CASE NO.

1
Dr. Rubi Li, Petitioner, vs. Spouses Reynaldo and Lina Soliman, as parents/heirs of deceased Angelica Soliman, Respondents.
G.R. No. 165279
June 7, 2011

Legal Issue: How is medical malpractice proven?

Legal Facts:
Respondents 11-year old daughter, Angelica Soliman, underwent a biopsy of the mass located in her lower extremity at
the St. Lukes Medical Center (SLMC) on July 7, 1993 and results showed that Angelica was suffering from osteosarcoma,
osteoblastic type, (highly malignant) cancer of the bone because of that a necessity of amputation was conducted by Dr,
Tamayo on Angelicas right leg in order to remove the tumor and to prevent the metastasis that chemotherapy was suggested
by Dr. Tamayo, which he referred to petitioner Dr. Rubi Li, a medical oncologist. The respondent was admitted to SLMC on
August 18, 1993; however, she died eleven (11) days after the (intravenous) administration of chemotherapy first cycle.
Respondents brought their daughters body to the Philippine National Police (PNP) Crime Laboratory at Camp Crame for post-
mortem examination after the refusal of the hospital to release the death certificate without full payment of bills. The Medico-
Legal Report showed that the cause of death as "Hypovolemic shock secondary to multiple organ hemorrhages and
Disseminated Intravascular Coagulation. The respondents filed charges against the SLMC and physicians involve for negligence
and failure to observe the essential precautions in to prevent Angelicas untimely death. Petitioner denied the allegation for
damages as she observed best known procedures, highest skill and knowledge in the administration of chemotherapy drugs
despite all efforts the patient died. The trial court was in favor of the petitioner and ordered to pay their unpaid hospital bill in
the amount of P139, 064.43, but the Court of Appeals reversed the decision supporting the respondents pray.
Holding:
In this case medical malpractice is proven because the four essential elements of such action are present based upon the
doctrine of informed consent.
Reasoning:
There are four essential elements a plaintiff must prove in a malpractice action based upon the doctrine of informed
consent: "(1) the physician had a duty to disclose material risks; (2) he failed to disclose or inadequately disclosed those risks; (3)
as a direct and proximate result of the failure to disclose, the patient consented to treatment she otherwise would not have
consented to; and (4) plaintiff was injured by the proposed treatment." Informed consent case requires the plaintiff to "point to
significant undisclosed information relating to the treatment that would alter her decision to undergo. The physician is not
expected to give the patient a short medical education, the disclosure rule only requires of him a reasonable general
explanation in nontechnical terms.
Policy Formation:
In all sorts of medical procedures either invasive or not, medical institution must have a certificate of competency in
rendering standards of care to delicate medical procedures before initiating a general protocol that would establish a guideline
principle in a form of proper disclosure of such procedure and presenting a consent or waiver to their patients so that possible
future medico-legal suits will be prevented.
Synthesis:
In Dr. Rubi Li, vs. Spouses Reynaldo and Lina Soliman, as parents/heirs of deceased Angelica Soliman, Respondents, G.R.
No. 165279, promulgated on June 7, 2011, the Court ruled that medical malpractice is proved base on lack/impaired informed
consent, and reasonable expert testimony subject a breach of duty causing gross injury to its patient.

Li vs Spouses Soliman
GR No. 165279 June 7, 2011
Facts: On July 7, 1993, respondents 11 year old daughter, Angelica Soliman underwent a biopsy of the mass located in her
lower extremity at the St. Lukes Medical Center (SLMC). Results showed that Angelica was suffering from osteosaucoma,
ostiobiostic type, a high-grade (highly malignant) cancer of the bone which usually affects teenage children. Following this
diagnosis, Angelicas right leg was amputated by Dr. Tamayo in order to remove the tumor. As a adjuvant treatment to eliminate
any remaining cancer cells, and hence minimizing the chances of recurrence and prevent the decease from spreading to other
parts of the patients body, chemotherapy was suggested by Dr. Tamayo and referred Angelica to another doctor at SLMC,
herein petitioner Dr. Rubi Li, a medical oncologist.
On July 23, 1993, petitioner saw the respondents at the hospital after Angelicas surgery and discussed with them
Angelicas condition. Petitioner told respondents that Angelica should be given 2-3 weeks to recover from the operation before
starting the chemotherapy. Respondents were apprehensive due to financial constraints as Reynaldo earns only from P70,000-
150,000 a year from his jewelry and watching repair business. Petitioner, however, assured them not to worry about her
professional fee and told them to just save up for medicines to be used.
As the chemotherapy session started, day by day, Angelica experience worsening condition and other physical effect on
the body such as discoloration, nausea, and vomiting.
Petitioner claimed, that she explained to respondents that even when a tumor is removed, there are still small lesions
undetectable to the naked eye and that adjuvant chemotherapy is needed to clean out the small lesions in order to lessen the
chance of cancer to recur. She did not give the respondents any assurance that chemotherapy will cure Angelicas cancer.
During these consultations with respondents, she explained the following side effects of chemotherapy treatment to
respondents: 1.) Falling hair; 2.) nausea and vomiting; 3.) loss of appetite; 4.) low count of WBC, RBC, and platelets; 5.) possible
sterility due to the effects on Angelicas ovary; 6.) Damage to kidney and heart; 7.) darkening of the skin especially when
exposed to sunlight. She actually talked to the respondents four times, once at the hospital after the surgery, twice at her clinic
and fourth when Angelicas mother called her through long distance. This was disputed by respondents who countered that
petitioner gave them assurance that there is 95% chance of healing for Angelica if she undergoes chemotherapy and that the
only side effects were nausea, vomiting and hair loss. Those were the only side effects of chemotherapy mentioned by
petitioner.
Issue: Whether or not petitioner committed medical malpractice.
Held: No. The type of lawsuit which has been called medical malpractice or more appropriately, medical negligence, is that
type of claim which a victim has available to him or her to redress a wrong committed by a medical professional which has
caused bodily harm. In order to successfully pursue such claim, a patient must prove that a health care provider in most cases a
physician, either failed to do something which a reasonably prudent health care provider would have done or that he or she did
something that a reasonably health care provider would not have done; and that failure or action caused injury to the patient.
Medical negligence cases are best proved by opinions of expert witnesses belonging in the same general neighborhood and in
the same general line of practice as defendant physician or surgeon. The deference of courts to the expert opinion of qualified
physicians stems from the formers realization that the latter possess unusual technical skills which layman in most instances are
incapable of intelligently evaluating, hence the indispensability of expert testimonies.
The doctrine of informed consent within the context of physician-patient relationships goes as far back into english
common law. As early as 1767, doctors were charged with the tort of battery if they have not gained the consent of their
patients prior to performing a surgery or procedure. In the United States, the seminal case was Schoendorff vs Society of New
York Hospital which involved unwanted treatment performed by a doctor. Justice Bejamin Cardozo oft-quoted opinion upheld
the basic right of a patient to give consent to any medical procedure or treatment; every human being of adult year and sound
mind has a right to determine what shall be done with his own body; and a surgeon who performs an operation without his
patients consent commits an assault, for which he is liable in damages. From a purely ethical norm, informed consent evolved
into a general principle of law that a physician has a duty to disclose what a reasonably prudent physician in the medical
community in the exercise of reasonable care would disclose to his patient as to whatever grave risk of injury might be incurred
from a proposed course of treatment, so that a patient, exercising ordinary care for her own welfare and faced with a choice of
undergoing the proposed treatment, as alternative treatment, or none at all, may intelligently exercise his judgement by
reasonably balancing the probable risk against the probable benefits.
There are four essential elements a plaintiff must proved in a malpractice action based upon the doctrine of informed
consent: 1.) the physician had a duty to disclose material risks; 2.) he failed to disclose or inadequately disclosed those risks; 3.)
as a direct and proximate result of the failure to disclose, the patient consented to treatment she otherwise would not have
consented to; and 4.) plaintiff was injured by the proposed treatment. The gravamen in an informed consent requires the
plaintiff to point to significant undisclosed information relating to the treatment which could have altered her decision to
undergo it.
Examining the evidence, we hold that there was adequate disclosure of material risks inherent in chemotherapy
procedure performed with the consent of Angelicas parents. Respondents could not have been unaware in the course of initial
treatment and amputation of Angelicas lower extremity that her immune system was already weak on account of the
malignant tumor in her knee. When petitioner informed the respondents beforehand of the side effects of chemotherapy which
includes lowered counts of white and red blood cells, decrease in blood platelets, possible kidney or heart damage and skin
darkening, there is reasonable expectation on the part of the doctor that the respondents understood very well that the
severity of these side effects will not be the same for all patients undergoing the procedure. In other words, by the nature of the
disease itself, each patients reaction to the chemical agents even with pre-treatment laboratory tests cannot be precisely
determined by the physician. That death can possibly result from complications of the treatment or the underlying cancer itself,
immediately or sometime after the administration of chemotherapy drugs, is a risk that cannot be ruled out, as with most other
major medical procedures, but such conclusion can be reasonably drawn from the general side effects of chemotherapy already
disclosed.

CASE No. 2
FACTS: A bus owned by Bachelor Express, Inc. and driven by Cresencio Rivera was the situs of a stampede which
resulted in the death of passengers Ornominio Beter and Narcisa Rautraut.

The bus came from Davao City on its way to Cagayan de Oro City; that while in Butuan City, the bus picked up a
passenger; that about 15 minutes later, a passenger at the rear portion suddenly stabbed a PC soldier which caused
commotion and panic among the passengers; that when the bus stopped, passengers Ornominio Beter and Narcisa
Rautraut were found lying down the road, the former already dead as a result of head injuries and the latter also
suffering from severe injuries which caused her death later. The passenger assailant alighted from the bus and ran
toward the bushes but was killed by the police. Thereafter, the heirs of Ornominio Beter and Narcisa Rautraut,
private respondents filed a complaint for "sum of money" against Bachelor Express, Inc. its alleged owner Samson
Yasay and the driver Rivera.

Petitioner alleged that the driver was able to transport his passengers safely to their respective places of destination
except Ornominio Beter and Narcisa Rautraut who jumped off the bus without the knowledge and consent.

The trial court dismissed the complaint which was reversed and set aside by the Court of Appeals.

Petitioners asseverate that they were not negligent in the performance of their duties and that the incident was
completely and absolutely attributable to a third person, the passenger who ran amuck, for without his criminal act,
Beter and Rautraut could not have been subjected to fear and shock which compelled them to jump off the running
bus. They argue that they should not be made liable for damages arising from acts of third persons over whom they
have no control or supervision. . In effect, the petitioner, in order to overcome the presumption of fault or
negligence under the law, states that the vehicular incident resulting in the death of passengers Beter and Rautraut
was caused by force majeure or caso fortuito over which the common carrier did not have any control.
ISSUE: Whether petitioner is liable.

HELD: YES. The liability of the petitioners is anchored on culpa contractual or breach of contract of carriage.

Ornominio Beter and Narcisa Rautraut were passengers of a bus belonging to petitioner Bachelor Express, Inc. and,
while passengers of the bus, suffered injuries which caused their death. Consequently, pursuant to Article 1756 of
the Civil Code, petitioner Bachelor Express, Inc. is presumed to have acted negligently unless it can prove that it had
observed extraordinary diligence in accordance with Articles 1733 and 1755 of the New Civil Code.

The running amuck of the passenger was the proximate cause of the incident as it triggered off a commotion and
panic among the passengers such that the passengers started running to the sole exit shoving each other resulting
in the falling off the bus by passengers Beter and Rautraut causing them fatal injuries. The sudden act of the
passenger who stabbed another passenger in the bus is within the context of force majeure.

A caso fortuito presents the following essential characteristics: (1) The cause of the unforeseen and unexpected
occurrence, 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 (debtor) must be free from any participation in the aggravation of the injury
resulting to the creditor.

As will be seen, these authorities agree that some extraordinary circumstance independent of the will of the obligor
or of his employees, is an essential element of a caso fortuito.

However, in order that a common carrier may be absolved from liability in case of force majeure, it is not enough
that the accident was caused by force majeure. The common carrier must still prove that it was not negligent in
causing the injuries resulting from such accident.

The bus driver did not immediately stop the bus at the height of the commotion; the bus was speeding from a full
stop; the victims fell from the bus door when it was opened or gave way while the bus was still running; the
conductor panicked and blew his whistle after people had already fallen off the bus; and the bus was not properly
equipped with doors in accordance with law-it is clear that the petitioners have failed to overcome the presumption
of fault and negligence found in the law governing common carriers.

The petitioners' argument that the petitioners "are not insurers of their passengers" deserves no merit in view of
the failure of the petitioners to prove that the deaths of the two passengers were exclusively due to force majeure
and not to the failure of the petitioners to observe extraordinary diligence in transporting safely the passengers to
their destinations as warranted by law.

CASE No. 3

Gacal vs. Philippine Airlines

(183 SCRA 189, G.R. No. 55300 March 16, 1990)

Facts: Plaintiffs Franklin Gacal, his wife and three others were passengers of PAL plane at Davao Airport for a flight
to Manila, not knowing that the flight, were Commander Zapata with other members of Moro National Liberation
Front. They were armed with grenades and pistols. After take off, the members of MNLF announced a hijacking and
directed the pilot to fly directly to Libya, later to Sabah. They were, however, forced to land in Zamboanga airport for
refueling, because the plane did not have enough fuel to make direct flight to Sabah. When the plane began to taxi
at the runaway of Zamboanga airport, it was met by two armored cars of the military.

An armored car subsequently bumped the stairs leading inside the plane. That commenced the battle between the
military and the hijackers, which led ultimately to the liberation of the planes surviving crew and passengers with the
final score of ten passengers and three hijackers dead.

Issue: Whether or not hijacking is a case fortuito or force majeure, which would exempt an aircraft from liability for,
damages to its passengers and personal belongings that were lost during the incident?

Held: In order to constitute a caso fortuito that would exempt from liability under Art 1174 of the civil code, it is
necessary that the following elements must occur: (a) the cause of the breach of obligation must be independent of
human will; (b) the event must be unforeseeable or unavoidable; (c) the event must be such as to render it
impossible for the debtor to fulfill his obligation in a normal manner; (d) the debtor must be free from any
participation in or aggravation of the injury to the creditor.

Applying the above guidelines, the failure to transport the petitioners safely from Davao to Manila was due to the
skyjacking incident staged buy the MNLF without connection to the private respondent, hence, independent of will of
PAL or its passengers.
The events rendered it impossible for PAL to perform its obligation in a normal manner and it cannot be faulted for
negligence on the duty performed by the military. The existence of force majeure has been established thus
exempting PAL from payment of damages.

CASE NO. 4 (di ko to sure)

PILIPINAS BANK v CA, Lilia Echaus G.R. No. 97873

QUIASON, J.:
This is a petition for certiorari under Rule 45 of the Revised Rules of Court to review the Resolution of the Court of
Appeals in CA-G.R. CV No. 06017 promulgated on March 14, 1991. The Resolution was rendered in response to private
respondent's motion for clarification of the decision of the Court of Appeals in CA-G.R. No. 06017. The matters
sought to be clarified arose in the course of the execution of the decision of the Regional Trial Court, Branch 71,
Antipolo, Rizal in Civil Case No. 239-A, as modified by the decision of the Court of Appeals in CA-G.R. CV No. 06017.
In Civil Case No. 239-A, private respondent filed a complaint against petitioner and its president, Constantino
Bautista, for collection of a sum of money. The complaint alleged: (1) that petitioner and Greatland Realty
Corporation (Greatland) executed a "Dacion en Pago," wherein Greatland conveyed to petitioner several parcels of
land in consideration of the sum of P7,776,335.69; (2) that Greatland assigned P2,300,000.00 out of the total
consideration of the Dacion en Pago, in favor of private respondent; and (3) that notwithstanding her demand for
payment, petitioner in bad faith, refused and failed to pay the said amount assigned to her.
Petitioner, while admitting the execution of the Dacion en Pago, claimed: (1) that its former president had no
authority to enter into such agreement; (2) that it never ratified the same; and (3) that assuming arguendo that the
agreement was binding, the conditions stipulated therein were never fulfilled.
Dismissing petitioner's defenses as unmeritorious, the trial court ruled in favor of private respondent. The trial court
ordered petitioner and its co-defendant, jointly and severally, to pay private respondent as follows:
"1) P2,300,000.00 the total amount assigned by Greatland in her favor out of the P2,300,000.00 liability of defendant
Pilipinas to Greatland plus legal interest from the dates of assignments until fully paid;
2) P3,217,707.00 representing the total actual damages suffered by the plaintiff plus legal interest until fully paid;
3) P1,000,000.00 in moral damages to partially assuage the extreme moral sufferings of plaintiff inflicted upon her
person considering the bad faith on the part of the defendants and their failure to act with justice, and to give what
is lawfully due her and observe honesty and good faith;
4) P100,000.00 exemplary and nominal damages to vindicate plaintiff's violated rights;
5) Attorney's fees equivalent to 15% of the total award in favor of the plaintiff;
6) Costs of suit" (Rollo, p. 78).
On March 22, 1985, petitioner appealed the decision of the trial court to the Court of Appeals, which docketed the
appeal as CA-G.R. No. 06017. On the same day, private respondent filed a Motion for Immediate Execution Pending
Appeal. The trial court granted the motion for execution pending appeal in an Order dated April 3, 1985. Petitioner
challenged the Order dated April 3, 1985 before the Court of Appeals in CA-G.R. No. SP No. 05909.
On October 30, 1986, the Court of Appeals modified the Order dated April 3, 1985, by limiting the execution pending
appeal against petitioner to P5,517,707.00 and deferring the execution of the award for moral, exemplary and
nominal damages to await the final judgment of the main case in CA-G.R. No. 06017. On June 17, 1987, the Supreme
Court in G.R. No. L-76506 affirmed the Order dated October 30, 1986 of the Court of Appeals.
On July 1, 1988, the trial court granted the new motion for execution pending appeal filed by private respondent
pursuant to the Resolution of the Supreme Court dated June 17, 1987, upon the filing of the required bond.
Petitioner complied with the writ of execution pending appeal by issuing two manager's checks in the total amount
of P5,517,707.00 (one for P4,965,936.30 payable to private respondent and another for P551,770.70 payable to the
Clerk of Court, RTC, Antipolo, Rizal).
The check payable to private respondent was encashed on July 15, 1988.
On June 28, 1990, the Court of Appeals rendered a decision in CA-G.R. No. CV-06017, which modified the judgment of
the trial court as follows:
"1. The defendant-appellant Pilipinas Bank, formerly known as Filipinas Manufacturers Bank is ordered to pay the
plaintiff-appellee the following:
(a) The sum of Two Million Three Hundred Thousand (2,300,000.00) Pesos, representing the total amount assigned
by Greatland to her, with interest at the legal rate starting July 24, 1981, date when demand was first made (Exh. "F"
and "G");
(b) The sum of One Hundred Thousand (P100,000.00) Pesos in moral damages, to assuage moral sufferings and
embarrassment of plaintiff-appellee as a consequence of appellant-bank's unwarranted acts;
(c) The sum of Twenty Five Thousand (P25,000.00) Pesos, as exemplary damages to serve as an example or
correction for the public good;
(d) The sum equivalent to ten (10) percent of the principal claim awarded, representing attorney's fees; and
2. Constantino Bautista is absolved of personal liability". (Rollo, pp. 31-32).
Petitioner filed a motion for extension of time to file a Petition for Review on Certiorari with the Supreme Court,
which however was withdrawn on July 23, 1990. Private respondent, on her part, filed a motion for reconsideration
of the decision of the Court of Appeals in CA-G.R. No. 06017, which likewise was withdrawn on August 13, 1990.
Hence, the decision of the Court of Appeals rendered in CA-G.R. No. 06017 became final and executory.
On September 4, 1990, petitioner filed a motion in the trial court praying that private respondent and Standard
Insurance Co. (which furnished the bond required in the advance execution of the decision of the trial court) to
refund to her the excess payment of P1,898,623.67 with interests at 6% (Rollo, pp. 83-84).
It must be recalled that while private respondent was able to collect P5,517,707.00 from petitioner pursuant to the
writ of advance execution allowed in CA-G.R. No. SP No. 05909, the final judgment in the main case (CA-G.R. No.
06017) awarded to private respondent damages in the total amount of only P2,655,000.00
(P2,300,000.00 representing the amount assigned by Greatland to private respondent, P100,000.00 as moral
damages;P25,000.00 as exemplary damages and attorney's fees equivalent to 10% of the P2,300,000.00), together
"with interest on the amount of P2,300,000.00 at the legal rate starting July 24, 1981, date when demand was first
made (Exh. "F" and "G")."
Private respondent opposed the motion of petitioner with respect to the rate of interest to be charged on the
amount of P2,300,000.00. According to private respondent, the legal interest on the principal amount of
P2,300,000.00 due her should be 12% per annum pursuant to CB Circular No. 416 and not 6% per annum as computed
by petitioner.
On October 12, 1990, the trial court, while ordering the refund to petitioner of the excess payment, fixed the interest
rate due on the amount of P2,300,000.00 at 12% per annum as proposed by private respondent, instead of 6% per
annum as proposed by petitioner.
On October 16, 1990, petitioner moved to reconsider the Order dated October 12, 1990 of the trial court, which
however could not be acted upon because on October 23, 1990, private respondent filed a Motion for Clarification
with the Court of Appeals in CA-G.R. CV No. 06017, regarding the following matters:
"a) The 'legal rate' of interest on the principal award of P2,300,000.00 from July 24, 1981 (as per decision) up to July
14, 1988 (date of actual payment made by defendant-appellant to plaintiff-appellee per execution pending appeal);
b) The imposition of such 'legal rate' of interest on the 'accrued interest' from July 24, 1981 up to July 14, 1988;
c) The amount of the costs of suit will include premium on surety bond;
d) The discharge of the surety bond whether total or partial, depending on the computation of the interest;
e) The award of attorney's fees equivalent to 10% of the principal award, whether this should totally go to plaintiff--
appellee's former counsel or to be shared on the basis of quantum meruit with the undersigned counsel; and
f) Aside from this final award of 10% attorney's fees chargeable against defendant-appellant, whether or not former
counsel of plaintiff-appellee can still collect from her the balance of 15% out of the 25% attorney's fees under Exh. 'N'"
(Rollo, p. 32).
In its Resolution promulgated on March 14, 1991, the Court of Appeals clarified that:
"a) The legal rate of interest on the principal award of P2,300,000.00 should be 12% per annum in accordance with
Circular No. 416 dated July 29, 1974 of the Central Bank.
b) The computation of compounding interest annually has no basis, therefore, not allowed in the instant case;
c) The payment of premium on the bond in the sum of P259,813.50 as cost, being without legal and factual basis, is
denied;
d) The surety bond posted by plaintiff-appellee may be released after satisfaction of the decision; and
e) Payment/distribution of attorney's fees may/shall be litigated in a separate proceeding if the parties cannot settle
their differences amicably.
SO ORDERED" (Rollo, pp. 35-36).
In this appeal, petitioner claims that the Court of Appeals erred:
(1) In ruling that the legal rate of interest on the amount of P2,300,000.00 adjudged to be paid by petitioner to
private respondent is 12% per annum.
(2) In not holding that the refund to which petitioner is entitled should earn interest at the rate of 12% per annum.
(3) In not holding that the surety bond should only be released after actual refund (Rollo, p. 18).
The Court of Appeals was of the theory that the action in Civil Case No. 239-A filed by private respondent against
petitioner "involves forbearance of money, as the principal award to plaintiff-appellee (private respondent) in the
amount of P2,300,000.00 was the overdue debt of defendant-appellant to her since July 1981. The case is, in effect, a
simple collection of the money due to plaintiff-appellee, as the unpaid creditor from the defendant bank,
the debtor" (Resolution, p. 3; Rollo, p. 33). Applying Central Bank Circular No. 416, the Court of Appeals held that the
applicable rate of interest is 12% per annum.
Petitioner argues that the applicable law is Article 2209 of the Civil Code, not the Central Bank Circular No. 416. Said
Article 2209 provides:
"Art. 2209. If the obligation consists in the payment of a sum of money, and the debtor incurs in delay, the indemnity
for damages, there being no stipulation to the contrary, shall be the payment of the interest agreed upon, and in the
absence of stipulation, the legal interest, which is six per cent per annum."
Presidential Decree No. 116 authorized the Monetary Board to prescribe the maximum rate or rates of interest for
the loan or renewal thereof or the forbearance of any money, goods or credits and amended the Usury Law (Act No.
2655) for that purpose.
As amended, the Usury Law now provides:
"SECTION 1. The rate of interest for the loan or forbearance of any money, goods, or credits and the rate allowed in
judgments, in the absence of express contract as to such rate of interest, shall be six per centumper annum or such
rate as may be prescribed by the Monetary Board of the Central Bank of the Philippines for that purpose in
accordance with the authority hereby granted."
"SECTION. 1-a. The Monetary Board is hereby authorized to prescribe the maximum rate or rates of interest for the
loan or renewal thereof or the forbearance of any money, goods or credits, and to charge such rate orrates
whenever warranted by prevailing economic and social conditions: Provided, That such changes shall not be made
oftener than once every twelve months.
'In the exercise of the authority herein granted, the Monetary Board may prescribe higher maximum rates for
consumer loans or renewals thereof as well as such loans made by pawnshops, finance companies and other similar
credit institutions although the rates prescribed for these institutions need not necessarily be uniform."
Acting on the authority vested on it by the Usury Law, as amended by P.D. No. 116, the Monetary Board of Central
Bank issued Central Bank Circular No. 416, which provides:
"By virtue of the authority granted to it under Section 1 of Act 2655, as amended, otherwise known as the 'Usury
Law' the Monetary Board in its Resolution No. 1622 dated July 29, 1974, has prescribed that the rate of interest for
the loan, or forbearance of any money, goods, or credits and the rate allowed in judgments, in the absence
of express contract as to such rate of interest, shall be twelve (12%) per cent per annum. This Circular shall take
effect immediately." (underscoring supplied)
Note that Circular No. 416, fixing the rate of interest at 12% per annum, deals with (1) loans; (2) forbearance of any
money, goods or credit; and (3) judgments.
In Reformina v. Tomol, Jr., 139 SCRA 260 [1985], the Court held that the judgments spoken of and referred to in
Circular No. 416 are "judgments in litigation involving loans or forbearance of any money, goods or credits. Any other
kind of monetary judgment which has nothing to do with nor involving loans or forbearance of any money, goods or
credits does not fall within the coverage of the said law for it is not, within the ambit of the authority granted to the
Central Bank."
Reformina was affirmed in Philippine Virginia Tobacco Administration v. Tensuan, 188 SCRA 628 [1990], which
emphasized that the "judgments" contemplated in Circular No. 417 "are judgments involving said loans or
forbearance only and not in judgments in litigation that have nothing to do with loans x x x."
We held that Circular No. 416 does not apply to judgments involving damages (Reformina v. Tomol, Jr., supra;
Philippine Virginia Tobacco Administration v. Tensuan, supra) and compensation in expropriation proceedings
(National Power Corporation v. Angas, 208 SCRA 542 [1992]). We also held that Circular No. 416 applies to judgments
involving the payment of unliquidated cash advances to an employee by his employer (Villarica v. Court of Appeals,
123 SCRA 259 [1983]) and the return of money paid by a buyer of a leasehold right but which contract was voided
due to the fault of the seller (Buisier v. Court of Appeals, 154 SCRA 438 [1987]).
What then is the nature of the judgment ordering petitioner to pay private respondent the amount
of P2,300,000.00?
The said amount was a portion of the P7,776,335.69 which petitioner was obligated to pay Greatland as
consideration for the sale of several parcels of land by Greatland to petitioner. The amount of P2,300,000.00 was
assigned by Greatland in favor of private respondent. The said obligation therefore arose from a contract of
purchase and sale and not from a contract of loan or mutuum. Hence, what is applicable is the rate of 6% per annum
as provided in Article 2209 of the Civil Code of the Philippines and not the rate of 12% per annum as provided in
Circular No. 416.
Petitioner next contends that, consistent with its thesis that Circular No. 416 applies only to judgments involving the
payment of loans or forbearance of money goods and credit, the Court of Appeals should have ordered private
respondent to pay interest at the rate of 12% on the overpayment collected by her pursuant to the advance
execution of the judgment.
Again, we sustain petitioner's contention as correct.
Private respondent was paid in advance the amount of P5,517,707.00 by petitioner pursuant to the order for the
execution pending appeal of the judgment of the trial court. On appeal, the Court of Appeals reduced the total
damages to P3,619,083.33, leaving a balance of P1,898,623.67 to be refunded by private respondent to petitioner. In
an execution pending appeal, funds are advanced by the losing party to the prevailing party with the implied
obligation of the latter to repay the former, in case the appellate court cancels or reduces the monetary award.
Under Section 5 of Rule 39 of the Revised Rules of Court where "the judgment executed is reversed totally or
partially on appeal, the trial court, on motion, after the case is remanded to it, may issue such orders of restitution,
as equity and justice may warrant under the circumstances." It was to guarantee the restitution contemplated by
Section 5 of Rule 39 of the Revised Rules of Court that private respondent was required by the trial court to post a
bond before the writ of advance execution was issued.
In the case before us, the excess amount ordered to be refunded by private respondent falls within the ruling
inViloria and Buiser that Circular No. 416 applies to cases where money is transferred from one person to another
and the obligation to return the same or a portion thereof is subsequently adjudged.
Finally, petitioner questions as vague the ruling of the Court of Appeals that the surety bond given to secure the
advance execution may be discharged "upon the finality and satisfaction of the decision." We believe that this ruling
of the Court of Appeals is clear enough in ordering that the surety bond shall be released only after private
respondent has fully refunded the overpayment to petitioner.
WHEREFORE, the petition is GRANTED. The Resolution of the Court of Appeals appealed from is MODIFIED in that
(1) the amount of P2,300,000.00 adjudged to be paid by petitioner to private respondent shall earn interest of 6%
per annum and (2) the amount of P1,898,623.67 to be refunded by private respondent to petitioner shall earn
interest of 12% per annum. Costs against private respondent.
SO ORDERED.

CASE No. 5

LOADMASTERS CUSTOMS SERVICES, INC., vs. GLODEL BROKERAGE CORPORATION and R&B INSURANCE
CORPORATION, / G.R. No. 179446 / January 10, 2011

FACTS:

The case is a petition for review on certiorari under Rule 45 of the Revised Rules of Court assailing the August
24, 2007 Decision of the Court of Appeals (CA) in CA-G.R. CV No. 82822.

On August 28, 2001, R&B Insurance issued Marine Policy No. MN-00105/2001 in favor of Columbia to insure the
shipment of 132 bundles of electric copper cathodes against All Risks. On August 28, 2001, the cargoes were shipped
on board the vessel "Richard Rey" from Isabela, Leyte, to Pier 10, North Harbor, Manila. They arrived on the same
date.
Columbia engaged the services of Glodel for the release and withdrawal of the cargoes from the pier and the
subsequent delivery to its warehouses/plants. Glodel, in turn, engaged the services of Loadmasters for the use of its
delivery trucks to transport the cargoes to Columbias warehouses/plants in Bulacan and Valenzuela City.
The goods were loaded on board twelve (12) trucks owned by Loadmasters, driven by its employed drivers
and accompanied by its employed truck helpers. Of the six (6) trucks route to Balagtas, Bulacan, only five (5)
reached the destination. One (1) truck, loaded with 11 bundles or 232 pieces of copper cathodes, failed to deliver its
cargo.
Later on, the said truck, was recovered but without the copper cathodes. Because of this
incident, Columbia filed with R&B Insurance a claim for insurance indemnity in the amount ofP1,903,335.39. After the
investigation, R&B Insurance paid Columbia the amount ofP1,896,789.62 as insurance indemnity.

R&B Insurance, thereafter, filed a complaint for damages against both Loadmasters and Glodel before the
Regional Trial Court, Branch 14, Manila (RTC), It sought reimbursement of the amount it had paid to Columbia for the
loss of the subject cargo. It claimed that it had been subrogated "to the right of the consignee to recover from the
party/parties who may be held legally liable for the loss."

On November 19, 2003, the RTC rendered a decision holding Glodel liable for damages for the loss of the
subject cargo and dismissing Loadmasters counterclaim for damages and attorneys fees against R&B Insurance.

Both R&B Insurance and Glodel appealed the RTC decision to the CA.
On August 24, 2007, the CA rendered that the appellee is an agent of appellant Glodel, whatever liability the
latter owes to appellant R&B Insurance Corporation as insurance indemnity must likewise be the amount it shall be
paid by appellee Loadmasters. Hence, Loadmasters filed the present petition for review on certiorari.

ISSUE:

Whether or not Loadmasters and Glodel are common carriers to determine their liability for the loss of the subject
cargo.

RULING:

The petition is PARTIALLY GRANTED. Judgment is rendered declaring petitioner Loadmasters Customs Services, Inc.
and respondent Glodel Brokerage Corporation jointly and severally liable to respondent

Under Article 1732 of the Civil Code, common carriers are persons, corporations, firms, or associations engaged in
the business of carrying or transporting passenger or goods, or both by land, water or air for compensation, offering
their services to the public. Loadmasters is a common carrier because it is engaged in the business of transporting
goods by land, through its trucking service. It is a common carrier as distinguished from a private carrier wherein the
carriage is generally undertaken by special agreement and it does not hold itself out to carry goods for the general
public. Glodel is also considered a common carrier within the context of Article 1732. For as stated and well provided
in the case of Schmitz Transport & Brokerage Corporation v. Transport Venture, Inc., a customs broker is also regarded
as a common carrier, the transportation of goods being an integral part of its business.

Loadmasters and Glodel, being both common carriers, are mandated from the nature of their business and for
reasons of public policy, to observe the extraordinary diligence in the vigilance over the goods transported by them
according to all the circumstances of such case, as required by Article 1733 of the Civil Code. When the Court speaks
of extraordinary diligence, it is that extreme measure of care and caution which persons of unusual prudence and
circumspection observe for securing and preserving their own property or rights. With respect to the time frame of
this extraordinary responsibility, the Civil Code provides that the exercise of extraordinary diligence lasts from the
time the goods are unconditionally placed in the possession of, and received by, the carrier for transportation until
the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to
receive them.

The Court is of the view that both Loadmasters and Glodel are jointly and severally liable to R & B Insurance for the
loss of the subject cargo. Loadmasters claim that it was never privy to the contract entered into by Glodel with the
consignee Columbia or R&B Insurance as subrogee, is not a valid defense.

For under ART. 2180. The obligation imposed by Article 2176 is demandable not only for ones own acts or omissions,
but also for those of persons for whom one is responsible.

xxxx

Employers shall be liable for the damages caused by their employees and household helpers acting within the scope
of their assigned tasks, even though the former are not engaged in any business or industry.

It is not disputed that the subject cargo was lost while in the custody of Loadmasters whose employees (truck driver
and helper) were instrumental in the hijacking or robbery of the shipment. As employer, Loadmasters should be
made answerable for the damages caused by its employees who acted within the scope of their assigned task of
delivering the goods safely to the warehouse.

Glodel is also liable because of its failure to exercise extraordinary diligence. It failed to ensure that Loadmasters
would fully comply with the undertaking to safely transport the subject cargo to the designated destination. Glodel
should, therefore, be held liable with Loadmasters. Its defense of force majeure is unavailing.

For the consequence, Glodel has no one to blame but itself. The Court cannot come to its aid on equitable grounds.
"Equity, which has been aptly described as a justice outside legality, is applied only in the absence of, and never
against, statutory law or judicial rules of procedure." The Court cannot be a lawyer and take the cudgels for a party
who has been at fault or negligent.

CASE No. 6

MAKATI SHANGRI-LA HOTEL vs HARPER

Negligence Article 2176 0f the New Civil Code provides 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.

The hotel business is imbued with public interest. Hotelkeepers are bound to provide not only lodging for their
guests but also security to their persons and belongings to their guest. The twin duty constitutes the essence of the
business (Arts 2000-2001 New Civil Code)

Hotel owner is liable for civil damages to surviving heirs of hotel guest whom strangers murder inside his hotel
room.

FACTS:

Christian Harper was a Norweigian who came to Manila on a business trip. He stayed at Makati Shangri-la Hotel, but
he was murdered in his hotel room [Specifically Room 1428. His ghost can be found there].

It was found that the murderer, a caucasian male, was able to trespass into the hotel room of the victim and was
then able to murder and rob the victim. The heirs of the victim blame the hotel's gross negligence in providing the
most basic security system of its guests.

The RTC held in favor of the heirs and ordered Shangri-la to pay damages. CA affirmed.

ISSUE: WON Shangri-la Hotel is liable for damages.

HELD: Yes. Shangri-la is liable due to its own negligence.

The testimony revealed that the management practice of the hotel prior to the death of the victim was to deploy
only one security or roving guard for every three or four floors of the hotel, which is inadequate because the hotel is
L-shaped that rendered hallways not visible end to end. That there was a recommendation to increase security to
one guard per floor but this was not followed. This ommission is critical. The hotel business is imbued with public
interest. Hotelkeepers are bound to provide not only lodging for their guests but also security to their persons and
belongings to their guest. The twin duty constitutes the essence of the business.

Therefore, the hotel has a greater degree of care and responsibility for its guests , otherwise the hotelkeepers would
just stand idly by while strangers have unrestricted access to all hotel rooms on the pretense of being visitors of the
guests which is absurd.

Note: The decision of the CA was reproduced in the decision to which the SC concurred. The CA discussed the test of
negligence as:

The test of negligence is objective. WE measure the act or ommission of the tortfeasor with a perspective as that of
an ordinary reasonable person who is similarly situated. The test, as applied to the extant case, is whether or not
[Shangri-la Hotel], under the attendant circumstances, used that reasonable care and caution which an ordinary
person would have used in the same situation.

CASE NO. 7

CADIENTE v. MACAS G.R. No. 161946; November 14, 2008

FACTS:

Bithuel Macas while standing on the shoulder of the road was bumped and run over by a Ford Fiera, driven by
Cimafranca which resulted to the amputation of both legs up to the groins of the victim. Records showed that the
Ford Fiera was registered in the name of Atty. Cadiente, who However, claimed that when the accident happened,
he was no longer the owner of the Ford Fiera since he already sold it to Engr. Jalipa on March 28, 1994.

The victim's father, filed a complaint for torts and damages against Cimafranca and Cadiente before the RTC of
Davao City. Cadiente later filed a third-party complaint against Jalipa. Jalipa, however, filed a fourth-party complaint
against Abubakar, to whom Jalipa allegedly sold the vehicle on June 20, 1994.

The RTC rendered in favor of the plaintiff declaring Atty. Medardo Ag. Cadiente and Engr. Rogelio Jalipa jointly and
severally liable for damages to the plaintiff for their own negligence. The Court of Appeals denied their appeal and
subsequent motion for reconsideration.

ISSUES:

1.Whether there was contributory negligence on the part of the victim, hence not entitled to recover damages.

2. Whether the petitioner and third-party defendant Jalipa are jointly and severally liable to the victim.

HELD:

1.NONE. Records show that when the accident happened, the victim was standing on the shoulder, which was the
uncemented portion of the highway. As noted by the trial court, the shoulder was intended for pedestrian use alone.
Only stationary vehicles, such as those loading or unloading passengers may use the shoulder. Running vehicles are
not supposed to pass through the said uncemented portion of the highway. However, the Ford Fiera in this case,
without so much as slowing down, took off from the cemented part of the highway, inexplicably swerved to the
shoulder, and recklessly bumped and ran over an innocent victim. The victim was just where he should be when the
unfortunate event transpired. 2.

The registered owner of any vehicle, even if he had already sold it to someone else, is primarily responsible to the
public for whatever damage or injury the vehicle may cause. In the case of Villanueva v. Domingo

we said that the policy behind vehicle registration is the easy identification of the owner who can be held
responsible in case of accident, damage or injury caused by the vehicle. This is so as not to inconvenience or
prejudice a third party injured by one whose identity cannot be secured. Therefore, since the Ford Fiera was still
registered in the petitioner's name at the time when the misfortune took place, the petitioner cannot escape liability
for the permanent injury it caused the respondent, who had since stopped schooling and is now forced to face life
with nary but two remaining limbs.
CASE NO. 8

CASE NO. 9

AMADORA VS COURT OF APPEALS

FACTS: Alfredo Amadora was shot by a gun fired by his classmate Daffon while in the Colegio de San Jose-
Recoletos Auditorium at a date after the semester ended. He was there to submit a graduation requirement in
Physics.

Daffon was convicted of homicide thru reckless imprudence . Additionally, the herein petitioners, as the victims
parents, filed a civil action for damages under Article 2180 of the CC against the Colegio de San Jose-Recoletos, its
rector the high school principal, the dean of boys, and the physics teacher, together with Daffon and two other
students, through their respective parents.

The complaint against the students was later dropped. After trial, the CFI of Cebu held the remaining defendants
liable to the plaintiffs, representing death compensation, loss of earning capacity, costs of litigation, funeral
expenses, MD, ED and AF.

On appeal to the respondent court, however, the decision was reversed and all the defendants were completely
absolved. Hence this petition for certiorari under Rule 45 of the Rules of Court.

In its decision the respondent court found that Article 2180 was not applicable as the Colegio de San Jose-
Recoletos was not a school of arts and trades but an academic institution of learning. It also held that the students
were not in the custody of the school at the time of the incident as the semester had already ended.

ISSUE: how should Art. 2180 be applied in this case

HELD: the petition is DENIED. The rector, the high school principal and the dean of boys cannot be held liable
because none of them was the teacher-in-charge as previously defined. Colegio de San Jose-Recoletos cannot be
held directly liable under the article because only the teacher or the head of the school of arts and trades is made
responsible for the damage caused by the student or apprentice

Art. 2180. The obligation imposed by Article 2176 is demandable not only for ones own acts or omissions, but also
for those of persons for whom one is responsible.

xx

Lastly, teachers or heads of establishments of arts and trades shall be liable for damages caused by their pupils and
students or apprentices, so long as they remain in their custody.

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

After an exhaustive examination of the problem, the Court has come to the conclusion that the provision in
question should apply to all schools, academic as well as non-academic. Where the school is academic rather than
technical or vocational in nature, responsibility for the tort committed by the student will attach to the teacher in
charge of such student, following the first part of the provision. This is the general rule. In the case of
establishments of arts and trades, it is the head thereof, and only he, who shall be held liable as an exception to
the general rule.

As stated in the dissent of Justice J.B.L. Reyes in the Exconde Case, under Art. 2180, he said, was imposed on (1)
teachers in general; and (2) heads of schools of arts and trades in particular. The modifying clause of
establishments of arts and trades should apply only to heads and not teachers.

But of course, as long as the defendant can show that he had taken the necessary precautions to prevent the injury
complained of, he can exonerate himself from the liability imposed by Article 2180, as stated in its last paragraph.

In this connection, it should be observed that the teacher will be held liable not only when he is acting in loco
parentis for the law does not require that the offending student be of minority age. Unlike the parent, who wig be
liable only if his child is still a minor, the teacher is held answerable by the law for the act of the student under him
regardless of the students age

In any event, it should be noted that the liability imposed by this article is supposed to fall directly on the teacher
or the head of the school of arts and trades and not on the school itself. If at all, the school, whatever its nature,
may be held to answer for the acts of its teachers or even of the head thereof under the general principle of
respondeat superior, but then it may exculpate itself from liability by proof that it had exercised the diligence of a
bonus pater familias.The school can show that it exercised proper measures in selecting the head or its teachers
and the appropriate supervision over them in the custody and instruction of the pupils pursuant to its rules and
regulations for the maintenance of discipline among them.

The other matter to be resolved is the duration of the responsibility of the teacher or the head of the school of arts
and trades over the students. Is such responsibility co-extensive with the period when the student is actually
undergoing studies during the school term, as contended by the respondents and impliedly admitted by the
petitioners themselves?

This does not necessarily mean that such, custody be co-terminous with the semester, beginning with the start of
classes and ending upon the close thereof, and excluding the time before or after such period, such as the period
of registration, and in the case of graduating students, the period before the commencement exercises [During
such periods, the student is still subject to the disciplinary authority of the school and cannot consider himself
released altogether from observance of its rules.]In the view of the Court, the student is in the custody of the
school authorities as long as he is under the control and influence of the school and within its premises, whether
the semester has not yet begun or has already ended.

As long as it can be shown that the student is in the school premises in pursuance of a legitimate student objective,
in the exercise of a legitimate student right, and even in the enjoyment of a legitimate student right, and even in
the enjoyment of a legitimate student privilege, the responsibility of the school authorities over the student
continues. Indeed, even if the student should be doing nothing more than relaxing in the campus in the company
of his classmates and friends and enjoying the ambience and atmosphere of the school, he is still within the
custody and subject to the discipline of the school authorities under the provisions of Article 2180.

NOTES:

The reason for the disparity [distinction of who should be responsible for students between academic and arts and
trades schools] can be traced to the fact that historically the head of the school of arts and trades exercised a
closer tutelage over his pupils than the head of the academic school. The old schools of arts and trades were
engaged in the training of artisans apprenticed to their master who personally and directly instructed them on the
technique and secrets of their craft. By contrast, the head of the academic school was not as involved with his
students and exercised only administrative duties over the teachers who were the persons directly dealing with
the students. The head of the academic school had then (as now) only a vicarious relationship with the students.
Consequently, while he could not be directly faulted for the acts of the students, the head of the school of arts and
trades, because of his closer ties with them, could be so blamed.

It is conceded that the distinction no longer obtains at present in view of the expansion of the schools of arts and
trades, the consequent increase in their enrollment, and the corresponding diminution of the direct and personal
contract of their heads with the students. Article 2180, however, remains unchanged. In its present state, the
provision must be interpreted by the Court according to its clear and original mandate until the legislature, taking
into account the charges in the situation subject to be regulated, sees fit to enact the necessary amendment.

CASE NO. 10

MANLANGIT VS URGEL

Facts: On August 13, 1994, the jeepney owned by complainant and driven by Edgardo Castillo, plied its usual route
going to Virac, Catanduanes. While approaching a blind curve, the jeepney driver occupied the wrong lane. At the
curve, they suddenly saw a parked dump truck and in order to avoid collision driver swerved to the right and
accidentally plunged into the river. The passengers sustained some injuries.

Consequently, a criminal complaint against Castillo and complainant was filed before the sala of respondent judge
who then issued a warrant for the arrest of both Castillo and complainant.

Issue: WON complainant can be held criminally liable.

Ruling: It has been held in Chapman v. Underwood (G.R. No. 9010, March 28, 1914, 27 Phil 374.) "that An owner who
sits in his automobile and permits his driver to continue in a violation of the law by the performance of negligent
acts, after he has had reasonable opportunity to observe them and to direct that the driver cease therefrom,
becomes himself responsible for such acts. On the other hand, if the driver, by a sudden act of negligence, and
without the owner having reasonable opportunity to prevent the act or its continuance, injures a person or violates
the criminal law, the owner of the automobile, although present therein at the time the act was committed, is not
responsible, either criminally or civilly, therefor. The act complained of must be continued in the presence of the
owner for such a length of time that the owner, by his acquiescence, makes his driver's acts his own."

In the case at bar, nowhere does it show that complainant participated in abetted or even approved the negligent
and reckless manner in which his driver maneuvered the vehicle on that blind curve. Hence, the warrant of arrest
issued by respondent judge was erroneous.