From civil law outline 2008 - docshare01.docshare.tipsdocshare01.docshare.tips/files/18512/185126707.pdf · From civil law outline 2008: 1.Article 19 – Abuse of Right - Rellosa

From civil law outline 2008:

1. Article 19 – Abuse of Right

- Rellosa v. Pellosis, August 9, 2001

This provision is not just a declaration of principle for it can, in itself constitute, when duly ignored, a valid cause of action.

- Even in the exercise of a right, if there is an abuse of right, there may be liability for damages because of the principle of abuse of right. (Velayo v. Shell).

- Requisites:

1. right2. duty3. violation of such right

In the exercise of one’s right, and in the performance of one’s obligation, a person should not discard the norms of human conduct provided for by law. If he causes damage to another even in the exercise of such right, he is liable for damages.

There is an abuse of right if it is exercised only for the purpose of prejudicing another. (HSBC v. Catalan, October 18, 2004)

GF Equity Inc. v. Valenzona, June 30, 2005If a company unduly pre – terminates a coaching contract to the extent of violating the principle of mutuality of contracts, there is abuse of right. In this case, the pre – termination was not based on a legal ground, the company failed to exercise it in a legitimate manner thus, causing damage to the coach. The company is liable for damages.

2. Article 21

- This law was put into the Civil Code in order to solve a void in the law as there was a perception that an act may injure another person’s rights, yet, the same may no longer be criminally punished. (Batara v. Marcos). Hence, if the act is contrary to morals, the same may be compensated by an award of moral damages.

A mere breach of promise to marry is not an actionable wrong. There must be an act independent of the breach in order that it may be actionable. Like arranging the wedding and making the preparations then, one party does not appear on the date set for the wedding.

- People v. Manuel, G.R. No. 165842, November 29, 2005

If a man conceals the fact that he is married; proposes marriage to a woman; goes with his parents to the house of the parents of the woman to assure them that he is single; apply for a license to marry and make it appear that he is single; purports to be single during their coverture; abandons her; the woman can file a complaint for bigamy, with prayer for moral damages. The totality of his acts which are immoral and illegal constitutes the basis for his liability for moral damages. He deprived the woman of a legitimate claim of coverture with a man who is lawfully married to her.

3. Article 39, 40

- Buenventura v. Buenaventura, March 31, 2005

- Action for nullity due to psychological incapacity

- No moral damages to be awarded unless there is evidence that the marriage was done deliberately and with malice by the party who had knowledge of his disability and willfully concealed it

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- Since psychological incapacity means that one is truly incognitive of the basic marital covenants that one must discharge or assume, it removes the basis for the contention that the defendant purposely deceived the other spouse. No basis for award of moral damages.

4. Articles 1167; 1168

- In obligation to do, it may be done if the other party does not do it.

If poorly done, it can be undone.

In both, there is liability for damages. The reason is that, there is delay or contravention of the tenor of the obligation (Art. 1170).

Kinds of Penalty Clauses (Art 1226)

1. imposed due to breach- to enforce

2. indemnity for damages (Lorenzo Shipping v. BJ Marthel Int’l., Inc. v. November 19, 2004).

- need to distinguish if there is non – performance

Article 1571, NCC

Goodyear Phils., Inc. v. Sy, et al.G.R. No. 154554, November 9, 2005

An action for damages for a breach of implied warranties must be brought within 6 months from the delivery of the thing sold. The vehicle is understood to have been delivered when it was placed under his control or possession.

ARTICLE 1561

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If a motor vehicle is sold but there was a hidden defect, the vendee

must file an action for damages for breach of the warranty within 6 months

from the delivery of the thing sold. After 6 months, the action prescribes. In

this case, the action was filed more than 19 months. (De Guzman v. Toyota

Cubao, Inc., November 29, 2006).

a. If there is an award of a sum of money but in the form of damages, the interest is 6%. But from the time of the finality of the judgment up to the time of payment, it becomes a forbearance of money, it earns 12%. (Eastern Shippers Lines v. CA; AG & P of Manila; RCBC; Vicente v. Planters Dev. Bank, January 25, 2003). In BSP v. Sta. Maria, January 13, 2003, where there was supply of labor material and a judgment relative thereto, the interest is 6%. Reason is because it is not a forbearance of money.

5. Articles 2176 & 2177 – Proximate Cause Cases

a. Lambert v. Heirs of Castillon, et al., G.R. No. 160709, February 23, 2005

The abrupt and sudden left turn by the driver of a jeep without first establishing his right of way was the proximate cause of the mishap which resulted in the death of the motorcycle driver. If the deceased is guilty of contributory negligence, the award of damages may be reduced.

b. NPC v. CA, et al., G.R. No. 124378, March 8, 2005

The negligence of the NPC or its inability to maintain the level of water in the dam caused damage to the properties of the plaintiffs. (Delsan Transport Lines, Inc. v. CA, October 1, , 2003).

6. Remedies in Negligence Cases

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a. Sue the accused under Article 100, RPC for civil liability ex delicto.

b. Sue under Article 2176, NCC for ex quasi delicto.c. Motion under Article 103, RPC for the subsidiary liability under

the RPC.

But there shall be no double recovery. (Rafael Reyes Trucking v. CA, G.R. No. 129029, April 3, 2000).

7. Liability Under Contractual Tort

a. Air France v. Carrascoso, September 23, 1966

As a rule, there can be no liability for tort if there is a contract. The exception is when there is an act that violates the contract and the act is independent of the contract.

Article 2180 (See: 218, 219, 221, Family Code).

An employer’s liability based on a quasi-delict is primary and direct, while the employer’s liability based on a delict is merely subsidiary. (People vs. Fabro, 93 SCRA 200 (1979). The words “primary and direct” as contrasted with “subsidiary”, refer to the remedy provided by law for enforcing the obligation rather than to the character and limits of the obligation. (33A Words and Phrases 215 (197, Ed.). Although liability under Article 2180 originates from negligent act of the employee, the aggrieved party may sue the employer directly. When an employee causes damage, the law presumes that the employer has himself committed an act of negligence in not preventing or avoiding the damage. This is the fault that the law condemns. While the employer is civilly liable in a subsidiary capacity for the employee’s criminal negligence, the employer is also civilly liable directly and separately for his own civil negligence in failing to exercise due diligence in selecting and supervising his employee. The idea that the employer’s liability is solely subsidiary is wrong. (Barredo vs. Garcia, supra.).

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It has been consistently ruled that the registered owner of any vehicle is directly and primarily responsible to the public and third persons while it is being operated. The rationale behind such doctrine was explained way back in 1957 in Erezo vs. Jepte where it was said that the principle upon which this doctrine is based is that in dealing with vehicles registered under the Public Service Law, the public has the right to assume or presume that the registered owner is the actual owner thereof, for it would be difficult for the public to enforce the actions that they may have for injuries caused to them by the vehicles being negligently operated if the public should be required to prove who the actual owner is. How would the public or third persons know against whom to enforce their rights in case of subsequent transfers of the vehicles? We do not imply by his doctrine, however, that the registered owner may not recover whatever amount he had paid by virtue of his liability to third persons from the person to whom he had actually sold, assigned or conveyed the vehicle. (Villanueva vs. Domingo, et al., G.R. No. 144274, September 20, 2004).

8. Liability of Employers in Civil Cases For the Acts of Employees.

ARTICLES 2180 ; 2176

Employer is liable for the negligent acts of the employee if the former fails to prove the diligence of a good father of a family in the selection and supervision of the employee the liability is solidary. (Mercury Drug Corp. v. Sps. Huang, June 27, 2007).

a. Villanueva v. Domingo, et al., G.R. No. 144274, September 20, 2004 (Basilio v. CA, January 18, 2000)

The registered owner of a vehicle is liable for damages regardless of whether the driver is authorized or not. In fact, the liability is primary in nature. (Sec. Equitable Leasing Corp. v. Suyom, September 5, 2002; FGU Insurance Corp. v. CA; Duavit v. CA, 173 SCRA 490; MPC – Agro Agricultural Corp. v. Vda. de Caldo, 132 SCRA 10; Aguilar v. Com. Savings Bank, June 29, 2001; Pleyto v. Lomboy, June 16, 2004). Even if the vehicle was sold but the buyer did not register the driver of the

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new owner is presumed to be the employee of the former owner who is liable. The purpose of car registration is to determine the person who is liable if there is an accident. This is to prevent difficulty of the public in trying to determine who is liable.

b. Cerezo v. Tuazon, March 23, 2004

The liability of the employer and the employee is solidary. Even if the employee is not served with summons, trial can be held. If he cannot prove the diligence of a good father of a family, then, he is solidary liable. (Sps. Hernandez, et al. v. Sps. Dolor, et al., G.R. No. 160286, July 30, 2004).

c. Castilex Industrial Corp. v. Vasquez, G.R. No. 132266, December 21, 1999

The employer is not liable if the employee is not performing his task at the time of the accident. This is especially so because it was already out of company time and premises. The exception is when the employee is running an errand for the employer.

d. Filipinas Broadcasting Network, Inc. v. Ago Medical and Educational Center – Bicol Christian College of Medicine, G.R. No. 141994, January 17, 2005

Joint tortfeasors are jointly and severally liable for the tort they commit. An employer and an employee are solidarily liable for a defamatory statement by the employee within the course and scope of his employment. (See: Doctrine of Corporate Liability in PSI case).

Other cases:

(Solidbank Corp. v. Mindanao Ferroally Corp., et al., G.R. No. 153535, July 28, 2005).

e. Doctors are protected by a special rule of law. They are not guarantors of care. They do not even warrant a good result. They are not insurers against mishaps or unusual

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consequences. They are not liable for honest mistakes of judgment. Whether they committed inexcusable lack of precaution in the treatment of their patients is to be determined according to the standard of care by other members of the profession of good standing. (Dr. Ninevetch Cruz v. CA, 282 SCRA 188)

Under the caption of the ship doctrine, the surgeon is likened to a captain of the ship who must be responsible for the safety of the crew and the passengers. He is responsible for everything that goes wrong within the four corners of the operating room. (Ramos v. CA, December 29, 1999).

f. A doctor who is a consultant in a hospital has no employee – employer relationship. Hence, the hospital is not solidarily liable with the doctor because

1. the hospital does not hire or engage the services of a consultant, but merely accredits and grants him the privilege of maintaining a clinic or admitting patients upon a showing of his qualifications;

2. it is not the hospital but the patient who pays the consultant’s fee for services rendered;

3. the hospital does not dismiss a consultant but merely loses his accreditation by the hospital;

4. when the doctor refers a patient to a hospital, it is not the latter, but the doctor who prescribes the treatment to be given to the patient. (Ramos v. CA, December 29, 1999).

g. The contract between the consultant and the patient is separate and distinct from the contract between the hospital and the patient. In the first, it has for its object, the rendition of medical services by the consultant to the patient.

In the second, it concerns the provision by the hospital of facilities and services by its staff like nurses and laboratory personnel necessary for the proper treatment of the patient. (Ramos v. CA, December 29, 1999).

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Captain of the Ship Rule.

Under the “Captain of the Ship” rule, the operating surgeon is the person in complete charge of the surgery room and all personnel connected with the operation. Their duty is to obey his orders. (Rural Educational Assn. v. Bush, 42 Tenn. App. 34, 298 S.W. 2d 761 (1956)).

Until the mid-nineteenth century, hospitals were generally charitable institutions, providing medical services to the lowest classes of society, without regard for a patient’s ability to pay. Those who could afford medical treatment were usually treated at home by their doctors. However, the days of house calls and philanthropic health care are over. The modern health care industry continues to distance itself from its charitable past and has experienced a significant conversion from a not-for-profit health care to for-profit hospital business. Consequently, significant changes in health law have accompanied the business-related changes in the hospital industry. One important legal change is an increase in hospital liability for medical malpractice. Many courts now allow claims for hospital vicarious liability under the theories of resondeat superior, apparent authority, ostensible authority, or agency by estoppel.

Professionals engaged by an employer, such as physicians, dentists, and pharmacists, are not “employees” under this article because the manner in which they perform their work is not within the control of the latter (employer). In other words, professionals are considered personally liable for the fault or negligence they commit in the discharge of their duties, and their employer cannot be held liable for such fault or negligence. In the context of the present case, “a hospital cannot be held liable for the fault or negligence of a physician or surgeon in the treatment or operation of patients.

Such view is grounded on the traditional notion that the professional status and the very nature of the physician’s calling preclude him from being classed as an agent or employee of a hospital, whenever he acts in a professional capacity. It has been said that medical practice strictly involves

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highly developed and specialized knowledge, such that physicians are generally free to exercise their own skill and judgment in rendering medical services sans interference. Hence, when a doctor practices medicine in a hospital setting, the hospital and its employees are deemed to subserve him in his ministrations to the patient and his actions are of his own responsibility.

Liability of hospitals and visiting consultants.

In our shores, the nature of the relationship between the hospital and the physicians is rendered inconsequential in view of our categorical pronouncement in Ramos v. Court of Appeals, that for purposes of apportioning responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians. Thus, it was held:

“We now discuss the responsibility of the hospital in this particular incident. The unique practice (among private hospitals) of filling up specialist staff with attending and visiting “consultants”, who are allegedly not hospital employees, presents problems in apportioning responsibility for negligence in medical malpractice cases. However, the difficulty is more apparent than real.

In the first place, hospitals exercise significant control in the hiring and firing of consultants and in the conduct of their work within the hospital premises. Doctors who apply for ‘consultant’ slots, visiting or attending, are required to submit proof of completion of residency, their educational qualifications, generally, evidence of accreditation by the appropriate board (diplomate), evidence of fellowship in most cases, and references. These requirements are carefully scrutinized by members of the hospital administration or by a review committee set up by the hospital who either accept or reject the application.

After a physician is accepted, either as a visiting or attending consultant, he is normally required to attend clinico-pathological

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conferences, conduct bedside rounds for clerks, interns and residents, moderate grand rounds and patient audits and perform other tasks and responsibilities, for the privilege of being able to maintain a clinic in the hospital, and/or for the privilege of admitting patients into the hospital. In addition to these, the physician’s performance as a specialist is generally evaluated by a peer review committee on the basis of mortality and morbidity statistics, and feedback from patients, nurses, interns and residents. A consultant remiss in his duties, or a consultant who regularly falls short of the minimum standards acceptable to the hospital or its peer review committee, is normally politely terminated.

In other words, private hospitals, hire, fire and exercise real control over their attending and visiting ‘consultant’ staff. While ‘consultants’ are not, technically employees, x x x , the control exercised, the hiring, and the right to terminate consultants all fulfill the important hallmarks of an employer-employee relationship, with the exception of the payment of wages. In assessing whether such a relationship in fact exists, the control test is determining. Accordingly, on the basis of the foregoing, we rule that for the purpose of allocating responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians.”

FGU Ins. Corp. v. CA, March 23, 1998

A rent – a – car company is not liable if it allows the lessee to drive. There is no vinculum juris between them. The lessee is liable alone.

The responsibility of employers for the negligence of their employees in the performance of their duties is primary. The injured party may recover from the employer directly, regardless of the solvency of the employee.

Civil liability of Employers for the Criminal Acts of the Employees

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a. Yonada v. CA, et al., G.R. No. 112346, March 29, 1996

The employer is merely liable subsidiarily if the employee is sued criminally and convicted. For the civil liability to attach, the employee must be insolvent. The employer can interpose the defense that he is not an employer; that the employee is not insolvent; that he did not act within the scope of his duties.

Liability of Parents for the acts of their children

a. Libi v. CA, G.R. No. 70890, September 18, 1992

The parents of a minor who killed his girl friend are primarily liable for the act of their minor son. There were pieces of evidence of their negligence.

Case reference:

a. St. Mary’s Academy of Dipolog v. Carpetanosb. Tamargo v. CA

The SC held that the adopting parents cannot be liable for the acts of the minor child subject of the adoption. The biological parents are liable because they still have supervision and custody of the child.

Vicarious liability

Macario Tamargo v. CA, 209 SCRA 518

The liability of parents for the tort committed by their minor children living with them is based on parental authority. The law presumes that when the minor commits a tortuous act, the parents are negligent. Parental liability is anchored upon parental authority couple with presumed parental dereliction in the discharge of the duties accompanying such authority. Parental dereliction is only presumed and the presumption can be one by evidence that the parents have exercised the diligence of good father of a family to prevent the damage.

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The rule is true with respect to the teacher, school, and administrators. (Amadora v. CA, 160 SCRA 274).

PSBA v. CA, 205 SCRA 729

The person who killed a student was not a student of the school. Article 2180 requires that the damage done should have been inflicted by a student, for the school to be liable.

9. Liability for Damages

i. Nikko Hotel Manila Garden, et al. v. Roberto Reyes, alias “Amay Bisaya”, G.R. No. 154259, February 28, 2005

The doctrine of volenti non fit injuria (to which a person asserts is not esteemed in law as injury) refers to a self – inflicted injury or to the consent to injury which precludes the recovery of damages by one who has knowingly and voluntarily exposed himself to danger, even if he is negligent in doing so.

Article 19 of the New Civil Code commonly known as the principle of abuse of right, is not a parracea for all human hurts and social grievances. When a right is exercised in a manner which does not conform with the standards in Article 19 and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be responsible. The object of this article is to set certain standards which must be observed not only in the performance of duty but even in the exercise of a right.

ii. Noel Buenaventura v. CA, et al., G.R. No. 127355, March 31, 2005

If a marriage is declared void on the ground of psychological incapacity, the defendant cannot be made liable for moral damages, as a rule. The award of moral damages should be predicated, not on the mere act of entering into the marriage, but on specific evidence that

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it was done deliberately and with malice by a party who had knowledge of his or her disability and willfully concealed the same.

Manuel v. People, November 29, 2005

If a man represents himself to be single; courts a woman; presents his parents to the parents of the woman assure them that he is single; apply with the woman for a marriage license and pretends to be single but in fact he is married; abandons the woman later, he is liable for moral damages.

The totality of his acts constitutes violation of Articles 19, 20, 21, NCC

Articles 2219 & 2217

Requisites for award of moral damages

1. injury sustained by the claimant2. culpable act or omission factually established3. wrongful act is the proximate cause of the injury4. award is predicated on Article 2219 (Expert Travel Tours v. CA,

June 25, 1999).

A corporation, being a juridical person, it cannot suffer from wounded feelings, serious anxiety, mental anguish or moral shock. Article 2219, paragraph 7 of the Civil Code expressly authorizes the recovery of moral damages in cases of libel, slander or any other form of defamation. The law, however, does not qualify whether the plaintiff s a natural or juridical person. Therefore, a juridical person such as a corporation can validly complain for libel or any other form of defamation and claim for moral damages. (Filipinas Broadcasting Network, Inc. vs. Ago Medical and Educational Center – Bicol Christian College of Medicine, et al., G.R. No. 141994, January 17, 2005).

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As a rule, documentary evidence should be presented to substantiate the claim for damages for the loss of earning capacity. The only exceptions are: (1) when the deceased is self-employed earning less than minimum wage under current labor laws; (2) when the deceased is employed as a daily wage worker earning less than the minimum wage under the current laws. In these two instances, judicial notice may be taken of the fact that in the deceased’s line of work no documentary evidence is available. Here the lower courts computed the award of compensatory damages for the loss of earning capacity only on the basis of the testimony of the husband. The award is erroneous because the deceased earnings do not fall within the exceptions. (Victory Liner, Inc. vs. Gammad, et al., G.R. No. 159636, November 25, 2004).

(See also: People vs. Mallari, G.R. No. 145993, June 17, 2003; People vs. Caraig, G.R. No. 116224, March 28, 2004; People vs. Duetes, et al., G.R. No. 144598, February 6, 2004).Nominal Damages

Nominal damages cannot co – exist with actual and compensatory. (Arnovit v. CA, 184 SCRA 476). It is to vindicate or recognize a right violated in order to preclude further contests and not for the purpose of vindication of a right.

Award of Compensatory damages

It is in itself a recognition of the plaintiff’s right, hence, no need to award nominal damages. (Vda. de Medina v. Cresencia, 99 SCRA 506).

Temperate damages are awarded on top of actual or compensatory in instances where the injury is chromic and continuing. There is no incompatibility between compensatory and temperate because of its unique nature. Though to a certain extent speculative, it should take into account the cost of proper case. (Ramos v. CA, December 29, 1999).

Suspension of credit card

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Equitable Band v. Calderon, December 14, 2000

The plaintiff exceeded his credit limit. The bank has the option to decide whether to reinstate or terminate a credit card previously suspended on considerations which the bank deems proper based on the cardholder’s record, capacity to pay and compliance with any requirement imposed by it. It is not liable for damages if it does not. Damnum absque injuria.

iii. Victory Liner, Inc. v. Gammad, et al., G.R. No. 159636, November 25, 2004

Award of compensatory damages cannot be based on bare testimony. Documentary evidence should be presented to substantiate the claim for damages for the loss of earning capacity. There are exception, like:

a. when the deceased was employed as a daily wage worker earning less than the minimum wage under the current labor laws.

b. when the deceased is self – employed earning less than the minimum wage under current labor laws.

If the heirs cannot be awarded compensatory damages, they may be entitled to temperate or moderate damages which are more than nominal but less than compensatory if the court finds that some pecuniary loss has been suffered but its amount cannot be proved, especially so that the fact of loss of earnings have been established.

Actual or compensatory damages are classified into two:

1. Dano emergente or loss of what a person already possessed.2. Lucro cesante or the failure to receive as a benefit that would have

pertained to him. (PNOC Shipping & Transport Corp. v. CA, 297 SCRA 402).

Smith Bell Dodwell Shipping Agency v. BorjaJanuary 10, 2002

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b. The amount of living expenses is fixed at 50% of the income.c. The formula cannot be attend otherwise, the basis in

computation of life expectancy would become indefinite. It is not fair anymore.

i. Magbanua v. Tabusares, et al., G.R. No. 152134, June 4, 2004

Article 2205, NCC allows the recovery of damages for loss or impairment of earning capacity in cases of temporary or permanent personal injury. Such damages cover the loss sustained by the dependents or heirs of the deceased, consisting of the support they would have received from him had he not die. The necessary expenses that he used for his own needs have to be deducted form the gross income.

What if the person who died, died at the age of 100? The formula remains the same. (Smith Bell Dodwell Shipping Agency Corp. v. Borja, June 10, 2002), otherwise, the formula or basis in computing the earning capacity will never become final, being always subject to the eventuality of death. The computation should not change. Fair is Fair!

ii. People v. Werba, June 9, 2004

Burial expenses may be recovered/awarded in the amount of P25, 000.00 even without proof by way of documentary evidence. More than that amount, there must be documentary evidence. In awarding the said amount, the court normally takes into account the custom of the Filipinos during wake. (People v. Baño, January 15, 2004; People v. Bajar, October 22, 2003).

iii. Solidbank Corp. v. Sps. Arrieta, G.R. No. 152720, February 17, 2005

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A bank’s gross negligence in not honoring a well – founded check, aggravated by its unreasonable delay in repairing the error, calls for an award of moral and exemplary damages. The resulting injury to the check writer’s reputation and peace of mind needs to be recognized and compensated.

iv. Premier Development Bank v. CA, G.R. No. 159352, April 14, 2004

The not – so – forthright conduct of a party to a contract may render it liable for damages.

v. Martinez v. Cokeing, et al., G.R. No. 150192, February 17, 2005

The mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution for the law could not have meant to impose a penalty on the right to litigate. (Lao v. CA, 271 SCRA 477).

10. Articles 2242 – 2244

Atlantic Erectors, Inc. v. Herbal Care Realty Corp., March 10, 2003

a. Contractor’s lien/preference with respect to specific building or improvement constructed

DBP v. CA, August 6, 2001

b. Extrajudicial foreclosure is not equivalent to insolvency proceedings

c. No prorating of credits in foreclosured. Prorating applies only if there is insolvency. (PS Bank v. Lantin,

209 SCRA 383; DBP v. NLRC, 186 SCRA 841).

DAMAGES

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11. Manila Doctors Hospital v. Sollen Chua, July 31, 2006

- removal of some facilities by hospital – non – essential for

the care of patient may be lessened

- patient can leave the hospital despite non-payment of bills

- rules are only demonstrative of the precondition that a

patient cannot step out of hospital

- but hospital can sue; other remedies

12. Article 2195 – Actual Damages – prove

a. Geluz v. CA (2003 Bar)b. Fuentes v. CA

- prove actual damagesc. PT & T v. CA, September 3, 2002

- compensatory damages – No; no proof of pecuniary loss- moral damages – No; mere delay in delivery of money

- no proof of bad faith or gross of negligence amounting to bad faith

- exemplary damages – No; failed to show entitlement to moral, temperate and compensatory damages- no showing of wanton, fraudulent, reckless, oppressive, malevolent act

- nominal – Yes; to compensate for violation of right to receive timely delivery of money

- Almeda v. Cariño, January 13, 2003- nominal damages for violation of right- no temperate damages- no proof of pecuniary loss

d. Victory Lines Inc. v. Gammad, November 25, 2004

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- temperate damages, more than nominal but less than compensatory awarded if there is proof of pecuniary loss but can’t be proved.- there is proof of earning capacity

e. People v. Bajar, October 27, 2003- burial expenses;- P25, 000.00 even if not proven- took cognizance of custom of the Filipino during wake. (People v. Baño, January 15, 2004; People v. Werba, June 9, 2004).- temperate

13. Articles 2205; 2206

a. Rosales v. CA; Carriaga v. BLTB – compensatory damages awarded to one not yet earning; what was compensated was the loss of capacity to earn; not actual loss of income

b. People v. Cuenco, January 10, 2002- earning capacity; prove; based on testimony of brother. Is not sufficient

c. Smith Dodwell Shipping Agency Corp. v. Borja, June 10, 2002- damages in death- formula- only net earnings – basis

- 50% - (People v. Cuenco, January 19, 2002)- basis of life expectancy – 80- otherwise, the basis of computing earning capacity will never become final, being always subject eventuality of death.- computation should not change even if deceased died beyond 80.Fair is fair.

d. indemnity for loss of earning capacity must be duly provene. testimony of brother not sufficientf. People v. Duetes, February 6, 2004 – documentary evidence is

necessary for recovery of earnings; exceptions – (1) self-employed earning less than the minimum wage; (2) employed as a daily worker earning less than minimum wage. (Victory Liner, Inc. v. Gammad, November 25, 2004).

14. Article 2217; 2219 – moral damages

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15. Exemplary Damages

a. Articles 2229; 2230; 2231

16. Special Laws PD 957RA 4725Concurrence, Preference of Credits

Note: Mercury Drug Corp. v. Huang – more than P 40M by way of damages.

From issues and questions.oblicon:

Robbery per se is not a fortuitous event.

In Sicam, et al. v. Jorge, et al., G.R. No. 159617, August 8, 2007, Lulu Jorge pawned several pieces of jewelry with Agencia de R.C. Sicam to secure a loan in the amount of P59,500.00. It was alleged that two armed men entered the pawnshop and took away whatever cash and jewelry found inside the pawnshop vault. It was reported to the police. She sued for damages but Sicam interposed the defense of fortuitous event, alleging that there was robbery. The SC brushed aside the contention and said:

Robbery per se, just like carnapping, is not a fortuitous event. It does not foreclose the possibility of negligence on his part.

In a case similarly situated, it was ruled that:

“It is not a defense for a repair shop of motor vehicles to escape liability simply because the damage or loss of a thing lawfully placed in its possession was due to carnapping. Carnapping per se cannot be considered as a fortuitous event. The fact that a thing was unlawfully and forcefully taken from another’s rightful possession, as in cases of carnapping, does not automatically give rise to a fortuitous event. To be considered as such, carnapping entails more than the mere forceful taking of another’s property. It must be proved and established that the event was an act of God or was done solely by third parties and that neither the claimant nor the person alleged to be negligent has any participation. In accordance with the Rules of Evidence, the burden of proving that the loss was due to a fortuitous event rests on him who invokes it – which in this case is the private respondent. However, other than the police report of the alleged carnapping

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incident, no other evidence was presented by private respondent to the effect that the incident was not due to its fault. A police report of an alleged crime, to which only private respondent is privy, does not suffice to establish the carnapping. Neither does it prove that there was no fault on the party of private respondent notwithstanding the parties’ agreement at the pre-trial that the car was carnapped. Carnapping does not foreclose the possibility of fault or negligence on the part of private respondent. (Co. v. CA, 353 Phil. 305 (1998); Sicam, et al. v. Jorge, et al., G.R. No. 159617, August 8, 2007).

In another case, it was held that to be relieved from civil liability of returning the pendant under Article 1174 of the Civil Code, it would only be sufficient that the unforeseen event, the robbery, took place without any concurrent fault on the debtor’s part, and this can be done by preponderance of evidence; that o be free from liability for reason of fortuitous event, the debtor must, in addition to the case itself, be free from any concurrent or contributory fault or negligence. (Sicam, et al. v. Jorge, et al., supra.).

Non-involvement clause in a contract; valid, provided there is limitation as to time, place and trade.

In Daisy Tiu v. Platinum Plans, Inc., G.R. No. 163512, February 28, 2007, the petitioner was employed as Division Marketing Director of the respondent, a pre-need company. In 1995, she stopped working and became the Vice President for Sales of Professional Pension Plans, Inc., another pre-need company. She was sued for damages for violating her contract with respondent which prohibited her in a business of the same nature within two (2) years from separation, whether voluntary or involuntary. The RTC and the CA held her liable. Before the SC, the petitioner contended that the non-involvement clause is offensive to public policy since the restraint imposed is much greater than what is necessary to afford respondent a fair and reasonable protection. She added that since the products sold in the pre-need industry are more or less the same, the transfer to a rival company is acceptable. She likewise argued that a strict application of the non-involvement clause would deprive her of the right to engage in the only work she knows.

Respondent countered that the validity of a non-involvement clause has been sustained by the Supreme Court in a long line of cases. It contended that the inclusion of the two-year non-involvement clause in the contract of employment was reasonable and needed since her job gave her access to the company’s confidential marketing strategies. It added that the non-involvement clause merely enjoined her from engaging in pre-need business akin to respondent’s within two years from her separation from respondent. She had not

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been prohibited from marketing other service plans. In brushing aside respondent’s contention, the SC

Held: As early as 1916, the validity of a non-involvement clause has already been discussed. In Ferazzini v. Gsell, 34 Phil. 697 (1916), it was held that such clause was unreasonable restraint of trade and therefore against public policy. In Ferrazzini, the employee was prohibited from engaging in any business or occupation in the Philippines for a period of five years after the termination of his employment contract and must first get the written permission of his employer if he were to do so. The Court ruled that while the stipulation was indeed limited as to time and space, it was not limited as to trade. Such prohibition, in effect, forced an employee to leave the Philippines to work should his employer refuse to give a written permission.

In G. Martini, Ltd. v. Glaiserman, 39 Phil. 120 (1918), a similar stipulation was declared as void for being unreasonable restraint of trade. There, the employee was prohibited from engaging in any business similar to that of his employer for a period of one year. Since the employee was employed only in connection with the purchase and export of abaca, among the many business of the employer, the restraint was considered too broad since it effectively prevented the employee from working in any other business similar to his employer even if his employment was limited only to one of its multifarious business activities.

However, in Del Castillo v. Richmond, 45 Phil. 679 (1974), a similar stipulation was upheld as legal, reasonable, and not contrary to public policy. In the said case, the employee was restricted from opening, owning or having any connection with any other drugstore within a radius of four miles from the employer’s place of business during the time the employer was operating his drugstore. A contract in restraint of trade is valid provided there is a limitation upon either time or place and the restraint upon one party is not greater than the protection the other party requires.

Finally, in Consulta v. Court of Appeals, G.R. No. 145443, March 18, 2005, 453 SCRA 732, a non-involvement clause was held in accordance with Article 1306 of the Civil Code. While the complainant in that case was an independent agent and not an employee, she was prohibited for one year from engaging directly or indirectly in activities of other companies that compete with the business of her principal. The restriction did not prohibit the agent from engaging in any other business, or from being connected with any other company, for as long as the business or company did not compete with the principal’s business. Further, the prohibition applied only for one year after the termination of the agent’s contract and was therefore a reasonable restriction designed to prevent acts prejudicial to the employer.

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Conformably with the aforementioned pronouncements, a non-involvement clause is not necessarily void for being in restraint of trade as long as there are reasonable limitations as to time, trade, and place.

In this case, the non-involvement clause has a time limit: two years from the time petitioner’s employment with respondent ends. It is also limited as to trade, since it only prohibits petitioner from engaging in any pre-need business akin to respondent’s.

In this case what makes the non-involvement clause valid is that, she had been privy to confidential and highly sensitive marketing strategies of respondent’s business. To allow her to engage in a rival business soon after she leaves would make respondent’s trade secrets vulnerable especially in a highly competitive marketing environment. In sum, the non-involvement clause is not contrary to public welfare and not greater than is necessary to afford a fair and reasonable protection to respondent. (Ollendorff v. Abrahamsom, 38 Phil. 585 (1918)).

In any event, Article 1306 of the Civil Code provides that parties to a contract may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

Article 1159 of the same Code also provides that obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. Courts cannot stipulate for the parties nor amend their agreement where the same does not contravene law, morals, good customs, public order or public policy, for to do so would be to alter the real intent of the parties, and would run contrary to the function of the courts to give force and effect thereto. (Phil. Communications Satellite Corp. v. Telecom, Inc., G.R. Nos. 147324 and 147334, May 25, 2004, 429 SCRA 153).

INTEREST – LOAN

Eastern Shipping teaches that, with respect to an award of interest in the concept of actual and compensatory damages, interest on the amount of damages awarded may be imposed at the discretion of the Court at the rate of 6% per annum for a breach of an obligation not constituting a loan or forbearance of money. No interest, however, shall be adjudged on unliquidated claims or damages except when or until the demand can be established with reasonable certainty. Where the demand is established with reasonable certainty, the interest shall begin to run from the time the claim is made judicially or extrajudicially. But when such certainty cannot be reasonably established at the time the demand is made, the interest shall begin to run only from the date the

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judgment of the court is made. (Eastern Shipping Lines, Inc. v. Court of Appeals, supra note 22 at 96, see also Biesterbos v. Court of Appeals, G.R. no. 152529, 22 September 2003, 411 SCRA 396, 406-407; Heirs of Ignacia Aguilar-Reyes v. Spouses Mijares, 457 Phil. 120, 140 (2003)).

In Eastern Shipping, the Court went on to state that when the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest, whether the obligation was in the form of a loan or forbearance of money or otherwise, shall be 12% per annum from such finality until its satisfaction, this interim period being deemed to be by then an equivalent to a forbearance of credit. (Eastern Shipping Lines, Inc. v. Court of Appeals, supra note 22. Reiterated in Almeda v. Cariño, 443 Phil. 182, 192 (2003); Biesterbos v. Court of Appeals, supra.; Vicente v. Planters Development Bank, 444 Phil. 309, 323-324 (2003); Solid Homes, Inc. v. IAC, et al., G.R. No. 74269; November 27, 2006).

AGENCY

Doctrine of procuring cause; entitlement to commission.

Facts:Medicard and United Laboratories Group of Companies (Unilab)

executed a Health Care Program Contract. Under this contract, Unilab shall pay Medicard a fixed monthly premium for the health insurance of its personnel. Unilab paid Medicard P4,148,005.00 representing the premium for one (1) year. Medicard then handed petitioner 18% of said amount or P746, 640.90 representing his commission.

Again, through petitioner’s initiative, the agency contract between Medicard and Unilab was renewed for another year.

Prior to the expiration of the renewed contract, Medicard proposed to Unilab, through petitioner, an increase of the premium for the next year. Unilab rejected the proposal “for the reason that it was too high”, prompting Dr. Nicanor Montoya (Medicard’s president and general manager), to request petitioner to reduce his commission, but the latter refused.

Unilab, through Carlos Ejercito, confirmed its decision not to renew the health program contract with Medicard.

Meanwhile, in order not to prejudice its personnel by the termination of their health insurance, Unilab, through respondent Ejercito, negotiated with Dr. Montoya and other officers of Medicard, to discuss ways in order to continue the insurance coverage of those personnel. It was accepted.

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Medicard did not give petitioner any commission under the new scheme, hence, petitioner demanded for his commission but Unilab refused to pay, hence, he filed a complaint for sum of money with damages to recover his commission. The RTC dismissed the complaint which the CA affirmed, holding that there was no proof that the contract was executed thru his efforts. The Supreme Court affirmed the decision and

Held:It is dictum that in order for an agent to be entitled to a commission, he

must be the procuring cause of the sale, which simply means that the measures employed by him and the efforts he exerted must result in a sale. (Damon vs. Antonio Brimo & Co., 42 Phil. 134; Ramos vs. CA, 63 SCRA 331). In other words, an agent receives his commission only upon the successful conclusion of a sale. (Hahn vs. CA, G.R. No. 113074, January 22, 1997, 266 SCRA 537). Conversely, it follows that where his efforts are unsuccessful, or there was no effort on his part, he is not entitled to a commission.

In this case, the contract was negotiated directly by the parties after the agency was revoked due to his refusal to reduce his commission. Revocation is allowed by law which states that the agency is revoked if the principal directly manages the business entrusted to the agent, dealing directly with third persons. (Art. 1924, NCC).

The agent was not the procuring cause of the contract between the parties, hence, he is not entitled to commission. (Sanchez vs. Medicard Phils. Inc., et al., G.R. No. 141525, September 2, 2005).

In Prats vs. CA, G.R. No. 39822, January 31, 1978, 81 SCRA 360, it has been held that for the purpose of equity, an agent who is not the efficient procuring cause is nonetheless entitled to his commission, where said agent, notwithstanding the expiration of his authority, nonetheless, took diligent steps to bring back together the parties, such that a sale was finalized and consummated between them. In Manotok Borthers vs. CA, G.R. No. 94753, April 7, 1993, 271 SCRA 224, where the Deed of Sale was only executed after the agent’s extended authority had expired, the Court, applying its ruling in Prats, held that the agent is entitled to a commission since he was the efficient procuring cause of the sale, notwithstanding that the sale took place after his authority had lapsed. The proximate, close, and causal connection between the agent’s efforts and the principal’s sale of his property cannot be ignored.

Note: This is based on Article 19, NCC.

Liability of the employer for the acts or omissions of the employee.

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Once again, the SC in Mercury Drug, et al. v. Sps. Huang, et al., G.R. No. 172122, June 22, 2007, (Puno, J) had the occasion to rule on the liability of the employer for the negligent act of the employee while in the performance of his duties and functions.

The liability of the employer under Art. 2180 of the Civil Code is direct or immediate. It is not conditioned on a prior recourse against the negligent employee, or a prior showing of insolvency of such employee. It is also joint and solidary with the employee. (Art. 2194, NCC).

To be relieved of liability, the employer should show that it exercised the diligence of a good father of a family, both in the selection of the employee and in the supervision of the performance of his duties. Thus, in the selection of its prospective employees, the employer is required to examine them as to their qualifications, experience, and service records. (Estacion v. Bernardo, G.R. No. 144723, February 27, 2006, 483 SCRA 222; Campo v. Camarote, 100 Phil. 459 (1056)). With respect to the supervision of its employees, the employer should formulate standard operating procedures, monitor their implementation, and impose disciplinary measures for their breach. To establish compliance with these requirements, employers must submit concrete proof, including documentary evidence. (Victory Liner, Inc. v. Heirs of Andres Malecdan, G.R. No. 154278, December 27, 2002, 394 SCRA 520).

In this case, the employer, Mercury Drug presented testimonial evidence on its hiring procedure. According to Mrs. Merlie Caamic, the Recruitment and Training Manager of petitioner Mercury Drug, applicants are required to take theoretical and actual driving tests, and psychological examination. In the case of employee, however, Mrs. Caamic admitted that he took the driving tests and psychological examination when he applied for the position of Delivery Man, but not when he applied for the position of Truck Man. Mrs. Caamic also admitted that employee used a Galant which is a light vehicle, instead of a truck during the driving tests. Further, no tests were conducted on the motor skills development, perceptual speed, visual attention, depth visualization, eye and hand coordination and steadiness of the employee. No NBI and police clearances were also presented. Lastly, he attended only three driving seminars. In effect, the only seminar he attended before the accident which occurred in 1996 was held twelve years ago in 1984.

Furthermore, in this case, the employer did not have back-up driver for long trips. At the time of the accident, the employee has been out on the road for more than thirteen hours, without any alternate. The witness admitted that she did not know of any company policy requiring back-up drivers for long trips.

The employer likewise failed to show that it exercised due diligence on the supervision and discipline over its employees. In fact, on the day of the accident,

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the employee was driving without a license. He was holding a TVR for reckless driving. He testified that he reported the incident to his superior, but nothing was done about it. He was not suspended or reprimanded. No disciplinary action whatsoever was taken against him. Thus, the employer failed to discharge its burden of proving that it exercised due diligence in the selection and supervision of its employee.

Damage recoverable.

The trial court awarded the following amounts:

1. Two Million Nine Hundred Seventy-Three Thousand Pesos (P2,973,000.00) actual damages;

2. As compensatory damages:

a. Twenty-Three Million Four Hundred Sixty One Thousand, and Sixty-Two Pesos (P23,461,062.00) for life care cost of Stephen;

b. Ten Million Pesos (P10,000,000.00) as and for lost or impaired earning capacity of Stephen;

3. Four Million Pesos (P4,000,000.00) as moral damages;

4. Two Million Pesos (P2,000,000.00) as exemplary damages; and

5. One Million Pesos (P1,000,000.00) as attorney’s fees and litigation expense.

The Court of Appeals affirmed the decision of the trial court but reduced the award of moral damages to P1,000,000.00.

With regard to actual damages, Art. 2199 of the Civil Code provides that “Except as provided by law or by stipulation one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved x x x.” In this case, the actual damages claimed were supported by receipts. The amount of P2,973,000.00 represented cost of hospital expenses, medicines, medical services and supplies, and nursing care services provided on the victim of the vehicular accident.

Petitioners are also liable for all damages which are the natural and probable consequences of the act or omission complained of. (Art. 2202, NCC). The doctors who attended to the victim are one in their prognosis that his chances of walking again and performing basic body functions are nil. For the rest of his life, he will need continuous rehabilitation and therapy to prevent further complications such as pneumonia, bladder and rectum infection, renal

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failure, sepsis and severe bed sores, osteoporosis and fractures, and other spinal cord injury-related conditions. He will be completely dependent on the care and support of his family, hence, the award of P23,461,062.00 for the life care cost of the victim was upheld based on his average monthly expense and the actuarial computation of the remaining years that he is expected to live; and the conservative amount of P10,000,000.00, for the loss or impairment of his earning capacity, (Art. 2205, NCC), considering his age, probable life expectancy, the state of his health, and his mental and physical condition before the accident. He was only seventeen years old, nearly six feet tall and weighed 175 pounds. He was in fourth year high school, and a member of the school varsity basketball team. He was also class president and editor-in-chief of the school annual. He had shown very good leadership qualities. He was looking forward to his college life, having just passed the entrance examinations of the University of the Philippines, De La Salle University, and the University of Asia and the Pacific. The University of Sto. Tomas even offered him a chance to obtain an athletic scholarship, but the accident prevented him from attending the basketball try-outs. Without doubt, he was an exceptional student. He excelled both in his academics and extracurricular undertakings. He is intelligent and motivated, a go-getter. Had the accident not happened, he had a rosy future ahead of him. He wanted to embark on a banking career, get married and raise children. Taking into account his outstanding abilities, he would have enjoyed a successful professional career in banking. But, now, it is highly unlikely for someone like respondent to ever secure a job in a bank.

Moral damages.

The award of moral and exemplary damages and attorney’s fees was likewise upheld:

“The award of moral damages is aimed at a restoration, within the limits of the possible, of the spiritual status quo ante. (Roque v. Tomas, G.R. No. 157632, December 6, 2006). Moral damages are designed to compensate and alleviate in some way the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury unjustly caused a person. Although incapable of pecuniary computation, they must be proportionate to the suffering inflicted. (PNR v. Brunty, G.R. No. 169891, November 2, 2006). The amount of the award bears no relation whatsoever with the wealth or means of the offender.

Evidence of moral damages.

Stephen Huang the victim and his parents Richard and Carmen Huang testified to the intense suffering they continue to experience as a result of the accident. Stephen recounted the nightmares and traumas he suffers almost

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every night when he relives the accident. He also gets depression when he thinks of his bleak future. He feels frustration and embarrassment in needing to be helped with almost everything and in his inability to do simple things he used to do. Similarly, respondent spouses and the rest of the family undergo their own private suffering. They live with the day-to-day uncertainty of respondent Stephen Huang’s condition. They know that the chance of full recovery is nil. Moreover, respondent Stephen Huang’s paralysis has made him prone to many other illnesses. His family, especially respondent spouses, have to make themselves available for Stephen twenty-four hours a day. They have patterned their daily life around taking care of him, ministering to his daily needs, altering the lifestyle to which they had been accustomed.

Exemplary damages.

On the matter of exemplary damages, Art. 2231 of the Civil Code provides that in cases of quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence. At the time of the accident, the employee was driving without a license because he was previously ticketed for reckless driving. The evidence also showed that he failed to step on his brakes immediately after the impact. Had he done so, the injuries which the victim sustained could have been greatly reduced. Wanton acts such as that committed by the employer need be suppressed; and employers like Mercury Drug should be more circumspect in the observance of due diligence in the selection and supervision of their employees. The award of exemplary damages is therefore justified.

Attorney’s fees.

With the award of exemplary damages, the award of attorney’s fees was upheld. (Art. 2208(1), NCC). In addition, attorney’s fees may be granted when a party is compelled to litigate or incur expenses to protect his interest by reason of an unjustified act of the other party. (Art. 2208(4), NCC).

Liability of hospitals under the doctrine of apparent authority and doctrine of corporate negligence.

The case of Professional Services, Inc. v. Agana, G.R. No. 126297; Agana, et al. v. Fuentes, G.R. No. 126467; Ampil v. Agana, et al., G.R. No. 127590, January 31, 2007 set the precedent for the liability of hospitals for the negligence of doctors employed by it, or even consultants. The SC said that courts in holding a hospital liable for damages, having undertaken one of mankind’s most important and delicate endeavors, must assume the grave responsibility of pursuing it with appropriate care. The care and service dispensed through this high trust, however technical, complex and esoteric its character may be, must meet standards of responsibility commensurate with the

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undertaking to preserve and protect the health, and indeed, the very lives of those placed in the hospital’s keeping. (Beeck v. Tuzon General Hospital, 500 P. 2d 1153 (1972), citing Darling v. Charleston Community Memorial Hospital, 33 Ill. 2d 326, 211 N.E. 2d 253).

Dr. Ampil, assisted by the medical staff of the Medical City Hospital, performed an anterior resection surgery on Natividad. He found that the malignancy in her sigmoid area had spread on her left ovary, necessitating the removal of certain portions of it. Thus, Dr. Ampil obtained the consent of Natividad’s husband, Enrique Agana, to permit Dr. Juan Fuentes, to perform hysterectomy on her.

After Dr. Fuentes had completed the hysterectomy, Dr. Ampil took over, completed the operation and closed the incision.

The operation appeared to be flawed, because the attending nurse entered these remarks:

“sponge count lacking 2“announced to surgeon searched (sic) done but to no avail continue for closure.”

Natividad was released from the hospital, but later on complained of excruciating pain in her anal region. She consulted both doctors about it. They told her that the pain is the natural consequence of the surgery. Dr. Ampil then recommended that she consult an oncologist to examine the cancerous nodes which were not removed during the operation.

Accompanied by her husband she went to the United States to seek further treatment. After four months of consultations and laboratory examinations, she was told she was free of cancer. Hence, she was advised to return to the Philippines.

After her return to the Philippines, her daughter found a piece of gauze protruding from her vagina. Upon being informed about it, Dr. Ampil proceeded to her house where he managed to extract by hand a piece of gauze measuring 1.5 inches in width. He then assured her that the pains would soon vanish.

Dr. Ampil’s assurance did not come true. Instead, the pains intensified, prompting Natividad to seek treatment at the Polymedic General Hospital. While confined there, Dr. Ramon Gutierrez detected the presence of another foreign object in her vagina – a foul-smelling gauze measuring 1.5 inches in width badly infected her vaginal vault. A recto-vaginal fistula had formed in her reproductive organs which forced stool to excrete through the vagina. Another surgical operation was needed to remedy the damage. Thus, in October 1984, she underwent another surgery.

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The spouses filed a complaint for damages alleging that the doctors are liable for negligence for leaving two pieces of gauze inside Natividad’s body and malpractice for concealing their acts of negligence.

On February 16, 1986, pending the outcome of the above case, she died and was duly substituted by her children.

The trial court rendered a judgment holding the doctors liable for negligence and malpractice.

On appeal, the CA dismissed the case against Dr. Fuentes but affirmed the judgment against Dr. Ampil and the hospital.

On September 6, 1996, the Court of Appeals rendered its Decision jointly disposing of CA-GR CV No. 42062 and CA-GR SP No. 32198, dismissing the case against Dr. Fuentes and holding PSI and Dr. Ampil solidarily liable.

Only Dr. Ampil filed a motion for reconsideration, but was denied.

PSI alleged in its petition that the Court of Appeals erred in holding that: (1) it is estopped from raising the defense that Dr. Ampil is not its employee; (2) it is solidarily liable with Dr. Ampil; and (3) it is not entitled to its counterclaim against the Aganas. PSI contended that Dr. Ampil is not its employee, but a mere consultant or independent contractor. As such, he alone should answer for his negligence.

The Aganas maintained that the Court of Appeals erred in finding that Dr. Fuentes is not guilty of negligence or medical malpractice, invoking the doctrine of res ipsa loquitur. They contended that the pieces of gauze are prima facie proofs that the operating surgeons have been negligent.

Dr. Ampil asserted that the Court of Appeals erred in finding him liable for negligence and malpractice sans evidence that he left the two pieces of gauze in Natividad’s vagina. He pointed to other probable cause, such as: (1) it was Dr. Fuentes who used gauzes in performing the hysterectomy; (2) the attending nurses’ failure to properly count the gauzes used during surgery; and (3) the medical intervention of the American doctors who examined Natividad in the United States of America.

The issues submitted to the court were: first, whether the Court of Appeals erred in holding Dr. Ampil liable for negligence and malpractice; second, whether the Court of Appeals erred in absolving Dr. Fuentes of any liability; and third, whether PSI may be held solidarily liable for the negligence of Dr. Ampil.

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Held: (1) Whether the Court of Appeals erred in holding Dr. Ampil liable for negligence and malpractice.

Dr. Ampil argued that the Court should not discount either of the following possibilities: first, Dr. Fuentes left the gauzes in Natividad’s body after performing hysterectomy; second, the attending nurses erred in counting the gauzes; and third, the American doctors were the ones who placed the gauzes in Natividad’s body.

The arguments are purely conjectural and without basis. Records show that he did not present any evidence to prove that the American doctors were the ones who put or left the gauzes in Natividad’s body. Neither did he submit evidence to rebut the correctness of the record of operation, particularly the number of gauzes used. As to the alleged negligence of Dr. Fuentes, Dr. Ampil examined his work and found it in order.

The glaring truth is that all the major circumstances, taken together, as specified by the Court of Appeals, directly point to Dr. Ampil as the negligent party, thus:

First, it is not disputed that the surgeons used gauzes as sponges to control the bleeding of the patient during the surgical operation.

Second, immediately after the operation, the nurses who assisted in the surgery noted in their support that the ‘sponge count (was) lacking 2’; that such anomaly was ‘announced to surgeon’ and that a ‘search was done but to no avail’ prompting Dr. Ampil to ‘continue for closure’ x x x.

Third, after the operation, two (2) gauzes were extracted from the same spot of the body of Mrs. Agana where the surgery was performed.

An operation requiring the placing of sponges in the incision is not complete until the sponges are properly removed, and it is settled that the leaving of sponges or other foreign substances in the wound after the incision has been closed is at least prima facie negligence by the operating surgeon. (Rule v. Cheeseman, 317 P. 2d 472 (1957), citing Russel v. Newman, 116 Kan. 268 P. 752; Bernsden v. Johnson, 174 Kan. 230, 255 P. 2d 1033). To put simply, such act is considered so inconsistent with due care as to raise an inference of negligence. There are even legions of authorities to the effect that such act is negligence per se.

The SC further ruled that it is not blind to the reality that there are times when danger to a patient’s life precludes a surgeon from further searching missing sponges or foreign objects left in the body. But this does not leave him

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free from any obligation. Even if it has been shown that a surgeon was required by the urgent necessities of the case to leave a sponge in his patient’s abdomen, because of the dangers attendant upon delay, still, it is his legal duty to so inform his patient within a reasonable time thereafter by advising her of what he had been compelled to do. This is in order that she might seek relief from the effects of the foreign object left in her body as her condition might permit. In Smith v. Zeagler, it was ruled, thus:

“The removal of all sponges used is part of a surgical operation, and when a physician or surgeon fails to remove a sponge he has placed in his patient’s body that should be removed as part of the operation, he thereby leaves his operation uncompleted and creates a new condition which imposes upon him the legal duty of calling the new condition to his patient’s attention, and endeavoring with the means he has at hand to minimize and avoid untoward results likely to ensue therefrom. (157 So. 328 Pla. (1934)).

Dr. Ampil did not inform Natividad about the missing two pieces of gauze. Worse, he even misled her that the pain she was experiencing was the ordinary consequence of her operation. Had he been more candid, Natividad could have taken the immediate and appropriate medical remedy to remove the gauzes from her body. What was initially an act of negligence by Dr. Ampil has ripened into a deliberate wrongful act of deceiving his patient.

To successfully pursue this kind of case, a patient must only prove that a health care provider either failed to do something which a reasonably prudent health care provider would have done, or that he did something that a reasonably prudent provider would not have done; and that failure or action caused injury to the patient. (Garcia-Rueda v. Pascasio, G.R. No. 118141, September 5, 1997, 278 SCRA 769). Simply put, the elements are duty, breach, injury and proximate causation. Dr. Ampil, as the lead surgeon, had the duty to remove all foreign objects, such as gauzes, from Natividad’s body before closure of the incision. When he failed to do so, it was his duty to inform Natividad about it. Dr. Ampil breached both duties. Such breach caused injury to Natividad, necessitating her further examination by American doctors and another surgery. That Dr. Ampil’s negligence is the proximate cause of Natividad’s injury could be traced from his act of closing the incision despite the information given by the attending nurses that two pieces of gauze were still missing. That they were later on extracted from Natividad’s vagina established the causal link between Dr. Ampil’s negligence and the injury. And what further aggravated such injury was his deliberate concealment of the missing gauzes from the knowledge of Natividad and her family.

(2) Whether the Court of Appeals erred in absolving Dr. Fuentes of any liability.

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The Aganas assailed the dismissal by the trial court of the case against Dr. Fuentes on the ground that it is contrary to the doctrine of res ipsa loquitur. According to them, the fact that the two pieces of gauze were left inside Natividad’s body is a prima facie evidence of Dr. Fuentes’ negligence.

Held: The SC ruled otherwise.

Literally, res ipsa loquitur means “the thing speaks for itself”. It is the rule that the fact of the occurrence of an injury, taken with the surrounding circumstances, may permit an inference or raise a presumption of negligence, or make out a plaintiff’s prima facie case, and present a question of fact for defendant to meet with an explanation. (Ramos v. CA, G.R. No. 124354, December 29, 1999, 321 SCRA 584). Stated differently, where the thing which caused the injury, without the fault of the injured, is under the exclusive control of the defendant and the injury is such that it should not have occurred if he, having such control used proper care, it affords reasonable evidence, in the absence of explanation that the injury arose from the defendant’s want of care, and the burden of proof is shifted to him to establish that he has observed due care and diligence. (Africa v. Caltex (Phils.) Inc., 123 Phil. 280).

From the foregoing statements of the rule, the requisites for the applicability of the doctrine of res ipsa loquitur are: (1) the occurrence of an injury; (2) the thing which caused the injury was under the control and management of the defendant; (3) the occurrence was such that in the ordinary course of things, would not have happened if those who had control or management used proper care; and (4) the absence of explanation by the defendant. Of the foregoing requisites, the most instrumental is the “control and management of the thing which cause the injury”.

The element of “control and management of the thing which caused the injury” are wanting in the case. Hence, the doctrine of res ipsa loquitur will not lie.


Dr. Ampil was the lead surgeon during the operation of Natividad. He requested the assistance of Dr. Fuentes only to perform hysterectomy when he found that the malignancy in her sigmoid area had spread to her left ovary. Dr. Fuentes performed the surgery and thereafter reported and showed his work to Dr. Ampil. The latter examined it and finding everything to be in order, allowed Dr. Fuentes to leave the operating room. Dr. Ampil then resumed operating on Natividad. He was about to finish the procedure when the attending nurses informed him that two pieces of gauze were missing. A “diligent search” was conducted, but the misplaced gauzes were not found. Dr. Ampil then directed that the incision be closed. During this entire period, Dr. Fuentes was no longer in the operating room and had, in fact, left the hospital.

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Under the “Captain of the Ship” rule, the operating surgeon is the person in complete charge of the surgery room and all personnel connected with the operation. Their duty is to obey his orders. (Rural Educational Assn. v. Bush, 42 Tenn. App. 34, 298 S.W. 2d 761 (1956)). As stated before, Dr. Ampil was the lead surgeon. In other words, he was the “Captain of the Ship”. That he discharged such role is evidenced from his following conduct: (1) calling Dr. Fuentes to perform a hysterectomy; (2) examining the work of Dr. Fuentes and finding it in order; (3) granting Dr. Fuentes’ permission to leave; and (4) ordering the closure of the incision. It was this act of ordering the closure of the incision notwithstanding that two pieces of gauze remained unaccounted for, that caused injury to Natividad’s body. Clearly, the control and management of the thing which caused the injury was in the hands of Dr. Ampil, not Dr. Fuentes.

In this jurisdiction, res ipsa loquitur is not a rule of substantive law, hence, does not per se create or constitute an independent or separate ground of liability, being a mere evidentiary rule. In other words, mere invocation and application of the doctrine does not dispense with the requirement of proof of negligence. Here, the negligence was proven to have been committed by Dr. Ampil and not by Dr. Fuentes.

(3) Whether PSI is liable for the negligence of Dr. Ampil.

The third issue necessitates a glimpse at the historical development of hospitals and the resulting theories concerning their liability for the negligence of physicians.


The statute governing liability for negligent acts is Article 2176 of the Civil Code, which reads:

Article 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing

36

contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.

A derivated of this provision is Article 2180, the rule governing vicarious liability under the doctrine of respondeat superior, thus:

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

xxx xxx

The owners and managers of an establishment or enterprise are likewise responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions.

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

xxx xxx

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


Such view is grounded on the traditional notion that the professional status and the very nature of the physician’s calling preclude him from being classed as an agent or employee of a hospital, whenever he acts in a professional capacity. It has been said that medical practice strictly involves highly developed and specialized knowledge, such that physicians are generally free to exercise their own skill and judgment in rendering medical services sans interference. Hence, when a doctor practices medicine in a hospital setting, the hospital and its employees are deemed to subserve him in his ministrations to the patient and his actions are of his own responsibility.

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The case of Schloendorff v. Society of New York Hospital, 211 N.Y. 125, 105 N.E. 92, 52 L.R.A., N.S. 505 (1914), was then considered an authority for this view. The “Schloendorff doctrine” regards a physician, even if employed by a hospital, as an independent contractor because of the skill he exercises and the lack of control exerted over his work. Under this doctrine, hospitals are exempt from the application of the respondeat superior principle for fault or negligence committed by physicians in the discharge of their profession.

However, the efficacy of such doctrine has weakened with the significant developments in medical care. Courts came to realize that modern hospitals are increasingly taking active role in supplying and regulating medical care to patients. No longer were a hospital’s functions limited to furnishing room, food, facilities for treatment and operation, and attendants for its patients. Thus, in Bing v. Thunig, 2 N.Y. 2d 656, 163 NYS 2d 3, 143 (1957), the New York Court of Appeals deviated from the Schloendorff doctrine, noting that modern hospitals actually do far more than provide facilities for treatment. Rather, they regularly employ, on a salaried basis, a large staff of physicians, interns, nurses, administrative and manual workers. They charge patients for medical care and treatment, even collecting for such services through legal action, if necessary. The court then concluded that there is no reason to exempt hospitals from the universal rule of respondeat superior.




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After a physician is accepted, either as a visiting or attending consultant, he is normally required to attend clinico-pathological conferences, conduct bedside rounds for clerks, interns and residents, moderate grand rounds and patient audits and perform other tasks and responsibilities, for the privilege of being able to maintain a clinic in the hospital, and/or for the privilege of admitting patients into the hospital. In addition to these, the physician’s performance as a specialist is generally evaluated by a peer review committee on the basis of mortality and morbidity statistics, and feedback from patients, nurses, interns and residents. A consultant remiss in his duties, or a consultant who regularly falls short of the minimum standards acceptable to the hospital or its peer review committee, is normally politely terminated.

In other words, private hospitals, hire, fire and exercise real control over their attending and visiting ‘consultant’ staff. While ‘consultants’ are not, technically employees, x x x , the control exercised, the hiring, and the right to terminate consultants all fulfill the important hallmarks of an employer-employee relationship, with the exception of the payment of wages. In assessing whether such a relationship in fact exists, the control test is determining. Accordingly, on the basis of the foregoing, we rule that for the purpose of allocating responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians.”

Doctrine of apparent authority, etc.

The Ramos pronouncement is not the only basis in sustaining PSI’s liability. Its liability is also anchored upon the agency principle of apparent authority or agency by estoppel and the doctrine of corporate negligence which have gained acceptance in the determination of a hospital’s liability for negligent acts of health professionals.

Doctrine of apparent authority or the holding out theory; or doctrine of ostensible agency or agency by estoppel.

This doctrine imposes liability, not as the result of the reality of a contractual relationship, but rather because of the actions of a principal or an employer in somehow misleading the public into believing that the relationship or the authority exists. (Irving v. Doctors Hospital of Lake Worth, Inc., 415 So. 2d 55 (1982), quoting Arthur v. St. Peters Hospital, 169 N.J. 575, 405 A 2d 443 (1979)). The concept is essentially one of estoppel.

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Under the rule, the principal is bound by the acts of his agent with the apparent authority which he knowingly permits the agent to assume, or which he holds to the agent out to the public as possessing. The question in every case is whether the principal has by his voluntary act placed the agent with business usages and the nature of the particular business, is justified in presuming that such agent has authority to perform the particular act in question. (Hudson C., Loan Assn., Inc. v. Horowytz, 116 N.J.L. 605, 608 A 437 (Supp. Ct. 1936).

The applicability of the doctrine of apparent authority in the field of hospital liability has been upheld in Irving v. Doctor Hospital of Lake Worth Inc.. In this case, it was said that there does not appear to be any rational basis for excluding the concept of apparent authority from the field of hospital liability. In cases where it can be shown that a hospital, by its actions, has held out a particular physician as its agent and/or employee and that the patient has accepted treatment from the physician in the reasonable belief that it is being tendered in behalf of the hospital, then the hospital will be liable for the physician’s negligence.

The Civil Code recognizes the concept of agency by implication or estoppel. Article 1869 of the Civil Code provides:

“Agency may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority.”

The defendant Professional Services, Inc. displayed in the lobby of the Medical City Hospital the names and specializations of the physicians associated or accredited by it. It is estopped from passing all blame to the physicians whose names it proudly paraded in the public directory leading the public to believe that it vouched for their skill and competence. That is tantamount to holding out to the public that the hospital through its accredited physicians, offers quality health care services. By accrediting the doctors and publicly advertising their qualifications, the hospital created the impression that they were agents, authorized to perform medical and surgical services for its patients. As expected, the patients accepted the services on the reasonable belief that such were being rendered by the hospital or its employees, agents or servants.

As aptly said by the trial court:

“x x x regardless of the education and status in life of the patient, he ought not be burdened with the defense of absence of employer-employee relationship between the hospital and the independent physician whose name and competence are certainly certified to the general public by the hospital’s act of listing him and his

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specialty in its lobby. The high costs of today’s medical and health care should not at least exact on the hospital greater, if not broader, legal responsibility for the conduct of treatment and surgery within its facility by its accredited physician or surgeon, regardless of whether he is independent or employed.”

The wisdom of such reasoning is easy to discern. Corporate entities like hospitals are capable of acting only through other individuals like physicians. If these accredited physicians do their job well, the hospital succeeds in its mission of offering quality medical services and thus, profits financially. Logically, where negligence mars the quality of its services, the hospital should not be allowed to escape liability for the acts of its ostensible agents. (Professional Services, Inc. v. Agana, G.R. No. 126297; Agana v. Juan Fuentes, G.R. No. 126467; Ampil v. Agana, G.R. No. 127590, January 31, 2007).

Doctrine of corporate negligence or corporate responsibility.

The complaint alleged that PSI as owner, operator and manager of Medical City Hospital did not perform the necessary supervision or exercise diligent efforts in the supervision of Dr. Ampil and Fuentes and its nursing staff, resident doctors, medical interns who assisted the doctors in the performance of their duties. Hence, premised on the doctrine of corporate negligence, PSI is directly liable for such breach of duty.

Is the contention correct? Why?

Held: Yes. It was duly established that PSI operates the Medical City Hospital for the purpose and under the concept of providing comprehensive medical services to the public. Accordingly, it has the duty to exercise reasonable care to protect from harm all patients admitted into its facility for medical treatment. Unfortunately, PSI failed to perform such duty. The findings of the trial court are convincing, thus:

x x x x PSI’s liability is traceable to its failure to conduct an investigation of the matter reported in the nota bene of the count nurse. Such failure established PSI’s part in the dark conspiracy of silence and concealment about the gauzes. Ethical considerations, if not also legal, dictated the holding of an immediate inquiry into the events, if not for the benefit of the patient to whom the duty is primarily owed, then in the interest of arriving at the truth. The Court cannot accept that the medical and the healing professions, through their members like defendant surgeons, and their institutions like PSI’s hospital facility, can callously turn their backs on and disregard even a mere probability of mistake or

41

negligence by refusing or failing to investigate a report of such seriousness as the one in Natividad’s case.

It is worthy to note that Dr. Ampil and Dr. Fuentes operated on Natividad with the assistance of the Medical City Hospital’s staff, composed of resident doctors, nurses, and interns. As such, it is reasonable to conclude that PSI, as the operator of the hospital, has actual or constructive knowledge of the procedures carried out, particularly the report of the attending nurses that the two pieces of gauze were missing. In Fridena v. Evans,127 Ariz. 516, 622 P. 2d 463 (1980), it was held that a corporation is bound by the knowledge acquired by or notice given to its agents or officers within the scope of their authority and in reference to a matter to which their authority extends. This means that the knowledge of any of the staff of Medical City Hospital constitutes knowledge of PSI. The failure of PSI, despite the attending nurses’ report, to investigate and inform the patient regarding the missing gauzes amounts to callous negligence. Not only did PSI breach its duties to oversee or supervise all persons who practice medicine within its walls, it also failed to take an active step in fixing the negligence committed. This renders PSI, not only vicariously liable for the negligence of Dr. Ampil under Article 2180 of the Civil Code, but also directly liable for its own negligence under Article 2176. In Fridena, the Supreme Court of Arizona held:

x x x In recent years, however, the duty of care owed to the patient by the hospital has expanded. The emerging trend is to hold the hospital responsible where the hospital has failed to monitor and review medical services being provided within its walls. See Kahn Hospital Malpractice Prevention, 27 De Paul. Rev. 23 (1977).

Among the cases indicative of the ‘emerging trend’ is Purcell v. Zimbelman, 18 Ariz. App. 75,500 P. 2d 335 (1972). In Purcell, the hospital argued that it could not be held liable for the malpractice of a medical practitioner because he was an independent contractor within the hospital. The Court of Appeals pointed out that the hospital had created a professional staff whose competence and performance was to be monitored and reviewed by the governing body of the hospital, and the court held that a hospital would be negligent where it had knowledge or reason to believe that a doctor using the facilities was employing a method of treatment or care which fell below the recognized standard of care.

Subsequent to the Purcell decision, the Arizona Court of Appeals held that a hospital has certain inherent responsibilities regarding the quality of medical care furnished to patients within its walls and it must meet the standards of responsibility commensurate with this undertaking. Beeck v. Tucson General Hospital, 18 Ariz. App. 165, 500 P. 2d 1153 (1972). This court has

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confirmed the rulings of the Court of Appeals that a hospital has the duty of supervising the competence of the doctors on its staff. xxx.

x x x x x x

In the amended complaint, the plaintiffs did plead that the operation was performed at the hospital with its knowledge, aid, and assistance, and that the negligence of the defendants was the proximate cause of the patient’s injuries. We find that such general allegations of negligence, along with the evidence produced at the trial of this case, are sufficient to support the hospital’s liability based on the theory of negligent supervision.”

Anent the corollary issue of whether PSI is solidarily liable with Dr. Ampil for damages, let it be emphasized that PSI, apart from a general denial of its responsibility, failed to adduce evidence showing that it exercised the diligence of a good father of a family in the accreditation and supervision of the latter. In neglecting to offer such proof, PSI failed to discharge its burden under the last paragraph of Article 2180 cited earlier, and, therefore, must be adjudged solidarily liable with Dr. Ampil. Moreover, as we have discussed, PSI is also directly liable to the Aganas.

One final word. Once a physician undertakes the treatment and care of a patient, the law imposes on him certain obligations. In order to escape liability, he must possess that reasonable degree of learning, skill and experience required by his profession. At the same time, he must apply reasonable care and diligence in the exercise of his skill and the application of his knowledge, and exert his best judgment.

History of the doctrine of corporate negligence.

Recent years have seen the doctrine of corporate negligence as the judicial answer to the problem of allocating hospital’s liability for the negligent acts of health practitioners, absent facts to support the application of respondeat superior or apparent authority. Its formulation proceeds from the judiciary’s acknowledgment that in these modern times, the duty of providing quality medical service is no longer the sole prerogative and responsibility of the physician. The modern hospitals have changed structure. Hospitals now tend to organize a highly-professional medical staff whose competence and performance need to be monitored by the hospitals commensurate with their inherent responsibility to provide quality medical care. (Purcell v. Zimberman, 18 Ariz. App. 75, 500 P 2d 335 (1972)).

The doctrine has its genesis in Darling v. Charleston Community Hospital, 33 Ill. 2d 326, 211 N.E. 2d 253). There, the Supreme Court of Illinois held that

43

“the jury could have found a hospital negligent, inter alia, in failing to have a sufficient number of trained nurses attending the patient; failing to require a consultation with or examination by members of the hospital staff; and failing to review the treatment rendered to the patient.” On the basis of Darling, other jurisdictions held that a hospital’s corporate negligence extends to permitting a physician known to be incompetent to practice at the hospital. (Corleto v. Hospital, 138 N.J. Super. 302, 350 A. 2d 534 (Super. Ct. Law Div. 1975); Purcell v. Zimbelman, 18 Ariz. App. 75,500 P. 2d 335 (1972); Hospital Authority v. Joiner, 229 Ga. 140, 189 S.E. 2d 412 (1972)). With the passage of time, more duties were expected from hospitals, among them: (1) the use of reasonable care in the maintenance of safe and adequate facilities and equipment; (2) the selection and retention of competent physicians; (3) the overseeing or supervision of all persons who practice medicine within its walls; and (4) the formulation, adoption and enforcement of adequate rules and policies that ensure quality care for its patients. (Welsh v. Bulger, 548 Pa. 504, 698 A. 2d 581 (1997)). Thus, in Tucson Medical Center, Inc. v. Misevich, 115 Ariz. 34, 545 P 2d 958 (1976), it was held that a hospital, following the doctrine of corporate responsibility, has the duty to see that it meets the standards of responsibilities for the care of patients. Such duty includes the proper supervision of the members of its medical staff. And in Bost v. Riley, 262 S.E. 2d 391, 300 NC 194, 269 S.E. 2d 621 (1980), the court concluded that a patient who enters a hospital does so with the reasonable expectation that it will attempt to cure him. The hospital accordingly has the duty to make a reasonable effort to monitor and oversee the treatment prescribed and administered by the physicians practicing in its premises. tly liable for such breach of duty.



x x x x PSI’s liability is traceable to its failure to conduct an investigation of the matter reported in the nota bene of the count nurse. Such failure established PSI’s part in the dark conspiracy of silence and concealment about the gauzes. Ethical considerations, if not also legal, dictated the holding of an immediate inquiry into the events, if not for the benefit of the patient to whom the duty is primarily owed, then in the interest of arriving at the truth. The Court cannot accept that the medical and the healing professions, through their members like defendant surgeons, and their institutions like PSI’s hospital facility, can callously turn their

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backs on and disregard even a mere probability of mistake or negligence by refusing or failing to investigate a report of such seriousness as the one in Natividad’s case.

It is worthy to note that Dr. Ampil and Dr. Fuentes operated on Natividad with the assistance of the Medical City Hospital’s staff, composed of resident doctors, nurses, and interns. As such, it is reasonable to conclude that PSI, as the operator of the hospital, has actual or constructive knowledge of the procedures carried out, particularly the report of the attending nurses that the two pieces of gauze were missing. In Fridena v. Evans,127 Ariz. 516, 622 P. 2d 463 (1980), it was held that a corporation is bound by the knowledge acquired by or notice given to its agents or officers within the scope of their authority and in reference to a matter to which their authority extends. This means that the knowledge of any of the staff of Medical City Hospital constitutes knowledge of PSI. The failure of PSI, despite the attending nurses’ report, to investigate and inform the patient regarding the missing gauzes amounts to callous negligence. Not only did PSI breach its duties to oversee or supervise all persons who practice medicine within its walls, it also failed to take an active step in fixing the negligence committed. This renders PSI, not only vicariously liable for the negligence of Dr. Ampil under Article 2180 of the Civil Code, but also directly liable for its own negligence under Article 2176. In Fridena, the Supreme Court of Arizona held:



Subsequent to the Purcell decision, the Arizona Court of Appeals held that a hospital has certain inherent responsibilities regarding the quality of medical care furnished to patients within its walls and it must meet the standards of responsibility commensurate with this undertaking. Beeck v. Tucson General

45

Hospital, 18 Ariz. App. 165, 500 P. 2d 1153 (1972). This court has confirmed the rulings of the Court of Appeals that a hospital has the duty of supervising the competence of the doctors on its staff. xxx.

x x x x x x


Anent the corollary issue of whether PSI is solidarily liable with Dr. Ampil for damages, let it be emphasized that PSI, apart from a general denial of its responsibility, failed to adduce evidence showing that it exercised the diligence of a good father of a family in the accreditation and supervision of the latter. In neglecting to offer such proof, PSI failed to discharge its burden under the last paragraph of Article 2180 cited earlier, and, therefore, must be adjudged solidarily liable with Dr. Ampil. Moreover, as we have discussed, PSI is also directly liable to the Aganas.




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The doctrine has its genesis in Darling v. Charleston Community Hospital, 33 Ill. 2d 326, 211 N.E. 2d 253). There, the Supreme Court of Illinois held that “the jury could have found a hospital negligent, inter alia, in failing to have a sufficient number of trained nurses attending the patient; failing to require a consultation with or examination by members of the hospital staff; and failing to review the treatment rendered to the patient.” On the basis of Darling, other jurisdictions held that a hospital’s corporate negligence extends to permitting a physician known to be incompetent to practice at the hospital. (Corleto v. Hospital, 138 N.J. Super. 302, 350 A. 2d 534 (Super. Ct. Law Div. 1975); Purcell v. Zimbelman, 18 Ariz. App. 75,500 P. 2d 335 (1972); Hospital Authority v. Joiner, 229 Ga. 140, 189 S.E. 2d 412 (1972)). With the passage of time, more duties were expected from hospitals, among them: (1) the use of reasonable care in the maintenance of safe and adequate facilities and equipment; (2) the selection and retention of competent physicians; (3) the overseeing or supervision of all persons who practice medicine within its walls; and (4) the formulation, adoption and enforcement of adequate rules and policies that ensure quality care for its patients. (Welsh v. Bulger, 548 Pa. 504, 698 A. 2d 581 (1997)). Thus, in Tucson Medical Center, Inc. v. Misevich, 115 Ariz. 34, 545 P 2d 958 (1976), it was held that a hospital, following the doctrine of corporate responsibility, has the duty to see that it meets the standards of responsibilities for the care of patients. Such duty includes the proper supervision of the members of its medical staff. And in Bost v. Riley, 262 S.E. 2d 391, 300 NC 194, 269 S.E. 2d 621 (1980), the court concluded that a patient who enters a hospital does so with the reasonable expectation that it will attempt to cure him. The hospital accordingly has the duty to make a reasonable effort to monitor and oversee the treatment prescribed and administered by the physicians practicing in its premises.

Negligence; its concept.

In PNR, et al. vs. CA, et al., G.R. No. 157658, October 15, 2007, once against the SC held PNR liable for damages due to its failure to provide safety measures for the protection of the lives and limbs of commuters crossing its railroad tracks. In fact, such negligent acts resulted in the death of a commuter.

In the early afternoon of April 27, 1992, Jose Amores was traversing the railroad tracks in Kahilum II Street, Pandacan, Manila. Before crossing the railroad track, he stopped for a while then proceeded accordingly. Unfortunately, just as Amores was at the intersection, a Philippine National Railways' (PNR) train turned up and collided with the car.

At the time of the mishap, there was neither a signal nor a crossing bar at the intersection to warn motorists of an approaching train. Aside from the railroad track, the only visible warning sign at that time was the defective standard signboard “STOP, LOOK and LISTEN” wherein the sign “Listen” was lacking

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while that of “Look” was bent. No whistle blow from the train was likewise heard before it finally bumped the car of Amores. After impact, the car was dragged about ten (10) meters beyond the center of the crossing. Amores died as a consequence thereof.

In their complaint, respondent averred that the train's speedometer was defective, and that the petitioners' negligence was the proximate cause of the mishap for their failure to take precautions to prevent injury to persons and property despite the dense population in the vicinity. They then prayed for actual and moral damages, as well as attorney’s fees.

In their Answer, the petitioners denied the allegations, stating that the train was railroadworthy and without any defect. According to them, the proximate cause of the death of Amores was his own carelessness and negligence, and Amores wantonly disregarded traffic rules and regulationss in crossing the railroad tracks and trying to beat the approaching train. They admitted that there was no crossing bar at the site of the accident because it was merely a barangay road. PNR stressed that it exercised the diligence of a good father of a family in the selection and supervision of the locomotive driver and train engineer, Borja, and that the latter likewise used extraordinary diligence and caution to avoid the accident. Petitioners further asserted that respondents had the last clear chance to avoid the accident but recklessly failed to do so.

After trial on the merits, the RTC dismissed the complaint ruling that the proximate cause of the collision was Amores' fatal misjudgment and the reckless course of action he took in crossing the railroad track even after seeing or hearing the oncoming train.

On appeal, the CA reversed the RTC decision and found the petitioners negligent. The court based the petitioners' negligence on the failure of the PNR to install a semaphore or at the very least, to post a flagman, considering that the crossing is located in a thickly populated area. Moreover, the signboard “Stop, Look and Listen” was found insufficient because of its defective condition as described above. Lastly, no negligence could be attributed to Amores as he exercised reasonable diligence in crossing the railroad track, hence, a petition for review on certiorari was filed with the SC reiterating their contentions.

Held: The SC held that petitioners liable for damages due to their negligence, ruling that whenever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there was no preexisting contractual relation between the parties, is called quasidelict and is governed by the provisions of this chapter.(Art. 2176, NCC).

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Negligence has been defined as “the failure to observe for the protection of the interest of another person that degree of care, precaution, and vigilance which the circumstances justly demand, whereby such other person suffers injury.” Using the aforementioned philosophy, it may be reliably concluded that there is no hard and fast rule whereby such degree of care and vigilance is calibrated; it is dependent upon the circumstances in which a person finds himself. All that the law requires is that it is perpetually compelling upon a person to use that care and diligence expected of sensible men under comparable circumstances.

The petitioners were negligent when the collision took place. The train was running at a fast speed because notwithstanding the application of the ordinary and emergency brakes, the train still dragged the car some distance away from the point of impact. Evidence likewise unveils the inadequate precautions taken by petitioner PNR to forewarn the public of the impending danger. Aside from not having any crossing bar, no flagman or guard to man the intersection at all times was posted on the day of the incident. A reliable signaling device in good condition, not just a dilapidated “Stop, Look and Listen” signage because of many years of neglect, is needed to give notice to the public. It is the responsibility of the railroad company to use reasonable care to keep the signal devices in working order. Failure to do so would be an indication of negligence.

As held in the case of Philippine National Railway vs. Brunty, 90 SCRA 357 ([1979]), it may broadly be stated that railroad companies owe to the public a duty of exercising a reasonable degree of care to avoid injury to persons and property at railroad crossings, which duties pertain both to the operation of trains and to the maintenance of the crossings. Moreover, every corporation constructing or operating a railway shall make and construct at all points where such railway crosses any public road, good, sufficient, and safe crossings, and erect at such points, at sufficient elevation from such road as to admit a free passage of vehicle of every kind, a sign with large and distinct letters placed thereon, to give notice of the proximity of the railway, and warn persons of the necessity of looking out for trains. The failure of the PNR to put a cross bar, or signal light, flagman or switchman, or semaphore is evidence of negligence and disregard of the safety of the public, even if thre is no law or ordinance requiring it, because public safety demands that said device or equipment be installed.

Rightofway in a railroad crossing.

The petitioners insist that a train has a rightofway in a railroad crossing under the existing laws. They derive their theory from Section 42(d), Article III of

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R.A. No. 4136, otherwise known as the Land Transportation and Traffic Code, which stattes that:

The driver of a vehicle upon a highway shall bring to a full stop such vehicle before traversing any “through highway” or railroad crossing: Provided, That when it is apparent that no hazard exists, the vehicle may be slowed down to five miles per hour instead of bringing it to a full stop.

They claim that motorists are enjoined by law to stop, look and listen before crossing railroad tracks and that a heavier responsibility rests upon the motorists in avoiding accidents at level crossings.

It is true that one driving an automobile must use his faculties of seeing and hearing when nearing a railroad crossing. However, the obligation to bring to a full stop vehicles moving in public highways before traversing any “through street” only accrues from the time the said “through street” or crossing is so designated and signposted. Amores exercised all the necessary precautions required of him as to avoid injury to himself and to others since he slackened his speed, made a full stop, and then proceeded to cross the tracks when he saw that there was no impending danger to his life. He did everything, with absolute care and caution, to avoid the collision.

It is settled that every person or motorist crossing a railroad track should use ordinary prudence and alertness to determine the proximity of a train before attempting to cross, for no person would sacrifice his precious life if he had the slightest opportunity to evade the catastrophe. Besides, the authority in this jurisdiction is that the failure of a railroad company to install a semaphore or at the very least, to post a flagman or watchman to warn the public of the passing train amounts to negligence. (PNR vs. Intermediate Appeallate Court, G.R. No. 70547, January 22, 1993, 271 SCRA 401, 416, citing Lilius vs. Manila Railroad Company, 59 Phil. 758 ([1934]).

Liability of PNR.

The liability of petitioner PNR is governed by Article 2180 of the New Civil Code which discusses the liability of the employer once negligence or fault on the part of the employee has been established. The employer is actually liable on the assumption of juris tantum that the employer failed to exercise diligentissimi patris families in the selection and supervision of its employees. The liability is primary and can only be negated by showing due diligence in the selection and supervision of the employee, a factual matter that has not been demonstrated.

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(Light Railway Transit Authority vs. Natividad, 397 SCRA 75 ([2003]). Even the existence of hiring procedures and supervisory employees cannot be incidentally invoked to overturn the presumption of negligence on the part of the employer. (Fabre, Jr. vs. CA, G.R. No. 111127, July 26, 1996, 259 SCRA 426, 434435, citing Metro Manila Transit Corp. vs. CA, 233 SCRA 521 ([1993]); Campo vs. Camarote, 100 Phil. 459 ([1956]).

From sc.dec.06-07

QUASI-DELICT and DAMAGES

Liability of hospitals under the doctrine of apparent authority and doctrine of corporate negligence.

The case of Professional Services, Inc. v. Agana, G.R. No. 126297; Agana, et al. v. Fuentes, G.R. No. 126467; Ampil v. Agana, et al., G.R. No. 127590, January 31, 2007 set the precedent for the liability of hospitals for the negligence of doctors employed by it, or even consultants. The SC said that courts in holding a hospital liable for damages, having undertaken one of mankind’s most important and delicate endeavors, must assume the grave responsibility of pursuing it with appropriate care. The care and service dispensed through this high trust, however technical, complex and esoteric its character may be, must meet standards of responsibility commensurate with the undertaking to preserve and protect the health, and indeed, the very lives of those placed in the hospital’s keeping. (Beeck v. Tuzon General Hospital, 500 P. 2d 1153 (1972), citing Darling v. Charleston Community Memorial Hospital, 33 Ill. 2d 326, 211 N.E. 2d 253).

Dr. Ampil, assisted by the medical staff of the Medical City Hospital, performed an anterior resection surgery on Natividad. He found that the malignancy in her sigmoid area had spread on her left ovary, necessitating the removal of certain portions of it. Thus, Dr. Ampil obtained the consent of Natividad’s husband, Enrique Agana, to permit Dr. Juan Fuentes, to perform hysterectomy on her.

After Dr. Fuentes had completed the hysterectomy, Dr. Ampil took over, completed the operation and closed the incision.

The operation appeared to be flawed, because the attending nurse entered these remarks:

“sponge count lacking 2

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“announced to surgeon searched (sic) done but to no avail continue for closure.”

Natividad was released from the hospital, but later on complained of excruciating pain in her anal region. She consulted both doctors about it. They told her that the pain is the natural consequence of the surgery. Dr. Ampil then recommended that she consult an oncologist to examine the cancerous nodes which were not removed during the operation.

Accompanied by her husband she went to the United States to seek further treatment. After four months of consultations and laboratory examinations, she was told she was free of cancer. Hence, she was advised to return to the Philippines.

After her return to the Philippines, her daughter found a piece of gauze protruding from her vagina. Upon being informed about it, Dr. Ampil proceeded to her house where he managed to extract by hand a piece of gauze measuring 1.5 inches in width. He then assured her that the pains would soon vanish.

Dr. Ampil’s assurance did not come true. Instead, the pains intensified, prompting Natividad to seek treatment at the Polymedic General Hospital. While confined there, Dr. Ramon Gutierrez detected the presence of another foreign object in her vagina – a foul-smelling gauze measuring 1.5 inches in width badly infected her vaginal vault. A recto-vaginal fistula had formed in her reproductive organs which forced stool to excrete through the vagina. Another surgical operation was needed to remedy the damage. Thus, in October 1984, she underwent another surgery.

The spouses filed a complaint for damages alleging that the doctors are liable for negligence for leaving two pieces of gauze inside Natividad’s body and malpractice for concealing their acts of negligence.

On February 16, 1986, pending the outcome of the above case, she died and was duly substituted by her children.

The trial court rendered a judgment holding the doctors liable for negligence and malpractice.

On appeal, the CA dismissed the case against Dr. Fuentes but affirmed the judgment against Dr. Ampil and the hospital.

On September 6, 1996, the Court of Appeals rendered its Decision jointly disposing of CA-GR CV No. 42062 and CA-GR SP No. 32198, dismissing the case against Dr. Fuentes and holding PSI and Dr. Ampil solidarily liable.

Only Dr. Ampil filed a motion for reconsideration, but was denied.

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PSI alleged in its petition that the Court of Appeals erred in holding that: (1) it is estopped from raising the defense that Dr. Ampil is not its employee; (2) it is solidarily liable with Dr. Ampil; and (3) it is not entitled to its counterclaim against the Aganas. PSI contended that Dr. Ampil is not its employee, but a mere consultant or independent contractor. As such, he alone should answer for his negligence.

The Aganas maintained that the Court of Appeals erred in finding that Dr. Fuentes is not guilty of negligence or medical malpractice, invoking the doctrine of res ipsa loquitur. They contended that the pieces of gauze are prima facie proofs that the operating surgeons have been negligent.

Dr. Ampil asserted that the Court of Appeals erred in finding him liable for negligence and malpractice sans evidence that he left the two pieces of gauze in Natividad’s vagina. He pointed to other probable cause, such as: (1) it was Dr. Fuentes who used gauzes in performing the hysterectomy; (2) the attending nurses’ failure to properly count the gauzes used during surgery; and (3) the medical intervention of the American doctors who examined Natividad in the United States of America.

The issues submitted to the court were: first, whether the Court of Appeals erred in holding Dr. Ampil liable for negligence and malpractice; second, whether the Court of Appeals erred in absolving Dr. Fuentes of any liability; and third, whether PSI may be held solidarily liable for the negligence of Dr. Ampil.

Held: (1) Whether the Court of Appeals erred in holding Dr. Ampil liable for negligence and malpractice.

Dr. Ampil argued that the Court should not discount either of the following possibilities: first, Dr. Fuentes left the gauzes in Natividad’s body after performing hysterectomy; second, the attending nurses erred in counting the gauzes; and third, the American doctors were the ones who placed the gauzes in Natividad’s body.

The arguments are purely conjectural and without basis. Records show that he did not present any evidence to prove that the American doctors were the ones who put or left the gauzes in Natividad’s body. Neither did he submit evidence to rebut the correctness of the record of operation, particularly the number of gauzes used. As to the alleged negligence of Dr. Fuentes, Dr. Ampil examined his work and found it in order.

The glaring truth is that all the major circumstances, taken together, as specified by the Court of Appeals, directly point to Dr. Ampil as the negligent party, thus:

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First, it is not disputed that the surgeons used gauzes as sponges to control the bleeding of the patient during the surgical operation.

Second, immediately after the operation, the nurses who assisted in the surgery noted in their support that the ‘sponge count (was) lacking 2’; that such anomaly was ‘announced to surgeon’ and that a ‘search was done but to no avail’ prompting Dr. Ampil to ‘continue for closure’ x x x.

Third, after the operation, two (2) gauzes were extracted from the same spot of the body of Mrs. Agana where the surgery was performed.

An operation requiring the placing of sponges in the incision is not complete until the sponges are properly removed, and it is settled that the leaving of sponges or other foreign substances in the wound after the incision has been closed is at least prima facie negligence by the operating surgeon. (Rule v. Cheeseman, 317 P. 2d 472 (1957), citing Russel v. Newman, 116 Kan. 268 P. 752; Bernsden v. Johnson, 174 Kan. 230, 255 P. 2d 1033). To put simply, such act is considered so inconsistent with due care as to raise an inference of negligence. There are even legions of authorities to the effect that such act is negligence per se.

The SC further ruled that it is not blind to the reality that there are times when danger to a patient’s life precludes a surgeon from further searching missing sponges or foreign objects left in the body. But this does not leave him free from any obligation. Even if it has been shown that a surgeon was required by the urgent necessities of the case to leave a sponge in his patient’s abdomen, because of the dangers attendant upon delay, still, it is his legal duty to so inform his patient within a reasonable time thereafter by advising her of what he had been compelled to do. This is in order that she might seek relief from the effects of the foreign object left in her body as her condition might permit. In Smith v. Zeagler, it was ruled, thus:

“The removal of all sponges used is part of a surgical operation, and when a physician or surgeon fails to remove a sponge he has placed in his patient’s body that should be removed as part of the operation, he thereby leaves his operation uncompleted and creates a new condition which imposes upon him the legal duty of calling the new condition to his patient’s attention, and endeavoring with the means he has at hand to minimize and avoid untoward results likely to ensue therefrom. (157 So. 328 Pla. (1934)).

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Dr. Ampil did not inform Natividad about the missing two pieces of gauze. Worse, he even misled her that the pain she was experiencing was the ordinary consequence of her operation. Had he been more candid, Natividad could have taken the immediate and appropriate medical remedy to remove the gauzes from her body. What was initially an act of negligence by Dr. Ampil has ripened into a deliberate wrongful act of deceiving his patient.

To successfully pursue this kind of case, a patient must only prove that a health care provider either failed to do something which a reasonably prudent health care provider would have done, or that he did something that a reasonably prudent provider would not have done; and that failure or action caused injury to the patient. (Garcia-Rueda v. Pascasio, G.R. No. 118141, September 5, 1997, 278 SCRA 769). Simply put, the elements are duty, breach, injury and proximate causation. Dr. Ampil, as the lead surgeon, had the duty to remove all foreign objects, such as gauzes, from Natividad’s body before closure of the incision. When he failed to do so, it was his duty to inform Natividad about it. Dr. Ampil breached both duties. Such breach caused injury to Natividad, necessitating her further examination by American doctors and another surgery. That Dr. Ampil’s negligence is the proximate cause of Natividad’s injury could be traced from his act of closing the incision despite the information given by the attending nurses that two pieces of gauze were still missing. That they were later on extracted from Natividad’s vagina established the causal link between Dr. Ampil’s negligence and the injury. And what further aggravated such injury was his deliberate concealment of the missing gauzes from the knowledge of Natividad and her family.

(2) Whether the Court of Appeals erred in absolving Dr. Fuentes of any liability.

The Aganas assailed the dismissal by the trial court of the case against Dr. Fuentes on the ground that it is contrary to the doctrine of res ipsa loquitur. According to them, the fact that the two pieces of gauze were left inside Natividad’s body is a prima facie evidence of Dr. Fuentes’ negligence.

Held: The SC ruled otherwise.

Literally, res ipsa loquitur means “the thing speaks for itself”. It is the rule that the fact of the occurrence of an injury, taken with the surrounding circumstances, may permit an inference or raise a presumption of negligence, or make out a plaintiff’s prima facie case, and present a question of fact for defendant to meet with an explanation. (Ramos v. CA, G.R. No. 124354, December 29, 1999, 321 SCRA 584). Stated differently, where the thing which caused the injury, without the fault of the injured, is under the exclusive control of the defendant and the injury is such that it should not have occurred if he, having such control used proper care, it affords reasonable evidence, in the absence of explanation that the injury arose from the defendant’s want of care, and the

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burden of proof is shifted to him to establish that he has observed due care and diligence. (Africa v. Caltex (Phils.) Inc., 123 Phil. 280).

From the foregoing statements of the rule, the requisites for the applicability of the doctrine of res ipsa loquitur are: (1) the occurrence of an injury; (2) the thing which caused the injury was under the control and management of the defendant; (3) the occurrence was such that in the ordinary course of things, would not have happened if those who had control or management used proper care; and (4) the absence of explanation by the defendant. Of the foregoing requisites, the most instrumental is the “control and management of the thing which cause the injury”.

The element of “control and management of the thing which caused the injury” are wanting in the case. Hence, the doctrine of res ipsa loquitur will not lie.


Dr. Ampil was the lead surgeon during the operation of Natividad. He requested the assistance of Dr. Fuentes only to perform hysterectomy when he found that the malignancy in her sigmoid area had spread to her left ovary. Dr. Fuentes performed the surgery and thereafter reported and showed his work to Dr. Ampil. The latter examined it and finding everything to be in order, allowed Dr. Fuentes to leave the operating room. Dr. Ampil then resumed operating on Natividad. He was about to finish the procedure when the attending nurses informed him that two pieces of gauze were missing. A “diligent search” was conducted, but the misplaced gauzes were not found. Dr. Ampil then directed that the incision be closed. During this entire period, Dr. Fuentes was no longer in the operating room and had, in fact, left the hospital.

Under the “Captain of the Ship” rule, the operating surgeon is the person in complete charge of the surgery room and all personnel connected with the operation. Their duty is to obey his orders. (Rural Educational Assn. v. Bush, 42 Tenn. App. 34, 298 S.W. 2d 761 (1956)). As stated before, Dr. Ampil was the lead surgeon. In other words, he was the “Captain of the Ship”. That he discharged such role is evidenced from his following conduct: (1) calling Dr. Fuentes to perform a hysterectomy; (2) examining the work of Dr. Fuentes and finding it in order; (3) granting Dr. Fuentes’ permission to leave; and (4) ordering the closure of the incision. It was this act of ordering the closure of the incision notwithstanding that two pieces of gauze remained unaccounted for, that caused injury to Natividad’s body. Clearly, the control and management of the thing which caused the injury was in the hands of Dr. Ampil, not Dr. Fuentes.

In this jurisdiction, res ipsa loquitur is not a rule of substantive law, hence, does not per se create or constitute an independent or separate ground of liability, being a mere evidentiary rule. In other words, mere invocation and application of the doctrine does not dispense with the requirement of proof of

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negligence. Here, the negligence was proven to have been committed by Dr. Ampil and not by Dr. Fuentes.

(3) Whether PSI is liable for the negligence of Dr. Ampil.

The third issue necessitates a glimpse at the historical development of hospitals and the resulting theories concerning their liability for the negligence of physicians.


The statute governing liability for negligent acts is Article 2176 of the Civil Code, which reads:

Article 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.

A derivated of this provision is Article 2180, the rule governing vicarious liability under the doctrine of respondeat superior, thus:

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

xxx xxx

The owners and managers of an establishment or enterprise are likewise responsible for damages caused by their employees in the service of the branches in which the latter are employed or on the occasion of their functions.

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

xxx xxx

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


Such view is grounded on the traditional notion that the professional status and the very nature of the physician’s calling preclude him from being classed as an agent or employee of a hospital, whenever he acts in a professional capacity. It has been said that medical practice strictly involves highly developed and specialized knowledge, such that physicians are generally free to exercise their own skill and judgment in rendering medical services sans interference. Hence, when a doctor practices medicine in a hospital setting, the hospital and its employees are deemed to subserve him in his ministrations to the patient and his actions are of his own responsibility.

The case of Schloendorff v. Society of New York Hospital, 211 N.Y. 125, 105 N.E. 92, 52 L.R.A., N.S. 505 (1914), was then considered an authority for this view. The “Schloendorff doctrine” regards a physician, even if employed by a hospital, as an independent contractor because of the skill he exercises and the lack of control exerted over his work. Under this doctrine, hospitals are exempt from the application of the respondeat superior principle for fault or negligence committed by physicians in the discharge of their profession.

However, the efficacy of such doctrine has weakened with the significant developments in medical care. Courts came to realize that modern hospitals are increasingly taking active role in supplying and regulating medical care to patients. No longer were a hospital’s functions limited to furnishing room, food, facilities for treatment and operation, and attendants for its patients. Thus, in Bing v. Thunig, 2 N.Y. 2d 656, 163 NYS 2d 3, 143 (1957), the New York Court of Appeals deviated from the Schloendorff doctrine, noting that modern hospitals actually do far more than provide facilities for treatment. Rather, they regularly

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employ, on a salaried basis, a large staff of physicians, interns, nurses, administrative and manual workers. They charge patients for medical care and treatment, even collecting for such services through legal action, if necessary. The court then concluded that there is no reason to exempt hospitals from the universal rule of respondeat superior.




After a physician is accepted, either as a visiting or attending consultant, he is normally required to attend clinico-pathological conferences, conduct bedside rounds for clerks, interns and residents, moderate grand rounds and patient audits and perform other tasks and responsibilities, for the privilege of being able to maintain a clinic in the hospital, and/or for the privilege of admitting patients into the hospital. In addition to these, the physician’s performance as a specialist is generally evaluated by a peer review committee on the basis of mortality and morbidity statistics, and feedback from patients, nurses, interns and residents. A consultant remiss in his duties, or a consultant who regularly falls short of the minimum standards acceptable to the hospital or its peer review committee, is normally politely terminated.

In other words, private hospitals, hire, fire and exercise real control over their attending and visiting ‘consultant’ staff. While

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‘consultants’ are not, technically employees, x x x , the control exercised, the hiring, and the right to terminate consultants all fulfill the important hallmarks of an employer-employee relationship, with the exception of the payment of wages. In assessing whether such a relationship in fact exists, the control test is determining. Accordingly, on the basis of the foregoing, we rule that for the purpose of allocating responsibility in medical negligence cases, an employer-employee relationship in effect exists between hospitals and their attending and visiting physicians.”

Doctrine of apparent authority, etc.

The Ramos pronouncement is not the only basis in sustaining PSI’s liability. Its liability is also anchored upon the agency principle of apparent authority or agency by estoppel and the doctrine of corporate negligence which have gained acceptance in the determination of a hospital’s liability for negligent acts of health professionals.

Doctrine of apparent authority or the holding out theory; or doctrine of ostensible agency or agency by estoppel.

This doctrine imposes liability, not as the result of the reality of a contractual relationship, but rather because of the actions of a principal or an employer in somehow misleading the public into believing that the relationship or the authority exists. (Irving v. Doctors Hospital of Lake Worth, Inc., 415 So. 2d 55 (1982), quoting Arthur v. St. Peters Hospital, 169 N.J. 575, 405 A 2d 443 (1979)). The concept is essentially one of estoppel.

Under the rule, the principal is bound by the acts of his agent with the apparent authority which he knowingly permits the agent to assume, or which he holds to the agent out to the public as possessing. The question in every case is whether the principal has by his voluntary act placed the agent with business usages and the nature of the particular business, is justified in presuming that such agent has authority to perform the particular act in question. (Hudson C., Loan Assn., Inc. v. Horowytz, 116 N.J.L. 605, 608 A 437 (Supp. Ct. 1936).

The applicability of the doctrine of apparent authority in the field of hospital liability has been upheld in Irving v. Doctor Hospital of Lake Worth Inc.. In this case, it was said that there does not appear to be any rational basis for excluding the concept of apparent authority from the field of hospital liability. In cases where it can be shown that a hospital, by its actions, has held out a particular physician as its agent and/or employee and that the patient has accepted treatment from the physician in the reasonable belief that it is being tendered in

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behalf of the hospital, then the hospital will be liable for the physician’s negligence.

The Civil Code recognizes the concept of agency by implication or estoppel. Article 1869 of the Civil Code provides:

“Agency may be express, or implied from the acts of the principal, from his silence or lack of action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without authority.”

The defendant Professional Services, Inc. displayed in the lobby of the Medical City Hospital the names and specializations of the physicians associated or accredited by it. It is estopped from passing all blame to the physicians whose names it proudly paraded in the public directory leading the public to believe that it vouched for their skill and competence. That is tantamount to holding out to the public that the hospital through its accredited physicians, offers quality health care services. By accrediting the doctors and publicly advertising their qualifications, the hospital created the impression that they were agents, authorized to perform medical and surgical services for its patients. As expected, the patients accepted the services on the reasonable belief that such were being rendered by the hospital or its employees, agents or servants.

As aptly said by the trial court:

“x x x regardless of the education and status in life of the patient, he ought not be burdened with the defense of absence of employer-employee relationship between the hospital and the independent physician whose name and competence are certainly certified to the general public by the hospital’s act of listing him and his specialty in its lobby. The high costs of today’s medical and health care should not at least exact on the hospital greater, if not broader, legal responsibility for the conduct of treatment and surgery within its facility by its accredited physician or surgeon, regardless of whether he is independent or employed.”

The wisdom of such reasoning is easy to discern. Corporate entities like hospitals are capable of acting only through other individuals like physicians. If these accredited physicians do their job well, the hospital succeeds in its mission of offering quality medical services and thus, profits financially. Logically, where negligence mars the quality of its services, the hospital should not be allowed to escape liability for the acts of its ostensible agents. (Professional Services, Inc. v. Agana, G.R. No. 126297; Agana v. Juan Fuentes, G.R. No. 126467; Ampil v. Agana, G.R. No. 127590, January 31, 2007).

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Doctrine of corporate negligence or corporate responsibility.

The complaint alleged that PSI as owner, operator and manager of Medical City Hospital did not perform the necessary supervision or exercise diligent efforts in the supervision of Dr. Ampil and Fuentes and its nursing staff, resident doctors, medical interns who assisted the doctors in the performance of their duties. Hence, premised on the doctrine of corporate negligence, PSI is directly liable for such breach of duty.



x x x x PSI’s liability is traceable to its failure to conduct an investigation of the matter reported in the nota bene of the count nurse. Such failure established PSI’s part in the dark conspiracy of silence and concealment about the gauzes. Ethical considerations, if not also legal, dictated the holding of an immediate inquiry into the events, if not for the benefit of the patient to whom the duty is primarily owed, then in the interest of arriving at the truth. The Court cannot accept that the medical and the healing professions, through their members like defendant surgeons, and their institutions like PSI’s hospital facility, can callously turn their backs on and disregard even a mere probability of mistake or negligence by refusing or failing to investigate a report of such seriousness as the one in Natividad’s case.

It is worthy to note that Dr. Ampil and Dr. Fuentes operated on Natividad with the assistance of the Medical City Hospital’s staff, composed of resident doctors, nurses, and interns. As such, it is reasonable to conclude that PSI, as the operator of the hospital, has actual or constructive knowledge of the procedures carried out, particularly the report of the attending nurses that the two pieces of gauze were missing. In Fridena v. Evans,127 Ariz. 516, 622 P. 2d 463 (1980), it was held that a corporation is bound by the knowledge acquired by or notice given to its agents or officers within the scope of their authority and in reference to a matter to which their authority extends. This means that the knowledge of any of the staff of Medical City Hospital constitutes knowledge of PSI. The failure of PSI, despite the attending nurses’ report, to investigate and inform the patient regarding the missing gauzes amounts to callous negligence. Not only did PSI breach its duties to oversee or supervise all persons who

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practice medicine within its walls, it also failed to take an active step in fixing the negligence committed. This renders PSI, not only vicariously liable for the negligence of Dr. Ampil under Article 2180 of the Civil Code, but also directly liable for its own negligence under Article 2176. In Fridena, the Supreme Court of Arizona held:



Subsequent to the Purcell decision, the Arizona Court of Appeals held that a hospital has certain inherent responsibilities regarding the quality of medical care furnished to patients within its walls and it must meet the standards of responsibility commensurate with this undertaking. Beeck v. Tucson General Hospital, 18 Ariz. App. 165, 500 P. 2d 1153 (1972). This court has confirmed the rulings of the Court of Appeals that a hospital has the duty of supervising the competence of the doctors on its staff. xxx.

x x x x x x


Anent the corollary issue of whether PSI is solidarily liable with Dr. Ampil for damages, let it be emphasized that PSI, apart from a general denial of its responsibility, failed to adduce evidence showing that it exercised the diligence of

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a good father of a family in the accreditation and supervision of the latter. In neglecting to offer such proof, PSI failed to discharge its burden under the last paragraph of Article 2180 cited earlier, and, therefore, must be adjudged solidarily liable with Dr. Ampil. Moreover, as we have discussed, PSI is also directly liable to the Aganas.




The doctrine has its genesis in Darling v. Charleston Community Hospital, 33 Ill. 2d 326, 211 N.E. 2d 253). There, the Supreme Court of Illinois held that “the jury could have found a hospital negligent, inter alia, in failing to have a sufficient number of trained nurses attending the patient; failing to require a consultation with or examination by members of the hospital staff; and failing to review the treatment rendered to the patient.” On the basis of Darling, other jurisdictions held that a hospital’s corporate negligence extends to permitting a physician known to be incompetent to practice at the hospital. (Corleto v. Hospital, 138 N.J. Super. 302, 350 A. 2d 534 (Super. Ct. Law Div. 1975); Purcell v. Zimbelman, 18 Ariz. App. 75,500 P. 2d 335 (1972); Hospital Authority v. Joiner, 229 Ga. 140, 189 S.E. 2d 412 (1972)). With the passage of time, more duties were expected from hospitals, among them: (1) the use of reasonable care in the maintenance of safe and adequate facilities and equipment; (2) the selection and retention of competent physicians; (3) the overseeing or supervision of all persons who practice medicine within its walls; and (4) the formulation, adoption and enforcement of adequate rules and policies that ensure quality care for its patients. (Welsh v. Bulger, 548 Pa. 504, 698 A. 2d 581 (1997)). Thus, in Tucson Medical Center, Inc. v. Misevich, 115 Ariz. 34, 545 P 2d

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958 (1976), it was held that a hospital, following the doctrine of corporate responsibility, has the duty to see that it meets the standards of responsibilities for the care of patients. Such duty includes the proper supervision of the members of its medical staff. And in Bost v. Riley, 262 S.E. 2d 391, 300 NC 194, 269 S.E. 2d 621 (1980), the court concluded that a patient who enters a hospital does so with the reasonable expectation that it will attempt to cure him. The hospital accordingly has the duty to make a reasonable effort to monitor and oversee the treatment prescribed and administered by the physicians practicing in its premises.

Res Ipsa Loquitur; medical negligence cases.

Once again, the SC in Dr. Milagros Cantre v. Sps. Go, G.R. No. 160889, April 27, 2007, had the occasion to say that the Hippocratic Oath mandates physicians to give primordial consideration to the well-being of their patients. If a doctor fails to live up to this precept, he is accountable for his acts. This notwithstanding, courts face a unique restraint in adjudicating medical negligence cases because physicians are not guarantors of case and, they never set out to intentionally cause injury to their patients. However, intent is immaterial in negligence cases because where negligence exists and is proven, it automatically gives the injured a right to reparation for the damage caused. (Ramos v. CA, G.R. No. 124354, December 29, 1999, 321 SCRA 584).

In cases involving medical negligence, the doctrine of res ipsa loquitur allows the mere existence of an injury to justify a presumption of negligence on the part of the person who controls the instrument causing the injury, provided that the following requisites concur:

1. The accident is of a kind which ordinarily does not occur in the absence of someone’s negligence;

2. It is caused by an instrumentality within the exclusive control of the defendant or defendants; and

3. the possibility of contributing conduct would make the plaintiff responsible is eliminated.

In this case, a woman gave birth. Due to the operation, there was profuse bleeding inside her womb, hence, the doctors performed various medical procedures. Her blood pressure was monitored with the use of a sphygmonammeter. It was observed later on that there was a fresh gaping wound in the inner portion of her left arm. The NBI-Medico Legal found out that it appeared to be a burn resulting in the placing of a droplight near her skin. Despite surgical operation, there was an unsightly mark in her left arm and the pain remained and her movements were restricted. A complaint was filed praying for damages where the RTC rendered judgment holding the doctor liable. The

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CA affirmed, but modified the judgment. On appeal to the SC it was contended that the wound was not caused by the droplight but by the constant taking of her blood pressure.

The SC said that, that is immaterial. The medical practice is to deflate the blood pressure cuff immediately after each use. Otherwise, the inflated band can cause injury to the patient similar to what could have happened in this case. Thus, if the wound was caused by the blood pressure cuff, then the taking of the blood pressure must have been done so negligently as to have inflicted a gaping wound on her arm, for which the defendant cannot escape liability under the “captain of the ship” doctrine.

The argument that the failed plastic surgery was not intended as a cosmetic procedure, but rather as a measure to prevent complication does not help her case. It does not negate negligence on her part.

Based on the foregoing, the presumption that defendant was negligent in the exercise of her profession stands unrebutted. In this connection, the Civil Code provides:

ART. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done…

ART. 2217. Moral damages include physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury. Though incapable of pecuniary computation, moral damages may be recovered if they are the proximate result of the defendant’s wrongful act or omission.

Clearly, under the law, the defendant is obliged to pay plaintiff for moral damages suffered by the latter as a proximate result of her negligence.

On the presumption of negligence under the principle of res ipsa loquitur, the SC in applying the requirements of the rule said:

As to the first requirement, the gaping wound the plaintiff’s certainly not an ordinary occurrence in the act of delivering a baby, far removed as the arm is from the organs involved in the process of giving birth. Such injury could not have happened unless negligence had set in somewhere.

Second, whether the injury was caused by the droplight or by the blood pressure cuff is of no moment. Both instruments are deemed within the exclusive control of the physician in charge under the “captain of the ship” doctrine. This doctrine holds the surgeon in charge of an operation liable for the negligence of

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his assistants during the time when those assistants are under the surgeon’s control. (Black Law Dictionary, 192 (5th ed., 1979). In this particular case, it can be logically inferred that defendant, the senior consultant in charge during the delivery of the baby, exercised control over the assistants assigned to both the use of the droplight and the taking of the plaintiff’s blood pressure. Hence, the use of the droplight and the blood pressure cuff is also within her exclusive control.

Third, the gaping wound on the plaintiff’s left arm, by its very nature and considering her condition, could only be caused by something external to her and outside her control as she was unconscious while in hypovolemic shock. Hence, plaintiff could not, by any stretch of the imagination, have contributed to her own injury.

The defense that the wound was caused not by the droplight but by the constant taking of her blood pressure, even if the latter was necessary given her condition, does not absolve her from liability.

* * * *

In Jose Roque, Jr. v. Jaime Torres, et al., G.R. No. 157632, December 6, 2006, a complaint for damages was filed against the respondent on account of the acts of the security guard employed by him, by shooting the plaintiff resulting in death. Respondent employed security guards to prevent the plaintiff from entering a parcel of land despite knowledge that he did not own the same and that there was a title under the name of the plaintiff’s son. When the latter insisted in entering the land, the guards shoot him. He filed a complaint but there was substitution by his heirs because he subsequently died. In holding the respondent liable, the SC

Held: Article 2176 of the Civil Code states that “whoever by act or omission causes damage to another, there being fault or negligence, is obliged to pay for the damage done.” In the case at bar, respondent cannot feign ignorance of the fact that at the time of the shooting incident, the titles to the disputed property were already registered in the name of petitioner’s son, the cancellation for title case filed by respondent having been dismissed. In fact, during trial, the offer for stipulation of petitioner’s counsel that at the time of shooting incident, there is a valid and existing title in the name of petitioner’s son which was never cancelled by the court, was accepted by the respondent. Therefore, by hiring the security guards to prevent entry, possibly even by the registered owner, to the subject property, titles to which he fully knew he did not possess, respondent blatantly acted in bad faith. His unwarranted act of posting security guards within the property, which he clearly knew is registered in the name of another, unduly placed petitioner at harm and deprived him of his right to fully exercise his privileges and duties as administrator of said property. By his grossly faulty acts, paved the way to the infliction of injuries by the security guards on petitioner.

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Furthermore, respondent’s palpable display of bad faith in claiming a superior right to the property over petitioner’s son entitles petitioner to damages resulting therefrom. In order that a plaintiff may maintain an action for the injuries which he sustained, he must establish that such injuries resulted from a breach of duty which the defendant owed to the plaintiff – a concurrence of injury to the plaintiff and legal responsibility by the person causing it. In other words, in order that the law will give redress for an act causing damage, the act must be not only hurtful, but wrongful.

Respondent violated the principle embodied in Article 19 of the Civil Code which mandates that “every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.” When a right is exercise in a manner which discards these norms resulting in damage to another, a legal wrong is committed for which the actor can be held accountable. If mere fault or negligence in one’s act can make him liable for damages for injury caused thereby, with more reason should abuse or bad faith make him liable. (De Guzman v. NLRC, G.R. No. 90856, July 23, 1992, 211 SCRA 723).

They are awarded only to enable the injured parties to obtain means, diversions or amusements that will serve to alleviate the moral sufferings the injured parties have undergone by reason of defendant’s culpable action. In other words, the award of moral damages is aimed at a restoration within the limits of possible, of the spiritual status quo ante; and therefore it must be proportionate to the suffering inflicted. (Roque, Jr. v. Torre, et al., G.R. 157632, December 6, 2006).

As to exemplary damages, Article 2229 of the Civil Code provides that such damages may be imposed by way of example or correction for the public good, in addition to the moral, temperate, liquidated or compensatory damages. While exemplary damages cannot be recovered as a matter of right, they need not be proved, although plaintiff must show that he is entitled to moral, temperate or compensatory damages before the court may consider the question of whether or not exemplary damages should be awarded. In the case at bar, having determined that petitioner is entitled to the award of actual and moral damages as a result of the wanton act of respondent in stationing security guards in the property, the title of which is under the name of plaintiff’s son, said act ultimately resulting in the paralysis and blindness of plaintiff, the award of exemplary damages to be proper by way of correction for the public good of respondent’s flagrant display of bad faith. (Roque, Jr. v. Torres, et al., G.R. No. 157632, December 6, 2006; Garcia, Jr. v. Salvador, et al., G.R. No. 168512, March 20, 2007).

Liability of the employer for the acts or omissions of the employee.

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Once again, the SC in Mercury Drug, et al. v. Sps. Huang, et al., G.R. No. 172122, June 22, 2007, (Puno, J) had the occasion to rule on the liability of the employer for the negligent act of the employee while in the performance of his duties and functions.

The liability of the employer under Art. 2180 of the Civil Code is direct or immediate. It is not conditioned on a prior recourse against the negligent employee, or a prior showing of insolvency of such employee. It is also joint and solidary with the employee. (Art. 2194, NCC).

To be relieved of liability, the employer should show that it exercised the diligence of a good father of a family, both in the selection of the employee and in the supervision of the performance of his duties. Thus, in the selection of its prospective employees, the employer is required to examine them as to their qualifications, experience, and service records. (Estacion v. Bernardo, G.R. No. 144723, February 27, 2006, 483 SCRA 222; Campo v. Camarote, 100 Phil. 459 (1056)). With respect to the supervision of its employees, the employer should formulate standard operating procedures, monitor their implementation, and impose disciplinary measures for their breach. To establish compliance with these requirements, employers must submit concrete proof, including documentary evidence. (Victory Liner, Inc. v. Heirs of Andres Malecdan, G.R. No. 154278, December 27, 2002, 394 SCRA 520).

In this case, the employer, Mercury Drug presented testimonial evidence on its hiring procedure. According to Mrs. Merlie Caamic, the Recruitment and Training Manager of petitioner Mercury Drug, applicants are required to take theoretical and actual driving tests, and psychological examination. In the case of employee, however, Mrs. Caamic admitted that he took the driving tests and psychological examination when he applied for the position of Delivery Man, but not when he applied for the position of Truck Man. Mrs. Caamic also admitted that employee used a Galant which is a light vehicle, instead of a truck during the driving tests. Further, no tests were conducted on the motor skills development, perceptual speed, visual attention, depth visualization, eye and hand coordination and steadiness of the employee. No NBI and police clearances were also presented. Lastly, he attended only three driving seminars. In effect, the only seminar he attended before the accident which occurred in 1996 was held twelve years ago in 1984.

Furthermore, in this case, the employer did back-up driver for long trips. At the time of the accident, the employee has been out on the road for more than thirteen hours, without any alternate. The witness admitted that she did not know of any company policy requiring back-up drivers for long trips.

The employer likewise failed to show that it exercised due diligence on the supervision and discipline over its employees. In fact, on the day of the accident,

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the employee was driving without a license. He was holding a TVR for reckless driving. He testified that he reported the incident to his superior, but nothing was done about it. He was not suspended or reprimanded. No disciplinary action whatsoever was taken against him. Thus, the employer failed to discharge its burden of proving that it exercised due diligence in the selection and supervision of its employee.

Damage recoverable.

The trial court awarded the following amounts:

1. Two Million Nine Hundred Seventy-Three Thousand Pesos (P2,973,000.00) actual damages;

2. As compensatory damages:

a. Twenty-Three Million Four Hundred Sixty One Thousand, and Sixty-Two Pesos (P23,461,062.00) for life care cost of Stephen;

b. Ten Million Pesos (P10,000,000.00) as and for lost or impaired earning capacity of Stephen;

3. Four Million Pesos (P4,000,000.00) as moral damages;

4. Two Million Pesos (P2,000,000.00) as exemplary damages; and

5. One Million Pesos (P1,000,000.00) as attorney’s fees and litigation expense.

The Court of Appeals affirmed the decision of the trial court but reduced the award of moral damages to P1,000,000.00.

With regard to actual damages, Art. 2199 of the Civil Code provides that “Except as provided by law or by stipulation one is entitled to an adequate compensation only for such pecuniary loss suffered by him as he has duly proved x x x.” In this case, the actual damages claimed were supported by receipts. The amount of P2,973,000.00 represented cost of hospital expenses, medicines, medical services and supplies, and nursing care services provided on the victim of the vehicular accident.

Petitioners are also liable for all damages which are the natural and probable consequences of the act or omission complained of. (Art. 2202, NCC). The doctors who attended to the victim are one in their prognosis that his chances of walking again and performing basic body functions are nil. For the rest of his life, he will need continuous rehabilitation and therapy to prevent further complications such as pneumonia, bladder and rectum infection, renal

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failure, sepsis and severe bed sores, osteoporosis and fractures, and other spinal cord injury-related conditions. He will be completely dependent on the care and support of his family, hence, the award of P23,461,062.00 for the life care cost of the victim was uphold based on his average monthly expense and the actuarial computation of the remaining years that he is expected to live; and the conservative amount of P10,000,000.00, for the loss or impairment of his earning capacity, (Art. 2205, NCC), considering his age, probable life expectancy, the state of his health, and his mental and physical condition before the accident. He was only seventeen years old, nearly six feet tall and weighed 175 pounds. He was in fourth year high school, and a member of the school varsity basketball team. He was also class president and editor-in-chief of the school annual. He had shown very good leadership qualities. He was looking forward to his college life, having just passed the entrance examinations of the University of the Philippines, De La Salle University, and the University of Asia and the Pacific. The University of Sto. Tomas even offered him a chance to obtain an athletic scholarship, but the accident prevented him from attending the basketball try-outs. Without doubt, he was an exceptional student. He excelled both in his academics and extracurricular undertakings. He is intelligent and motivated, a go-getter. Had the accident not happened, he had a rosy future ahead of him. He wanted to embark on a banking career, get married and raise children. Taking into account his outstanding abilities, he would have enjoyed a successful professional career in banking. But, now, it is highly unlikely for someone like respondent to ever secure a job in a bank.

Moral damages.

The award of moral and exemplary damages and attorney’s fees was likewise upheld:

“The award of moral damages is aimed at a restoration, within the limits of the possible, of the spiritual status quo ante. (Roque v. Tomas, G.R. No. 157632, December 6, 2006). Moral damages are designed to compensate and alleviate in some way the physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury unjustly caused a person. Although incapable of pecuniary computation, they must be proportionate to the suffering inflicted. (PNR v. Brunty, G.R. No. 169891, November 2, 2006). The amount of the award bears no relation whatsoever with the wealth or means of the offender.

Exemplary damages.

On the matter of exemplary damages, Art. 2231 of the Civil Code provides that in cases of quasi-delicts, exemplary damages may be granted if the defendant acted with gross negligence. At the time of the accident, the employee

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was driving without a license because he was previously ticketed for reckless driving. The evidence also showed that he failed to step on his brakes immediately after the impact. Had he done so, the injuries which the victim sustained could have been greatly reduced. Wanton acts such as that committed by the employer need be suppressed; and employers like Mercury Drug should be more circumspect in the observance of due diligence in the selection and supervision of their employees. The award of exemplary damages is therefore justified.

When someone may be liable for malicious prosecution.

In Antonio Diaz v. Davao Light & Power Corp., et al., G.R. No. 160959, April 4, 2007 (Callejo, J), petitioner unilaterally installed a meter to replace another one. There was a notice of disconnection and eventually, the connection was cut. There was a petition for mandatory injunction to restore connection. It was however settled by way of a compromise agreement where the parties agreed to reduce the respondent’s claim and to waive the counterclaim and to install the electric service. There was no agreement to bar the institution of other action. Thereafter, respondent filed criminal cases for theft against the petitioner, hence, a complaint for damages for abuse of right under Article 19, NCC was filed.

Petitioner insisted that the compromise agreement as well as the decision based on it already settled the controversies between them; yet, DLPC instituted the theft case against petitioner, and worse, instituted another action for violation of P.D. 401, as amended by B.P. 876. Thus, the only conclusion that can be inferred from the acts of DLPC is that they were designed to harass, embarrass, prejudice, and ruin him. He further averred that the compromise agreement in civil case completely erased litigious matters that could necessarily arise out of either Electric Meter No. 84737 or 86673509. Moreover, he asserted that the evidence he presented is sufficient to prove the damages he suffered by reason of the malicious institution of the criminal cases. In brushing aside his contentions, the SC

Held: Article 2028 of the Civil Code defines a compromise as a contract whereby the parties, by making reciprocal concessions, avoid litigation or put an end to one already commenced. The purpose of compromise is to settle the claims of the parties and bar all future disputes and controversies. However, criminal liability is not affected by compromise for it is a public offense which must be prosecuted and punished by the Government on its own motion, though complete reparation should have been made of the damages suffered by the offended party. A criminal case is committed against the People, and the offended party may not waive or extinguish the criminal liability that the law imposes for the commission of the offense. Moreover, a compromise is not one

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of the grounds prescribed by the Revised Penal Code for the extinction of criminal liability.

Petitioner is not entitled to damages under Articles 19, 20 and 21, and Article 2217 and 2219(8) of the New Civil Code.

The elements of abuse of rights are the following: (a) the existence of a legal right or duty; (b) which is exercise in bad faith; and (c) for the sole intent of prejudicing or injuring another. (Hongkong and Shanghai Banking Corp., Limited v. Catalan, G.R. No. 159591, October 18, 2004, 440 SCRA 498, 511-512; Saber v. Court of Appeals, G.R. No. 132981, August 31, 2004, 437 SCRA 259). Thus, malice or bad faith is at the core of the above provisions. Good faith refers to the state of the mind which is manifested by the acts of the individual concerned. In consists of the intention to abstain from taking an unconscionable and unscrupulous advantage of another. Good faith is presumed and he who alleges bad faith has the duty to prove the same. Bad faith, on the other hand, does not simply connote bad judgment to simple negligence, dishonest purpose or some moral obloquy and conscious doing of a wrong, a breach of known duty due to some motives or interest or ill-will that partakes of the nature of fraud. Malice connotes ill-will or spite and speaks not in response to duty. It implies an intention to do ulterior and unjustifiable harm. Malice is bad faith or bad motive.

There was no malice or bad faith. Petitioner himself alleged in his complaint that he unilaterally installed a meter after it was removed by DLPC. No less than the Court, admonished petitioner and reminded him that connections of electrical service and installations of electric meters should always be upon mutual contract of the parties, and that payments for electrical consumption should also be made promptly whenever due. Based on these established facts, petitioner has not shown that the acts of respondent were done with the sole intent of prejudicing and injuring him.

Petitioner may have suffered damages as a result of the filing of the complaints. However, there is a material distinction between damages and injury. Injury is the illegal invasion of a legal right; damage is the loss, hurt or harm which results from the injury; and damages are the recompense or compensation awarded for the damage suffered. Thus, there can be damage without injury in those instances in which the loss or harm was not the result of a violation of a legal duty. In such cases, the consequences must be borne by the injured person alone; the law affords no remedy for damages resulting from an act which does not amount to a legal injury or wrong. These situations are often called damnum absque injuria. (Far East Bank and Trust Company v. Pacilan, Jr., G.R. No. 157314, July 29, 2005, 465 SCRA 372, 384-385). Whatever damages petitioner may have suffered would have to be borne by him alone since it was his acts which led to the filing of the complaints against him.

Concept of malicious prosecution.

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On the other hand, malicious prosecution has been defined as an action for damages brought by or against who a criminal prosecution, civil suit or other legal proceeding has been instituted maliciously and without probable cause, after the termination of such prosecution, suit, or other proceeding in favor of the defendant therein. (Yasonña v. De Ramos, 440 SCRA 154 (2004). It is an established rule that in order for malicious prosecution to prosper, the following requisites must be proven by petitioner: (1) the fact of prosecution and the further fact that the defendant (respondent) was himself the prosecutor, and that the action finally terminated with an acquittal; (2) that in bringing the action, the prosecutor acted without probable cause; and (3) that the prosecutor was actuated or impelled by legal malice, that is, by improper or sinister motive. The foregoing are necessary to preserve a person’s right to litigate which may be emasculated by the undue filing of malicious prosecution cases. From the foregoing requirements, it can be inferred that malice and want of probable cause must both be clearly established to justify an award of damages based on malicious prosecution. (Id. At 158-159; Villanueva v. UCPB, G.R. No. 138291, March 7, 2000, 327 SCRA 391, 400; Ponce v. Legaspi, G.R. No. 79184, May 6, 1992, 208 SCRA 377, 388).

A claim for damages based on malicious prosecution will prosper only if the three elements aforecited are shown to exist. In this case, the cases were dismissed by the prosecutor before they could be filed in court, hence, they did not end in acquittal.

It cannot be likewise concluded that respondent DLPC acted without probable cause when it instituted the actions. The events which led to the filing of the complaints are undisputed, and respondent DLPC cannot be faulted for filing them. In the early case of Buchanan v. Esteban, 32 Phil. 363 (1915) it was stressed that “one cannot be held liable in damages for maliciously instituting a prosecution where he acted with probable cause.” As Justice Moreland explained in that case:

Probable cause is the existence of such facts and circumstances as would excite the belief, in a reasonable mind, acting on the facts within the knowledge of the prosecutor, that the person charged was guilty of the crime for which he was prosecuted. The general rule is well settled that one cannot be held liable in damages for maliciously instituting a prosecution where he acted with probable cause. In other words, a suit will lie only in cases where a legal prosecution has been carried on without probable cause. And the reason for the rule as stated by Blackstone, is that it would be a very great discouragement to public justice is prosecutors, who had a tolerable ground of suspicion, were liable to be sued at law when their indictments miscarried.

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Thus, the element of malice and the absence of probable cause must be proved. (China Banking Corp. v. CA, G.R. No. 94182, March 28, 1994, 231 SCRA 472, 478; Albenson Enterprise Corp. v. CA, G.R. No. 88694, January 11, 1993, 217 SCRA 16, 29). There must be proof that the prosecution was prompted by a sinister design to vex and humiliate a person, and that it was initiated deliberately knowing that the charge was false and baseless to entitle the victims to damages. The two elements must simultaneously exist; otherwise, the presence of probable cause signifies, as a legal consequence, the absence of malice. (Lucas v. Royo, G.R. No. 136185, October 30, 2000; 344 SCRA 481). In the instant case, it is evidence that respondent DLPC was not motivated by malicious intent or by a sinister design to unduly harass petitioner, but only by a well-founded anxiety to protect its rights. Respondent DLPC cannot therefore be faulted in availing of the remedies provided for by the law.

In a free society, controversies are heard and settled under the rule of law in the forum of the courts of justice. It is one of the virtues of our system of government that a person who feels aggrieved does not have to take the law into his or her hands or resort to the use of force for the vindication of injury. The courts are there to hear and act on the complaint. The right to litigate is an escape valve to relieve the pressures of personal disagreements that might otherwise explode in physical confrontation. It is necessary not only for upholding one’s claims when they are unjustly denied but also for the maintenance of peace, if not goodwill, among incipient antagonists. Without the right to litigate, conflicting claims cannot be examined and resolved in accordance with one of the primary purposes of government, which is to provide for a just and orderly society. Hence, the mere act of submitting a case to the authorities for prosecution does not render a person liable for malicious prosecution should he or she be unsuccessful, for the law could not have meant to impose a penalty on the right to litigate. (Rivera v. Roman, G.R. No. 142402, September 20, 2005, 470 SCRA 276; Saber v, CA, supra., at 290; China Banking Corp. v. CA, supra.).

From Civ.law.bar.handouts. 2007

QUASI – DELICT

Proximate cause.

In Lambert, et al. vs. Heirs of Ray Castillon, et al., G.R. No. 160709, February 23, 2005, the deceased and another person were on board a motorcycle. They were traversing a road in Iligan City, following a jeepney which was traveling along the same direction. Suddenly, the jeepney turned left which resulted in an accident. As a consequence, one of the riders of the motorcycle died and the other got injured. A complaint for damages was filed. The defendant

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contended that the deceased had contributory negligence. The core of the issue is the cause of the death of the decedent. The Supreme Court

Held: The abrupt and sudden left turn by the driver of the jeep without first establishing his right of way, was the proximate cause of the mishap which claimed the life of the deceased and injury to the other. Proximate cause is defined as that which, in the natural and continuous sequence, unbroken by any efficient, intervening cause, produces the injury, and without which the result would not have occurred. The cause of collision is traceable to the negligent act of he jeep driver, for without that left turn executed with no precaution, the mishap in all probability would not have happened.

There was an invocation of Raynera vs. Hiceta, 365 Phil. 546 (1999). But that case is not applicable. That case also involved a motorcycle crashing into the left rear portion of another vehicle, and it has declared that drivers of vehicles “who bump the rear of another vehicle” are presumed to be “the cause of the accident, unless contradicted by other evidence”. In Raynera, the death of the victim was solely attributable to his own negligence in bumping the rear of the trailer truck which was traveling ahead of him 20 to 30 kilometers per hour. Raynera, being the driver of the rear vehicle, had full control of the situation as he was in a position to observe the vehicle in front of him. The trailer truck therein did not make a sudden left turn as in the case at bar. Thus, the theory that drivers of vehicles “who bump the rear of another vehicle” are presumed to be the cause of the accident is, as in this case, sufficiently contradicted by evidence, which is the sudden left turn made by the jeep driver which proximately caused the collision.

The deceased is guilty of contributory negligence as defined under Article 2179 of the Civil Code, it is equitable to increase the ration of apportionment of damages on account of the victim’s negligence.

Principle underlying contributory negligence.

The underlying precept on contributory negligence is that a plaintiff who is partly responsible for his own injury should not be entitled to recover damages in full but must bear the consequences of his own negligence. The defendant must thus be held liable only for the damages actually caused by his negligence. (Syki vs. Begasa, 414 SCRA 237 (2003). The determination of the mitigation of the defendant’s liability varies depending on the circumstances of each case. The Court had sustained a mitigation of 50% in Rakes vs. AG & P, 7 Phil. 359 (1907) in Phoenix Construction, Inc. vs. Intermediate Appellate Court and LBC Air Cargo, Inc. vs. Court of Appeals, 311 Phil. 715; and 40% in Bank of the Philippine Islands vs. Court of Appeals, 216 SCRA 51; and Philippine Bank of Commerce vs. Court of Appeals, 336 Phil. 667.

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Under Article 1172, “liability (for culpa contractual) may be regulated by the courts, according to the circumstances.” This means that if the defendant exercised the proper diligence in the selection and supervision of its employee, or if the plaintiff was guilty of contributory negligence, then, the courts may reduce the award of damages.

In Philippine Bank of Commerce vs. CA, where the Court held the depositor guilty of contributory negligence, the Court allocated the damages between the depositor and the bank on a 40-60 ration. Applying the same ruling to this case, it was held that L.C. Diaz must shoulder 40% of the actual damages awarded by the appellate court. Solid Bank must pay the other 60% of the actual damages.

Employer’s liability based on tort is primary; delict-subsidiary.

Distinction between the liability of an employer in quasi-delicts from crimes.

An employer’s liability based on a quasi-delict is primary and direct, while the employer’s liability based on a delict is merely subsidiary. (People vs. Fabro, 93 SCRA 200 (1979). The words “primary and direct” as contrasted with “subsidiary”, refer to the remedy provided by law for enforcing the obligation rather than to the character and limits of the obligation. (33A Words and Phrases 215 (197, Ed.). Although liability under Article 2180 originates from negligent act of the employee, the aggrieved party may sue the employer directly. When an employee causes damage, the law presumes that the employer has himself committed an act of negligence in not preventing or avoiding the damage. This is the fault that the law condemns. While the employer is civilly liable in a subsidiary capacity for the employee’s criminal negligence, the employer is also civilly liable directly and separately for his own civil negligence in failing to exercise due diligence in selecting and supervising his employee. The idea that the employer’s liability is solely subsidiary is wrong. (Barredo vs. Garcia, supra.).

The action can be brought directly against the person responsible (for another), without including the author of the act. The action against the principal is accessory in the sense that it implies the existence of a prejudicial act committed by the employee, but it is not subsidiary in the sense that it can not be instituted till after the judgment against the author of the act or at least, that it is subsidiary to the principal action; the action for responsibility of the employee is in itself a principal action. (Barredo vs. Garcia, citing Laurent,

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20 Principles of French Civil Law, 734-735 (Spanish Translation).

Thus, there is no need in this case for the trial court to acquire jurisdiction over the driver. The trial court’s acquisition of jurisdiction over the bus owner is sufficient to dispose of the present case on the merits.

Liability of joint tortfeasors is solidary in nature.

Q - A truck of Pampanga Sugar Development Co., Inc. carrying sugar cane met an accident at the NLEX. As a consequence of which, a pile of sugarcane in the middle of both lanes of the highway were found. Employees of he PNCC placed lit cans with diesel oil on the lanes to warn motorists of the obstruction. The employees together with PASUDECO cleared the highway, then removed the lit cans and left at 5:45 a.m. There were however flattened sugarcane scattered on the road. At 6:30 a.m. Rodrigo Arnaiz was driving his car towards Baguio and ran over the scattered sugarcanes. The car turned turtle several times resulting in injuries to him and his passengers. A complaint for damages was filed against PASUDECO and PNCC. PNC answered that it was due to the unreasonable speed of the car of Arnaiz that it turned turtle. It also claimed that the proximate cause of the mishap was PASUDECO’s gross negligence and failure to clear the area completely. It also alleged that Arnaiz had contributory negligence. The RTC held PASUDECO liable. It dismissed the case against PNCC. The CA modified holding them solidarily liable. PNCC maintained that it should only be PASUDECO that should be liable as it was not negligent in the operation of the highway. Is the contention correct? Why?

Held: No. PNCC failed to exercise the requisite diligence in maintaining the NLEX safe for motorists. The lighted cans and lane dividers on the highway were removed even as flattered sugarcanes lay scattered on the ground. The highway was still wet from the juice and sap of the sugarcanes. PNCC could have foreseen that the wet condition of the highway would endanger motorists passing by at night or in the wee hours of the morning. PASUDECO’s negligence in transporting sugarcanes without proper harness/straps, and that of PNCC in removing the emergency warning devices, were two successive negligent acts which were the direct and proximate cause of the injuries of the plaintiffs, hence, they are solidarily liable. As held in Sabido vs. Custodio, 17 SCRA 1088:

“According to the great weight of authority, where the concurrent or successive negligent acts or omission of two or more persons, although acting independently of each other, are, in combination, the direct and proximate cause of a single injury to a third person and it is impossible to determine in what proportion each contributed to the injury, either is

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responsible for the whole injury, even though his act alone might not have caused the entire injury, or the same damage might have resulted from the acts of the other tortfeasors.” (PNCC vs. CA, et al., G.R. No. 159270, August 22, 2005; Cerezo vs. Tuazon, G.R. No. 141538, March 23, 2004).

Registered owner of vehicle liable for damages regardless of whether driver is authorized or not.

The petitioner insisted that he is not liable for damages in a vehicular accident since the driver of the vehicle at the time of the accident was not an authorized driver of the new (actual) owner of the vehicle. He claimed that the ruling in First Malayan Leasing and Finance Corporation vs. CA, 209 SCRA 660, implies that to hold the registered owner liable for damages, the driver of the vehicle must have been authorized, allowed and permitted by its actual owner to operate and drive it. Thus, if the vehicle is driven without the knowledge and consent of the actual owner, then the registered owner cannot be held liable for damages.

He further argued that this was the underlying theory behind Duavit vs. CA, 173 SCRA 490, wherein the court absolved the registered owner from liability after finding that the vehicle was virtually stolen from the owner’s garage by a person who was neither authorized nor employed by the owner. Petitioner concludes that the ruling in Duavit and not the one in First Malayan should be applicable to him. Rule on the contention. Explain.

Answer: The contention lacks merit. Whether the driver is authorized or not by the actual owner is irrelevant to determining the liability of the registered owner who the law holds primarily and directly responsible for any accident, injury or death caused by the operation of the vehicle in the streets and highways. To require the driver of the vehicle to be authorized by the actual owner before the registered owner can be held accountable is to defeat the very purpose why motor vehicle legislations are enacted in the first place.

The main purpose of vehicle registration is the easy identification of the owner who can be held responsible for any accident, damage or injury caused by the vehicle. Easy identification prevents inconvenience and prejudice to a third party injured by one who is unknown or unidentified. To allow a registered owner to escape liability by claiming that the driver was not authorized by the new (actual) owner results in the public detriment the law seeks to avoid. (Villanueva vs. Domingo, et al., G.R. No. 144274, September 20, 2004).

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Not necessary that the driver be authorized driver for the owner to be liable.

Whether or not the driver of the vehicle during the accident was authorized is not at all relevant to determining the liability of the registered owner. This must be so if we are to comply with the rationale and principle behind the registration requirement under the motor vehicle law.

It has been consistently ruled that the registered owner of any vehicle is directly and primarily responsible to the public and third persons while it is being operated. The rationale behind such doctrine was explained way back in 1957 in Erezo vs. Jepte where it was said that the principle upon which this doctrine is based is that in dealing with vehicles registered under the Public Service Law, the public has the right to assume or presume that the registered owner is the actual owner thereof, for it would be difficult for the public to enforce the actions that they may have for injuries caused to them by the vehicles being negligently operated if the public should be required to prove who the actual owner is. How would the public or third persons know against whom to enforce their rights in case of subsequent transfers of the vehicles? We do not imply by his doctrine, however, that the registered owner may not recover whatever amount he had paid by virtue of his liability to third persons from the person to whom he had actually sold, assigned or conveyed the vehicle. (Villanueva vs. Domingo, et al., G.R. No. 144274, September 20, 2004).

Liability of joint tortfeasors.

The petitioner is the owner of a gasoline station in Aringay, La Union. Finding the need for additional sewerage and septic tanks for its washrooms, it engaged the services of Dioscoro Yoro a construction contractor to do the work. The contract provided as follows:

x x x x

“4. Any damage within or outside the property of the FIRST PARTY incurred during the digging shall be borne by the SECOND PARTY;

5. In the event that valuable objects are found on the property, the same shall be divided among the parties as follows:

FIRST PARTY – 60%SECOND PARTY – 40%

6. In the event that valuable objects are found outside the property line during the said digging, the same shall be divided among the parties as follows:

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FIRST PARTY – 35%SECOND PARTY – 65%

In the process of conducting the digging, the respondent informed the petitioner that the digging traversed and penetrated a portion of the land belonging to the respondent. The foundation of the chapel was affected as a tunnel was drugged directly under it to its damage and prejudice. A complaint was filed against the petitioner, and Yoro. Petitioner interposed the defense that it was Yoro alone who should be liable as it is proved for in the contract. The RTC held them solidarily liable holding them to be joint tortfeasors. It was affirmed by the CA saying that the basis of their solidarity is not the Memorandum of Agreement but the fact that they have become joint tortfeasors. There is solidary liability only when the obligation expressly so states, or when the law or the nature of the obligation requires solidarity.

The CA found that the real purpose of the digging was to find hidden treasure and they were partners in the endeavor.

Is the ruling of the CA correct? Explain.

Held: Yes, as they are joint tortfeasors, hence, liable for damages based on quasi – delict. The tortuous act was the excavation which caused damage to the respondent because it was done surreptitiously within its premises and it may have affected the foundation of the chapel. The excavation on respondent’s premises was caused by fault. Finally, there was no pre – existing contractual relation between the petitioner and Yoro on the one hand, and the respondened on the other.

For the damage caused to respondent, petitioner Yoro are jointly (solidarily) liable as they are joint tortfeasors. Verily, the responsibility of two or more persons who are liable for a quasi – delict is solidary. (Art. 2194, NCC).

The heavy reliance of petitioner in paragraph 4 of the MOA cited earlier cannot steer him clear of any liability.

As a general rule, joint tortfeasors are all the persons who command, instigate, promote, encourage, advise, countenance, cooperate in, aid or abet the commission of a tort, or who approve of it after it is done, if done for their benefit. (Worcester vs. Ocampo, 22 Phil. 42 (1912); citing Cooley on Torts, 133; Moir vs. Hopkins, 16 Ill., 313 (63 Am. Dec., 312 and note); Berry vs. Fletch, 1 st Dill., 67; Smithwick vs. Ward, 7 Jones L. 64; Smith vs. Felt, 50 Barb. (N.Y.), 612; Shepard McQuilkin, 2 W. Va., 90; Lewis vs. Johns, 34 Cal., 269).

Indubitably, petitioner and Yoro cooperated in committing the tort. They even had provisions in their MOA as to how they would divide the treasure if any is found within or outside petitioner’s property line. Thus, that insures that he be

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so declared as liable. (John Kam Biak Y. Chan, Jr. vs. Iglesia ni Cristo, Inc., G.R. No. 160283, October 14, 2005).

Doctrine of last clear chance.

Doctrine of last clear chance is not applicable in the relationship of the bank and the depositors.

The doctrine of last clear chance states that where both parties are negligent but the negligent act of one is appreciably later than that of the other, or where it is impossible to determine whose fault or negligence caused the loss, the one who had the last clear chance or opportunity to avoid the loss but failed to do so, is chargeable with the loss. Stated differently, the antecedent negligence of the plaintiff does not preclude him from recovering damages caused by the supervening negligence of the defendant, who had the last fair chance to prevent the impending harm by the exercise of due diligence. (Philippine Bank of Commerce vs. CA, supra.).

The Court did not apply the doctrine of last clear chance to the present case. Solid Bank is liable for breach of contract due to negligence in the performance of its contractual obligation to L.C. Diaz. This is a case of culpa contractual, where neither the contributory negligence of the plaintiff nor his last clear chance to avoid the loss, would exonerate the defendant from liability. Such contributory negligence or last clear chance by the plaintiff merely serves to reduce the recovery of damages by the plaintiff but does not exculpate the defendant from his breach of contract. (Del Prado vs. Manila Electric Co., 52 Phil. 900; Consolidated Bank & Trust Corp. vs. CA, et al., G.R. No. 138569, September 11, 2003).

DAMAGES

MORAL DAMAGES

Moral damages awarded in a conviction for bigamy.

A man misrepresented himself to be single, thus, after a short courtship, the woman agreed to marry him. Then, he abandoned the woman who found out that he was married. In contesting the award, he cited People vs. Bondoc, CA-GR No. 22573-R, April 23, 1959, where award of moral damages was not allowed in a bigamy case. He maintained that moral damages may be awarded only in any of the cases provided in Article 2219 of the Civil Code, and bigamy is not one of them.

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When the accused courted the complainant and proposed to marry her, he assured her that he was single. He even brought his parents to the house of the private complainant where he and his parents made the same assurance – that he was single. Thus, the complainant agreed to marry the accused, who even stated in the certificate of marriage that he was single. She lived with the accused and dutifully performed her duties as his wife, believing all the while that he was her lawful husband. For two years or so until the petitioner heartlessly abandoned her, the complainant had no inkling that he was already married to another before they were married.

The Court of Appeals awarded moral damages to the complainant, saying that while bigamy is not included in those cases enumerated in Article 2219 of the Civil Code, it is not proscribed from awarding moral damages against the accused and said that it is not bound by the ruling in People vs. Bondoc. Is the decision of the Court of Appeals correct? Why?

Answer: Yes. The law does not intend that moral damages should be awarded in all cases where the aggrieved party has suffered mental anguish, fright, moral anxieties, besmirched reputation, wounded feelings, moral shock, social humiliation and similar injury arising out of an act or omission of another, otherwise, there would not have been any reason for the inclusion of specific acts in Article 2219 and analogous cases (which refer to those cases bearing analogy or resemblance, corresponds to some others or resembling, in other respects, as in form, proportion, relation, etc.).

Bigamy is not one of those specifically mentioned in Article 2219 of the Civil Code in which the offender may be ordered to pay moral damages to the offended party. Nevertheless, the accused is liable to the complainant for moral damages under Article 2219 in relation to Article 19, 20 and 21 of the Civil Code.

Under Article 19, “every person must, in the exercise of his rights and in the performance of his duties, act with justice, give everyone his due, and observe honesty and good faith.” This provision contains what is commonly referred to as the principle of abuse of rights, and sets certain standards which must be observed not only in the exercise of one’s right but also in the performance of one’s duties. The standards are the following: act with justice; give everyone his due; and observe honesty and good faith. The elements for abuse of rights are: (a) there is a legal right or duty; (b) exercised in bad faith; and (c) for the sole intent of prejudicing or injuring another. (Albenson Ent. Corp. vs. CA, G.R. No. 886694, January 11, 1993, 217 SCRA 16).

Article 20 speaks of the general sanctions of all other provisions of law which do not especially provide for its own sanction. When a right is exercised in a manner which does not conform to the standards set forth in the said provision and results in damage to another, a legal wrong is thereby committed for which the wrongdoer must be responsible. (Globe Mackay Cable & Radio Corp. vs. CA, G.R. No. 812262, August 25, 1989, 176 SCRA 778). If the provision does not

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provide a remedy for its violation, an action for damages under either Article 20 or Article 21 of the Civil Code would be proper. Article 20 provides that “every person who, contrary to law, willfully or negligently causes damage to another shall indemnify the latter for the same”. On the other hand, Article 21 provides that “any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for damages”. The latter provision is adopted to remedy “the countless gaps in the statutes which leave so many victims of moral wrongs helpless, even though they have actually suffered material and moral injury should vouchsafe adequate legal remedy for that untold number of moral wrongs which it is impossible for human foresight to prove for specifically in the statutes”. Whether or not the principle of abuse of rights has been violated resulting in damages under Article 20 or Article 21 of the Civil Code or other applicable provisions of law depend upon the circumstances of each case.

The complainant was an innocent victim of the accused’s chicanery and heartless deception, the fraud consisting not of a single act alone, but a continuous series of acts. Day by day, he maintained the appearance of being a lawful husband to the complainant, who changed her status from a single woman to a married woman, lost the consortium, attributes and support of a single man she could have married lawfully and endured mental pain and humiliation, being bound to a man who it turned out was not her lawful husband. (Leventhal vs. Liberman, 186 N.E. 675 (1933).

The accused’s collective acts of fraud and deceit before, during and after his marriage with the complainant were willful, deliberate and with malice and caused injury to the latter. That she did not sustain any physical injuries is not a bar to an award for moral damages.

The acts of the accused are against public policy as they undermined and subverted the family as a social institution, good morals and the interest and general welfare of society.

Because the complainant was an innocent victim of the accused’s perfidy, she is not barred from claiming moral damages. Besides, even considerations of public policy would not prevent her from recovery. (Eduardo Manuel vs. People, G.R. No. 165842, November 29, 2005).

Liability of bank in dishonoring a well-funded check.

A bank’s gross negligence in dishonoring a well-funded check, aggravated by its unreasonable delay in repairing the error, calls for an award of moral and

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exemplary damages. The resulting injury to the check writer’s reputation and peace of mind needs to be recognized and compensated.

In holding a bank liable for moral damages, the Supreme Court said that case law lays out the following conditions for the award of moral damages: (1) there is an injury – whether physical, mental or psychological – clearly sustained by the claimant; (2) the culpable act or omission is factually established; (3) the wrongful act or omission of the defendant is the proximate cause of the injury sustained by the claimant; and (4) the award of damages is predicated on any of the cases stated in Article 2219 of the Civil Code. (United Coconut Planters Bank vs. Ramos, 415 SCRA 596, November 11, 2003; Cathay Pacific Airways, Ltd. vs. Spouses Vazquez, 399 SCRA 207, March 14, 2003; Citytrust Banking Corporation vs. Villanueva, 361 SCRA 446, July 19, 2001; Expertravel and Tours, Inc. vs. CA, 309 SCRA 141, June 25, 1999).

The plaintiff is a bank depositor of long standing. She works with Central Negros Electric Cooperative, Inc. as executive secretary and later department secretary. She is a deaconess.

These are positions which no doubt elevate her social standing in the community. Understandably – and as sufficiently proven by her testimony – she suffered mental anguish, serious anxiety, besmirched reputation, wounded feelings and social humiliation; and she suffered them when the people she worked with – her friends, her family and even her daughter’s classmates – learned and talked about her bounced check.

The subject check was adequately funded, but that bank wrongfully dishonored it, and wrongful dishonor of her check was the proximate cause of her embarrassment and humiliation in her workplace, in her own home, and in the church where she served as deaconess.

The bank treated her account as closed, merely because the ledger could not be found was a reckless act that could not simply be brushed off as an honest mistake. It has always been emphasized that the banking industry is impressed with public interest. Consequently, the highest degree of diligence is expected, and high standards of integrity and performance are even required of it. By the nature of its functions, a bank is under obligation to treat the accounts of its depositors with meticulous care and always to have in mind the fiduciary nature of its relationship with them. (Bank of P.I. vs. Casa Montessori Internationale, G.R. No. 49454, May 28, 2004; Solidbank Corp. vs. Sps. Arrieta, G.R. No. 152720, February 7, 2005).

The bank’s negligence was so gross as to amount to a willful injury to the depositor. Article 21 of the Civil Code states that “any person who willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy shall compensate the latter for the damage”. Further, Article 2219

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provides for the recovery of moral damages for acts referred to in the aforementioned Article 21. Hence, the bank is liable for moral damages to the depositor.

Award of exemplary damages.

The law allows the grant of exemplary damages to set an example for the public good. The business of a bank is affected with public interest; thus, it makes a sworn profession of diligence and meticulousness in giving irreproachable service. For this reason, the bank should guard against injury attributable to negligence or bad faith on its part. The banking sector must at all times maintain a high level of meticulousness. The grant of exemplary damages is justified by the initial carelessness of the bank, aggravated by its lack of promptness in repairing its error. (Solidbank Corp. vs. Sps. Arrieta, G.R. No. 152720, February 17, 2005).

COMPENSATORY DAMAGES

Award of compensatory damages cannot be based on bare testimony; exceptions.

A passenger died. Prior to her death, she was a Section Chief of the BIR in Tuguerarao, Cagayan. Her husband testified that she was earning P83,088.00 prior to her death but he did not present any documentary evidence. The lower courts awarded P1,135,536.10 as compensatory damages. Ruling that the award was not proper, the SC

Held: No, the award is erroneous. As a rule, documentary evidence should be presented to substantiate the claim for damages for the loss of earning capacity. The only exceptions are: (1) when the deceased is self-employed earning less than minimum wage under current labor laws; (2) when the deceased is employed as a daily wage worker earning less than the minimum wage under the current laws. In these two instances, judicial notice may be taken of the fact that in the deceased’s line of work no documentary evidence is available. Here the lower courts computed the award of compensatory damages for the loss of earning capacity only on the basis of the testimony of the husband. The award is erroneous because the deceased earnings do not fall within the exceptions. (Victory Liner, Inc. vs. Gammad, et al., G.R. No. 159636, November 25, 2004).

(See also: People vs. Mallari, G.R. No. 145993, June 17, 2003; People vs. Caraig, G.R. No. 116224, March 28, 2004; People vs. Duetes, et al., G.R. No. 144598, February 6, 2004).

Heirs entitled to temperate and moral damages.

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Temperate or moderate damages which are more than nominal but less than compensatory may be recovered when the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case be proved. Since the fact of loss of earnings has been established, temperate damages can be awarded together with P50, 000.00 as indemnity for her death. Moral and exemplary damages may likewise be awarded. (Victory Liner, Inc. vs. Gammad, et al., G.R. No. 159636, November 25, 2004).

MALICIOUS PROSECUTION(Moral Damages)

There can be no liability if one enforces a right.

There was a complaint for estafa but it was dismissed. Thereafter, the accused filed a complaint for damages based on malicious prosecution contending that by filing baseless criminal suits, the complainants have subjected the accused and his family to untold anxiety, disgrace and financial ruin. The complainants in the criminal case contended that the criminal actions were filed as a valid exercise of their rights to pursue their legitimate claims. Decide.

Held: No. There is malicious prosecution when a person directly insinuates or imputes to an innocent person the commission of a crime and the accused is compelled to defend himself in court. While generally associated with unfounded criminal actions, the term has been expanded to include unfounded civil suits instituted just to vex and humiliate the defendant despite the absence of a cause of action or probable cause. (Bayani vs. Panay Electric Co., Inc., 330 SCRA 759 (2000).

When liability attaches in case of malicious prosecution.

To merit the award of damages in a case of malicious prosecution, the aggrieved party must prove: (1) that he has been denounced or charged falsely of an offense by the defendant, (2) that the latter knows that the charge was false or lacks probable cause, (3) that the said defendant acted with malice, and, of course, (4) the damage he has suffered. (Ventura vs. Bernabe, 38 SCRA 587). The elements of want of probable cause and malice must simultaneously exist; otherwise, the presence of probable cause signifies, as a legal consequence, the absence of malice. (Lucas vs. Royo, 344 SCRA 481). On these, there must be proof that the prosecution was prompted by a sinister design to vex and humiliate a person, and that it was initiated deliberately knowing that the charge was false and baseless to entitle the victim to damages.

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It is a doctrine well-entrenched in jurisprudence that the mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution, for the law could not have meant to impose a penalty on the right to litigate. (Lao vs. CA, 271 SCRA 477).

It is a sound principle of justice and public policy that persons shall have free resort to the courts for redress of wrong and vindication of their rights. (Cacayoren vs. Suller, 344 SCRA 166 (2000)). This is not to undermine a previous ruling that the right to institute criminal prosecutions has its metes and bounds and cannot be exercised maliciously and in bad faith to the detriment and harassment of a person who, without a cause, is pestered, inconvenienced, and rendered cash-strapped inasmuch as such suits where liberty is at stake, compel an accused to hire a lawyer and incur other expenses for his defense. These monetary costs are the psychological burden that an accused and his family would have to hurdle in the interregnum. Indeed, being tagged as an “accused” is by itself traumatic. Nevertheless, the award of damages arising from malicious prosecution is justified if and only if it is proved that there was a misuse or abuse of judicial processes or the institution and pursuit of legal proceedings for the purpose of harassing, annoying, vexing or injuring an innocent person. (Cacayoren vs. Suller, 344 SCRA 159; Marteris vs. Cokeing, et al., G.R. No. 150192, February 17, 2005).

Declaration of nullity of marriage on the ground of psychological incapacity with award of moral damages; when proper.

There was a complaint for declaration of nullity of marriage filed by Noel Buenaventura against his wife Isabel Singh Buenaventura on the ground of psychological incapacity contending that she deceived him. After trial, the court declared the marriage void on the ground of psychological incapacity and awarded moral damages citing Articles 2217 and 21 of the Civil Code.

The SC held that there can be no award of moral damages, because the signs of psychological incapacity may become manifest only after the solemnization of the marriage. By declaring the petitioner as psychologically incapacitated, the possibility of awarding moral damages on the same set of facts was negated. The award of moral damages should be predicated, not on the mere act of entering into the marriage, but on specific evidence that it was done deliberately and with malice by a party who had knowledge of his or her disability and yet willfully concealed the same.

“For the same reason, since psychological incapacity means that one is truly incognitive of the basic marital covenants that one must assume and discharge as a consequence of marriage, it removes the basis for the contention that the petitioner purposely deceived the private respondent. If the private

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respondent was deceived, it was not due to a willful act on the part of the petitioner. Therefore, the award of moral damages was without basis in law and in fact.” (Noel Buenaventura vs. CA, et al., G.R. Nos. 127358; 127449, March 31, 2005).

Suspension of card without notice.

A complaint for damages was filed due to the suspension of the card of the plaintiff without notice. In fact, a day before he departed for Hongkong, he deposited US$14, 000.00 in his dollar account with the bank. But despite this, his card was dishonored in Hongkong. The defendant contended that his credit card privileges were suspended due to the fact that he exceeded his credit limit, and failed to settle prior credit purchases on due date thus, causing his obligation to become due. The RTC held the bank liable for damages, but the CA reversed although it held the bank liable for moral damages. It held that the bank was not in bad faith and without malice in suspending the card privileges. Is the ruling correct? Why?

Held: No. There is no basis to hold the bank liable for negligence in not notifying the cardholder of the suspended status of the card privileges considering the automatic suspension without prior notice provision in the Credit Card Agreement. The company cannot be assumed to have reinstated the card by reason of the deposit of $14, 000.00. As issuer of the card, the bank has the option to decide whether to reinstate or altogether terminate a credit card previously suspended on considerations which the bank deemed proper, based on the cardholder’s record, capacity to pay, and compliance with any requirement imposed by it. The situation in which plaintiff found himself is a case of damnum absque injuria. (Equitable Banking Corp. vs. Calderon, G.R. No. 156168, December 14, 2004).

TEMPERATE DAMAGES

Funeral expenses as temperate damages awarded even if not proven with receipts but up to P25, 000.00 only.

In People vs. Werba, G. R. No. 144599, June 9, 2004, in a criminal case for robbery with homicide, the amount of funeral expenses proven was only P18,000.00. The Supreme Court however, awarded P25, 000.00. It said that in People vs. Abrazaldo, 397 SCRA 137 (2003), the doctrine was laid down that where the amount of actual damages for funeral expenses cannot be determined because of the absence of receipts to prove them, temperate damages may be awarded in the amount of P25, 0000. This doctrine specifically refers to a situation where no evidence at all of funeral expenses was presented in the trial court. However, in instances where actual expenses amount to less than P25,

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000 are proved during the trial, the ruling in the more recent case of People vs. Villanueva, G.R. No. 139177, August 11, 2003, which modified the Abrazaldo doctrine, should be applied. In Villanueva, it was held that “when actual damages proven by receipts during the trial amount to less than P25, 000, the award of temperate damages for P25, 000 is justified in lieu of the actual damages of a lesser amount. To rule otherwise would be anomalous and unfair because the victim’s heirs who tried but succeeded in proving actual damages of an amount less than P25,000 would be in a worse situation than those who might have presented no receipts at all but would now be entitled to P25, 000 temperate damages. (See also People vs. Agundez, et al., G.R. No. 138386-87, May 20, 2004; People vs. Segnar, February 18, 2004). Not-so-forthright conduct of a party to a contract may render it liable for damages.

Q- A complaint for damages was filed by Panacor Marketing Corporation and Arizona Transport Corporation against Premiere Development Bank alleging loss of income in its exclusive dealership agreement with Colgate Palmolive Phils. (Colgate). It alleged that they applied for loan with the bank but since the amount was not sufficient, they applied for a take-out loan with IBA Finance Corporation. IBA-Finance agreed to grant the loan and even paid in full their loan with Premier, but despite the agreement between the bank and IBA, the bank refused to surrender the title and other documents to IBA, hence, Panacor failed to generate the required capital for its exclusive dealership agreement with Colgate. Panacor and Arizona filed a complaint for specific performance with damages against the bank, IBA intervened. After trial, the bank was required to surrender the title and other documents to IBA and held it liable for damages. On appeal, the bank and IBA entered into a compromise agreement whereby the bank agreed to return the amount of P6M it paid earlier. The Court of Appeals however decided for Arizona and Panacor, hence, it appealed to the Supreme Court. Is Premiere liable to Panacor and Arizona for damages? Explain.

Held: Yes. Premier is liable because of its bad faith in dealing with Panacor and Arizona. Despite the agreement between IBA and the bank of the approval of the loan with IBA, and the payment of the amount of P6M, it failed to comply with its obligation to surrender the title and other documents to IBA, thus, the latter failed to release the remaining part of the loan, and consequently, it led to the revocation of the distributorship agreement. The not-so-forthright conduct of Premiere in its dealings with the corporations caused damage to them. Its contention that with its compromise with IBA, it extinguished its obligations to the corporations is not proper. Such compromise did not extinguish all direct and collateral incidents to the aborted take-out such that it also cancelled its obligation to Panacor. Thus, its obligations remained despite the compromise agreement. (Premiere Development Bank vs. CA, et al., G.R. No. 159352, April 14, 2004).

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Documents

From civil law outline 2008 - docshare01.docshare.tipsdocshare01.docshare.tips/files/18512/185126707.pdf · From civil law outline 2008: 1.Article 19 – Abuse of Right - Rellosa