The reservation of the right to institute separately the civil action shall be made before

Culpa Aquiliana v. Crime the prosecution starts presenting its evidence and under circumstances affording the
Articles 100-101 of the Revised Penal Code offended party a reasonable opportunity to make such reservation.
Art. 100. Civil liability of a person guilty of felony. — Every person criminally liable for
a felony is also civilly liable. When the offended party seeks to enforce civil liability against the accused by way of
Art. 101. Rules regarding civil liability in certain cases. — The exemption from criminal moral, nominal, temperate, or exemplary damages without specifying the amount
liability established in subdivisions 1, 2, 3, 5 and 6 of Article 12 and in subdivision 4 of thereof in the complaint or information, the filing fees thereof shall constitute a first
Article 11 of this Code does not include exemption from civil liability, which shall be lien on the judgment awarding such damages.
enforced subject to the following rules:
Where the amount of damages, other than actual, is specified in the complaint or
First. In cases of subdivisions 1, 2, and 3 of Article 12, the civil liability for acts information, the corresponding filing fees shall be paid by the offended party upon the
committed by an imbecile or insane person, and by a person under nine years of age, filing thereof in court.
or by one over nine but under fifteen years of age, who has acted without
discernment, shall devolve upon those having such person under their legal authority Except as otherwise provided in these Rules, no filing fees shall be required for actual
or control, unless it appears that there was no fault or negligence on their damages.
part.chanrobles virtual law library
No counterclaim, cross-claim or third-party complaint may be filed by the accused in
the criminal case, but any cause of action which could have been the subject thereof
Should there be no person having such insane, imbecile or minor under his authority,
may be litigated in a separate civil action. (1a)
legal guardianship or control, or if such person be insolvent, said insane, imbecile, or
minor shall respond with their own property, excepting property exempt from (b) The criminal action for violation of Batas Pambansa Blg. 22 shall be deemed to
execution, in accordance with the civil law.chanrobles virtual law library include the corresponding civil action. No reservation to file such civil action
separately shall be allowed.
Second. In cases falling within subdivision 4 of Article 11, the persons for whose
benefit the harm has been prevented shall be civilly liable in proportion to the benefit Upon filing of the aforesaid joint criminal and civil actions, the offended party shall pay
which they may have received.chanrobles virtual law library in full the filing fees based on the amount of the check involved, which shall be
considered as the actual damages claimed. Where the complaint or information also
The courts shall determine, in sound discretion, the proportionate amount for which seeks to recover liquidated, moral, nominal, temperate or exemplary damages, the
each one shall be liable.chanrobles virtual law library offended party shall pay additional filing fees based on the amounts alleged therein. If
the amounts are not so alleged but any of these damages are subsequently awarded
When the respective shares cannot be equitably determined, even approximately, or by the court, the filing fees based on the amount awarded shall constitute a first lien
when the liability also attaches to the Government, or to the majority of the inhabitants on the judgment.
of the town, and, in all events, whenever the damages have been caused with the
consent of the authorities or their agents, indemnification shall be made in the manner Where the civil action has been filed separately and trial thereof has not yet
prescribed by special laws or regulations. commenced, it may be consolidated with the criminal action upon application with the
court trying the latter case. If the application is granted, the trial of both actions shall
Third. In cases falling within subdivisions 5 and 6 of Article 12, the persons using proceed in accordance with section 2 of this Rule governing consolidation of the civil
violence or causing the fears shall be primarily liable and secondarily, or, if there be and criminal actions. (cir. 57-97)
no such persons, those doing the act shall be liable, saving always to the latter that
part of their property exempt from execution.ch Section 2. When separate civil action is suspended. — After the criminal action has
Rule 111, Rules of Court been commenced, the separate civil action arising therefrom cannot be instituted until
final judgment has been entered in the criminal action.
RULE 111

Prosecution of Civil Action

Section 1. Institution of criminal and civil actions. — (a) When a criminal action is
instituted, the civil action for the recovery of civil liability arising from the offense
charged shall be deemed instituted with the criminal action unless the offended party
waives the civil action, reserves the right to institute it separately or institutes the civil
action prior to the criminal action.
If the criminal action is filed after the said civil action has already been instituted, the Section 6. Suspension by reason of prejudicial question. — A petition for suspension
latter shall be suspended in whatever stage it may be found before judgment on the of the criminal action based upon the pendency of a prejudicial question in a civil
merits. The suspension shall last until final judgment is rendered in the criminal action may be filed in the office of the prosecutor or the court conducting the
action. Nevertheless, before judgment on the merits is rendered in the civil action, the preliminary investigation. When the criminal action has been filed in court for trial, the
same may, upon motion of the offended party, be consolidated with the criminal petition to suspend shall be filed in the same criminal action at any time before the
action in the court trying the criminal action. In case of consolidation, the evidence prosecution rests. (6a)
already adduced in the civil action shall be deemed automatically reproduced in the
criminal action without prejudice to the right of the prosecution to cross-examine the Section 7. Elements of prejudicial question. — The elements of a prejudicial question
witnesses presented by the offended party in the criminal case and of the parties to are: (a) the previously instituted civil action involves an issue similar or intimately
present additional evidence. The consolidated criminal and civil actions shall be tried related to the issue raised in the subsequent criminal action, and (b) the resolution of
and decided jointly. such issue determines whether or not the criminal action may proceed. (5a)

During the pendency of the criminal action, the running of the period of prescription of Article 29 of the Civil Code
the civil action which cannot be instituted separately or whose proceeding has been
suspended shall be tolled. (n) Art. 29. When the accused in a criminal prosecution is acquitted on the ground that
his guilt has not been proved beyond reasonable doubt, a civil action for damages for
The extinction of the penal action does not carry with it extinction of the civil action. the same act or omission may be instituted. Such action requires only a
However, the civil action based on delict shall be deemed extinguished if there is a preponderance of evidence. Upon motion of the defendant, the court may require the
finding in a final judgment in the criminal action that the act or omission from which plaintiff to file a bond to answer for damages in case the complaint should be found to
the civil liability may arise did not exist. (2a) be malicious.

Section 3. When civil action may proceeded independently. — In the cases provided Barredo v. Garcia, G.R. No. 48006, July 08, 1942 (previously assigned)
for in Articles 32, 33, 34 and 2176 of the Civil Code of the Philippines, the
independent civil action may be brought by the offended party. It shall proceed People v. Ligon, G.R. No. 74041, July 29, 1987- Dandan
independently of the criminal action and shall require only a preponderance of Facts:
evidence. In no case, however, may the offended party recover damages twice for the The prosecution tried to establish, through the sole testimony of the taxicab driver,
same act or omission charged in the criminal action. (3a) Prudencio Castillo, that Gabat grabbed the box of cigarettes from Rosales and pried
loose the latter's hand from the window of the car, resulting in the latter falling down
Section 4. Effect of death on civil actions. — The death of the accused after and hitting the pavement. In its decision, the trial court summarized the testimony of
arraignment and during the pendency of the criminal action shall extinguish the civil Castillo as follows: The vehicular traffic stopped and Prudencio Castillo's taxi was
liability arising from the delict. However, the independent civil action instituted under right behind a Volkswagen Kombi. While waiting for the traffic light to change to
section 3 of this Rule or which thereafter is instituted to enforce liability arising from green, Castillo Idly watched the Volkswagen Kombi and saw Gabat, the passenger
other sources of obligation may be continued against the estate or legal sitting beside the driver, signal to a cigarette vendor. The cigarette vendor, Rosales,
representative of the accused after proper substitution or against said estate, as the approached the right side of the Kombi. While Rosales was handing the cigarettes to
case may be. The heirs of the accused may be substituted for the deceased without Gabat, the traffic light suddenly changed to green. When the Kombi moved forward,
requiring the appointment of an executor or administrator and the court may appoint a Gabat suddenly grabbed the cigarette box held by Rosales. Taken aback, Jose
guardian ad litem for the minor heirs. Rosales ran beside the Kombi and was able to hold on to the windowsill of the right
front door with his right hand. While Rosales was clinging to the windowsill, with both
The court shall forthwith order said legal representative or representatives to appear feet off the ground, the Kombi continued to speed. Castillo, who was closely following
and be substituted within a period of thirty (30) days from notice. the Kombi, then saw Gabat forcibly remove the hand of Rosales from the windowsill
and the latter fell face down.
A final judgment entered in favor of the offended party shall be enforced in the
manner especially provided in these rules for prosecuting claims against the estate of The version of the defense, on the other hand, was summarized by the court as
the deceased. follows: On the date and time in question, Fernando Gabat, was on board the
Volkswagen Kombi driven by Rogelio Ligon. Fernando Gabat, who wanted to buy
If the accused dies before arraignment, the case shall be dismissed without prejudice cigarettes, called a cigarette vendor who approached the right side of the Kombi.
to any civil action the offended party may file against the estate of the deceased. (n) Gabat bought two sticks of cigarettes and handed to the cigarette vendor, Rosales. In
order to change the P5.00 big, Rosales placed his cigarette box containing assorted
Section 5. Judgment in civil action not a bar. — A final judgment rendered in a civil cigarettes on the windowsill of the front door of the Kombi between the arm of Gabat
action absolving the defendant from civil liability is not a bar to a criminal action and the window frame. Suddenly, the traffic light changed from red to green and
against the defendant for the same act or omission subject of the civil action. (4a) Rogelio Ligon moved the vehicle forward, heedless of the transaction between Gabat
and the cigarette vendor. As the vehicle sped onward, the cigarette box which was
squeezed between the right arm of Gabat and the window frame fell inside the Kombi. done. Gabat's wilfull act of calling Rosales, the cigarette vendor, to the middle of a
Rosales then ran beside the vehicle and clung to the windowsill of the moving vehicle. busy street to buy two sticks of cigarettes set the chain of events which led to the
Gabat testified that when he saw the cigarette vendor clinging on the side of the front death of Rosales. Through fault and negligence, Gabat (1) failed to prevent the driver
door, he told Ligon to veer to the right in order that Rosales could get off at the from moving forward while the purchase was completed; (2) failed to help Rosales
sidewalk. However, Gabat declared, that Ligon said that it could not be done because while the latter clung precariously to the moving vehicle, and (3) did not enforce his
of the moving vehicular traffic. Then, while the vehicle slowed down and Ligon was order to the driver to stop. Finally, Gabat acquiesced in the driver's act of speeding
maneuvering to the right in an attempt to go toward the sidewalk, Rosales lost his grip away, instead of stopping and picking up the injured victim. These proven facts taken
on the window frame and fell to the pavement of Quezon Boulevard. Gabat allegedly together are firm bases for finding Gabat civilly liable under the Civil Code20 for the
shouted at Ligon to stop but Ligon replied that they should go on to Las Pinas and damage done to Rosales.
report the incident to the parents of Gabat, and later they would come back to the WHEREFORE, judgment is rendered acquitting the appellant Gabat for the crime of
scene of the incident. However, while the Kombi was speeding, it was blocked by the Robbery with Homicide. However, he is hereby held civilly liable for his acts and
taxi of Prudencio Castillo and a jeep driven by policemen. Gabat and Ligon were omissions, there being fault or negligence, and sentenced to indemnify the heirs of
brought to police headquarters, but neither of them executed any written statement.13 Jose Rosales y Ortiz in the amount of P15.000.00 for the latter's death, P1,733.35 for
Issues: hospital and medical expenses, and P4,100.00 for funeral expenses. The alleged loss
of income amounting to P20,000.00, not being supported by sufficient evidence, is
1. WON, respondent is not criminally liable. – No. DENIED. Costs de officio. 
2. WON, respondent is free from civil liability.- No.
Maniago v. Court of Appeals, G.R. No. 104392, February 20, 1996- Catorce
Ruling: Facts:
We find it significant that in his statement given to the police that very evening,15
Castillo did not mention that he saw Gabat forcibly prying off the hand of Rosales Petitioner Ruben Maniago was the owner of shuttle buses which were used in
from the windowsill of the Kombi, although the police report prepared by the transporting employees of the Texas Instruments, (Phils.), Inc. from Baguio City
investigating officer, Pfc. Fermin M. Payuan, on the same date, stated that when the proper to its plant site at the Export Processing Authority.
traffic signal changed to green and the driver stepped on the gas, the cigarette box of
the cigarette vendor (Rosales) was grabbed by the passenger Gabat and "instantly On January 7, 1990, one of his buses figured in a vehicular accident with a passenger
the former clung to the door and was dragged at a distance while at the same time jeepney owned by private respondent Alfredo Boado along Loakan Road, Baguio
the latter punched the vendor's arm until the same fell to the pavement," thus showing City. As a result of the accident, a criminal case for reckless imprudence resulting in a
that during the police investigation Castillo must have given a statement to the police damage to property and multiple physical injuries was filed on March 2, 1990 against
which indicated that Gabat did something to cause Rosales to fall from the Kombi.  petitioner’s driver, Herminio Andaya. A month later, on April 19, 1990, a civil case for
Considering the above circumstances, the Court is not convinced that the guilt of the damages was filed by private respondent Boado against petitioner himself. 
accused Fernando Gabat has been established beyond reasonable doubt. In our
view, the quantum of proof necessary to sustain Gabat's conviction of so serious a Petitioner moved for the suspension of the proceedings in the civil case against him,
crime as robbery with homicide has not been met in this case. He is therefore entitled cit Petitioner moved for the suspension of the proceedings in the civil case against
to acquittal on reasonable doubt. him, citing the pendency of the criminal case against his driver. The trial court denied
However, it does not follow that a person who is not criminally liable is also free from the motion on the ground that pursuant to the Civil Code, the action could proceed
civil liability. While the guilt of the accused in a criminal prosecution must be independently of the criminal action, in addition to the fact that the petitioner was not
established beyond reasonable doubt, the accused in the criminal case.

only a preponderance of evidence is required in a civil action for damages.17 The On appeal, the petitioner maintained that the civil action could not proceed
judgment of acquittal extinguishes the civil liability of the accused only when it independently of the criminal case because no reservation of the right to bring it
includes a declaration that the facts from which the civil liability might arise did not separately had been made in the criminal case.
exist.18
The reason for the provisions of Article 29 of the Civil Code, which provides that the The CA dismissed the petition. It held that a civil action for damages can be filed
acquittal of the accused on the ground that his guilt has not been proved beyond independently of the criminal action even though no reservation to file the same has
reasonable doubt does not necessarily exempt him from civil liability for the same act been made. Hence, this petition for review on certiorari. 
or omission.
In the instant case, we find that a preponderance of evidence exists sufficient to Petitioner argues that the civil action against him was impliedly instituted in the
establish the facts from which the civil liability of Gabat arises. On the basis of the trial criminal action previously filed against his employee because private respondent did
court's evaluation of the testimonies of both prosecution and defense witnesses at the not reserve his right to bring this action separately. The records show that the criminal
trial and applying the quantum of proof required in civil cases, we find that a action was dismissed for failure of the prosecution to prosecute its case. Accordingly,
preponderance of evidence establishes that Gabat by his act and omission with fault per petitioner’s argument, the civil action which was impliedly instituted was also
and negligence caused damage to Rosales and should answer civilly for the damage dismissed.
 Indeed, the requirement that the right to institute actions under the Civil Code
Although he admitted that he failed to reserve the right to institute the civil action, separately must be reserved is not incompatible with the independent character of
respondent contends rights under Art. 2176 and 2177 of the Civil Code are such actions. There is a difference between allowing the trial of civil actions to
substantive in character, the enforcement of which must not be conditioned on a proceed independently of the criminal prosecution and requiring that, before they may
reservation to be instituted separately.  be instituted at all, a reservation to bring them separately must be made. Put in
another way, it is the conduct of the trial of the civil action - not its institution through
the filing of a complaint - which is allowed to proceed independently of the outcome of
Issue: the criminal case.
Nor does it matter that the action is against the employer to enforce his vicarious
Whether or not despite the absence of such reservation, private respondent may liability under Art. 2180 of the Civil Code. Though not an accused in the criminal case,
nonetheless bring an action for damages against petitioner under Art. 2176 and  Art. the employer is very much a party, as long as the right to bring or institute a separate
2180 of the Civil Code. action (whether arising from crime or from quasi delict) is not reserved. 

The ruling that a decision convicting the employee is binding and conclusive upon the
Ruling: employer "not only with regard to its civil liability but also with regard to its amount
because the liability of an employer cannot be separated but follows that of his
No. After considering the arguments of the parties, the Court has reached the employee" is true not only with respect to the civil liability arising from crime but also
conclusion that the right to bring an action for damages under the Civil Code must be with respect to the civil liability under the Civil Code. Since whatever is recoverable
reserved as required by Rule III of the Revised Rules of Criminal Procedure, §1, against the employer is ultimately recoverable by him from the employee, the policy
otherwise it should be dismissed. against double recovery requires that only one action be maintained for the same act
or omission whether the action is brought against the employee or against his
§1 of Rule II of the Revised Rules of Criminal Procedure provides: employer.

L.G. Foods v. Pagapong-Agraviador, G.R. No. 158995, September 26, 2006-

When a criminal action is instituted, the civil action for the recovery of civil liability is
Cahibaybayan
impliedly instituted with the criminal action, unless the offended party waives the
Note by the Court : The circumstance that no reservation to institute a separate civil
civil action, reserves his right to institute it separately, or institutes the civil action prior
action for damages was made when the criminal case was filed is of no moment for
to the criminal action.
the simple reason that the criminal case was dismissed without any pronouncement
It quite clearly requires that a reservation must be made to institute separately all civil
having been made therein. In reality, therefor, it is as if there was no criminal case to
actions for the recovery of civil liability, otherwise they will be deemed to have been
speak of in the first place. And for the petitioners to insist for the conviction of their
instituted with the criminal case. Such civil actions are not limited to those which arise
driver as a condition sine qua non to hold them liable for damages is to ask for the
"from the offense charged”. In other words the right of the injured party to sue
impossible.
separately for the recovery of the civil liability whether arising from crimes (ex delicto)
or from quasi delict under Art. 2176 of the Civil Code must be reserved otherwise they
Facts:
will be deemed instituted with the criminal action.
Charles Vallereja, a 7-year old son of the spouses Florentino Vallejera and Theresa
On the basis of Rule III, §§1-3, a civil action for the recovery of civil liability is, as a
Vallejera, was hit by a Ford Fiera van owned by the petitioners and driven at the time
general rule, impliedly instituted with the criminal action, except only (1) when such
by their employee, Vincent Norman Yeneza y Ferrer. Charles died as a result of the
action arising from the same act or omission, which is the subject of the criminal
accident.
action, is waived; (2) the right to bring it separately is reserved or (3) such action has
An Information for Reckless Imprudence Resulting to Homicide was filed against the
been instituted prior to the criminal action.
driver before the Municipal Trial Court in Cities (MTCC)
Unfortunately, before the trial could be concluded, the accused driver committed
Indeed the question on whether the criminal action and the action for recovery of the
suicide
civil liability must be tried in a single proceeding has always been regarded a matter
On account thereof, the MTCC, in its order of September 30, 1998, dismissed the
of procedure and, since the rule making power has been conferred by the
criminal case.
Constitution on this Court, it is in the keeping of this Court.
In the RTC of Bacolod City, the spouses Vallejera filed a complaint[3] for damages
against the petitioners as employers of the deceased driver, In their Answer with
Contrary to private respondent's contention, the requirement that before a separate
Compulsory Counterclaim,[4] the petitioners as defendants denied liability for the
civil action may be brought, it must be reserved, does not impair, diminish or defeat
death of the Vallejeras' 7-year old son, claiming that they had exercised the required
substantive rights, but only regulates their exercise in the general interest of orderly
due diligence in the selection and supervision of their employees, including the
procedure. The requirement is merely procedural in nature.
deceased driver. They thus prayed in their Answer for the dismissal of the complaint
for lack of cause of action on the part of the Vallejera couple.
The trial court required them to file within ten days a memorandum of authorities diligence required of a good father of the family in the selection and supervision of
supportive of their position. their employees, which diligence, if exercised, could have prevented the vehicular
The defendant petitioners filed a Motion to Dismiss, principally arguing that the accident that resulted to the death of their 7-year old son
complaint is basically a "claim for subsidiary liability against an employer" under the
provision of Article 103[5] of the Revised Penal Code. Prescinding there from, they Section 2, Rule 2, of the 1997 Rules of Civil Procedure defines cause of action as the
contend that there must first be a judgment of conviction against their driver as a "act or omission by which a party violates the right of another." Such act or omission
condition sine qua non to hold them liable. gives rise to an obligation which may come from law, contracts, quasi contracts,
Ergo, since the driver died during the pendency of the criminal action, the sine qua delicts or quasi-delicts
non condition for their subsidiary liability was not fulfilled, hence the of lack of cause
of action on the part of the plaintiffs. They further argue that since the plaintiffs did not
make a reservation to institute a separate action for damages when... the criminal Corollarily, an act or omission causing damage to another may give rise to two
case was filed, the damage suit in question is thereby deemed instituted with the separate civil liabilities on the part of the offender, i.e., 1) civil liability ex delicto;12 and
criminal action. which was already dismissed. 2) independent civil liabilities, such as those (a) not arising from an act or omission
The trial court denied the motion to dismiss for lack of merit and set the case for pre- complained of as felony (e.g., culpa contractual or obligations arising from law;13 the
trial. intentional torts;14 and culpa aquiliana15); or (b) where the injured party is granted a
The petitioners then went on certiorari to the CA in CA-G.R. SP No. 67600, imputing right to file an action independent and distinct from the criminal action. 16 Either of
grave abuse of discretion on the part of the trial judge in refusing to dismiss the basic these two possible liabilities may be enforced against the offender.17
complaint for damages in Civil Case No. 99-10845. Stated otherwise, victims of negligence or their heirs have a choice between an action
The CA denied the petition and upheld the trial court. to enforce the civil liability arising from culpa criminal under Article 100 of the Revised
The petitioners' present recourse on their submission that the appellate court Penal Code, and an action for quasi-delict (culpa aquiliana) under Articles 2176 to
committed reversible error in upholding... the trial court's denial of their motion to 2194 of the Civil Code. If, as here, the action chosen is for quasi-delict, the plaintiff
dismiss. may hold the employer liable for the negligent act of its employee, subject to the
employer's defense of exercise of the diligence of a good father of the family. On the
Issues: other hand, if the action chosen is for culpa criminal, the plaintiff can hold the
Whether the spouses Vallejeras' cause of action in Civil Case No. 99-10845 is employer subsidiarily liable only upon proof of prior conviction of its employee.18
founded on Article 103 of the Revised Penal Code, as maintained by the petitioners, Article 116119 of the Civil Code provides that civil obligation arising from criminal
or derived from Article 2180[10] of the Civil Code offenses shall be governed by penal laws subject to the provision of Article 2177 20
Ruling: and of the pertinent provision of Chapter 2, Preliminary Title on Human Relation, and
of Title XVIII of this Book, regulating damages. Plainly, Article 2177 provides for the
The Court Denied the Petition alternative remedies the plaintiff may choose from in case the obligation has the
possibility of arising indirectly from the delict/crime or directly from quasi-delict/tort.
That defendant LG Foods Corporation is civilly liable for the negligence/imprudence The choice is with the plaintiff who makes known his cause of action in his initiatory
of its employee since it failed to exercise the necessary diligence required of a good pleading or complaint,21 and not with the defendant who can not ask for the dismissal
father of the family in the selection and supervision of his employee, Vincent Norman of the plaintiff's cause of action or lack of it based on the defendant's perception that
Yeneza y Ferrer... which diligence if exercised, would have prevented said incident. the plaintiff should have opted to file a claim under Article 103 of the Revised Penal
Code.
Nothing in the foregoing allegations suggests, even remotely, that the herein Under Article 2180 of the Civil Code, the liability of the employer is direct or
petitioners are being made to account for their subsidiary liability under Article 103 of immediate. It is not conditioned upon prior recourse against the negligent employee
the Revised Penal Code. As correctly pointed out by the trial court in its order of and a prior showing of insolvency of such employee.22
September 4, 2001 denying... the petitioners' Motion to Dismiss, the complaint did not Here, the complaint sufficiently alleged that the death of the couple's minor son was
even aver the basic elements for the subsidiary liability of an employer under Article caused by the negligent act of the petitioners' driver; and that the petitioners
103 of the Revised Penal Code, such as the prior conviction of the driver in the themselves were civilly liable for the negligence of their driver for failing "to exercise
criminal case filed against him nor his  insolvency. the necessary diligence required of a good father of the family in the selection and
supervision of [their] employee, the driver, which diligence, if exercised, would have
Admittedly, the complaint did not explicitly state that plaintiff Vallejeras were suing the prevented said accident."
defendant petitioners for damages based on quasi-delict. Clear it is, however, from In this case, had the respondent spouses elected to sue the petitioners based on
the allegations of the complaint that quasi-delict was their choice of remedy against Article 103 of the Revised Penal Code, they would have alleged that the guilt of the
the petitioners. To stress, the plaintiff spouses alleged in their complaint gross fault driver had been proven beyond reasonable doubt; that such accused driver is
and negligence on the part of the driver and the failure of the petitioners, as insolvent; that it is the subsidiary liability of the defendant petitioners as employers to
employers, to exercise due diligence in the selection and supervision of their pay for the damage done by their employee (driver) based on the principle that every
employees. The spouses further alleged that the petitioners are civilly liable for the person criminally liable is also civilly liable. Since there was no conviction in the
negligence/imprudence of their driver since they failed to exercise the necessary criminal case against the driver, precisely because death intervened prior to the
 termination of the criminal proceedings, the spouses' recourse was, therefore, to sue RTC ruled in favor of the respondent. CA affirmed the RTC’s decision.
the petitioners for their direct and primary liability based on quasi-delict. Issues:
A.WON the CA erred on a question of law in affirming the trial court’s reliance on the
version of the respondent (Jeep owner - Calaunan and his driver) on how the
Manliclic v. Calaunan, G.R. No. 150157, January 25, 2007- Anino accident supposedly occurred.
Facts: B. WON the CA erred on a question of law in affirming the trial court’s unfair disregard of
The vehicles involved in this case are: herein petitioner PRBL’s defense of exercise of due diligence in the selection and
(1)   Philippine Rabbit Bus owned by petitioner PRBLI and driven by petitioner Mauricio supervision of its employees.
Manliclic; and Rulings:
(2)   Owner-type jeep owned by respondent Modesto Calaunan and driven by Marcelo A.    No. SC fully agree in the finding of the trial court, as affirmed by the Court of
Mendoza Appeals, that it was petitioner Manliclic who was negligent in driving the PRBLI
In the morning of 12 July 1988, respondent Calaunan, together with Marcelo bus which was the cause of the collision.
Mendoza, was on his way to Manila from Pangasinan on board his owner-type jeep. From the complaint, it can be gathered that the civil case for damages was one
The Philippine Rabbit Bus was likewise bound for Manila from Concepcion, Tarlac. At arising from, or based on, quasi-delict. Petitioner Manliclic was sued for his
approximately Kilometer 40 of the North Luzon Expressway in Barangay Lalangan, negligence or reckless imprudence in causing the collision, while petitioner PRBLI
Plaridel, Bulacan, the two vehicles collided. The front right side of the Philippine was sued for its failure to exercise the diligence of a good father in the selection and
Rabbit Bus hit the rear left side of the jeep causing the latter to move to the shoulder supervision of its employees, particularly petitioner Manliclic.
on the right and then fall on a ditch with water resulting to further extensive damage. From the foregoing declaration of the Court of Appeals, it appears that petitioner
By reason of such collision, the following cases were filed: Manliclic was acquitted not on reasonable doubt, but on the ground that he is not the
(1)   A criminal case was filed before the RTC of Malolos, Bulacan, charging petitioner author of the act complained of which is based on Section 2(b) of Rule 111 of the
Manliclic with Reckless Imprudence Resulting in Damage to Property with Physical Rules of Criminal Procedure which reads:(b) Extinction of the penal action does not
Injuries, carry with it extinction of the civil, unless the extinction proceeds from a declaration in
(2)   Subsequently, respondent filed a complaint for damages against petitioners Manliclic a final judgment that the fact from which the civil might arise did not exist.
and PRBLI before the RTC of Dagupan City. In spite of said ruling, petitioner Manliclic can still be held liable for the mishap. The
The versions of the parties are summarized by the trial court as follows: afore-quoted section applies only to a civil action arising from crime or ex delicto and
PRBLI and his driver: not to a civil action arising from quasi-delict or culpa aquiliana. The extinction of civil
The jeep was cruising at the speed of 60 to 70 kilometers per hour on the slow lane of liability referred to in Par. (e) of Section 3, Rule 111 [now Section 2 (b) of Rule 111],
the expressway when the Philippine Rabbit Bus overtook the jeep and in the process refers exclusively to civil liability founded on Article 100 of the Revised Penal Code,
of overtaking the jeep, the Philippine Rabbit Bus hit the rear of the jeep on the left whereas the civil liability for the same act considered as a quasi-delict only and not as
side. At the time the Philippine Rabbit Bus hit the jeep, it was about to overtake the a crime is not extinguished even by a declaration in the criminal case that the criminal
jeep. act charged has not happened or has not been committed by the accused.
In other words, the Philippine Rabbit Bus was still at the back of the jeep when the A quasi-delict or culpa aquiliana is a separate legal institution under the Civil Code
jeep was hit. Fernando Ramos corroborated the testimony of the plaintiff and Marcelo with a substantivity all its own, and individuality that is entirely apart and independent
Mendoza. He said that he was on another jeep following the Philippine Rabbit Bus from a delict or crime – a distinction exists between the civil liability arising from a
and the jeep of plaintiff when the incident took place. He said, the jeep of the plaintiff crime and the responsibility for quasi-delicts or culpa extra-contractual. The same
overtook them and the said jeep of the plaintiff was followed by the Philippine Rabbit negligence causing damages may produce civil liability arising from a crime under the
Bus which was running very fast. The bus also overtook the jeep in which he was Penal Code, or create an action for quasi-delicts or culpa extra-contractual under the
riding. After that, he heard a loud sound. He saw the jeep of the plaintiff swerved to Civil Code. It is now settled that acquittal of the accused, even if based on a finding
the right on a grassy portion of the road. The Philippine Rabbit Bus stopped and they that he is not guilty, does not carry with it the extinction of the civil liability based on
overtook the Philippine Rabbit Bus so that it could not moved (sic), meaning they quasi delict.
stopped in front of the Philippine Rabbit Bus. He testified that the jeep of plaintiff In other words, if an accused is acquitted based on reasonable doubt on his guilt, his
swerved to the right because it was bumped by the Philippine Rabbit bus from civil liability arising from the crime may be proved by preponderance of evidence only.
behind. However, if an accused is acquitted on the basis that he was not the author of the act
Jeep owner Manliclic and his driver, Oscar Buan: or omission complained of (or that there is declaration in a final judgment that the fact
Both admitted that the Philippine Rabbit Bus bumped the jeep in question. However, from which the civil might arise did not exist), said acquittal closes the door to civil
they explained that when the Philippine Rabbit bus was about to go to the left lane to liability based on the crime or ex delicto. In this second instance, there being no crime
overtake the jeep, the latter jeep swerved to the left because it was to overtake or delict to speak of, civil liability based thereon or ex delicto is not possible. In this
another jeep in front of it. Such was their testimony before the RTC in Malolos in the case, a civil action, if any, may be instituted on grounds other than the delict
criminal case and before this Court in the instant case. complained of.
Thus, which of the two versions of the manner how the collision took place was
correct, would be determinative of who between the two drivers was negligent in the As regards civil liability arising from quasi-delict or culpa aquiliana, same will not be
operation of their respective vehicles. extinguished by an acquittal, whether it be on ground of reasonable doubt or that
accused was not the author of the act or omission complained of (or that there is supervision. Regular supervision of employees, that is, prior to any accident, should
declaration in a final judgment that the fact from c ivil liability might arise did not exist). have been shown and established. This, petitioner failed to do. The lack of
The responsibility arising from fault or negligence in a quasi-delict is entirely separate supervision can further be seen by the fact that there is only one set of manual
and distinct from the civil liability arising from negligence under the Penal Code. An containing the rules and regulations for all the drivers of PRBLI.
acquittal or conviction in the criminal case is entirely irrelevant in the civil case based
on quasi-delict or culpa aquiliana. Supreme Transportation Liner, Inc. v San Andres, G.R. No. 200444, August 15,
Petitioners ask SC to give credence to their version of how the collision occurred and 2018- Villas
to disregard that of respondent’s. Petitioners insist that while the PRBLI bus was in Facts:
the process of overtaking respondent’s jeep, the latter, without warning, suddenly On November 5, 2002, Ernesto Belchez, driving a Mabel Tours Bus sideswiped a
swerved to the left (fast) lane in order to overtake another jeep ahead of it, thus Toyota Revo it was overtaking. The Mabel Tours Bus immediately swerved to the left
causing the collision. As a general rule, questions of fact may not be raised in a lane and in the process hit the Supreme Bus owned by petitioner, Supreme Bus
petition for review. The factual findings of the trial court, especially when affirmed by Transportation Line, Inc.. Because of the strong impact of the incident, the Supreme
the appellate court, are binding and conclusive on the Supreme Court. Bus  was pushed to the side of the road and the Mabel Tour Bus continuously moved
B. For failure to adduce proof that it exercised the diligence of a good father of until it hit a passenger jeepney that was parked on the side of the road which later on
a family in the selection and supervision of its employees, petitioner PRBLI is fell on the canal. Nobody died but all the vehicles were damaged. 
held solidarily responsible for the damages caused by petitioner Manliclic’s Respondent San Andres, owner of the Mabel Tour Bus filed a complaint for damages
negligence. before the court a quo against petitioners alleging actual damage to Mabel Tours Bus
Having ruled that it was petitioner Manliclic’s negligence that caused the smash up, and unrealized profits for the non-use of the Mabel Bus Tours at the time it underwent
there arises the juris tantum presumption that the employer is negligent, rebuttable repairs. 
only by proof of observance of the diligence of a good father of a family. Subsequently, petitioners filed their Answer with Counterclaim alleging, among
Under Article 2180 of the New Civil Code, when an injury is caused by the negligence others, that plaintiff has no cause of action against them; the proximate cause of the
of the employee, there instantly arises a presumption of law that there was vehicular accident is the reckless imprudence of the respondent’s driver for operating
negligence on the part of the master or employer either in the selection of the servant the bus Mabel Tours Bus recklessly and in violation of traffic laws and regulations in
or employee, or in supervision over him after selection or both. The liability of the negotiating the overtaking of another vehicle; and that at the time of the accident,
employer under Article 2180 is direct and immediate; it is not conditioned upon prior respondent operated the Mabel Tours Bus outside his franchise and without a
recourse against the negligent employee and a prior showing of the insolvency of registered plate. 
such employee. Therefore, it is incumbent upon the private respondents to prove that No amicable settlement was reached by the parties. In the trial on the merits, Jessi
they exercised the diligence of a good father of a family in the selection and Alvarez stated that he filed a criminal complaint for reckless imprudence resulting to
supervision of their employee. damage to property against Ernesto Belchez before the CFI which was terminated
In the selection of prospective employees, employers are required to examine them with the accused convicted because of his admission of the crime charged. In the said
as to their qualifications, experience and service records. In the supervision of criminal complaint, he did not reserve their civil claim of asked the fiscal to reserve it,
employees, the employer must formulate standard operating procedures, monitor which, if itemized, would also be the amount of their counterclaim in the present civil
their implementation and impose disciplinary measures for the breach thereof. To action filed by respondent.  
fend off vicarious liability, employers must submit concrete proof, including The RTC dismissed both the complaint and the counterclaim  providing that the
documentary evidence, that they complied with everything that was incumbent on respondent was not able to prove the petitioner’s liability and petitioner has failed to
them. reserve the civil action upon institution of the criminal action. Upon appeal to the CA,
From the evidence of the defendants, it seems that the Philippine Rabbit Bus Lines the appellate court dismissed the same, stating that the RTC has correctly ruled that
has a very good procedure of recruiting its driver as well as in the maintenance of its the counterclaim could not prosper because their recourse was limited to the
vehicles. There is no evidence though that it is as good in the supervision of its enforcement of the respondent’s subsidiary liability under Article 103 of the Revised
personnel. There has been no iota of evidence introduced by it that there are rules Penal Code and that to allow the counterclaim is tantamount to double recovery.
promulgated by the bus company regarding the safe operation of its vehicle and in ISSUE: WHETHER OR NOT THE PETITIONERS’ COUNTERCLAIM WAS
the way its driver should manage and operate the vehicles assigned to them. There is CORRECTLY DENIED BY THE RTC. 
no showing that somebody in the bus company has been employed to oversee how Ruling:
its driver should behave while operating their vehicles without courting incidents No, the RTC was not correct when it denied petitioners’ counterclaim as petitioners’
similar to the herein case. In regard to supervision, it is not difficult to observe that the counterclaim, being in the nature of an independent civil action, required no prior
Philippine Rabbit Bus Lines, Inc. has been negligent as an employer and it should be reservation. 
made responsible for the acts of its employees, particularly the driver involved in this
case. The omission of the driver in violation of Article 365 of the Revised Penal Code could
The presence of ready investigators after the occurrence of the accident is not give rise not only to the obligation ex delicto, but also to the obligation based on culpa
enough to exempt petitioner PRBLI from liability arising from the negligence of aquiliana under Article 2176 of the Civil Code. Under Section 1 of Rule 111, what is
petitioner Manliclic. Same does not comply with the guidelines set forth in the cases deemed instituted with the criminal action is only the action to recover civil liability
above-mentioned. The presence of the investigators after the accident is not enough arising from the crime or ex-delicto. All the other civil actions under Articles 32,33, 34,
and 2176 of the Civil Code are no longer deemed instituted and may be filed RULING:
separately and prosecuted independently even without any reservation in the criminal
action. The failure to make a reservation in the criminal action is not a waiver of the There is no contributory negligence on behalf of the plaintiff. The Supreme Court
right to file a separate and independent civil action based on these articles of the Civil provides some test that may find the contributory negligence of a person. Was there
Code.  anything in the circumstances surrounding the plaintiff at the time he alighted from the
Under the factual antecedents herein, both obligations rested on the common train which would have admonished a person of average prudence that to get off the
element of negligence. Article 2177 of the Civil Code and Section 3, Rule 111 of the train under the conditions then existing was dangerous? If so, the plaintiff should have
Rules of Court allow the injured party to prosecute both criminal and civil action desisted from alighting; and his failure so to desist was contributory negligence.
simultaneously. 
The foregoing notwithstanding, the petitioners as the injured parties have to choose Alighting from a moving train while it is slowing down is a common practice and a lot
the remedy by which to enforce their claim in the event of the favorable decisions in of people are doing so every day without suffering injury. Cangco has the vigor and
both actions. This is because Article 2177 of the Civil Code bars them from recovering agility of young manhood, and it was by no means so risky for him to get off while the
damages twice upon the same act or omission.  train was yet moving as the same act would have been in an aged or feeble person.
In this case, petitioners’ allegation that they had not yet recovered damages from the He was also ignorant of the fact that sacks of watermelons were there as there were
respondent was not controlling considering that the criminal case against the no appropriate warnings and the place was dimly lit.
respondent’s driver had already been concluded. It remains for the petitioners to still
demonstrate that the RTC as the trial court did not award civil damages in the criminal Article 1173, first paragraph: The fault or negligence of the obligor consists in the
case.  omission of that diligence which is required by the nature of the obligation and
Consequently, Civil Case No. T-2240 was remanded to the RTC for further corresponds with the circumstances of that persons, of the time and of the place.
proceedings, to afford petitioners the opportunity to present evidence on their When negligence shows bad faith, the provisions of Article 1171 and 2201, paragraph
counterclaim subject to the prohibition against double recovery of damages.  2, shall apply.
 
In the case the proximate cause of the accident is the lack of diligence of the
Culpa Aquiliana v. Culpa Contractual
company to inform their employees to not put any hindrance in the platform like sacks
Cangco v. Manila Railroad, G.R. 12191, October 14, 1918- Suico of watermelon. The contract of defendant to transport plaintiff carried with it, by
implication, the duty to carry him in safety and to provide safe means of entering and
FACTS: leaving its trains (civil code, article 1258). That duty, being contractual, was direct and
immediate, and its non-performance could not be excused by proof that the fault was
Jose Cangco was in the employment of Manila Railroad Company. He lived in the morally imputable to defendant’s servants. Therefore, the company is liable for
pueblo of San Mateo, in the province of Rizal, which is located upon the line of the damages against Cangco.
defendant railroad company; and in coming daily by train to the company’s office in FGU Insurance v. Sarmiento, G.R. No. 141910, August 6, 2002- Quiñones
the city of Manila where he worked, he used a pass, supplied by the company, which
entitled him to ride upon the company’s trains free of charge. Facts:
         On June 18, 1994 G.P. Sarmiento Trucking Corporation (GPS) undertook to
During his ride in the train he arose from his seat and makes his way to the exit while deliver thirty (30) units of Condura S.D. white refrigerators aboard one of its Isuzu
the train is still on travel. When the train has proceeded a little farther Jose Cangco truck, driven by Lambert Eroles, from the plant site of Concepcion Industries, Inc.,
step down into the cement platform but unfortunately step in to a sack of watermelon, along South Superhighway in Alabang, Metro Manila, to the Central Luzon
fell down and rolled under the platform and was drawn under the moving car which Appliances in Dagupan City.  While the truck was traversing the north diversion road
resulting to his arm to be crashed and lacerated. He was rushed to the hospital and along McArthur highway in Barangay Anupol, Bamban, Tarlac, it collided with an
sued the company and the employee who put the sack of watermelon in the platform. unidentified truck, causing it to fall into a deep canal, resulting in damage to the
cargoes.
The accident occurred between 7 and 8 o’ clock on the dark night. It is that time of the
year that may we considered as season to harvest watermelon explaining why there
FGU Insurance Corporation (FGU), an insurer of the shipment, paid to Concepcion
are sacks of watermelon in the platform. The plaintiff contends that it is the negligence
Industries, Inc., the value of the covered cargoes in the sum of P204,450.00.  FGU, in
of the Manila Railroad Co. on why they let their employees put a hindrance in the
turn, being the subrogee of the rights and interests of Concepcion Industries, Inc.,
platform that may cause serious accident. The defendant answered that it is the lack
sought reimbursement of the amount it had paid to the latter from GPS.  Since the
of diligence on behalf of the plaintiff alone on why he did not wait for the train to stop
trucking company failed to heed the claim, FGU filed a complaint for damages and
before alighting the train.
breach of contract of carriage against GPS and its driver Lambert Eroles with the
ISSUE: Regional Trial Court, Branch 66, of Makati City.  In its answer, respondents asserted
that GPS was the exclusive hauler only of Concepcion Industries, Inc., since 1988,
Whether or not the company is liable or there is a contributory negligence on behalf of and it was not so engaged in business as a common carrier.  Respondents further
the plaintiff. claimed that the cause of damage was purely accidental.
Issue(s): FACTS:

1.    Whether or not GPS may be considered as a common carrier. Private respondent Eliza got injured (fractured and confined in the hospital)
or   Whether or not GPS, either as a common carrier or a private carrier, may be while riding a passenger jeepney owned and operated by petitioner Vicente Calalas
presumed to have been negligent when the goods it undertook to transport after an Isuzu truck driven by Iglecerio Verena and owned by Francisco Salva
safely were subsequently damaged while in its protective custody and bumped the left rear portion of the jeepney.
possession.
Eliza filed a complaint for damages against Calalas, alleging violation of the
Ruling: contract of carriage by the former in failing to exercise the diligence required of him as
a common carrier.
No, GPS, being an exclusive contractor and hauler of Concepcion Industries, Inc.,
rendering or offering its services to no other individual or entity cannot be considered Calalas, on the other hand, filed a third-party complaint against Salva, the
a common carrier.  The law provides that common carriers are persons, corporations, owner of the Isuzu truck.
firms or associations engaged in the business of carrying or transporting passengers
or goods or both, by land, water, or air, for hire or compensation, offering their The lower court rendered judgment against Salva as third-party defendant
services to the public, whether to the public in general or to a limited clientele in and absolved Calalas of liability, holding that it was the driver of the Isuzu truck who
particular, but never on an exclusive basis. The true test of a common carrier is the was responsible for the accident.
carriage of passengers or goods, providing space for those who opt to avail
themselves of its transportation service for a fee. Given accepted standards, GPS The court took cognizance of another case (Civil Case No. 3490), filed by
scarcely falls within the term “common carrier.” Calalas against Salva and Verena, for quasi-delict, and held Salva and his driver
Verena jointly liable to Calalas for the damage to his jeepney.
         This cannot absolve GPS from liability.
On appeal, the CA reversed on the ground that Eliza’s cause of action was
         In culpa contractual, upon which the action of petitioner rests as being the based on a contract of carriage, not quasi-delict. The CA dismissed the third-party
subrogee of Concepcion Industries, Inc., the mere proof of the existence of the complaint against Salva and adjudged Calalas liable for damages to Eliza. 
contract and the failure of its compliance justify,prima facie, a corresponding right of
relief. The law, recognizing the obligatory force of contracts, will not permit a party to Hence, this petition, Calalas contending that the ruling in Civil Case 3490
be set free from liability for any kind of misperformance of the contractual undertaking negates his liability and that the incident was a caso fortuito.
or a contravention of the tenor thereof. A breach upon the contract confers upon the
injured party a valid cause for recovering that which may have been lost or suffered. 
ISSUES:
         Respondent trucking corporation recognizes the existence of a contract of
carriage between it and petitioner’s assured, and admits that the cargoes it has
assumed to deliver have been lost or damaged while in its custody.  In such a a. Whether or not the principle of res judicata applies.
situation, a default on, or failure of compliance with, the obligation – in this case, the b. Whether or not Calalas is liable on his contract of carriage. (WON the
delivery of the goods in its custody to the place of destination - gives rise to a Doctrine of proximate cause applies) 
presumption of lack of care and corresponding liability on the part of the contractual c. Did the driver of jeepney carry Eliza "safely as far as human care and
obligor the burden being on him to establish otherwise.  In the case at bar, GPS has foresight could provide, using the utmost diligence of very cautious persons,
failed to do so. with due regard for all the circumstances" as required by Art. 1755? 
         Respondent driver, on the other hand, without concrete proof of his
negligence or fault, may not himself be ordered to pay the petitioner.  The driver, not ISSUES &RULING:
being a party to the contract of carriage between petitioner’s principal and defendant,
may not be held liable under the agreement.  A contract can only bind the parties who a. Whether or not the principle of res judicata applies.
have entered into it or their successors who have assumed their personality or their
juridical position. Consonantly with the axiom res inter alios acta aliis neque nocet No, the argument that Eliza (passesnger) is bound by the ruling in Civil Case
prodest, such contract can neither favor nor prejudice a third person.  Petitioner’s civil No. 3490 finding the driver and the owner of the truck liable for quasi-delict ignores
action against the driver can only be based on culpa aquiliana, which, unlike culpa the fact that she was never a party to that case, thus res judicata does not apply.
contractual, would require the claimant for damages to prove negligence or fault on Neither the issues in Civil Case No. 3490 and in the present case are the same.
the part of the defendant.
    The issue in Civil Case No. 3490 was quasi-delict whereas in the present
case is culpa contractual or the contract of carriage.
Calalas v. Sunga, G.R. No. 122039, May 31, 2000- Queniahan
 Quasi-delict, also known as culpa aquiliana or culpa extra contractual, event which could not be foreseen, or which, though foreseen, was inevitable. Also,
has as its source the negligence of the tortfeasor.  While breach of contract or there is no legal basis for awarding moral damages since there was no factual finding
culpa contractual, is premised upon the negligence in the performance of a by the appellate court that petitioner acted in bad faith in the performance of the
contractual obligation. contract of carriage.

Consequently, in quasi-delict, the negligence or fault should be clearly AirFrance vs. Rafael Carrascoso, G.R. No. L-21438, September 28, 1966 -
established because it is the basis of the action, whereas in breach of contract, the Peñaroya
action can be prosecuted merely by proving the existence of the contract and the fact FACTS:
that the obligor, in this case the common carrier, failed to transport his passenger Carrascoso was a member of a group of 48 Filipino pilgrims that left Manila
safely to his destination. Thus, there is no basis that Eliza is bound to the ruling in for Lourdes on March 30, 1958. Air France, through its authorized agent, Philippine
Civil Case 3490. Air Lines, issued to Carrascoso a "first class" round trip airplane ticket from Manila to
Rome. From Manila to Bangkok, Carrascoso travelled in "first class", but at Bangkok,
b.  Whether or not Calalas is liable on his contract of carriage. Is the the Manager of Air France forced Carrascoso to vacate the "first class" seat that he
present case a quasi-delict or culpa contractual? (WON the Doctrine of was occupying because, in the words of a witness, there was a "white man", who, the
proximate cause applies) Manager alleged, had a "better right" to the seat. When asked to vacate his "first
class" seat, Carrascoso refused, and told the Manager that his seat would be taken
This is a culpa-contractual case, thus, the doctrine of proximate cause* does over his dead body. A commotion ensued, and, according to the witness,
not apply because 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 "many of the Filipino passengers got nervous in the tourist class; when they
proximate cause is applicable only in actions for quasi-delict, not in actions involving found out that Carrascoso was having a hot discussion with the manager, they came
breach of contract.  to Carrascoso and pacified him to give his seat to the white man." Thus, Carrascoso
reluctantly gave his "first class" seat in the plane.
Where there is a pre-existing contractual relation between the parties, it is The CFI of Manila sentenced Air France to pay Carrascoso P25,000.00 by
the parties themselves who create the obligation, and the function of the law is merely way of moral damages; P10,000.00 as exemplary damages; P393.20 representing
to regulate the relation thus created.In case of death or injuries to passengers, Art. the difference in fare between first class and tourist class for the portion of the trip
1756 of the Civil Code provides that common carriers are presumed to have been Bangkok-Rome.
at fault or to have acted negligently unless they prove that they observed On appeal, the CA slightly reduced the amount of refund on Carrascoso's
extraordinary diligence as defined in Arts. 1733 and 1755 of the Code. This provision plane ticket from P393.20 to P383.10, and affirmed the appealed decision in all other
necessarily shifts to the common carrier the burden of proof.  respects.
Thus, Air France filed the instant petition claiming that Carrascoso's action is
planted upon breach of contract; and to authorize an award for moral damages, there
In the case at bar, upon the happening of the accident, the presumption of
must be an averment of fraud or bad faith. Air France argues that the decision of the
negligence at once arose, and it became the duty of petitioner to prove that he had
CA fails to make a finding of bad faith.
to observe extraordinary diligence in the care of his passengers. 
ISSUES:
*Doctrine of proximate cause- is a device for imputing liability to a person where
1. Whether or not Carrascoso was entitled to the first class seat.
there is no relation between him and another party. In such a case, the obligation is
2. Whether or not Carrascoso is entitled to the award of moral damages.
created by law itself.
3. Whether or not Carrascoso is entitled to exemplary damages.
c. Did the driver of jeepney carry Eliza "safely as far as human care and
RULING:
foresight could provide, using the utmost diligence of very cautious persons,
1. Yes, Carrascoso was entitled to the first class seat.
with due regard for all the circumstances" as required by Art. 1755?  
Except for a slight difference of a few pesos in the amount refunded on
Carrascoso's ticket, the decision of the CFI was affirmed by the CA in all other
NO. Hence, Calalas is liable to the contract of carriage, but not liable for moral respects. Implicit in that affirmance is a determination by the CA that the proceeding
damages. in the CFI was free from prejudicial error and all questions raised by the assignments
of error and all questions that might have been raised are to be regarded as finally
First, as found by the CA, the jeepney was not properly parked, a violation of the R.A. adjudicated against the appellant.
No. 4136 Obstruction of Traffic. Second, the fact that Eliza was seated in an As a rule, a written document speaks a uniform language; spoken word
"extension seat" placed her in a peril greater, a violation of §32(a), “Exceeding could be notoriously unreliable. The lower courts refused to believe the oral evidence
registered capacity”. But it is true of petitioner's contention that the jeepney being intended to defeat the covenants in the ticket.
bumped while it was improperly parked constitutes caso fortuito. A caso fortuito is an
2. Yes, Carrascoso is entitled to the award of moral damages. The manner of ejectment of Carrascoso from his first class seat fits into this
First, there was a contract to furnish Carrascoso a first class passage legal precept. Thus exemplary damages are proper in addition to moral damages.
covering, amongst others, the Bangkok-Tehran leg; Second, the contract was  
breached when Air France failed to furnish first class transportation at Bangkok; and  
Third, there was bad faith when Air France’s employee compelled Carrascoso to Fores v. Miranda, G.R. No. L-12163, March 4, 1959- Merin
leave his first class accommodation berth after he was already, seated and to take a Defendant-petitioner Paz Fores brings this petition for review of the decision of the
seat in the tourist class, by reason of which he suffered inconvenience, Court of Appeals awarding to the plaintiff-respondent Ireneo Miranda the sums of
embarrassments and humiliations, thereby causing him mental anguish, serious P5,000 by way of actual damages and counsel fees, and P10,000 as moral damages,
anxiety, wounded feelings and social humiliation, resulting in moral damages. It is with costs.
true that there is no specific mention of the term bad faith in the complaint. But, the Respondent was one of the passengers on a jeepney driven by Eugenio Luga. The
inference of bad faith is there, it may be drawn from the facts and circumstances set driver lost control  causing it to swerve and to hit the bridge wall. Five of the
forth therein. It is, therefore, unnecessary to inquire as to whether or not there is passengers were injured, including the respondent who suffered a fracture of the
sufficient averment in the complaint to justify an award for moral damages. Deficiency upper right humerus. At the time of the trial, it appears that respondent had not yet
in the complaint, if any, was cured by the evidence. recovered the use of his right arm. The driver was charged with serious physical
Even though the CA, in its decision, did not use the term "bad faith," the injuries through reckless imprudence, and upon interposing a plea of guilty was
recital of facts therein points to bad faith. The manager not only prevented sentenced
Carrascoso from enjoying his right to a first class seat; worse, he imposed his
arbitrary will; he forcibly ejected him from his seat, made him suffer the humiliation of accordingly. Fores contended that the passenger jeep used was allegedly sold  to a
having to go to the tourist class compartment - just to give way to another passenger certain Carmen Sackerman.
whose right thereto has not been established. Certainly, this is bad faith. "Bad faith" The initial problem raised by the petitioner in this appeal may be formulated thus —
contemplates a "state of mind affirmatively operating with furtive design or with some "Is the approval of the Public Service Commission necessary for the sale of a public
motive of self-interest or will or for ulterior purpose." service vehicle even without conveying therewith the authority to operate the same?"
The responsibility of an employer for the tortious act of its employees need Assuming the dubious sale to be a fact, the court of Appeals answered the query in
not be essayed. Article 21 of the Civil Code says: the affirmative. The ruling should be upheld.
ART. 21. Any person who willfully causes loss or injury to another in a manner that is The law was designed primarily for the protection of the public interest; and until the
contrary to morals, good customs or public policy shall compensate the latter for the approval of the public Service Commission is obtained the vehicle is, in contemplation
damage. of law, still under the service of the owner or operator standing in the records of the
Similarly, upon the provisions of Article 2219 of the Civil Code, moral Commission which the public has a right to rely upon.[TJM1] 
damages are recoverable. ISSUE: Whether or not the respondent’s award for moral damages amounting to
Furthermore, a contract to transport passengers is quite different in kind and 10,000 is valid.
degree from any other contractual relation. This is because of the relation which an RULING:
air-carrier sustains with the public. Its business is mainly with the travelling public. The No.
contract of air carriage, Anent the moral damages ordered to be paid to the respondent, the same must be
discarded. We have repeatedly ruled (Cachero vs. Manila Yellow Taxicab Co. Inc.,
therefore, generates a relation attended with a public duty. Neglect or 101 Phil., 523; 54 Off. Gaz., [26], 6599; Necesito, et al vs. Paras, 104 Phil., 75; 56
malfeasance of the carrier's employees, naturally, could give ground for an action for Off. Gaz., [23] 4023, that moral damages are not recoverable in damage actions
damages. predicted on a breach of the contract of transportation, in view of Articles 2219 and
Passengers do not contract merely for transportation. They have a right to 2220 of the new Civil Code, which provide as follows:
be treated by the carrier's employees with kindness, respect, courtesy and due Art. 2219. Moral damages may be recovered in the following and analogous cases:
consideration. They are entitled to be protected against personal misconduct, (1) A criminal offense resulting in physical injuries;
injurious language, indignities and abuses from such employees. So it is, that any rule (2) Quasi-delicts causing physical injuries;
or discourteous conduct on the part of employees towards a passenger gives the xxx    xxx    xxx
latter an action for damages against the carrier. Art. 2220. Willful injury to property may be a legal ground for awarding moral
Although the relation of passenger and carrier is "contractual both in origin damages if the court should find that, under circumstances, such damages are justify
and nature" nevertheless "the act that breaks the contract may be also a tort". due. The same rule applies to breaches of contract where the defendant acted
Air France’s contract with Carrascoso is one attended with public duty. The fraudulently or in bad faith.
stress of Carrascoso's action is placed upon his wrongful expulsion. This is a violation By contrasting the provisions of these two article it immediately becomes apparent
of public duty by the air carrier — a case of quasi-delict. Hence, damages are proper. that:
 3. Yes, exemplary damages are well awarded. (a) In case of breach of contract (including one of transportation) proof of bad faith or
The Civil Code gives the court ample power to grant exemplary damages — fraud (dolus), i.e., wanton or deliberately injurious conduct, is essential to justify an
in contracts and quasi-contracts. The only condition is that Air France should have award of moral damages; and
"acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner."
(b) That a breach of contract can not be considered included in the descriptive term In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible
"analogous cases" used in Art. 2219; not only because Art. 2220 specifically provides for all damages which may be reasonably attributed to the non-performance of the
for the damages that are caused by obligation.
It is to be presumed, in the absence of statutory provision to the contrary, that this
contractual breach, but because the definition of quasi-delict in Art. 2176 of the Code difference was in the mind of the lawmakers when in Art. 2220 they limited recovery
expressly excludes the cases where there is a "preexisting contractual relation of moral damages to breaches of contract in bad faith. It is true that negligence may
between the parties." be occasionally so gross as to amount to malice; but that fact must be shown in
Art. 2176. Whoever by act or omission causes damage to another, there being fault or evidence, and a carrier's bad faith is not to be lightly inferred from a mere finding that
negligence, is obliged to pay for the damage dome. Such fault or negligence, if there the contract was breached through negligence of the carrier's employees.
is no pre-existing contractual relation between the parties, is called a quasi-delict and  
is governed by the provisions of this Chapter.
The exception to the basic rule of damages now under consideration is a mishap  [TJM1]Side note lang ni siya. Not really related sa damages
resulting in the death of a passenger, in which case Article 1764 makes the common  
carrier expressly subject to the rule of Art. 2206, that entitles the deceased passenger  
to "demand moral damages for mental anguish by reason of the death of the PSBA v. CA, G.R. No. 84698, February 4, 1992- Melendres
deceased" (Necesito vs. Paras, 104 Phil., 84, Resolution on motion to reconsider, FACTS:
September 11, 1958). But the exceptional rule of Art. 1764 makes it all the more Private respondents sought to adjudge petitioner PSBA and its officers liable for the
evident that where the injured passenger does not die, moral damages are not death of Carlitos Bautista, a third year commerce student who was stabbed while on
recoverable unless it is proved that the carrier was guilty of malice or bad faith. We the premises of PSBA by elements from outside the school. Private respondents are
think it is clear that the mere carelessness of the carrier's driver does not per se suing under the law on quasi-delicts alleging the school and its officers’ negligence,
constitute of justify an inference of malice or bad faith on the part of the carrier; and in recklessness and lack of safety precautions before, during, and after the attack on the
the case at bar there is no other evidence of such malice to support the award of victim. Petitioners moved to dismiss the suit but were denied by the trial court. CA
moral damages by the Court of Appeals. To award moral damages for breach of affirmed.
contract, therefore, without proof of bad faith or malice on the part of the defendant, ISSUE:
as required by Art. 220, would be to violate the clear provisions of the law, and Whether or not PSBA may be held liable under quasi-delicts.
constitute unwarranted judicial legislation. RULING:
It is also suggested that a carrier's violation of its engagement to safety transport the NO. Because the circumstances of the present case evince a contractual relation
passenger involves a breach of the passenger's confidence, and therefore should be between the PSBA and Carlitos Bautista, the rules on quasi-delict do not really
regarded as a breach of contract in bad faith, justifying recovery of moral damages govern. A perusal of Article 2176 shows that obligations arising from quasi-delicts or
under Art. 2220. This theory is untenable, for under it the carrier would always be tort, also known as extra-contractual obligations, arise only between parties not
deemed in bad faith, in every case its obligation to the passenger is infringed, and it otherwise bound by contract, whether express or implied.
would be never accountable for simple negligence; while under the law (Art. 1756). When an academic institution accepts students for enrollment, there is established a
the presumption is that common carriers acted negligently (and not maliciously), and contract between them, resulting in bilateral obligations which both parties are bound
Art. 1762 speaks of negligence of the common carrier. to comply with. For its part, the school undertakes to provide the student with an
ART. 1756. In case of death of or injuries to passengers, common carriers are education that would presumably suffice to equip
presumed to have been at fault or to have acted negligently, unless they prove that
they observed extraordinary diligence as prescribed in article 1733 and 1755. him with the necessary tools and skills to pursue higher education or a profession. On
ART. 1762. The contributory negligence of the passenger does not bar recovery of the other hand, the student covenants to abide by the school’s academic
damages for his death or injuries, if the proximate cause thereof is the negligence of requirements and observe its rules and regulations. Necessarily, the school must
the common carrier, but the amount of damages shall be equitably reduced. ensure that adequate steps are taken to maintain peace and order within the campus
The distinction between fraud, bad faith or malice in the sense of deliberate or wanton premises and to prevent the breakdown thereof.
wrong doing and negligence (as mere carelessness) is too fundamental in our law to In the circumstances obtaining in the case at bar, however, there is, as yet, no finding
be ignored (Arts. 1170-1172); their consequences being clearly differentiated by the that the contract between the school and Bautista had been breached thru the
Code. former’s negligence in providing proper security measures. This would be for the trial
ART. 2201. In contracts and quasi-contracts, the damages for which the obligor who court to determine. And, even if there be a finding of negligence, the same could give
acted in good faith is liable shall be those that are the natural and probable rise generally to a breach of contractual obligation only. 
consequences of the breach of the
Syquia v. Court of Appeals, G.R. No. 98695, January 27, 1993- Gitgano
obligation, and which the parties have foreseen or could have reasonably foreseen at
the time the obligation was constituted. FACTS:
1. Petitioners were the parents and siblings, respectively, of the deceased Vicente Those who in the performance of their obligations are guilty of fraud, negligence, or
Juan Syquia. On March 5, 1979, they filed a complaint in the then Court of First delay, and those who in any manner contravene the tenor thereof, are liable for
Instance against herein private respondent, Manila Memorial Park Cemetery, Inc. for damages.
recovery of damages arising from breach of contract and/or quasi-delict.
There was no stipulation in the Deed of Sale and Certificate of Perpetual Care and in
2. According to the complaint, the petitioners and respondent to inter the remains of the Rules and Regulations of the Manila Memorial Park Cemetery, Inc. that the vault
deceased in the Manila Memorial Park Cemetery in the morning of July 25, 1978. would be waterproof.
They also alleged that the concrete vault encasing the coffin of the deceased had a
hole approximately three (3) inches in diameter. Upon opening the vault, it became The law defines negligence as the "omission of that diligence which is required by the
apparent that there was evidence of total flooding, the coffin was entirely damaged nature of the obligation and corresponds with the circumstances of the persons, of the
and the exposed parts of the deceased’s remains were damaged. time and of the place." In the absence of stipulation or legal provision providing the
contrary, the diligence to be observed in the performance of the obligation is that
3. The complaint prayed that judgment be rendered ordering defendant-appellee to which is expected of a good father of a family.
pay plaintiffs-appellants P30,000.00 for actual damages, P500,000.00 for moral
damages, etc. Private respondent has exercised the diligence of a good father of a family in
preventing the accumulation of water inside the vault which would have resulted in
DECISION OF LOWER COURTS: the caving in of earth around the grave filling the same with earth.
Light Rail Transit v. Navidad, G.R. No. 145804, February 6, 2003- Dela Paz
1. Trial Court: dismissed the complaint. the contract between the parties did not FACTS:
guarantee that the cement vault would be waterproof; that there could be no quasi- A drunk Nicanor Navidad (Nicanor) entered the EDSA LRT station after purchasing a
delict because the defendant was not guilty of any fault or negligence, and because “token” which serves as fare for LRT transit. While Nicanor was standing at the
there was a pre- existing contractual relation. 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
Contention of the defense: "The hole had to be bored through the concrete vault instantaneously upon being hit by a moving train operated by Rodolfo Roman.
because if it has no hole the vault will (sic) float and the grave would be filled with  
water and the digging would caved (sic) in the earth, the earth would caved (sic) in The widow of Nicanor, along with her children, filed a complaint for damages against
the (sic) fill up the grave." 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
2. Court of Appeals: affirmed dismissal. Nicanor and a cross-claim against Escartin and Prudent.
 
ISSUE: whether the Manila Memorial Park Cemetery, Inc., breached its contract with
Prudent denied liability averred that it had exercised due diligence in the selection
petitioners; or, alternatively, whether private respondent was guilty of a tort.
and surpervision of its security guards.
RULING:  
The petitioners contend that Escartin’s assault upon Navidad, which caused the latter
NO, there was no negligent act on the part of the cemetery. to fall on the tracks, was an act of a stranger that could not have been foreseen or
prevented. The LRTA would add that the appellate court’s conclusion on the
Although a pre-existing contractual relation between the parties does not preclude the existence of an employer-employee relationship between Roman and LRTA lacked
existence of a culpa aquiliana, We find no reason to disregard the respondent's Court basis because Roman himself had testified being an employee of Metro Transit and
finding that there was no negligence. not of the LRTA.
 
Art. 2176. Whoever by act or omission causes damage to another, there being fault or On the other hand, Respondent Navidad and Prudent countered that a contract of
negligence, is obliged to pay for the damage done. Such fault or negligence, if there carriage was deemed created from the moment Navidad paid the fare at the LRT
is no pre-existing contractual relation between the parties, is called a quasi- delict station and entered the premises of the latter, entitling Navidad to all the rights and
protection under a contractual relation. 
Syquias and the Manila Memorial Park Cemetery, Inc., entered into a contract entitled Roman and LRTA lacked basis because Roman himself had testified being an
"Deed of Sale and Certificate of Perpetual Care" on August 27, 1969. That agreement employee of Metro Transit and not of the LRTA.
governed the relations of the parties and defined their respective rights and  
obligations. Hence, had there been actual negligence on the part of the Manila On the other hand, Respondent Navidad and Prudent countered that a contract of
Memorial Park Cemetery, Inc., it would be held liable not for a quasi-delict or culpa carriage was deemed created from the moment Navidad paid the fare at the LRT
aquiliana, but for culpa contractual as provided by Article 1170 of the Civil Code, to station and entered the premises of the latter, entitling Navidad to all the rights and
wit: protection under a contractual relation. 
 
ISSUE: WON CA erred in holding that LRTA and Roman are jointly and severally  
liable for the death of Nicanor Navidad and exonerating Prudent Agency from There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of
liability. any culpable act or omission, he must also be absolved from liability. Needless to say,
  the contractual tie between the LRT and Navidad is not itself a juridical relation
RULING: between the latter and Roman; thus, Roman can be made liable only for his own fault
  or negligence.
No, the Court did not err in holding LRTA liable.  
The law requires common carriers to carry passengers safely using the utmost Orient Freight International, inc. v. Keihin-Everett Forwarding, G.R. No. 191937,
diligence of very cautious persons with due regard for all circumstances. Such duty of August 9, 2017- Ilandag
a common carrier to provide safety to its passengers so obligates it not only during LEONEN, J.:
the course of the trip but for so long as the passengers are within its premises and
where they ought to be in pursuance to the contract of carriage. The statutory Article 2176 of the Civil Code does not apply when the party's negligence occurs in
provisions render a common carrier liable for death of or injury to passengers the performance of an obligation. The negligent act would give rise to a quasi-delict
(a) through the negligence or wilful acts of its employees or only when it may be the basis for an independent action were the parties not
(b) on account of willful acts or negligence of other passengers or of strangers if the otherwise bound by a contract.
common carrier's employees through the exercise of due diligence could have This resolves a Petition for Review[1] on Certiorari under Rule 45 of the Rules of
prevented or stopped the act or omission Court, assailing the January 21, 2010 Decision[2] and April 21, 2010 Resolution[3] of
  the Court of Appeals, which affirmed the Regional Trial Court February 27, 2008
The foundation of LRTA's liability is the contract of carriage and its obligation to Decision.[4] The Regional Trial Court found that petitioner Orient Freight International,
indemnify the victim arises from the breach of that contract by reason of its failure to Inc.'s (Orient Freight) negligence caused the cancellation of Keihin-Everett
exercise the high diligence required of the common carrier. In the discharge of its Forwarding Company, Inc.'s (Keihin-Everett) contract with Matsushita Communication
commitment to ensure the safety of passengers, a carrier may choose to hire its own Industrial Corporation of the Philippines (Matsushita).[5]
employees or avail itself of the services of an outsider or an independent firm to
On October 16, 2001, Keihin-Everett entered into a Trucking Service Agreement with
undertake the task. In either case, the common carrier is not relieved of its
Matsushita. Under the Trucking Service Agreement, Keihin-Everett would provide
responsibilities under the contract of carriage.
services for Matsushita's trucking requirements. These services were subcontracted
 
by Keihin-Everett to Orient Freight, through their own Trucking Service Agreement
As to the liability of Prudent Agency, NO, Prudent Agency is not liable.
executed on the same day.[6]
 
Employer's liability is premised upon the negligence or fault on the part of the When the Trucking Service Agreement between Keihin-Everett and Matsushita
employee. Once such fault is established, the employer can then be made liable on expired on December 31, 2001, Keihin-Everett executed an In-House Brokerage
the basis of the presumption juris tantum Service Agreement for Matsushita's Philippine Economic Zone Authority export
that the employer failed to exercise diligentissimi patris familias in the selection and operations. Keihin-Everett continued to retain the services of Orient Freight, which
supervision of its employees. sub-contracted its work to Schmitz Transport and Brokerage Corporation.[7]
 
The liability is primary and can only be negated by showing due diligence in the In April 2002, Matsushita called Keihin-Everett's Sales Manager, Salud Rizada, about
selection and supervision of the employee, a factual matter that has not been shown. a column in the April 19, 2002 issue of the tabloid newspaper Tempo. This news
Absent such a showing, one might ask further, how then must the liability of the narrated the April 17, 2002 interception by Caloocan City police of a stolen truck filled
common carrier, on the one hand, and an independent contractor, on the other hand, with shipment of video monitors and CCTV systems owned by Matsushita.[8]
be described? It would be solidary.
  When contacted by Keihin-Everett about this news, Orient Freight stated that the
A contractual obligation can be breached by tort and when the same act or omission tabloid report had blown the incident out of proportion. They claimed that the incident
causes the injury, one resulting in culpa contractual and the other in culpa Aquiliana.  simply involved the breakdown and towing of the truck, which was driven by Ricky
In fine, a liability for tort may arise even under a contract, where tort is that which Cudas (Cudas), with truck helper, Rubelito Aquino[9] (Aquino). The truck was promptly
breaches the contract. Stated differently, when an act which constitutes a breach of released and did not miss the closing time of the vessel intended for the shipment.[10]
contract would have itself constituted the source of a quasi-delictual liability had no
contract existed between the parties, the contract can be said to have been breached Keihin-Everett directed Orient Freight to investigate the matter. During its April 20,
by tort, thereby allowing the rules on tort to apply. 2002 meeting with Keihin-Everett and Matsushita, as well as in its April 22, 2002 letter
  addressed to Matsushita, Orient Freight reiterated that the truck merely broke down
Regrettably for LRT, as well as perhaps the surviving spouse and heirs of the late and had to be towed.[11]
Nicanor Navidad, this Court is concluded by the factual finding of the Court of Appeals
that there is nothing to link (Prudent) to the death of Nicanor (Navidad), for the reason
that the negligence of its employee, Escartin, has not been duly proven .
However, when the shipment arrived in Yokohama, Japan on May 8, 2002, it was contract.[22] The trial court ordered Orient Freight "to pay [Keihin-Everett] the amount
discovered that 10 pallets of the shipment's 218 cartons, worth US$34,226.14, were of [P] 1,666,667.00 as actual damages representing net profit loss incurred" and
missing.[12] P50,000.00 in attorney's fees.[23] However, it denied respondent's prayer for
exemplary damages, finding that petitioner did not act with gross negligence.[24]
Keihin-Everett independently investigated the incident. During its investigation, it
obtained a police report from the Caloocan City Police Station. The report stated, Orient Freight appealed the Regional Trial Court Decision to the Court of Appeals. On
among others, that at around 2:00 p.m. on April 17, 2002, somewhere in Plaza Dilao, January 21, 2010, the Court of Appeals issued its Decision[25] affirming the trial court's
Paco Street, Manila, Cudas told Aquino to report engine trouble to Orient Freight. decision. It ruled that Orient Freight "not only had knowledge of the foiled hijacking of
After Aquino made the phone call, he informed Orient Freight that the truck had gone the truck carrying the . . . shipment but, more importantly, withheld [this] information
missing. When the truck was intercepted by the police along C3 Road near the corner from [Keihin-Everett]."[26]
of Dagat-Dagatan Avenue in Caloocan City, Cudas escaped and became the subject
of a manhunt.[13] The Court of Appeals ruled that the oral and documentary evidence has established
both the damage suffered by Keihin-Everett and Orient Freight's fault or negligence.
When confronted with Keihin-Everett's findings, Orient Freight wrote back on May 15, Orient Freight was negligent in not reporting and not thoroughly investigating the April
2002 to admit that its previous report was erroneous and that pilferage was 17, 2002 incident despite Keihin-Everett's instruction to do so.[27] It further ruled that
apparently proven.[14] while Keihin-Everett sought to establish its claim for lost income of P2,500,000.00 by
submitting its January 2002 to June 2002 net income statement,[28] this was refuted by
In its June 6, 2002 letter, Matsushita terminated its In-House Brokerage Service Orient Freight by presenting Keihin-Everett's own audited financial statements. The
Agreement with Keihin-Everett, effective July 1, 2002. Matsushita cited loss of Court of Appeals held that the trial court correctly arrived at the amount of
confidence for terminating the contract, stating that Keihin-Everett's way of handling P1,666,667.00 as the award of lost income.[29]
the April 17, 2002 incident and its nondisclosure of this incident's relevant facts
"amounted to fraud and signified an utter disregard of the rule of law."[15] The Court of Appeals denied Orient Freight's Motion for Reconsideration in its April
21, 2010 Resolution.[30]
Keihin-Everett, by counsel, sent a letter dated September 16, 2002 to Orient Freight,
demanding P2,500,000.00 as indemnity for lost income. It argued that Orient Freight's On June 9, 2010, Orient Freight filed this Petition for Review on Certiorari under Rule
mishandling of the situation caused the termination of Keihin-Everett's contract with 45 with this Court, arguing that the Court of Appeals incorrectly found it negligent
Matsushita.[16] under Article 2176 of the Civil Code.[31] As there was a subsisting Trucking Service
Agreement between Orient Freight itself and Keihin-Everett, petitioner avers that
When Orient Freight refused to pay, Keihin-Everett filed a complaint dated October there was a pre-existing contractual relation between them, which would preclude the
24, 2002 for damages with Branch 10, Regional Trial Court, Manila. The case was application of the laws on quasi-delicts.[32]
docketed as Civil Case No. 02-105018.[17] In its complaint, Keihin-Everett alleged that
Orient Freight's "misrepresentation, malice, negligence and fraud" caused the Applying the test in Far East Bank and Trust Company v. Court of Appeals,
[33]
termination of its In-House Brokerage Service Agreement with Matsushita. Keihin-  petitioner claims that its failure to inform respondent Keihin-Everett about the
Everett prayed for compensation for lost income, with legal interest, exemplary hijacking incident could not give rise to a quasi-delict since the Trucking Service
damages, attorney's fees, litigation expenses, and the costs of the suit.[18] Agreement between the parties did not include this obligation. It argues that there
being no obligation under the Trucking Service Agreement to inform Keihin-Everett of
In its December 20, 2002 Answer, Orient Freight claimed, among others, that its initial the hijacking incident, its report to Keihin-Everett was done in good faith and did not
ruling of pilferage was in good faith as manifested by the information from its constitute negligence. Its representations regarding the hijacking incident were a
employees and the good condition and the timely shipment of the cargo. It also sound business judgment and not a negligent act.[34] Finally, it claims that the Court of
alleged that the contractual termination was a prerogative of Matsushita. Further, by Appeals incorrectly upheld the award of damages, as the trial court had based its
its own Audited Financial Statements on file with the Securities and Exchange computation on, among others, Keihin-Everett's profit and loss statement.[35]
Commission, Keihin-Everett derived income substantially less than what it sued for.
Along with the dismissal of the complaint, Orient Freight also asserted counterclaims On August 2, 2010, Keihin-Everett filed its Comment,[36] arguing that the petition does
for compensatory and exemplary damages, attorney's fees, litigation expenses, and not contain the names of the parties in violation of Rule 45, Section 4 of the Rules of
the costs of the suit.[19] Court. It contends that the issues and the arguments raised in this petition are the
same issues it raised in the Regional Trial Court and the Court of Appeals.[37] It claims
The Regional Trial Court rendered its February 27, 2008 Decision,[20] in favor of that the findings of fact and law of the Court of Appeals are in accord with this Court's
Keihin-Everett. It found that Orient Freight was "negligent in failing to investigate decisions.[38]
properly the incident and make a factual report to Keihin[-Everett] and Matsushita,"
despite having enough time to properly investigate the incident.[21] On October 7, 2010, Orient Freight filed its Reply.[39] It notes that a cursory reading of
the petition would readily show the parties to the case. It claims that what is being
The trial court also ruled that Orient Freight's failure to exercise due diligence in contested and appealed is the application of the law on negligence by lower courts
disclosing the true facts of the incident to Keihin-Everett and Matsushita caused and, while the findings of fact by the lower courts are entitled to great weight, the
Keihin-Everett to suffer income losses due to Matsushita's cancellation of their
exceptions granted by jurisprudence apply to this case. It reiterates that the pre- Negligence in culpa contractual, on the other hand, is "the fault or negligence incident
existing contractual relation between the parties should bar the application of the in the performance of an obligation which already-existed, and which increases the
principles of quasi-delict. Because of this, the terms and conditions of the contract liability from such already existing obligation."[48] This is governed by Articles 1170 to
between the parties must be applied. It also claimed that the Regional Trial Court's 1174 of the Civil Code:[49]
computation of the award included figures from respondent's Profit and Loss
Statement, which the trial court had allegedly rejected. It rendered the computation Article 1170. Those who in the performance of their obligations are guilty of fraud,
unreliable.[40] negligence, or delay, and those who in any manner contravene the tenor thereof, are
liable for damages.
This Court issued a Resolution[41] dated February 16, 2011, requiring petitioner to
submit a certified true copy of the Regional Trial Court February 27, 2008 Decision. Article 1171. Responsibility arising from fraud is demandable in all obligations. Any
waiver of an action for future fraud is void.
On March 31, 2011, petitioner filed its Compliance,[42] submitting a certified true copy
of the Regional Trial Court Decision. Article 1172. Responsibility arising from negligence in the performance of every kind
of obligation is also demandable, but such liability may be regulated by the courts,
The issues for this Court's resolution are: according to the circumstances.

First, whether the failure to state the names of the parties in this Petition for Review, Article 1173. The fault or negligence of the obligor consists in the omission of that
in accordance with Rule 45, Section 4 of the Rules of Court, is a fatal defect; diligence which is required by the nature of the obligation and corresponds with the
circumstances of the persons, of the time and of the place. When negligence shows
Second, whether the Court of Appeals, considering the existing contracts in this case, bad faith, the provisions of articles 1171 and 2201, paragraph 2, shall apply.
erred in applying Article 2176 of the Civil Code;
If the law or contract does not state the diligence which is to be observed in the
Third, whether Orient Freight, Inc. was negligent for failing to disclose the facts performance, that which is expected of a good father of a family shall be required.
surrounding the hijacking incident on April 17, 2002, which led to the termination of
the Trucking Service Agreement between Keihin-Everett Forwarding Co., Inc. and Article 1174. Except in cases expressly specified by the law, or when it is otherwise
Matsushita Communication Industrial Corporation of the Philippines; and declared by stipulation, or when the nature of the obligation requires the assumption
of risk, no person shall be responsible for those events which could not be foreseen,
Finally, whether the trial court erred in the computation of the awarded actual and or which, though foreseen, were inevitable.
pecuniary loss by basing it on, among others, the Profit and Loss Statement
submitted by Keihin-Everett Forwarding Co., Inc. Actions based on contractual negligence and actions based on quasi-delicts differ in
terms of conditions, defenses, and proof. They generally cannot co-exist.[50] Once a
The petition is denied. breach of contract is proved, the defendant is presumed negligent and must prove not
being at fault. In a quasi-delict, however, the complaining party has the burden of
I
proving the other party's negligence.[51] In Huang v. Phil. Hoteliers, Inc.:[52]
The petition does not violate Rule 45, Section 4 of the Rules of Court[43] for failing to
[T]his Court finds it significant to take note of the following differences between quasi-
state the names of the parties in the body. The names of the parties are readily
delict (culpa aquilina) and breach of contract (culpa contractual). In  quasi-delict,
discernable from the caption of the petition, clearly showing the appealing party as
negligence is direct, substantive and independent, while in breach of contract,
the petitioner and the adverse party as the respondent. The Court of Appeals had
negligence is merely incidental to the performance of the contractual obligation; there
also been erroneously impleaded in the petition. However, this Court in Aguilar v.
is a pre-existing contract or obligation, In quasi-delict, the defense of "good father of a
Court of Appeals, et al.[44] ruled that inappropriately impleading the lower court as
family" is a complete and proper defense insofar as parents, guardians and
respondent does not automatically mean the dismissal of the appeal. This is a mere
employers are concerned, while in breach of contract, such is not a complete and
formal defect.[45]
proper defense in the selection and supervision of employees. In  quasi-delict, there is
II no presumption of negligence and it is incumbent upon the injured party to prove the
negligence of the defendant, otherwise, the former's complaint will be
Negligence may either result in culpa aquiliana or culpa contractual.[46] Culpa dismissed, while in breach of contract, negligence is presumed so long as it can be
aquiliana is the "the wrongful or negligent act or omission which creates a vinculum proved that there was breach of the contract and the burden is on the defendant to
juris and gives rise to an obligation between two persons not formally bound by any prove that there was no negligence in the carrying out of the terms of the contract; the
other obligation,"[47] and is governed by Article 2176 of the Civil Code: rule of respondeat superior  is followed.[53] (Emphasis in the original, citations omitted)

Article 2176. Whoever by act or omission causes damage to another, there being In  Government Service Insurance System v. Spouses Labung-Deang,[54] since the
fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if petitioner's obligation arose from a contract, this Court applied the Civil Code
there is no pre-existing contractual relation between the parties, is called a quasi- provisions on contracts, instead of those of Article 2176:
delict and is governed by the provisions of this Chapter.
The trial court and the Court of Appeals treated the obligation of GSIS as one However, there are instances when Article 2176 may apply even when there is a pre-
springing from quasi-delict. We do not agree. Article 2176 of the Civil Code existing contractual relation. A party may still commit a tort or quasi-delict against
defines quasi-delict as follows: another, despite the existence of a contract between them.[58]

"Whoever by act or omission causes damages to another, there being fault or In Cangco v. Manila Railroad,[59] this Court explained why a party may be held liable
negligence, is obliged to pay for the damage done. Such fault or negligence, if there for either a breach of contract or an extra-contractual obligation for a negligent act:
is no pre-existing contractual relation between the parties, is called a quasi-delict and
is governed by the provisions of this Chapter (italics ours)." It is evident, therefore, that in its decision in the Yamada case, the court treated
plaintiff's action as though founded in tort rather than as based upon the breach of the
Under the facts, there was a pre-existing contract between the parties. GSIS and the contract of carriage, and an examination of the pleadings and of the briefs shows that
spouses Deang had a loan agreement secured by a real estate mortgage. The duty to the questions of law were in fact discussed upon this theory. Viewed from the
return the owner's duplicate copy of title arose as soon as the mortgage was standpoint of the defendant the practical result must have been the same in any
released. GSIS insists that it was under no obligation to return the owner's duplicate event. The proof disclosed beyond doubt that the defendant's servant was grossly
copy of the title immediately. This insistence is not warranted. Negligence is obvious negligent and that his negligence was the proximate cause of plaintiff's injury. It also
as the owners' duplicate copy could not be returned to the owners. Thus, the more affirmatively appeared that defendant had been guilty of negligence in its failure to
applicable provisions of the Civil Code are: exercise proper discretion in the direction of the servant. Defendant was, therefore,
liable for the injury suffered by plaintiff, whether the breach of the duty were to be
"Article 1170. Those who in the performance of their obligations are guilty of fraud, regarded as constituting culpa aquilina or culpa contractual. As Manresa points out . .
negligence, or delay and those who in any manner contravene the tenor thereof are . whether negligence occurs as an incident in the course of the performance of a
liable for damages." contractual undertaking or is itself (he source of an extra-contractual obligation, its
essential characteristics are identical. There is always an act or omission productive
"Article 2201. In contracts and quasi-contracts, the damages for which the obligor
of damage due to carelessness or inattention on the part of the
who acted in good faith is liable shall be those that are the natural and probable
defendant. Consequently, when the court holds that a defendant is liable in damages
consequences of the breach of the obligation, and which the parties have foreseen or
for having failed to exercise due care, either directly, or in failing to exercise proper
could have reasonably foreseen at the time the obligation was constituted . .."
care in the selection and direction of his servants, the practical result is identical in
Since good faith is presumed and bad faith is a matter of fact which should be proved, either case . . ,
we shall treat GSIS as a party who defaulted in its obligation to return the owners'
The true explanation of such cases is to be found by directing the attention to the
duplicate copy of the title. As an obligor in good faith, GSIS is liable for all the "natural
relative spheres of contractual and extra-contractual obligations. The field of non-
and probable consequences of the breach of the obligation." The inability of the
contractual obligation is much more broader [sic] than that of contractual obligation,
spouses Deang to secure another loan and the damages they suffered thereby has
comprising, as it does, the whole extent of juridical human relations. These two fields,
its roots in the failure of the GSIS to return the owners' duplicate copy of the title.
[55] figuratively speaking, concentric; that is to say, the mere fact that a person is bound
 (Citations omitted)
to another by contract does not relieve him from extra-contractual liability to such
Similarly, in Syquia v. Court of Appeals,[56] this Court ruled that private respondent person. When such a contractual relation exists the obligor may break the contract
would have been held liable for a breach of its contract with the petitioners, and not under such conditions that the same act which constitutes a breach of the contract
for quasi-delict, had it been found negligent: would have constituted the source of an extra-contractual obligation had no contract
existed between the parties.[60] (Emphasis supplied, citation omitted)
With respect to herein petitioners' averment that private respondent has
committed culpa aquiliana, the Court of Appeals found no negligent act on the part of If a contracting party's act that breaches the contract would have given rise to an
private respondent to justify an award of damages against it. Although a pre-existing extra-contractual liability had there been no contract, the contract would be deemed
contractual relation between the parties does not preclude the existence of a culpa breached by a tort,[61] and the party may be held liable under Article 2176 and its
aquiliana, We find no reason to disregard the respondent's Court finding that there related provisions.[62]
was no negligence.
In  Singson v. Bank of the Philippine Islands,[63] this Court upheld the petitioners' claim
.... for damages based on a quasi-delict, despite the parties' relationship being
contractual in nature:
In this case, it has been established that the Syquias and the Manila Memorial Park
Cemetery, Inc., entered into a contract entitled "Deed of Sale and Certificate of After appropriate proceedings, the Court of First Instance of Manila rendered
Perpetual Care" on August 27, 1969. That agreement governed the relations of the judgment dismissing the complaint upon the ground that plaintiffs cannot recover from
parties and defined their respective rights and obligations. Hence, had there been the defendants upon the basis of a quasi-delict, because the relation between the
actual negligence on the part of the Manila Memorial Park Cemetery, Inc., it would be parties is contractual in nature; because this case does not fall under Article 2219 of
held liable not for a  quasi-delict or  culpa aquiliana, but for culpa contractual as our Civil Code, upon which plaintiffs rely; and because plaintiffs have not established
provided by Article 1170 of the Civil Code[.][57] the amount of damages allegedly sustained by them.
The lower court held that plaintiffs' claim for damages cannot be based upon a tort or "Any person who wilfully causes loss or injury to another in a manner  that is contrary
quasi-delict, their relation with the defendants being contractual in nature. We have to morals, good customs or public policy shall compensate the latter for the damage."
repeatedly held, however, that the existence of a contract between the parties does (Italics supplied)
not bar the commission of a tort by the one against the order and the consequent
recovery of damages therefor. Indeed, this view has been in effect, reiterated in a Air France penalized the racist policy of the airline which emboldened the petitioner's
comparatively recent case. Thus, in Air France vs. Carrascoso, involving an airplane employee to forcibly oust the private respondent to cater to the comfort of a white
passenger who, despite his first-class ticket, had been illegally ousted from his first- man who allegedly "had a better right to the seat." In Austro-American, supra, the
class accommodation, and compelled to take a seat in the tourist compartment, was public embarrassment caused to the passenger was the justification for the Circuit
held entitled to recover damages from the air-carrier, upon the ground of tort on the Court of Appeals, (Second Circuit), to award damages to the latter. From the
latter's part, for, although the relation between a passenger and the carrier is foregoing, it can be concluded that should the act which breaches a contract be done
"contractual both in origin and nature . . . the act that breaks the contract may also be in bad faith and be violative of Article 21, then there is a cause to view the act as
a tort".[64] (Citations omitted) constituting a quasi-delict.

However, if the act complained of would not give rise to a cause of action for a quasi- In the circumstances obtaining in the case at bar, however, there is, as yet, no finding
delict independent of the contract, then the provisions on quasi-delict or tort would be that the contract between the school and Bautista had been breached thru the
inapplicable.[65] former's negligence in providing proper security measures. This would be for the trial
court to determine. And, even if there be a finding of negligence, the same could give
In Philippine School of Business Administration v. Court of Appeals,[66] petitioner's rise generally to a breach of contractual obligation only. Using the test of Cangco,
obligation to maintain peace and order on campus was based on a contract with its supra, the negligence of the school would not be relevant absent a contract. In fact,
students. Without this contract, the obligation does not exist. Therefore, the private that negligence becomes material only because of the contractual relation between
respondents' cause of action must be founded on the breach of contract and cannot PSBA and Bautista. In other words, a contractual relation is a condition sine qua
be based on Article 2176: non to the school's liability. The negligence of the school cannot exist independently
on the contract, unless the negligence occurs under the circumstances set out in
Because the circumstances of the present case evince a contractual relation between Article 21 of the Civil Code.[67] (Citations omitted)
the PSBA and Carlitos Bautista, the rules on quasi-delict do not really govern. A
perusal of Article 2176 shows that obligations arising from quasi-delicts or tort, also In situations where the contractual relation is indispensable to hold a party liable,
known as extra-contractual obligations, arise only between parties not otherwise there must be a finding that the act or omission complained of was done in bad faith
bound by contract, whether express or implied. However, this impression has not and in violation of Article 21 of the Civil Code to give rise to an action based on tort.[68]
prevented this Court from determining the existence of a tort even when there obtains
a contract. In Air France vs. Carroscoso (124 Phil. 722), the private respondent was In Far East Bank and Trust Company v. Court of Appeals,[69] as the party's claim for
awarded damages for his unwarranted expulsion from a first-class seat aboard the damages was based on a contractual relationship, the provisions on quasi-delict
petitioner airline. It is noted, however, that the Court referred to the petitioner-airline's generally did not apply. In this case, this Court did not award moral damages to the
liability as one arising from tort, not one arising from a contract of carriage. In private respondent because the applicable Civil Code provision was Article 2220,
[70]
effect, Air France is authority for the view that liability from tort may exist even if there  not Article 21, and neither fraud nor bad faith was proved:
is a contract, for the act that breaks the contract may be also a tort. (Austro-America
We are not unaware of the previous rulings of this Court, such as in American
S.S. Co. vs. Thomas, 248 Fed. 231).
Express International, Inc. vs. Intermediate Appellate Court  (167 SCRA 209)
This view was not all that revolutionary, for even as early as 1918, this Court was and Bank of [the] Philippine Islands vs. Intermediate Appellate Court (206 SCRA
already of a similar mind. In Cangco vs. Manila Railroad (38 Phil. 780), Mr. Justice 408), sanctioning the application of Article 21, in relation to Article 2217 and Article
Fisher elucidated thus: 2219 of the Civil Code to a contractual breach similar to the case at bench. Article 21
states:
"The field of non-contractual obligation is much more broader [sic] than that of
contractual obligation, comprising, as it does, the whole extent of juridical human "Art. 21. Any person who willfully causes loss or injury to another in a manner that is
relations. These two fields, figuratively speaking, concentric; that is to say, the mere contrary to morals, good customs or public policy shall compensate the latter for the
fact that a person is bound to another by contract does not relieve him from extra- damage."
contractual liability to such person. When such a contractual relation exists the obligor
Article 21 of the Code, it should be observed, contemplates a conscious act to cause
may break the contract under such conditions that the same act which constitutes a
harm. Thus, even if we are to assume that the provision could properly relate to a
breach of the contract would have constituted the source of an extra-contractual
breach of contract, its application can be warranted only when the defendant's
obligation had no contract existed between the parties."
disregard of his contractual obligation is so deliberate as to approximate a degree of
Immediately what comes to mind is the chapter of the Civil Code on Human misconduct certainly no less worse [sic] than fraud or bad faith. Most importantly,
Relations, particularly Article 21, which provides: Article 21 is a mere declaration of a general principle in human relations that clearly
must, in any case, give way to the specific provision of Article 2220 of the Civil Code
authorizing the grant of moral damages in culpa contractual solely when the breach is and report on the veracity of the news report. Pursuant to respondent's request,
due to fraud or bad faith. petitioner met with respondent and Matsushita on April 20, 2002 and issued a letter
dated April 22, 2002, addressed to Matsushita.[74] Respondent's claim was based on
.... petitioner's negligent conduct when it was required to investigate and report on the
incident:
The Court has not in the process overlooked another rule that a quasi-delict can be
the cause for breaching a contract that might thereby permit the application of The defendant claimed that it should not be held liable for damages suffered by the
applicable principles on tort even where there is a pre-existing contract between the plaintiff considering that the proximate cause of the damage done to plaintiff is the
plaintiff and the defendant (Phil. Airlines vs. Court of Appeals, 106 SCRA negligence by employees of Schmitz trucking. This argument is untenable because
143; Singson vs. Bank of the Phil. Islands, 23 SCRA 1117; and Air France vs. the defendant is being sued in this case not for the negligence of the employees of
Carrascoso, 18 SCRA 155). This doctrine, unfortunately, cannot improve private Schmitz trucking but based on defendant's own negligence in failing to disclose the
respondents' case for it can aptly govern only where the act or omission complained true facts of the hijacking incident to plaintiff Keihin and Matsushita.[75]
of would constitute an actionable tort independently of the contract. The test (whether
a quasi-delict can be deemed to underlie the breach of a contract) can be stated Both the Regional Trial Court and Court of Appeals erred in finding petitioner's
thusly: Where, without a pre-existing contract between two parties, an act or omission negligence of its obligation to report to be an action based on a quasi-delict
can nonetheless amount to an actionable tort by itself, the fact that the parties are Petitioner's negligence did not create the vinculum juris or legal relationship with the
contractually bound is no bar to the application of quasi-delict provisions to the case. respondent, which would have otherwise given rise to a quasi-delict. Petitioner's duty
Here, private respondents' damage claim is predicated solely on their contractual to respondent existed prior to its negligent act. When respondent contacted petitioner
relationship; without such agreement, the act or omission complained of cannot by regarding the news report and asked it to investigate the incident, petitioner's
itself be held to stand as a separate cause of action or as an independent actionable obligation was created. Thereafter, petitioner was alleged to have performed its
tort.[71] (Citations omitted) obligation negligently, causing damage to respondent.

Here, petitioner denies that it was obliged to disclose the facts regarding the hijacking The doctrine "the act that breaks the contract may also be a tort," on which the lower
incident since this was not among the provisions of its Trucking Service Agreement courts relied, is inapplicable here. Petitioner's negligence, arising as it does from its
with respondent. There being no contractual obligation, respondent had no cause of performance of its obligation to respondent, is dependent on this obligation. Neither
action against petitioner: do the facts show that Article 21 of the Civil Code applies, there being no finding that
petitioner's act was a conscious one to cause harm, or be of such a degree as to
Applying said test, assuming for the sake of argument that petitioner indeed failed to approximate fraud or bad faith:
inform respondent of the incident where the truck was later found at the Caloocan
Police station, would an independent action prosper based on such omission? To be sure, there was inaction on the part of the defendant which caused damage to
Assuming that there is no contractual relation between the parties herein, would the plaintiff, but there is nothing to show that the defendant intended to conceal the
petitioner's omission of not informing respondent that the truck was impounded gives truth or to avoid liability. When the facts became apparent to defendant, the latter
[sic] rise to a quasi-delict? Obviously not, because the obligation, if there is any in the readily apologized to Keihin and Matsushita for their mistake.[76]
contract, that is to inform plaintiff of said incident, could have been spelled out in the
very contract itself duly executed by the parties herein specifically in the Trucking Consequently, Articles 1170, 1172, and 1173 of the Civil Code on negligence in the
Service Agreement. It is a fact that no such obligation or provision existed in the performance of an obligation should apply.
contract. Absent said terms and obligations, applying the principles on tort as a cause
III
for breaching a contract would therefore miserably fail as the lower Court erroneously
did in this case.[72] Under Article 1170 of the Civil Code, liability for damages arises when those in the
performance of their obligations are guilty of negligence, among others. Negligence
The obligation to report what happened during the hijacking incident, admittedly, does
here has been defined as "the failure to observe that degree of care, precaution and
not appear on the plain text of the Trucking Service Agreement. Petitioner argues that
vigilance that the circumstances just demand, whereby that other person suffers
it is nowhere in the agreement. Respondent does not dispute this claim. Neither the
injury."[77] If the law or contract does not provide for the degree of diligence to be
Regional Trial Court nor the Court of Appeals relied on the provisions of the Trucking
exercised, then the required diligence is that of a good father of a family.[78] The test to
Service Agreement to arrive at their respective conclusions. Breach of the Trucking
determine a party's negligence is if the party used "the reasonable care and caution
Service Agreement was neither alleged nor proved.
which an ordinarily prudent person would have used in the same situation"[79] when it
While petitioner and respondent were contractually bound under the Trucking Service performed the negligent act. If the party did not exercise reasonable care and caution,
Agreement and the events at the crux of this controversy occurred during the then it is guilty of negligence.
performance of this contract, it is apparent that the duty to investigate and report
In this case, both the Regional Trial Court and the Court of Appeals found that
arose subsequent to the Trucking Service Agreement. When respondent discovered
petitioner was negligent in failing to adequately report the April 17, 2002 hijacking
the news report on the hijacking incident, it contacted petitioner, requesting
incident to respondent and not conducting a thorough investigation despite being
information on the incident.[73] Respondent then requested petitioner to investigate
directed to do so. The trial court's factual findings, when affirmed by the Court of mechanical breakdown or towing of the container truck to the police station. [Orient
Appeals, are binding on this Court and are generally conclusive.[80] Freight] pointed to specific facts that would naturally arouse suspicion that something
was wrong when the container was found in the premises of the Caloocan Police
The Regional Trial Court found that petitioner's conduct showed its negligent handling Station and that driver Ricky Cudas was nowhere to be found. The police does [sic]
of the investigation and its failure to timely disclose the facts of the incident to not ordinarily impound a motor vehicle if the problem is merely a traffic violation. More
respondent and Matsushita: important, driver Ricky Cudas disappeared and was reported missing. When the
Caloocan Police chanced upon the container van, it was found straying at C-3 which
[Orient Freight] was clearly negligent in failing to investigate properly the incident and
is outside its usual route. All these circumstances should have been enough for
make a factual report to Keihin and Matsushita. [Orient Freight] claimed that it was
[Orient Freight] to inquire deeper on the real circumstances of the incident.
pressed for time considering that they were given only about one hour and a half to
investigate the incident before making the initial report. They claimed that their ....
employees had no reason to suspect that the robbery occurred considering that the
seal of the van remained intact. Moreover, the priority they had at that time was to [Orient Freight] talked to Rubelito Aquino and apparently failed to listen closely to the
load the cargo to the carrying vessel on time for shipment on April 19, 200[2]. They statement given by their truck helper to the Caloocan Police. The truck helper
claimed that they made arrangement with the Caloocan Police Station for the release recounted how the engine of the truck stalled and the driver was able to start the
of the truck and the cargo and they were able to do that and the objective was engine but thereafter, he was nowhere to be seen. By this circumstance alone, it
achieved. This may be true but the Court thinks that [Orient Freight] had enough time should have become apparent to [Orient Freight] that the truck driver gypped the
to investigate properly the incident. The hijacking incident happened on April 17, truck helper into calling the company and had a different intention which was to run
200[2] and the tabloid Tempo published the hijacking incident only on April 19, 200[2]. away with the container van. It readily shows that Ricky Cudas intended to hijack the
This means that [Orient Freight] had about two (2) days to conduct a diligent inquiry vehicle by feigning or giving the false appearance of an engine breakdown. Yet,
about the incident. It took them until May 15, 200[2] to discover that a robbery indeed [Orient Freight] dismissed the incident as a simple case of a unit breakdown and
occurred resulting in the loss of ten pallets or 218 cartons valued at US $34,226.14. towing of vehicle allegedly due to traffic violation. Under the circumstances, therefore,
They even denied that there was no police report only to find out that on May 15, the defendant failed to exercise the degree of care, precaution and vigilance which
200[2] that there was such a report. It was [Orient Freight] 's duty to inquire from the the situation demands.[84]
Caloocan Police Station and to find out if they issued a police report, Yet, it was
plaintiff Keihin which furnished them a copy of the police report. The failure of [Orient Despite the circumstances which would have cautioned petitioner to act with care
Freight] to investigate properly the incident and make a timely report constitutes while investigating and reporting the hijacking incident, petitioner failed to do so.
negligence. Evidently, [Orient Freight] failed to exercise due diligence in disclosing Petitioner is responsible for the damages that respondent incurred due to the former's
the true facts of the incident to plaintiff Keihin and Matsushita. As a result, plaintiff negligent performance of its obligation.
Keihin suffered income losses by reason of Matsushita's cancellation of their contract
IV
which primarily was caused by the negligence of [Orient Freight].[81]
Articles 2200 and 2201 of the Civil Code provide for the liability for damages in
The Court of Appeals affirmed the trial court's finding of negligence:
contractual obligations:
From the foregoing account, it is evident that [Orient Freight] not only had knowledge
Article 2200. Indemnification for damages shall comprehend not only the value of the
of the foiled hijacking of the truck carrying the subject shipment but, more importantly,
loss suffered, but also that of the profits which the obligee failed to obtain.
withheld said information from [Keihin-Everett], Confronted with the April 19, 2002
tabloid account thereof, [Orient Freight] appears to have further compounded its Article 2201. In contracts and quasi-contracts, the damages for which the obligor who
omission by misleading [Keihin-Everett] and Matsu[s]hita into believing that the acted in good faith is liable shall be those that are the natural and probable
subject incident was irresponsibly reported and merely involved a stalled vehicle consequences of the breach of the obligation, and which the parties have foreseen or
which was towed to avoid obstruction of traffic. Given that the police report could have reasonably foreseen at the time the obligation was constituted.
subsequently obtained by [Keihin-Everett] was also dated April 17, 2002, [Orient
Freight's insistence on its good faith on the strength of the information it gathered In case of fraud, bad faith, malice or wanton attitude, the obligor shall be responsible
from its employees as well as the timely shipment and supposed good condition of for all damages which may be reasonably attributed to the non-performance of the
the cargo clearly deserve scant consideration.[82] obligation.
Petitioner's argument that its acts were a "sound business judgment which the court In Central Bank of the Philippines v. Court of Appeals,[85] this Court explained the
cannot supplant or question nor can it declare as a negligent act"[83] lacks merit. The principles underlying Articles 2200 and 2201:
Regional Trial Court found that the circumstances should have alerted petitioner to
investigate the incident in a more circumspect and careful manner: Construing these provisions, the following is what this Court held in Cerrano vs. Tan
Chuco, 38 Phil. 392:
On this score, [Orient Freight] itself presented the circumstances which should have
alerted [Orient Freight] that there was more to the incident than simply a case of
"... Article 1106 (now 2200) of the Civil Code establishes the rule that prospective how it reduced the respondent's claimed loss of profit and arrived at the damages to
profits may be recovered as damages, while article 1107 (now 2201) of the same be awarded:
Code provides that the damages recoverable for the breach of obligations not
originating in fraud (dolo) are those which were or might have been foreseen at the The difference between the total gross revenue of plaintiff for 2002 as reported in the
time the contract was entered into. Applying these principles to the facts in this case, monthly profit and loss statement of [P]14,801,744.00 and the audited profit and loss
we think that it is unquestionable that defendant must be deemed to have foreseen at statement of the amount of [P]10,434,144.00 represents 1/3 of the total gross
the time he made the contract that in the event of his failure to perform it, the plaintiff revenues of the plaintiff for the six months period. Accordingly, the net profit loss of
would be damaged by the loss of the profit he might reasonably have expected to [P]2.5 million pesos as reported in the monthly profit and loss statement of the plaintiff
derive from its use. should be reduced by 1/3 or the amount of [P]833,333.33. Therefore, the net profit
loss of the plaintiff for the remaining period of six months should only be the amount
"When the existence of a loss is established, absolute certainty as to its amount is not of [P] 1,666,667.70 and not [P]2.5 million as claimed.[90]
required. The benefit to be derived from a contract which one of the parties has Petitioner has not sufficiently shown why the computation made by the trial court
absolutely failed to perform is of necessity to some extent, a matter of speculation, but should be disturbed.
the injured party is not to be denied all remedy for that reason alone. He must
produce the best evidence of which his case is susceptible and if that evidence WHEREFORE, the petition is DENIED. The January 21, 2010 Decision and April 21,
warrants the inference that he has been damaged by the loss of profits which he 2010 Resolution of the Court of Appeals in CA-G.R. CV No. 91889 are AFFIRMED.
might with reasonable certainty have anticipated but for the defendant's wrongful act,
he is entitled to recover. As stated in Sedgwick on Damages (Ninth Ed., par. 177):

'The general rule is, then, that a plaintiff may recover compensation for any gain
which he can make it appear with reasonable certainty the defendant's wrongful act
prevented him from acquiring, . . .' (See also Algarra vs. Sandejas, 27 Phil. Rep., 284,
289; Hicks vs. Manila Hotel Co., 28 Phil, Rep., 325.)" (At pp. 398-399.)[86]

The lower courts established that petitioner's negligence resulted in Matsushita's

cancellation of its contract with respondent. The Regional Trial Court found:

In the letter dated June 6, 2002, Matsushita pre-terminated its In-House Brokerage
Service Agreement with plaintiff Keihin for violation of the terms of said contract. Its
President, KenGo Toda, stated that because of the incident that happened on April
17, 2002 involving properties which the plaintiff failed to inform them, Matsushita has
lost confidence in plaintiff's capability to handle its brokerage and forwarding
requirements. There was clearly a breach of trust as manifested by plaintiff's failure to
disclose facts when it had the duty to reveal them and it constitutes fraud. Moreover,
the negligence of plaintiff personnel cannot be tolerated as Matsushita is bound to
protect the integrity of the company.[87]

It could be reasonably foreseen that the failure to disclose the true facts of an
incident, especially when it turned out that a crime might have been committed, would
lead to a loss of trust and confidence in the party which was bound to disclose these
facts. Petitioner caused the loss of trust and confidence when it misled respondent
and Matsushita into believing that the incident had been irresponsibly reported and
merely involved a stalled truck.[88] Thus, petitioner is liable to respondent for the loss
of profit sustained due to Matsushita's termination of the In-House Brokerage Service
Agreement.

As regards the amount of damages, this Court cannot rule on whether the Regional
Trial Court erred in using the Profit and Loss Statement submitted by respondent for
its computation. The amount of the award of damages is a factual matter generally
not reviewable in a Rule 45 petition,[89] The damages awarded by the Regional Trial
Court, as affirmed by the Court of Appeals, were supported by documentary evidence
such as respondent's audited financial statement. The trial court clearly explained