Chapter 3: Civil and Natural Obligations (Kinds of Obligations)
Arts. 1423-1430, NCC; Arts. 1956 and 1960, NCC.
Siga-an v. Villanueva, 576 SCRA 696 (2009); Ching v. Nicdao, 522 SCRA 316 , 361
(2007); Tan v. Valdehueza, 160 Phil. 760, 767 (1975)
Chapter 4: Real and Personal Obligations (Kinds of Obligations)
Arts. 1163-1168, NCC
Concept: Philippine National Construction Corp. v. CA, G.R. No. 116896, May 5, 1997, 272
SCRA 183, 191.
Diligence of good father of family: Francisco v. Chemical Bulk Carriers, Incorporated, G.R.
No. 193577, Sep. 7, 2011
Chapter 5: Breach of Obligation
Arts. 1169-1178, NCC
A. Mora (Delay)
(aa) Mora Solvendi
Concept: Raquel-Santos v. CA, 592 SCRA 169 (2009); J Plus Asia Development Corp. v.
Utility Assurance Corp., 700 SCRA 134 (2013); Selegna Management and Development
Corp. v. UCPB, 489 SCRA 125 (2006) and Philippine Export and Foreign Loan Guarantee
Corporation v. V.P. Eusebio Construction, Inc.,478 Phil. 269 (2004); Titan-Ikeda
Construction & Development Corp. v. Primetown Property Group, Inc., 544 SCRA 466
(2008) and RCBC v. CA, 305 SCRA 449, 456 (1999).
Requisites: Maybank Philippines, Inc. (formerly PNB-Republic Bank) v. Tarrosa, 772
SCRA 670 (2015); Solante v. COA, 733 SCRA 266 (2014); J Plus Asia Development Corp. v.
Utility Assurance Corp., 700 SCRA 134 (2013); Cruz v. Gruspe, 693 SCRA 415
(2013); Social Security System v. Moonwalk Development and Housing Corp., 221 SCRA
119 (1993); Selegna Management and Development Corp. v. UCPB, 489 SCRA 125
(2006); Pantaleon v. American Express International, Inc., 587 SCRA 551 (2009); Raquel-
Santos v. CA, 592 SCRA 169 (2009).
Form of Demand: Cetus Development, Inc. v. CA, 176 SCRA 72, 81 (1989).
Exception to Requirement of Demand: Maybank Philippines, Inc. (formerly PNB-Republic
Bank) v. Tarrosa, 772 SCRA 670 (2015); Lorenzo Shipping Corp. v. BJ Marthel
International, Inc., 443 SCRA 163, 174 (2004).
Effects of Mora Solvendi: Arts. 1170, 2209, 1262, 1165, NCC; Solid Homes v. Tan, 465
SCRA 137 (2005) and Autocorp Group v. Intra Strata Assurance Corporation, 556 SCRA
250 (2008)
(bb) Compensatio Morae:
Concept: Cortes v. CA, G.R. No. 126083, July 12, 2006; Megaworld Properties and
Holdings, Inc. v. Majestic Finance and Investment Co., Inc., 777 SCRA 37 (2015)
Reciprocal Obligation: Megaworld Properties and Holdings, Inc. v. Majestic Finance and
Investment Co., Inc., 777 SCRA 37 (2015); Consolidated Industrial Gases, Inc. v. Alabang
Medical Center, G.R. No. 181983, November 13, 2013, 709 SCRA 409; MBTC v. Chiok, 742
SCRA 435 (2014); Heirs of Ramon C. Gaite v. The Plaza, Inc., G.R. No. 177685, January 26,
2011, 640 SCRA 576; Cortes v. CA, G.R. No. 126083, July 12, 2006; Casio, Jr. v. CA, G.R. No.
133803, September 16, 2005
Requirement of Demand in Reciprocal Obligations: Solar Harvest, Inc. v. Davao
Corrugated Carton Corp., G.R. No. 176868, July 26, 2010
(cc) Mora Accipiendi
Concept and Requisites: Pantaleon v. American Express International, Inc., 587 SCRA 551
(2009).
B. Fraud (Dolo)
Legaspi Oil Co., Inc. v. CA, G.R. No. 96505, July 1, 1993
C. Culpa (Negligence)
Culpa contractual: Sps. Erlinda and Frank Batal v. Sps. Luz San Pedro and Kenichiro
Tominaga, G.R. No. 164601, Sep. 27, 2006
Culpa Contractual v. Culpa Extra-Contractual: Calalas v. CA, 332 SCRA 356 (2000);
Cangco v. Manila Railroad Co., G.R. No. L-12191, Oct. 14, 1918; FGU Insurance Corp. v.
G.P. Sarmiento Trucking Corp., G.R. 141910, Aug. 6, 2002
When Negligence Exist: Crisostomo v. CA, G.R. No. 138334, Aug. 25, 2003; Mindanao
Terminal and Brokerage Service, Inc. v. Phoenix Assurance Company of New
York/McGee & Co., Inc., G.R. No. 162467, May 8, 2009; G.V. Florida Transport, Inc. v. Heirs
of Romeo L. Battung, Jr., 772 SCRA 579 (2015); Jarco Marketing Corporation v. Court of
Appeals, 378 Phil. 991 (1999); Picart v. Smith, 37 Phil. 809 (1918); Ruks Konsult and
Construction v. Adworld Sign and Advertising Corp., 748 SCRA 622 (2015); Sicam v.
Jorge, 529 SCRA 443.
Waiver of Action For Future Negligence: Nogales v. Capitol Medical Center, G.R. No.
142625, Dec. 19, 2006.
D. Contravention of Tenor of Obligation
Arrieta v. National Rice and Corn Corp., G.R. No. _15645, Jan. 31, 1964, citing De la Cruz
Seminary of Manila, 18 Phil. 330; Municipality of Moncada v. Cajuigan, 21 Phil. 184; De la
Cavada v. Diaz, 37 Phil. 982; Maluenda & Co. v. Enriquez, 46 Phil. 916; Pasumil v. Chong,
49 Phil. 1003; Pando v. Gimenez, 54 Phil. 459; Acme Films v. Theaters Supply, 63 Phil.
657
Criticism By Justice J.B.L. Reyes, XVI Lawyer’s Journal 47, Jan. 31, 1951.
E. Fortuitous Event
Definition: Metro Concast Steel Corp. v. Allied Bank Corp., 711 SCRA 479 (2013);
Republic v. Luzon Stevedoring Corp., 21 SCRA 279 (1967); Sicam v. Jorge, 529 SCRA 443;
Nakpil v. IAC, 144 SCRA 596 (1986).
Acts of God and Acts of Man (Force Majuere): Republic v. Luzon Stevedoring Corp., 21
SCRA 279 (1967) and Asset Privatization Trust v. T.J. Enterprises, G.R. No. 167195, May
8, 2009
Requisites of Fortuitous Event: Nakpil v. IAC, 144 SCRA 596 (1986); Tanguilig v. CA, G.R.
No. 117190, January 2, 1997; Huibonhoa v. CA, G.R. No. 95897. December 14,
1999; Sicam v. Jorge, 529 SCRA 443.
Robbery and Carnapping: Sicam v. Jorge, 529 SCRA 443; Co v. CA, 353 Phil. 305 (1998);
Austria v. CA, 148-A Phil. 462 (1971); Hernandez v. Chairman, Commission on Audit, 179
SCRA 39 (1989), Cruz v. Gangan, 443 Phil. 863 (2003).
Defects in Automobile and Tire Blow-Out: Yobido v. CA, 281 SCRA 1 (1997); Lasam v.
Smith, Jr., 45 Phil. 657 (1924); Son v. Cebu Autobus Co., 94 Phil. 892 (1954); Necessito v.
Paras, 104 Phil 75 (1958); La Mallorca and Pampanga Bus Co. v. De Jesus, 17 SCRA 23
(1966), Juntilla v. Fontanar, 136 SCRA 624 (1985).
Exception to Liability; Assumption of Risk: Co v. CA, 353 Phil. 305 (1998)
GEORGE MANANTAN, petitioner vs. COURT OF APPEALS, defendant
G.R. No. 107125. January 29, 2001
FACTS:
In the evening of September 25, 1982, at the National Highway of Malvar,
Santiago, Isabela, George Manantan was driving a Toyota car going home. At that time, he
was with Fiscal Ambrocio, Miguel Tabangin and Ruben Nicolas. Suddenly, a jeepney,
coming from the opposite direction hit the driver side of the car, driven by Manantan.
Consequently, Manantan, Ambrocio and Tabangin were injured while Nicolas died.TRIAL
FOLLOWED.
The lower court acquitted the accused of the crime of reckless imprudence resulting to
homicide. The respondents filed their notice of appeal on the civil aspect of the lower
court’s judgment. Even if the accused was acquitted from his criminal liability,
the Appellate Court held him civilly liable and ordered him to indemnify the aggrieved
party for the death of Nicolas.
ISSUE:
Whether or not the acquittal of petitioner extinguished his civil liability.
RULING:
The acquittal was based on reasonable doubt on the guilt of the accused. Article 29 of the
Civil Code provides that a civil liability is not extinguished in criminal cases. Therefore,
the accused cannot be exempted from paying civil damages which may only be proven by
preponderance of evidence.
Manantan claimed that he was placed on double jeopardy but the courts did not give
merit to this contention. The following elements must be present for double jeopardy to
exist: (1) A first jeopardy must have attached prior to the second; (2) The
first jeopardy must have terminated; and (3) the third jeopardy must be for the
same offense as the first.
In the case at bar, the initially put into jeopardy but he it was terminated by his
discharge. When the case was elevated to the Court of Appeals, the issue was about the
civil aspect of the criminal case. Thus, there could be no double jeopardy.
NUGUID vs. NICDAO Case Digest
EMMA P. NUGUID vs. CLARITA S. NICDAO
G.R. No. 150785 September 15, 2006
FACTS: Accused Clarita S. Nicdao is charged with having committed the crime of
Violation of BP 22 in fourteen (14) counts. The criminal complaints allege that
respondent and her husband approached petitioner and asked her if they could borrow
money to settle some obligations. Having been convinced by them and because of the
close relationship of respondent to petitioner, the latter lent the former her money. Thus,
every month, she was persuaded to release P100,000.00 to the accused until the total
amount reached P1,150,000.00.
As security for the P1,150,000.00, respondent gave petitioner open dated checks with
the assurance that if the entire amount is not paid within one (1) year, petitioner can
deposit the checks.
Subsequently, petitioner demanded payment of the sums above-mentioned, but
respondent refused to acknowledge the indebtedness. Thereafter, petitioner deposited
all aforementioned checks in the bank totaling P1,150,000.00. The checks were all
returned for having been drawn against insufficient funds.
A verbal and written demand was made upon respondent to pay the amount represented
by the bounced checks, but to no avail. Hence, a complaint for violation of BP 22 was filed
against the respondent. The trial court convicted the defendant. The CA reversed the
decision, thus acquitting Nicdao. Petitioner now contends that the civil liability of the
defendant was not extinguished by the acquittal.
ISSUE: Whether respondent remains civilly liable to petitioner despite her acquittal.
HELD: No. From the standpoint of its effects, a crime has a dual character: (1) as an
offense against the State because of the disturbance of the social order and (2) as an
offense against the private person injured by the crime unless it involves the crime of
treason, rebellion, espionage, contempt and others (wherein no civil liability arises on
the part of the offender either because there are no damages to be compensated or there
is no private person injured by the crime.
What gives rise to the civil liability is really the obligation of everyone to repair or to
make whole the damage caused to another by reason of his act or omission, whether
done intentionally or negligently and whether or not punishable by law.
Extinction of penal action does not carry with it the eradication of civil liability, unless
the extinction proceeds from a declaration in the final judgment that the fact from which
the civil liability might arise did not exist.
The basic principle in civil liability ex delicto is that every person criminally liable is also
civilly liable, crime being one of the five sources of obligations under the Civil Code. A
person acquitted of a criminal charge, however, is not necessarily civilly free because the
quantum of proof required in criminal prosecution (proof beyond reasonable doubt) is
greater than that required for civil liability (mere preponderance of evidence). In order
to be completely free from civil liability, a person's acquittal must be based on the fact
that he did not commit the offense. If the acquittal is based merely on reasonable doubt,
the accused may still be held civilly liable since this does not mean he did not commit the
act complained of. It may only be that the facts proved did not constitute the offense
charged.
Acquittal will not bar a civil action in the following cases: (1) where the acquittal is based
on reasonable doubt as only preponderance of evidence is required in civil cases; (2)
where the court declared the accused's liability is not criminal but only civil in nature
and (3) where the civil liability does not arise from or is not based upon the criminal act
of which the accused was acquitted.
In this petition, we find no reason to ascribe any civil liability to respondent. As found by
the CA, her supposed civil liability had already been fully satisfied and extinguished by
payment. The statements of the appellate court leave no doubt that respondent, who was
acquitted from the charges against her, had already been completely relieved of civil 1. where the civil liability which is included in the criminal action is that arising from and
liability. as a consequence of the criminal act, and the defendant was acquitted in the criminal
case, (no civil liability arising from the criminal case), no civil liability arising from the
Padilla v CA (Torts) criminal charge could be imposed upon him
2. liability of the defendant for the return of the amount received by him may not be
PADILLA v CA G.R. No. L-39999 May 31, 1984 ROY PADILLA, FILOMENO GALDONES, enforced in the criminal case but must be raised in a separate civil action for the
ISMAEL GONZALGO and JOSE FARLEY BEDENIA, petitioners, vs. COURT OF recovery of the said amount
APPEALS, respondent.

FACTS: ISSUE: whether or not the respondent court committed a reversible error in requiring
1. The information states that on February 8, 1964 at around 9AM, the accused the petitioners to pay civil indemnity to the complainants after acquitting them from the
prevented Antonio Vergara and his family to close their stall located at the Public Market, criminal charge.
Building No. 3, Jose Panganiban, Camarines Norte, and by subsequently forcibly opening RULING:
the door of said stall and thereafter brutally demolishing and destroying said stall and No, the Court of Appeals is correct.
the furnitures therein by axes and other massive instruments, and carrying away the 1. A separate civil action is not required. To require a separate civil action simply
goods, wares and merchandise because the accused was acquitted would mean needless clogging of court dockets and
unnecessary duplication of litigation with all its attendant loss of time, effort, and money
Contentions: on the part of all concerned.
Section 1 of Rule 111 of the Rules of Court states the fundamental proposition that when
Vergara Family a criminal action is instituted, the civil action for recovery of civil liability arising from the
1. accused took advantage of their public positions: Roy Padilla, being the incumbent offense charged is impliedly instituted with it. The exceptions are when the offended party
municipal mayor, and the rest of the accused being policemen, except Ricardo Celestino expressly waives the civil action or reserves his right to institute it separately.
who is a civilian, all of Jose Panganiban, Camarines Norte, and that it was committed with Civil liability which is also extinguished upon acquittal of the accused is the civil liability
evident premeditation. arising from the act as a crime.
The judgment of acquittal extinguishes the liability of the accused for damages only
when it includes a declaration that the facts from which the civil might arise did not exist.
Roy Padilla, et al Thus, the civil liability is not extinguished by acquittal where the acquittal is based on
1. finding of grave coercion was not supported by the evidence reasonable doubt.
2. the town mayor had the power to order the clearance of market premises and the Article 2177 of the Civil Code provides:
removal of the complainants' stall because the municipality had enacted municipal Responsibility for fault or negligence under the preceding article is entirely separate
ordinances pursuant to which the market stall was a nuisance per se and distinct from the civil liability arising from negligence under the Penal Code. But
3. violation of the very directive of the petitioner Mayor which gave the stall owners the plaintiff cannot recover damages twice for the same act or omission of the
seventy two (72) hours to vacate the market premise defendant. That the same punishable act or omission can create two kinds of civil
liabilities against the accused and, where provided by law, his employer. 'There is
the civil liability arising from the act as a crime and the liability arising from the
DECISION OF LOWER COURTS: same act as a quasi-delict. Either one of these two types of civil liability may be
(1) Trial court: conviction. Roy Padilla, Filomeno Galdonez, Ismael Gonzalgo and Jose enforced against the accused, However, the offended party cannot recover
Parley Bedenia guilty beyond reasonable doubt of the crime of grave coercion, and damages under both types of liability.
hereby imposes upon them to suffer an imprisonment of FIVE (5) months and One (1) Article 29 of the Civil Code, earlier cited, that "when the accused in a criminal
day; to pay a fine of P500.00 each; to pay actual and compensatory damages in the prosecution is acquitted on the ground that his guilt has not been proved beyond
amount of P10,000.00; moral damages in the amount of P30,000.00; and another reasonable doubt, a civil action for damages for the same act or omission may be
P10,000.00 for exemplary damages, jointly and severally, and all the accessory penalties instituted."
provided for by law; and to pay the proportionate costs of this proceedings. What Article 29 merely emphasizes that a civil action for damages is not precluded by an
(2) Court of Appeals: acquittal but ordered them to pay solidarily the amount of 9,000. acquittal for the same criminal act or omission.
The petitioners were acquitted because these acts were denominated coercion when The Civil Code provision does not state that the remedy can be availed of only in a
they properly constituted some petitioners were acquitted because these acts were separate civil action. A separate civil case may be filed but there is no statement that
denominated coercion when they properly constituted some other offense such as threat such separate filing is the only and exclusive permissible mode of recovering damages.
or malicious mischief Considering moreover the delays suffered by the case in the trial, appellate, and review
stages, it would be unjust to the complainants in this case to require at this time a
Roy Padilla et al for petition for review on certiorari - grounds separate civil action to be filed.
[G.R. No. 145391. August 26, 2002] AVELINO CASUPANAN and ROBERTO
CAPITULO, petitioners, vs. MARIO LLAVORE LAROYA, respondent.
CARPIO, J.:
Facts :
The two vehicle, driven by the respondent Laroya and the petitioner Capitulo and
Avelino had an accident. As a result two cases were filed with the Municipal Circuit
Trial Court, Laroya filed a criminal case against Casupanan for reckless
imprudence resulting in damage to property. On the other hand, Casupanan and
Capitulo filed a civil case against Laroya for quasi-delict.
ISSUE:
Whether an accused in a pending criminal case for reckless imprudence can
validly file, simultaneously and independently, a separate civil action for quasi-
delict against the private complainant in the criminal case.
Ruling:
Under Section 1 of the present Rule 111, the independent civil action in Articles
32, 33, 34 and 2176 of the Civil Code is not deemed instituted with the criminal
action but may be filed separately by the offended party even without
reservation. Thus, the offended party can file two separate suits for the same act or
omission. The first a criminal case where the civil action to recover civil liability
ex-delicto is deemed instituted, and the other a civil case for quasi-delict - without
violating the rule on non-forum shopping. The two cases can proceed
simultaneously and independently of each other.
Similarly, the accused can file a civil action for quasi-delict for the same act or
omission he is accused of in the criminal case.
To disallow the accused from filing a separate civil action for quasi-delict, while
refusing to recognize his counterclaim in the criminal case, is to deny him due
process of law, access to the courts, and equal protection of the law.
Thus, the civil action based on quasi-delict filed separately by Casupanan and
Capitulo is proper. The order of dismissal on the ground of forum-shopping is
erroneous.
Related to : Art. 33
Extinction of Civil Liability
45. PEOPLE v BAYOTAS (236 SCRA 239) September 2, 1994
G.R. No. 102007
Facts:
Bayotas died on February 4, 1992 at the National Bilibid Hospital due to cardio
respiratory arrest. Consequently, the Supreme Court in its Resolution of May 20, 1992
dismissed the criminal aspect of the appeal. However, it required the Solicitor General to
file its comment with regard to Bayotas' civil liability arising from his commission of the
offense charged.
Issue: WON the death of the accused Bayotas extinguished his criminal liability and civil
liability based solely on the act complained.
Held: Yes
Ratio:
The Supreme Court held that the death of the accused Bayotas extinguished his
criminal liability and civil liability based solely on the act complained of, i.e., rape. The
Court ruled that: (1) death of the accused pending appeal of his conviction extinguishes
his criminal liability as well as the civil liability based solely thereon; (2) the claim for
civil liability survives notwithstanding the death of accused, if the same may also be
predicated on a source of obligation other than delict, such as law, contracts, quasi-
contracts or quasi-delicts; (3) where the civil liability survives, as explained in Number 2
above, an action for recovery therefor may be pursued but only by way of filing a
separate civil action and subject to Section 1, Rule 111 of the 1985 Rules on Criminal
Procedure; and (4) the private offended party need not fear a forfeiture of his right to file
this separate civil action by prescription, in cases where during the prosecution of the
criminal action and prior to its extinction, the private-offended party instituted together
therewith the civil action for in such case, the statute of limitations on the civil liability is
deemed interrupted during the pendency of the criminal case.
[G.R. No. 82562. April 11, 1997]
LYDIA A. VILLEGAS, MA. TERESITA VILLEGAS, ANTONIO VILLEGAS, JR., and MA.
ANTONIETTE VILLEGAS, petitioners, vs. THE COURT OF APPEALS, PEOPLE
OF THE PHILIPPINES, and ANTONIO V. RAQUIZA, respondents.
[G.R. No. 82592. April 11, 1997]
ANTONIO V. RAQUIZA, petitioner, vs. COURT OF APPEALS, LYDIA A. VILLEGAS,
ANTONIO VILLEGAS, JR., MA. ANTONETTE VILLEGAS, MA. LYDIA VILLEGAS
and ESTATE OF ANTONIO J. VILLEGAS, respondents.
DECISION
ROMERO, J.:
This case originated from a libel suit filed by then Assemblyman Antonio V. Raquiza
against then Manila Mayor Antonio J. Villegas, who allegedly publicly imputed to him acts
constituting violations of the Anti-Graft and Corrupt Practices Act. He did this on several
occasions in August 1968 through (a) a speech before the Lion's Club of Malasiqui,
Pangasinan on August 10; (b) public statements in Manila on August 13 and in Davao on
August 17, which was coupled with a radio-TV interview; and (c) a public statement
shortly prior to his appearance before the Senate Committee on Public Works (the
Committee) on August 20 to formally submit a letter-complaint implicating Raquiza,
among other government officials.
The Committee, however, observed that all the allegations in the complaint were
based mainly on the uncorroborated testimony of a certain Pedro U. Fernandez, whose
credibility turned out to be highly questionable. Villegas also failed to submit the original
copies of his documentary evidence. Thus, after thorough investigation, Raquiza was
cleared of all charges by the Committee.[1] All these acts of political grandstanding
received extensive media coverage.
 On July 25, 1969, an information for libel was filed by the Office of the City Fiscal of
Manila with the then Court of First Instance of Manila against Villegas who denied the
charge. After losing in the 1971 elections, Villegas left for the United States where he
stayed until his death on November 16, 1984. Nevertheless, trial proceeded in absentia;
by the time of his death in 1984, the prosecution had already rested its case. Two months
after notice of his death, the court issued an order dismissing the criminal aspect of the
case but reserving the right to resolve its civil aspect. No memorandum was ever filed in
his behalf.
Judge Marcelo R. Obien[2] rendered judgment on March 7, 1985, the dispositive
portion of which was amended on March 26 to read as follows:
"WHEREFORE, and in view of the foregoing considerations, judgment is hereby rendered
as follows:
1. The dismissal of the criminal case against Antonio J. Villegas, on account of
his death on November 16, 1984, is hereby reiterated;
2. Ordering the estate of Antonio J. Villegas, represented herein by his legal
heirs, namely: Lydia A. Villegas, Ma. Teresita Villegas, Antonio Villegas, Jr.,
Ma. Anton(i)ette Villegas, and Ma. Lydia Villegas (sic), to pay plaintiff
Antonio V. Raquiza Two Hundred Million Pesos
(P200,000,000.00), itemized as follows:
a) One Hundred Fifty Million Pesos (P150,000,000.00) as moral damages;
b) Two Hundred Thousand Pesos (P200,000.00) as actual damages;
c) Forty-nine Million Eight Hundred Thousand Pesos (P49,800,000.00) as exemplary
damages; and
d) The cost of suit.
SO ORDERED." [3] (Amendments underscored)
The heirs of Villegas (the Heirs), through their father's counsel, Atty. Norberto
Quisumbing, appealed the decision on these three main grounds:
"1. Whether the trial court, three months after notice of the death of the accused and
before his counsel could file a memorandum in his behalf, could validly render judgment
in the case?
2. Whether, in the absence of formal substitution of parties, the trial court could validly
render judgment against the heirs and estate of a deceased accused?
3. Whether, under the facts of the instant case, deceased Villegas was liable for libel, and
assuming he was, whether the damages awarded by the trial court were just and
reasonable?"
On March 15, 1988, the Court of Appeals rendered a decision affirming the trial
court's judgment modified only with respect to the award of damages which was
reduced to P2 million representing P1.5 million, P300,000.00, and P200,000.00 in moral,
exemplary and actual damages, respectively. Both parties elevated said decision to this
Court for review.
In their petition (G.R. No. 82562), the Heirs once again raise the very same issues
brought before the Court of Appeals, albeit reworded. On the other hand, petitioner
Raquiza (G.R. No. 82592) questions the extensions of time to file appellant's brief
granted by the appellate court to the Heirs, as well as the drastic reduction in the award
of damages.
It is immediately apparent that the focal issue in these petitions is the effect of the
death of Villegas before the case was decided by the trial court. Stated otherwise, did the
death of the accused before final judgment extinguish his civil liability?
Fortunately, this Court has already settled this issue with the promulgation of the
case of People v. Bayotas (G.R. No. 102007) on September 2, 1994,[4] viz.:
"It is thus evident that as jurisprudence evolved from Castillo [5] to Torrijos,[6] the rule
established was that the survival of the civil liability depends on whether the same can
be predicated on sources of obligations other than delict. Stated differently, the claim for
civil liability is also extinguished together with the criminal action if it were solely based
thereon, i.e., civil liability ex delicto.
xxx xxx xxx
(I)n recovering damages for injury to persons thru an independent civil action based on
Article 33 of the Civil Code, the same must be filed against the executor or administrator
of the estate of deceased accused (under Sec. 1, Rule 87, infra.) and not against the estate
under Sec. 5, Rule 86 because this rule explicitly limits the claim to those for funeral
expenses, expenses for the last sickness of the decedent, judgment for money and claims
arising from contract, express or implied.[7]
xxx xxx xxx
From this lengthy disquisition, we summarize our ruling herein:
1. Death of the accused pending appeal of his conviction extinguishes his
criminal liability as well as the civil liability based solely thereon. As
opined by Justice Regalado, in this regard, 'the death of the accused prior
to final judgment terminates his criminal liability and only the civil
liability directly arising from and based solely on the offense committed,
i.e., civil liability ex delicto in senso strictiore.'
2. Corollarily, the claim for civil liability survives notwithstanding the death of
(the) accused, if the same may also be predicated on a source of obligation
other than delict. Article 1157 of the Civil Code enumerates these other
sources of obligation from which the civil liability may arise as a result of
the same act or omission:
a) Law
b) Contracts
c) Quasi-contracts
d) xxx xxx xxx
e) Quasi-delicts
3. Where the civil liability survives, as explained in Number 2 above, an action
for recovery therefor may be pursued but only by way of filing a separate
civil action and subject to Section 1, Rule 111 of the 1985 Rules on
Criminal Procedure as amended.[8] This separate civil action may be
enforced either against the executor/administrator o(f) the estate of the
accused, depending on the source of obligation upon which the same is
based as explained above.
4. Finally, the private offended party need not fear a forfeiture of his right to file this
separate civil action by prescription, in cases where during the prosecution of the
criminal action and prior to its extinction, the private offended party instituted together
therewith the civil action. In such case, the statute of limitations on the civil liability is
deemed interrupted during the pendency of the criminal case, conformably with (the)
provisions of Article 1155 of the Civil Code, that should thereby avoid any apprehension
on a possible privation of right by prescription." (Underscoring supplied)
The source of Villegas' civil liability in the present case is the felonious act of libel
he allegedly committed. Yet, this act could also be deemed a quasi-delict within the
purview of Article 33[9] in relation to Article 1157 of the Civil Code. If the Court ruled
in Bayotas that the death of an accused during the pendency of his appeal extinguishes
not only his criminal but also his civil liability unless the latter can be predicated on a
source of obligation other than the act or omission complained of, with more reason
should it apply to the case at bar where the accused died shortly after the prosecution
had rested its case and before he was able to submit his memorandum, and all this
before any decision could even be reached by the trial court.
The Bayotas ruling, however, makes the enforcement of a deceased accused's civil
liability dependent on two factors, namely, that it be pursued by filing a separate civil
action and that it be made subject to Section 1, Rule 111 of the 1985 Rules on Criminal
Procedure, as amended. Obviously, in the case at bar, the civil action was deemed
instituted with the criminal. There was no waiver of the civil action and no reservation of
the right to institute the same, nor was it instituted prior to the criminal action. What
then is the recourse of the private offended party in a criminal case such as this which
must be dismissed in accordance with the Bayotas doctrine, where the civil action was
impliedly instituted with it?
The answer is likewise provided in Bayotas, thus:
"'Assuming that for lack of express reservation, Belamala's civil action for damages was
to be considered instituted together with the criminal action still, since both proceedings
were terminated without final adjudication, the civil action of the offended party under
Article 33 may yet be enforced separately.'"[10] (Underscoring supplied)
Hence, logically, the court a quo should have dismissed both actions against
Villegas which dismissal will not, however, bar Raquiza as the private offended party
from pursuing his claim for damages against the executor or administrator of the
former's estate, notwithstanding the fact that he did not reserve the right to institute a
separate civil action based on Article 33 of the Civil Code.
It cannot be argued either that to follow Bayotas would result in further delay in
this protracted litigation. This is because the resolution of the civil aspect of the case
after the dismissal of the main criminal action by the trial court was technically
defective. There was no proper substitution of parties, as correctly pointed out by the
Heirs and repeatedly put in issue by Atty. Quisumbing. What should have been followed
by the court a quo was the procedure laid down in the Rules of Court, specifically, Section
17, Rule 3, in connection with Section 1, Rule 87. The pertinent provisions state as
follows:
"Rule 3
Sec. 17. Death of party. After a party dies and the claim is not thereby extinguished, the
court shall order, upon proper notice, the legal representative of the deceased to appear
and to be substituted for the deceased, within a period of thirty (30) days, or within such
time as may be granted. x x x The heirs of the deceased may be allowed to be substituted
for the deceased, without requiring the appointment of an executor or administrator and
the court may appoint guardian ad litem for the minor heirs.
Rule 87
Sec. 1. Actions which may and which may not be brought against executor or
administrator. No action upon a claim for the recovery of money or debt or interest
thereon shall be commenced against the executor or administrator; but actions to
recover real or personal property, or an interest therein, from the estate, or to enforce a
lien thereon, and actions to recover damages for an injury to person or property, real or
personal, may be commenced against him."
Accordingly, the Court sees no more necessity in resolving the other issues raised
by both parties in these petitions.
WHEREFORE, the petition in G.R. No. 82562 is GRANTED and the petition in G.R.
No. 82592 is DENIED. The decisions of the Court of Appeals in CA-G.R. CR No. 02186
dated March 15, 1988, and of the Manila Regional Trial Court, Branch 44, dated March 7,
1985, as amended, are hereby REVERSED and SET ASIDE, without prejudice to the right
of the private offended party, Antonio V. Raquiza, to file the appropriate civil action for
damages against the executor or administrator of the estate, or the heirs, of the late
Antonio J. Villegas in accordance with the foregoing procedure.
SO ORDERED.
[G.R. No. 136843. September 28, 2000]
PEOPLE OF THE PHILIPPINES, appellee, vs. PEDRO ABUNGAN alias "Pedring,"
RANDY PASCUA and ERNESTO RAGONTON Jr., accused;
PEDRO ABUNGAN alias "Pedring," appellant.
RESOLUTION
PANGANIBAN, J.:
The death of the appellant pending appeal and prior to the finality of conviction
extinguished his criminal and civil liabilities arising from the delict or crime. Hence, the
criminal case against him, not the appeal, should be dismissed.
The Case and the Facts
Before us is an appeal filed by Pedro Abungan assailing the Decision [1] of the
Regional Trial Court of Villasis, Pangasinan, Branch 50,[2] in Criminal Case No. V-0447, in
which he was convicted of murder, sentenced to reclusion perpetua, and ordered to pay
P50,000 as indemnity to the heirs of the deceased.
In an Information[3]dated March 9, 1993, Prosecutor I Benjamin R. Bautista charged
appellant, together with Randy Pascua and Ernesto Ragonton Jr. (both at large), with
murder committed as follows:
"That on or about the 4th day of August 1992, at Barangay Capulaan, Municipality of
Villasis, Province of Pangasinan, Philippines, and within the jurisdiction of this
Honorable Court, the above-named accused conspiring, confederating and mutually
helping one another, armed with long firearms, with intent to kill, with treachery,
evident premeditation and superior strength, did then and there wilfully, unlawfully and
feloniously attack, assault and shoot Camilo Dirilo, [Sr.] y Pajarito, inflicting upon him
wounds on the different parts of his body x x x injuries [which] directly caused his death,
to the damage and prejudice of his heirs.
"Contrary to Art. 248 of the Revised Penal Code."[4]
With the assistance of Atty. Simplicio Sevilleja, appellant pleaded not guilty upon
his arraignment on April 30, 1993.[5] After trial on the merits, the trial court rendered the
assailed August 24, 1998 Decision, the dispositive portion of which reads as follows:
"WHEREFORE, his guilt having been established beyond reasonable doubt, the
[Appellant] Pedro Abungan is hereby sentenced to suffer the penalty of RECLUSION
PERPETUA and such penalties accessory thereto as may be provided for by law.
The x x x [appellant] is hereby further ordered to indemnify the heirs of Camilo Dirilo Sr.
in the amount of FIFTY THOUSAND PESOS (P50,000.00) and to pay the costs."[6]
Appellant, through counsel, filed the Notice of Appeal on September 14, 1998. On
January 9, 1999, he was committed to the New Bilibid Prison (NBP) in Muntinlupa. On
October 26, 1999, he filed the Appellant's Brief[7] before this Court. The Office of the
Solicitor General, on the other hand, submitted the Appellee's Brief[8] on February 4,
2000.The case was deemed submitted for resolution on June 5, 2000, when the Court
received the Manifestation of appellant stating that he would not file a reply brief.
In a letter dated August 7, 2000,[9] however, Joselito A. Fajardo, assistant director of
the Bureau of Corrections, informed the Court that Appellant Abungan had died on July
19, 2000 at the NBP Hospital. Attached to the letter was Abungan's Death Certificate.
Issue
The only issue before us is the effect of Appellant Abungan's death on the case and
on the appeal.
This Court's Ruling
The death of appellant on July 19, 2000 during the pendency of his appeal
extinguished his criminal as well as his civil liability, based solely on delict (civil
liability ex delicto).
Main Issue: Effect of Appellant's Death During Appeal
The consequences of appellant's death are provided for in Article 89 (1) of the
Revised Penal Code, which reads as follows:
"Art. 89. How criminal liability is totally extinguished. - Criminal liability is totally
extinguished:
1. By the death of the convict, as to the personal penalties; and as to pecuniary penalties,
liability therefor is extinguished only when the death of the offender occurs before final
judgment;
x x x x x x x x x"
Applying this provision, the Court in People v. Bayotas[10] made the following
pronouncements:
"1. Death of the accused pending appeal of his conviction extinguishes his criminal
liability as well as the civil liability based solely thereon. As opined by Justice Regalado,
in this regard, 'the death of the accused prior to final judgment terminates his criminal
liability and only the civil liability directly arising from and based solely on the offense
committed, i.e., civil liability ex delicto in senso strictiore.'"
"2. Corollarily, the claim for civil liability survives notwithstanding the death of (the)
accused, if the same may also be predicated on a source of obligation other than
delict. Article 1157 of the Civil Code enumerates these other sources of obligation from
which the civil liability may arise as a result of the same act or omission:
a) Law
b) Contracts
c) Quasi-contracts
d) x x x x x x x x x
e) Quasi-delicts
"3. Where the civil liability survives, as explained in Number 2 above, an action for
recovery therefor may be pursued but only by way of filing a separate civil action and
subject to Section 1, Rule 111 of the 1985 Rules on Criminal Procedure as amended. This
separate civil action may be enforced either against the executor/administrator or the
estate of the accused, depending on the source of obligation upon which the same is
based as explained above.
"4. Finally, the private offended party need not fear a forfeiture of his right to file this
separate civil action by prescription, in cases where during the prosecution of the
criminal action and prior to its extinction, the private offended party instituted together
therewith the civil action. In such case, the statute of limitations on the civil liability is
deemed interrupted during the pendency of the criminal case, conformably with the
provisions of Article 1155 of the Civil Code, that should thereby avoid any apprehension
on a possible privation of right by prescription."
In the present case, it is clear that, following the above disquisition in Bayotas, the
death of appellant extinguished his criminal liability. Moreover, because he died during
the pendency of the appeal and before the finality of the judgment against him, his civil
liability arising from the crime or delict (civil liability ex delicto) was also extinguished. It
must be added, though, that his civil liability may be based on sources of obligation other
than delict. For this reason, the victims may file a separate civil action against his estate,
as may be warranted by law and procedural rules.
Moreover, we hold that the death of Appellant Abungan would result in the
dismissal of the criminal case against him.[11] Necessarily, the lower court's Decision --
finding him guilty and sentencing him to suffer reclusion perpetua and to indemnify the
heirs of the deceased -- becomes ineffectual.
WHEREFORE, the criminal case (No. V-0447, RTC of Villasis, Pangasinan) against
Pedro Abungan is hereby DISMISSED and the appealed Decision SET ASIDE. Costs de
oficio.
SO ORDERED.
PEOPLE OF THE PHILIPPINES, G.R. No. 175784
Plaintiff-Appellee,
Present:
CORONA, C.J.,
Chairperson,
- versus - VELASCO, JR.,
LEONARDO-DE CASTRO,
DEL CASTILLO, and
PEREZ, JJ.
JAIME AYOCHOK y TAULI, Promulgated:
Accused-Appellant.
August 25, 2010
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -x
DECISION
LEONARDO-DE CASTRO, J.:
Before Us is an appeal filed by Jaime Ayochok y Tauli (Ayochok) assailing the
Decision[1] dated June 28, 2005 of the Court of Appeals in CA-G.R. CR No. 00949,
entitled People of the Philippines v. Jaime Ayochok y Tauli, which affirmed with
modifications the Decision dated August 13, 2003 of the Regional Trial Court (RTC) of
Baguio City, Branch 6, in Criminal Case No. 18658-R.[2] The RTC found Ayochok guilty
beyond reasonable doubt of the crime of Murder.
In an Amended Information[3] dated September 21, 2001, Prosecutor Benedicto
T. Carantes charged Ayochok with Murder, committed as follows:
That on or about the 15th day of July, 2001, in the City of
Baguio, Philippines, and within the jurisdiction of this Honorable
Court, the above-named accused, being then armed with a gun, with
intent to kill and with evident premeditation and by means of
treachery and with cruelty by deliberately and inhumanly outraging
at the victim, did then and there willfully, unlawfully and feloniously
attack, assault and shoot SPO1 CLAUDIO CALIGTAN y NGODO in the
following manner, to wit: that while the victim was relieving himself
with his back turned to the accused, the latter coming from the blind
side of the victim, shoot him several times hitting him on the different
 parts of his body and there was no opportunity or means to defend
himself from the treacherous act of the assailant, thereby inflicting
upon the latter: hypovolemic shock due to massive hemorrhage;
multiple gunshot wounds on the head, neck, and upper extremities
which directly caused his death.
When arraigned, Ayochok pleaded not guilty.
After trial on the merits of Criminal Case No. 18658-R, the RTC rendered a
Decision on August 13, 2003, the dispositive portion of which reads:
WHEREFORE, the Court finds the accused Jaime Ayochok
guilty beyond reasonable doubt of the offense of Murder, defined and
penalized under Article 248 of the Revised Penal Code as amended,
qualified by treachery as charged in the Information and hereby
sentences him to reclusion perpetua; to indemnify the heirs of the
deceased SPO1 Claudio Caligtan the sum of P75,000.00 as civil
indemnity for his death; P200,000.00 as moral damages; P378,956.50
as actual damages in connection with his death; P2,573,096.40 as
unearned income, all indemnifications being without subsidiary
imprisonment in case of insolvency; and to pay the costs.
The accused Jaime Ayochok being a detention prisoner is
entitled to be credited 4/5 of his preventive imprisonment in the
service of his sentence in accordance with Article 29 of the Revised
Penal Code.[4]
Ayochok was committed at the New Bilibid Prison in Muntinlupa City on
October 31, 2003.
The case was directly elevated to us for automatic review and was docketed as
G.R. No. 161469. However, pursuant to our decision in People v. Mateo[5]which modified
the pertinent provisions of the Revised Rules on Criminal Procedure on direct appeals
from the RTC to the Supreme Court in cases where the penalty imposed is
death, reclusion perpetua or life imprisonment G.R. No. 161469 was transferred to the
Court of Appeals,[6] where it was docketed as CA-G.R. CR No. 00949.
In its Decision dated June 28, 2005, the Court of Appeals affirmed with
modifications the RTC judgment, to wit:
WHEREFORE, in view of the foregoing premises, the
Decision subject of this review is hereby AFFIRMED, save for several
modifications in the civil aspect. Accordingly, the civil indemnity is
reduced to P50,000.00; moral damages reduced to P50,000.00; actual
damages reduced to P144,375.75 and unearned income reduced
to P2,571,696.10.[7]
Initially, Ayochok filed a Motion for Reconsideration[8] of the foregoing Decision
of the Court of Appeals. Subsequently, however, Ayochok filed a Motion to Withdraw
Motion for Reconsideration with Notice of Appeal[9] since he believed there was no
chance that the appellate court would reverse itself, and prayed that the case already be
forwarded to us instead. In a Resolution dated June 14, 2006, the Court of Appeals denied
Ayochoks Motion to Withdraw Motion for Reconsideration with Notice of Appeal. In
another Resolution dated August 11, 2006, the appellate court denied Ayochoks Motion
for Reconsideration of the Decision dated June 28, 2005.
Ayochok, through counsel, filed a Notice of Appeal with the Court of Appeals
conveying his intention to appeal to us the Decision dated June 28, 2005 of said court. On
December 29, 2006, the Judicial Records Division of the Court of Appeals elevated to us
the original records of CA-G.R. CR No. 00949,[10] and Ayochoks appeal was docketed as
G.R. No. 175784.
On February 12, 2007, we required the parties in G.R. No. 175784 to file their
supplemental briefs. [11]
Ayochok filed his Supplemental Appellants Brief[12] on May 31, 2007, while the
Office of the Solicitor General filed a Manifestation[13] on March 29, 2007, stating that it
would no longer file a supplemental brief given that its Appellees Brief, originally filed in
G.R. No. 161469, is adequate to ventilate the Peoples cause.On August 6, 2007, we
submitted G.R. No. 175784 for resolution.[14]
However, in a letter dated February 16, 2010, Julio A. Arciaga, the Assistant
Director for Prisons and Security of the Bureau of Corrections, informed us that Ayochok
had died on January 15, 2010 at the Philippine General Hospital, Manila. A copy of the
death report signed by a medical officer of the New Bilibid Prison Hospital was attached
to said letter.
In a Resolution dated April 28, 2010, we noted the letter and required the
Director of the Bureau of Corrections to submit a certified true copy of Ayochoks death
certificate from the local civil registrar within five days from notice of the said resolution.
On June 22, 2010, Melind M. Alipe, Head of the Medical and Dental Division of
the New Bilibid Prison, Muntinlupa City, submitted a certified true copy of the death
certificate of Ayochok.
Given Ayochoks death, we are now faced with the question of the effect of such
death on the present appeal.
Ayochoks death on January 15, 2010, during the pendency of his appeal,
extinguished not only his criminal liability for the crime of murder committed against
Senior Police Officer 1 Claudio N. Caligtan, but also his civil liability solely arising from or
based on said crime.
According to Article 89(1) of the Revised Penal Code, criminal liability is totally
extinguished:
1. By the death of the convict, as to the personal penalties; and as to
pecuniary penalties, liability therefor is extinguished only
when the death of the offender occurs before final judgment.
 Applying the foregoing provision, we laid down the following guidelines
in People v. Bayotas[15]:
1. Death of the accused pending appeal of his conviction extinguishes
his criminal liability as well as the civil liability based solely
thereon. As opined by Justice Regalado, in this regard, the
death of the accused prior to final judgment terminates his
criminal liability and only the civil liability directly arising
from and based solely on the offense committed, i.e., civil
liability ex delicto in senso strictiore.
2. Corollarily, the claim for civil liability survives notwithstanding the
death of (the) accused, if the same may also be predicated on
a source of obligation other than delict. Article 1157 of the
Civil Code enumerates these other sources of obligation from
which the civil liability may arise as a result of the same act
or omission:
a) Law
b) Contracts
c) Quasi-contracts
xxxx
e) Quasi-delicts
3. Where the civil liability survives, as explained in Number 2 above,
an action for recovery therefor may be pursued but only by
way of filing a separate civil action and subject to Section 1,
Rule 111 of the 1985 Rules on Criminal Procedure as
amended. This separate civil action may be enforced either
against the executor/administrator or the estate of the
accused, depending on the source of obligation upon which
the same is based as explained above.
4. Finally, the private offended party need not fear a forfeiture of his
right to file this separate civil action by prescription, in cases
where during the prosecution of the criminal action and
prior to its extinction, the private-offended party instituted
together therewith the civil action. In such case, the statute
of limitations on the civil liability is deemed interrupted
during the pendency of the criminal case, conformably with
the provisions of Article 1155 of the Civil Code that should
thereby avoid any apprehension on a possible privation of
right by prescription.[16]
Clearly, in view of a supervening event, it is unnecessary for the Court to rule on
Ayochoks appeal. Whether or not he was guilty of the crime charged has become
irrelevant since, following Article 89(1) of the Revised Penal Code and our disquisition
in Bayotas, even assuming Ayochok had incurred any criminal liability, it was totally
extinguished by his death. Moreover, because Ayochoks appeal was still pending and no
final judgment of conviction had been rendered against him when he died, his civil
liability arising from the crime, being civil liability ex delicto, was likewise extinguished
by his death.
Consequently, the appealed Decision dated June 28, 2005 of the Court of
Appeals in CA-G.R. CR No. 00949 finding Ayochok guilty of Murder, sentencing him to
imprisonment, and ordering him to indemnify his victim had become ineffectual.[17]
WHEREFORE, in view of the death of accused-appellant Jaime Ayochok y Tauli,
the Decision dated June 28, 2005 of the Court of Appeals in CA-G.R. CR No. 00949 is SET
ASIDE and Criminal Case No. 18658-R before the Regional Trial Court of Baguio City
is DISMISSED. Costs de oficio.
SO ORDERED.
DY TEBAN TRADING, INC., v. JOSE CHING
FACTS
A Nissan van owned by petitioner Dy Teban Trading, Inc. was traversing along
the National Highway in Butuan City, going to Surigao City. A Joana Paula passenger bus
was cruising on the opposite lane towards the van.
In between the two vehicles was a parked prime mover with a trailer, owned by
private respondent Liberty Forest, Inc. The parked prime mover suffered a tire blowout
the night before, so its driver parked the vehicle askew occupying a substantial portion
of the national highway. However, the parked prime mover was not equipped with
triangular, collapsible reflectorized plates as required by the law, instead a banana trunk
was placed as substitute.
To avoid hitting the parked prime mover occupying its lane, the incoming bus
swerved to the right, onto the lane of the approaching Nissan van. When the Nissan van
driver saw this, he swerved to the left to avoid the oncoming bus but the van instead hit
the front of the stationary prime mover. The passenger bus hit the rear of the prime
mover.
Petitioner Nissan van owner filed a complaint for damages against private respondents
prime mover owner and driver.
ISSUE
1. Whether or not the prime mover is liable for the damages suffered by the
Nissan van YES
a. Whether or not prime mover driver was negligent in parking the
vehicle YES
b. Whether or not his negligence was the proximate cause of the damage
to the Nissan van YES
HELD
Article 2176 of the Civil Code provides that 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.
Requisites to claim based on quasi-delict:
(a) damage suffered by plaintiff; (b) fault or negligence of defendant; and (c) connection
of cause and effect between the fault or negligence of defendant and the damage incurred
by plaintiff.
a. Prime mover driver was negligent in parking the prime mover on the national
highway; he failed to prevent or minimize the risk to oncoming motorists.
Negligence is defined as the failure to observe for the protection of the interests of
another person that degree of care, precaution, and vigilance which the circumstances
justly demand, whereby such other person suffers injury. The test by which to determine
the existence or negligence in a particular case may be stated as follows: Did the
defendant in doing the alleged negligent act use that reasonable care and caution
which an ordinary person would have used in the same situation? If not, then he is
guilty of negligence.
We find that the prime mover driver was negligent in parking the prime mover askew on
the right side of the national highway. The vehicle occupied a substantial portion of the
national road on the lane of the passenger bus. It is common sense that the skewed
parking of the prime mover on the national road posed a serious risk to oncoming
motorists. It was incumbent upon the driver to take some measures to prevent that risk,
or at least minimize it.
b. The skewed parking of the prime mover was the proximate cause of the collision.
Proximate cause is defined 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. More comprehensively, proximate cause is that cause
acting first and producing the injury, either immediately or by setting other events in
motion, all constituting a natural and continuous chain of events, each having a close
causal connection with its immediate predecessor, the final event in the chain
immediately effecting the injury as natural and probable result of the cause which first
acted, under such circumstances that the person responsible for the first event should, as
an ordinarily prudent and intelligent person, have reasonable ground to expect at the
moment of his act or default that an injury to some person might probably result
therefrom.
Plaintiff must, establish a sufficient link between the act or omission and the
damage or injury. That link must not be remote or far-fetched; otherwise, no liability will
attach. The damage or injury must be a natural and probable result of the act or
omission.
Private respondents Liberty Forest, Inc. and Limbaga are liable for all damages that
resulted from the skewed parking of the prime mover. Their liability includes those
damages resulting from precautionary measures taken by other motorist in trying to
avoid collision with the parked prime mover. The skewed parking is the proximate cause
of the damage to the Nissan van.
FAUSTO BARREDO, petitioner, vs. SEVERINO GARCIA and TIMOTEO ALMARIO,
respondents
No. 48006. July 8, 1942
Facts:
A head-on collision between a taxicab owned by Barredo and a carretela occurred.
The carretela was overturned and one of its passengers, a 16-year old boy, the son of
Garcia and Almario, died as a result of the injuries which he received. The driver of the
taxicab, an employee of Barredo, was prosecuted for the crime and was convicted. When
the criminal case was instituted, Garcia and Almario reserved their right to institute a
separate civil action for damages. Subsequently, Garcia and Almario instituted a civil
action for damages against Barredo, the employer of the taxicab driver.
Issue:
Whether or not they can file a separate civil action against Fausto Barredo making him
primarily and directly responsible
Held:
(Foreword: The Barredo case was decided by the Supreme Court prior to the present
Civil Code. However, the principle enunciated in said case, that responsibility for fault or
negligence as quasi-delict is distinct and separate from negligence penalized under the
Revised Penal Code, is now specifically embodied in Art. 2177 of the Civil Code.)
The defendant maintains that Fontanilla’s negligence being punishable by the Penal
Code, his (defendant’s) liability as an employer is only subsidiary, according to said Penal
Code, but Fontanilla has not been sued in a civil action and his property has not been
exhausted. To decide the main issue, we must cut thru the tangle that has, in the minds of
many, confused and jumbled together delitos and cuasi delitos, or crimes under the Penal
Code and fault or negligence under Articles 1902-1910 of the Civil Code. According to the
Supreme Tribunal of Spain:
“Authorities support the proposition that a quasi-delict or ‘culpa aquiliana’ is a separate
legal institution under the Civil Code, with a substantivity all its own, and individuality
that is entirely apart and independent from a delict or crime. Upon this principle, and on
the wording and spirit of Article 1903 of the Civil Code, the primary and direct
responsibility of employers may be safely anchored.
“It will thus be seen that while the terms of Article 1902 of the Civil Code seem to be
broad enough to cover the driver’s negligence in the instant case, nevertheless Article
1903 limits cuasi-delitos TO ACTS OR OMISSIONS ‘NOT PUNISHABLE BY LAW.’ But
inasmuch as Article 365 of the Revised Penal Code punishes not only reckless but even
simple imprudence or negligence, the fault or negligence under Article 1902 of the Civil
Code has apparently been crowded out. It is this overlapping that makes the “confusion
worse confounded.’ However, a closer study shows that such a concurrence of scope in
regard to negligent acts does not destroy the distinction between the civil liability arising
from a crime and the responsibility for cuasi-delitos or culpa extra-contractual. The same
negligent act causing damages may produce civil liability arising from a crime under
Article 100 of the Revised Penal Code; or create an action for cuasi-delito or culpa extra-
contractual under Articles 1902-1910 of the Civil Code. “Some of the differences between
crimes under the Penal Code are:
“1. That crimes affect the public interest, while quasi-delitos are only of private concern.
“2. That consequently, the Penal Code punishes or corrects the criminal act, while the
Civil Code, by means of indemnification, merely repairs the damage.
“3. That delicts are not as broad as quasi-delicts, because for the former are punished
only if there is a penal law clearly covering them, while the latter, cuasi-delitos, include
all acts in which ‘ any kind of fault or negligence intervenes.’ However, it should be noted
that not all violations of the penal law produce civil responsibility, such as begging in
contravention of ordinances, violation of the game laws, infraction of the rules of traffic
when nobody is hurt.
“The foregoing authorities clearly demonstrate the separate individuality of cuasi-delitos
or culpa aquiliana under the Civil Code. Specifically they show that there is a distinction
between civil liability arising from criminal negligence (governed by the Penal Code) and
responsibility for fault or negligence under Articles 1902 to 1910 of the Civil Code, and
that the same negligent act may produce either a civil liability arising from a crime under
the Penal Code, or a separate responsibility for fault or negligence under Articles 1902 to
1910 of the Civil Code. Still more concretely the authorities above cited render it
inescapable to conclude that the employer – in this case the defendant-petitioner – is
primarily and directly liable under Article 1903 of the Civil Code.”
Farncisco and Soledad Diana vs Batangas Transportation Co. (BTC)
Facts:
 Plaintiffs are heirs of Florenio Diana. While Diana was riding a truck, belonging
to BTC, driven by Vivencio Bristol, the truck ran into a ditch at Laguna resulting
in the death of Diana and other passengers.
 Bristol was convicted of multiple homicide through reckless imprudence and
ordered to indemnify the heirs of Diana in the amount of P2000. A writ of
execution was issued to satisfy the indemnity but the sheriff filed a return
because the accused had no visible leviable property.
 A complaint was filed when BTC failed to pay the indemnity under its
subsidiary liability. BTC filed a motion to dismiss on ground that there was
another action pending between the same parties for the same cause in which
the plaintiffs sought to recover from the same defendant the amount of P4500
as damages for the death of Diana. The action referred to by BTC was
predicated on culpa aquiliana.
 Plaintiffs filed a written opposition to the motion to dismiss. The court dimissed
the complaint. MR was likewise denied.
Isuue: WON the court properly dismissed the complaint on ground of another action
pending between the same parties for the same cause.
Held:
 In order that this ground may be invoked, there must be between the action
under consideration and the other action, (1) identity of parties, or at least such
as representing the same interest in both actions; (2) identity of rights asserted
and relief prayed for, the relief being found on the same facts; and (3) the
identity on the two preceding particulars should be such that any judgment
which may be rendered on the other action will, regardless of which party is
successful, amount to res adjudicate in the action under consideration.
 There is no doubt with regard to the identity of parties. In both cases, the
plaintiffs and the defendant are the same. With regard to the identity of reliefs
prayed for, a different consideration should be made. It should be noted that
the present case stems from a criminal case in which the driver of the
defendant was found guilty of multiple homicide through reckless imprudence
and was ordered to pay an indemnity of P2, 000 for which the defendant is
made subsidiarily liable under article 103 of the Revised Penal Code, while the
other case is an action for damages based on culpa aquiliana which underlies
the civil liability predicated on articles 1902 to 1910 of the old Civil Code. These
two cases involve two different remedies. As this court aptly said: "A quasi-
delict or culpa aquiliana is a separate legal institution under the Civil Code, with
substantivity all its own, and individuality that is entirely apart and
independent from a delict or crime. * * *. A distinction exists between the civil
liability arising from a crime and the responsibility for cuasi-delictos or culpa
extra-contractual. The same negligent act causing dam- ages may produce civil
liability arising from a crime under article 100 of the Revised Penal Code, or
create an action for cuasi-delito or culpa extra-contractual under articles 1902-
1910 of the Civil Code . The other differences pointed out between crimes
and culpa aquiliana are:
1. That crimes affect the public interest, while cuasi-delitos are only of private
concern.
2. That, consequently, the Penal Code punishes or corrects the criminal act,
while the Civil Code, by means of indemnification, merely repairs the damage.
3. That delicts are not as broad as quasi-delicts, because the former are
punished only if there is a penal law clearly covering them, while the
latter, cuasi-delitos, include all acts in which 'any kind of fault or negligence
intervenes. (P. 611, supra.).
 Considering the distinguishing characteristics of the two cases, which involve
two different remedies, it can hardly be said that there is identity of reliefs in
both actions as to make the present case fall under the operation of Rule 8,
section 1(d) of the Rules of Court. In other words, it is a mistake to say that the
present action should be dismissed because of the pendency of another action
between the same parties involving the same cause. Evidently, both cases
involve different causes of action. In fact, when the Court of Appeals dismissed
the action based on culpa aquiliana (civil case No. 8023), this distinction was
stressed. It was there said that the negligent act committed by defendant's
employee is not a quasi crime, for such negligence is punishable by law. What
plaintiffs should have done was to institute an action under article 103 of the
Revised Penal Code (CA-G.R. No. 3632-R). And this is what plaintiffs have done.
To deprive them now of this remedy, after the conviction of defendant's
employee, would be to deprive them altogether of the indemnity to which they
are entitled by law and by a court decision, which injustice it is our duty to
prevent.
American Express International, Inc.
VS
Noel Cordero
G.R. No. 138550 [October 14, 2005]
This is a petition for review of the decision of the Court of Appeals.
Factsof the Case:
American Express International was a foreign corporation that issued charge cards used
to purchase goods and services at accredited merchants worldwide to its customers.
Nilda Cordero, wife of respondent Noel Cordero, was issued an American Expresscharge
card. An extension charge card, was likewise issued to respondent Noel Corderowhich he
also signed. Respondent, together with his family went on a three-day holiday trip to
Hong Kong. The group went to the Watson’s Chemist Shop. While there, Noel picked
up chocolate candies and handed his American Express extension charge card to the
sales clerk to pay for his purchases. Susan Chong, the store manager, informed
respondent that she had to confiscate the card. Thereupon, she cut
respondent’s American Express card in half with a pair of scissors. This, according to
respondent, caused him embarrassment and humiliation. Hence, Nilda had to pay for the
purchases using her own American Express charge card.
The card was placed in the Inspect Airwarn Support System, asystem utilized by
petitioner as a protection both for the company and the cardholders against the
fraudulent use of their charge cards. Once a card suspected of unauthorized use is placed
in the system, the person to whom the card is tendered must verify the identity of the
holder. If the true identity of the card owner is established, the card is honored and the
charges are approved. Otherwise, the card is revoked or confiscated.
Respondent filed with the Regional Trial Court a complaint for damages against
petitioner. He prayed for the award of moral damages and exemplary damages, as well as
attorney’s fees as a result of the humiliation he suffered. According to the trial court,
petitioner should have informed respondent that on November 1, 1991, a person in Hong
Kong attempted to use a charge card bearing similar number to that of respondent’s card
and that petitioner’s inexcusable failure to do so is the proximate cause of the
“confiscation and cutting of respondent’s extension card which exposed the latter to
public humiliation for which the petitioner should be held liable. Upon appeal, the Court
of Appeals affirmed the trial court’s decision.
Issue:
Whether the lower courts gravely erred in awarding moral damages, exemplary damages
and attorney’s fees to Cordero.
Ruling of the Court:
YES. The Court ruled that petitioner can revoke respondent’s card without notice, as was
done. The subject card would not have been confiscated and cut had respondent talked
to petitioner’s representative and identified himself as the genuine cardholder. As
explained by respondent himself, he could have used his card upon verification by the
sales clerk of Watson that indeed he is the authorized cardholder. That could have been
accomplished had respondent talked to petitioner’s representative, enabling the latter to
determine that respondent was indeed the true holder of the card. Clearly, no negligence
which breached the contract could have been attributed to petitioner. If at all, the cause
of respondent’s humiliation and embarrassment was his refusal to talk to petitioner’s
representative. It was thus safe to conclude that there was no negligence on the part
of petitioner and that, therefore, it cannot be held liable to respondent for damages.
The petition was granted.
G.R. No. 145804 February 6, 2003
Lessons Applicable: Actionable Document (transportation)
Laws Cited: Art. 1755,Art. 1756,Art. 1759,Art. 1763
FACTS:
 October 14, 1993, 7:30 p.m. : Drunk Nicanor Navidad (Nicanor) entered the EDSA
LRT station after purchasing a “token”.
 While Nicanor was standing at the platform near the LRT tracks, the guard Junelito
Escartin approached him.
 Due to misunderstanding, they had a fist fight
 Nicanor fell on the tracks and killed instantaneously upon being hit by a moving
train operated by Rodolfo Roman
 December 8, 1994: The widow of Nicanor, along with her children, filed a complaint
for damages against Escartin, Roman, LRTA, Metro Transit Org. Inc. and Prudent
(agency of security guards) for the death of her husband.
 LRTA and Roman filed a counter-claim against Nicanor and a cross-claim against
Escartin and Prudent
 Prudent: denied liability – averred that it had exercised due diligence in the
selection and surpervision of its security guards
 LRTA and Roman: presented evidence
 Prudent and Escartin: demurrer contending that Navidad had failed to prove that
Escartin was negligent in his assigned task
 RTC: In favour of widow and against Prudent and Escartin, complaint against LRT
and Roman were dismissed for lack of merit
 CA: reversed by exonerating Prudent and held LRTA and Roman liable
ISSUE: W/N LRTA and Roman should be liable according to the contract of carriage
HELD: NO. Affirmed with Modification: (a) nominal damages is DELETED (CANNOT co-
exist w/ compensatory damages) (b) Roman is absolved.
 Law and jurisprudence dictate that a common carrier, both from the nature of its
business and for reasons of public policy, is burdened with the duty off exercising
utmost diligence in ensuring the safety of passengers
 Civil Code:
 Art. 1755. A common carrier is bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence of very cautious
persons, with a due regard for all the circumstances
 Art. 1756. In case of death or injuries to passengers, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove that
they observed extraordinary diligence as prescribed in articles 1733 and 1755
 Art. 1759. Common carriers are liable for the death of or injuries to passengers
through the negligence or wilful acts of the former’s employees, although such
employees may have acted beyond the scope of their authority or in violation of the
orders of the common carriers
This liability of the common carriers does NOT cease upon proof that they
Exercised all the diligence of a good father of a family in the selection and
supervision of their employees
 Art. 1763. A common carrier is responsible for injuries suffered by a passenger on
account of the wilful acts or negligence of other passengers or of strangers, if the
common carrier’s employees through the exercise of the diligence of a good father
of a family could have prevented or stopped the act or omission.
 Carriers presumed to be at fault or been negligent and by simple proof of injury, the
passenger is relieaved of the duty to still establish the fault or negligence of the
carrier or of its employees and the burden shifts upon the carrier to prove that the
injury is due to an unforeseen event or to force majeure
 Where it hires its own employees or avail itself of the services of an outsider or an
independent firm to undertake the task, the common carrier is NOT relieved of its
responsibilities under the contract of carriage
 GR: Prudent can be liable only for tort under Art. 2176 and related provisions in
conjunction with Art. 2180 of the Civil Code. (Tort may arise even under a contract,
where tort [quasi-delict liability] is that which breaches the contract)
 EX: if employer’s liability is negligence or fault on the part of the employee,
employer can be made liable on the basis of the presumption juris tantum that the
employer failed to exercise diligentissimi patris families in the selection and
supervision of its employees.
 EX to the EX: Upon showing due diligence in the selection and supervision of the
employee
 Factual finding of the CA: NO link bet. Prudent and the death of Nicanor for the
reason that the negligence of Escartin was NOT proven
 NO showing that Roman himself is guilty of any culpable act or omission, he must
also be absolved from liability
 Contractual tie bet. LRT and Nicanor is NOT itself a juridical relation bet. Nicanor
and Roman
 Roman can be liable only for his own fault or negligence
Calalas v. Court of Appeals 332 SCRA 356 Transportation Law Case Digests
Facts: Private respondent Eliza Sunga, then freshman at Siliman University , took a
passenger jeepney owned and operated by petitioner Vicente Calalas. As the jeepney
was filled to capacity, Sunga was given by the conductor an extension seat, a
wooden stool at the back of the door at the rear end of the vehicle. When the
jeepney stopped to a let passenger off and Sunga was about to give way to the
outgoing passenger, an Izuzu truck driven by Verena and owned by Salva bumped
the left rear portion of the jeepney. Sunga sustained multiple injuries and remained
on a cast for three months. Sunga filed a complaint for damages against Calalas, for
breach of contract of carriage. Calalas, on the other hand,filed a third party
complaint against Francisco Salva, the owner of the truck. The lower court rendered
judgment against Salva and absolved Calalas of liability. It took cognizance of other
case (Civil Case No. 3490), filed by Calalas against Salva and Verena ,for quasi-delict,
in which branch 37 of the same court held Salva and his driver Verena jointly liable
to Calalas for the damage to his jeepney The CA reversed the lower courts ruling on
the ground the ground that Sunga’s cause of action was based on a contract of
carriage, not quasi-deplict, and that the common carrier failed to exercise the
diligence required under the Civil Code. The appellate court dismissed the third-
party complaint against Salva and adjudged Calalas liable for damages to Sunga.
Issue:
Held: Iin quasi-delict, the negligence or fault should be clearly established because it
is the basis of the action, whereas in breach of contract, the action can be prosecuted
merely by proving the existence of the contract and the fact that the obligor, in this
case the common carrier, failed to transport his passenger safely to his destination.
In case of death or injuries to passengers, Article 1756 of the Civil Code provides
that common carriers are presumed to have been at fault or have acted negligently
unless they proved that they observed extraordinary diligence as defined in Arts.
1733 and 1755 of the Code. This provision necessarily shifts to the common carrier
the burden of proof. It is immaterial that the proximate cause of the collision
between the jeepney and the truck was the negligence of the truck driver. The
doctrine of proximate cause is applicable only in action for quasidelict, not in actions
involving breach of contract. The doctrine is a device for imputing liability to a
person where there is no relation between him and another party. In such a case,
the obligation is created by law itself. But, where there is a pre-existing contractual
relation between parties, it is the parties themselves who create the obligation, and
the function of the law is merely to regulate the relation thus created.
FGU INSURANCE CORP. VS. G.P. SARMIENTO TRUCKING CORP. (GPS)
G.R. No. 141910. August 6, 2002
Facts: GPS is an exclusive contractor and hauler of Concepcion Industries, Inc. One day, it
was to deliver certain goods of Concepcion Industries, Inc. aboard one of its trucks. On its
way, the truck collided with an unidentified truck, resulting in damage to the cargoes.
FGU, insurer of the shipment paid to Concepcion Industries, Inc. the amount of the
damage and filed a suit against GPS. GPS filed a motion to dismiss for failure to prove that
it was a common carrier.
Issue: Whether or not GPS falls under the category of a common carrier.
Held: Note that GPS is an exclusive contractor and hauler of Concepcion Industries, Inc.
offering its service to no other individual or entity.
A common carrier is one which offers its services whether to the public in general or to a
limited clientele in particular but never on an exclusive basis. Therefore, GPS does not fit
the category of a common carrier although it is not freed from its liability based on culpa
contractual.
PNCC vs. CA. G. R. No. 116896. May 5, 1997
Nature: Petition for review on certiorari of decision made by the Court of Appeals (CA)
Facts: On 18 November 1985, petitioner Philippine National Construction Corporation
(PNCC) executed a contract of lease with private respondents, stipulating to pay rent for
the use of land, at the monthly rate of P 20,000.00 payable yearly in advance. The said
land is to be used by petitioner as site for a rock crushing plant. The term of lease is for
five years, commencing on the date of issuance of an industrial clearance by the Ministry
of Human Settlements (Ministry).
On 7 January 1986 PNCC obtained a Temporary Use Permit from the Ministry for the
proposed rock crushing project. Nine days later private respondents wrote to PNCC,
asking for the first annual rental, and assuring that they have stopped considering
proposals of other aggregates plants in favor of PNCC.
In reply, PNCC argued that the contract must commence on the date of issuance by the
Ministry of an industrial clearance in their favor. It also expressed its desire to terminate
the contract it executed with respondents, due to “financial, as well as technical
difficulties.” Respondents refused to accede to PNCC’s request for pre termination and on
19 May 1986, instituted an action against PNCC for Specific Performance with Damages.
Trial court ruled in favor of respondents and ordered PNCC to pay rentals for two years,
with legal interests plus attorney’s fees. The Court of Appeals affirmed the decision of the
trial court upon appeal by PNCC; hence, this case.
Issues:
(1) WON contract commences on the date of issuance of clearance by Ministry;
(2) WON PNCC should be released from its contract with respondents due to unforeseen
events and causes beyond its control;
(3) WON sum of money ordered to be paid by the court is excessive and;
(4) WON PNCC was deprived of right to due process.
Held: Petition denied.
Ratio:
(1) PNCC is estopped from claiming that Lease Contract commences on the date of
issuance of clearance by Ministry, because in its letter to respondents, PNCC recognized
its obligation to pay rentals counted from the date the temporary permit was issued.
(2) PNCC cites Art. 1266, asserting that it should be released from the obligatory force of
the contract because its purpose did not materialize due to unforeseen events and causes
beyond its control. However, this article applies only to obligations “to do” and not “to
give”, while obligation arising out of said contract is an obligation “to do”. Further, PNCC
executed the contract with open eyes on the deteriorating conditions of the country and
mere pecuniary inability to fulfill an engagement does not discharge a contractual
obligation. The “unforeseen events and causes beyond its control” cited by PNCC are not
the legal and physical impossibilities contemplated in Art. 1266.
(3) PNCC asserts that it was not able to use and enjoy the land and is not entitled to pay
damages cited by the court. However, respondents suffered damages because of its
inability to use the premises. Respondents are entitled to indemnification under Art.
1659 of the Civil Code.
(4) PNCC was not deprived of due process because trial court granted several
postponements to petitioner before it waived the presentation of evidence in petitioner’s
behalf.
TITAN-IKEDA VS. PRIMETOWN
G.R No. 158768. February 12, 2008
FACTS: The respondent Primetown Property Corporation entered into contract weith
the petitioner Titan-Ikeda Construction Corporation for the structural works of a 32-
storey prime tower. After the construction of the tower, respondent again awarded to
the petitioner the amount of P 130,000,000.00 for the tower’s architectural design and
structure. Howevere, in 1994, the respondent entered inot a contract of sale of the tower
in favor of the petitioner in a manner called full-swapping. Since the respondent had
allegedly constructed almost one third of the project as weel as selling some units to
third persons unknown to the petitioner. Integrated Inc. took over the project, thus the
petitioner is demanding for the return of its advanced payment in the amount of P2,
000,000.00 as weel as the keys of the unit.
ISSUE: Whether or not the petitioner is entitled to damages.
RULING: No, because in a contract necessarily that there is a meeting of the minds of the
parties in which this will be the binding law upon them. Thus, in a reciprocal obligation.
Both parties are obliged to perform their obligation simultaneously and in good faith. In
this case, petitioner, Titan-Ikeda can not recover damages because it was found out there
was no solutio indebiti or mistake in payment in this case since the latter is just entitled
to the actual services it rendered to the respondent and thus it is ordered to return the
condominium units to the respondent.
G.R. No. 177921 December 4, 2013
METRO CONCAST STEEL CORPORATION, SPOUSES JOSE S. DYCHIAO AND TIUOH
YAN, SPOUSES GUILLERMO AND MERCEDES DYCHIAO, AND SPOUSES VICENTE AND
FILOMENA DYCHIAO, Petitioners,
vs.
ALLIED BANK CORPORATION, Respondent.
RESOLUTION
PERLAS-BERNABE, J.:
Assailed in this petition for review on certiorari1 are the Decision2 dated February 12,
2007 and the Resolution3dated May 10, 2007 of the Court of Appeals (CA) in CA-G.R. CV
No. 86896 which reversed and set aside the Decision4 dated January 17, 2006 of the
Regional Trial Court of Makati, Branch 57 (RTC) in Civil Case No. 00-1563, thereby
ordering petitioners Metro Concast Steel Corporation (Metro Concast), Spouses Jose S.
Dychiao and Tiu Oh Yan, Spouses Guillermo and Mercedes Dychiao, and Spouses Vicente
and Filomena Duchiao (individual petitioners) to solidarily pay respondent Allied Bank
Corporation (Allied Bank) the aggregate amount of ₱51,064,094.28, with applicable
interests and penalty charges.
The Facts
On various dates and for different amounts, Metro Concast, a corporation duly organized
and existing under and by virtue of Philippine laws and engaged in the business of
manufacturing steel,5 through its officers, herein individual petitioners, obtained several
loans from Allied Bank. These loan transactions were covered by a promissory note and
separate letters of credit/trust receipts, the details of which are as follows:
The interest rate under Promissory Note No. 96-21301 was pegged at 15.25% per
annum (p.a.), with penalty charge of 3% per month in case of default; while the twelve
(12) trust receipts uniformly provided for an interest rate of 14% p.a. and 1% penalty
charge. By way of security, the individual petitioners executed several Continuing
Guaranty/Comprehensive Surety Agreements19 in favor of Allied Bank. Petitioners failed
to settle their obligations under the aforementioned promissory note and trust receipts,
hence, Allied Bank, through counsel, sent them demand letters, 20 all dated December 10,
1998, seeking payment of the total amount of ₱51,064,093.62, but to no avail. Thus,
Allied Bank was prompted to file a complaint for collection of sum of money 21 (subject
complaint) against petitioners before the RTC, docketed as Civil Case No. 00-1563. In
their second22 Amended Answer,23petitioners admitted their indebtedness to Allied
Bank but denied liability for the interests and penalties charged, claiming to have paid
the total sum of ₱65,073,055.73 by way of interest charges for the period covering 1992
to 1997.24
They also alleged that the economic reverses suffered by the Philippine economy in 1998
as well as the devaluation of the peso against the US dollar contributed greatly to the
downfall of the steel industry, directly affecting the business of Metro Concast and
eventually leading to its cessation. Hence, in order to settle their debts with Allied Bank,
petitioners offered the sale of Metro Concast’s remaining assets, consisting of
machineries and equipment, to Allied Bank, which the latter, however, refused. Instead,
Allied Bank advised them to sell the equipment and apply the proceeds of the sale to
their outstanding obligations. Accordingly, petitioners offered the equipment for sale,
but since there were no takers, the equipment was reduced into ferro scrap or scrap
metal over the years. In 2002, Peakstar Oil Corporation (Peakstar), represented by one
Crisanta Camiling (Camiling), expressed interest in buying the scrap metal. During the
negotiations with Peakstar, petitioners claimed that Atty. Peter Saw (Atty. Saw), a
member of Allied Bank’s legal department, acted as the latter’s agent. Eventually, with
the alleged conformity of Allied Bank, through Atty. Saw, a Memorandum of
Agreement25 dated November 8, 2002 (MoA) was drawn between Metro Concast,
represented by petitioner Jose Dychiao, and Peakstar, through Camiling, under which
Peakstar obligated itself to purchase the scrap metal for a total consideration of
₱34,000,000.00, payable as follows:
(a) ₱4,000,000.00 by way of earnest money – ₱2,000,000.00 to be paid in cash
and the other ₱2,000,000.00 to be paid in two (2) post-dated checks of
₱1,000,000.00 each;26 and
(b) the balance of ₱30,000,000.00 to be paid in ten (10) monthly installments of
₱3,000,000.00, secured by bank guarantees from Bankwise, Inc. (Bankwise) in
the form of separate post-dated checks.27
Unfortunately, Peakstar reneged on all its obligations under the MoA.1âwphi1 In this
regard, petitioners asseverated that:
(a) their failure to pay their outstanding loan obligations to Allied Bank must be
considered as force majeure ; and
(b) since Allied Bank was the party that accepted the terms and conditions of
payment proposed by Peakstar, petitioners must therefore be deemed to have
settled their obligations to Allied Bank. To bolster their defense, petitioner Jose
Dychiao (Jose Dychiao) testified28 during trial that it was Atty. Saw himself who
drafted the MoA and subsequently received29 the ₱2,000,000.00 cash and the
two (2) Bankwise post-dated checks worth ₱1,000,000.00 each from Camiling.
However, Atty. Saw turned over only the two (2) checks and ₱1,500,000.00 in
cash to the wife of Jose Dychiao.30
Claiming that the subject complaint was falsely and maliciously filed, petitioners prayed
for the award of moral damages in the amount of ₱20,000,000.00 in favor of Metro
Concast and at least ₱25,000,000.00 for each individual petitioner, ₱25,000,000.00 as
exemplary damages, ₱1,000,000.00 as attorney’s fees, ₱500,000.00 for other litigation
expenses, including costs of suit.
The RTC Ruling
After trial on the merits, the RTC, in a Decision31 dated January 17, 2006, dismissed the
subject complaint, holding that the "causes of action sued upon had been paid or
otherwise extinguished." It ruled that since Allied Bank was duly represented by its
agent, Atty. Saw, in all the negotiations and transactions with Peakstar – considering that
Atty. Saw
(a) drafted the MoA,
(b) accepted the bank guarantee issued by Bankwise, and
(c) was apprised of developments regarding the sale and disposition of the
scrap metal – then it stands to reason that the MoA between Metro Concast and
Peakstar was binding upon said bank.
The CA Ruling
Allied Bank appealed to the CA which, in a Decision32 dated February 12, 2007, reversed
and set aside the ruling of the RTC, ratiocinating that there was "no legal basis in fact and
in law to declare that when Bankwise reneged its guarantee under the [MoA], herein
[petitioners] should be deemed to be discharged from their obligations lawfully incurred
in favor of [Allied Bank]."33
The CA examined the MoA executed between Metro Concast, as seller of the ferro scrap,
and Peakstar, as the buyer thereof, and found that the same did not indicate that Allied
Bank intervened or was a party thereto. It also pointed out the fact that the post-dated
checks pursuant to the MoA were issued in favor of Jose Dychiao. Likewise, the CA found
no sufficient evidence on record showing that Atty. Saw was duly and legally authorized
to act for and on behalf of Allied Bank, opining that the RTC was "indulging in hypothesis
and speculation"34 when it made a contrary pronouncement. While Atty. Saw received
the earnest money from Peakstar, the receipt was signed by him on behalf of Jose
Dychiao.35
It also added that "[i]n the final analysis, the aforesaid checks and receipts were signed
by [Atty.] Saw either as representative of [petitioners] or as partner of the latter’s legal
counsel, and not in anyway as representative of [Allied Bank]." 36
Consequently, the CA granted the appeal and directed petitioners to solidarily pay Allied
Bank their corresponding obligations under the aforementioned promissory note and
trust receipts, plus interests, penalty charges and attorney’s fees. Petitioners sought
reconsideration37 which was, however, denied in a Resolution38 dated May 10, 2007.
Hence, this petition.
The Issue Before the Court
At the core of the present controversy is the sole issue of whether or not the loan
obligations incurred by the petitioners under the subject promissory note and various
trust receipts have already been extinguished.
The Court’s Ruling
Article 1231 of the Civil Code states that obligations are extinguished either by payment
or performance, the loss of the thing due, the condonation or remission of the debt, the
confusion or merger of the rights of creditor and debtor, compensation or novation.
In the present case, petitioners essentially argue that their loan obligations to Allied
Bank had already been extinguished due to Peakstar’s failure to perform its own
obligations to Metro Concast pursuant to the MoA. Petitioners classify Peakstar’s default
as a form of force majeure in the sense that they have, beyond their control, lost the
funds they expected to have received from the Peakstar (due to the MoA) which they
would, in turn, use to pay their own loan obligations to Allied Bank. They further state
that Allied Bank was equally bound by Metro Concast’s MoA with Peakstar since its
agent, Atty. Saw, actively represented it during the negotiations and execution of the said
agreement. Petitioners’ arguments are untenable. At the outset, the Court must dispel the
notion that the MoA would have any relevance to the performance of petitioners’
obligations to Allied Bank. The MoA is a sale of assets contract, while petitioners’
obligations to Allied Bank arose from various loan transactions. Absent any showing that
the terms and conditions of the latter transactions have been, in any way, modified or
novated by the terms and conditions in the MoA, said contracts should be treated
separately and distinctly from each other, such that the existence, performance or breach
of one would not depend on the existence, performance or breach of the other. In the
foregoing respect, the issue on whether or not Allied Bank expressed its conformity to
the assets sale transaction between Metro Concast and Peakstar (as evidenced by the
MoA) is actually irrelevant to the issues related to petitioners’ loan obligations to the
bank. Besides, as the CA pointed out, the fact of Allied Bank’s representation has not been
proven in this case and hence, cannot be deemed as a sustainable defense to exculpate
petitioners from their loan obligations to Allied Bank. Now, anent petitioners’ reliance on
force majeure, suffice it to state that Peakstar’s breach of its obligations to Metro Concast
arising from the MoA cannot be classified as a fortuitous event under jurisprudential
formulation. As discussed in Sicam v. Jorge:39
Fortuitous events by definition are extraordinary events not foreseeable or
avoidable.1âwphi1 It is therefore, not enough that the event should not have been
foreseen or anticipated, as is commonly believed but it must be one impossible to foresee
or to avoid. The mere difficulty to foresee the happening is not impossibility to foresee
the same. To constitute a fortuitous event, the following elements must concur: (a) the
cause of the unforeseen and unexpected occurrence or of the failure of the debtor to
comply with obligations must be independent of human will; (b) it must be impossible
to foresee the event that constitutes the caso fortuito or, if it can be foreseen, it must be
impossible to avoid; (c) the occurrence must be such as to render it impossible for
the debtor to fulfill obligations in a normal manner; and (d) the obligor must be free
from any participation in the aggravation of the injury or loss.40(Emphases supplied)
While it may be argued that Peakstar’s breach of the MoA was unforseen by petitioners,
the same us clearly not "impossible"to foresee or even an event which is independent of
human will." Neither has it been shown that said occurrence rendered it impossible for
petitioners to pay their loan obligations to Allied Bank and thus, negates the
former’s force majeure theory altogether. In any case, as earlier stated, the performance
or breach of the MoA bears no relation to the performance or breach of the subject loan
transactions, they being separate and distinct sources of obligations. The fact of the
matter is that petitioners’ loan obligations to Allied Bank remain subsisting for the basic
reason that the former has not been able to prove that the same had already been
paid41 or, in any way, extinguished. In this regard, petitioners’ liability, as adjudged by
the CA, must perforce stand. Considering, however, that Allied Bank’s extra-judicial
demand on petitioners appears to have been made only on December 10, 1998, the
computation of the applicable interests and penalty charges should be reckoned only
from such date.

WHEREFORE, the petition is DENIED. The Decision dated February 12, 2007 and
Resolution dated May 10, 2007 of the Court of Appeals in CA-G.R. CV No. 86896 are
hereby AFFIRMED with MODIFICATION reckoning the applicable interests and penalty
charges from the date of the extrajudicial demand or on December 10, 1998. The rest of
the appellate court’s dispositions stand.

SO ORDERED.

It is well to note that the party who alleges the affirmative defense of payment has the
burden of proving it. As held in the case of Bank of the Phil. Islands v. Sps. Royeca (581
Phil. 188, 195 [2009]):

As a general rule, one who pleads payment has the burden of proving it. Even
where the plaintiff must allege, rather than on the plaintiff to prove non-
payment. The debtor has the burden of showing with legal certainty that the
obligation has been discharge by payment.

When the existence of a debt is fully established by the evidence contained in

the record, the burden or proving that it has been extinguished by payment
devolves upon the debtor who offers such a defense to the claim of the creditor.
Where the debtor introduces some evidence of payment, the burden if proof –
shifts to the creditor, who is then under a duty or producing some evidence to
show non-payment.