the injury complained of is shown to be under the management of the defendant or his servants and the accident is such as in ordinary course of things does not happen if those who have its management or control use proper care, it affords reasonable evidence, in the absence of explanation by the defendant, that the accident arose from or was caused by the defendants want of care.[14] The doctrine of res ipsa loquitur is simply a recognition of the postulate that, as a matter of common knowledge and experience, the very nature of certain types of occurrences may justify an inference of negligence on the part of the person who controls the instrumentality causing the injury in the absence of some explanation by the defendant who is charged with negligence.[15] It is grounded in the superior logic of ordinary human experience and on the basis of such experience or common knowledge, negligence may be deduced from the mere occurrence of the accident itself.[16] Hence, res ipsa loquitur is applied in conjunction with the doctrine of common knowledge. However, much has been said that res ipsa loquitur is not a rule of substantive law and, as such, does not create or constitute an independent or separate ground of liability.[17] Instead, it is considered as merely evidentiary or in the nature of a procedural rule.[18] It is regarded as a mode of proof, or a mere procedural convenience since it furnishes a substitute for, and relieves a plaintiff of, the burden of producing specific proof of negligence.[19] In other words, mere invocation and application of the doctrine does not dispense with the requirement of proof of negligence. It is simply a step in the process of such proof, permitting the plaintiff to present along with the proof of the accident, enough of the attending circumstances to invoke the doctrine, creating an inference or presumption of negligence, and to thereby place on the defendant the burden of going forward with the proof.[20] Still, before resort to the doctrine may be allowed, the following requisites must be satisfactorily shown: 1. The accident is of a kind which ordinarily does not occur in the absence of someones negligence; 2. It is caused by an instrumentality within the exclusive control of the defendant or defendants; and 3. The possibility of contributing conduct which would make the plaintiff responsible is eliminated.[21] In the above requisites, the fundamental element is the control of the instrumentality which caused the damage.[22] Such element of control must be shown to be within the dominion of the defendant. In order to have

the benefit of the rule, a plaintiff, in addition to proving injury or damage, must show a situation where it is applicable, and must establish that the essential elements of the doctrine were present in a particular incident.[23] Medical malpractice[24]cases do not escape the application of this doctrine. Thus, res ipsa loquitur has been applied when the circumstances attendant upon the harm are themselves of such a character as to justify an inference of negligence as the cause of that harm.[25] The application of res ipsa loquitur in medical negligence cases presents a question of law since it is a judicial function to determine whether a certain set of circumstances does, as a matter of law, permit a given inference.[26] Although generally, expert medical testimony is relied upon in malpractice suits to prove that a physician has done a negligent act or that he has deviated from the standard medical procedure, when the doctrine of res ipsa loquitur is availed by the plaintiff, the need for expert medical testimony is dispensed with because the injury itself provides the proof of negligence.[27] The reason is that the general rule on the necessity of expert testimony applies only to such matters clearly within the domain of medical science, and not to matters that are within the common knowledge of mankind which may be testified to by anyone familiar with the facts.[28] Ordinarily, only physicians and surgeons of skill and experience are competent to testify as to whether a patient has been treated or operated upon with a reasonable degree of skill and care. However, testimony as to the statements and acts of physicians and surgeons, external appearances, and manifest conditions which are observable by any one may be given by nonexpert witnesses.[29] Hence, in cases where the res ipsa loquitur is applicable, the court is permitted to find a physician negligent upon proper proof of injury to the patient, without the aid of expert testimony, where the court from its fund of common knowledge can determine the proper standard of care.[30] Where common knowledge and experience teach that a resulting injury would not have occurred to the patient if due care had been exercised, an inference of negligence may be drawn giving rise to an application of the doctrine of res ipsa loquitur without medical evidence, which is ordinarily required to show not only what occurred but how and why it occurred. [31] When the doctrine is appropriate, all that the patient must do is prove a nexus between the particular act or omission complained of and the injury sustained while under the custody and management of the defendant without need to produce expert medical testimony to establish the standard of care. Resort to res ipsa loquitur is allowed because there is no other way, under usual and ordinary conditions, by which the patient can obtain redress for injury suffered by him. Thus, courts of other jurisdictions have applied the doctrine in the following situations: leaving of a foreign object in the body of the patient after an operation,[32] injuries sustained on a healthy part of the body which was not under, or in the area, of treatment,[33] removal of the wrong part of the body when another part was intended, [34] knocking out a tooth while a patients jaw was under anesthetic for the removal of his tonsils,[35] and loss of an eye while the patient plaintiff was under the influence of anesthetic, during or following an operation for appendicitis,[36] among others. Nevertheless, despite the fact that the scope of res ipsa loquitur has been measurably enlarged, it does not automatically apply to all cases of medical negligence as to mechanically shift the burden of proof to the defendant to show that he is not guilty of the ascribed negligence. Res ipsa loquitur is not a rigid or ordinary doctrine to be perfunctorily used but a rule to be cautiously applied, depending upon the circumstances of each case. It is generally restricted to situations in malpractice cases where a layman is able to say, as a matter of common knowledge and observation, that the consequences of professional care were not as such as would ordinarily have followed if due care had been exercised.[37] A distinction must be made between the failure to secure results, and the occurrence of something more unusual and not ordinarily found if the service or treatment rendered followed the usual procedure of those skilled in that particular practice. It must be conceded that the doctrine of res ipsa loquitur can have no application in a suit against a physician or surgeon which involves the merits of a diagnosis or of a scientific treatment.[38] The physician or surgeon is not required at his peril to explain why any particular diagnosis was not correct, or why any particular scientific treatment did not produce the desired result.[39] Thus, res ipsa loquitur is not available in a malpractice suit if the only showing is that the desired result of an operation or treatment was not accomplished.[40] The real question, therefore, is whether or not in the process of the operation any extraordinary incident or unusual event outside of the routine performance occurred which is beyond the regular scope of customary professional activity in such operations, which, if unexplained would themselves reasonably speak to the average man as the negligent cause or causes of the untoward consequence.[41] If there was such extraneous interventions, the doctrine of res ipsa loquitur may be utilized and the defendant is called upon to explain the matter, by evidence of exculpation, if he could.[42]

We find the doctrine of res ipsa loquitur appropriate in the case at bar. As will hereinafter be explained, the damage sustained by Erlinda in her brain prior to a scheduled gall bladder operation presents a case for the application of res ipsa loquitur. A case strikingly similar to the one before us is Voss vs. Bridwell,[43] where the Kansas Supreme Court in applying the res ipsa loquitur stated: The plaintiff herein submitted himself for a mastoid operation and delivered his person over to the care, custody and control of his physician who had complete and exclusive control over him, but the operation was never performed. At the time of submission he was neurologically sound and physically fit in mind and body, but he suffered irreparable damage and injury rendering him decerebrate and totally incapacitated. The injury was one which does not ordinarily occur in the process of a mastoid operation or in the absence of negligence in the administration of an anesthetic, and in the use and employment of an endoctracheal tube. Ordinarily a person being put under anesthesia is not rendered decerebrate as a consequence of administering such anesthesia in the absence of negligence. Upon these facts and under these circumstances a layman would be able to say, as a matter of common knowledge and observation, that the consequences of professional treatment were not as such as would ordinarily have followed if due care had been exercised. Here the plaintiff could not have been guilty of contributory negligence because he was under the influence of anesthetics and unconscious, and the circumstances are such that the true explanation of event is more accessible to the defendants than to the plaintiff for they had the exclusive control of the instrumentalities of anesthesia. Upon all the facts, conditions and circumstances alleged in Count II it is held that a cause of action is stated under the doctrine of res ipsa loquitur.[44] Indeed, the principles enunciated in the aforequoted case apply with equal force here. In the present case, Erlinda submitted herself for cholecystectomy and expected a routine general surgery to be performed on her gall bladder. On that fateful day she delivered her person over to the care, custody and control of private respondents who exercised complete and exclusive control over her. At the time of submission, Erlinda was neurologically sound and, except for a few minor discomforts, was likewise physically fit in mind and body. However, during the administration of anesthesia and prior to the performance of cholecystectomy she suffered irreparable damage to her brain. Thus, without undergoing surgery, she went out of the operating room already decerebrate and totally incapacitated. Obviously, brain damage, which Erlinda sustained, is an injury which does not normally occur in the process of a gall bladder operation. In fact, this kind of situation does not happen in the absence of negligence of someone in the administration of anesthesia and in the use of endotracheal tube. Normally, a person being put under anesthesia is not rendered decerebrate as a consequence of administering such anesthesia if the proper procedure was followed. Furthermore, the instruments used in the administration of anesthesia, including the endotracheal tube, were all under the exclusive control of private respondents, who are the physicians-in-charge. Likewise, petitioner Erlinda could not have been guilty of contributory negligence because she was under the influence of anesthetics which rendered her unconscious. Considering that a sound and unaffected member of the body (the brain) is injured or destroyed while the patient is unconscious and under the immediate and exclusive control of the physicians, we hold that a practical administration of justice dictates the application of res ipsa loquitur. Upon these facts and under these circumstances the Court would be able to say, as a matter of common knowledge and observation, if negligence attended the management and care of the patient. Moreover, the liability of the physicians and the hospital in this case is not predicated upon an alleged failure to secure the desired results of an operation nor on an alleged lack of skill in the diagnosis or treatment as in fact no operation or treatment was ever performed on Erlinda. Thus, upon all these initial determination a case is made out for the application of the doctrine of res ipsa loquitur. Nonetheless, in holding that res ipsa loquitur is available to the present case we are not saying that the doctrine is applicable in any and all cases where injury occurs to a patient while under anesthesia, or to any and all anesthesia cases. Each case must be viewed in its own light and scrutinized in order to be within the res ipsa loquitur coverage.

Having in mind the applicability of the res ipsa loquitur doctrine and the presumption of negligence allowed therein, the Court now comes to the issue of whether the Court of Appeals erred in finding that private respondents were not negligent in the care of Erlinda during the anesthesia phase of the operation and, if in the affirmative, whether the alleged negligence was the proximate cause of Erlindas comatose condition. Corollary thereto, we shall also determine if the Court of Appeals erred in relying on the testimonies of the witnesses for the private respondents. In sustaining the position of private respondents, the Court of Appeals relied on the testimonies of Dra. Gutierrez, Dra. Calderon and Dr. Jamora. In giving weight to the testimony of Dra. Gutierrez, the Court of Appeals rationalized that she was candid enough to admit that she experienced some difficulty in the endotracheal intubation[45]of the patient and thus, cannot be said to be covering her negligence with falsehood. The appellate court likewise opined that private respondents were able to show that the brain damage sustained by Erlinda was not caused by the alleged faulty intubation but was due to the allergic reaction of the patient to the drug Thiopental Sodium (Pentothal), a short-acting barbiturate, as testified on by their expert witness, Dr. Jamora. On the other hand, the appellate court rejected the testimony of Dean Herminda Cruz offered in favor of petitioners that the cause of the brain injury was traceable to the wrongful insertion of the tube since the latter, being a nurse, was allegedly not knowledgeable in the process of intubation. In so holding, the appellate court returned a verdict in favor of respondents physicians and hospital and absolved them of any liability towards Erlinda and her family. We disagree with the findings of the Court of Appeals. We hold that private respondents were unable to disprove the presumption of negligence on their part in the care of Erlinda and their negligence was the proximate cause of her piteous condition. In the instant case, the records are helpful in furnishing not only the logical scientific evidence of the pathogenesis of the injury but also in providing the Court the legal nexus upon which liability is based. As will be shown hereinafter, private respondents own testimonies which are reflected in the transcript of stenographic notes are replete of signposts indicative of their negligence in the care and management of Erlinda. With regard to Dra. Gutierrez, we find her negligent in the care of Erlinda during the anesthesia phase. As borne by the records, respondent Dra. Gutierrez failed to properly intubate the patient. This fact was attested to by Prof. Herminda Cruz, Dean of the Capitol Medical Center School of Nursing and petitioner's sister-in-law, who was in the operating room right beside the patient when the tragic event occurred. Witness Cruz testified to this effect: ATTY. PAJARES: Q: A: Q: In particular, what did Dra. Perfecta Gutierrez do, if any on the patient? In particular, I could see that she was intubating the patient. Do you know what happened to that intubation process administered by Dra. Gutierrez?

ATTY. ALCERA: She will be incompetent Your Honor. COURT: Witness may answer if she knows. A: As I have said, I was with the patient, I was beside the stretcher holding the left hand of the patient and all of a sudden I heard some remarks coming from Dra. Perfecta Gutierrez herself. She was saying Ang hirap ma-intubate nito, mali yata ang pagkakapasok. O lumalaki ang tiyan. xxx ATTY. PAJARES: Q: From whom did you hear those words lumalaki ang tiyan?

A:

From Dra. Perfecta Gutierrez. xxx After hearing the phrase lumalaki ang tiyan, what did you notice on the person of the patient?

A:

I notice (sic) some bluish discoloration on the nailbeds of the left hand where I was at.

Q: Where was Dr. Orlino Ho[s]aka then at that particular time? A: I saw him approaching the patient during that time.

Q: When he approached the patient, what did he do, if any? A: Q: He made an order to call on the anesthesiologist in the person of Dr. Calderon. Did Dr. Calderon, upon being called, arrive inside the operating room?

A: Yes sir. Q: What did [s]he do, if any? A: [S]he tried to intubate the patient.

Q: What happened to the patient? A: When Dr. Calderon try (sic) to intubate the patient, after a while the patients nailbed became bluish and I saw the patient was placed in trendelenburg position. xxx Q: Do you know the reason why the patient was placed in that trendelenburg position?

A: As far as I know, when a patient is in that position, there is a decrease of blood supply to the brain.[46] xxx The appellate court, however, disbelieved Dean Cruz's testimony in the trial court by declaring that: A perusal of the standard nursing curriculum in our country will show that intubation is not taught as part of nursing procedures and techniques. Indeed, we take judicial notice of the fact that nurses do not, and cannot, intubate. Even on the assumption that she is fully capable of determining whether or not a patient is properly intubated, witness Herminda Cruz, admittedly, did not peep into the throat of the patient. (TSN, July 25, 1991, p. 13). More importantly, there is no evidence that she ever auscultated the patient or that she conducted any type of examination to check if the endotracheal tube was in its proper place, and to determine the condition of the heart, lungs, and other organs. Thus, witness Cruz's categorical statements that appellant Dra. Gutierrez failed to intubate the appellee Erlinda Ramos and that it was Dra. Calderon who succeeded in doing so clearly suffer from lack of sufficient factual bases.[47] In other words, what the Court of Appeals is trying to impress is that being a nurse, and considered a layman in the process of intubation, witness Cruz is not competent to testify on whether or not the intubation was a success. We do not agree with the above reasoning of the appellate court. Although witness Cruz is not an anesthesiologist, she can very well testify upon matters on which she is capable of observing such as, the statements and acts of the physician and surgeon, external appearances, and manifest conditions which are observable by any one.[48] This is precisely allowed under the doctrine of res ipsa loquitur where the testimony of expert witnesses is not required. It is the accepted rule that expert testimony is not necessary for the proof of negligence in non-technical matters or those of which an ordinary person may be expected to have knowledge, or where the lack of skill or want of care is so obvious as to render expert testimony unnecessary.[49] We take judicial notice of the

fact that anesthesia procedures have become so common, that even an ordinary person can tell if it was administered properly. As such, it would not be too difficult to tell if the tube was properly inserted. This kind of observation, we believe, does not require a medical degree to be acceptable. At any rate, without doubt, petitioner's witness, an experienced clinical nurse whose long experience and scholarship led to her appointment as Dean of the Capitol Medical Center School of Nursing, was fully capable of determining whether or not the intubation was a success. She had extensive clinical experience starting as a staff nurse in Chicago, Illinois; staff nurse and clinical instructor in a teaching hospital, the FEU-NRMF; Dean of the Laguna College of Nursing in San Pablo City; and then Dean of the Capitol Medical Center School of Nursing. [50]Reviewing witness Cruz' statements, we find that the same were delivered in a straightforward manner, with the kind of detail, clarity, consistency and spontaneity which would have been difficult to fabricate. With her clinical background as a nurse, the Court is satisfied that she was able to demonstrate through her testimony what truly transpired on that fateful day. Most of all, her testimony was affirmed by no less than respondent Dra. Gutierrez who admitted that she experienced difficulty in inserting the tube into Erlindas trachea, to wit: ATTY. LIGSAY: Q: In this particular case, Doctora, while you were intubating at your first attempt (sic), you did not immediately see the trachea?

DRA. GUTIERREZ: A: Yes sir. Q: Did you pull away the tube immediately?

A: You do not pull the ... Q: A: Did you or did you not? I did not pull the tube.

Q: When you said mahirap yata ito, what were you referring to? A: Q: Mahirap yata itong i-intubate, that was the patient. So, you found some difficulty in inserting the tube?

A: Yes, because of (sic) my first attempt, I did not see right away.[51] Curiously in the case at bar, respondent Dra. Gutierrez made the haphazard defense that she encountered hardship in the insertion of the tube in the trachea of Erlinda because it was positioned more anteriorly (slightly deviated from the normal anatomy of a person)[52] making it harder to locate and, since Erlinda is obese and has a short neck and protruding teeth, it made intubation even more difficult. The argument does not convince us. If this was indeed observed, private respondents adduced no evidence demonstrating that they proceeded to make a thorough assessment of Erlindas airway, prior to the induction of anesthesia, even if this would mean postponing the procedure. From their testimonies, it appears that the observation was made only as an afterthought, as a means of defense. The pre-operative evaluation of a patient prior to the administration of anesthesia is universally observed to lessen the possibility of anesthetic accidents. Pre-operative evaluation and preparation for anesthesia begins when the anesthesiologist reviews the patients medical records and visits with the patient, traditionally, the day before elective surgery.[53] It includes taking the patients medical history, review of current drug therapy, physical examination and interpretation of laboratory data.[54] The physical examination performed by the anesthesiologist is directed primarily toward the central nervous system, cardiovascular system, lungs and upper airway.[55] A thorough analysis of the patient's airway normally involves investigating the following: cervical spine mobility,

temporomandibular mobility, prominent central incisors, diseased or artificial teeth, ability to visualize uvula and the thyromental distance.[56] Thus, physical characteristics of the patients upper airway that could make tracheal intubation difficult should be studied.[57] Where the need arises, as when initial assessment indicates possible problems (such as the alleged short neck and protruding teeth of Erlinda) a thorough examination of the patients airway would go a long way towards decreasing patient morbidity and mortality. In the case at bar, respondent Dra. Gutierrez admitted that she saw Erlinda for the first time on the day of the operation itself, on 17 June 1985. Before this date, no prior consultations with, or pre-operative evaluation of Erlinda was done by her. Until the day of the operation, respondent Dra. Gutierrez was unaware of the physiological make-up and needs of Erlinda. She was likewise not properly informed of the possible difficulties she would face during the administration of anesthesia to Erlinda. Respondent Dra. Gutierrez act of seeing her patient for the first time only an hour before the scheduled operative procedure was, therefore, an act of exceptional negligence and professional irresponsibility. The measures cautioning prudence and vigilance in dealing with human lives lie at the core of the physicians centuries-old Hippocratic Oath. Her failure to follow this medical procedure is, therefore, a clear indicia of her negligence. Respondent Dra. Gutierrez, however, attempts to gloss over this omission by playing around with the trial court's ignorance of clinical procedure, hoping that she could get away with it. Respondent Dra. Gutierrez tried to muddle the difference between an elective surgery and an emergency surgery just so her failure to perform the required pre-operative evaluation would escape unnoticed. In her testimony she asserted: ATTY. LIGSAY: Q: Would you agree, Doctor, that it is good medical practice to see the patient a day before so you can introduce yourself to establish good doctor-patient relationship and gain the trust and confidence of the patient? DRA. GUTIERREZ: A: As I said in my previous statement, it depends on the operative procedure of the anesthesiologist and in my case, with elective cases and normal cardio-pulmonary clearance like that, I usually don't do it except on emergency and on cases that have an abnormalities (sic).[58] However, the exact opposite is true. In an emergency procedure, there is hardly enough time available for the fastidious demands of pre-operative procedure so that an anesthesiologist is able to see the patient only a few minutes before surgery, if at all. Elective procedures, on the other hand, are operative procedures that can wait for days, weeks or even months. Hence, in these cases, the anesthesiologist possesses the luxury of time to make a proper assessment, including the time to be at the patient's bedside to do a proper interview and clinical evaluation. There is ample time to explain the method of anesthesia, the drugs to be used, and their possible hazards for purposes of informed consent. Usually, the pre-operative assessment is conducted at least one day before the intended surgery, when the patient is relaxed and cooperative. Erlindas case was elective and this was known to respondent Dra. Gutierrez. Thus, she had all the time to make a thorough evaluation of Erlindas case prior to the operation and prepare her for anesthesia. However, she never saw the patient at the bedside. She herself admitted that she had seen petitioner only in the operating room, and only on the actual date of the cholecystectomy. She negligently failed to take advantage of this important opportunity. As such, her attempt to exculpate herself must fail. Having established that respondent Dra. Gutierrez failed to perform pre-operative evaluation of the patient which, in turn, resulted to a wrongful intubation, we now determine if the faulty intubation is truly the proximate cause of Erlindas comatose condition. Private respondents repeatedly hammered the view that the cerebral anoxia which led to Erlindas coma was due to bronchospasm[59] mediated by her allergic response to the drug, Thiopental Sodium, introduced into her system. Towards this end, they presented Dr. Jamora, a Fellow of the Philippine College of Physicians and Diplomate of the Philippine Specialty Board of Internal Medicine, who advanced private respondents' theory that the

oxygen deprivation which led to anoxic encephalopathy,[60] was due to an unpredictable drug reaction to the shortacting barbiturate. We find the theory of private respondents unacceptable. First of all, Dr. Jamora cannot be considered an authority in the field of anesthesiology simply because he is not an anesthesiologist. Since Dr. Jamora is a pulmonologist, he could not have been capable of properly enlightening the court about anesthesia practice and procedure and their complications. Dr. Jamora is likewise not an allergologist and could not therefore properly advance expert opinion on allergic-mediated processes. Moreover, he is not a pharmacologist and, as such, could not have been capable, as an expert would, of explaining to the court the pharmacologic and toxic effects of the supposed culprit, Thiopental Sodium (Pentothal). The inappropriateness and absurdity of accepting Dr. Jamoras testimony as an expert witness in the anesthetic practice of Pentothal administration is further supported by his own admission that he formulated his opinions on the drug not from the practical experience gained by a specialist or expert in the administration and use of Sodium Pentothal on patients, but only from reading certain references, to wit: ATTY. LIGSAY: Q: In your line of expertise on pulmonology, did you have any occasion to use pentothal as a method of management?

DR. JAMORA: A: We do it in conjunction with the anesthesiologist when they have to intubate our patient. Q: A: Q: A: Q: But not in particular when you practice pulmonology? No. In other words, your knowledge about pentothal is based only on what you have read from books and not by your own personal application of the medicine pentothal? Based on my personal experience also on pentothal. How many times have you used pentothal?

A: They used it on me. I went into bronchospasm during my appendectomy. Q: A: And because they have used it on you and on account of your own personal experience you feel that you can testify on pentothal here with medical authority? No. That is why I used references to support my claims.[61]

An anesthetic accident caused by a rare drug-induced bronchospasm properly falls within the fields of anesthesia, internal medicine-allergy, and clinical pharmacology. The resulting anoxic encephalopathy belongs to the field of neurology. While admittedly, many bronchospastic-mediated pulmonary diseases are within the expertise of pulmonary medicine, Dr. Jamora's field, the anesthetic drug-induced, allergic mediated bronchospasm alleged in this case is within the disciplines of anesthesiology, allergology and pharmacology. On the basis of the foregoing transcript, in which the pulmonologist himself admitted that he could not testify about the drug with medical authority, it is clear that the appellate court erred in giving weight to Dr. Jamoras testimony as an expert in the administration of Thiopental Sodium. The provision in the rules of evidence[62]regarding expert witnesses states: Sec. 49. Opinion of expert witness. - The opinion of a witness on a matter requiring special knowledge, skill, experience or training which he is shown to possess, may be received in evidence. Generally, to qualify as an expert witness, one must have acquired special knowledge of the subject matter about which he or she is to testify, either by the study of recognized authorities on the subject or by practical

experience.[63] Clearly, Dr. Jamora does not qualify as an expert witness based on the above standard since he lacks the necessary knowledge, skill, and training in the field of anesthesiology. Oddly, apart from submitting testimony from a specialist in the wrong field, private respondents intentionally avoided providing testimony by competent and independent experts in the proper areas. Moreover, private respondents theory, that Thiopental Sodium may have produced Erlinda's coma by triggering an allergic mediated response, has no support in evidence. No evidence of stridor, skin reactions, or wheezing - some of the more common accompanying signs of an allergic reaction - appears on record. No laboratory data were ever presented to the court. In any case, private respondents themselves admit that Thiopental induced, allergic-mediated bronchospasm happens only very rarely. If courts were to accept private respondents' hypothesis without supporting medical proof, and against the weight of available evidence, then every anesthetic accident would be an act of God. Evidently, the Thiopental-allergy theory vigorously asserted by private respondents was a mere afterthought. Such an explanation was advanced in order to absolve them of any and all responsibility for the patients condition. In view of the evidence at hand, we are inclined to believe petitioners stand that it was the faulty intubation which was the proximate cause of Erlindas comatose condition. Proximate cause has been defined as that which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces injury, and without which the result would not have occurred.[64] An injury or damage is proximately caused by an act or a failure to act, whenever it appears from the evidence in the case, that the act or omission played a substantial part in bringing about or actually causing the injury or damage; and that the injury or damage was either a direct result or a reasonably probable consequence of the act or omission.[65] It is the dominant, moving or producing cause. Applying the above definition in relation to the evidence at hand, faulty intubation is undeniably the proximate cause which triggered the chain of events leading to Erlindas brain damage and, ultimately, her comatosed condition. Private respondents themselves admitted in their testimony that the first intubation was a failure. This fact was likewise observed by witness Cruz when she heard respondent Dra. Gutierrez remarked, Ang hirap maintubate nito, mali yata ang pagkakapasok. O lumalaki ang tiyan. Thereafter, witness Cruz noticed abdominal distention on the body of Erlinda. The development of abdominal distention, together with respiratory embarrassment indicates that the endotracheal tube entered the esophagus instead of the respiratory tree. In other words, instead of the intended endotracheal intubation what actually took place was an esophageal intubation. During intubation, such distention indicates that air has entered the gastrointestinal tract through the esophagus instead of the lungs through the trachea. Entry into the esophagus would certainly cause some delay in oxygen delivery into the lungs as the tube which carries oxygen is in the wrong place. That abdominal distention had been observed during the first intubation suggests that the length of time utilized in inserting the endotracheal tube (up to the time the tube was withdrawn for the second attempt) was fairly significant. Due to the delay in the delivery of oxygen in her lungs Erlinda showed signs of cyanosis.[66] As stated in the testimony of Dr. Hosaka, the lack of oxygen became apparent only after he noticed that the nailbeds of Erlinda were already blue.[67] However, private respondents contend that a second intubation was executed on Erlinda and this one was successfully done. We do not think so. No evidence exists on record, beyond private respondents' bare claims, which supports the contention that the second intubation was successful. Assuming that the endotracheal tube finally found its way into the proper orifice of the trachea, the same gave no guarantee of oxygen delivery, the hallmark of a successful intubation. In fact, cyanosis was again observed immediately after the second intubation. Proceeding from this event (cyanosis), it could not be claimed, as private respondents insist, that the second intubation was accomplished. Even granting that the tube was successfully inserted during the second attempt, it was obviously too late. As aptly explained by the trial court, Erlinda already suffered brain damage as a result of the inadequate oxygenation of her brain for about four to five minutes.[68] The above conclusion is not without basis. Scientific studies point out that intubation problems are responsible for one-third (1/3) of deaths and serious injuries associated with anesthesia.[69] Nevertheless, ninetyeight percent (98%) or the vast majority of difficult intubations may be anticipated by performing a thorough evaluation of the patients airway prior to the operation.[70] As stated beforehand, respondent Dra. Gutierrez failed

to observe the proper pre-operative protocol which could have prevented this unfortunate incident. Had appropriate diligence and reasonable care been used in the pre-operative evaluation, respondent physician could have been much more prepared to meet the contingency brought about by the perceived anatomic variations in the patients neck and oral area, defects which would have been easily overcome by a prior knowledge of those variations together with a change in technique.[71] In other words, an experienced anesthesiologist, adequately alerted by a thorough preoperative evaluation, would have had little difficulty going around the short neck and protruding teeth.[72] Having failed to observe common medical standards in pre-operative management and intubation, respondent Dra. Gutierrez negligence resulted in cerebral anoxia and eventual coma of Erlinda. We now determine the responsibility of respondent Dr. Orlino Hosaka as the head of the surgical team. As the so-called captain of the ship,[73] it is the surgeons responsibility to see to it that those under him perform their task in the proper manner. Respondent Dr. Hosakas negligence can be found in his failure to exercise the proper authority (as the captain of the operative team) in not determining if his anesthesiologist observed proper anesthesia protocols. In fact, no evidence on record exists to show that respondent Dr. Hosaka verified if respondent Dra. Gutierrez properly intubated the patient. Furthermore, it does not escape us that respondent Dr. Hosaka had scheduled another procedure in a different hospital at the same time as Erlindas cholecystectomy, and was in fact over three hours late for the latters operation. Because of this, he had little or no time to confer with his anesthesiologist regarding the anesthesia delivery. This indicates that he was remiss in his professional duties towards his patient. Thus, he shares equal responsibility for the events which resulted in Erlindas condition. We now discuss the responsibility of the hospital in this particular incident. The unique practice (among private hospitals) of filling up specialist staff with attending and visiting consultants,[74] who are allegedly not hospital employees, presents problems in apportioning responsibility for negligence in medical malpractice cases. However, the difficulty is only more apparent than real. In the first place, hospitals exercise significant control in the hiring and firing of consultants and in the conduct of their work within the hospital premises. Doctors who apply for consultant slots, visiting or attending, are required to submit proof of completion of residency, their educational qualifications; generally, evidence of accreditation by the appropriate board (diplomate), evidence of fellowship in most cases, and references. These requirements are carefully scrutinized by members of the hospital administration or by a review committee set up by the hospital who either accept or reject the application.[75] This is particularly true with respondent hospital. After a physician is accepted, either as a visiting or attending consultant, he is normally required to attend clinico-pathological conferences, conduct bedside rounds for clerks, interns and residents, moderate grand rounds and patient audits and perform other tasks and responsibilities, for the privilege of being able to maintain a clinic in the hospital, and/or for the privilege of admitting patients into the hospital. In addition to these, the physicians performance as a specialist is generally evaluated by a peer review committee on the basis of mortality and morbidity statistics, and feedback from patients, nurses, interns and residents. A consultant remiss in his duties, or a consultant who regularly falls short of the minimum standards acceptable to the hospital or its peer review committee, is normally politely terminated. In other words, private hospitals, hire, fire and exercise real control over their attending and visiting consultant staff. While consultants are not, technically employees, a point which respondent hospital asserts in denying all responsibility for the patients condition, the control exercised, the hiring, and the right to terminate consultants all fulfill the important hallmarks of an employer-employee relationship, with the exception of the payment of wages. In assessing whether such a relationship in fact exists, the control test is determining. Accordingly, on the basis of the foregoing, we rule that for the purpose of allocating responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians. This being the case, the question now arises as to whether or not respondent hospital is solidarily liable with respondent doctors for petitioners condition.[76] The basis for holding an employer solidarily responsible for the negligence of its employee is found in Article 2180 of the Civil Code which considers a person accountable not only for his own acts but also for those of others based on the formers responsibility under a relationship of patria potestas.[77] Such responsibility ceases when the persons or entity concerned prove that they have observed the diligence of a good father of the family to prevent damage.[78] In other words, while the burden of proving negligence rests on the plaintiffs, once negligence is

shown, the burden shifts to the respondents (parent, guardian, teacher or employer) who should prove that they observed the diligence of a good father of a family to prevent damage. In the instant case, respondent hospital, apart from a general denial of its responsibility over respondent physicians, failed to adduce evidence showing that it exercised the diligence of a good father of a family in the hiring and supervision of the latter. It failed to adduce evidence with regard to the degree of supervision which it exercised over its physicians. In neglecting to offer such proof, or proof of a similar nature, respondent hospital thereby failed to discharge its burden under the last paragraph of Article 2180. Having failed to do this, respondent hospital is consequently solidarily responsible with its physicians for Erlindas condition. Based on the foregoing, we hold that the Court of Appeals erred in accepting and relying on the testimonies of the witnesses for the private respondents. Indeed, as shown by the above discussions, private respondents were unable to rebut the presumption of negligence. Upon these disquisitions we hold that private respondents are solidarily liable for damages under Article 2176[79] of the Civil Code. We now come to the amount of damages due petitioners. The trial court awarded a total of P632,000.00 pesos (should be P616,000.00) in compensatory damages to the plaintiff, subject to its being updated covering the period from 15 November 1985 up to 15 April 1992, based on monthly expenses for the care of the patient estimated at P8,000.00. At current levels, the P8000/monthly amount established by the trial court at the time of its decision would be grossly inadequate to cover the actual costs of home-based care for a comatose individual. The calculated amount was not even arrived at by looking at the actual cost of proper hospice care for the patient. What it reflected were the actual expenses incurred and proved by the petitioners after they were forced to bring home the patient to avoid mounting hospital bills. And yet ideally, a comatose patient should remain in a hospital or be transferred to a hospice specializing in the care of the chronically ill for the purpose of providing a proper milieu adequate to meet minimum standards of care. In the instant case for instance, Erlinda has to be constantly turned from side to side to prevent bedsores and hypostatic pneumonia. Feeding is done by nasogastric tube. Food preparation should be normally made by a dietitian to provide her with the correct daily caloric requirements and vitamin supplements. Furthermore, she has to be seen on a regular basis by a physical therapist to avoid muscle atrophy, and by a pulmonary therapist to prevent the accumulation of secretions which can lead to respiratory complications. Given these considerations, the amount of actual damages recoverable in suits arising from negligence should at least reflect the correct minimum cost of proper care, not the cost of the care the family is usually compelled to undertake at home to avoid bankruptcy. However, the provisions of the Civil Code on actual or compensatory damages present us with some difficulties. Well-settled is the rule that actual damages which may be claimed by the plaintiff are those suffered by him as he has duly proved. The Civil Code provides: Art. 2199. - Except as provided by law or by stipulation, one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved. Such compensation is referred to as actual or compensatory damages. Our rules on actual or compensatory damages generally assume that at the time of litigation, the injury suffered as a consequence of an act of negligence has been completed and that the cost can be liquidated. However, these provisions neglect to take into account those situations, as in this case, where the resulting injury might be continuing and possible future complications directly arising from the injury, while certain to occur, are difficult to predict. In these cases, the amount of damages which should be awarded, if they are to adequately and correctly respond to the injury caused, should be one which compensates for pecuniary loss incurred and proved, up to the time of trial; and one which would meet pecuniary loss certain to be suffered but which could not, from the nature of the case, be made with certainty.[80] In other words, temperate damages can and should be awarded on top of actual or compensatory damages in instances where the injury is chronic and continuing. And because of the unique nature

of such cases, no incompatibility arises when both actual and temperate damages are provided for. The reason is that these damages cover two distinct phases. As it would not be equitable - and certainly not in the best interests of the administration of justice - for the victim in such cases to constantly come before the courts and invoke their aid in seeking adjustments to the compensatory damages previously awarded - temperate damages are appropriate. The amount given as temperate damages, though to a certain extent speculative, should take into account the cost of proper care. In the instant case, petitioners were able to provide only home-based nursing care for a comatose patient who has remained in that condition for over a decade. Having premised our award for compensatory damages on the amount provided by petitioners at the onset of litigation, it would be now much more in step with the interests of justice if the value awarded for temperate damages would allow petitioners to provide optimal care for their loved one in a facility which generally specializes in such care. They should not be compelled by dire circumstances to provide substandard care at home without the aid of professionals, for anything less would be grossly inadequate. Under the circumstances, an award of P1,500,000.00 in temperate damages would therefore be reasonable.[81] In Valenzuela vs. Court of Appeals,[82] this Court was confronted with a situation where the injury suffered by the plaintiff would have led to expenses which were difficult to estimate because while they would have been a direct result of the injury (amputation), and were certain to be incurred by the plaintiff, they were likely to arise only in the future. We awarded P1,000,000.00 in moral damages in that case. Describing the nature of the injury, the Court therein stated: As a result of the accident, Ma. Lourdes Valenzuela underwent a traumatic amputation of her left lower extremity at the distal left thigh just above the knee. Because of this, Valenzuela will forever be deprived of the full ambulatory functions of her left extremity, even with the use of state of the art prosthetic technology. Well beyond the period of hospitalization (which was paid for by Li), she will be required to undergo adjustments in her prosthetic devise due to the shrinkage of the stump from the process of healing. These adjustments entail costs, prosthetic replacements and months of physical and occupational rehabilitation and therapy. During her lifetime, the prosthetic devise will have to be replaced and readjusted to changes in the size of her lower limb effected by the biological changes of middle-age, menopause and aging. Assuming she reaches menopause, for example, the prosthetic will have to be adjusted to respond to the changes in bone resulting from a precipitate decrease in calcium levels observed in the bones of all post-menopausal women. In other words, the damage done to her would not only be permanent and lasting, it would also be permanently changing and adjusting to the physiologic changes which her body would normally undergo through the years. The replacements, changes, and adjustments will require corresponding adjustive physical and occupational therapy. All of these adjustments, it has been documented, are painful. x x x. A prosthetic devise, however technologically advanced, will only allow a reasonable amount of functional restoration of the motor functions of the lower limb. The sensory functions are forever lost. The resultant anxiety, sleeplessness, psychological injury, mental and physical pain are inestimable.[83] The injury suffered by Erlinda as a consequence of private respondents negligence is certainly much more serious than the amputation in the Valenzuela case. Petitioner Erlinda Ramos was in her mid-forties when the incident occurred. She has been in a comatose state for over fourteen years now. The burden of care has so far been heroically shouldered by her husband and children, who, in the intervening years have been deprived of the love of a wife and a mother.

Meanwhile, the actual physical, emotional and financial cost of the care of petitioner would be virtually impossible to quantify. Even the temperate damages herein awarded would be inadequate if petitioners condition remains unchanged for the next ten years. We recognized, in Valenzuela that a discussion of the victims actual injury would not even scratch the surface of the resulting moral damage because it would be highly speculative to estimate the amount of emotional and moral pain, psychological damage and injury suffered by the victim or those actually affected by the victims condition.[84] The husband and the children, all petitioners in this case, will have to live with the day to day uncertainty of the patients illness, knowing any hope of recovery is close to nil. They have fashioned their daily lives around the nursing care of petitioner, altering their long term goals to take into account their life with a comatose patient. They, not the respondents, are charged with the moral responsibility of the care of the victim. The familys moral injury and suffering in this case is clearly a real one. For the foregoing reasons, an award of P2,000,000.00 in moral damages would be appropriate. Finally, by way of example, exemplary damages in the amount of P100,000.00 are hereby awarded. Considering the length and nature of the instant suit we are of the opinion that attorneys fees valued at P100,000.00 are likewise proper. Our courts face unique difficulty in adjudicating medical negligence cases because physicians are not insurers of life and, they rarely set out to intentionally cause injury or death to their patients. However, intent is immaterial in negligence cases because where negligence exists and is proven, the same automatically gives the injured a right to reparation for the damage caused. Established medical procedures and practices, though in constant flux are devised for the purpose of preventing complications. A physicians experience with his patients would sometimes tempt him to deviate from established community practices, and he may end a distinguished career using unorthodox methods without incident. However, when failure to follow established procedure results in the evil precisely sought to be averted by observance of the procedure and a nexus is made between the deviation and the injury or damage, the physician would necessarily be called to account for it. In the case at bar, the failure to observe pre-operative assessment protocol which would have influenced the intubation in a salutary way was fatal to private respondents case. WHEREFORE, the decision and resolution of the appellate court appealed from are hereby modified so as to award in favor of petitioners, and solidarily against private respondents the following: 1) P1,352,000.00 as actual damages computed as of the date of promulgation of this decision plus a monthly payment of P8,000.00 up to the time that petitioner Erlinda Ramos expires or miraculously survives; 2) P2,000,000.00 as moral damages, 3) P1,500,000.00 as temperate damages; 4) P100,000.00 each as exemplary damages and attorneys fees; and, 5) the costs of the suit. SO ORDERED. Davide, Jr., C.J., (Chairman), Puno, Pardo and Ynares-Santiago, JJ., concur.

FIRST DIVISION [G.R. No. 137873. April 20, 2001]

D.M. CONSUNJI, INC., petitioner, vs. COURT OF APPEALS and MARIA J. JUEGO, respondents. DECISION KAPUNAN, J.: At around 1:30 p.m., November 2, 1990, Jose Juego, a construction worker of D.M. Consunji, Inc., fell 14 floors from the Renaissance Tower, Pasig City to his death. PO3 Rogelio Villanueva of the Eastern Police District investigated the tragedy and filed a report dated November 25, 1990, stating that: x x x. [The] [v]ictim was rushed to [the] Rizal Medical Center in Pasig, Metro Manila where he was pronounced dead on arrival (DOA) by the attending physician, Dr. Errol de Yzo[,] at around 2:15 p.m. of the same date. Investigation disclosed that at the given time, date and place, while victim Jose A. Juego together with Jessie Jaluag and Delso Destajo [were] performing their work as carpenter[s] at the elevator core of the 14th floor of the Tower D, Renaissance Tower Building on board a [p]latform made of channel beam (steel) measuring 4.8 meters by 2 meters wide with pinulid plywood flooring and cable wires attached to its four corners and hooked at the 5 ton chain block, when suddenly, the bolt or pin which was merely inserted to connect the chain block with the [p]latform, got loose xxx causing the whole [p]latform assembly and the victim to fall down to the basement of the elevator core, Tower D of the building under construction thereby crushing the victim to death, save his two (2) companions who luckily jumped out for safety. It is thus manifest that Jose A. Juego was crushed to death when the [p]latform he was then on board and performing work, fell. And the falling of the [p]latform was due to the removal or getting loose of the pin which was merely inserted to the connecting points of the chain block and [p]latform but without a safety lock.[1] On May 9, 1991, Jose Juegos widow, Maria, filed in the Regional Trial Court (RTC) of Pasig a complaint for damages against the deceaseds employer, D.M. Consunji, Inc. The employer raised, among other defenses, the widows prior availment of the benefits from the State Insurance Fund. After trial, the RTC rendered a decision in favor of the widow Maria Juego. The dispositive portion of the RTC decision reads: WHEREFORE, judgment is hereby rendered ordering defendant to pay plaintiff, as follows: 1. P50,000.00 for the death of Jose A. Juego. 2. P10,000.00 as actual and compensatory damages. 3. P464,000.00 for the loss of Jose A. Juegos earning capacity. 4. P100,000.00 as moral damages.

5. P20,000.00 as attorneys fees, plus the costs of suit. SO ORDERED.[2] On appeal by D.M. Consunji, the Court of Appeals (CA) affirmed the decision of the RTC in toto. D.M. Consunji now seeks the reversal of the CA decision on the following grounds: THE APPELLATE COURT ERRED IN HOLDING THAT THE POLICE REPORT WAS ADMISSIBLE EVIDENCE OF THE ALLEGED NEGLIGENCE OF PETITIONER. THE APPELLATE COURT ERRED IN HOLDING THAT THE DOCTRINE OF RES IPSA LOQUITOR [sic] IS APPLICABLE TO PROVE NEGLIGENCE ON THE PART OF PETITIONER. THE APPELLATE COURT ERRED IN HOLDING THAT PETITIONER IS PRESUMED NEGLIGENT UNDER ARTICLE 2180 OF THE CIVIL CODE, AND THE APPELLATE COURT ERRED IN HOLDING THAT RESPONDENT IS NOT PRECLUDED FROM RECOVERING DAMAGES UNDER THE CIVIL CODE.[3] Petitioner maintains that the police report reproduced above is hearsay and, therefore, inadmissible. The CA ruled otherwise. It held that said report, being an entry in official records, is an exception to the hearsay rule. The Rules of Court provide that a witness can testify only to those facts which he knows of his personal knowledge, that is, which are derived from his perception.[4] A witness, therefore, may not testify as what he merely learned from others either because he was told or read or heard the same. Such testimony is considered hearsay and may not be received as proof of the truth of what he has learned.[5] This is known as the hearsay rule. Hearsay is not limited to oral testimony or statements; the general rule that excludes hearsay as evidence applies to written, as well as oral statements.[6] The theory of the hearsay rule is that the many possible deficiencies, suppressions, sources of error and untrustworthiness, which lie underneath the bare untested assertion of a witness, may be best brought to light and exposed by the test of cross-examination.[7] The hearsay rule, therefore, excludes evidence that cannot be tested by cross-examination.[8] The Rules of Court allow several exceptions to the rule,[9] among which are entries in official records. Section 44, Rule 130 provides: Entries in official records made in the performance of his duty made in the performance of his duty by a public officer of the Philippines, or by a person in the performance of a duty specially enjoined by law are prima facie evidence of the facts therein stated. In Africa, et al. vs. Caltex (Phil.), Inc., et al. ,[10] this Court, citing the work of Chief Justice Moran, enumerated the requisites for admissibility under the above rule: (a) that the entry was made by a public officer or by another person specially enjoined by law to do so; (b) that it was made by the public officer in the performance of his duties, or by such other person in the performance of a duty specially enjoined by law; and (c) that the public officer or other person had sufficient knowledge of the facts by him stated, which must have been acquired by him personally or through official information.

The CA held that the police report meets all these requisites. Petitioner contends that the last requisite is not present. The Court notes that PO3 Villanueva, who signed the report in question, also testified before the trial court. In Rodriguez vs. Court of Appeals,[11] which involved a Fire Investigation Report, the officer who signed the fire report also testified before the trial court. This Court held that the report was inadmissible for the purpose of proving the truth of the statements contained in the report but admissible insofar as it constitutes part of the testimony of the officer who executed the report. x x x. Since Major Enriquez himself took the witness stand and was available for cross-examination, the portions of the report which were of his personal knowledge or which consisted of his perceptions and conclusions were not hearsay. The rest of the report, such as the summary of the statements of the parties based on their sworn statements (which were annexed to the Report) as well as the latter, having been included in the first purpose of the offer [as part of the testimony of Major Enriquez], may then be considered as independently relevant statements which were gathered in the course of the investigation and may thus be admitted as such, but not necessarily to prove the truth thereof. It has been said that: Where regardless of the truth or falsity of a statement, the fact that it has been made is relevant, the hearsay rule does not apply, but the statement may be shown. Evidence as to the making of such statement is not secondary but primary, for the statement itself may constitute a fact in issue, or be circumstantially relevant as to the existence of such a fact. When Major Enriquez took the witness stand, testified for petitioners on his Report and made himself available for cross-examination by the adverse party, the Report, insofar as it proved that certain utterances were made (but not their truth), was effectively removed from the ambit of the aforementioned Section 44 of Rule 130. Properly understood, this section does away with the testimony in open court of the officer who made the official record, considers the matter as an exception to the hearsay rule and makes the entries in said official record admissible in evidence as prima facie evidence of the facts therein stated. The underlying reasons for this exceptionary rule are necessity and trustworthiness, as explained in Antillon v. Barcelon. The litigation is unlimited in which testimony by officials is daily needed; the occasions in which the officials would be summoned from his ordinary duties to declare as a witness are numberless. The public officers are few in whose daily work something is not done in which testimony is not needed from official sources. Were there no exception for official statements, hosts of officials would be found devoting the greater part of their time to attending as witnesses in court or delivering deposition before an officer. The work of administration of government and the interest of the public having business with officials would alike suffer in consequence. For these reasons, and for many others, a certain verity is accorded such documents, which is not extended to private documents. (3 Wigmore on Evidence, Sec. 1631). The law reposes a particular confidence in public officers that it presumes they will discharge their several trusts with accuracy and fidelity; and, therefore, whatever acts they do in discharge of their duty may be given in evidence and shall be taken to be true under such a degree of caution as to the nature and circumstances of each case may appear to require. It would have been an entirely different matter if Major Enriquez was not presented to testify on his report. In that case the applicability of Section 44 of Rule 143 would have been ripe for determination, and this Court would have agreed with the Court of Appeals that said report was inadmissible since the aforementioned third requisite was not satisfied. The statements given by the sources of information of Major Enriquez failed to qualify as official information, there being no showing that, at the very least, they were under a duty to give the statements for record.

Similarly, the police report in this case is inadmissible for the purpose of proving the truth of the statements contained therein but is admissible insofar as it constitutes part of the testimony of PO3 Villanueva. In any case, the Court holds that portions of PO3 Villanuevas testimony which were of his personal knowledge suffice to prove that Jose Juego indeed died as a result of the elevator crash. PO3 Villanueva had seen Juegos remains at the morgue,[12] making the latters death beyond dispute. PO3 Villanueva also conducted an ocular inspection of the premises of the building the day after the incident[13] and saw the platform for himself.[14] He observed that the platform was crushed[15] and that it was totally damaged.[16] PO3 Villanueva also required Garcia and Fabro to bring the chain block to the police headquarters. Upon inspection, he noticed that the chain was detached from the lifting machine, without any pin or bolt.[17] What petitioner takes particular exception to is PO3 Villanuevas testimony that the cause of the fall of the platform was the loosening of the bolt from the chain block. It is claimed that such portion of the testimony is mere opinion. Subject to certain exceptions,[18] the opinion of a witness is generally not admissible.[19] Petitioners contention, however, loses relevance in the face of the application of res ipsa loquitur by the CA. The effect of the doctrine is to warrant a presumption or inference that the mere fall of the elevator was a result of the person having charge of the instrumentality was negligent. As a rule of evidence, the doctrine of res ipsa loquitur is peculiar to the law of negligence which recognizes that prima facie negligence may be established without direct proof and furnishes a substitute for specific proof of negligence.[20] The concept of res ipsa loquitur has been explained in this wise: While negligence is not ordinarily inferred or presumed, and while the mere happening of an accident or injury will not generally give rise to an inference or presumption that it was due to negligence on defendants part, under the doctrine of res ipsa loquitur, which means, literally, the thing or transaction speaks for itself, or in one jurisdiction, that the thing or instrumentality speaks for itself, the facts or circumstances accompanying an injury may be such as to raise a presumption, or at least permit an inference of negligence on the part of the defendant, or some other person who is charged with negligence. x x x where it is shown that the thing or instrumentality which caused the injury complained of was under the control or management of the defendant, and that the occurrence resulting in the injury was such as in the ordinary course of things would not happen if those who had its control or management used proper care, there is sufficient evidence, or, as sometimes stated, reasonable evidence, in the absence of explanation by the defendant, that the injury arose from or was caused by the defendants want of care.[21] One of the theoretical bases for the doctrine is its necessity, i.e., that necessary evidence is absent or not available.[22] The res ipsa loquitur doctrine is based in part upon the theory that the defendant in charge of the instrumentality which causes the injury either knows the cause of the accident or has the best opportunity of ascertaining it and that the plaintiff has no such knowledge, and therefore is compelled to allege negligence in general terms and to rely upon the proof of the happening of the accident in order to establish negligence. The inference which the doctrine permits is grounded upon the fact that the chief evidence of the true cause, whether culpable or innocent, is practically accessible to the defendant but inaccessible to the injured person. It has been said that the doctrine of res ipsa loquitur furnishes a bridge by which a plaintiff, without knowledge of the cause, reaches over to defendant who knows or should know the cause, for any explanation of care exercised by the defendant in respect of the matter of which the plaintiff complains. The res ipsa loquitur doctrine, another court has said, is a rule of necessity, in that it proceeds on the theory that under the peculiar circumstances in which the doctrine is applicable, it is within the power of the defendant to show that there was no negligence on his part, and direct proof of defendants negligence is beyond plaintiffs power. Accordingly, some courts add to the three prerequisites for the application of the res ipsa loquitur doctrine the further requirement that for the res ipsa loquitur doctrine to apply, it must appear that the injured party had no knowledge or means of knowledge as to the cause of

the accident, or that the party to be charged with negligence has superior knowledge or opportunity for explanation of the accident.[23] The CA held that all the requisites of res ipsa loquitur are present in the case at bar: There is no dispute that appellees husband fell down from the 14th floor of a building to the basement while he was working with appellants construction project, resulting to his death. The construction site is within the exclusive control and management of appellant. It has a safety engineer, a project superintendent, a carpenter leadman and others who are in complete control of the situation therein. The circumstances of any accident that would occur therein are peculiarly within the knowledge of the appellant or its employees. On the other hand, the appellee is not in a position to know what caused the accident. Res ipsa loquitur is a rule of necessity and it applies where evidence is absent or not readily available, provided the following requisites are present: (1) the accident was of a kind which does not ordinarily occur unless someone is negligent; (2) the instrumentality or agency which caused the injury was under the exclusive control of the person charged with negligence; and (3) the injury suffered must not have been due to any voluntary action or contribution on the part of the person injured. x x x. No worker is going to fall from the 14th floor of a building to the basement while performing work in a construction site unless someone is negligent[;] thus, the first requisite for the application of the rule of res ipsa loquitur is present. As explained earlier, the construction site with all its paraphernalia and human resources that likely caused the injury is under the exclusive control and management of appellant[;] thus[,] the second requisite is also present. No contributory negligence was attributed to the appellees deceased husband[;] thus[,] the last requisite is also present. All the requisites for the application of the rule of res ipsa loquitur are present, thus a reasonable presumption or inference of appellants negligence arises. x x x.[24] Petitioner does not dispute the existence of the requisites for the application of res ipsa loquitur, but argues that the presumption or inference that it was negligent did not arise since it proved that it exercised due care to avoid the accident which befell respondents husband. Petitioner apparently misapprehends the procedural effect of the doctrine. As stated earlier, the defendants negligence is presumed or inferred[25] when the plaintiff establishes the requisites for the application of res ipsa loquitur. Once the plaintiff makes out a prima facie case of all the elements, the burden then shifts to defendant to explain.[26] The presumption or inference may be rebutted or overcome by other evidence and, under appropriate circumstances a disputable presumption, such as that of due care or innocence, may outweigh the inference.[27] It is not for the defendant to explain or prove its defense to prevent the presumption or inference from arising. Evidence by the defendant of say, due care, comes into play only after the circumstances for the application of the doctrine has been established. In any case, petitioner cites the sworn statement of its leadman Ferdinand Fabro executed before the police investigator as evidence of its due care. According to Fabro's sworn statement, the company enacted rules and regulations for the safety and security of its workers. Moreover, the leadman and the bodegero inspect the chain block before allowing its use. It is ironic that petitioner relies on Fabros sworn statement as proof of its due care but, in arguing that private respondent failed to prove negligence on the part of petitioners employees, also assails the same statement for being hearsay. Petitioner is correct. Fabro's sworn statement is hearsay and inadmissible. Affidavits are inadmissible as evidence under the hearsay rule, unless the affiant is placed on the witness stand to testify thereon.[28] The inadmissibility of this sort of evidence is based not only on the lack of opportunity on the part of the adverse party to cross-examine the affiant, but also on the commonly known fact that, generally, an affidavit is not prepared by the affiant himself but by another who uses his own language in writing the affiants statements which may either be omitted or misunderstood by the one writing them.[29] Petitioner, therefore, cannot use said statement as proof of its due care any more than private respondent can use it to prove the cause of her husbands death. Regrettably, petitioner does not cite any other evidence to rebut the inference or presumption of negligence arising from the application of res ipsa loquitur, or to establish any defense relating to the incident.

Next, petitioner argues that private respondent had previously availed of the death benefits provided under the Labor Code and is, therefore, precluded from claiming from the deceaseds employer damages under the Civil Code. Article 173 of the Labor Code states: ART. 173. Extent of liability. Unless otherwise provided, the liability of the State Insurance Fund under this Title shall be exclusive and in place of all other liabilities of the employer to the employee, his dependents or anyone otherwise entitled to receive damages on behalf of the employee or his dependents. The payment of compensation under this Title shall not bar the recovery of benefits as provided for in Section 699 of the Revised Administrative Code, Republic Act Numbered Eleven hundred sixty-one, as amended, Republic Act Numbered Six hundred ten, as amended, Republic Act Numbered Forty-eight hundred sixty-four as amended, and other laws whose benefits are administered by the System or by other agencies of the government. The precursor of Article 173 of the Labor Code, Section 5 of the Workmens Compensation Act, provided that: SEC. 5. Exclusive right to compensation. The rights and remedies granted by this Act to an employee by reason of a personal injury entitling him to compensation shall exclude all other rights and remedies accruing to the employee, his personal representatives, dependents or nearest of kin against the employer under the Civil Code and other laws because of said injury x x x. Whether Section 5 of the Workmens Compensation Act allowed recovery under said Act as well as under the Civil Code used to be the subject of conflicting decisions. The Court finally settled the matter in Floresca vs. Philex Mining Corporation,[30] which involved a cave-in resulting in the death of the employees of the Philex Mining Corporation. Alleging that the mining corporation, in violation of government rules and regulations, failed to take the required precautions for the protection of the employees, the heirs of the deceased employees filed a complaint against Philex Mining in the Court of First Instance (CFI). Upon motion of Philex Mining, the CFI dismissed the complaint for lack of jurisdiction. The heirs sought relief from this Court. Addressing the issue of whether the heirs had a choice of remedies, majority of the Court En Banc,[31] following the rule in Pacaa vs. Cebu Autobus Company, held in the affirmative. WE now come to the query as to whether or not the injured employee or his heirs in case of death have a right of selection or choice of action between availing themselves of the workers right under the Workmens Compensation Act and suing in the regular courts under the Civil Code for higher damages (actual, moral and exemplary) from the employers by virtue of the negligence or fault of the employers or whether they may avail themselves cumulatively of both actions, i.e., collect the limited compensation under the Workmens Compensation Act and sue in addition for damages in the regular courts. In disposing of a similar issue, this Court in Pacaa vs. Cebu Autobus Company, 32 SCRA 442, ruled that an injured worker has a choice of either to recover from the employer the fixed amounts set by the Workmens Compensation Act or to prosecute an ordinary civil action against the tortfeasor for higher damages but he cannot pursue both courses of action simultaneously. [Underscoring supplied.] Nevertheless, the Court allowed some of the petitioners in said case to proceed with their suit under the Civil Code despite having availed of the benefits provided under the Workmens Compensation Act. The Court reasoned: With regard to the other petitioners, it was alleged by Philex in its motion to dismiss dated May 14, 1968 before the court a quo, that the heirs of the deceased employees, namely Emerito Obra, Larry Villar, Jr., Aurelio Lanuza, Lorenzo Isla and Saturnino submitted notices and claims for compensation to the Regional Office No.1 of the then Department of Labor and all of them have been paid in full as of August 25, 1967, except Saturnino Martinez whose heirs decided that they be paid in installments x x x. Such allegation was admitted by herein petitioners in their opposition to the motion to dismiss dated May 27, 1968 x x x in the lower court, but they set up the defense that the claims were filed under the Workmens Compensation Act before they learned of the official report of the committee

created to investigate the accident which established the criminal negligence and violation of law by Philex, and which report was forwarded by the Director of Mines to then Executive Secretary Rafael Salas in a letter dated October 19, 1967 only x x x. WE hold that although the other petitioners had received the benefits under the Workmens Compensation Act, such may not preclude them from bringing an action before the regular court because they became cognizant of the fact that Philex has been remiss in its contractual obligations with the deceased miners only after receiving compensation under the Act. Had petitioners been aware of said violation of government rules and regulations by Philex, and of its negligence, they would not have sought redress under the Workmens Compensation Commission which awarded a lesser amount for compensation. The choice of the first remedy was based on ignorance or a mistake of fact, which nullifies the choice as it was not an intelligent choice. The case should therefore be remanded to the lower court for further proceedings. However, should the petitioners be successful in their bid before the lower court, the payments made under the Workmens Compensation Act should be deducted from the damages that may be decreed in their favor. [Underscoring supplied.] The ruling in Floresca providing the claimant a choice of remedies was reiterated in Ysmael Maritime Corporation vs. Avelino,[32] Vda. de Severo vs. Feliciano-Go,[33] and Marcopper Mining Corp. vs. Abeleda.[34] In the last case, the Court again recognized that a claimant who had been paid under the Act could still sue under the Civil Code. The Court said: In the Robles case, it was held that claims for damages sustained by workers in the course of their employment could be filed only under the Workmens Compensation Law, to the exclusion of all further claims under other laws. In Floresca, this doctrine was abrogated in favor of the new rule that the claimants may invoke either the Workmens Compensation Act or the provisions of the Civil Code, subject to the consequence that the choice of one remedy will exclude the other and that the acceptance of compensation under the remedy chosen will preclude a claim for additional benefits under the other remedy. The exception is where a claimant who has already been paid under the Workmens Compensation Act may still sue for damages under the Civil Code on the basis of supervening facts or developments occurring after he opted for the first remedy. (Underscoring supplied.) Here, the CA held that private respondents case came under the exception because private respondent was unaware of petitioners negligence when she filed her claim for death benefits from the State Insurance Fund. Private respondent filed the civil complaint for damages after she received a copy of the police investigation report and the Prosecutors Memorandum dismissing the criminal complaint against petitioners personnel. While stating that there was no negligence attributable to the respondents in the complaint, the prosecutor nevertheless noted in the Memorandum that, if at all, the case is civil in nature. The CA thus applied the exception in Floresca: x x x We do not agree that appellee has knowledge of the alleged negligence of appellant as early as November 25, 1990, the date of the police investigators report. The appellee merely executed her sworn statement before the police investigator concerning her personal circumstances, her relation to the victim, and her knowledge of the accident. She did not file the complaint for Simple Negligence Resulting to Homicide against appellants employees. It was the investigator who recommended the filing of said case and his supervisor referred the same to the prosecutors office. This is a standard operating procedure for police investigators which appellee may not have even known. This may explain why no complainant is mentioned in the preliminary statement of the public prosecutor in her memorandum dated February 6, 1991, to wit: Respondent Ferdinand Fabro x x x are being charged by complaint of Simple Negligence Resulting to Homicide. It is also possible that the appellee did not have a chance to appear before the public prosecutor as can be inferred from the following statement in said memorandum: Respondents who were notified pursuant to Law waived their rights to present controverting evidence, thus there was no reason for the public prosecutor to summon the appellee. Hence, notice of appellants negligence cannot be imputed on appellee before she applied for death benefits under ECC or before she received the first payment therefrom. Her using the police investigation report to support her complaint filed on May 9, 1991 may just be an afterthought after receiving a copy of the February 6, 1991 Memorandum of the Prosecutors Office dismissing the criminal complaint for insufficiency of evidence, stating therein that: The death of the victim is not attributable to any negligence on the part of the respondents. If at all and as shown by the records this case is civil in nature.

(Underscoring supplied.) Considering the foregoing, We are more inclined to believe appellees allegation that she learned about appellants negligence only after she applied for and received the benefits under ECC. This is a mistake of fact that will make this case fall under the exception held in the Floresca ruling.[35] The CA further held that not only was private respondent ignorant of the facts, but of her rights as well: x x x. Appellee [Maria Juego] testified that she has reached only elementary school for her educational attainment; that she did not know what damages could be recovered from the death of her husband; and that she did not know that she may also recover more from the Civil Code than from the ECC. x x x.[36] Petitioner impugns the foregoing rulings. It contends that private respondent "failed to allege in her complaint that her application and receipt of benefits from the ECC were attended by ignorance or mistake of fact. Not being an issue submitted during the trial, the trial court had no authority to hear or adjudicate that issue." Petitioner also claims that private respondent could not have been ignorant of the facts because as early as November 28, 1990, private respondent was the complainant in a criminal complaint for "Simple Negligence Resulting to Homicide" against petitioner's employees. On February 6, 1991, two months before the filing of the action in the lower court, Prosecutor Lorna Lee issued a resolution finding that, although there was insufficient evidence against petitioner's employees, the case was "civil in nature." These purportedly show that prior to her receipt of death benefits from the ECC on January 2, 1991 and every month thereafter, private respondent also knew of the two choices of remedies available to her and yet she chose to claim and receive the benefits from the ECC. When a party having knowledge of the facts makes an election between inconsistent remedies, the election is final and bars any action, suit, or proceeding inconsistent with the elected remedy, in the absence of fraud by the other party. The first act of election acts as a bar.[37] Equitable in nature, the doctrine of election of remedies is designed to mitigate possible unfairness to both parties. It rests on the moral premise that it is fair to hold people responsible for their choices. The purpose of the doctrine is not to prevent any recourse to any remedy, but to prevent a double redress for a single wrong.[38] The choice of a party between inconsistent remedies results in a waiver by election. Hence, the rule in Floresca that a claimant cannot simultaneously pursue recovery under the Labor Code and prosecute an ordinary course of action under the Civil Code. The claimant, by his choice of one remedy, is deemed to have waived the other. Waiver is the intentional relinquishment of a known right.[39] [It] is an act of understanding that presupposes that a party has knowledge of its rights, but chooses not to assert them. It must be generally shown by the party claiming a waiver that the person against whom the waiver is asserted had at the time knowledge, actual or constructive, of the existence of the party's rights or of all material facts upon which they depended. Where one lacks knowledge of a right, there is no basis upon which waiver of it can rest. Ignorance of a material fact negates waiver, and waiver cannot be established by a consent given under a mistake or misapprehension of fact. A person makes a knowing and intelligent waiver when that person knows that a right exists and has adequate knowledge upon which to make an intelligent decision. Waiver requires a knowledge of the facts basic to the exercise of the right waived, with an awareness of its consequences. That a waiver is made knowingly and intelligently must be illustrated on the record or by the evidence.[40] That lack of knowledge of a fact that nullifies the election of a remedy is the basis for the exception in Floresca. It is in light of the foregoing principles that we address petitioners contentions. Waiver is a defense, and it was not incumbent upon private respondent, as plaintiff, to allege in her complaint that she had availed of benefits from the ECC. It is, thus, erroneous for petitioner to burden private respondent with raising waiver as an issue. On the contrary, it is the defendant who ought to plead waiver, as petitioner did in pages

2-3 of its Answer;[41] otherwise, the defense is waived. It is, therefore, perplexing for petitioner to now contend that the trial court had no jurisdiction over the issue when petitioner itself pleaded waiver in the proceedings before the trial court. Does the evidence show that private respondent knew of the facts that led to her husbands death and the rights pertaining to a choice of remedies? It bears stressing that what negates waiver is lack of knowledge or a mistake of fact. In this case, the fact that served as a basis for nullifying the waiver is the negligence of petitioners employees, of which private respondent purportedly learned only after the prosecutor issued a resolution stating that there may be civil liability. In Floresca, it was the negligence of the mining corporation and its violation of government rules and regulations. Negligence, or violation of government rules and regulations, for that matter, however, is not a fact, but a conclusion of law, over which only the courts have the final say. Such a conclusion binds no one until the courts have decreed so. It appears, therefore, that the principle that ignorance or mistake of fact nullifies a waiver has been misapplied in Floresca and in the case at bar. In any event, there is no proof that private respondent knew that her husband died in the elevator crash when on November 15, 1990 she accomplished her application for benefits from the ECC. The police investigation report is dated November 25, 1990, 10 days after the accomplishment of the form. Petitioner filed the application in her behalf on November 27, 1990. There is also no showing that private respondent knew of the remedies available to her when the claim before the ECC was filed. On the contrary, private respondent testified that she was not aware of her rights. Petitioner, though, argues that under Article 3 of the Civil Code, ignorance of the law excuses no one from compliance therewith. As judicial decisions applying or interpreting the laws or the Constitution form part of the Philippine legal system (Article 8, Civil Code), private respondent cannot claim ignorance of this Courts ruling in Floresca allowing a choice of remedies. The argument has no merit. The application of Article 3 is limited to mandatory and prohibitory laws.[42] This may be deduced from the language of the provision, which, notwithstanding a person's ignorance, does not excuse his or her compliance with the laws. The rule in Floresca allowing private respondent a choice of remedies is neither mandatory nor prohibitory. Accordingly, her ignorance thereof cannot be held against her. Finally, the Court modifies the affirmance of the award of damages. The records do not indicate the total amount private respondent ought to receive from the ECC, although it appears from Exhibit K[43] that she received P3,581.85 as initial payment representing the accrued pension from November 1990 to March 1991. Her initial monthly pension, according to the same Exhibit K, was P596.97 and present total monthly pension was P716.40. Whether the total amount she will eventually receive from the ECC is less than the sum of P644,000.00 in total damages awarded by the trial court is subject to speculation, and the case is remanded to the trial court for such determination. Should the trial court find that its award is greater than that of the ECC, payments already received by private respondent under the Labor Code shall be deducted from the trial courts award of damages. Consistent with our ruling in Floresca, this adjudication aims to prevent double compensation. WHEREFORE, the case is REMANDED to the Regional Trial Court of Pasig City to determine whether the award decreed in its decision is more than that of the ECC. Should the award decreed by the trial court be greater than that awarded by the ECC, payments already made to private respondent pursuant to the Labor Code shall be deducted therefrom. In all other respects, the Decision of the Court of Appeals is AFFIRMED. SO ORDERED. Davide, Jr., C.J. (Chairman), Puno, and Ynares-Santiago, JJ., concur. Pardo, J., on sick leave.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-22533 February 9, 1967

PLACIDO C. RAMOS and AUGUSTO L. RAMOS, petitioners, vs. PEPSI-COLA BOTTLING CO. OF THE P.I. and ANDRES BONIFACIO, respondents. Placido B. Ramos and Renato L. Ramos for petitioners. Trinidad & Borromeo for respondents. BENGZON, J.P., J.: On June 30, 1958 Placido and Augusto Ramos sued Pepsi-Cola Bottling Co. of the P.I. 1 and Andres Bonifacio in the Court of First Instance of Manila as a consequence of a collision, on May 10, 1958, involving the car of Placido Ramos and a tractor-truck and trailer of PEPESI-COLA. Said car was at the time of the collision driven by Augusto Ramos, son and co-plaintiff of Placido. PEPSI-COLA's tractor-truck was then driven by its driver and co-defendant Andres Bonifacio. After trial the Court of First Instance rendered judgment on April 15, 1961, finding Bonifacio negligent and declaring that PEPSI-COLA had not sufficiently proved its having exercised the due diligence of a good father of a family to prevent the damage. PEPSI-COLA and Bonifacio, solidarily, were ordered to pay the plaintiffs P2,638.50 actual damages; P2,000.00 moral damages; P2,000.00 as exemplary damages; and, P1,000.00 attorney's fees, with costs. Not satisfied with this decision, the defendants appellee to the Court of Appeals. Said Court, on January 15, 1964, affirmed the trial court's judgment insofar as it found defendant Bonifacio negligent, but modified it by absolving defendant PEPSI-COLA from liability, finding that, contrary to the plaintiffs' contention, PEPSI-COLA sufficiently proved due diligence in the selection of its driver Bonifacio. Plaintiffs thereupon appealed to Us through this petition for review of the Court of Appeals' decision. And appellants would argue before this Court that defendant PEPSI-COLA's evidence failed to show that it had exercised due diligence in the selection of its driver in question. Said point, as stated, was resolved by the Court of Appeals in PEPSI-COLA's favor, thus: The uncontradicted testimony of Juan T. Anasco, personnel manager of defendant company, was to the effect that defendant driver was first hired as a member of the bottle crop in the production department; that when he was hired as a driver, 'we had size [sic] him by looking into his background, asking him to submit clearances, previous experience, physical examination and later on, he was sent to the pool house to take the usual driver's examination, consisting of: First, theoretical examination and second, the

practical driving examination, all of which he had undergone, and that the defendant company was a member of the Safety Council. In view hereof, we are of the sense that defendant company had exercised the diligence of a good father of a family in the choice or selection of defendant driver'. In the case of Campo vs. Camarote No. L-9147 (1956), 53 O.G. 2794, cited in appellee's brief, our Supreme Court had occasion to put it down as a rule that "In order that the defendant may be considered as having exercised all the diligence of a good father of a family, he should not have been satisfied with the mere possession of a professional driver's license; he should have carefully examined the applicant for employment as to his qualifications, his experiences and record of service." Defendant Company has taken all these steps.2 Appellants herein seek to assail the foregoing portion of the decision under review by taking issue with the testimony of Anasco upon which the findings of due diligence aforestated are rested. Thus, it is now contended that Aasco being PEPSI-COLA's employee, is a biased and interested witness; and that his testimony is not believable. It is rather clear, therefore, that appellants would raise herein an issue of fact and credibility, something as to which this Court has consistently respected the findings of the Court of Appeals, with some few exceptions, which do not obtain herein.3 Stated differently, Aascos credibility is not for this Court now to re-examine. And said witness having been found credible by the Court of Appeals, his testimony, as accepted by said Court, cannot at this stage be assailed. As We said in Co Tao vs. Court of Appeals , L-9194, April 25, 1957, assignments of error involving the credibility of witnesses and which in effect dispute the findings of fact of the Court of Appeals, cannot be reviewed in these proceedings. For a question to be one of law it must involve no examination of the probative value of the evidence presented by the litigants or any of them. 4 And the distinction is well-known: There is a question of law in a given case when the doubt or difference arises as to what the law is on a certain state of facts; there is a question of fact when the doubt or difference arises as to the truth or the falsehood of alleged facts. 5 From all this it follows that for the purposes of this appeal, it must be taken as established that, as testified to by Aasco, PEPSI-COLA did in fact carefully examine the driver-applicant Bonifacio as to his qualifications, experiences and record of service, taking all steps mentioned by the Court of Appeals in its decision already quoted.1wph1.t Such being the case, there can be no doubt that PEPSI-COLA exercised the required due diligence in the selection of its driver. As ruled by this Court in Campo vs. Camarote 53 O.G. 2794, 2797: "In order that the defendant may be considered as having exercised all diligence of a good father of a family, he should not be satisfied with the mere possession of a professional driver's license; he should have carefully examined the applicant for employment as to his qualifications, his experience and record of service." It should perhaps be stated that in the instant case no question is raised as to due diligence in the supervision by PEPSI-COLA of its driver. Article 2180 of the Civil Code provides inter alia: ... 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. xxx xxx xxx

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

And construing a similar provision of the old Civil Code, this Court said in Bahia vs. Litonjua, 30 Phil. 624, 627: From this article two things are apparent: (1) That when an injury is caused by the negligence of a servant or employee there instantly arises a presumption of law that there was negligence on the part of the master or employer either in the selection of the servant or employee, or in supervision over him after the selection, or both; and (2) that the presumption is juris tantum and not juris et de jure, and consequently may be rebutted. It follows necessarily that if the employer shows to the satisfaction of the court that in selection and supervision he has exercised the care and diligence of a good father of a family, the presumption is overcome and he is relieved from liability. As pointed out, what appellants here contend as not duly proved by PEPSI-COLA is only due diligence in the selection of its driver. And, parenthetically, it is not surprising that appellants thus confine their arguments to this aspect of due diligence, since the record as even appellants' brief (pp. 13-17) reflects in quoting in part the testimony of PEPSI-COLA's witness would show sufficient evidence to establish due diligence in the supervision by PEPSI-COLA of its drivers, including Bonifacio. Appellants' other assignment of errors are likewise outside the purview of this Court's reviewing power. Thus, the question of whether PEPSI- COLA violated the Revised Motor Vehicle Law and rules and regulations related thereto, not having been raised and argued in the Court of Appeals, cannot be ventilated herein for the first time. 6 And the matter of whether or not PEPSI-COLA did acts to ratify the negligent act of its driver is a factual issue not proper herein. Wherefore, the decision of the Court of Appeals is hereby affirmed, with costs against appellants. So ordered. Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar, Sanchez and Castro, JJ., concur. RESOLUTION ON MOTION FOR RECONSIDERATION May 16, 1967 BENGZON, J.P., J.: Petitioners seek a reconsideration 1 of Our decision2 in the instant case affirming in toto the challenged decision of the Court of Appeals absolving respondent PEPSI-COLA from liability. In Our decision, We refrained from passing on the merits of the question whether PEPSI-COLA, in operating the tractor-truck and trailer, violated the Rev. Motor Vehicle Law 3 and the rules and regulations related thereto, for the procedural reason that it did not appear to have been raised before the Court of Appeals. It now appears, however, that said question was raised in a motion to reconsider filed with the Court of Appeals which resolved the same against petitioners. Due consideration of the matter on its merits, convinces Us that the decision of the Court of Appeals should still be affirmed in toto. Petitioners impute to PEPSI-COLA the violation of subpars. 1 and 4(d), par. (a), Sec. 27 of M.V.O. Administrative Order No. 1, dated Sept. 1, 1951, in that at the time of the collision, the trailer-truck, which had a total weight of 30,000 kgms., was (a) being driven at a speed of about 30 k.p.h. or beyond the 15 k.p.h. limit set and (b) was not equipped with a rear-vision mirror nor provided with a helper for the driver. The cited provisions read:

SECTION 27. Registration, operation, and inspection of truck-trailer combinations, semitrailers, and tractors. (a) No trailer or semi-trailer having a gross weight of more than 2,000 kilograms and is not equipped with effective brakes on at least two opposite wheels of the rear axle and are so controlled that the brakes will act in unison with or preceding the effective action of the brakes of the tractor-truck shall be registered for operation on public highways of the Philippines; provided, that the trialers without brakes may be registered from year to year for operation under the following conditions: 1. No such trailer shall be operated at any time at a speed in excess of 15 kilometers per hour in conjunction with a tractor-truck, the actual gross weight of which is less than twice the weight of the trailer. xxx xxx xxx

4(d) Tractor-trucks shall be either equipped with rear-vision mirror to enable the driver to see vehicles approaching mirror the rear or shall carry a helper who shall be so stationed on the truck or trailer that he will constantly have a view of the rear. He shall be provided with means of effectively signalling to the driver to give way to overtaking vehicles. 4(e) No truck and trailer combination shall be operated at a speed greater than 30 kilometers per hour. It will be noted that the 15 k.p.h. limit in subpar. 1, supra, refers only to trailers or semi-trailers having a gross weight of more than 2,000 kgms., AND which are "not equipped with effective brakes on at least two opposite wheels, of the rear axle and are so controlled that the brakes will act in unison with or preceding the effective action of the brakes of the tractor-truck..." This is the condition set in the proviso in par. (a), supra, wherein "trailers without [such] brakes may be registered from year to year for operation ..." i.e., they should not "be operated at any time at a speed in excess of 15 kilometers per hour in conjunction with a tractor-truck ...". But there was no finding by the Court of Appeals that the trucktrailer here did not have such brakes. In the absence of such fact, it is subpar. 4(e), supra, that will apply. And petitioners admit that the truck-trailer was being driven at about 30 k.p.h. It is a fact that driver Bonifacio was not accompanied by a helper on the night of the collision since he was found to be driving alone. However, there is no finding that the tractor-truck did not have a rear-vision mirror. To be sure, the records disclose that Pat. Rodolfo Pahate, the traffic policeman who went to the collision scene, testified that he saw the tractor-truck there but he does not remember if it had any rear vision mirror.4 This cannot prove lack of rear-vision mirror. And the cited provision subpar. 4(d) is complied if either of the two alternatives, i.e., having a rear-vision mirror or a helper, is present. Stated otherwise, said provision is violated only where there is a positive finding that the tractor-truck did not have both rear-vision mirror and a helper for the driver. Petitioners also charge PEPSI-COLA with having violated par. (b) of Sec. 8-A of the Rev. Motor Vehicle Law, providing that: No motor vehicle operating as a single unit shall exceed the following dimensions: Overall width ................ 2.5 meters. xxx xxx xxx

since there was an express finding that the truck-trailer was 3 meters wide. However, Sec. 9 (d) of the same law, as amended, providing that

SEC. 9. Special permits, fees for.-The chief of the Motor Vehicles Office with the approval of the Secretary of Public Works and Communications shall establish regulations and a tariff of additional fees under which special permits may be issued in the discretion of the Chief of the Motor Vehicles Office or his deputies, for each of the following special cases, and without such special permit, no such motor vehicles shall be operated on the public highways. xxx xxx xxx

(d) For registration or use of a motor vehicle exceeding the limit of permissible dimensions specified in subsections (b) and (c) of section eight-A hereof. (Emphasis supplied) xxx xxx xxx

expressly allows the registration, or use of motor vehicles exceeding the limits of permissible dimensions specified in subsec. (b) of Sec. 8-A. So, to conclude that there was a violation of law which undisputably constitutes negligence, at the very least it is not enough that the width of the tractor-truck exceed the limit in Sec. 8-A; in addition, it must also appear that there was no special permit granted under Sec. 9. Unfortunately for petitioners, that vital factual link is missing. There was no proof much less any finding to that effect. And it was incumbent upon petitioners-appellants to have proved lack of such permit since the tractor-truck and the trailer were registered. 5 Compliance with law and regularity in the performance of official duty in this case, the issuance of proper registration papers are presumed 6 and prevail over mere surmises. Having charged a violation of law, the onus of substantiating the same fell upon petitioners-appellants. Hence, the conclusion that there was a violation of the law lacks factual basis. Petitioners would also have Us abandon the Bahia ruling.7 In its stead, We are urged to apply the AngloAmerican doctrine of respondent superior. We cannot however, abandon the Bahia ruling without going against the explicit mandate of the law. A motor vehicle owner is not an absolute insurer against all damages caused by its driver. Article 2180 of our Civil Code is very explicit that the owner's responsibility shall cease once it proves that it has observed the diligence of a good father of a family to prevent damage. The Bahia case merely clarified what that diligence consists of, namely, diligence in the selection and supervision of the driver-employee. Neither could We apply the respondent superior principle. Under Article 2180 of the Civil Code, the basis of an employer's liability is his own negligence, not that of his employees. The former is made responsible for failing to properly and diligently select and supervise his erring employees. We do not and have never followed the respondent superior rule. 8 So, the American rulings cited by petitioners, based as they are on said doctrine, are not authoritative here. In view of the foregoing, the motion for reconsideration is hereby denied. Concepcion, C.J., Reyes, J.B.L., Dizon, Regala, Makalintal, Zaldivar, Sanchez and Castro, JJ., concur.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION

G.R. No. L-87584 June 16, 1992 GOTESCO INVESTMENT CORPORATION, petitioner, vs. GLORIA E. CHATTO and LINA DELZA CHATTO, respondents.

DAVIDE. JR., J.: Assailed in this petition for review under Rule 45 of the Rules of Court are both the Decision 1 promulgated on 27 July 1988 and the Resolution dated 14 March 1989 2 of the respondent Court of Appeals in CA-G.R. CV No. 09699 which, respectively affirmed in toto the decision of Branch XXI of the Regional Trial Court of Cebu in Civil Case No. R-22567 entitled "Gloria Chatto, et al. versus Gotesco Investment Corporation", and denied petitioner's motion to reconsider the same. The trial court ordered the defendant, herein petitioners to pay the plaintiff Lina Delza E. Chatto the sum of P10,000.00 as moral damages and the plaintiff Gloria E. Chatto the sum of P49,050.00 as actual and consequential damages, P75,000.00 as moral damages and P20,000.00 as attorney's fees, plus the cost of the suit. These awards, except for the attorney's fees, were to earn interest at the rate of twelve per cent (12%) per annum beginning from the date the complaint was filed, 16 November 1982, until the amounts were fully paid. The antecedent facts, as found by the trial court and affirmed by the respondent Court, are summarized by the latter in the challenged decision as follows: The evidence shows that in the afternoon of June 4, 1982 plaintiff Gloria E. Chatto, and her 15-year old daughter, plaintiff Lina Delza E. Chatto went to see the movie "Mother Dear" at Superama I theater, owned by defendant Gotesco Investment Corporation. They bought balcony tickets but even then were unable to find seats considering the number of people patronizing the movie. Hardly ten (10) minutes after entering the theater, the ceiling of its balcony collapsed. The theater was plunged into darkness and pandemonium ensued. Shocked and hurt, plaintiffs managed to crawl under the fallen ceiling. As soon as they were able to get out to the street they walked the nearby FEU Hospital where they were confined and treated for one (1) day. The next day, they transferred to the UST hospital. Plaintiff Gloria Chatto was treated in said hospital from June 5 to June 19 and plaintiff Lina Delza Chatto from June 5 to 11. Per Medico Legal Certificate (Exh, "C") issued by Dr. Ernesto G. Brion, plaintiff Lina Delza Chatto suffered the following injuries: Physical injuries:

Contusions: forehead and drental region, scalp left with hematoma; chest anterior upper bilateral; back right, scapular region; back, mid-portion, thoraco-lumbar regions, bilateral Abrasions: back lumbar region, horizontal, across midline, from left to right; hand right, palm, near wrist; hand left, index finger, dorsum, proximal phalanx. Conclusion, cerebral. X-Ray Skull; Thoraco-lumbar region All negative. CONCLUSIONS 1. Physical injuries rioted on the subject. 2. That under normal condition in the absence of complication, said physical injuries will require medical attendance and/or incapacitate the subject for a period of from two to four weeks. On the other hand, the findings on plaintiff Gloria Chatto per Medico Legal Certificate (Exh. "D") of Dr. Brion are as follows: xxx xxx xxx Physical injuries: Lacerated wounds: scalp vertex, running across suggittal line, from left to right, 3.0 cm sutured; Contusion, forearm right, anterior aspect, upper third. Abrasions: Shoulder and upper third, arm right, posterior aspect, linear; backright, scapular region, two in number, linear; elbow right, posterior aspect; forearm right, anterior aspect, middle third. Concusion (sic), cerebral. X-Ray Skull Negative. Cervical spines Straightening of cervical spine, probably to muscular spasm. CONCLUSIONS: 1. Physical injuries noted on subject.

2. That under normal condition, in the absence of complication, said physical injuries will require medical attendance and/or incapacitate the subject for a period of from two to four weeks. Due to continuing pain in the neck, headache and dizziness, plaintiff went to Illinois, USA in July 1982 for further treatment (Exh "E"). She was treated at the Cook County Hospital in Chicago, Illinois. She stayed in the U.S. for about three (3) months during which time she had to return to the Cook County Hospital five (5) or, six (6) times. Defendant tried to avoid liability by alleging that the collapse of the ceiling of its theater was done due to force majeure. It maintained that its theater did not suffer from any structural or construction defect. (Exh. 1, 2, 3, 4, & 5) 3 In justifying its award of actual or compensatory and moral damages and attorney's fees, the trial court said: It has been established thru the uncontradicted testimony of Mrs. Chatto that during the chaos and confusion at the theater she lost a pair of earrings worth P2,500 and the sum of P1,000.00 in cash contained in her wallet which was lost; and that she incurred the following expenses: P500.00 as transportation fare from Cebu City to Manila on the first leg of her trip to the United States; P350.00 for her passport; and P46,978.00 for her expense relative to her treatment in the United States, including the cost of a round-trip ticket (P11,798.00) hospital and medical bills and other attendant expenses. The total is P51,328.00, which is more than the sum of P49,050.00 claimed in the complaint, hence should be reduced accordingly. The same testimony has also established that Mrs. Chatto contracted to pay her counsel the sum of P20,000.00, which this court considers reasonable considering, among other things, the professional standing of work (sic) involved in the prosecution of this case. Such award of attorney's fees is proper because the defendant's omission to provide the plaintiffs proper and adequate safeguard to life and limb which they deserved as patrons to (sic) its theater had compelled the plaintiffs to hire the services of a counsel, file this case and prosecute it, thus incurring expenses to protect their interest. The plaintiffs are entitled to moral damages, which are the direct and proximate result of the defendants gross negligence and omission. Such moral damages include the plaintiffs' physical suffering, mental anguish, fright and serious anxiety. On the part of Mrs. Chatto, who obviously suffered much more pain, anguish, fright and anxiety than her daughter Lina Delza, such damages are compounded by the presence of permanent deformities on her body consisting of a 6-inch scar on the head and a 2-inch scar on one arm. The court believes that the sum of P75,000.00 for plaintiff Gloria E. Chatto and the sum of P10,000.00 for plaintiff Lina Delza E. Chatto would be reasonable. 4 Petitioner submitted before the respondent Court the following assignment of errors: I. THE LOWER COURT ERRED IN ADMITTING PATENTLY INADMISSIBLE EVIDENCE PRESENTED BY PLAINTIFF-APPELLEES AND IN GIVING LESS PROBATIVE VALUE TO PUBLIC DOCUMENTS AND CERTIFICATIONS OF THE CONDITION OF THE BUILDING, PARTICULARLY THE CERTIFICATE OF OCCUPANCY ISSUED BY THE CITY ENGINEER'S OFFICE OF MANILA. II. THE LOWER COURT ERRED IN FINDING THAT "THE CEILING OF THE BALCONY COLLAPSED DUE TO SOME STRUCTURAL CONSTRUCTION OR ARCHITECTURAL DEFECT," AND NOT DUE TO AN ACT OF GOD OR FORCE MAJEURE. III. THE LOWER COURT ERRED IN FINDING THAT THE APPELLANT WAS GROSSLY NEGLIGENT IN FAILING "TO CAUSE PROPER AND ADEQUATE INSPECTION MAINTENANCE AND UPKEEP OF THE BUILDING." 5

In its decision, respondent Court found the appeal to be without merit. As to the first assigned error, it ruled that the trial court did not err in admitting the exhibits in question in the light of the ruling in Abrenica vs. Gonda 6 on waiver of objections arising out of failure to object at the proper time Thus: Exh. "A", the letter dated June 9, 1982 of Tina Mojica of defendant-appellant to the Administrator of UST Hospital expressing their willingness to guaranty the payment of the hospital bills of the plaintiffsappellees was not objected to in trial court for lack of authentication. It is too late to raise that objection on appeal. Exhibits "B", "C", "D", "F" to "F-13" are the hospital records at FEU, UST and Cook County Hospital. It may be true that the doctors who prepared them were not presented as witnesses. Nonetheless, the records will show that counsel for defendant-appellant cross examined plaintiff-appellee Gloria Chatto on the matter especially the content of Exhibits "F" to F-13", Consequently, defendant-appellant is estopped from claiming lack of opportunity to verify their textual truth. Moreover, the record is full of the testimony of plaintiffs-appellees on the injuries they sustained from the collapse of the ceiling of defendant-appellant's theater. Their existence is crystal clear. Exh. "E" is the flight coupon and passenger ticket (Northwest Orient) of plaintiff-appellee Gloria Chatto from the Philippines to the U.S. (Manila-Chicago-Manila). Certainly, this is relevant evidence on whether or not she actually travelled (sic) to the U.S. for further medical treatment. Defendant-appellant's contention that the best evidence on the issue is her passport is off the mark. The best evidence rule applies only if the contents of the writing are directly in issue. In any event, her passport is not the only evidence on the matter. Exh. "G" is the summary of plaintiff-appellee Gloria Chatto's expenses in the U.S in her own handwriting. Defendant-appellant's objection that it is self serving goes to the weight of the evidence. The truth of Exh. "G" could be and should have been tested by cross examination. It cannot be denied however that such expenses are within the personal knowledge of the witness. Exh. "H" is the surgical neckwear worn by the plaintiff-appellee Gloria Chatto as part of her treatment in the U.S. Defendant-appellant objects to its admission because it is self-serving. The objection is without merit in view of the evidence on record that plaintiff-appellee Gloria Chatto sustained head injuries from the collapse of the ceiling of defendant-appellant's theater. In fact, counsel for defendant-appellant cross examined the said witness on the medical finding of Cook County Hospital that she was suffering from neck muscle spasm. (TSN, April 17, 1984, p. 11) The wearing of a surgical neckwear has proper basis. Exh. "I" is the photograph of plaintiff-appellee Gloria Chatto in the U.S. showing the use of her surgical neckwear. Defendant-appellant objects to this exhibit its hearsay because the photographer was not presented as a witness. The objection is incorrect. In order that photographs or pictures may be given in evidence, they must be shown to be a true and faithful representation of the place or objects to which they refer. The photographs may be verified either by the photographer who took it or by any person who is acquainted with the object represented and testify (sic) that the photograph faithfully represents the object. (Moran, Comments in the Rules of Court, Vol. V, 1980 ed., p. 80 citing New York Co vs. Moore, 105 Fed. 725) In the case at bar, Exh. "I" was identified by plaintiff appellee Gloria Chatto. 7 As to the, other assigned errors, the respondent Court ruled: The lower court did not also err in its finding that the collapse of the ceiling of the theater's balcony was due to construction defects and not to force majeure. It was the burden defendant-appellant to prove that its theater did not suffer from any structural defect when it was built and that it has been well maintained when the incident occurred. This is its Special and Affirmative Defense and it is incumbent on defendantappellant to prove it. Considering the collapse of the ceiling of its theater's balcony barely four (4) years after its construction, it behooved defendant-appellant to conduct an exhaustive study of the reason for

the tragic incident. On this score, the effort of defendant-appellant borders criminal nonchalance. Its witness Jesus Lim Ong testified: Atty. Barcelona: Q By the way, you made mention a while ago that your staff of engineer and architect used to make round inspection of the building under your construction the of these buildings is Gotesco Cinema 1 and 2, subject matter of this case, and you also made a regular round up or inspection of the theater. Is that right? A Yes, sir. Q And do you personally inspect these buildings under your construction? A Yes, whenever I can. Q In the case of Gotesco Cinema 1 and 2, had you any chance to inspect this building? A Yes, sir. Q Particularly in the months of May and June of 1982? A Yes, in that (sic) months. Q Now, you said also that sometime in June 1982 you remember that one of these theaters. Atty. Barcelona: continuing particularly Superama 1 the ceiling had collapsed? A Yes, sir. Q Did you conduct an investigation? A Yes, sir. Q What was your finding? A There was really nothing, I cannot explain. I could not give any reason why the ceiling collapsed. Q Could it not be due to any defect of the plant? Atty. Florido: Already answered, Your Honor, he could not give any reason. COURT: Objection sustained. Atty. Barcelona:

Q When that incident happened, did the owner Gotesco Investment Corporation went (sic) to you to call your attention? A Yes, sir. Atty. Florido: Your Honor, we noticed (sic) series of leading questions, but this time we object. COURT: Sustained. Atty. Barcelona; Q What did the owner of Gotesco do when the ceiling collapsed, upon knowing that one of the cinemas you maintained collopsed? A He asked for a thorough investigation. Q And as a matter of fact as asked you to investigate? A Yes, sir. Q Did you come out with any investigation report. A There was nothing to report. Clearly, there was no authoritative investigation conducted by impartial civil and structural engineers on the cause of the collapse of the theater's ceiling, Jesus Lim Ong is not an engineer, He is a graduate of architecture from the St. Louie (sic) University in Baguio City. It does not appear he has passed the government examination for architects. (TSN, June 14, 1985 p. 4) In fine, the ignorance of Mr. Ong about the cause of the collapse of the ceiling of their theater cannot be equated, as an act, of God. To sustain that proposition is to introduce sacrilege in our jurisprudence. 8 Its motion for reconsideration of the decision having been denied by the respondent Court, petitioner filed this petition assailing therein the challenged decision on the following grounds: 1. The basis of the award for damages stems from medical reports issued by private physicians of local hospitals without benefit of cross-examination and more seriously, xerox copies of medical findings issued by American doctors in the United States without the production of originals, without the required consular authentication for foreign documents, and without the opportunity for cross-examination. 2. The damage award in favor of respondents is principally, made depend on such unreliable, hearsay and incompetent evidence for which an award of more than P150,000.00 in alleged actual, moral and I "consequential" damages are awarded to the prejudice of the right of petitioner to due process. . . . 3. Unfortunately, petitioners evidence of due diligence in the care and maintenance of the building was not seriously considered by the Court of Appeals, considering that frequent inspections and maintenance precautions had to be observed by hired engineers of petitioner, which enjoys an unsullied reputation in the business of exhibiting movies in a chain of movie houses in Metro Manila. 9

After the private respondents filed their Comment as required in the Resolution of 17 May 1989, this Court resolved to give due course to the petition and required the parties to file their respective Memoranda. Subsequently, private respondents, in a motion, prayed for leave to adopt their Comment as their Memorandum, which this Court granted on 6 December 1989. Petitioner filed its Memorandum on 10 January 1990. The petition presents both factual and legal issues. The first relates to the cause of the collapse of the ceiling while the latter involves the correctness of the admission of the exhibits in question. We find no merit in the petition. The rule is well-settled that the jurisdiction of this Court in cases brought to it from the Court of Appeals is limited to reviewing and revising the errors of law imputed to it, its findings of fact being conclusive, 10 except only where a case is shown as coming under the accepted exception. 11 None of the exceptions which this Court has painstakingly summarized in several cases 12 has been shown to exist in this petition. Petitioner's claim that the collapse of the ceiling of the theater's balcony was due to force majeure is not even founded on facts because its own witness, Mr. Jesus Lim Ong, admitted that "he could not give any reason why the ceiling collapsed." Having interposed it as a defense, it had the burden to prove that the collapse was indeed caused by force majeure. It could not have collapsed without a cause. That Mr. Ong could not offer any explanation does not imply force majeure. As early as eightyfive (85) years ago, this Court had the occasion to define force majeure. In Pons y Compaia vs. La Compaia Maritima 13 this Court held: An examination of the Spanish and American authorities concerning the meaning of force majeure shows that the jurisprudence of these two countries practically agree upon the meaning of this phrase. Blackstone, in his Commentaries on English Law, defines it as Inevitable accident or casualty; an accident produced by any physical cause which is irresistible; such as lightning. tempest, perils of the sea, inundation, or earthquake; the sudden illness or death of a person. (2 Blackstone's Commentaries, 122; Story in Bailments, sec. 25.) Escriche, in his Diccionario de Legislacion y Jurisprudencia, defines fuerza mayor as follows. The event which we could neither foresee nor resist; as for example, the lightning stroke, hail, inundation, hurricane, public enemy, attack by robbers; Vis major est, says Cayo, ea quae consilio humano neque provideri neque vitari potest. Accident and mitigating circumstances. Bouvier defines the same as Any accident due to natural cause, directly exclusively without human intervention, such as could not have been prevented by any kind of oversight, pains and care reasonably to have been expected. (Law Reports, 1 Common Pleas Division, 423; Law Reports, 10 Exchequer, 255.) Corkburn, chief justice, in a well considered English case (1 Common Pleas Division, 34, 432), said that were a captain Uses all the known means to which prudent and experienced captains ordinarily have recourse, he does all that can be reasonably required of him; and if, under such circumtances, he is overpowered by storm or other natural agency, he is within the rule which gives immunity from the effects of such vis major. The term generally applies, broadly speaking, to natural accidents, such as those caused by lightning, earthquake, tempests, public enemy ,etc.

Petitioner could have easily discovered the cause of the collapse if indeed it were due to force majeure. To Our mind, the real reason why Mr. Ong could not explain the cause or reason is that either he did not actually conduct the investigation or that he is, as the respondent Court impliedly held, incompetent. He is not an engineer, but an architect who had not even passed the government's examination. Verily, postincident investigation cannot be considered as material to the present proceedings. What is significant is the finding of the trial court, affirmed by the respondent Court, that the collapse was due to construction defects. There was no evidence offered to overturn this finding. The building was constructed barely four (4) years prior to the accident in question. It was not shown that any of the causes denominates as force majeure obtained immediately before or at the time of the collapse of the ceiling. Such defects could have been easily discovered if only petitioner exercised due diligence and care in keeping and maintaining the premises. But as disclosed by the testimony of Mr. Ong, there was no adequate inspection of the premises before the date of the accident. His answers to the leading questions on inspection disclosed neither the exact dates of said. inspection nor the nature and extent of the same. That the structural designs and plans of the building were duly approved by the City Engineer and the building permits and certificate of occupancy were issued do not at all prove that there were no defects in the construction, especially as regards the ceiling, considering that no testimony was offered to prove that it was ever inspected at all. It is settled that: The owner or proprietor of a place of public amusement impliedly warrants that the premises, appliances and amusement devices are safe for the purpose for which they are designed, the doctrine being subject to no other exception or qualification than that he does not contract against unknown defects not discoverable by ordinary or reasonable means. 14 This implied warranty has given rise to the rule that: Where a patron of a theater or other place of public amusement is injured, and the thing that caused the injury is wholly and exclusively under the control and management of the defendant, and the accident is such as in the ordinary course of events would not have happened if proper care had been exercised, its occurrence raises a presumption or permits of an inference of negligence on the part of the defendant. 15 That presumption or inference was not overcome by the petitioner. Besides, even assuming for the sake of argument that, as petitioner vigorously insists, the cause of the collapse was due to force majeure, petitioner would still be liable because it was guilty of negligence, which the trial court denominated as gross. As gleaned from Bouvier's definition of and Cockburn's elucidation on force majeure for one to be exempt from any liability because of it, he must have exercised care, i.e., he should not have been guilty of negligence. Turning now to the legal issue posed in this petition, the error lies not in the disquisitions of the respondent Court, but in the sweeping conclusion of petitioner. We agree with the respondent Court that petitioner offered no reasonable objection to the exhibits. More than this, however, We note that the exhibits were admitted not as independent evidence, but, primarily, as part of the testimony of Mrs. Gloria Chatto. Neither were the exhibits made the main basis for the award of damages. As to the latter, including the award for attorney's fees, the testimonial evidence presented is sufficient to support the same; moreover, petitioner was not deprived of its right to test the, truth or falsity of private respondents' testimony through cross-examination or refute their claim by its own evidence. It could not then be successfully argued by petitioner that the admission of the exhibits violated the hearsay rule. As this Court sees it, the trial court admitted such merely as independently relevant statements, which was not objectionable, for: Where, regardless of the truth or the falsity of a statement, the fact that it has been made is relevant, the hearsay rule does not apply, but the statement may be shown. Evidence as to the making of such

statement is not secondary but primary, for the statement itself may constitute a fact; in issue, or be circumstantially relevant as to the existence of such a fact. 16 Furthermore, and with particular reference to the documents issued in the United States of America (Exhibits "F", "F-1" to "F-13", inclusive), the main objection thereto was not that they are hearsay. In its written comment and/or opposition to documentary exhibits, petitioner objected to their admission on the following grounds only: . . . for being incompetent evidence considering that the same were not duly authenticated by the responsible consular and/or embassy officials authorized to authenticate the said documents. 17 All told, the instant petition is without merit. WHEREFORE, judgment is hereby rendered DENYING the instant petition with costs against petitioner. SO ORDERED.

Republic of the Philippines SUPREME COURT Manila EN BANC G.R. No. L-18805 August 14, 1967

THE BOARD OF LIQUIDATORS1 representing THE GOVERNMENT OF THE REPUBLIC OF THE PHILIPPINES, plaintiff-appellant, vs. HEIRS OF MAXIMO M. KALAW,2 JUAN BOCAR, ESTATE OF THE DECEASED CASIMIRO GARCIA,3 and LEONOR MOLL, defendants-appellees. Simeon M. Gopengco and Solicitor General for plaintiff-appellant. L. H. Hernandez, Emma Quisumbing, Fernando and Quisumbing, Jr.; Ponce Enrile, Siguion Reyna, Montecillo and Belo for defendants-appellees. SANCHEZ, J.: The National Coconut Corporation (NACOCO, for short) was chartered as a non-profit governmental organization on May 7, 1940 by Commonwealth Act 518 avowedly for the protection, preservation and development of the coconut industry in the Philippines. On August 1, 1946, NACOCO's charter was amended [Republic Act 5] to grant that corporation the express power "to buy, sell, barter, export, and in any other manner deal in, coconut, copra, and dessicated coconut, as well as their by-products, and to act as agent, broker or commission merchant of the producers, dealers or merchants" thereof. The charter amendment was enacted to stabilize copra prices, to serve coconut producers by securing advantageous prices for them, to cut down to a minimum, if not altogether eliminate, the margin of middlemen, mostly aliens.4 General manager and board chairman was Maximo M. Kalaw; defendants Juan Bocar and Casimiro Garcia were members of the Board; defendant Leonor Moll became director only on December 22, 1947. NACOCO, after the passage of Republic Act 5, embarked on copra trading activities. Amongst the scores of contracts executed by general manager Kalaw are the disputed contracts, for the delivery of copra, viz: (a) July 30, 1947: Alexander Adamson & Co., for 2,000 long tons, $167.00: per ton, f. o. b., delivery: August and September, 1947. This contract was later assigned to Louis Dreyfus & Co. (Overseas) Ltd. (b) August 14, 1947: Alexander Adamson & Co., for 2,000 long tons $145.00 per long ton, f.o.b., Philippine ports, to be shipped: September-October, 1947. This contract was also assigned to Louis Dreyfus & Co. (Overseas) Ltd. (c) August 22, 1947: Pacific Vegetable Co., for 3,000 tons, $137.50 per ton, delivery: September, 1947. (d) September 5, 1947: Spencer Kellog & Sons, for 1,000 long tons, $160.00 per ton, c.i.f., Los Angeles, California, delivery: November, 1947.

(e) September 9, 1947: Franklin Baker Division of General Foods Corporation, for 1,500 long tons, $164,00 per ton, c.i.f., New York, to be shipped in November, 1947. (f) September 12, 1947: Louis Dreyfus & Co. (Overseas) Ltd., for 3,000 long tons, $154.00 per ton, f.o.b., 3 Philippine ports, delivery: November, 1947. (g) September 13, 1947: Juan Cojuangco, for 2,000 tons, $175.00 per ton, delivery: November and December, 1947. This contract was assigned to Pacific Vegetable Co. (h) October 27, 1947: Fairwood & Co., for 1,000 tons, $210.00 per short ton, c.i.f., Pacific ports, delivery: December, 1947 and January, 1948. This contract was assigned to Pacific Vegetable Co. (i) October 28, 1947: Fairwood & Co., for 1,000 tons, $210.00 per short ton, c.i.f., Pacific ports, delivery: January, 1948. This contract was assigned to Pacific Vegetable Co. An unhappy chain of events conspired to deter NACOCO from fulfilling these contracts. Nature supervened. Four devastating typhoons visited the Philippines: the first in October, the second and third in November, and the fourth in December, 1947. Coconut trees throughout the country suffered extensive damage. Copra production decreased. Prices spiralled. Warehouses were destroyed. Cash requirements doubled. Deprivation of export facilities increased the time necessary to accumulate shiploads of copra. Quick turnovers became impossible, financing a problem. When it became clear that the contracts would be unprofitable, Kalaw submitted them to the board for approval. It was not until December 22, 1947 when the membership was completed. Defendant Moll took her oath on that date. A meeting was then held. Kalaw made a full disclosure of the situation, apprised the board of the impending heavy losses. No action was taken on the contracts. Neither did the board vote thereon at the meeting of January 7, 1948 following. Then, on January 11, 1948, President Roxas made a statement that the NACOCO head did his best to avert the losses, emphasized that government concerns faced the same risks that confronted private companies, that NACOCO was recouping its losses, and that Kalaw was to remain in his post. Not long thereafter, that is, on January 30, 1948, the board met again with Kalaw, Bocar, Garcia and Moll in attendance. They unanimously approved the contracts hereinbefore enumerated. As was to be expected, NACOCO but partially performed the contracts, as follows: Buyers Pacific Vegetable Oil Spencer Kellog Franklin Baker Louis Dreyfus Louis Dreyfus (Adamson contract of July 30, 1947) Louis Dreyfus (Adamson Contract of August 14, 1947) T O TALS Tons Delivered 2,386.45 None 1,000 800 1,150 1,755 Undelivered 4,613.55 1,000 500 2,200 850 245

7,091.45

9,408.55

The buyers threatened damage suits. Some of the claims were settled, viz: Pacific Vegetable Oil Co., in copra delivered by NACOCO, P539,000.00; Franklin Baker Corporation, P78,210.00; Spencer Kellog & Sons, P159,040.00. But one buyer, Louis Dreyfus & Go. (Overseas) Ltd., did in fact sue before the Court of First Instance of Manila, upon claims as follows: For the undelivered copra under the July 30 contract (Civil Case 4459); P287,028.00; for the balance on the August 14 contract (Civil Case 4398), P75,098.63; for that per the September 12 contract reduced to judgment (Civil Case 4322, appealed to this Court in L-2829), P447,908.40. These cases culminated in an out-of-court amicable settlement when the Kalaw management was already out. The corporation thereunder paid Dreyfus P567,024.52 representing 70% of the total claims. With particular reference to the Dreyfus claims, NACOCO put up the defenses that: (1) the contracts were void because Louis Dreyfus & Co. (Overseas) Ltd. did not have license to do business here; and (2) failure to deliver was due to force majeure, the typhoons. To project the utter unreasonableness of this compromise, we reproduce in haec verba this finding below: x x x However, in similar cases brought by the same claimant [Louis Dreyfus & Co. (Overseas) Ltd.] against Santiago Syjuco for non-delivery of copra also involving a claim of P345,654.68 wherein defendant set up same defenses as above, plaintiff accepted a promise of P5,000.00 only (Exhs. 31 & 32 Heirs.) Following the same proportion, the claim of Dreyfus against NACOCO should have been compromised for only P10,000.00, if at all. Now, why should defendants be held liable for the large sum paid as compromise by the Board of Liquidators? This is just a sample to show how unjust it would be to hold defendants liable for the readiness with which the Board of Liquidators disposed of the NACOCO funds, although there was much possibility of successfully resisting the claims, or at least settlement for nominal sums like what happened in the Syjuco case .5 All the settlements sum up to P1,343,274.52. In this suit started in February, 1949, NACOCO seeks to recover the above sum of P1,343,274.52 from general manager and board chairman Maximo M. Kalaw, and directors Juan Bocar, Casimiro Garcia and Leonor Moll. It charges Kalaw with negligence under Article 1902 of the old Civil Code (now Article 2176, new Civil Code); and defendant board members, including Kalaw, with bad faith and/or breach of trust for having approved the contracts. The fifth amended complaint, on which this case was tried, was filed on July 2, 1959. Defendants resisted the action upon defenses hereinafter in this opinion to be discussed. The lower court came out with a judgment dismissing the complaint without costs as well as defendants' counterclaims, except that plaintiff was ordered to pay the heirs of Maximo Kalaw the sum of P2,601.94 for unpaid salaries and cash deposit due the deceased Kalaw from NACOCO. Plaintiff appealed direct to this Court. Plaintiff's brief did not, question the judgment on Kalaw's counterclaim for the sum of P2,601.94. Right at the outset, two preliminary questions raised before, but adversely decided by, the court below, arrest our attention. On appeal, defendants renew their bid. And this, upon established jurisprudence that an appellate court may base its decision of affirmance of the judgment below on a point or points ignored by the trial court or in which said court was in error. 6 1. First of the threshold questions is that advanced by defendants that plaintiff Board of Liquidators has lost its legal personality to continue with this suit. Accepted in this jurisdiction are three methods by which a corporation may wind up its affairs: (1) under Section 3, Rule 104, of the Rules of Court [which superseded Section 66 of the Corporation Law] 7 whereby, upon voluntary dissolution of a corporation, the court may direct "such disposition of its assets as justice requires, and may appoint a receiver to collect such assets and pay the debts of the

corporation;" (2) under Section 77 of the Corporation Law, whereby a corporation whose corporate existence is terminated, "shall nevertheless be continued as a body corporate for three years after the time when it would have been so dissolved, for the purpose of prosecuting and defending suits by or against it and of enabling it gradually to settle and close its affairs, to dispose of and convey its property and to divide its capital stock, but not for the purpose of continuing the business for which it was established;" and (3) under Section 78 of the Corporation Law, by virtue of which the corporation, within the three year period just mentioned, "is authorized and empowered to convey all of its property to trustees for the benefit of members, stockholders, creditors, and others interested." 8 It is defendants' pose that their case comes within the coverage of the second method. They reason out that suit was commenced in February, 1949; that by Executive Order 372, dated November 24, 1950, NACOCO, together with other government-owned corporations, was abolished, and the Board of Liquidators was entrusted with the function of settling and closing its affairs; and that, since the three year period has elapsed, the Board of Liquidators may not now continue with, and prosecute, the present case to its conclusion, because Executive Order 372 provides in Section 1 thereof that Sec.1. The National Abaca and Other Fibers Corporation, the National Coconut Corporation, the National Tobacco Corporation, the National Food Producer Corporation and the former enemy-owned or controlled corporations or associations, . . . are hereby abolished. The said corporations shall be liquidated in accordance with law, the provisions of this Order, and/or in such manner as the President of the Philippines may direct; Provided, however, That each of the said corporations shall nevertheless be continued as a body corporate for a period of three (3) years from the effective date of this Executive Order for the purpose of prosecuting and defending suits by or against it and of enabling the Board of Liquidators gradually to settle and close its affairs, to dispose of and, convey its property in the manner hereinafter provided. Citing Mr. Justice Fisher, defendants proceed to argue that even where it may be found impossible within the 3 year period to reduce disputed claims to judgment, nonetheless, "suits by or against a corporation abate when it ceases to be an entity capable of suing or being sued" (Fisher, The Philippine Law of Stock Corporations, pp. 390-391). Corpus Juris Secundum likewise is authority for the statement that "[t]he dissolution of a corporation ends its existence so that there must be statutory authority for prolongation of its life even for purposes of pending litigation"9 and that suit "cannot be continued or revived; nor can a valid judgment be rendered therein, and a judgment, if rendered, is not only erroneous, but void and subject to collateral attack." 10 So it is, that abatement of pending actions follows as a matter of course upon the expiration of the legal period for liquidation, 11 unless the statute merely requires a commencement of suit within the added time. 12 For, the court cannot extend the time alloted by statute. 13 We, however, express the view that the executive order abolishing NACOCO and creating the Board of Liquidators should be examined in context. The proviso in Section 1 of Executive Order 372, whereby the corporate existence of NACOCO was continued for a period of three years from the effectivity of the order for "the purpose of prosecuting and defending suits by or against it and of enabling the Board of Liquidators gradually to settle and close its affairs, to dispose of and convey its property in the manner hereinafter provided", is to be read not as an isolated provision but in conjunction with the whole. So reading, it will be readily observed that no time limit has been tacked to the existence of the Board of Liquidators and its function of closing the affairs of the various government owned corporations, including NACOCO. By Section 2 of the executive order, while the boards of directors of the various corporations were abolished, their powers and functions and duties under existing laws were to be assumed and exercised by the Board of Liquidators. The President thought it best to do away with the boards of directors of the defunct corporations; at the same time, however, the President had chosen to see to it that the Board of Liquidators step into the vacuum. And nowhere in the executive order was there any mention of the lifespan of the Board of Liquidators. A glance at the other provisions of the executive order buttresses our conclusion. Thus, liquidation by the Board of Liquidators may, under section 1, proceed in accordance with law, the provisions of the executive order, " and/or in such manner as the President of the

Philippines may direct." By Section 4, when any property, fund, or project is transferred to any governmental instrumentality "for administration or continuance of any project," the necessary funds therefor shall be taken from the corresponding special fund created in Section 5. Section 5, in turn, talks of special funds established from the "net proceeds of the liquidation" of the various corporations abolished. And by Section, 7, fifty per centum of the fees collected from the copra standardization and inspection service shall accrue "to the special fund created in section 5 hereof for the rehabilitation and development of the coconut industry." Implicit in all these, is that the term of life of the Board of Liquidators is without time limit. Contemporary history gives us the fact that the Board of Liquidators still exists as an office with officials and numerous employees continuing the job of liquidation and prosecution of several court actions. Not that our views on the power of the Board of Liquidators to proceed to the final determination of the present case is without jurisprudential support. The first judicial test before this Court is National Abaca and Other Fibers Corporation vs. Pore , L-16779, August 16, 1961. In that case, the corporation, already dissolved, commenced suit within the three-year extended period for liquidation. That suit was for recovery of money advanced to defendant for the purchase of hemp in behalf of the corporation. She failed to account for that money. Defendant moved to dismiss, questioned the corporation's capacity to sue. The lower court ordered plaintiff to include as co-party plaintiff, The Board of Liquidators, to which the corporation's liquidation was entrusted by Executive Order 372. Plaintiff failed to effect inclusion. The lower court dismissed the suit. Plaintiff moved to reconsider. Ground: excusable negligence, in that its counsel prepared the amended complaint, as directed, and instructed the board's incoming and outgoing correspondence clerk, Mrs. Receda Vda. de Ocampo, to mail the original thereof to the court and a copy of the same to defendant's counsel. She mailed the copy to the latter but failed to send the original to the court. This motion was rejected below. Plaintiff came to this Court on appeal. We there said that "the rule appears to be well settled that, in the absence of statutory provision to the contrary, pending actions by or against a corporation are abated upon expiration of the period allowed by law for the liquidation of its affairs." We there said that "[o]ur Corporation Law contains no provision authorizing a corporation, after three (3) years from the expiration of its lifetime, to continue in its corporate name actions instituted by it within said period of three (3) years." 14 However, these precepts notwithstanding, we, in effect, held in that case that the Board of Liquidators escapes from the operation thereof for the reason that "[o]bviously, the complete loss of plaintiff's corporate existence after the expiration of the period of three (3) years for the settlement of its affairs is what impelled the President to create a Board of Liquidators, to continue the management of such matters as may then be pending." 15 We accordingly directed the record of said case to be returned to the lower court, with instructions to admit plaintiff's amended complaint to include, as party plaintiff, the Board of Liquidators. Defendants' position is vulnerable to attack from another direction. By Executive Order 372, the government, the sole stockholder, abolished NACOCO, and placed its assets in the hands of the Board of Liquidators. The Board of Liquidators thus became the trustee on behalf of the government. It was an express trust. The legal interest became vested in the trustee the Board of Liquidators. The beneficial interest remained with the sole stockholder the government. At no time had the government withdrawn the property, or the authority to continue the present suit, from the Board of Liquidators. If for this reason alone, we cannot stay the hand of the Board of Liquidators from prosecuting this case to its final conclusion. 16 The provisions of Section 78 of the Corporation Law the third method of winding up corporate affairs find application. We, accordingly, rule that the Board of Liquidators has personality to proceed as: party-plaintiff in this case. 2. Defendants' second poser is that the action is unenforceable against the heirs of Kalaw.

Appellee heirs of Kalaw raised in their motion to dismiss, 17 which was overruled, and in their nineteenth special defense, that plaintiff's action is personal to the deceased Maximo M. Kalaw, and may not be deemed to have survived after his death. 18 They say that the controlling statute is Section 5, Rule 87, of the 1940 Rules of Court.19 which provides that "[a]ll claims for money against the decedent, arising from contract, express or implied", must be filed in the estate proceedings of the deceased. We disagree. The suit here revolves around the alleged negligent acts of Kalaw for having entered into the questioned contracts without prior approval of the board of directors, to the damage and prejudice of plaintiff; and is against Kalaw and the other directors for having subsequently approved the said contracts in bad faith and/or breach of trust." Clearly then, the present case is not a mere action for the recovery of money nor a claim for money arising from contract. The suit involves alleged tortious acts. And the action is embraced in suits filed "to recover damages for an injury to person or property, real or personal", which survive. 20 The leading expositor of the law on this point is Aguas vs. Llemos, L-18107, August 30, 1962. There, plaintiffs sought to recover damages from defendant Llemos. The complaint averred that Llemos had served plaintiff by registered mail with a copy of a petition for a writ of possession in Civil Case 4824 of the Court of First Instance at Catbalogan, Samar, with notice that the same would be submitted to the Samar court on February 23, 1960 at 8:00 a.m.; that in view of the copy and notice served, plaintiffs proceeded to the said court of Samar from their residence in Manila accompanied by their lawyers, only to discover that no such petition had been filed; and that defendant Llemos maliciously failed to appear in court, so that plaintiffs' expenditure and trouble turned out to be in vain, causing them mental anguish and undue embarrassment. Defendant died before he could answer the complaint. Upon leave of court, plaintiffs amended their complaint to include the heirs of the deceased. The heirs moved to dismiss. The court dismissed the complaint on the ground that the legal representative, and not the heirs, should have been made the party defendant; and that, anyway, the action being for recovery of money, testate or intestate proceedings should be initiated and the claim filed therein. This Court, thru Mr. Justice Jose B. L. Reyes, there declared: Plaintiffs argue with considerable cogency that contrasting the correlated provisions of the Rules of Court, those concerning claims that are barred if not filed in the estate settlement proceedings (Rule 87, sec. 5) and those defining actions that survive and may be prosecuted against the executor or administrator (Rule 88, sec. 1), it is apparent that actions for damages caused by tortious conduct of a defendant (as in the case at bar) survive the death of the latter. Under Rule 87, section 5, the actions that are abated by death are: (1) claims for funeral expenses and those for the last sickness of the decedent; (2) judgments for money; and (3) "all claims for money against the decedent, arising from contract express or implied." None of these includes that of the plaintiffs-appellants; for it is not enough that the claim against the deceased party be for money, but it must arise from "contract express or implied", and these words (also used by the Rules in connection with attachments and derived from the common law) were construed in Leung Ben vs. O'Brien, 38 Phil. 182, 189-194, "to include all purely personal obligations other than those which have their source in delict or tort." Upon the other hand, Rule 88, section 1, enumerates actions that survive against a decedent's executors or administrators, and they are: (1) actions to recover real and personal property from the estate; (2) actions to enforce a lien thereon; and (3) actions to recover damages for an injury to person or property. The present suit is one for damages under the last class, it having been held that "injury to property" is not limited to injuries to specific property, but extends to other wrongs by which personal estate is injured or diminished (Baker vs. Crandall, 47 Am. Rep. 126; also 171 A.L.R., 1395). To maliciously cause a party to incur unnecessary expenses, as charged in this case, is certainly injury to that party's property (Javier vs. Araneta, L-4369, Aug. 31, 1953). The ruling in the preceding case was hammered out of facts comparable to those of the present. No cogent reason exists why we should break away from the views just expressed. And, the conclusion

remains: Action against the Kalaw heirs and, for the matter, against the Estate of Casimiro Garcia survives. The preliminaries out of the way, we now go to the core of the controversy. 3. Plaintiff levelled a major attack on the lower court's holding that Kalaw justifiedly entered into the controverted contracts without the prior approval of the corporation's directorate. Plaintiff leans heavily on NACOCO's corporate by-laws. Article IV (b), Chapter III thereof, recites, as amongst the duties of the general manager, the obligation: "(b) To perform or execute on behalf of the Corporation upon prior approval of the Board, all contracts necessary and essential to the proper accomplishment for which the Corporation was organized." Not of de minimis importance in a proper approach to the problem at hand, is the nature of a general manager's position in the corporate structure. A rule that has gained acceptance through the years is that a corporate officer "intrusted with the general management and control of its business, has implied authority to make any contract or do any other act which is necessary or appropriate to the conduct of the ordinary business of the corporation. 21 As such officer, "he may, without any special authority from the Board of Directors perform all acts of an ordinary nature, which by usage or necessity are incident to his office, and may bind the corporation by contracts in matters arising in the usual course of business. 22 The problem, therefore, is whether the case at bar is to be taken out of the general concept of the powers of a general manager, given the cited provision of the NACOCO by-laws requiring prior directorate approval of NACOCO contracts. The peculiar nature of copra trading, at this point, deserves express articulation. Ordinary in this enterprise are copra sales for future delivery. The movement of the market requires that sales agreements be entered into, even though the goods are not yet in the hands of the seller. Known in business parlance as forward sales, it is concededly the practice of the trade. A certain amount of speculation is inherent in the undertaking. NACOCO was much more conservative than the exporters with big capital. This short-selling was inevitable at the time in the light of other factors such as availability of vessels, the quantity required before being accepted for loading, the labor needed to prepare and sack the copra for market. To NACOCO, forward sales were a necessity. Copra could not stay long in its hands; it would lose weight, its value decrease. Above all, NACOCO's limited funds necessitated a quick turnover. Copra contracts then had to be executed on short notice at times within twenty-four hours. To be appreciated then is the difficulty of calling a formal meeting of the board. Such were the environmental circumstances when Kalaw went into copra trading. Long before the disputed contracts came into being, Kalaw contracted by himself alone as general manager for forward sales of copra. For the fiscal year ending June 30, 1947 , Kalaw signed some 60 such contracts for the sale of copra to divers parties. During that period, from those copra sales, NACOCO reaped a gross profit of P3,631,181.48. So pleased was NACOCO's board of directors that, on December 5, 1946, in Kalaw's absence, it voted to grant him a special bonus "in recognition of the signal achievement rendered by him in putting the Corporation's business on a self-sufficient basis within a few months after assuming office, despite numerous handicaps and difficulties." These previous contract it should be stressed, were signed by Kalaw without prior authority from the board. Said contracts were known all along to the board members. Nothing was said by them. The aforesaid contracts stand to prove one thing: Obviously, NACOCO board met the difficulties attendant to forward sales by leaving the adoption of means to end, to the sound discretion of NACOCO's general manager Maximo M. Kalaw. Liberally spread on the record are instances of contracts executed by NACOCO's general manager and submitted to the board after their consummation, not before. These agreements were not Kalaw's alone.

One at least was executed by a predecessor way back in 1940, soon after NACOCO was chartered. It was a contract of lease executed on November 16, 1940 by the then general manager and board chairman, Maximo Rodriguez, and A. Soriano y Cia., for the lease of a space in Soriano Building On November 14, 1946, NACOCO, thru its general manager Kalaw, sold 3,000 tons of copra to the Food Ministry, London, thru Sebastian Palanca. On December 22, 1947, when the controversy over the present contract cropped up, the board voted to approve a lease contract previously executed between Kalaw and Fidel Isberto and Ulpiana Isberto covering a warehouse of the latter. On the same date, the board gave its nod to a contract for renewal of the services of Dr. Manuel L. Roxas. In fact, also on that date, the board requested Kalaw to report for action all copra contracts signed by him "at the meeting immediately following the signing of the contracts ." This practice was observed in a later instance when, on January 7, 1948, the board approved two previous contracts for the sale of 1,000 tons of copra each to a certain "SCAP" and a certain "GNAPO". And more. On December 19, 1946, the board resolved to ratify the brokerage commission of 2% of Smith, Bell and Co., Ltd., in the sale of 4,300 long tons of copra to the French Government. Such ratification was necessary because, as stated by Kalaw in that same meeting, "under an existing resolution he is authorized to give a brokerage fee of only 1% on sales of copra made through brokers." On January 15, 1947, the brokerage fee agreements of 1-1/2% on three export contracts, and 2% on three others, for the sale of copra were approved by the board with a proviso authorizing the general manager to pay a commission up to the amount of 1-1/2% " without further action by the Board ." On February 5, 1947, the brokerage fee of 2% of J. Cojuangco & Co. on the sale of 2,000 tons of copra was favorably acted upon by the board. On March 19, 1947, a 2% brokerage commission was similarly approved by the board for Pacific Trading Corporation on the sale of 2,000 tons of copra. It is to be noted in the foregoing cases that only the brokerage fee agreements were passed upon by the board, not the sales contracts themselves. And even those fee agreements were submitted only when the commission exceeded the ceiling fixed by the board. Knowledge by the board is also discernible from other recorded instances. 1wph1.t When the board met on May 10, 1947, the directors discussed the copra situation: There was a slow downward trend but belief was entertained that the nadir might have already been reached and an improvement in prices was expected. In view thereof, Kalaw informed the board that "he intends to wait until he has signed contracts to sell before starting to buy copra."23 In the board meeting of July 29, 1947, Kalaw reported on the copra price conditions then current: The copra market appeared to have become fairly steady; it was not expected that copra prices would again rise very high as in the unprecedented boom during January-April, 1947; the prices seemed to oscillate between $140 to $150 per ton; a radical rise or decrease was not indicated by the trends. Kalaw continued to say that " the Corporation has been closing contracts for the sale of copra generally with a margin of P5.00 to P7.00 per hundred kilos." 24 We now lift the following excerpts from the minutes of that same board meeting of July 29, 1947: 521. In connection with the buying and selling of copra the Board inquired whether it is the practice of the management to close contracts of sale first before buying . The General Manager replied that this practice is generally followed but that it is not always possible to do so for two reasons: (1) The role of the Nacoco to stabilize the prices of copra requires that it should not cease buying even when it does not have actual contracts of sale since the suspension of buying by the Nacoco will result in middlemen taking advantage of the temporary inactivity of the Corporation to lower the prices to the detriment of the producers.

(2) The movement of the market is such that it may not be practical always to wait for the consummation of contracts of sale before beginning to buy copra. The General Manager explained that in this connection a certain amount of speculation is unavoidable. However, he said that the Nacoco is much more conservative than the other big exporters in this respect.25 Settled jurisprudence has it that where similar acts have been approved by the directors as a matter of general practice, custom, and policy, the general manager may bind the company without formal authorization of the board of directors. 26 In varying language, existence of such authority is established, by proof of the course of business, the usage and practices of the company and by the knowledge which the board of directors has, or must be presumed to have, of acts and doings of its subordinates in and about the affairs of the corporation. 27 So also, x x x authority to act for and bind a corporation may be presumed from acts of recognition in other instances where the power was in fact exercised. 28 x x x Thus, when, in the usual course of business of a corporation, an officer has been allowed in his official capacity to manage its affairs, his authority to represent the corporation may be implied from the manner in which he has been permitted by the directors to manage its business. 29 In the case at bar, the practice of the corporation has been to allow its general manager to negotiate and execute contracts in its copra trading activities for and in NACOCO's behalf without prior board approval. If the by-laws were to be literally followed, the board should give its stamp of prior approval on all corporate contracts. But that board itself, by its acts and through acquiescence, practically laid aside the by-law requirement of prior approval. Under the given circumstances, the Kalaw contracts are valid corporate acts. 4. But if more were required, we need but turn to the board's ratification of the contracts in dispute on January 30, 1948, though it is our (and the lower court's) belief that ratification here is nothing more than a mere formality. Authorities, great in number, are one in the idea that "ratification by a corporation of an unauthorized act or contract by its officers or others relates back to the time of the act or contract ratified, and is equivalent to original authority;" and that " [t]he corporation and the other party to the transaction are in precisely the same position as if the act or contract had been authorized at the time." 30 The language of one case is expressive: "The adoption or ratification of a contract by a corporation is nothing more or less than the making of an original contract. The theory of corporate ratification is predicated on the right of a corporation to contract, and any ratification or adoption is equivalent to a grant of prior authority." 31 Indeed, our law pronounces that "[r]atification cleanses the contract from all its defects from the moment it was constituted." 32 By corporate confirmation, the contracts executed by Kalaw are thus purged of whatever vice or defect they may have. 33 In sum, a case is here presented whereunder, even in the face of an express by-law requirement of prior approval, the law on corporations is not to be held so rigid and inflexible as to fail to recognize equitable considerations. And, the conclusion inevitably is that the embattled contracts remain valid. 5. It would be difficult, even with hostile eyes, to read the record in terms of "bad faith and/or breach of trust" in the board's ratification of the contracts without prior approval of the board. For, in reality, all that

we have on the government's side of the scale is that the board knew that the contracts so confirmed would cause heavy losses. As we have earlier expressed, Kalaw had authority to execute the contracts without need of prior approval. Everybody, including Kalaw himself, thought so, and for a long time. Doubts were first thrown on the way only when the contracts turned out to be unprofitable for NACOCO. Rightfully had it been said that bad faith does not simply connote bad judgment or negligence; it imports a dishonest purpose or some moral obliquity and conscious doing of wrong; it means breach of a known duty thru some motive or interest or ill will; it partakes of the nature of fraud. 34 Applying this precept to the given facts herein, we find that there was no "dishonest purpose," or "some moral obliquity," or "conscious doing of wrong," or "breach of a known duty," or "Some motive or interest or ill will" that "partakes of the nature of fraud." Nor was it even intimated here that the NACOCO directors acted for personal reasons, or to serve their own private interests, or to pocket money at the expense of the corporation. 35 We have had occasion to affirm that bad faith contemplates a "state of mind affirmatively operating with furtive design or with some motive of self-interest or ill will or for ulterior purposes." 36 Briggs vs. Spaulding, 141 U.S. 132, 148-149, 35 L. ed. 662, 669, quotes with approval from Judge Sharswood (in Spering's App., 71 Pa. 11), the following: "Upon a close examination of all the reported cases, although there are many dicta not easily reconcilable, yet I have found no judgment or decree which has held directors to account, except when they have themselves been personally guilty of some fraud on the corporation, or have known and connived at some fraud in others, or where such fraud might have been prevented had they given ordinary attention to their duties. . . ." Plaintiff did not even dare charge its defendant-directors with any of these malevolent acts. Obviously, the board thought that to jettison Kalaw's contracts would contravene basic dictates of fairness. They did not think of raising their voice in protest against past contracts which brought in enormous profits to the corporation. By the same token, fair dealing disagrees with the idea that similar contracts, when unprofitable, should not merit the same treatment. Profit or loss resulting from business ventures is no justification for turning one's back on contracts entered into. The truth, then, of the matter is that in the words of the trial court the ratification of the contracts was "an act of simple justice and fairness to the general manager and the best interest of the corporation whose prestige would have been seriously impaired by a rejection by the board of those contracts which proved disadvantageous." 37 The directors are not liable." 38 6. To what then may we trace the damage suffered by NACOCO. The facts yield the answer. Four typhoons wreaked havoc then on our copra-producing regions. Result: Copra production was impaired, prices spiralled, warehouses destroyed. Quick turnovers could not be expected. NACOCO was not alone in this misfortune. The record discloses that private traders, old, experienced, with bigger facilities, were not spared; also suffered tremendous losses. Roughly estimated, eleven principal trading concerns did run losses to about P10,300,000.00. Plaintiff's witness Sisenando Barretto, head of the copra marketing department of NACOCO, observed that from late 1947 to early 1948 "there were many who lost money in the trade." 39 NACOCO was not immune from such usual business risk. The typhoons were known to plaintiff. In fact, NACOCO resisted the suits filed by Louis Dreyfus & Co. by pleading in its answers force majeure as an affirmative defense and there vehemently asserted that "as a result of the said typhoons, extensive damage was caused to the coconut trees in the copra producing regions of the Philippines and according to estimates of competent authorities, it will take about one year until the coconut producing regions will be able to produce their normal coconut yield and it will take some time until the price of copra will reach normal levels;" and that "it had never been the intention of the

contracting parties in entering into the contract in question that, in the event of a sharp rise in the price of copra in the Philippine market produce by force majeure or by caused beyond defendant's control, the defendant should buy the copra contracted for at exorbitant prices far beyond the buying price of the plaintiff under the contract." 40 A high regard for formal judicial admissions made in court pleadings would suffice to deter us from permitting plaintiff to stray away therefrom, to charge now that the damage suffered was because of Kalaw's negligence, or for that matter, by reason of the board's ratification of the contracts. 41 Indeed, were it not for the typhoons, 42 NACOCO could have, with ease, met its contractual obligations. Stock accessibility was no problem. NACOCO had 90 buying agencies spread throughout the islands. It could purchase 2,000 tons of copra a day. The various contracts involved delivery of but 16,500 tons over a five-month period. Despite the typhoons, NACOCO was still able to deliver a little short of 50% of the tonnage required under the contracts. As the trial court correctly observed, this is a case of damnum absque injuria. Conjunction of damage and wrong is here absent. There cannot be an actionable wrong if either one or the other is wanting. 43 7. On top of all these, is that no assertion is made and no proof is presented which would link Kalaw's acts ratified by the board to a matrix for defraudation of the government. Kalaw is clear of the stigma of bad faith. Plaintiff's corporate counsel 44 concedes that Kalaw all along thought that he had authority to enter into the contracts, that he did so in the best interests of the corporation; that he entered into the contracts in pursuance of an overall policy to stabilize prices, to free the producers from the clutches of the middlemen. The prices for which NACOCO contracted in the disputed agreements, were at a level calculated to produce profits and higher than those prevailing in the local market. Plaintiff's witness, Barretto, categorically stated that "it would be foolish to think that one would sign (a) contract when you are going to lose money" and that no contract was executed "at a price unsafe for the Nacoco." 45 Really, on the basis of prices then prevailing, NACOCO envisioned a profit of around P752,440.00. 46 Kalaw's acts were not the result of haphazard decisions either. Kalaw invariably consulted with NACOCO's Chief Buyer, Sisenando Barretto, or the Assistant General Manager. The dailies and quotations from abroad were guideposts to him. Of course, Kalaw could not have been an insurer of profits. He could not be expected to predict the coming of unpredictable typhoons. And even as typhoons supervened Kalaw was not remissed in his duty. He exerted efforts to stave off losses. He asked the Philippine National Bank to implement its commitment to extend a P400,000.00 loan. The bank did not release the loan, not even the sum of P200,000.00, which, in October, 1947, was approved by the bank's board of directors. In frustration, on December 12, 1947, Kalaw turned to the President, complained about the bank's short-sighted policy. In the end, nothing came out of the negotiations with the bank. NACOCO eventually faltered in its contractual obligations. That Kalaw cannot be tagged with crassa negligentia or as much as simple negligence, would seem to be supported by the fact that even as the contracts were being questioned in Congress and in the NACOCO board itself, President Roxas defended the actuations of Kalaw. On December 27, 1947, President Roxas expressed his desire "that the Board of Directors should reelect Hon. Maximo M. Kalaw as General Manager of the National Coconut Corporation." 47 And, on January 7, 1948, at a time when the contracts had already been openly disputed, the board, at its regular meeting, appointed Maximo M. Kalaw as acting general manager of the corporation. Well may we profit from the following passage from Montelibano vs. Bacolod-Murcia Milling Co., Inc., L-15092, May 18, 1962:

"They (the directors) hold such office charged with the duty to act for the corporation according to their best judgment, and in so doing they cannot be controlled in the reasonable exercise and performance of such duty. Whether the business of a corporation should be operated at a loss during a business depression, or closed down at a smaller loss, is a purely business and economic problem to be determined by the directors of the corporation, and not by the court. It is a well known rule of law that questions of policy of management are left solely to the honest decision of officers and directors of a corporation, and the court is without authority to substitute its judgment for the judgment of the board of directors; the board is the business manager of the corporation, and so long as it acts in good faith its orders are not reviewable by the courts." (Fletcher on Corporations, Vol. 2, p. 390.) 48 Kalaw's good faith, and that of the other directors, clinch the case for defendants.
49

Viewed in the light of the entire record, the judgment under review must be, as it is hereby, affirmed. Without costs. So ordered. Reyes, J.B.L., Makalintal, Bengzon, J.P., Zaldivar, Castro and Angeles, JJ., concur. Fernando, J., took no part. Concepcion, C.J. and Dizon, J., are on leave.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION

G.R. No. 83589 March 13, 1991 RAMON FAROLAN as ACTING COMMISSIONER OF CUSTOMS, and GUILLERMO PARAYNO, as CHIEF OF CUSTOM INTELLIGENCE and INVESTIGATION DIVISION, petitioners, vs. SOLMAC MARKETING CORPORATION and COURT OF APPEALS, respondents. Dakila F. Castro & Associates for private respondent.

SARMIENTO, J.:p This petition for review on certiorari, instituted by the Solicitor General on behalf of the public officerspetitioners, seek the nullification and setting aside of the Resolution 1 dated May 25, 1988 of the Court of Appeals in CA-G.R. No. SP-10509, entitled "Solmac Marketing Corporation vs. Ramon Farolan, Acting Commissioner of Customs, and Guillermo Parayno, Chief of Customs Intelligence and Investigation Division," which adjudged these public officers to pay solidarily and in their private personal capacities respondent Solmac Marketing Corporation temperate damages in the sum of P100,000.00, exemplary damages in the sum of P50,000.00, and P25,000.00, as attorney's fees and expenses of litigation. This challenged resolution of the respondent court modified its decision 2 of July 27, 1987 by reducing into halves the original awards of P100,000.00 and P50,000.00 for exemplary damages and attorney's fees and litigation expenses, respectively, keeping intact the original grant of P100,000.00 in the concept of temperate damages. (Strangely, the first name of petitioner Farolan stated in the assailed resolution, as well as in the decision, of the respondent court is "Damian" when it should be "Ramon", his correct given name. Strictly speaking, petitioner Ramon Farolan could not be held liable under these decision and resolution for he is not the one adjudged to pay the huge damages but a different person. Nonetheless, that is of no moment now considering the disposition of this ponencia.) The relevant facts, as culled from the records, are as follows: At the time of the commission of the acts complained of by the private respondent, which was the subject of the latter's petition for mandamus and injunction filed with the Regional Trial Court (RTC) of Manila in Civil Case No. 84-23537, petitioner Ramon Farolan was then the Acting Commissioner of Customs while petitioner Guillermo Parayno was then the Acting Chief, Customs Intelligence and Investigation Division. They were thus sued in their official capacities as officers in the government as clearly indicated in the title of the case in the lower courts and even here in this Court. Nevertheless, they were both held personally liable for the awarded damages "(s)ince the detention of the goods by the defendants

(petitioners herein) was irregular and devoid of legal basis, hence, not done in the regular performance of official duty . . . ." 3 However, as adverted to at the outset, in the dispositive portion of the challenged resolution, the one held personally liable is a "Damian Farolan" and not the petitioner, Ramon Farolan. Also as earlier mentioned, we will ignore that gross error. Private respondent Solmac Marketing Corporation is a corporation organized and existing under the laws of the Philippines. It was the assignee, transferee, and owner of an importation of Clojus Recycling Plastic Products of 202,204 kilograms of what is technically known as polypropylene film , valued at US$69,250.05. Polypropylene is a substance resembling polyethelyne which is one of a group of partially crystalline lightweight thermoplastics used chiefly in making fibers, films, and molded and extruded products. 4 Without defect, polypropylene film is sold at a much higher price as prime quality film. Once rejected as defective due to blemishes, discoloration, defective winding, holes, etc., polypropylene film is sold at a relatively cheap price without guarantee or return, and the buyer takes the risk as to whether he can recover an average 30% to 50% usable matter. 5 This latter kind of polypropylene is known as OPP film waste/scrap and this is what respondent SOLMAC claimed the Clojus shipment to be. The subject importation, consisting of seventeen (17) containers, arrived in December, 1981. Upon application for entry, the Bureau of Customs asked respondent SOLMAC for its authority from any government agency to import the goods described in the bill of lading. Respondent SOLMAC presented a Board of Investment (BOI) authority for polypropylene film scrap. However, upon examination of the shipment by the National Institute of Science and Technology (NIST), it turned out that the fibers of the importation were oriented in such a way that the materials were stronger than OPP film scrap. 6 In other words, the Clojus shipment was not OPP film scrap, as declared by the assignee respondent SOLMAC to the Bureau of Customs and BOI Governor Lilia R. Bautista, but oriented polypropylene the importation of which is restricted, if not prohibited, under Letter of Instructions (LOI) No. 658-B. Specifically, Sections 1 and 2 of LOI No. 658-B provide that: xxx xxx xxx 1. The importation of cellophane shall be allowed only for quantities and types of cellophane that cannot be produced by Philippine Cellophane Film Corporation. The Board of Investments shall issue guidelines regulating such importations. 2. The Collector of Customs shall see to the apprehension of all illegal importations of cellophane and oriented polypropylene (OPP) and the dumping of imported stock lots of cellophane and OPP. xxx xxx xxx Considering that the shipment was different from what had been authorized by the BOI and by law, petitioners Parayno and Farolan withheld the release of the subject importation. On June 7, 1982, petitioner Parayno, then Chief of Customs Intelligence and Investigation Division, wrote the BOI asking for the latter's advice on whether or no t the subject importation may be released 7 A series of exchange of correspondence between the BOI and the Bureau of Customs, on one hand, and between the late Dakila Castro, counsel for the private respondent, and the BOI and the Bureau of Customs, on the other, ensued, to wit: xxx xxx xxx 4. In a letter dated August 17, 1982, the BOI agreed that the subject imports may be released but that holes may be drilled on them by the Bureau of Customs prior to their release.

5. On January 20, 1983, (the late) Atty. Dakila Castro, (then) counsel of private respondent wrote to petitioner Commissioner Farolan of Customs asking for the release of the importation. The importation was not released, however, on the ground that holes had to be drilled on them first. 6. Atty. Dakila Castro then wrote a letter dated October 6, 1983, to BOI Governor Hermenigildo Zayco stressing the reasons why the subject importation should be released without drilling of holes. 7. On November 8, 1983, BOI Governor H. Zayco wrote a letter to the Bureau of Customs stating that the subject goods may be released without drilling of holes inasmuch as the goods arrived prior to the endorsement on August 17, 1982 to the drilling of holes on all importations of waste/scrap films. 8. On February 1, 1984, petitioner Commissioner Farolan wrote the BOI requesting for definite guidelines regarding the disposition of importations of Oriented Polypropylene (OPP) and Polypropylene (PP) then being held at the Bureau of Customs. 9. On March 12, 1984, Minister Roberto Ongpin of Trade, the BOI Chairman, wrote his reply to petitioner Farolan . . . . 8 (This reply of Minister Ongpin is copied in full infra.) On March 26, 1984, respondent Solmac filed the action for mandamus and injunction with the RTC as above mentioned. It prayed for the unconditional release of the subject importation. It also prayed for actual damages, exemplary damages, and attorney's fees. As prayed for, the trial court issued a writ of preliminary injunction. After hearing on the merits, the RTC rendered a decision on February 5, 1985, the dispositive portion of which reads as follows: Premises considered, judgment is hereby rendered ordering defendants to release the subject importation immediately without drilling of holes, subject only to the normal requirements of the customs processing for such release to be done with utmost dispatch as time is of the essence; and the preliminary injunction hereto issued is hereby made permanent until actual physical release of the merchandise and without pronouncement as to costs. SO ORDERED. 9 From the decision of the trial court, Solmac, the plaintiff below and the private respondent herein, appealed to the Court of Appeals only insofar as to the denial of the award of damages is concerned. On the other hand, the petitioners did not appeal from this decision. They did not see any need to appeal because as far as they were concerned, they had already complied with their duty. They had already ordered the release of the importation "without drilling of holes," as in fact it was so released, in compliance with the advice to effect such immediate release contained in a letter of BOI dated October 9, 1984, to Commissioner Farolan. Thus, to stress, even before the RTC rendered its decision on February 5, 1984, the Clojus shipment of OPP was released 10 to the private respondent in its capacity as assignee of the same. Be that it may, the private respondent filed its appeal demanding that the petitioners be held, in their personal and private capacities, liable for damages despite the finding of lack of bad faith on the part of the public officers. After due proceeding, the Court of Appeals rendered a decision portion which reads as follows:
11

on July 27, 1987, the dispositive

WHEREFORE, the appealed judgment is modified by ordering the defendants Ramon Farolan and Guillermo Parayno solidarity, in their personal capacity, to pay the plaintiff temperate damages in the sum of P100,000, exemplary damages in the sum of P100,000 and P50,000 as attorney's fees and expenses of litigation. Costs against the defendants.

SO ORDERED. On August 14, 1987, the petitioners filed a motion for reconsideration of the decision of the Court of Appeals. On May 25, 1988, the Court of Appeals issued its resolution modifying the award of damages, to wit: temperate damages in the sum of P100,000,00, exemplary damages in the sum of P50,000.00, and P25,000.00 as attorney's fees and expenses of litigation. The respondent court explained the reduction of the awards for exemplary damages and attorney's fees and expenses of litigation in this wise: 3. In our decision of July 27, 1987, We awarded to plaintiff-appellant Pl00,000 as temperate damages, Pl00,000.00 as exemplary damages, and P50,000.00 as attorney's fees and expenses of litigation. Under Art. 2233 of the Civil Code, recovery of exemplary damages is not a matter of right but depends upon the discretion of the court. Under Article 2208 of the Civil Code, attorney's fees and expenses of litigation must always be reasonable. In view of these provisions of the law, and since the award of temperate damages is only P100,000.00, the amount of exemplary damages may not be at par as temperate damages. An award of P50,000.00, as exemplary damages may already serve the purpose, i.e., as an example for the public good. Likewise, the attorney's fees and expenses of litigation have to be reduced to 25% of the amount of temperate damages, or P25,000.00, if the same have to be reasonable. The reduction in the amount of exemplary damages, and attorney's fees and expenses of litigation would be in accord with justice and fairness. 12 The petitioners now come to this Court, again by the Solicitor General, assigning the following errors allegedly committed by the respondent court: I The Court of Appeals erred in disregarding the finding of the trial court that the defense of good faith of petitioners (defendants) cannot be discredited. II The Court of Appeals erred in adjudging petitioners liable to pay temperate damages, exemplary damages, attorney's fees and expenses of litigation. 13 These two issues boil down to a single question, i.e., whether or not the petitioners acted in good faith in not immediately releasing the questioned importation, or, simply, can they be held liable, in their personal and private capacities, for damages to the private respondent. We rule for the petitioners. The respondent court committed a reversible error in overruling the trial court's finding that: . . . with reference to the claim of plaintiff to damages, actual and exemplary, and attorney's fees, the Court finds it difficult to discredit or disregard totally the defendants' defense of good faith premised on the excuse that they were all the time awaiting clarification of the Board of Investments on the matter. 14 We hold that this finding of the trial court is correct for good faith is always presumed and it is upon him who alleges the contrary that the burden of proof lies. 15 In Abando v. Lozada, 16 we defined good faith as "refer[ring] to a state of the mind which is manifested by the acts of the individual concerned. It consists of the honest intention to abstain from taking an unconscionable and unscrupulous advantage of another. It is the opposite of fraud, and its absence should be established by convincing evidence."

We had reviewed the evidence on record carefully and we did not see any clear and convincing proof showing the alleged bad faith of the petitioners. On the contrary, the record is replete with evidence bolstering the petitioners' claim of good faith. First, there was the report of the National Institute of Science and Technology (NIST) dated January 25, 1982 that, contrary to what the respondent claimed, the subject importation was not OPP film scraps but oriented polypropylene, a plastic product of stronger material, whose importation to the Philippines was restricted, if not prohibited, under LOI 658-B. 17 It was on the strength of this finding that the petitioners withheld the release of the subject importation for being contrary to law. Second, the petitioners testified that, on many occasions, the Bureau of Customs sought the advice of the BOI on whether the subject importation might be released. 18 Third, petitioner Parayno also testified during the trial that up to that time (of the trial) there was no clearcut policy on the part of the BOI regarding the entry into the Philippines of oriented polypropylene (OPP), as the letters of BOI Governors Tordesillas and Zayco of November 8, 1983 and September 24, 1982, respectively, ordering the release of the subject importation did not clarify the BOI policy on the matter. He then testified on the letter of the BOI Chairman Roberto Ongpin dated March 12, 1984, which states in full: Thank you for your letter of 1 February 1984, on the subject of various importations of Oriented Polypropylene (OPP) and Polypropylene (PP) withheld by Customs and the confusion over the disposition of such imports. I have discussed the matter with Vice-Chairman Tordesillas and Governor Zayco of the Board of Investments and the following is their explanation: 1. On 22 June 1982, the BOI ruled that importation of OPP/PP film scraps intended for recycling or repelletizing did not fall within the purview of LOI 658-B. 2. On 17 August l982, the BOI agreed that holes could be drilled on subject film imports to prevent their use for other purposes. 3. For importations authorized prior to 22 June 1982, the drilling of holes should depend on purpose for which the importations was approved by the BOI that is, for direct packaging use or for recycling/repelletizing into raw material. The exemption from drilling of holes on Solmac Marketing's importation under Certificates of Authority issued on 1 April 1982 and 5 May 1982 and on Clojus' importation authorized in 1982 were endorsed by the BOI on the premise that these were not intended for recycling/repelletizing. Should your office have any doubts as to the authorized intended use of any imported lots of OPP/PP film scraps that you have confiscated, we have no objection to the drilling of holes to ensure that these are indeed recycled. I have requested Governor Zayco to contact your office in order to offer any further assistance which you may require. 19 It can be seen from all the foregoing that even the highest officers (Chairman Ongpin, Vice-Chairman Tordesillas, and Governor Zayco) of the BOI themselves were not in agreement as to what proper course to take on the subject of the various importations of Oriented Polypropylene (OPP) and Polypropylene (PP) withheld by the Bureau of Customs. The conflicting recommendations of the BOI on this score prompted the petitioners to seek final clarification from the former with regard to its policy on these importations. This resulted in the inevitable delay in the release of the Clojus shipment, one of the several of such importations. The confusion over the disposition of this particular importation obviates bad faith. Thus the trial court's finding that the petitioners acted in good faith in not immediately releasing the Clojus shipment pending a definitive policy of the BOI on this matter is correct. It is supported by substantial

evidence on record, independent of the presumption of good faith, which as stated earlier, was not successfully rebutted. When a public officer takes his oath of office, he binds himself to perform the duties of his office faithfully and to use reasonable skill and diligence, and to act primarily for the benefit of the public. Thus, in the discharge of his duties, he is to use that prudence, caution, and attention which careful men use in the management of their affairs. In the case at bar, prudence dictated that petitioners first obtain from the BOI the latter's definite guidelines regarding the disposition of the various importations of oriented polypropylene (OPP) and polypropylene (PP) then being withheld at the Bureau of Customs. These cellophane/film products were competing with locally manufactured polypropylene and oriented polypropylene as raw materials which were then already sufficient to meet local demands, hence, their importation was restricted, if not prohibited under LOI 658-B. Consequently, the petitioners can not be said to have acted in bad faith in not immediately releasing the import goods without first obtaining the necessary clarificatory guidelines from the BOI. As public officers, the petitioners had the duty to see to it that the law they were tasked to implement, i.e., LOI 658-B, was faithfully complied with. But even granting that the petitioners committed a mistake in withholding the release of the subject importation because indeed it was composed of OPP film scraps, 20 contrary to the evidence submitted by the National Institute of Science and Technology that the same was pure oriented OPP, nonetheless, it is the duty of the Court to see to it that public officers are not hampered in the performance of their duties or in making decisions for fear of personal liability for damages due to honest mistake. Whatever damage they may have caused as a result of such an erroneous interpretation, if any at all, is in the nature of a damnum absque injuria. Mistakes concededly committed by public officers are not actionable absent any clear showing that they were motivated by malice or gross negligence amounting to bad faith. 21 After all, "even under the law of public officers, the acts of the petitioners are protected by the presumption of good faith. 22 In the same vein, the presumption, disputable though it may be, that an official duty has been regularly performed 23 applies in favor of the petitioners. Omnia praesumuntur rite et solemniter esse acta. (All things are presumed to be correctly and solemnly done.) It was private respondent's burden to overcome this juris tantum presumption. We are not persuaded that it has been able to do so. WHEREFORE, the petition is hereby GRANTED, the assailed Resolution of the respondent court, in CAG.R. SP No. 10509, dated May 25, 1988, is SET ASIDE and ANNULLED. No costs. SO ORDERED. Melencio-Herrera, Paras, Padilla and Regalado, JJ., concur.

Republic of the Philippines SUPREME COURT Manila SECOND DIVISION G.R. No. L-53401 November 6, 1989 THE ILOCOS NORTE ELECTRIC COMPANY, petitioner, vs. HONORABLE COURT OF APPEALS, (First Division) LILIAN JUAN LUIS, JANE JUAN YABES, VIRGINIA JUAN CID, GLORIA JUAN CARAG, and PURISIMA JUAN, respondents. Herman D. Coloma for petitioner. Glicerio S. Ferrer for private respondents.

PARAS, J.: Sought to be reversed in this petition is the Decision * of the respondent Court of Appeals' First Division, setting aside the judgment of the then Court of First Instance (CFI) of Ilocos Norte, with the following dispositive portion: WHEREFORE, the appealed judgment is hereby set aside and another rendered in its stead whereby defendant is hereby sentenced to pay plaintiffs actual damages of P30,229.45; compensatory damages of P50,000.00; exemplary damages of P10,000.00; attorney's fees of P3,000.00; plus the costs of suit in both instances. (p. 27 Rollo) Basically, this case involves a clash of evidence whereby both patties strive for the recognition of their respective versions of the scenario from which the disputed claims originate. The respondent Court of Appeals (CA) summarized the evidence of the parties as follows: From the evidence of plaintiffs it appears that in the evening of June 28 until the early morning of June 29, 1967 a strong typhoon by the code name "Gening" buffeted the province of Ilocos Norte, bringing heavy rains and consequent flooding in its wake. Between 5:30 and 6:00 A.M. on June 29, 1967, after the typhoon had abated and when the floodwaters were beginning to recede the deceased Isabel Lao Juan, fondly called Nana Belen, ventured out of the house of her son-in-law, Antonio Yabes, on No. 19 Guerrero Street, Laoag City, and proceeded northward towards the direction of the Five Sisters Emporium, of which she was the owner and proprietress, to look after the merchandise therein that might have been damaged. Wading in waist-deep flood on Guerrero, the deceased was followed by Aida Bulong, a Salesgirl at the Five Sisters Grocery, also owned by the deceased, and by Linda Alonzo Estavillo, a ticket seller at the YJ Cinema, which was partly owned by the deceased. Aida and Linda walked side by side at a distance of between 5 and 6 meters behind the deceased, Suddenly, the deceased screamed "Ay" and quickly sank into the water. The two girls attempted to help, but fear dissuaded them from doing so because on the spot where the deceased sank they saw an electric wire dangling from a post and moving in snake-like fashion in the water. Upon their shouts for help, Ernesto dela Cruz came out of the house of

Antonio Yabes. Ernesto tried to go to the deceased, but at four meters away from her he turned back shouting that the water was grounded. Aida and Linda prodded Ernesto to seek help from Antonio Yabes at the YJ Cinema building which was four or five blocks away. When Antonio Yabes was informed by Ernesto that his mother-in law had been electrocuted, he acted immediately. With his wife Jane, together with Ernesto and one Joe Ros, Yabes passed by the City Hall of Laoag to request the police to ask the people of defendant Ilocos Norte Electric Company or INELCO to cut off the electric current. Then the party waded to the house on Guerrero Street. The floodwater was receding and the lights inside the house were out indicating that the electric current had been cut off in Guerrero. Yabes instructed his boys to fish for the body of the deceased. The body was recovered about two meters from an electric post. In another place, at about 4:00 A.M. on that fateful date, June 29, 1967, Engineer Antonio Juan, Power Plant Engineer of the National Power Corporation at the Laoag Diesel-Electric Plant, noticed certain fluctuations in their electric meter which indicated such abnormalities as grounded or short-circuited lines. Between 6:00 and 6:30 A.M., he set out of the Laoag NPC Compound on an inspection. On the way, he saw grounded and disconnected lines. Electric lines were hanging from the posts to the ground. Since he could not see any INELCO lineman, he decided to go to the INELCO Office at the Life Theatre on Rizal Street by way of Guerrero. As he turned right at the intersection of Guerrero and Rizal, he saw an electric wire about 30 meters long strung across the street "and the other end was seeming to play with the current of the water." (p. 64, TSN, Oct. 24, 1972) Finding the Office of the INELCO still closed, and seeing no lineman therein, he returned to the NPC Compound. At about 8:10 A.M., Engr. Juan went out of the compound again on another inspection trip. Having learned of the death of Isabel Lao Juan, he passed by the house of the deceased at the corner of Guerrero and M.H. del Pilar streets to which the body had been taken. Using the resuscitator which was a standard equipment in his jeep and employing the skill he acquired from an in service training on resuscitation, he tried to revive the deceased. His efforts proved futile. Rigor mortis was setting in. On the left palm of the deceased, Engr. Juan noticed a hollow wound. Proceeding to the INELCO Office, he met two linemen on the way. He told them about the grounded lines of the INELCO In the afternoon of the same day, he went on a third inspection trip preparatory to the restoration of power. The dangling wire he saw on Guerrero early in the morning of June 29, 1967 was no longer there. Many people came to the house at the corner of Guerrero and M.H. del Pilar after learning that the deceased had been electrocuted. Among the sympathizers was Dr. Jovencio Castro, Municipal Health Officer of Sarrat, Ilocos Norte. Upon the request of the relatives of the deceased, Dr. Castro examined the body at about 8:00 A.M. on June 29, 1967. The skin was grayish or, in medical parlance, cyanotic, which indicated death by electrocution. On the left palm, the doctor found an "electrically charged wound" (Exh. C-1: p. 101, TSN, Nov. 28, 1972) or a first degree burn. About the base of the thumb on the left hand was a burned wound. (Exh. C-2, pp. 102-103, Ibid.) The certificate of death prepared by Dr. Castro stated the cause of' death as ,'circulatory shock electrocution" (Exh. I; p. 103, Ibid.). In defense and exculpation, defendant presented the testimonies of its officers and employees, namely, Conrado Asis, electric engineer; Loreto Abijero, collector-inspector; Fabico Abijero, lineman; and Julio Agcaoili, president-manager of INELCO Through the testimonies of these witnesses, defendant sought to prove that on and even before June 29, 1967 the electric service system of the INELCO in the whole franchise area, including Area No. 9 which covered the residence of Antonio Yabes at No. 18 Guerrero Street, did not suffer from any defect that might constitute a hazard to life and property. The service lines, devices and other INELCO equipment in Area No. 9 had been newly-installed prior to the date in question. As a public service operator and in line with its business of supplying electric current to the public, defendant had installed safety devices to prevent and avoid injuries to persons and damage to property in case of natural calamities such as floods, typhoons, fire and others. Defendant had 12 linesmen charged with the duty of making a round-the-clock check-up of the areas respectively assigned to them.

Defendant asserts that although a strong typhoon struck the province of Ilocos Norte on June 29, 1967, putting to streets of Laoag City under water, only a few known places in Laoag were reported to have suffered damaged electric lines, namely, at the southern approach of the Marcos Bridge which was washed away and where the INELCO lines and posts collapsed; in the eastern part near the residence of the late Governor Simeon Mandac; in the far north near the defendant's power plant at the corner of Segundo and Castro Streets, Laoag City and at the far northwest side, near the premises of the Ilocos Norte National High School. Fabico Abijero, testified that in the early morning before 6 o'clock on June 29, 1967 he passed by the intersection of Rizal and Guerrero Streets to switch off the street lights in Area No. 9. He did not see any cut or broken wires in or near the vicinity. What he saw were many people fishing out the body of Isabel Lao Juan. A witness in the person of Dr. Antonio Briones was presented by the defense to show that the deceased could not have died of electrocution Substantially, the testimony of the doctor is as follows: Without an autopsy on the cadaver of the victim, no doctor, not even a medicolegal expert, can speculate as to the real cause of death. Cyanosis could not have been found in the body of the deceased three hours after her death, because cyanosis which means lack of oxygen circulating in the blood and rendering the color of the skin purplish, appears only in a live person. The presence of the elongated burn in the left palm of the deceased (Exhibits C-1 and C-2) is not sufficient to establish her death by electrocution; since burns caused by electricity are more or less round in shape and with points of entry and exit. Had the deceased held the lethal wire for a long time, the laceration in her palm would have been bigger and the injury more massive. (CA Decision, pp. 18-21, Rollo) An action for damages in the aggregate amount of P250,000 was instituted by the heirs of the deceased with the aforesaid CFI on June 24, 1968. In its Answer (Vide, Record on Appeal, p. 55, Rollo), petitioner advanced the theory, as a special defense, that the deceased could have died simply either by drowning or by electrocution due to negligence attributable only to herself and not to petitioner. In this regard, it was pointed out that the deceased, without petitioner's knowledge, caused the installation of a burglar deterrent by connecting a wire from the main house to the iron gate and fence of steel matting, thus, charging the latter with electric current whenever the switch is on. Petitioner then conjectures that the switch to said burglar deterrent must have been left on, hence, causing the deceased's electrocution when she tried to open her gate that early morning of June 29, 1967. After due trial, the CFI found the facts in favor of petitioner and dismissed the complaint but awarded to the latter P25,000 in moral damages and attorney's fees of P45,000. An appeal was filed with the CA which issued the controverted decision. In this petition for review the petitioner assigns the following errors committed by the respondent CA: 1. The respondent Court of Appeals committed grave abuse of discretion and error in considering the purely hearsay alleged declarations of Ernesto de la Cruz as part of the res gestae. 2. The respondent Court of Appeals committed grave abuse of discretion and error in holding that the strong typhoon "Gening" which struck Laoag City and Ilocos Norte on June 29, 1967 and the flood and deluge it brought in its wake were not fortuitous events and did not exonerate petitioner-company from liability for the death of Isabel Lao Juan. 3. The respondent Court of Appeals gravely abused its discretion and erred in not applying the legal principle of "assumption of risk" in the present case to bar private respondents from collecting damages from petitioner company. 4. That the respondent Court of Appeals gravely erred and abused its discretion in completely reversing the findings of fact of the trial court. 5. The findings of fact of the respondent Court of Appeals are reversible under the recognized exceptions.

6. The trial court did not err in awarding moral damages and attorney's fees to defendant corporation, now petitioner company. 7. Assuming arguendo that petitioner company may be held liable from the death of the late Isabel Lao Juan, the damages granted by respondent Court of Appeals are improper and exhorbitant. (Petitioners Memorandum, p. 133, Rollo) Basically, three main issues are apparent: (1) whether or not the deceased died of electrocution; (2) whether or not petitioner may be held liable for the deceased's death; and (3) whether or not the respondent CA's substitution of the trial court's factual findings for its own was proper. In considering the first issue, it is Our view that the same be resolved in the affirmative. By a preponderance of evidence, private respondents were able to show that the deceased died of electrocution, a conclusion which can be primarily derived from the photographed burnt wounds (Exhibits "C", "C-1", "C-2") on the left palm of the former. Such wounds undoubtedly point to the fact that the deceased had clutched a live wire of the petitioner. This was corroborated by the testimony of Dr. Jovencio Castro who actually examined the body of the deceased a few hours after the death and described the said burnt wounds as a "first degree burn" (p. 144, TSN, December 11, 1972) and that they were "electrically charged" (p. 102, TSN, November 28, 1972). Furthermore, witnesses Linda Alonzo Estavillo and Aida Bulong added that after the deceased screamed "Ay" and sank into the water, they tried to render some help but were overcome with fear by the sight of an electric wire dangling from an electric post, moving in the water in a snake-like fashion ( supra). The foregoing therefore justifies the respondent CA in concluding that "(t)he nature of the wounds as described by the witnesses who saw them can lead to no other conclusion than that they were "burns," and there was nothing else in the street where the victim was wading thru which could cause a burn except the dangling live wire of defendant company" (CA Decision, p. 22, Rollo). But in order to escape liability, petitioner ventures into the theory that the deceased was electrocuted, if such was really the case when she tried to open her steel gate, which was electrically charged by an electric wire she herself caused to install to serve as a burglar deterrent. Petitioner suggests that the switch to said burglar alarm was left on. But this is mere speculation, not backed up with evidence. As required by the Rules, "each party must prove his own affirmative allegations." (Rule 131, Sec. 1). Nevertheless, the CA significantly noted that "during the trial, this theory was abandoned" by the petitioner (CA Decision, p. 23, Rollo). Furthermore the CA properly applied the principle of res gestae. The CA said: Linda Alonzo Estavillo, a ticket seller, and Aida Bulong, a salesgirl, were with the deceased during that fateful morning of June 29, 1967. This Court has not been offered any sufficient reason to discredit the testimonies of these two young ladies. They were one in the affirmation that the deceased, while wading in the waist-deep flood on Guerrero Street five or six meters ahead of them, suddenly screamed "Ay" and quickly sank into the water. When they approached the deceased to help, they were stopped by the sight of an electric wire dangling from a post and moving in snake-like fashion in the water. Ernesto dela Cruz also tried to approach the deceased, but he turned back shouting that the water was grounded. These bits of evidence carry much weight. For the subject of the testimonies was a startling occurrence, and the declarations may be considered part of the res gestae. (CA Decision, p. 21, Rollo) For the admission of the res gestae in evidence, the following requisites must be present: (1) that the principal act, the res gestae, be a startling occurrence; (2) that the statements were made before the declarant had time to contrive or devise; (3) that the statements made must concern the occurrence in question and its immediately attending circumstances (People vs. Ner, 28 SCRA 1151; People vs. Balbas, 122 SCRA 959). We do not find any abuse of discretion on the CA' part in view of the satisfaction of said requisites in the case at bar.

The statements made relative to the startling occurrence are admitted in evidence precisely as an exception to the hearsay rule on the grounds of trustworthiness and necessity. "Trustworthiness" because the statements are made instinctively (Wesley vs. State, 53 Ala. 182), and "necessity" because such natural and spontaneous utterances are more convincing than the testimony of the same person on the stand (Mobile vs. Ascraft 48 Ala. 31). Therefore, the fact that the declarant, Ernesto de la Cruz, was not presented to testify does not make the testimony of Linda Alonzo Estavillo and Aida Bulong hearsay since the said declaration is part of the res gestae. Similarly, We considered part of the res gestae a conversation between two accused immediately after commission of the crime as overheard by a prosecution witness (People vs. Reyes, 82 Phil. 563). While it may be true that, as petitioner argues (vide petitioner's Memorandum, p. 135, Rollo), Ernesto de la Cruz was not an actual witness to the instant when the deceased sank into the waist-deep water, he acted upon the call of help of Aida Bulong and Linda Alonzo Estavillo with the knowledge of, and immediately after, the sinking of the deceased. In fact the startling event had not yet ceased when Ernesto de la Cruz entered the scene considering that the victim remained submerged. Under such a circumstance, it is undeniable that a state of mind characterized by nervous excitement had been triggered in Ernesto de la Cruz's being as anybody under the same contingency could have experienced. As such, We cannot honestly exclude his shouts that the water was grounded from the res gestae just because he did not actually see the sinking of the deceased nor hear her scream "Ay." Neither can We dismiss the said declaration as a mere opinion of Ernesto de la Cruz. While We concede to the submission that the statement must be one of facts rather than opinion, We cannot agree to the proposition that the one made by him was a mere opinion. On the contrary, his shout was a translation of an actuality as perceived by him through his sense of touch. Finally, We do not agree that the taking of Ernesto de la Cruz' testimony was suppressed by the private respondents, thus, is presumed to be adverse to them pursuant to Section 5(e), Rule 131. For the application of said Rule as against a party to a case, it is necessary that the evidence alleged to be suppressed is available only to said party (People vs. Tulale, L-7233, 18 May 1955, 97 Phil. 953). The presumption does not operate if the evidence in question is equally available to both parties (StaplesHowe Printing Co. vs. Bldg. and Loan Assn., 36 Phil. 421). It is clear from the records that petitioner could have called Ernesto de la Cruz to the witness stand. This, precisely, was Linda Alonzo Estavillo's suggestion to petitioner's counsel when she testified on cross examination: Q. And that Erning de la Cruz, how far did he reach from the gate of the house? A. Well, you can ask that matter from him sir because he is here. (TSN, p. 30, 26 Sept. 1972) The foregoing shows that petitioner had the opportunity to verify the declarations of Ernesto de la Cruz which, if truly adverse to private respondent, would have helped its case. However, due to reasons known only to petitioner, the opportunity was not taken. Coming now to the second issue, We tip the scales in the private respondents' favor. The respondent CA acted correctly in disposing the argument that petitioner be exonerated from liability since typhoons and floods are fortuitous events. While it is true that typhoons and floods are considered Acts of God for which no person may be held responsible, it was not said eventuality which directly caused the victim's death. It was through the intervention of petitioner's negligence that death took place. We subscribe to the conclusions of the respondent CA when it found: On the issue whether or not the defendant incurred liability for the electrocution and consequent death of the late Isabel Lao Juan, defendant called to the witness-stand its electrical engineer, chief lineman, and lineman to show exercise of extraordinary diligence and to negate the charge of negligence. The witnesses testified in a general way about their duties and the measures which defendant usually adopts to prevent hazards to life and limb. From these testimonies, the lower court found "that the electric lines

and other equipment of defendant corporation were properly maintained by a well-trained team of lineman, technicians and engineers working around the clock to insure that these equipments were in excellent condition at all times." (P. 40, Record on Appeal) The finding of the lower court, however, was based on what the defendant's employees were supposed to do, not on what they actually did or failed to do on the date in question, and not on the occasion of the emergency situation brought about by the typhoon. The lower court made a mistake in assuming that defendant's employees worked around the clock during the occurrence of the typhoon on the night of June 28 and until the early morning of June 29, 1967, Engr. Antonio Juan of the National Power Corporation affirmed that when he first set out on an inspection trip between 6:00 and 6:30 A.M. on June 29, 1967, he saw grounded and disconnected electric lines of the defendant but he saw no INELCO lineman. The INELCO Office at the Life theatre on Rizal Street was still closed. (pp. 63-64, TSN, Oct. 24, 1972) Even the witnesses of defendant contradict the finding of the lower court. Conrado Asis, defendant's electrical engineer, testified that he conducted a general inspection of the franchise area of the INELCO only on June 30, 1967, the day following the typhoon. The reason he gave for the delay was that all their vehicles were submerged. (p. 337, TSN, July 20, 1973) According to Asis, he arrived at his office at 8:00 A.M. on June 30 and after briefing his men on what to do they started out. (p. 338, lbid) One or two days after the typhoon, the INELCO people heard "rumors that someone was electrocuted" so he sent one of his men to the place but his man reported back that there was no damaged wire. (p. 385, Id.) Loreto Abijero, chief lineman of defendant, corroborated Engr. Juan. He testified that at about 8:00 A.M. on June 29, 1967 Engr. Juan came to the INELCO plant and asked the INELCO people to inspect their lines. He went with Engr. Juan and their inspection lasted from 8:00 A.M. to 12:00 noon. (pp. 460, 465, TSN, Jan. 28, 1975) Fabico Abijero lineman of defendant, testified that at about 6:00 on June 29, 1967 the typhoon ceased. At that time, he was at the main building of the Divine Word College of Laoag where he had taken his family for refuge. (pp. 510-511, Ibid.) In times of calamities such as the one which occurred in Laoag City on the night of June 28 until the early hours of June 29, 1967, extraordinary diligence requires a supplier of electricity to be in constant vigil to prevent or avoid any probable incident that might imperil life or limb. The evidence does not show that defendant did that. On the contrary, evidence discloses that there were no men (linemen or otherwise) policing the area, nor even manning its office. (CA Decision, pp. 24-25, Rollo) Indeed, under the circumstances of the case, petitioner was negligent in seeing to it that no harm is done to the general public"... considering that electricity is an agency, subtle and deadly, the measure of care required of electric companies must be commensurate with or proportionate to the danger. The duty of exercising this high degree of diligence and care extends to every place where persons have a right to be" (Astudillo vs. Manila Electric, 55 Phil. 427). The negligence of petitioner having been shown, it may not now absolve itself from liability by arguing that the victim's death was solely due to a fortuitous event. "When an act of God combines or concurs with the negligence of the defendant to produce an injury, the defendant is liable if the injury would not have resulted but for his own negligent conduct or omission" (38 Am. Jur., p. 649). Likewise, the maxim "volenti non fit injuria" relied upon by petitioner finds no application in the case at bar. It is imperative to note the surrounding circumstances which impelled the deceased to leave the comforts of a roof and brave the subsiding typhoon. As testified by Linda Alonzo Estavillo (see TSN, p. 5, 26 Sept. 1972) and Aida Bulong (see TSN, p. 43, 26 Sept. 1972), the deceased, accompanied by the former two, were on their way to the latter's grocery store "to see to it that the goods were not flooded." As such, shall We punish her for exercising her right to protect her property from the floods by imputing upon her the unfavorable presumption that she assumed the risk of personal injury? Definitely not. For it has been held that a person is excused from the force of the rule, that when he voluntarily assents to a known danger he must abide by the consequences, if an emergency is found to exist or if the life or property of another is in peril (65A C.S.C. Negligence(174(5), p. 301), or when he seeks to rescue his endangered property (Harper and James, "The Law of Torts." Little, Brown and Co., 1956, v. 2, p. 1167). Clearly, an emergency was at hand as the deceased's property, a source of her livelihood, was faced with an impending loss.

Furthermore, the deceased, at the time the fatal incident occurred, was at a place where she had a right to be without regard to petitioner's consent as she was on her way to protect her merchandise. Hence, private respondents, as heirs, may not be barred from recovering damages as a result of the death caused by petitioner's negligence (ibid., p. 1165, 1166). But petitioner assails the CA for having abused its discretion in completely reversing the trial court's findings of fact, pointing to the testimonies of three of its employees its electrical engineer, collectorinspector, lineman, and president-manager to the effect that it had exercised the degree of diligence required of it in keeping its electric lines free from defects that may imperil life and limb. Likewise, the said employees of petitioner categorically disowned the fatal wires as they appear in two photographs taken on the afternoon of June 29, 1967 (Exhs. "D" and "E"), suggesting that said wires were just hooked to the electric post (petitioner's Memorandum, p. 170, Rollo). However, as the CA properly held, "(t)he finding of the lower court ... was based on what the defendant's employees were supposed to do, not on what they actually did or failed to do on the date in question, and not on the occasion of the emergency situation brought about by the typhoon" (CA Decision, p. 25, Rollo). And as found by the CA, which We have already reiterated above, petitioner was in fact negligent. In a like manner, petitioner's denial of ownership of the several wires cannot stand the logical conclusion reached by the CA when it held that "(t)he nature of the wounds as described by the witnesses who saw them can lead to no other conclusion than that they were 'burns', and there was nothing else in the street where the victim was wading thru which could cause a burn except the dangling live wire of defendant company" ( supra). "When a storm occurs that is liable to prostrate the wires, due care requires prompt efforts to discover and repair broken lines" (Cooley on Torts, 4th ed., v. 3, p. 474). The fact is that when Engineer Antonio Juan of the National Power Corporation set out in the early morning of June 29, 1967 on an inspection tour, he saw grounded and disconnected lines hanging from posts to the ground but did not see any INELCO lineman either in the streets or at the INELCO office (vide, CA Decision, supra). The foregoing shows that petitioner's duty to exercise extraordinary diligence under the circumstance was not observed, confirming the negligence of petitioner. To aggravate matters, the CA found: . . .even before June 28 the people in Laoag were already alerted about the impending typhoon, through radio announcements. Even the fire department of the city announced the coming of the big flood. (pp. 532-534, TSN, March 13, 1975) At the INELCO irregularities in the flow of electric current were noted because "amperes of the switch volts were moving". And yet, despite these danger signals, INELCO had to wait for Engr. Juan to request that defendant's switch be cut off but the harm was done. Asked why the delay, Loreto Abijero answered that he "was not the machine tender of the electric plant to switch off the current." (pp. 467-468, Ibid.) How very characteristic of gross inefficiency! (CA Decision, p. 26, Rollo) From the preceding, We find that the CA did not abuse its discretion in reversing the trial court's findings but tediously considered the factual circumstances at hand pursuant to its power to review questions of fact raised from the decision of the Regional Trial Court, formerly the Court of First Instance (see sec. 9, BP 129). In considering the liability of petitioner, the respondent CA awarded the following in private respondent's favor: P30,229.45 in actual damages (i.e., P12,000 for the victim's death and P18,229.45 for funeral expenses); P50,000 in compensatory damages, computed in accordance with the formula set in the VillaRey Transit case (31 SCRA 511) with the base of P15,000 as average annual income of the deceased; P10,000 in exemplary damages; P3,000 attorney's fees; and costs of suit. Except for the award of P12,000 as compensation for the victim's death, We affirm the respondent CA's award for damages and attorney's fees. Pusuant to recent jurisprudence (People vs. Mananquil, 132 SCRA 196; People vs. Traya, 147 SCRA 381), We increase the said award of P12,000 to P30,000, thus, increasing the total actual damages to P48,229.45. The exclusion of moral damages and attorney's fees awarded by the lower court was properly made by the respondent CA, the charge of malice and bad faith on the part of respondents in instituting his case

being a mere product of wishful thinking and speculation. Award of damages and attorney's fees is unwarranted where the action was filed in good faith; there should be no penalty on the right to litigate (Espiritu vs. CA, 137 SCRA 50). If damage results from a person's exercising his legal rights, it is damnum absque injuria (Auyong Hian vs. CTA, 59 SCRA 110). WHEREFORE, the questioned decision of the respondent, except for the slight modification that actual damages be increased to P48,229.45 is hereby AFFIRMED. SO ORDERED. Melencio-Herrera (Chairperson), Padilla, Sarmiento and Regalado, JJ., concur.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION

G.R. No. 97626 March 14, 1997 PHILIPPINE BANK OF COMMERCE, now absorbed by PHILIPPINE COMMERCIAL INTERNATIONAL BANK, ROGELIO LACSON, DIGNA DE LEON, MARIA ANGELITA PASCUAL, et al., petitioners, vs. THE COURT OF APPEALS, ROMMEL'S MARKETING CORP., represented by ROMEO LIPANA, its President & General Manager, respondents.

HERMOSISIMA, JR., J.: Challenged in this petition for review is the Decision dated February 28, 1991 1 rendered by public respondent Court of Appeals which affirmed the Decision dated November 15, 1985 of the Regional Trial Court, National Capital Judicial Region, Branch CLX (160), Pasig City, in Civil Case No. 27288 entitled "Rommel's Marketing Corporation, etc. v. Philippine Bank of Commerce, now absorbed by Philippine Commercial and Industrial Bank." The case stemmed from a complaint filed by the private respondent Rommel's Marketing Corporation (RMC for brevity), represented by its President and General Manager Romeo Lipana, to recover from the former Philippine Bank of Commerce (PBC for brevity), now absorbed by the Philippine Commercial International Bank, the sum of P304,979.74 representing various deposits it had made in its current account with said bank but which were not credited to its account, and were instead deposited to the account of one Bienvenido Cotas, allegedly due to the gross and inexcusable negligence of the petitioner bank. RMC maintained two (2) separate current accounts, Current Account Nos. 53-01980-3 and 53-01748-7, with the Pasig Branch of PBC in connection with its business of selling appliances. In the ordinary and usual course of banking operations, current account deposits are accepted by the bank on the basis of deposit slips prepared and signed by the depositor, or the latter's agent or representative, who indicates therein the current account number to which the deposit is to be credited, the name of the depositor or current account holder, the date of the deposit, and the amount of the deposit either in cash or checks. The deposit slip has an upper portion or stub, which is detached and given to the depositor or his agent; the lower portion is retained by the bank. In some instances, however, the deposit slips are prepared in duplicate by the depositor. The original of the deposit slip is retained by the bank, while the duplicate copy is returned or given to the depositor. From May 5, 1975 to July 16, 1976, petitioner Romeo Lipana claims to have entrusted RMC funds in the form of cash totalling P304,979.74 to his secretary, Irene Yabut, for the purpose of depositing said funds

in the current accounts of RMC with PBC. It turned out, however, that these deposits, on all occasions, were not credited to RMC's account but were instead deposited to Account No. 53-01734-7 of Yabut's husband, Bienvenido Cotas who likewise maintains an account with the same bank. During this period, petitioner bank had, however, been regularly furnishing private respondent with monthly statements showing its current accounts balances. Unfortunately, it had never been the practice of Romeo Lipana to check these monthly statements of account reposing complete trust and confidence on petitioner bank. Irene Yabut's modus operandi is far from complicated. She would accomplish two (2) copies of the deposit slip, an original and a duplicate. The original showed the name of her husband as depositor and his current account number. On the duplicate copy was written the account number of her husband but the name of the account holder was left blank. PBC's teller, Azucena Mabayad, would, however, validate and stamp both the original and the duplicate of these deposit slips retaining only the original copy despite the lack of information on the duplicate slip. The second copy was kept by Irene Yabut allegedly for record purposes. After validation, Yabut would then fill up the name of RMC in the space left blank in the duplicate copy and change the account number written thereon, which is that of her husband's, and make it appear to be RMC's account number, i.e., C.A. No. 53-01980-3. With the daily remittance records also prepared by Ms. Yabut and submitted to private respondent RMC together with the validated duplicate slips with the latter's name and account number, she made her company believe that all the while the amounts she deposited were being credited to its account when, in truth and in fact, they were being deposited by her and credited by the petitioner bank in the account of Cotas. This went on in a span of more than one (1) year without private respondent's knowledge. Upon discovery of the loss of its funds, RMC demanded from petitioner bank the return of its money, but as its demand went unheeded, it filed a collection suit before the Regional Trial Court of Pasig, Branch 160. The trial court found petitioner bank negligent and ruled as follows: WHEREFORE, judgment is hereby rendered sentencing defendant Philippine Bank of Commerce, now absorbed by defendant Philippine Commercial & Industrial Bank, and defendant Azucena Mabayad to pay the plaintiff, jointly and severally, and without prejudice to any criminal action which may be instituted if found warranted: 1. The sum of P304,979.72, representing plaintiffs lost deposit, plus interest thereon at the legal rate from the filing of the complaint; 2. A sum equivalent to 14% thereof, as exemplary damages; 3. A sum equivalent to 25% of the total amount due, as and for attorney's fees; and 4. Costs. Defendants' counterclaim is hereby dismissed for lack of merit. 2 On appeal, the appellate court affirmed the foregoing decision with modifications, viz: WHEREFORE, the decision appealed from herein is MODIFIED in the sense that the awards of exemplary damages and attorney's fees specified therein are eliminated and instead, appellants are ordered to pay plaintiff, in addition to the principal sum of P304,979.74 representing plaintiff's lost deposit plus legal interest thereon from the filing of the complaint, P25,000.00 attorney's fees and costs in the lower court as well as in this Court. 3 Hence, this petition anchored on the following grounds:

1) The proximate cause of the loss is the negligence of respondent Rommel Marketing Corporation and Romeo Lipana in entrusting cash to a dishonest employee. 2) The failure of respondent Rommel Marketing Corporation to cross-check the bank's statements of account with its own records during the entire period of more than one (1) year is the proximate cause of the commission of subsequent frauds and misappropriation committed by Ms. Irene Yabut. 3) The duplicate copies of the deposit slips presented by respondent Rommel Marketing Corporation are falsified and are not proof that the amounts appearing thereon were deposited to respondent Rommel Marketing Corporation's account with the bank, 4) The duplicate copies of the deposit slips were used by Ms. Irene Yabut to cover up her fraudulent acts against respondent Rommel Marketing Corporation, and not as records of deposits she made with the bank. 4 The petition has no merit. Simply put, the main issue posited before us is: What is the proximate cause of the loss, to the tune of P304,979.74, suffered by the private respondent RMC petitioner bank's negligence or that of private respondent's? Petitioners submit that the proximate cause of the loss is the negligence of respondent RMC and Romeo Lipana in entrusting cash to a dishonest employee in the person of Ms. Irene Yabut. 5 According to them, it was impossible for the bank to know that the money deposited by Ms. Irene Yabut belong to RMC; neither was the bank forewarned by RMC that Yabut will be depositing cash to its account. Thus, it was impossible for the bank to know the fraudulent design of Yabut considering that her husband, Bienvenido Cotas, also maintained an account with the bank. For the bank to inquire into the ownership of the cash deposited by Ms. Irene Yabut would be irregular. Otherwise stated, it was RMC's negligence in entrusting cash to a dishonest employee which provided Ms. Irene Yabut the opportunity to defraud RMC. 6 Private respondent, on the other hand, maintains that the proximate cause of the loss was the negligent act of the bank, thru its teller Ms. Azucena Mabayad, in validating the deposit slips, both original and duplicate, presented by Ms. Yabut to Ms. Mabayad, notwithstanding the fact that one of the deposit slips was not completely accomplished. We sustain the private respondent. Our law on quasi-delicts states: Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter. There are three elements of a quasi-delict: (a) damages suffered by the plaintiff; (b) fault or negligence of the defendant, or some other person for whose acts he must respond; and (c) the connection of cause and effect between the fault or negligence of the defendant and the damages incurred by the plaintiff. 7 In the case at bench, there is no dispute as to the damage suffered by the private respondent (plaintiff in the trial court) RMC in the amount of P304,979.74. It is in ascribing fault or negligence which caused the damage where the parties point to each other as the culprit. Negligence is the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a

prudent and reasonable man would do. The seventy-eight (78)-year-old, yet still relevant, case of Picart v. Smith, 8 provides the test by which to determine the existence of negligence in a particular case which may be stated as follows: Did the defendant in doing the alleged negligent act use that reasonable care and caution which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of negligence. The law here in effect adopts the standard supposed to be supplied by the imaginary conduct of the discreet paterfamilias of the Roman law. The existence of negligence in a given case is not determined by reference to the personal judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by that. Applying the above test, it appears that the bank's teller, Ms. Azucena Mabayad, was negligent in validating, officially stamping and signing all the deposit slips prepared and presented by Ms. Yabut, despite the glaring fact that the duplicate copy was not completely accomplished contrary to the selfimposed procedure of the bank with respect to the proper validation of deposit slips, original or duplicate, as testified to by Ms. Mabayad herself, thus: Q: Now, as teller of PCIB, Pasig Branch, will you please tell us Mrs. Mabayad your important duties and functions? A: I accept current and savings deposits from depositors and encashments. Q: Now in the handling of current account deposits of bank clients, could you tell us the procedure you follow? A: The client or depositor or the authorized representative prepares a deposit slip by filling up the deposit slip with the name, the account number, the date, the cash breakdown, if it is deposited for cash, and the check number, the amount and then he signs the deposit slip . Q: Now, how many deposit slips do you normally require in accomplishing current account deposit, Mrs. Mabayad? A: The bank requires only one copy of the deposit although some of our clients prepare the deposit slip in duplicate. Q: Now in accomplishing current account deposits from your clients, what do you issue to the depositor to evidence the deposit made? A: We issue or we give to the clients the depositor's stub as a receipt of the deposit. Q: And who prepares the deposit slip? A: The depositor or the authorized representative sir? Q: Where does the depositor's stub comes (sic) from Mrs. Mabayad, is it with the deposit slip? A: The depositor's stub is connected with the deposit slip or the bank's copy. In a deposit slip, the upper portion is the depositor's stub and the lower portion is the bank's copy, and you can detach the bank's copy from the depositor's stub by tearing it sir. Q: Now what do you do upon presentment of the deposit slip by the depositor or the depositor's authorized representative?

A: We see to it that the deposit slip 9 is properly accomplished and then we count the money and then we tally it with the deposit slip sir. Q: Now is the depositor's stub which you issued to your clients validated? A: Yes, sir. 10 [Emphasis ours] Clearly, Ms. Mabayad failed to observe this very important procedure. The fact that the duplicate slip was not compulsorily required by the bank in accepting deposits should not relieve the petitioner bank of responsibility. The odd circumstance alone that such duplicate copy lacked one vital information that of the name of the account holder should have already put Ms. Mabayad on guard. Rather than readily validating the incomplete duplicate copy, she should have proceeded more cautiously by being more probing as to the true reason why the name of the account holder in the duplicate slip was left blank while that in the original was filled up. She should not have been so naive in accepting hook, line and sinker the too shallow excuse of Ms. Irene Yabut to the effect that since the duplicate copy was only for her personal record, she would simply fill up the blank space later on. 11 A "reasonable man of ordinary prudence" 12 would not have given credence to such explanation and would have insisted that the space left blank be filled up as a condition for validation. Unfortunately, this was not how bank teller Mabayad proceeded thus resulting in huge losses to the private respondent. Negligence here lies not only on the part of Ms. Mabayad but also on the part of the bank itself in its lackadaisical selection and supervision of Ms. Mabayad. This was exemplified in the testimony of Mr. Romeo Bonifacio, then Manager of the Pasig Branch of the petitioner bank and now its Vice-President, to the effect that, while he ordered the investigation of the incident, he never came to know that blank deposit slips were validated in total disregard of the bank's validation procedures, viz: Q: Did he ever tell you that one of your cashiers affixed the stamp mark of the bank on the deposit slips and they validated the same with the machine, the fact that those deposit slips were unfilled up, is there any report similar to that? A: No, it was not the cashier but the teller. Q: The teller validated the blank deposit slip? A: No it was not reported. Q: You did not know that any one in the bank tellers or cashiers validated the blank deposit slip? A: I am not aware of that. Q: It is only now that you are aware of that? A: Yes, sir. 13 Prescinding from the above, public respondent Court of Appeals aptly observed: xxx xxx xxx It was in fact only when he testified in this case in February, 1983, or after the lapse of more than seven (7) years counted from the period when the funds in question were deposited in plaintiff's accounts (May, 1975 to July, 1976) that bank manager Bonifacio admittedly became aware of the practice of his teller

Mabayad of validating blank deposit slips. Undoubtedly, this is gross, wanton, and inexcusable negligence in the appellant bank's supervision of its employees. 14 It was this negligence of Ms. Azucena Mabayad, coupled by the negligence of the petitioner bank in the selection and supervision of its bank teller, which was the proximate cause of the loss suffered by the private respondent, and not the latter's act of entrusting cash to a dishonest employee, as insisted by the petitioners. Proximate cause is determined on the facts of each case upon mixed considerations of logic, common sense, policy and precedent. 15 Vda. de Bataclan v. Medina, 16 reiterated in the case of Bank of the Phil. Islands v. Court of Appeals, 17 defines proximate cause as "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. . . ." In this case, absent the act of Ms. Mabayad in negligently validating the incomplete duplicate copy of the deposit slip, Ms. Irene Yabut would not have the facility with which to perpetrate her fraudulent scheme with impunity. Apropos, once again, is the pronouncement made by the respondent appellate court, to wit: . . . . Even if Yabut had the fraudulent intention to misappropriate the funds entrusted to her by plaintiff, she would not have been able to deposit those funds in her husband's current account, and then make plaintiff believe that it was in the latter's accounts wherein she had deposited them, had it not been for bank teller Mabayad's aforesaid gross and reckless negligence. The latter's negligence was thus the proximate, immediate and efficient cause that brought about the loss claimed by plaintiff in this case, and the failure of plaintiff to discover the same soon enough by failing to scrutinize the monthly statements of account being sent to it by appellant bank could not have prevented the fraud and misappropriation which Irene Yabut had already completed when she deposited plaintiff's money to the account of her husband instead of to the latter's accounts. 18 Furthermore, under the doctrine of "last clear chance" (also referred to, at times as "supervening negligence" or as "discovered peril"), petitioner bank was indeed the culpable party. This doctrine, in essence, states that where both parties are negligent, but the negligent act of one is appreciably later in time than that of the other, or when it is impossible to determine whose fault or negligence should be attributed to the incident, the one who had the last clear opportunity to avoid the impending harm and failed to do so is chargeable with the consequences thereof. 19 Stated differently, the rule would also mean that an antecedent negligence of a person does not preclude the recovery of damages for the supervening negligence of, or bar a defense against liability sought by another, if the latter, who had the last fair chance, could have avoided the impending harm by the exercise of due diligence. 20 Here, assuming that private respondent RMC was negligent in entrusting cash to a dishonest employee, thus providing the latter with the opportunity to defraud the company, as advanced by the petitioner, yet it cannot be denied that the petitioner bank, thru its teller, had the last clear opportunity to avert the injury incurred by its client, simply by faithfully observing their self-imposed validation procedure. At this juncture, it is worth to discuss the degree of diligence ought to be exercised by banks in dealing with their clients. The New Civil Code provides: 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 2201, 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. (1104a)

In the case of banks, however, the degree of diligence required is more than that of a good father of a family. Considering the fiduciary nature of their relationship with their depositors, banks are duty bound to treat the accounts of their clients with the highest degree of care. 21 As elucidated in Simex International (Manila), Inc. v. Court of Appeals, 22 in every case, the depositor expects the bank to treat his account with the utmost fidelity, whether such account consists only of a few hundred pesos or of millions. The bank must record every single transaction accurately, down to the last centavo, and as promptly as possible. This has to be done if the account is to reflect at any given time the amount of money the depositor can dispose as he sees fit, confident that the bank will deliver it as and to whomever he directs. A blunder on the part of the bank, such as the failure to duly credit him his deposits as soon as they are made, can cause the depositor not a little embarrassment if not financial loss and perhaps even civil and criminal litigation. The point is that as a business affected with public interest and because of the nature of its functions, the bank is under obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their relationship. In the case before us, it is apparent that the petitioner bank was remiss in that duty and violated that relationship. Petitioners nevertheless aver that the failure of respondent RMC to cross-check the bank's statements of account with its own records during the entire period of more than one (1) year is the proximate cause of the commission of subsequent frauds and misappropriation committed by Ms. Irene Yabut. We do not agree. While it is true that had private respondent checked the monthly statements of account sent by the petitioner bank to RMC, the latter would have discovered the loss early on, such cannot be used by the petitioners to escape liability. This omission on the part of the private respondent does not change the fact that were it not for the wanton and reckless negligence of the petitioners' employee in validating the incomplete duplicate deposit slips presented by Ms. Irene Yabut, the loss would not have occurred. Considering, however, that the fraud was committed in a span of more than one (1) year covering various deposits, common human experience dictates that the same would not have been possible without any form of collusion between Ms. Yabut and bank teller Mabayad. Ms. Mabayad was negligent in the performance of her duties as bank teller nonetheless. Thus, the petitioners are entitled to claim reimbursement from her for whatever they shall be ordered to pay in this case. The foregoing notwithstanding, it cannot be denied that, indeed, private respondent was likewise negligent in not checking its monthly statements of account. Had it done so, the company would have been alerted to the series of frauds being committed against RMC by its secretary. The damage would definitely not have ballooned to such an amount if only RMC, particularly Romeo Lipana, had exercised even a little vigilance in their financial affairs. This omission by RMC amounts to contributory negligence which shall mitigate the damages that may be awarded to the private respondent 23 under Article 2179 of the New Civil Code, to wit: . . . When the plaintiff's own negligence was the immediate and proximate cause of his injury, he cannot recover damages. But if his negligence was only contributory, the immediate and proximate cause of the injury being the defendant's lack of due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be awarded. In view of this, we believe that the demands of substantial justice are satisfied by allocating the damage on a 60-40 ratio. Thus, 40% of the damage awarded by the respondent appellate court, except the award of P25,000.00 attorney's fees, shall be borne by private respondent RMC; only the balance of 60% needs to be paid by the petitioners. The award of attorney's fees shall be borne exclusively by the petitioners.

WHEREFORE, the decision of the respondent Court of Appeals is modified by reducing the amount of actual damages private respondent is entitled to by 40%. Petitioners may recover from Ms. Azucena Mabayad the amount they would pay the private respondent. Private respondent shall have recourse against Ms. Irene Yabut. In all other respects, the appellate court's decision is AFFIRMED. Proportionate costs. SO ORDERED. Bellosillo, Vitug and Kapunan, JJ., concur.

Separate Opinions

PADILLA, J., dissenting: I regret that I cannot join the majority in ruling that the proximate cause of the damage suffered by Rommel's Marketing Corporation (RMC) is mainly "the wanton and reckless negligence of the petitioner's employee in validating the incomplete duplicate deposit slips presented by Ms. Irene Yabut" (Decision, p. 15). Moreover, I find it difficult to agree with the ruling that "petitioners are entitled to claim reimbursement from her (the bank teller) for whatever they shall be ordered to pay in this case." It seems that an innocent bank teller is being unduly burdened with what should fall on Ms. Irene Yabut, RMC's own employee, who should have been charged with estafa or estafa through falsification of private document. Interestingly, the records are silent on whether RMC had ever filed any criminal case against Ms. Irene Yabut, aside from the fact that she does not appear to have been impleaded even as a party defendant in any civil case for damages. Why is RMC insulating Ms. Irene Yabut from liability when in fact she orchestrated the entire fraud on RMC, her employer? To set the record straight, it is not completely accurate to state that from 5 May 1975 to 16 July 1976, Miss Irene Yabut had transacted with PCIB (then PBC) through only one teller in the person of Azucena Mabayad. In fact, when RMC filed a complaint for estafa before the Office of the Provincial Fiscal of Rizal, it indicted all the tellers of PCIB in the branch who were accused of conspiracy to defraud RMC of its current account deposits. (See Annex B, Rollo p. 22 and 47). Even private respondent RMC, in its Comment, maintains that "when the petitioner's tellers" allowed Irene Yabut to carry out her modus operandi undetected over a period of one year, " their negligence cannot but be gross." (Rollo, p. 55; see also Rollo pp. 58 to 59). This rules out the possibility that there may have been some form of collusion between Yabut and bank teller Mabayad. Mabayad was just unfortunate that private respondent's documentary evidence showed that she was the attending teller in the bulk of Yabut's transactions with the bank. Going back to Yabut's modus operandi, it is not disputed that each time Yabut would transact business with PBC's tellers, she would accomplish two (2) copies of the current account deposit slip. PBC's deposit slip, as issued in 1975, had two parts. The upper part was called the depositor's stub and the lower part was called the bank copy. Both parts were detachable from each other. The deposit slip was prepared

and signed by the depositor or his representative, who indicated therein the current account number to which the deposit was to be credited, the name of the depositor or current account holder, the date of the deposit, and the amount of the deposit either in cash or in checks. ( Rollo, p. 137) Since Yabut deposited money in cash, the usual bank procedure then was for the teller to count whether the cash deposit tallied with the amount written down by the depositor in the deposit slip. If it did, then the teller proceeded to verify whether the current account number matched with the current account name as written in the deposit slip. In the earlier days before the age of full computerization, a bank normally maintained a ledger which served as a repository of accounts to which debits and credits resulting from transactions with the bank were posted from books of original entry. Thus, it was only after the transaction was posted in the ledger that the teller proceeded to machine validate the deposit slip and then affix his signature or initial to serve as proof of the completed transaction. It should be noted that the teller validated the depositor's stub in the upper portion and the bank copy on the lower portion on both the original and duplicate copies of the deposit slips presented by Yabut. The teller, however, detached the validated depositor's stub on the original deposit slip and allowed Yabut to retain the whole validated duplicate deposit slip that bore the same account number as the original deposit slip, but with the account name purposely left blank by Yabut, on the assumption that it would serve no other purpose but for a personal record to complement the original validated depositor's stub. Thus, when Yabut wrote the name of RMC on the blank account name on the validated duplicate copy of the deposit slip, tampered with its account number, and superimposed RMC's account number, said act only served to cover-up the loss already caused by her to RMC, or after the deposit slip was validated by the teller in favor of Yabut's husband. Stated otherwise, when there is a clear evidence of tampering with any of the material entries in a deposit slip, the genuineness and due execution of the document become an issue in resolving whether or not the transaction had been fair and regular and whether the ordinary course of business had been followed by the bank. It is logical, therefore, to conclude that the legal or proximate cause of RMC's loss was when Yabut, its employee, deposited the money of RMC in her husband's name and account number instead of that of RMC, the rightful owner of such deposited funds. Precisely, it was the criminal act of Yabut that directly caused damage to RMC, her employer, not the validation of the deposit slip by the teller as the deposit slip was made out by Yabut in her husband's name and to his account. Even if the bank teller had required Yabut to completely fill up the duplicate deposit slip, the original deposit slip would nonetheless still be validated under the account of Yabut's husband. In fine, the damage had already been done to RMC when Yabut deposited its funds in the name and account number of her husband with petitioner bank. It is then entirely left to speculation what Yabut would have done afterwards like tampering both the account number and the account name on the stub of the original deposit slip and on the duplicate copy in order to cover up her crime. Under the circumstances in this case, there was no way for PBC's bank tellers to reasonably foresee that Yabut might or would use the duplicate deposit slip to cover up her crime. In the first place, the bank tellers were absolutely unaware that a crime had already been consummated by Yabut when her transaction by her sole doing was posted in the ledger and validated by the teller in favor of her husband's account even if the funds deposited belonged to RMC. The teller(s) in this case were not in any way proven to be parties to the crime either as accessories or accomplices. Nor could it be said that the act of posting and validation was in itself a negligent act because the teller(s) simply had no choice but to accept and validate the deposit as written in the original deposit slip under the account number and name of Yabut's husband. Hence, the act of validating the duplicate copy was not the proximate cause of RMC's injury but merely a remote cause which an

independent cause or agency merely took advantage of to accomplish something which was not the probable or natural effect thereof. That explains why Yabut still had to tamper with the account number of the duplicate deposit slip after filling in the name of RMC in the blank space. Coming now to the doctrine of "last clear chance," it is my considered view that the doctrine assumes that the negligence of the defendant was subsequent to the negligence of the plaintiff and the same must be the proximate cause of the injury. In short, there must be a last and a clear chance, not a last possible chance, to avoid the accident or injury. It must have been a chance as would have enabled a reasonably prudent man in like position to have acted effectively to avoid the injury and the resulting damage to himself. In the case at bar, the bank was not remiss in its duty of sending monthly bank statements to private respondent RMC so that any error or discrepancy in the entries therein could be brought to the bank's attention at the earliest opportunity. Private respondent failed to examine these bank statements not because it was prevented by some cause in not doing so, but because it was purposely negligent as it admitted that it does not normally check bank statements given by banks. It was private respondent who had the last and clear chance to prevent any further misappropriation by Yabut had it only reviewed the status of its current accounts on the bank statements sent to it monthly or regularly. Since a sizable amount of cash was entrusted to Yabut, private respondent should, at least, have taken ordinary care of its concerns, as what the law presumes. Its negligence, therefore, is not contributory but the immediate and proximate cause of its injury. I vote to grant the petition.

Republic of the Philippines SUPREME COURT Manila FIRST DIVISION G.R. No. L-83524 October 13, 1989 ERNESTO KRAMER, JR. and MARIA KRAMER, petitioners, vs. HON. COURT OF APPEALS and TRANS-ASIA SHIPPING LINES, INC., respondents. Rodolfo D. Mapile for petitioners. Jose Al. Perez for private respondent.

GANCAYCO, J.: The principal issue in this Petition for Review is whether or not a Complaint for damages instituted by the petitioners against the private respondent arising from a marine collision is barred by the statute of limitations. The record of the case discloses that in the early morning of April 8, 1976, the F/B Marjolea, a fishing boat owned by the petitioners Ernesto Kramer, Jr. and Marta Kramer, was navigating its way from Marinduque to Manila. Somewhere near Maricabon Island and Cape Santiago, the boat figured in a collision with an inter-island vessel, the M/V Asia Philippines owned by the private respondent Trans-Asia Shipping Lines, Inc. As a consequence of the collision, the F/B Marjolea sank, taking with it its fish catch. After the mishap, the captains of both vessels filed their respective marine protests with the Board of Marine Inquiry of the Philippine Coast Guard. The Board conducted an investigation for the purpose of determining the proximate cause of the maritime collision. On October 19, 1981, the Board concluded that the loss of the F/B Marjolea and its fish catch was attributable to the negligence of the employees of the private respondent who were on board the M/V Asia Philippines during the collision. The findings made by the Board served as the basis of a subsequent Decision of the Commandant of the Philippine Coast Guard dated April 29, 1982 wherein the second mate of the M/V Asia Philippines was suspended from pursuing his profession as a marine officer. 1 On May 30, 1985, the petitioners instituted a Complaint for damages against the private respondent before Branch 117 of the Regional Trial Court in Pasay City. 2 The suit was docketed as Civil Case No. 2907-P. The private respondent filed a Motion seeking the dismissal of the Complaint on the ground of prescription. He argued that under Article 1146 of the Civil Code, 3 the prescriptive period for instituting a Complaint for damages arising from a quasi-delict like a maritime collision is four years. He maintained that the petitioners should have filed their Complaint within four years from the date when their cause of

action accrued, i.e., from April 8, 1976 when the maritime collision took place, and that accordingly, the Complaint filed on May 30, 1985 was instituted beyond the four-year prescriptive period. For their part, the petitioners contended that maritime collisions have peculiarities and characteristics which only persons with special skill, training and experience like the members of the Board of Marine Inquiry can properly analyze and resolve. The petitioners argued that the running of the prescriptive period was tolled by the filing of the marine protest and that their cause of action accrued only on April 29, 1982, the date when the Decision ascertaining the negligence of the crew of the M/V Asia Philippines had become final, and that the four-year prescriptive period under Article 1146 of the Civil Code should be computed from the said date. The petitioners concluded that inasmuch as the Complaint was filed on May 30, 1985, the same was seasonably filed. In an Order dated September 25, 1986, 4 the trial court denied the Motion filed by the private respondent. The trial court observed that in ascertaining negligence relating to a maritime collision, there is a need to rely on highly technical aspects attendant to such collision, and that the Board of Marine Inquiry was constituted pursuant to the Philippine Merchant Marine Rules and Regulations, which took effect on January 1, 1975 by virtue of Letter of Instruction No. 208 issued on August 12, 1974 by then President Ferdinand E. Marcos, precisely to answer the need. The trial court went on to say that the four-year prescriptive period provided in Article 1146 of the Civil Code should begin to run only from April 29, 1982, the date when the negligence of the crew of the M/V Asia Philippines had been finally ascertained. The pertinent portions of the Order of the trial court are as follows Considering that the action concerns an incident involving a collision at sea of two vehicles and to determine negligence for that incident there is an absolute need to rely on highly technical aspects attendant to such collisions. It is obviously to answer such a need that the Marine Board of Inquiry ( Sic) was constituted pursuant to the Philippine Merchant Marine Rules and Regulations which became effective January 1, 1975 under Letter of Instruction(s) No. 208 dated August 12, 1974. The relevant section of that law (Art. XVI/b/ provided as follow(s): 1. Board of Marine Inquiry (BMI) Shall have the jurisdiction to investigate marine accidents or casualties relative to the liability of shipowners and officers, exclusive jurisdiction to investigate cases/complaints against the marine officers; and to review all proceedings or investigation conducted by the Special Boards of Marine Inquiry. 2. Special Board of Marine Inquiry. Shall have original jurisdiction to investigate marine casualties and disasters which occur or are committed within the limits of the Coast Guard District concerned or those referred by the Commandant. The Court finds reason in the argument of the plaintiff that marine incidents have those 'peculiarities which only persons of special skill, training and exposure can rightfully decipher and resolve on the matter of the negligence and liabilities of parties involved and inasmuch as the report of the Board of Inquiry (sic) admittedly came out only on April 29, 1982, the prescriptive period provided x x x under Art. 1146 of the Civil Code should begin to run only from that date. The complaint was filed with this Court on May 10, 1985, hence the statute of limitations can not constitute a bar to the filing of this case. 5 The private respondent elevated the case to the Court of Appeals by way of a special civil action for certiorari and prohibition, alleging therein that the trial court committed a grave abuse of discretion in refusing to dismiss the Complaint filed by the petitioners. The case was assigned to the Second Division of the appellate court and was docketed as Case No. CA-G.R. SP No. 12032. 6 In a Decision dated November 27, 1987, 7 and clarified in a Resolution dated January 12, 1988, 8 the Court of Appeals granted the Petition filed by the private respondent and ordered the trial court to dismiss the Complaint. The pertinent portions of the Decision of the appellate court are as follows

It is clear that the cause of action of private respondent (the herein petitioners Ernesto Kramer, Jr. and Marta Kramer) accrued from the occurrence of the mishap because that is the precise time when damages were inflicted upon and sustained by the aggrieved party and from which relief from the court is presently sought. Private respondents should have immediately instituted a complaint for damages based on a quasi-delict within four years from the said marine incident because its cause of action had already definitely ripened at the onset of the collision. For this reason, he (sic) could cite the negligence on the part of the personnel of the petitioner to exercise due care and lack of (sic) diligence to prevent the collision that resulted in the total loss of their x x x boat. We can only extend scant consideration to respondent judge's reasoning that in view of the nature of the marine collision that allegedly involves highly technical aspects, the running of the prescriptive period should only commence from the finality of the investigation conducted by the Marine Board of Inquiry (sic) and the decision of the Commandant, Philippine Coast Guard, who has original jurisdiction over the mishap. For one, while it is true that the findings and recommendation of the Board and the decision of the Commandant may be helpful to the court in ascertaining which of the parties are at fault, still the former (court) is not bound by said findings and decision. Indeed, the same findings and decision could be entirely or partially admitted, modified, amended, or disregarded by the court according to its lights and judicial discretion. For another, if the accrual of a cause of action will be made to depend on the action to be taken by certain government agencies, then necessarily, the tolling of the prescriptive period would hinge upon the discretion of such agencies. Said alternative it is easy to foresee would be fraught with hazards. Their investigations might be delayed and lag and then witnesses in the meantime might not be available or disappear, or certain documents may no longer be available or might be mislaid. ... 9 The petitioners filed a Motion for the reconsideration of the said Decision but the same was denied by the Court of Appeals in a Resolution dated May 27, 1988. 10 Hence, the instant Petition wherein the arguments raised by the petitioner before the trial court are reiterated. 11 In addition thereto, the petitioner contends that the Decision of the Court of Appeals 12 The private respondent filed its Comment on the Petition seeking therein the dismissal of the same. 13 It is also contended by the private respondent that the ruling of the Court in Vasquez is not applicable to the case at bar because the said case involves a maritime collision attributable to a fortuitous event. In a subsequent pleading, the private respondent argues that the Philippine Merchant Marine Rules and Regulations cannot have the effect of repealing the provisions of the Civil Code on prescription of actions.
14

On September 19,1988, the Court resolved to give due course to the petition. 15 After the parties filed their respective memoranda, the case was deemed submitted for decision. The petition is devoid of merit. Under Article 1146 of the Civil Code, an action based upon a quasi-delict must be instituted within four (4) years. The prescriptive period begins from the day the quasi-delict is committed. In Paulan vs. Sarabia, 16 this Court ruled that in an action for damages arising from the collision of two (2) trucks, the action being based on a quasi-delict, the four (4) year prescriptive period must be counted from the day of the collision. In Espanol vs. Chairman, Philippine Veterans Administration,
17

this Court held as follows-

The right of action accrues when there exists a cause of action, which consists of 3 elements, namely: a) a right in favor of the plaintiff by whatever means and under whatever law it arises or is created; b) an obligation on the part of defendant to respect such right; and c) an act or omission on the part of such defendant violative of the right of the plaintiff ... It is only when the last element occurs or takes place that it can be said in law that a cause of action has arisen ... .

From the foregoing ruling, it is clear that the prescriptive period must be counted when the last element occurs or takes place, that is, the time of the commission of an act or omission violative of the right of the plaintiff, which is the time when the cause of action arises. It is therefore clear that in this action for damages arising from the collision of two (2) vessels the four (4) year prescriptive period must be counted from the day of the collision. The aggrieved party need not wait for a determination by an administrative body like a Board of Marine Inquiry, that the collision was caused by the fault or negligence of the other party before he can file an action for damages. The ruling in Vasquez does not apply in this case. Immediately after the collision the aggrieved party can seek relief from the courts by alleging such negligence or fault of the owners, agents or personnel of the other vessel. Thus, the respondent court correctly found that the action of petitioner has prescribed. The collision occurred on April 8, 1976. The complaint for damages was filed iii court only on May 30, 1 985, was beyond the four (4) year prescriptive period. WHEREFORE, the petition is dismissed. No costs. SO ORDERED. Narvasa, Cruz, Grio-Aquino and Medialdea, JJ., concur.

Republic of the Philippines SUPREME COURT Manila THIRD DIVISION G.R. No. L-56487 October 21, 1991 REYNALDA GATCHALIAN, petitioner, vs. ARSENIO DELIM and the HON. COURT OF APPEALS, respondents. Pedro G. Peralta for petitioner. Florentino G. Libatique for private respondent.

FELICIANO, J.:p At noon time on 11 July 1973, petitioner Reynalda Gatchalian boarded, as a paying passenger, respondent's "Thames" mini bus at a point in San Eugenio, Aringay, La Union, bound for Bauang, of the same province. On the way, while the bus was running along the highway in Barrio Payocpoc, Bauang, Union, "a snapping sound" was suddenly heard at one part of the bus and, shortly thereafter, the vehicle

bumped a cement flower pot on the side of the road, went off the road, turned turtle and fell into a ditch. Several passengers, including petitioner Gatchalian, were injured. They were promptly taken to Bethany Hospital at San Fernando, La Union, for medical treatment. Upon medical examination, petitioner was found to have sustained physical injuries on the leg, arm and forehead, specifically described as follows: lacerated wound, forehead; abrasion, elbow, left; abrasion, knee, left; abrasion, lateral surface, leg, left. 1 On 14 July 1973, while injured. passengers were confined in the hospital, Mrs. Adela Delim, wife of respondent, visited them and later paid for their hospitalization and medical expenses. She also gave petitioner P12.00 with which to pay her transportation expense in going home from the hospital. However, before Mrs. Delim left, she had the injured passengers, including petitioner, sign an already prepared Joint Affidavit which stated, among other things: That we were passengers of Thames with Plate No. 52-222 PUJ Phil. 73 and victims after the said Thames met an accident at Barrio Payocpoc Norte, Bauang, La Union while passing through the National Highway No. 3; That after a thorough investigation the said Thames met the accident due to mechanical defect and went off the road and turned turtle to the east canal of the road into a creek causing physical injuries to us; xxx xxx xxx That we are no longer interested to file a complaint, criminal or civil against the said driver and owner of the said Thames, because it was an accident and the said driver and owner of the said Thames have gone to the extent of helping us to be treated upon our injuries. xxx xxx xxx 2 (Emphasis supplied) Notwithstanding this document, petitioner Gathalian filed with the then Court of First Instance of La Union an action extra contractu to recover compensatory and moral damages. She alleged in the complaint that her injuries sustained from the vehicular mishap had left her with a conspicuous white scar measuring 1 by 1/2 inches on the forehead, generating mental suffering and an inferiority complex on her part; and that as a result, she had to retire in seclusion and stay away from her friends. She also alleged that the scar diminished her facial beauty and deprived her of opportunities for employment. She prayed for an award of: P10,000.00 for loss of employment and other opportunities; P10,000.00 for the cost of plastic surgery for removal of the scar on her forehead; P30,000.00 for moral damages; and P1,000.00 as attorney's fees. In defense, respondent averred that the vehicular mishap was due to force majeure, and that petitioner had already been paid and moreover had waived any right to institute any action against him (private respondent) and his driver, when petitioner Gatchalian signed the Joint Affidavit on 14 July 1973. After trial, the trial court dismissed the complaint upon the ground that when petitioner Gatchalian signed the Joint Affidavit, she relinquished any right of action (whether criminal or civil) that she may have had against respondent and the driver of the mini-bus. On appeal by petitioner, the Court of Appeals reversed the trial court's conclusion that there had been a valid waiver, but affirmed the dismissal of the case by denying petitioner's claim for damages: We are not in accord, therefore, of ( sic) the ground of the trial court's dismissal of the complaint, although we conform to the trial court's disposition of the case its dismissal.

IN VIEW OF THE FOREGOING considerations, there being no error committed by the lower court in dismissing the plaintiff-appellant's complaint, the judgment of dismissal is hereby affirmed. Without special pronouncement as to costs. SO ORDERED. 3 In the present Petition for Review filed in forma pauperis, petitioner assails the decision of the Court of Appeals and ask this Court to award her actual or compensatory damages as well as moral damages. We agree with the majority of the Court of Appeals who held that no valid waiver of her cause of action had been made by petitioner. The relevant language of the Joint Affidavit may be quoted again: That we are no longer interested to file a complaint, criminal or civil against the said driver and owner of the said Thames, because it was an accident and the said driver and owner of the said Thames have gone to the extent of helping us to be treated upon our injuries. (Emphasis supplied) A waiver, to be valid and effective, must in the first place be couched in clear and unequivocal terms which leave no doubt as to the intention of a person to give up a right or benefit which legally pertains to him. 4 A waiver may not casually be attributed to a person when the terms thereof do not explicitly and clearly evidence an intent to abandon a right vested in such person. The degree of explicitness which this Court has required in purported waivers is illustrated in Yepes and Susaya v. Samar Express Transit (supra), where the Court in reading and rejecting a purported waiver said: . . . It appears that before their transfer to the Leyte Provincial Hospital, appellees were asked to sign as, in fact, they signed the document Exhibit I wherein they stated that "in consideration of the expenses which said operator has incurred in properly giving us the proper medical treatment, we hereby manifest our desire to waive any and all claims against the operator of the Samar Express Transit." xxx xxx xxx Even a cursory examination of the document mentioned above will readily show that appellees did not actually waive their right to claim damages from appellant for the latter's failure to comply with their contract of carriage. All that said document proves is that they expressed a "desire" to make the waiver which obviously is not the same as making an actual waiver of their right. A waiver of the kind invoked by appellant must be clear and unequivocal (Decision of the Supreme Court of Spain of July 8, 1887) which is not the case of the one relied upon in this appeal . (Emphasis supplied) If we apply the standard used in Yepes and Susaya, we would have to conclude that the terms of the Joint Affidavit in the instant case cannot be regarded as a waiver cast in "clear and unequivocal" terms. Moreover, the circumstances under which the Joint Affidavit was signed by petitioner Gatchalian need to be considered. Petitioner testified that she was still reeling from the effects of the vehicular accident, having been in the hospital for only three days, when the purported waiver in the form of the Joint Affidavit was presented to her for signing; that while reading the same, she experienced dizziness but that, seeing the other passengers who had also suffered injuries sign the document, she too signed without bothering to read the Joint Affidavit in its entirety. Considering these circumstances there appears substantial doubt whether petitioner understood fully the import of the Joint Affidavit (prepared by or at the instance of private respondent) she signed and whether she actually intended thereby to waive any right of action against private respondent.

Finally, because what is involved here is the liability of a common carrier for injuries sustained by passengers in respect of whose safety a common carrier must exercise extraordinary diligence, we must construe any such purported waiver most strictly against the common carrier. For a waiver to be valid and effective, it must not be contrary to law, morals, public policy or good customs. 5 To uphold a supposed waiver of any right to claim damages by an injured passenger, under circumstances like those exhibited in this case, would be to dilute and weaken the standard of extraordinary diligence exacted by the law from common carriers and hence to render that standard unenforceable. 6 We believe such a purported waiver is offensive to public policy. Petitioner Gatchalian also argues that the Court of Appeals, having by majority vote held that there was no enforceable waiver of her right of action, should have awarded her actual or compensatory and moral damages as a matter of course. We have already noted that a duty to exercise extraordinary diligence in protecting the safety of its passengers is imposed upon a common carrier. 7 In case of death or injuries to passengers, a statutory presumption arises that the common carrier was at fault or had acted negligently "unless it proves that it [had] observed extraordinary diligence as prescribed in Articles 1733 and 1755." 8 In fact, because of this statutory presumption, it has been held that a court need not even make an express finding of fault or negligence on the part of the common carrier in order to hold it liable. 9 To overcome this presumption, the common carrier must slow to the court that it had exercised extraordinary diligence to prevent the injuries. 10 The standard of extraordinary diligence imposed upon common carriers is considerably more demanding than the standard of ordinary diligence, i.e., the diligence of a good paterfamilias established in respect of the ordinary relations between members of society. A common carrier is bound to carry its passengers safely" as far as human care and foresight can provide , using the utmost diligence of a very cautious person, with due regard to all the circumstances". 11 Thus, the question which must be addressed is whether or not private respondent has successfully proved that he had exercised extraordinary diligence to prevent the mishap involving his mini-bus. The records before the Court are bereft of any evidence showing that respondent had exercised the extraordinary diligence required by law. Curiously, respondent did not even attempt, during the trial before the court a quo, to prove that he had indeed exercised the requisite extraordinary diligence. Respondent did try to exculpate himself from liability by alleging that the mishap was the result of force majeure. But allegation is not proof and here again, respondent utterly failed to substantiate his defense of force majeure. To exempt a common carrier from liability for death or physical injuries to passengers upon the ground of force majeure, the carrier must clearly show not only that the efficient cause of the casualty was entirely independent of the human will, but also that it was impossible to avoid. Any participation by the common carrier in the occurrence of the injury will defeat the defense of force majeure. In Servando v. Philippine Steam Navigation Company, 12 the Court summed up the essential characteristics of force majeure by quoting with approval from the Enciclopedia Juridica Espaola: Thus, where fortuitous event or force majeure is the immediate and proximate cause of the loss, the obligor is exempt from liability non-performance. The Partidas, the antecedent of Article 1174 of the Civil Code, defines "caso fortuito" as 'an event that takes place by accident and could not have been foreseen. Examples of this are destruction of houses, unexpected fire, shipwreck, violence of robber. In its dissertation on the phrase "caso fortuito" the Enciclopedia Juridica Espaola says: 'In legal sense and, consequently, also in relation to contracts, a "caso fortuito" presents the following essential characteristics: (1) the cause of the unforeseen and unexpected occurence, or of the failure of the debtor to comply with his obligation, must be independent of the human will; (2) it must be impossible to foresee the event which constitutes the "caso fortuito", or if it can be foreseen, it must be impossible to avoid; (3) the occurrence must be such as to render it impossible for the debtor to fulfill his obligation in a normal manner; and (4) the obligor must be free from any participation in the aggravation of the injury resulting to the creditor.

Upon the other hand, the record yields affirmative evidence of fault or negligence on the part of respondent common carrier. In her direct examination, petitioner Gatchalian narrated that shortly before the vehicle went off the road and into a ditch, a "snapping sound" was suddenly heard at one part of the bus. One of the passengers, an old woman, cried out, "What happened?" ("Apay addan samet nadadaelen?"). The driver replied, nonchalantly, "That is only normal" ("Ugali ti makina dayta"). The driver did not stop to check if anything had gone wrong with the bus. Moreover, the driver's reply necessarily indicated that the same "snapping sound" had been heard in the bus on previous occasions. This could only mean that the bus had not been checked physically or mechanically to determine what was causing the "snapping sound" which had occurred so frequently that the driver had gotten accustomed to it. Such a sound is obviously alien to a motor vehicle in good operating condition, and even a modicum of concern for life and limb of passengers dictated that the bus be checked and repaired. The obvious continued failure of respondent to look after the roadworthiness and safety of the bus, coupled with the driver's refusal or neglect to stop the mini-bus after he had heard once again the "snapping sound" and the cry of alarm from one of the passengers, constituted wanton disregard of the physical safety of the passengers, and hence gross negligence on the part of respondent and his driver. We turn to petitioner's claim for damages. The first item in that claim relates to revenue which petitioner said she failed to realize because of the effects of the vehicular mishap. Petitioner maintains that on the day that the mini-bus went off the road, she was supposed to confer with the district supervisor of public schools for a substitute teacher's job, a job which she had held off and on as a "casual employee." The Court of Appeals, however, found that at the time of the accident, she was no longer employed in a public school since, being a casual employee and not a Civil Service eligible, she had been laid off. Her employment as a substitute teacher was occasional and episodic, contingent upon the availability of vacancies for substitute teachers. In view of her employment status as such, the Court of Appeals held that she could not be said to have in fact lost any employment after and by reason of the accident. 13 Such was the factual finding of the Court of Appeals, a finding entitled to due respect from this Court. Petitioner Gatchalian has not submitted any basis for overturning this finding of fact, and she may not be awarded damages on the basis of speculation or conjecture. 14 Petitioner's claim for the cost of plastic surgery for removal of the scar on her forehead, is another matter. A person is entitled to the physical integrity of his or her body; if that integrity is violated or diminished, actual injury is suffered for which actual or compensatory damages are due and assessable. Petitioner Gatchalian is entitled to be placed as nearly as possible in the condition that she was before the mishap. A scar, especially one on the face of the woman, resulting from the infliction of injury upon her, is a violation of bodily integrity, giving raise to a legitimate claim for restoration to her conditio ante. If the scar is relatively small and does not grievously disfigure the victim, the cost of surgery may be expected to be correspondingly modest. In Araneta, et al. vs. Areglado, et al., 15 this Court awarded actual or compensatory damages for, among other things, the surgical removal of the scar on the face of a young boy who had been injured in a vehicular collision. The Court there held: We agree with the appellants that the damages awarded by the lower court for the injuries suffered by Benjamin Araneta are inadequate. In allowing not more than P1,000.00 as compensation for the "permanent deformity and something like an inferiority complex" as well as for the "pathological condition on the left side of the jaw" caused to said plaintiff, the court below overlooked the clear evidence on record that to arrest the degenerative process taking place in the mandible and restore the injured boy to a nearly normal condition, surgical intervention was needed, for which the doctor's charges would amount to P3,000.00, exclusive of hospitalization fees, expenses and medicines. Furthermore, the operation, according to Dr. Dio, would probably have to be repeated in order to effectuate a complete cure, while removal of the scar on the face obviously demanded plastic surgery. xxx xxx xxx The father's failure to submit his son to a plastic operation as soon as possible does not prove that such treatment is not called for. The damage to the jaw and the existence of the scar in Benjamin

Araneta's face are physical facts that can not be reasoned out of existence. That the injury should be treated in order to restore him as far as possible to his original condition is undeniable. The father's delay, or even his negligence, should not be allowed to prejudice the son who has no control over the parent's action nor impair his right to a full indemnity. . . . Still, taking into account the necessity and cost of corrective measures to fully repair the damage; the pain suffered by the injured party; his feelings of inferiority due to consciousness of his present deformity, as well as the voluntary character of the injury inflicted; and further considering that a repair, however, skillfully conducted, is never equivalent to the original state, we are of the opinion that the indemnity granted by the trial court should be increased to a total of P18,000.00. (Emphasis supplied) Petitioner estimated that the cost of having her scar surgically removed was somewhere between P10,000.00 to P15,000.00. 16 Upon the other hand, Dr. Fe Tayao Lasam, a witness presented as an expert by petitioner, testified that the cost would probably be between P5,000.00 to P10,000.00. 17 In view of this testimony, and the fact that a considerable amount of time has lapsed since the mishap in 1973 which may be expected to increase not only the cost but also very probably the difficulty of removing the scar, we consider that the amount of P15,000.00 to cover the cost of such plastic surgery is not unreasonable. Turning to petitioner's claim for moral damages, the long-established rule is that moral damages may be awarded where gross negligence on the part of the common carrier is shown. 18 Since we have earlier concluded that respondent common carrier and his driver had been grossly negligent in connection with the bus mishap which had injured petitioner and other passengers, and recalling the aggressive manuevers of respondent, through his wife, to get the victims to waive their right to recover damages even as they were still hospitalized for their injuries, petitioner must be held entitled to such moral damages. Considering the extent of pain and anxiety which petitioner must have suffered as a result of her physical injuries including the permanent scar on her forehead, we believe that the amount of P30,000.00 would be a reasonable award. Petitioner's claim for P1,000.00 as atttorney's fees is in fact even more modest. 19 WHEREFORE, the Decision of the Court of Appeals dated 24 October 1980, as well as the decision of the then Court of First Instance of La Union dated 4 December 1975 are hereby REVERSED and SET ASIDE.Respondent is hereby ORDERED to pay petitioner Reynalda Gatchalian the following sums: 1) P15,000.00 as actual or compensatory damages to cover the cost of plastic surgery for the removal of the scar on petitioner's forehead; 2) P30,000.00 as moral damages; and 3) P1,000.00 as attorney's fees, the aggregate amount to bear interest at the legal rate of 6% per annum counting from the promulgation of this decision until full payment thereof. Costs against private respondent. SO ORDERED. Fernan, C.J., Gutierrez, Jr., Bidin and Davide, Jr., JJ., concur.

THIRD DIVISION [G.R. No. 165969, November 27, 2008] NATIONAL POWER CORPORATION, PETITIONER, VS. HEIRS OF NOBLE CASIONAN, RESPONDENTS. DECISION

REYES, R.T., J.: PETITIONING power company pleads for mitigation of awarded damages on ground of contributory negligence. But is the victim in this case partly to blame for his electrocution and eventual demise? This is a review on certiorari of the Decision[1] of the Court of Appeals (CA) which found the National Power Corporation (NPC) liable for damages for the death of Noble Casionan due to electrocution from the company's high tension transmission lines. The Facts The facts, as found by the trial court are as follows: Respondents are the parents of Noble Casionan, 19 years old at the time of the incident that claimed his life on June 27, 1995. He would have turned 20 years of age on November 9 of that year. Noble was originally from Cervantes, Ilocos Sur. He worked as a pocket miner in Dalicno, Ampucao, Itogon, Benguet. A trail leading to Sangilo, Itogon, existed in Dalicno and this trail was regularly used by members of the community. Sometime in the 1970's, petitioner NPC installed high-tension electrical transmission lines of 69 kilovolts (KV) traversing the trail. Eventually, some of the transmission lines sagged and dangled reducing their distance from the ground to only about eight to ten feet. This posed a great threat to passersby who were exposed to the danger of electrocution especially during the wet season. As early as 1991, the leaders of Ampucao, Itogon made verbal and written requests for NPC to institute safety measures to protect users of the trail from their high tension wires. On June 18, 1991 and February 11, 1993, Pablo and Pedro Ngaosie, elders of the community, wrote Engr. Paterno Banayot, Area Manager of NPC, to make immediate and appropriate repairs of the high tension wires. They reiterated the danger it posed to small-scale miners especially during the wet season. They related an incident where one boy was nearly electrocuted. In a letter dated March 1, 1995, Engr. Banayot informed Itogon Mayor Cresencio Pacalso that NPC had installed nine additional poles on their Beckel-Philex 60 KV line. They likewise identified a possible rerouting scheme with an estimated total cost of 1.7 million pesos to improve the distance from its deteriorating lines to the ground. On June 27, 1995, Noble and his co-pocket miner, Melchor Jimenez, were at Dalicno. They cut two bamboo poles for their pocket mining. One was 18 to 19 feet long and the other was 14 feet long. Each man carried one pole horizontally on his shoulder: Noble carried the shorter pole while Melchor carried the longer pole. Noble walked ahead as both passed through the trail underneath the NPC high tension transmission lines on their way to their work place. As Noble was going uphill and turning left on a curve, the tip of the bamboo pole he was carrying touched one of the dangling high tension wires. Melchor, who was walking behind him, narrated that he heard a buzzing sound when the tip of Noble's pole touched the wire for only about one or two seconds. Thereafter, he saw Noble fall to the ground. Melchor rushed to Noble and shook him but the latter was already dead. Their co-workers heard Melchor's shout for help and together they brought the body of Noble to their camp.

A post-mortem examination by Dra. Ignacia Reyes Ciriaco, Municipal Health Officer of Itogon, Benguet, determined the cause of death to be cardiac arrest, secondary to ventricular fibulation, secondary to electrocution. [2] She also observed a small burned area in the middle right finger of the victim. Police investigators who visited the site of the incident confirmed that portions of the high tension wires above the trail hung very low, just about eight to ten feet above the ground. They noted that the residents, school children, and pocket miners usually used the trail and had to pass directly underneath the wires. The trail was the only viable way since the other side was a precipice. In addition, they did not see any danger warning signs installed in the trail. The elders and leaders of the community, through Mayor Cresencio Pacalso, informed the General Manager of NPC in Itogon of the incident. After learning of the electrocution, NPC repaired the dangling and sagging transmission lines and put up warning signs around the area. Consequently, the heirs of the deceased Noble filed a claim for damages against the NPC before the Regional Trial Court (RTC) in Benguet. In its answer, NPC denied being negligent in maintaining the safety of the high tension transmission lines. It averred that there were danger and warning signs installed but these were stolen by children. Excavations were also made to increase the necessary clearance from the ground to about 17 to 18 feet but some towers or poles sank due to pocket mining in the area. At the trial, NPC witnesses testified that the cause of death could not have been electrocution because the victim did not suffer extensive burns despite the strong 69 KV carried by the transmission lines. NPC argued that if Noble did die by electrocution, it was due to his own negligence. The company counter-claimed for attorney's fees and cost of litigation. RTC Disposition On February 17, 1998, the RTC decided in favor of respondents. The fallo of its decision reads: WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendant NPC as follows: 1. Declaring defendant NPC guilty of Negligence (Quasi-Delict) in connection with the death of Noble Casionan; 2. Ordering NPC as a consequence of its negligence, to pay the plaintiffs Jose and Linda Casionan, as heirs of the deceased, Noble Casionan, the following Damages: a. b. c. d. e. P50,000.00 as indemnity for the death of their son Noble Casionan; P100,000.00 as moral damages; P50,000.00 as exemplary damages; P52,277.50 as actual damages incurred for the expenses of burial and wake in connection with the death of Noble Casionan; P720,000.00 as the loss of unearned income; and

f.

P20,000.00 as attorney's fees and the cost of suit; and

3. Dismissing the counter claim of the NPC for lack of merit.[3] The RTC gave more credence to the testimony of witnesses for respondents than those of NPC who were not actually present at the time of the incident. The trial court observed that witnesses for NPC were biased witnesses because they were all employed by the company, except for the witness from the Department of Environment and Natural Resources (DENR). The RTC found: Melchor Jimenez was very vivid in his account. He declared that he and Noble Casionan cut two bamboo poles, one 14 feet and the other about 18 feet. The shorter bamboo pole was carried by Noble Casionan and the longer bamboo pole was carried by him. And they walked along the trail underneath the transmission lines. He was following Noble Casionan. And when they were going uphill in the trail and Noble Casionan was to turn left in a curve, the bamboo pole of Casionan swung around and its tip at the back touched for one or two seconds or for a split moment the transmission line that was dangling and a buzzing sound was heard. And Casionan immediately fell dead and simply stopped breathing. What better account would there be than this? Melchor Jimenez was an eye witness as to how it all happened.[4] (Emphasis added) The RTC ruled that the negligence of NPC in maintaining the high-tension wires was established by preponderance of evidence. On this score, the RTC opined: 1. On the matter of whether plaintiffs have a cause of action against defendant NPC, obviously, they would have. x x x This negligence of the NPC was well established and cannot be denied because previous to this incident, the attention of NPC has already been called by several requests and demands in 1991, 1993 and 1995 by elders and leaders of the community in the area to the fact that their transmission lines were dangling and sagging and the clearance thereof from the line to the ground was only 8 to 10 feet and not within the standard clearance of 18 to 20 feet but no safety measures were taken. They did not even put danger and warning signs so as to warn persons passing underneath.[5] (Emphasis added) Disagreeing with the ruling of the trial court, NPC elevated the case to the CA. In its appeal, it argued that the RTC erred in ruling that NPC was liable for Noble's death. Further, even assuming that Noble died of electrocution, the RTC erred in not finding that he was guilty of contributory negligence and in awarding excessive damages. CA Disposition On June 30, 2004, the CA promulgated its decision, disposing as follows: WHEREFORE, the appealed Decision is hereby AFFIRMED, with the MODIFICATION that the amount of moral damages is REDUCED to Fifty Thousand Pesos (P50,000.00); and the award of attorney's fees in the sum of Twenty Thousand Pesos (P20,000.00) is DELETED. [6] The CA sustained the findings of fact of the trial court but reduced the award of moral damages from P100,000.00 to P50,000.00. The CA further disallowed the award of attorney's fees because the reason for the award was not expressly stated in the body of the decision. Issues The following issues are presented for Our consideration: (i) Whether the award for damages should be deleted in view of the contributory negligence of the victim; and (ii) Whether the award for unearned income, exemplary, and moral damages should be deleted for lack of factual and legal bases.[7] Our Ruling

I That the victim Noble died from being electrocuted by the high-tension transmission wires of petitioner is not contested by petitioner. We are, however, asked to delete or mitigate the damages awarded by the trial and appellate courts in view of what petitioner alleges to be contributory negligence on the part of the victim. As a rule, only questions of law may be entertained on appeal by certiorari under Rule 45. The finding of negligence on the part of petitioner by the trial court and affirmed by the CA is a question of fact which We cannot pass upon since it would entail going into factual matters on which the finding of negligence was based. [8] Corollary to this, the finding by both courts of the lack of contributory negligence on the part of the victim is a factual issue which is deemed conclusive upon this Court absent any compelling reason for Us to rule otherwise. But even if We walk the extra mile, the finding of liability on the part of petitioner must stay . Petitioner contends that the mere presence of the high tension wires above the trail did not cause the victim's death. Instead, it was Noble's negligent carrying of the bamboo pole that caused his death. It insists that Noble was negligent when he allowed the bamboo pole he was carrying to touch the high tension wires. This is especially true because other people traversing the trail have not been similarly electrocuted. Petitioner's contentions are absurd. The sagging high tension wires were an accident waiting to happen. As established during trial, the lines were sagging around 8 to 10 feet in violation of the required distance of 18 to 20 feet. If the transmission lines were properly maintained by petitioner, the bamboo pole carried by Noble would not have touched the wires. He would not have been electrocuted. Petitioner cannot excuse itself from its failure to properly maintain the wires by attributing negligence to the victim. In Ma-ao Sugar Central Co., Inc. v. Court of Appeals,[9] this Court held that the responsibility of maintaining the rails for the purpose of preventing derailment accidents belonged to the company. The company should not have been negligent in ascertaining that the rails were fully connected than to wait until a life was lost due to an accident. Said the Court: In this petition, the respondent court is faulted for finding the petitioner guilty of negligence notwithstanding its defense of due diligence under Article 2176 of the Civil Code and for disallowing the deductions made by the trial court. Investigation of the accident revealed that the derailment of the locomotive was caused by protruding rails which had come loose because they were not connected and fixed in place by fish plates. Fish plates are described as strips of iron 8" to 12" long and 3 " thick which are attached to the rails by 4 bolts, two on each side, to keep the rails aligned. Although they could be removed only with special equipment, the fish plates that should have kept the rails aligned could not be found at the scene of the accident. There is no question that the maintenance of the rails, for the purpose, inter alia, of preventing derailments, was the responsibility of the petitioner, and that this responsibility was not discharged. According to Jose Reyes, its own witness, who was in charge of the control and supervision of its train operations, cases of derailment in the milling district were frequent and there were even times when such derailments were reported every hour.

The petitioner should therefore have taken more prudent steps to prevent such accidents instead of waiting until a life was finally lost because of its negligence.[10] Moreover, We find no contributory negligence on Noble's part. Negligence is the failure to observe, for the protection of the interest of another person, that degree of care, precaution, and vigilance which the circumstances justly demand, whereby such other person suffers injury.[11] On the other hand, contributory negligence is conduct on the part of the injured party, contributing as a legal cause to the harm he has suffered, which falls below the standard which he is required to conform for his own protection .[12] There is contributory negligence when the party's act showed lack of ordinary care and foresight that such act could cause him harm or put his life in danger. [13] It is an act or omission amounting to want of ordinary care on the part of the person injured which, concurring with the defendant's negligence, is the proximate cause of the injury. [14] The underlying precept on contributory negligence is that a plaintiff who is partly responsible for his own injury should not be entitled to recover damages in full but must bear the consequences of his own negligence. [15] If indeed there was contributory negligence on the part of the victim, then it is proper to reduce the award for damages. This is in consonance with the Civil Code provision that liability will be mitigated in consideration of the contributory negligence of the injured party. Article 2179 of the Civil Code is explicit on this score: When the plaintiff's own negligence was the immediate and proximate cause of his injury, he cannot recover damages. But if his negligence was only contributory, the immediate and proximate cause of the injury being the defendant's lack of due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be awarded. In Ma-ao Sugar Central, it was held that to hold a person as having contributed to his injuries, it must be shown that he performed an act that brought about his injuries in disregard of warnings or signs on an impending danger to health and body. This Court held then that the victim was not guilty of contributory negligence as there was no showing that the caboose where he was riding was a dangerous place and that he recklessly dared to stay there despite warnings or signs of impending danger.[16] In this case, the trail where Noble was electrocuted was regularly used by members of the community. There were no warning signs to inform passersby of the impending danger to their lives should they accidentally touch the high tension wires. Also, the trail was the only viable way from Dalicon to Itogon. Hence, Noble should not be faulted for simply doing what was ordinary routine to other workers in the area. Petitioner further faults the victim in engaging in pocket mining, which is prohibited by the DENR in the area. In Aonuevo v. Court of Appeals ,[17] this Court ruled that the violation of a statute is not sufficient to hold that the violation was the proximate cause of the injury, unless the very injury that happened was precisely what was intended to be prevented by the statute. In said case, the allegation of contributory negligence on the part of the injured party who violated traffic regulations when he failed to register his bicycle or install safety gadgets thereon was struck down. We quote: x x x The bare fact that Villagracia was violating a municipal ordinance at the time of the accident may have sufficiently established some degree of negligence on his part, but such negligence is without legal consequence unless it is shown that it was a contributing cause of the injury. If anything at all, it is but indicative of Villagracia's failure in fulfilling his obligation to the municipal government, which would then be the proper party to initiate corrective action as a result. But such failure alone is not determinative of Villagracia's

negligence in relation to the accident.Negligence is relative or comparative, dependent upon the situation of the parties and the degree of care and vigilance which the particular circumstances reasonably require. To determine if Villagracia was negligent, it is not sufficient to rely solely on the violations of the municipal ordinance, but imperative to examine Villagracia's behavior in relation to the contemporaneous circumstances of the accident. xxxx Under American case law, the failures imputed on Villagracia are not grievous enough so as to negate monetary relief. In the absence of statutory requirement, one is not negligent as a matter of law for failing to equip a horn, bell, or other warning devise onto a bicycle. In most cases, the absence of proper lights on a bicycle does not constitute negligence as a matter of law but is a question for the jury whether the absence of proper lights played a causal part in producing a collision with a motorist. The absence of proper lights on a bicycle at night, as required by statute or ordinance, may constitute negligence barring or diminishing recovery if the bicyclist is struck by a motorist as long as the absence of such lights was a proximate cause of the collision; however, the absence of such lights will not preclude or diminish recovery if the scene of the accident was well illuminated by street lights, if substitute lights were present which clearly rendered the bicyclist visible, if the motorist saw the bicycle in spite of the absence of lights thereon, or if the motorist would have been unable to see the bicycle even if it had been equipped with lights. A bicycle equipped with defective or ineffective brakes may support a finding of negligence barring or diminishing recovery by an injured bicyclist where such condition was a contributing cause of the accident. The above doctrines reveal a common thread. The failure of the bicycle owner to comply with accepted safety practices, whether or not imposed by ordinance or statute, is not sufficient to negate or mitigate recovery unless a causal connection is established between such failure and the injury sustained. The principle likewise finds affirmation in Sanitary Steam, wherein we declared that the violation of a traffic statute must be shown as the proximate cause of the injury, or that it substantially contributed thereto. Aonuevo had the burden of clearly proving that the alleged negligence of Villagracia was the proximate or contributory cause of the latter's injury.[18] (Emphasis added) That the pocket miners were unlicensed was not a justification for petitioner to leave their transmission lines dangling. We quote with approval the observation of the RTC on this matter: The claim of NPC that the pocket miners have no right to operate within the area of Dalicno, Itogon, Benguet as there was no permit issued by DENR is beside the point. The fact is that there were not only pocket miners but also there were many residents in the area of Dalicno, Ampucao, Itogon, Benguet using the trail. These residents were using this trail underneath the transmission lines x x x. They were using this trail even before the transmission lines were installed in the 1970's by NPC. The pocket miners, although they have no permit to do pocket mining in the area, are also human beings who have to eke out a living in the only way they know how. The fact that they were not issued a permit by the DENR to do pocket mining is no justification for NPC to simply leave their transmission lines dangling or hanging 8 to 10 feet above the ground posing danger to the life and limb of everyone in said community. x x x[19] (Emphasis added) In sum, the victim was not guilty of contributory negligence. Hence, petitioner is not entitled to a mitigation of its liability. II

We now determine the propriety of the awards for loss of unearned income, moral, and exemplary damages. From the testimony of the victim's mother, it was duly established during trial that he was earning P3,000.00 a month. To determine the compensable amount of lost earnings, We consider (1) the number of years for which the victim would otherwise have lived (life expectancy); and (2) the rate of loss sustained by the heirs of the deceased. Life expectancy is computed by applying the formula (2/3 x [80 - age at death]) adopted in the American Expectancy Table of Mortality or the Actuarial Combined Experience Table of Mortality. The second factor is computed by multiplying the life expectancy by the net earnings of the deceased, i.e., the total earnings less expenses necessary in the creation of such earnings or income and less living and other incidental expenses. The net earning is ordinarily computed at fifty percent (50%) of the gross earnings. Thus, the formula used by this Court in computing loss of earning capacity is: Net Earning Capacity= [2/3 x (80 - age at time of death) x (gross annual income - reasonable and necessary living expenses)]. [20] We sustain the trial court computation of unearned income of the victim: x x x the loss of his unearned income can be computed as follows: two-thirds of 80 years, minus 20 years, times P36,000.00 per year, equals P1,440,000.00. This is because Noble Casionan, at the time of his death, was 20 years old and was healthy and strong. And, therefore, his life expectancy would normally reach up to 80 years old in accordance with the above formula illustrated in the aforesaid cases. Thus, Noble Casionan had 60 more years life expectancy since he was 20 years old at the time of his death on June 27, 1995. Two-thirds of 60 years times P36,000.00 since he was earning about P3,000.00 a month of P36,000.00 a year would be P1,440,000.00. However, in determining the unearned income, the basic concern is to determine the damages sustained by the heirs or dependents of the deceased Casionan. And here, the damages consist not of the full amount of his earnings but the support they would have received from the deceased had he not died as a consequence of the unlawful act of the NPC. x x x The amount recoverable is not the loss of the entire earnings but the loss of that portion of the earnings which the heirs would have received as support. Hence, from the amount of P1,440,000.00, a reasonable amount for the necessary expenses of Noble Casionan had he lived would be deducted. Following the ruling in People v. Quilaton, 205 SCRA 279, the Court deems that 50 percent of the gross earnings of the deceased of P1,440,000.00 should be deducted for his necessary expenses had he lived, thus leaving the other half of about P720,000.00 as the net earnings that would have gone for the support of his heirs. This is the unearned income of which the heirs were deprived of.[21] In quasi delicts, exemplary damages are awarded where the offender was guilty of gross negligence.[22] Gross negligence has been defined to be the want or absence of even slight care or diligence as to amount to a reckless disregard of the safety of person or property. It evinces a thoughtless disregard of consequences without exerting any effort to avoid them.
[23]

Petitioner demonstrated its disregard for the safety of the members of the community of Dalicno who used the trail regularly when it failed to address the sagging high tension wires despite numerous previous requests and warnings. It only exerted efforts to rectify the danger it posed after a death from electrocution already occurred. Gross negligence was thus apparent, warranting the award of exemplary damages. As to the award of moral damages, We sustain the CA reduction of the award. Moral damages are designed to compensate the claimant for actual injury suffered and not to impose a penalty on the wrongdoer. It is not meant to enrich the complainant but to enable

the injured party to obtain means to obviate the moral suffering experience. Trial courts should guard against the award of exorbitant damages lest they be accused of prejudice or corruption in their decision making.[24] We find that the CA correctly reduced the award from P100,000.00 to P50,000.00. As for the award for attorney's fees, well-settled is the rule that the reason for the award must be discussed in the text of the court's decision and not only in the dispositive portion. [25] Except for the fallo, a discussion on the reason for the award for attorney's fees was not included by the RTC in its decision. The CA thus correctly disallowed it on appeal. WHREFORE, the petition is DENIED and the appealed decision of the Court of Appeals AFFIRMED. SO ORDERED. Ynares-Santiago, (Chairperson), Austria-Martinez, Chico-Nazario, and Nachura, JJ., concur.

FIRST DIVISION G.R. No. 160709. February 23, 2005 NELEN LAMBERT, assisted by her husband, GLENROY ALOYSUIS LAMBERT, Petitioners, vs. HEIRS OF RAY CASTILLON, Represented by MARILOU T. CASTILLON and SERGIO LABANG, Respondents. DECISION YNARES-SANTIAGO, J.: This is a petition for review under Rule 45 of the Rules of Court seeking the reversal of the decision[1] of the Court of Appeals dated October 21, 2002 in CA-G.R. CV No. 43734, which affirmed the June 29, 1993 decision of the Regional Trial Court of Iligan City, Branch 06, in Civil Case No. 06-2086. In the evening of January 13, 1991, Ray Castillon visited the house of his brother Joel Castillon at Tambo, Iligan City and borrowed his motorcycle. He then invited his friend, Sergio Labang, to roam around Iligan City. Ray drove the motorcycle with Sergio as the backrider.[2] At around past 10:00 p.m., after eating supper at Hona's Restaurant and imbibing a bottle of beer, they traversed the highway towards Tambo at a high speed. Upon reaching Brgy. Sto. Rosario, they figured in an accident with a Tamaraw jeepney, owned by petitioner Nelen Lambert and driven by Reynaldo Gamot, which was traveling on the same direction but made a sudden left turn. The incident resulted in the instantaneous death of Ray and injuries to Sergio.[3] Respondents, the heirs of Ray Castillon, thus filed an action for damages with prayer for preliminary attachment against the petitioner Nelen Lambert. The complaint was docketed as Civil Case No. 06-2086 of the RTC of Iligan City, Branch 06.[4] The complaint was subsequently amended to include the claim by Joel Castillon for the damages caused to the motorcycle.[5] On June 29, 1993, after a full-blown trial, the court a quo rendered a decision in favor of herein private respondents but reduced petitioner's liability by 20% in view of the contributory negligence of Ray. The dispositive portion of the decision reads: WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants, directing the latter, jointly and severally, to pay the former the following: 1. The sum of SIX HUNDRED THIRTY-THREE THOUSAND AND NINETY-ONE (P633,091) PESOS, representing loss of support, death indemnity, funeral and related expenses, moral damages and attorney's fees and 2. Costs of the suit. For lack of merit, defendants' counterclaim is dismissed.

On the claim of Joel Castillon, the evidence shows that he is not the real owner of the motorcycle. He is not the real party in interest. Accordingly, his complaint is dismissed. On the third-party complaint, the third-party defendant Zenith Insurance Corporation is ordered to pay the sum of P16,500.00 directly to the plaintiffs. This sum, if paid, should be deducted from the amount adjudged in par. 1 above. SO ORDERED.[6] The Court of Appeals affirmed the decision of the trial court.[7] Hence the present petition, based on the following arguments: 1. The Honorable Court of Appeals committed serious error of law and grave abuse of discretion when it did not apply the ruling of this Honorable Court in the case of Philippine Rabbit Bus Lines vs. The Honorable Intermediate Appellate Court and Casiano Pascua, Et. Al., [189 SCRA 168, August 30, 1990], as reiterated recently in the case of Edna A. Raynera vs. Freddie Hiceta and Jimmy Orpilla [306 SCRA 102, April 21, 1999], in which this Honorable Court enunciated that drivers of vehicles 'who bump the rear of another vehicle are presumed to be the cause of the accident. 2. The erroneous conclusion of the Honorable Trial Court as affirmed by the Honorable Court of Appeals that the act of tailgating, at high speed, constitutes contributory negligence only, is contrary to the rulings of this Honorable Court in the case of Sanitary Steam Laundry, INC. vs. The Honorable Court of Appeals [300 SCRA 20, December 10, 1998] and the case of Edna A. Raynera vs. Freddie Hiceta and Jimmy Orpilla [306 SCRA 102, April 21, 1999]. 3. The Honorable Court of Appeals grossly erred in its conclusion that petitioner's driver was negligent, without taking into consideration the presumptions enunciated by this Honorable Court in the case of Philippine Rabbit Bus Lines vs. The Honorable Intermediate Appellate Court and Casiano Pascua, Et. Al., [189 SCRA 168, August 30, 1990], and the case of Edna A. Raynera vs. Freddie Hiceta and Jimmy Orpilla [306 SCRA 102, April 21, 1999]. 4. As an alternative relief, petitioner most respectfully assigns as error the Honorable Trial Court's computation as to the loss of earning capacity of Ray Castillon. Such computation is contrary to the formula enunciated by this Honorable Court in the case of Villa Rey Transit, Inc. vs. The Honorable Court of Appeals [31 SCRA 511 (1970)]. 5. The Honorable Trial Court's award of moral damages is contrary to the pronunciation of this Honorable Court in the case of Ace Haulers Corporation vs. The Honorable Court of Appeals and Abiva [338 SCRA 572, August 23, 2000], wherein the award of moral damages was disallowed absent any evidence of bad faith or ill-motive.[8] Petitioner insists that the negligence of Ray Castillon was the proximate cause of his unfortunate death and therefore she is not liable for damages. In petitions for review on certiorari under Rule 45 of the Rules of Court, only questions of law may be put into issue. Questions of fact cannot be entertained. The finding of negligence by the Court of Appeals is a question of fact which we cannot pass upon as it would entail going into factual matters on which the finding of negligence was based. As a rule, factual findings of the trial court, especially those affirmed by the Court of Appeals, are conclusive on this Court when supported by the evidence on record.[9]

Our examination of the records shows that both the trial court and the Court of Appeals carefully considered the factual backdrop of the case. No cogent reason exists for disturbing the following findings of the trial court, which the Court of Appeals affirmed: To the mind of the court, this is exactly what happened. When Reynaldo Gamot was approaching the side road, he slightly veered to the right for his allowance. Ray Castillon, who was following closely behind, instinctively veered to the left but it was also the moment when Reynaldo Gamot sharply turned to the left towards the side road. At this juncture both were moving obliquely to the left. Thus the motorcycle sliced into the side of the jeepney throwing the driver forward so that his forehead hit the angle bar on the left front door of the jeepney even as the motorcycle shot forward and the jeepney veered back to the right and sped away.

The testimonies of the witnesses Frias, Opada, Labang and Sumile show that he did not stop even for a second, or less before making the left turn. On the contrary, he slightly veered to the right immediately followed by the abrupt and sudden turn to the left in order to enter the side road. It is apparent that Reynaldo Gamot did not keep a lookout for vehicles or persons following him before proceeding to turn left. He failed to take into account the possibility that others may be following him. He did not employ the necessary precaution to see to it that the road was clear.[10] Clearly, the abrupt and sudden left turn by Reynaldo, without first establishing his right of way, was the proximate cause of the mishap which claimed the life of Ray and injured Sergio. Proximate cause is defined as that which, in the natural and continuous sequence, unbroken by any efficient, intervening cause, produces the injury, and without which the result would not have occurred.[11] The cause of the collision is traceable to the negligent act of Reynaldo for, as the trial court correctly held, without that left turn executed with no precaution, the mishap in all probability would not have happened.[12] Petitioner misunderstood our ruling in Raynera v. Hiceta.[13] That case also involved a motorcycle crashing into the left rear portion of another vehicle, and we declared therein that drivers of vehicles 'who bump the rear of another vehicle are presumed to be 'the cause of the accident, unless contradicted by other evidence .[14] In Raynera, the death of the victim was solely attributable to his own negligence in bumping the rear of the trailer truck which was traveling ahead of him at 20 to 30 kilometers per hour. Raynera, being the driver of the rear vehicle, had full control of the situation as he was in a position to observe the vehicle in front of him. The trailer truck therein did not make a sudden left turn as in the case at bar. Thus, the theory that drivers of vehicles 'who bump the rear of another vehicle are presumed to be the cause of the accident is, as in this case, sufficiently contradicted by evidence, which is the sudden left turn made by Reynaldo which proximately caused the collision. While we agree with the trial court that Ray was likewise guilty of contributory negligence as defined under Article 2179 of the Civil Code, we find it equitable to increase the ratio of apportionment of damages on account of the victim's negligence. Article 2179 reads as follows: When the plaintiff's negligence was the immediate and proximate cause of his injury, he cannot recover damages. But if his negligence was only contributory, the immediate and proximate cause of the injury being the defendant's lack of due care, the plaintiff may recover damages, but the courts shall mitigate the damages to be awarded.

The underlying precept on contributory negligence is that a plaintiff who is partly responsible for his own injury should not be entitled to recover damages in full but must bear the consequences of his own negligence. The defendant must thus be held liable only for the damages actually caused by his negligence.[15] The determination of the mitigation of the defendant's liability varies depending on the circumstances of each case. The Court had sustained a mitigation of 50% in Rakes v. AG & P;[16] 20% in Phoenix Construction, Inc. v. Intermediate Appellate Court [17] and LBC Air Cargo, Inc. v. Court of Appeals;[18] and 40% in Bank of the Philippine Islands v. Court of Appeals [19] and Philippine Bank of Commerce v. Court of Appeals.[20] In the case at bar, it was established that Ray, at the time of the mishap: (1) was driving the motorcycle at a high speed; (2) was tailgating the Tamaraw jeepney; (3) has imbibed one or two bottles of beer; and (4) was not wearing a protective helmet.[21] These circumstances, although not constituting the proximate cause of his demise and injury to Sergio, contributed to the same result. The contribution of these circumstances are all considered and determined in terms of percentages of the total cause. Hence, pursuant to Rakes v. AG & P, the heirs of Ray Castillon shall recover damages only up to 50% of the award. In other words, 50% of the damage shall be borne by the private respondents; the remaining 50% shall be paid by the petitioner. Anent the award of loss of earning capacity, we agree with the petitioner that the trial court erred in the computation of the net earnings. In considering the earning capacity of the victim as an element of damages, the following factors are considered in determining the compensable amount of lost earnings: (1) the number of years for which the victim would otherwise have lived; and (2) the rate of loss sustained by the heirs of the deceased. Jurisprudence provides that the first factor, i.e., life expectancy, is computed by applying the formula (2/3 x [80 - age at death]) adopted in the American Expectancy Table of Mortality or the Actuarial Combined Experience Table of Mortality. As to the second factor, it is computed by multiplying the life expectancy by the net earnings of the deceased, i.e., the total earnings less expenses necessary in the creation of such earnings or income and less living and other incidental expenses. The net earning is ordinarily computed at fifty percent (50%) of the gross earnings. Thus, the formula used by this Court in computing loss of earning capacity is: Net Earning Capacity = [2/3 x (80 ' age at time of death) x (gross annual income ' reasonable and necessary living expenses)].[22] It was established that Ray was 35 at the time of his death and was earning a gross annual income of P31,876.00 as a driver at the Mindanao State University. In arriving at the net earnings, the trial court deducted from the gross annual income the annual living expenses in the amount of P9,672.00, broken down as follows: P20.00 a day for travel or P520.00 per month; P60.00 a month for cigarettes; P26.00 for drinks; and other personal expenses like clothing, toiletries, etc. estimated at P200.00 per month.[23] The amount of P9,672.00, however, appears unrealistic, and constitutes only 30.34% of the gross earnings. It even includes expenses for cigarettes which by no means can be classified as a necessary expense. Using the cited formula with the net earnings computed at 50% of the gross earnings, a detailed computation is as follows: NET EARNING LIFE EXPECTANCY x GROSS ANNUAL LIVING CAPACITY (X) [2/3 (80-age at the INCOME (GAI) (50% of GAI) time of death)] EXPENSES

X X X X

[2/3 (80-35)] [2/3 (45)]

x [P31,876.00 x [P31,876.00 x 15,938.00

-50% x P31,876.00] - P15,938.00]

P478,140.00

We sustain the awards of P33,215.00 as funeral and burial expenses being supported with receipts;[24] P50,000.00 as death indemnity; and P50,000.00 as moral damages. However, the award of P20,000.00 as attorney's fees must be deleted for lack of basis. The indemnity for death caused by a quasi-delict used to be pegged at P3,000.00,[25] based on Article 2206 of the Civil Code, which reads: ART. 2206. The amount of damages for death caused by a crime or quasi-delict shall be at least three thousand pesos, even though there may have been mitigating circumstances. In addition: (1) The defendant shall be liable for the loss of the earning capacity of the deceased, and the indemnity shall be paid to the heirs of the latter; such indemnity shall in every case be assessed and awarded by the court, unless the deceased on account of permanent physical disability not caused by the defendant, had no earning capacity at the time of his death; (2) If the deceased was obliged to give support according to the provisions of article 291, the recipient who is not an heir called to the decedent's inheritance by the law of testate or intestate succession, may demand support from the person causing the death, for a period of not exceeding five years, the exact duration to be fixed by the court; (3) The spouse, legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased. However, the amount has been gradually increased through the years. At present, prevailing jurisprudence fixes the amount at P50,000.00.[26] Paragraph 3 of the same provision also serves as the basis for the award of moral damages in quasi-delict. The reason for the grant of moral damages has been explained, thus: the award of moral damages is aimed at a restoration, within the limits possible, of the spiritual status quo ante; and therefore, it must be proportionate to the suffering inflicted. The intensity of the pain experienced by the relatives of the victim is proportionate to the intensity of affection for him and bears no relation whatsoever with the wealth or means of the offender.[27] While it is true that there can be no exact or uniform rule for measuring the value of human life and the measure of damages cannot be arrived at by a precise mathematical calculation, [28] we hold that the trial court's award of moral damages of P50,000.00 for the death of Ray Castillon is in accord with the prevailing jurisprudence.[29]

With respect to attorney's fees, it is well settled that the same should not be awarded in the absence of stipulation except under the instances enumerated in Article 2208 of the Civil Code. The trial court did not indicate the basis for its award. As we have held in Rizal Surety and Insurance Company v. Court of Appeals:[30] Article 2208 of the Civil Code allows attorney's fess to be awarded by a court when its claimant is compelled to litigate with third persons or to incur expenses to protect his interest by reason of an unjustified act or omission of the party from whom it is sought. While judicial discretion is here extant, an award thereof demands, nevertheless, a factual, legal or equitable justification. The matter cannot and should not be left to speculation and conjecture (Mirasol vs. De la Cruz, 84 SCRA 337; Stronghold Insurance Company, Inc. vs. Court of Appeals, 173 SCRA 619). In the case at bench, the records do not show enough basis for sustaining the award for attorney's fees and to adjudge its payment by petitioner Likewise, this Court held in Stronghold Insurance Company, Inc. vs. Court of Appeals that: In Abrogar v. Intermediate Appellate Court [G.R. No. 67970, January 15, 1988, 157 SCRA 57] the Court had occasion to state that '[t]he reason for the award of attorney's fees must be stated in the text of the court's decision, otherwise, if it is stated only in the dispositive portion of the decision, the same must be disallowed on appeal. ' WHEREFORE, in view of the foregoing, the petition is DENIED. The assailed decision of the Court of Appeals is AFFIRMED with the MODIFICATION that the net earnings is computed at 50% of the gross annual income to conform with the prevailing jurisprudence, and the FURTHER MODIFICATION that petitioner NELEN LAMBERT is ordered to pay the heirs of Ray Castillon only 50% of the damages herein awarded, except attorney's fees which is DELETED for lack of basis. SO ORDERED. Davide, Jr., C.J., (Chairman), Quisumbing, Carpio, and Azcuna, JJ., concur.