Pbc Npc Ilocos Tanjanco

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G.R. No. 97626 March 14, 1997

PHILIPPINE BANK OF COMMERCE, now absorbed by PHILIPPINE COMMERCIALINTERNATIONAL BANK, ROGELIO LACSON, DIGNA DE LEON, MARIA ANGELITAPASCUAL, et al., petitioners,

vs.THE COURT OF APPEALS, ROMMEL'S MARKETING CORP., represented byROMEO LIPANA, its President & General Manager, respondents.

HERMOSISIMA, JR., J.:

Challenged in this petition for review is the Decision dated February 28, 1991 1renderedby public respondent Court of Appeals which affirmed the Decision dated November 15,1985 of the Regional Trial Court, National Capital Judicial Region, Branch CLX (160),

Pasig City, in Civil Case No. 27288 entitled "Rommel's Marketing Corporation, etc. v.Philippine Bank of Commerce, now absorbed by Philippine Commercial and IndustrialBank."

The case stemmed from a complaint filed by the private respondent Rommel'sMarketing Corporation (RMC for brevity), represented by its President and GeneralManager Romeo Lipana, to recover from the former Philippine Bank of Commerce (PBCfor brevity), now absorbed by the Philippine Commercial International Bank, the sum ofP304,979.74 representing various deposits it had made in its current account with saidbank but which were not credited to its account, and were instead deposited to theaccount of one Bienvenido Cotas, allegedly due to the gross and inexcusable

negligence of the petitioner bank.

RMC maintained two (2) separate current accounts, Current Account Nos. 53-01980-3and 53-01748-7, with the Pasig Branch of PBC in connection with its business of sellingappliances.

In the ordinary and usual course of banking operations, current account deposits areaccepted by the bank on the basis of deposit slips prepared and signed by thedepositor, or the latter's agent or representative, who indicates therein the currentaccount number to which the deposit is to be credited, the name of the depositor orcurrent account holder, the date of the deposit, and the amount of the deposit either in

cash or checks. The deposit slip has an upper portion or stub, which is detached andgiven to the depositor or his agent; the lower portion is retained by the bank. In someinstances, however, the deposit slips are prepared in duplicate by the depositor. Theoriginal of the deposit slip is retained by the bank, while the duplicate copy is returned orgiven to the depositor.

From May 5, 1975 to July 16, 1976, petitioner Romeo Lipana claims to have entrustedRMC funds in the form of cash totalling P304,979.74 to his secretary, Irene Yabut, for


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the purpose of depositing said funds in the current accounts of RMC with PBC. It turnedout, however, that these deposits, on all occasions, were not credited to RMC's accountbut were instead deposited to Account No. 53-01734-7 of Yabut's husband, BienvenidoCotas who likewise maintains an account with the same bank. During this period,petitioner bank had, however, been regularly furnishing private respondent with monthly

statements showing its current accounts balances. Unfortunately, it had never been thepractice of Romeo Lipana to check these monthly statements of account reposingcomplete trust and confidence on petitioner bank.

Irene Yabut's modus operandiis far from complicated. She would accomplish two (2)copies of the deposit slip, an original and a duplicate. The original showed the name ofher husband as depositor and his current account number. On the duplicate copy waswritten the account number of her husband but the name of the account holder was leftblank. PBC's teller, Azucena Mabayad, would, however, validate and stamp both theoriginal and the duplicate of these deposit slips retaining only the original copy despitethe lack of information on the duplicate slip. The second copy was kept by Irene Yabut

allegedly for record purposes. After validation, Yabut would then fill up the name ofRMC in the space left blank in the duplicate copy and change the account numberwritten thereon, which is that of her husband's, and make it appear to be RMC's accountnumber, i.e., C.A. No. 53-01980-3. With the daily remittance records also prepared byMs. Yabut and submitted to private respondent RMC together with the validatedduplicate slips with the latter's name and account number, she made her companybelieve that all the while the amounts she deposited were being credited to its accountwhen, in truth and in fact, they were being deposited by her and credited by thepetitioner bank in the account of Cotas. This went on in a span of more than one (1)year without private respondent's knowledge.

Upon discovery of the loss of its funds, RMC demanded from petitioner bank the returnof its money, but as its demand went unheeded, it filed a collection suit before theRegional Trial Court of Pasig, Branch 160. The trial court found petitioner banknegligent and ruled as follows:

WHEREFORE, judgment is hereby rendered sentencing defendant Philippine Bank ofCommerce, now absorbed by defendant Philippine Commercial & Industrial Bank, anddefendant Azucena Mabayad to pay the plaintiff, jointly and severally, and withoutprejudice to any criminal action which may be instituted if found warranted:

1. The sum of P304,979.72, representing plaintiffs lost deposit, plus interest thereon atthe legal rate from the filing of the complaint;

2. A sum equivalent to 14% thereof, as exemplary damages;

3. A sum equivalent to 25% of the total amount due, as and for attorney's fees; and

4. Costs.

Defendants' counterclaim is hereby dismissed for lack of merit. 2


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On appeal, the appellate court affirmed the foregoing decision with modifications, viz:

WHEREFORE, the decision appealed from herein is MODIFIED in the sense that theawards of exemplary damages and attorney's fees specified therein are eliminated andinstead, appellants are ordered to pay plaintiff, in addition to the principal sum ofP304,979.74 representing plaintiff's lost deposit plus legal interest thereon from the filing

of the complaint, P25,000.00 attorney's fees and costs in the lower court as well as in thisCourt. 3

Hence, this petition anchored on the following grounds:

1) The proximate cause of the loss is the negligence of respondent Rommel MarketingCorporation and Romeo Lipana in entrusting cash to a dishonest employee.

2) The failure of respondent Rommel Marketing Corporation to cross-check the bank'sstatements of account with its own records during the entire period of more than one (1)year is the proximate cause of the commission of subsequent frauds andmisappropriation committed by Ms. Irene Yabut.

3) The duplicate copies of the deposit slips presented by respondent Rommel MarketingCorporation are falsified and are not proof that the amounts appearing thereon weredeposited to respondent Rommel Marketing Corporation's account with the bank,

4) The duplicate copies of the deposit slips were used by Ms. Irene Yabut to cover up herfraudulent acts against respondent Rommel Marketing Corporation, and not as records ofdeposits she made with the bank. 4

The petition has no merit.

Simply put, the main issue posited before us is: What is the proximate cause of the loss,

to the tune of P304,979.74, suffered by the private respondent RMC petitioner bank'snegligence or that of private respondent's?

Petitioners submit that the proximate cause of the loss is the negligence of respondentRMC and Romeo Lipana in entrusting cash to a dishonest employee in the person ofMs. Irene Yabut. 5According to them, it was impossible for the bank to know that themoney deposited by Ms. Irene Yabut belong to RMC; neither was the bank forewarnedby RMC that Yabut will be depositing cash to its account. Thus, it was impossible for thebank to know the fraudulent design of Yabut considering that her husband, BienvenidoCotas, also maintained an account with the bank. For the bank to inquire into theownership of the cash deposited by Ms. Irene Yabut would be irregular. Otherwise

stated, it was RMC's negligence in entrusting cash to a dishonest employee whichprovided Ms. Irene Yabut the opportunity to defraud RMC. 6

Private respondent, on the other hand, maintains that the proximate cause of the losswas the negligent act of the bank, thru its teller Ms. Azucena Mabayad, in validating thedeposit slips, both original and duplicate, presented by Ms. Yabut to Ms. Mabayad,notwithstanding the fact that one of the deposit slips was not completely accomplished.


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We sustain the private respondent.

Our law on quasi-delicts states:

Art. 2176. Whoever by act or omission causes damage to another, there being fault ornegligence, is obliged to pay for the damage done. Such fault or negligence, if there is nopre-existing contractual relation between the parties, is called a quasi-delictand isgoverned by the provisions of this Chapter.

There are three elements of a quasi-delict: (a) damages suffered by the plaintiff; (b) faultor negligence of the defendant, or some other person for whose acts he must respond;and (c) the connection of cause and effect between the fault or negligence of thedefendant and the damages incurred by the plaintiff. 7

In the case at bench, there is no dispute as to the damage suffered by the privaterespondent (plaintiff in the trial court) RMC in the amount of P304,979.74. It is inascribing fault or negligence which caused the damage where the parties point to each

other as the culprit.

Negligence is the omission to do something which a reasonable man, guided by thoseconsiderations which ordinarily regulate the conduct of human affairs, would do, or thedoing of something which a prudent and reasonable man would do. The seventy-eight(78)-year-old, yet still relevant, case ofPicart v. Smith, 8provides the test by which todetermine the existence of negligence in a particular case which may be stated asfollows: Did the defendant in doing the alleged negligent act use that reasonable careand caution which an ordinarily prudent person would have used in the same situation?If not, then he is guilty of negligence. The law here in effect adopts the standardsupposed to be supplied by the imaginary conduct of the discreet paterfamilias of the

Roman law. The existence of negligence in a given case is not determined by referenceto the personal judgment of the actor in the situation before him. The law considerswhat would be reckless, blameworthy, or negligent in the man of ordinary intelligenceand prudence and determines liability by that.

Applying the above test, it appears that the bank's teller, Ms. Azucena Mabayad, wasnegligent in validating, officially stamping and signing all the deposit slips prepared andpresented by Ms. Yabut, despite the glaring fact that the duplicate copy was notcompletely accomplished contrary to the self-imposed procedure of the bank withrespect to the proper validation of deposit slips, original or duplicate, as testified to byMs. Mabayad herself, thus:

Q: Now, as teller of PCIB, Pasig Branch, will you please tell us Mrs.Mabayad your important duties and functions?

A: I accept current and savings deposits from depositors andencashments.

Q: Now in the handling of current account deposits of bank clients, couldyou tell us the procedure you follow?


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A: The client or depositor or the authorized representative prepares adeposit slip by filling up the deposit slip with the name, the accountnumber, the date, the cash breakdown, if it is deposited for cash, and thecheck number, the amount and then he signs the deposit slip.

Q: Now, how many deposit slips do you normally require in

accomplishing current account deposit, Mrs. Mabayad?

A: The bank requires only one copy of the deposit although some of ourclients prepare the deposit slip in duplicate.

Q: Now in accomplishing current account deposits from your clients,what do you issue to the depositor to evidence the deposit made?

A: We issue or we give to the clients the depositor's stub as a receipt ofthe deposit.

Q: And who prepares the deposit slip?

A: The depositor or the authorized representative sir?

Q: Where does the depositor's stub comes (sic) from Mrs. Mabayad, is itwith the deposit slip?

A: The depositor's stub is connected with the deposit slip or the bank'scopy. In a deposit slip, the upper portion is the depositor's stub and thelower portion is the bank's copy, and you can detach the bank's copyfrom the depositor's stub by tearing it sir.

Q: Now what do you do upon presentment of the deposit slip by thedepositor or the depositor's authorized representative?

A: We see to it that the deposit slip 9is properly accomplished and thenwe count the money and then we tally it with the deposit slip sir.

Q: Now is the depositor's stub which you issued to your clientsvalidated?

A: Yes, sir. 10[Emphasis ours]

Clearly, Ms. Mabayad failed to observe this very important procedure. The factthat the duplicate slip was not compulsorily required by the bank in acceptingdeposits should not relieve the petitioner bank of responsibility. The odd

circumstance alone that such duplicate copy lacked one vital information thatof the name of the account holder should have already put Ms. Mabayad onguard. Rather than readily validating the incomplete duplicate copy, she shouldhave proceeded more cautiously by being more probing as to the true reasonwhy the name of the account holder in the duplicate slip was left blank while thatin the original was filled up. She should not have been so naive in acceptinghook, line and sinker the too shallow excuse of Ms. Irene Yabut to the effect thatsince the duplicate copy was only for her personal record, she would simply fill


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up the blank space later on. 11A "reasonable man of ordinary prudence" 12wouldnot have given credence to such explanation and would have insisted that thespace left blank be filled up as a condition for validation. Unfortunately, this wasnot how bank teller Mabayad proceeded thus resulting in huge losses to theprivate respondent.

Negligence here lies not only on the part of Ms. Mabayad but also on the part of thebank itself in its lackadaisical selection and supervision of Ms. Mabayad. This wasexemplified in the testimony of Mr. Romeo Bonifacio, then Manager of the Pasig Branchof the petitioner bank and now its Vice-President, to the effect that, while he ordered theinvestigation of the incident, he never came to know that blank deposit slips werevalidated in total disregard of the bank's validation procedures, viz:

Q: Did he ever tell you that one of your cashiers affixed the stamp markof the bank on the deposit slips and they validated the same with themachine, the fact that those deposit slips were unfilled up, is there anyreport similar to that?

A: No, it was not the cashier but the teller.

Q: The teller validated the blank deposit slip?

A: No it was not reported.

Q: You did not know that any one in the bank tellers or cashiersvalidated the blank deposit slip?

A: I am not aware of that.

Q: It is only now that you are aware of that?

A: Yes, sir. 13

Prescinding from the above, public respondent Court of Appeals aptly observed:

xxx xxx xxx

It was in fact only when he testified in this case in February, 1983, or after the lapse ofmore than seven (7) years counted from the period when the funds in question weredeposited in plaintiff's accounts (May, 1975 to July, 1976) that bank manager Bonifacioadmittedly became aware of the practice of his teller Mabayad of validating blank deposit

slips. Undoubtedly, this is gross, wanton, and inexcusable negligence in the appellantbank's supervision of its employees. 14

It was this negligence of Ms. Azucena Mabayad, coupled by the negligence of thepetitioner bank in the selection and supervision of its bank teller, which was theproximate cause of the loss suffered by the private respondent, and not the latter's actof entrusting cash to a dishonest employee, as insisted by the petitioners.


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Proximate cause is determined on the facts of each case upon mixed considerations oflogic, common sense, policy and precedent. 15Vda. de Bataclan v. Medina, 16reiteratedin the case ofBank of the Phil. Islands v. Court of Appeals, 17defines proximate causeas "that cause, which, in natural and continuous sequence, unbroken by any efficientintervening cause, produces the injury, and without which the result would not have

occurred. . . ." In this case, absent the act of Ms. Mabayad in negligently validating theincomplete duplicate copy of the deposit slip, Ms. Irene Yabut would not have the facilitywith which to perpetrate her fraudulent scheme with impunity. Apropos, once again, isthe pronouncement made by the respondent appellate court, to wit:

. . . . Even if Yabut had the fraudulent intention to misappropriate the funds entrusted toher by plaintiff, she would not have been able to deposit those funds in her husband'scurrent account, and then make plaintiff believe that it was in the latter's accountswherein she had deposited them, had it not been for bank teller Mabayad's aforesaidgross and reckless negligence. The latter's negligence was thus the proximate,immediate and efficient cause that brought about the loss claimed by plaintiff in this case,and the failure of plaintiff to discover the same soon enough by failing to scrutinize themonthly statements of account being sent to it by appellant bank could not have

prevented the fraud and misappropriation which Irene Yabut had already completedwhen she deposited plaintiff's money to the account of her husband instead of to thelatter's accounts. 18

Furthermore, under the doctrine of "last clear chance" (also referred to, at times as"supervening negligence" or as "discovered peril"), petitioner bank was indeed theculpable party. This doctrine, in essence, states that where both parties are negligent,but the negligent act of one is appreciably later in time than that of the other, or when itis impossible to determine whose fault or negligence should be attributed to theincident, the one who had the last clear opportunity to avoid the impending harm andfailed to do so is chargeable with the consequences thereof. 19Stated differently, the

rule would also mean that an antecedent negligence of a person does not preclude therecovery of damages for the supervening negligence of, or bar a defense againstliability sought by another, if the latter, who had the last fair chance, could have avoidedthe impending harm by the exercise of due diligence. 20 Here, assuming that privaterespondent RMC was negligent in entrusting cash to a dishonest employee, thusproviding the latter with the opportunity to defraud the company, as advanced by thepetitioner, yet it cannot be denied that the petitioner bank, thru its teller, had the lastclear opportunity to avert the injury incurred by its client, simply by faithfully observingtheir self-imposed validation procedure.

At this juncture, it is worth to discuss the degree of diligence ought to be exercised by

banks in dealing with their clients.

The New Civil Code provides:

Art. 1173. The fault or negligence of the obligor consists in the omission of that diligencewhich is required by the nature of the obligation and corresponds with the circumstancesof the persons, of the time and of the place. When negligence shows bad faith, theprovisions of articles 1171 and 2201, paragraph 2, shall apply.


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If the law or contract does not state the diligence which is to be observed in theperformance, that which is expected of a good father of a familyshall be required.(1104a)

In the case of banks, however, the degree of diligence required is more than that of agood father of a family. Considering the fiduciary nature of their relationship with their

depositors, banks are duty bound to treat the accounts of their clients with the highestdegree of care. 21

As elucidated in Simex International (Manila), Inc. v. Court of Appeals, 22in every case,the depositor expects the bank to treat his account with the utmost fidelity, whether suchaccount consists only of a few hundred pesos or of millions. The bank must recordevery single transaction accurately, down to the last centavo, and as promptly aspossible. This has to be done if the account is to reflect at any given time the amount ofmoney the depositor can dispose as he sees fit, confident that the bank will deliver it asand to whomever he directs. A blunder on the part of the bank, such as the failure toduly credit him his deposits as soon as they are made, can cause the depositor not a

little embarrassment if not financial loss and perhaps even civil and criminal litigation.

The point is that as a business affected with public interest and because of the nature ofits functions, the bank is under obligation to treat the accounts of its depositors withmeticulous care, always having in mind the fiduciary nature of their relationship. In thecase before us, it is apparent that the petitioner bank was remiss in that duty andviolated that relationship.

Petitioners nevertheless aver that the failure of respondent RMC to cross-check thebank's statements of account with its own records during the entire period of more thanone (1) year is the proximate cause of the commission of subsequent frauds and

misappropriation committed by Ms. Irene Yabut.

We do not agree.

While it is true that had private respondent checked the monthly statements of accountsent by the petitioner bank to RMC, the latter would have discovered the loss early on,such cannot be used by the petitioners to escape liability. This omission on the part ofthe private respondent does not change the fact that were it not for the wanton andreckless negligence of the petitioners' employee in validating the incomplete duplicatedeposit slips presented by Ms. Irene Yabut, the loss would not have occurred.Considering, however, that the fraud was committed in a span of more than one (1) year

covering various deposits, common human experience dictates that the same would nothave been possible without any form of collusion between Ms. Yabut and bank tellerMabayad. Ms. Mabayad was negligent in the performance of her duties as bank tellernonetheless. Thus, the petitioners are entitled to claim reimbursement from her forwhatever they shall be ordered to pay in this case.

The foregoing notwithstanding, it cannot be denied that, indeed, private respondent waslikewise negligent in not checking its monthly statements of account. Had it done so, the


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company would have been alerted to the series of frauds being committed against RMCby its secretary. The damage would definitely not have ballooned to such an amount ifonly RMC, particularly Romeo Lipana, had exercised even a little vigilance in theirfinancial affairs. This omission by RMC amounts to contributory negligence which shallmitigate the damages that may be awarded to the private respondent 23under Article

2179 of the New Civil Code, to wit:

. . . When the plaintiff's own negligence was the immediate and proximate cause of hisinjury, he cannot recover damages. But if his negligence was only contributory, theimmediate and proximate cause of the injury being the defendant's lack of due care, theplaintiff may recover damages, but the courts shall mitigate the damages to be awarded.

In view of this, we believe that the demands of substantial justice are satisfied byallocating the damage on a 60-40 ratio. Thus, 40% of the damage awarded bythe respondent appellate court, except the award of P25,000.00 attorney's fees,shall be borne by private respondent RMC; only the balance of 60% needs to bepaid by the petitioners. The award of attorney's fees shall be borne exclusively by

the petitioners.

WHEREFORE, the decision of the respondent Court of Appeals is modified by reducingthe amount of actual damages private respondent is entitled to by 40%. Petitioners mayrecover from Ms. Azucena Mabayad the amount they would pay the private respondent.Private respondent shall have recourse against Ms. Irene Yabut. In all other respects,the appellate court's decision is AFFIRMED.

Proportionate costs.

SO ORDERED.

Bellosillo, Vitug and Kapunan, JJ., concur.

Separate Opinions

PADILLA, J., dissenting:

I regret that I cannot join the majority in ruling that the proximate cause of the damagesuffered by Rommel's Marketing Corporation (RMC) is mainly "the wanton and recklessnegligence of the petitioner's employee in validating the incomplete duplicate depositslips presented by Ms. Irene Yabut" (Decision, p. 15). Moreover, I find it difficult to agree


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with the ruling that "petitioners are entitled to claim reimbursement from her (the bankteller) for whatever they shall be ordered to pay in this case."

It seems that an innocent bank teller is being unduly burdened with what should fall onMs. Irene Yabut, RMC's own employee, who should have been charged with estafa or

estafa through falsification of private document. Interestingly, the records are silent onwhether RMC had ever filed any criminal case against Ms. Irene Yabut, aside from thefact that she does not appear to have been impleaded even as a party defendant in anycivil case for damages. Why is RMC insulating Ms. Irene Yabut from liability when infact she orchestrated the entire fraud on RMC, her employer?

To set the record straight, it is not completely accurate to state that from 5 May 1975 to16 July 1976, Miss Irene Yabut had transacted with PCIB (then PBC) through only oneteller in the person of Azucena Mabayad. In fact, when RMC filed a complaint for estafabefore the Office of the Provincial Fiscal of Rizal, it indicted allthe tellers of PCIB in thebranch who were accused of conspiracy to defraud RMC of its current account deposits.

(See Annex B, Rollo p. 22 and 47).

Even private respondent RMC, in its Comment, maintains that "when the petitioner'stellers" allowed Irene Yabut to carry out hermodus operandiundetected over a periodof one year, "theirnegligence cannot but be gross." (Rollo, p. 55; see alsoRollo pp. 58to 59). This rules out the possibility that there may have been some form of collusionbetween Yabut and bank teller Mabayad. Mabayad was just unfortunate that privaterespondent's documentary evidence showed that she was the attending teller in the bulkof Yabut's transactions with the bank.

Going back to Yabut's modus operandi, it is not disputed that each time Yabut would

transact business with PBC's tellers, she would accomplish two (2) copies of the currentaccount deposit slip. PBC's deposit slip, as issued in 1975, had two parts. The upperpart was called the depositor's stub and the lower part was called the bank copy. Bothparts were detachable from each other. The deposit slip was prepared and signed bythe depositor or his representative, who indicated therein the current account number towhich the deposit was to be credited, the name of the depositor or current accountholder, the date of the deposit, and the amount of the deposit either in cash or inchecks. (Rollo, p. 137)

Since Yabut deposited money in cash, the usual bank procedure then was for the tellerto count whether the cash deposit tallied with the amount written down by the depositor

in the deposit slip. If it did, then the teller proceeded to verify whether the currentaccount number matched with the current account name as written in the deposit slip.

In the earlier days before the age of full computerization, a bank normally maintained aledger which served as a repository of accounts to which debits and credits resultingfrom transactions with the bank were posted from books of original entry. Thus, it wasonly afterthe transaction was posted in the ledger that the teller proceeded to machine


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validate the deposit slip and then affix his signature or initial to serve as proof of thecompleted transaction.

It should be noted that the teller validated the depositor's stub in the upper portion andthe bank copy on the lower portion on both the original and duplicate copies of the

deposit slips presented by Yabut. The teller, however, detached the validateddepositor's stub on the original deposit slip and allowed Yabut to retain the wholevalidated duplicate deposit slip that bore the same account number as the originaldeposit slip, but with the account name purposely left blank by Yabut, on theassumption that it would serve no other purpose but for a personal record tocomplement the original validated depositor's stub.

Thus, when Yabut wrote the name of RMC on the blank account name on the validatedduplicate copy of the deposit slip, tampered with its account number, and superimposedRMC's account number, said act only served to cover-up the loss already caused by herto RMC, or after the deposit slip was validated by the teller in favor of Yabut's husband.

Stated otherwise, when there is a clear evidence of tampering with any of the materialentries in a deposit slip, the genuineness and due execution of the document becomean issue in resolving whether or not the transaction had been fair and regular andwhether the ordinary course of business had been followed by the bank.

It is logical, therefore, to conclude that the legal or proximate cause of RMC's loss waswhen Yabut, its employee, deposited the money of RMC in her husband's name andaccount number instead of that of RMC, the rightful owner of such deposited funds.Precisely, it was the criminal act of Yabut that directly caused damage to RMC, heremployer, not the validation of the deposit slip by the teller as the deposit slip was madeout by Yabut in her husband's name and to his account.

Even if the bank teller had required Yabut to completely fill up the duplicate deposit slip,the original deposit slip would nonetheless still be validated under the account ofYabut's husband. In fine, the damage had already been done to RMC when Yabutdeposited its funds in the name and account number of her husband with petitionerbank. It is then entirely left to speculation what Yabut would have done afterwards like tampering both the account number and the account name on the stub of theoriginal deposit slip and on the duplicate copy in order to cover up her crime.

Under the circumstances in this case, there was no way for PBC's bank tellers toreasonably foresee that Yabut might or would use the duplicate deposit slip to cover up

her crime. In the first place, the bank tellers were absolutely unaware that a crime hadalready been consummated by Yabut when her transaction by her sole doing wasposted in the ledger and validated by the teller in favor of her husband's account even ifthe funds deposited belonged to RMC.

The teller(s) in this case were not in any way proven to be parties to the crime either asaccessories or accomplices. Nor could it be said that the act of posting and validationwas in itself a negligent act because the teller(s) simply had no choice but to accept and


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validate the deposit as written in the original deposit slip under the account number andname of Yabut's husband. Hence, the act of validating the duplicate copy was not theproximate cause of RMC's injury but merely a remote cause which an independentcause or agency merely took advantage of to accomplish something which was not theprobable or natural effect thereof. That explains why Yabut still had to tamper with the

account number of the duplicate deposit slip after filling in the name of RMC in the blankspace.

Coming now to the doctrine of "last clear chance," it is my considered view that thedoctrine assumes that the negligence of the defendant was subsequent to thenegligence of the plaintiff and the same must be the proximate cause of the injury. Inshort, there must be a lastand a clearchance, not a lastpossible chance, to avoid theaccident or injury. It must have been a chance as would have enabled a reasonablyprudent man in like position to have acted effectively to avoid the injury and the resultingdamage to himself.

In the case at bar, the bank was not remiss in its duty of sending monthly bankstatements to private respondent RMC so that any error or discrepancy in the entriestherein could be brought to the bank's attention at the earliest opportunity. Privaterespondent failed to examine these bank statements not because it was prevented bysome cause in not doing so, but because it was purposely negligent as it admitted that itdoes not normally check bank statements given by banks.

It was private respondent who had the lastand clearchance to prevent any furthermisappropriation by Yabut had it only reviewed the status of its current accounts on thebank statements sent to it monthly or regularly. Since a sizable amount of cash wasentrusted to Yabut, private respondent should, at least, have taken ordinary care of its

concerns, as what the law presumes. Its negligence, therefore, is not contributory butthe immediate and proximate cause of its injury.

I vote to grant the petition.

Separate Opinions

PADILLA, J., dissenting:

I regret that I cannot join the majority in ruling that the proximate cause of the damagesuffered by Rommel's Marketing Corporation (RMC) is mainly "the wanton and recklessnegligence of the petitioner's employee in validating the incomplete duplicate depositslips presented by Ms. Irene Yabut" (Decision, p. 15). Moreover, I find it difficult to agreewith the ruling that "petitioners are entitled to claim reimbursement from her (the bankteller) for whatever they shall be ordered to pay in this case."


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It seems that an innocent bank teller is being unduly burdened with what should fall onMs. Irene Yabut, RMC's own employee, who should have been charged with estafa orestafa through falsification of private document. Interestingly, the records are silent onwhether RMC had ever filed any criminal case against Ms. Irene Yabut, aside from thefact that she does not appear to have been impleaded even as a party defendant in any

civil case for damages. Why is RMC insulating Ms. Irene Yabut from liability when infact she orchestrated the entire fraud on RMC, her employer?

To set the record straight, it is not completely accurate to state that from 5 May 1975 to16 July 1976, Miss Irene Yabut had transacted with PCIB (then PBC) through only oneteller in the person of Azucena Mabayad. In fact, when RMC filed a complaint for estafabefore the Office of the Provincial Fiscal of Rizal, it indicted allthe tellers of PCIB in thebranch who were accused of conspiracy to defraud RMC of its current account deposits.(See Annex B, Rollo p. 22 and 47).

Even private respondent RMC, in its Comment, maintains that "when the petitioner's

tellers" allowed Irene Yabut to carry out hermodus operandiundetected over a periodof one year, "theirnegligence cannot but be gross." (Rollo, p. 55; see alsoRollo pp. 58to 59). This rules out the possibility that there may have been some form of collusionbetween Yabut and bank teller Mabayad. Mabayad was just unfortunate that privaterespondent's documentary evidence showed that she was the attending teller in the bulkof Yabut's transactions with the bank.

Going back to Yabut's modus operandi, it is not disputed that each time Yabut wouldtransact business with PBC's tellers, she would accomplish two (2) copies of the currentaccount deposit slip. PBC's deposit slip, as issued in 1975, had two parts. The upperpart was called the depositor's stub and the lower part was called the bank copy. Both

parts were detachable from each other. The deposit slip was prepared and signed bythe depositor or his representative, who indicated therein the current account number towhich the deposit was to be credited, the name of the depositor or current accountholder, the date of the deposit, and the amount of the deposit either in cash or inchecks. (Rollo, p. 137)

Since Yabut deposited money in cash, the usual bank procedure then was for the tellerto count whether the cash deposit tallied with the amount written down by the depositorin the deposit slip. If it did, then the teller proceeded to verify whether the currentaccount number matched with the current account name as written in the deposit slip.

In the earlier days before the age of full computerization, a bank normally maintained aledger which served as a repository of accounts to which debits and credits resultingfrom transactions with the bank were posted from books of original entry. Thus, it wasonly afterthe transaction was posted in the ledger that the teller proceeded to machinevalidate the deposit slip and then affix his signature or initial to serve as proof of thecompleted transaction.


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It should be noted that the teller validated the depositor's stub in the upper portion andthe bank copy on the lower portion on both the original and duplicate copies of thedeposit slips presented by Yabut. The teller, however, detached the validateddepositor's stub on the original deposit slip and allowed Yabut to retain the wholevalidated duplicate deposit slip that bore the same account number as the original

deposit slip, but with the account name purposely left blank by Yabut, on theassumption that it would serve no other purpose but for a personal record tocomplement the original validated depositor's stub.

Thus, when Yabut wrote the name of RMC on the blank account name on the validatedduplicate copy of the deposit slip, tampered with its account number, and superimposedRMC's account number, said act only served to cover-up the loss already caused by herto RMC, or after the deposit slip was validated by the teller in favor of Yabut's husband.Stated otherwise, when there is a clear evidence of tampering with any of the materialentries in a deposit slip, the genuineness and due execution of the document becomean issue in resolving whether or not the transaction had been fair and regular and

whether the ordinary course of business had been followed by the bank.

It is logical, therefore, to conclude that the legal or proximate cause of RMC's loss waswhen Yabut, its employee, deposited the money of RMC in her husband's name andaccount number instead of that of RMC, the rightful owner of such deposited funds.Precisely, it was the criminal act of Yabut that directly caused damage to RMC, heremployer, not the validation of the deposit slip by the teller as the deposit slip was madeout by Yabut in her husband's name and to his account.

Even if the bank teller had required Yabut to completely fill up the duplicate deposit slip,the original deposit slip would nonetheless still be validated under the account of

Yabut's husband. In fine, the damage had already been done to RMC when Yabutdeposited its funds in the name and account number of her husband with petitionerbank. It is then entirely left to speculation what Yabut would have done afterwards like tampering both the account number and the account name on the stub of theoriginal deposit slip and on the duplicate copy in order to cover up her crime.

Under the circumstances in this case, there was no way for PBC's bank tellers toreasonably foresee that Yabut might or would use the duplicate deposit slip to cover upher crime. In the first place, the bank tellers were absolutely unaware that a crime hadalready been consummated by Yabut when her transaction by her sole doing wasposted in the ledger and validated by the teller in favor of her husband's account even ifthe funds deposited belonged to RMC.

The teller(s) in this case were not in any way proven to be parties to the crime either asaccessories or accomplices. Nor could it be said that the act of posting and validationwas in itself a negligent act because the teller(s) simply had no choice but to accept andvalidate the deposit as written in the original deposit slip under the account number andname of Yabut's husband. Hence, the act of validating the duplicate copy was not theproximate cause of RMC's injury but merely a remote cause which an independent


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cause or agency merely took advantage of to accomplish something which was not theprobable or natural effect thereof. That explains why Yabut still had to tamper with theaccount number of the duplicate deposit slip after filling in the name of RMC in the blankspace.

Coming now to the doctrine of "last clear chance," it is my considered view that thedoctrine assumes that the negligence of the defendant was subsequent to thenegligence of the plaintiff and the same must be the proximate cause of the injury. Inshort, there must be a lastand a clearchance, not a lastpossible chance, to avoid theaccident or injury. It must have been a chance as would have enabled a reasonablyprudent man in like position to have acted effectively to avoid the injury and the resultingdamage to himself.

In the case at bar, the bank was not remiss in its duty of sending monthly bankstatements to private respondent RMC so that any error or discrepancy in the entriestherein could be brought to the bank's attention at the earliest opportunity. Private

respondent failed to examine these bank statements not because it was prevented bysome cause in not doing so, but because it was purposely negligent as it admitted that itdoes not normally check bank statements given by banks.

It was private respondent who had the lastand clearchance to prevent any furthermisappropriation by Yabut had it only reviewed the status of its current accounts on thebank statements sent to it monthly or regularly. Since a sizable amount of cash wasentrusted to Yabut, private respondent should, at least, have taken ordinary care of itsconcerns, as what the law presumes. Its negligence, therefore, is not contributory butthe immediate and proximate cause of its injury.

I vote to grant the petition.

G.R. Nos. 103442-45 May 21, 1993

NATIONAL POWER CORPORATION, ET AL., petitioners,vs.THE COURT OF APPEALS, GAUDENCIO C. RAYO, ET AL., respondents.

The Solicitor General for plaintiff-appellee.

Ponciano G. Hernandez for private respondents.

DAVIDE, JR., J.:

This is a petition for review on certiorariunder Rule 45 of the Revised Rules of Courturging this Court to set aside the 19 August 1991 consolidated Decision of the Court of

Appeals in CA.-G.R. CV Nos. 27290-93 1 which reversed the Decision of Branch 5 of the


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then Court of First Instance (now Regional Trial Court) of Bulacan, and held petitionersNational Power Corporation (NPC) and Benjamin Chavez jointly and severally liable tothe private respondents for actual and moral damages, litigation expenses andattorney's fees.

This present controversy traces its beginnings to four (4) separate complaints2

fordamages filed against the NPC and Benjamin Chavez before the trial court. Theplaintiffs therein, now private respondents, sought to recover actual and other damagesfor the loss of lives and the destruction to property caused by the inundation of the townof Norzagaray, Bulacan on 26-27 October 1978. The flooding was purportedly causedby the negligent release by the defendants of water through the spillways of the AngatDam (Hydroelectric Plant). In said complaints, the plaintiffs alleged, inter alia, that: 1)defendant NPC operated and maintained a multi-purpose hydroelectric plant in the

Angat River at Hilltop, Norzagaray, Bulacan; 2) defendant Benjamin Chavez was theplant supervisor at the time of the incident in question; 3) despite the defendants'knowledge, as early as 24 October 1978, of the impending entry of typhoon "Kading,"

they failed to exercise due diligence in monitoring the water level at the dam; 4) whenthe said water level went beyond the maximum allowable limit at the height of thetyphoon, the defendants suddenly, negligently and recklessly opened three (3) of thedam's spillways, thereby releasing a large amount of water which inundated the banksof the Angat River; and 5) as a consequence, members of the household of theplaintiffs, together with their animals, drowned, and their properties were washed awayin the evening of 26 October and the early hours of 27 October 1978. 3

In their Answers, the defendants, now petitioners, alleged that: 1) the NPC exerciseddue care, diligence and prudence in the operation and maintenance of the hydroelectricplant; 2) the NPC exercised the diligence of a good father in the selection of its

employees; 3) written notices were sent to the different municipalities of Bulacanwarning the residents therein about the impending release of a large volume of waterwith the onset of typhoon "Kading" and advise them to take the necessary precautions;4) the water released during the typhoon was needed to prevent the collapse of the damand avoid greater damage to people and property; 5) in spite of the precautionsundertaken and the diligence exercised, they could still not contain or control the floodthat resulted and; 6) the damages incurred by the private respondents were caused bya fortuitous event orforce majeure and are in the nature and character ofdamnumabsque injuria. By way of special affirmative defense, the defendants averred that theNPC cannot be sued because it performs a purely governmental function. 4

Upon motion of the defendants, a preliminary hearing on the special defense wasconducted. As a result thereof, the trial court dismissed the complaints as against theNPC on the ground that the provision of its charter allowing it to sue and be sued doesnot contemplate actions based on tort. The parties do not, however, dispute the fact thatthis Court overruled the trial court and ordered the reinstatement of the complaints asagainst the NPC. 5

Being closely interrelated, the cases were consolidated and trial thereafter ensued.


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The lower court rendered its decision on 30 April 1990 dismissing the complaints "forlack of sufficient and credible evidence." 6 Consequently, the private respondentsseasonably appealed therefrom to the respondent Court which then docketed the casesas CA-G.R. CV Nos. 27290-93.

In its joint decision promulgated on 19 August 1991, the Court of Appeals reversed theappealed decision and awarded damages in favor of the private respondents. Thedispositive portion of the decision reads:

CONFORMABLY TO THE FOREGOING, the joint decision appealed from is herebyREVERSED and SET ASIDE, and a new one is hereby rendered:

1. In Civil Case No. SM-950, ordering defendants-appellees to pay, jointly and severally,plaintiffs-appellants, with legal interest from the date when this decision shall becomefinal and executory, the following:

A. Actual damages, to wit:

1) Gaudencio C. Rayo, Two Hundred Thirty One Thousand Two HundredSixty Pesos (P231,260.00);

2) Bienvenido P. Pascual, Two Hundred Four Thousand Five HundredPesos (P204.500.00);

3) Tomas Manuel, One Hundred Fifty Five Thousand Pesos(P155,000.00);

4) Pedro C. Bartolome, One Hundred Forty Seven Thousand Pesos(P147,000.00);.

5) Bernardino Cruz, One Hundred Forty Three Thousand Five HundredFifty Two Pesos and Fifty Centavos (P143,552.50);

6) Jose Palad, Fifty Seven Thousand Five Hundred Pesos (P57,500.00);

7) Mariano S. Cruz, Forty Thousand Pesos (P40,000.00);

8) Lucio Fajardo, Twenty nine Thousand Eighty Pesos (P29,080.00); and

B. Litigation expenses of Ten Thousand Pesos (P10,000.00);

2. In Civil case No. SM-951, ordering defendants-appellees to pay jointly and severally,

plaintiff-appellant, with legal interest from the date when this decision shall have becomefinal and executory, the following :

A. Actual damages of Five Hundred Twenty Thousand Pesos(P520,000.00);.

B. Moral damages of five hundred Thousand Pesos (P500,000.00); and.

C. Litigation expenses of Ten Thousand Pesos (P10,000.00);.


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3. In Civil Case No. SM-953, ordering defendants-appellees to pay, jointly and severally,with legal interest from the date when this decision shall have become final andexecutory;

A. Plaintiff-appellant Angel C. Torres:

1) Actual damages of One Hundred Ninety Nine Thousand One Hundred Twenty Pesos(P199,120.00);

2) Moral Damages of One Hundred Fifty Thousand Pesos (P150,000.00);

B. Plaintiff-appellant Norberto Torres:

1) Actual damages of Fifty Thousand Pesos (P50,000.00);

2) Moral damages of Fifty Thousand Pesos (P50,000.00);

C. Plaintiff-appellant Rodelio Joaquin:

1) Actual damages of One Hundred Thousand Pesos (P100,000.00);

2) Moral damages of One Hundred Thousand Pesos (P100,000.00); and

D. Plaintifsf-appellants litigation expenses of Ten Thousand Pesos (P10,000.00);

4. In Civil case No. SM-1247, ordering defendants-appellees to pay, jointly and severally,with legal interest from the date when this decision shall have become final andexecutory :

A. Plaintiffs-appellants Presentacion Lorenzo and Clodualdo Lorenzo:

1) Actual damages of Two Hundred Fifty Six Thousand Six HundredPesos (P256,600.00);


B. Plaintiff-appellant Consolacion Guzman :

1) Actual damages of One Hundred forty Thousand Pesos(P140,000.00);


C. Plaintiff-appellant Virginia Guzman :

1) Actual damages of Two Hundred Five Hundred Twenty Pesos(205,520.00); and

D. Plaintiffs-appellants litigation expenses of Ten Thousand Pesos (10,000.00).


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In addition, in all the four (4) instant cases, ordering defendants-appellees to pay, jointlyand severally, plaintiffs-appellants attorney fees in an amount equivalent to 15% of thetotal amount awarded.

No pronouncement as to costs. 7

The foregoing judgment is based on the public respondent's conclusion that thepetitioners were guilty of:

. . . a patent gross and evident lack of foresight, imprudence and negligence . . . in themanagement and operation of Angat Dam. The unholiness of the hour, the extent of theopening of the spillways, And the magnitude of the water released, are all but products ofdefendants-appellees' headlessness, slovenliness, and carelessness. The resulting flashflood and inundation of even areas (sic) one (1) kilometer away from the Angat Riverbank would have been avoided had defendants-appellees prepared the Angat Dam bymaintaining in the first place, a water elevation which would allow room for the expectedtorrential rains. 8

This conclusion, in turn, is anchored on its findings of fact, to wit:

As early as October 21, 1978, defendants-appellees knew of the impending onslaught ofand imminent danger posed by typhoon "Kading". For as alleged by defendants-appellees themselves, the coming of said super typhoon was bannered by BulletinToday, a newspaper of national circulation, on October 25, 1978, as "Super Howler to hitR.P." The next day, October 26, 1978, said typhoon once again merited a headline insaid newspaper as "Kading's Big Blow expected this afternoon" (Appellee's Brief, p. 6).

Apart from the newspapers, defendants-appellees learned of typhoon "Kading' throughradio announcements (Civil Case No. SM-950, TSN, Benjamin Chavez, December 4,1984, pp. 7-9).

Defendants-appellees doubly knew that the Angat Dam can safely holda normal

maximum headwater elevation of 217 meters (Appellee's brief, p. 12; Civil Case No. SM-951, Exhibit "I-6"; Civil Case No. SM-953, Exhibit "J-6"; Civil Case No. SM-1247, Exhibit"G-6").

Yet, despite such knowledge, defendants-appellees maintained a reservoir waterelevation even beyond its maximum and safe level, thereby giving no sufficient allowancefor the reservoir to contain the rain water that will inevitably be brought by the comingtyphoon.

On October 24, 1978, before typhoon "Kading" entered the Philippine area ofresponsibility, water elevation ranged from 217.61 to 217.53, with very little opening ofthe spillways, ranging from 1/2 to 1 meter. On October 25, 1978, when typhoon "Kading"entered the Philippine area of responsibility, and public storm signal number one was

hoisted over Bulacan at 10:45 a.m., later raised to number two at 4:45 p.m., and then tonumber three at 10:45 p.m., water elevation ranged from 217.47 to 217.57, with very littleopening of the spillways, ranging from 1/2 to 1 meter. On October 26, 1978, when publicstorm signal number three remained hoisted over Bulacan, the water elevation stillremained at its maximum level of 217.00 to 218.00 with very little opening of the spillwaysranging from 1/2 to 2 meters, until at or about midnight, the spillways were suddenlyopened at 5 meters, then increasing swiftly to 8, 10, 12, 12.5, 13, 13.5, 14, 14.5 in theearly morning hours of October 27, 1978, releasing water at the rate of 4,500 cubicmeters per second, more or less. On October 27, 1978, water elevation remained at arange of 218.30 to 217.05 (Civil Case No. SM-950, Exhibits "D" and series, "L", "M", "N",


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and "O" and Exhibits "3" and "4"; Civil Case No. SM-951, Exhibits "H" and "H-1"; CivilCase No. SM-953, Exhibits "I" and "I-1"; Civil Case No. SM 1247, Exhibits "F" and "F-1").

xxx xxx xxx

From the mass of evidence extant in the record, We are convinced, and so hold that the

flash flood on October 27, 1978, was caused not by rain waters (sic), but by storedwaters (sic) suddenly and simultaneously released from the Angat Dam by defendants-appellees, particularly from midnight of October 26, 1978 up to the morning hours ofOctober 27,1978. 9

The appellate court rejected the petitioners' defense that they had sent "early warningwritten notices" to the towns of Norzagaray, Angat, Bustos, Plaridel, Baliwag andCalumpit dated 24 October 1978 which read:

TO ALL CONCERN (sic):

Please be informed that at present our reservoir (dam) is full and that we have beenreleasing water intermittently for the past several days.

With the coming of typhoon "Rita" (Kading) we expect to release greater (sic) volume ofwater, if it pass (sic) over our place.

In view of this kindly advise people residing along Angat River to keep alert and stay insafe places.

BENJAMIN L.CHAVEZ

PowerPlantSuperinendent10

because:

Said notice was delivered to the "towns of Bulacan" on October 26, 1978 by defendants-appellees driver, Leonardo Nepomuceno (Civil Case No. SM-950, TSN, BenjaminChavez, December 4, 1984, pp. 7-11 and TSN, Leonardo Nepomuceno, March 7, 1985,pp. 10-12).

Said notice is ineffectual, insufficient and inadequate for purposes of the opening of thespillway gates at midnight of October 26, 1978 and on October 27, 1978. It did notprepare or warn the persons so served, for the volume of water to be released, whichturned out to be of such magnitude, that residents near or along the Angat River, eventhose one (1) kilometer away, should have been advised to evacuate. Said notice,addressed "TO ALL CONCERN (sic)," was delivered to a policeman (Civil Case No. SM-950, pp. 10-12 and Exhibit "2-A") for the municipality of Norzagaray. Said notice was notthus addressed and delivered to the proper and responsible officials who could havedisseminated the warning to the residents directly affected. As for the municipality of Sta.


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Maria, where plaintiffs-appellants in Civil Case No. SM-1246 reside, said notice does notappear to have been served. 11

Relying on Juan F. Nakpil & Sons vs. Court of Appeals, 12 public respondent rejected the petitioners' pleathat the incident in question was caused by force majeure and that they are, therefore, not liable to theprivate respondents for any kind of damage such damage being in the nature ofdamnum absque

injuria.

The motion for reconsideration filed by the petitioners, as well as the motion to modify judgment filed bythe public respondents, 13 were denied by the public respondent in its Resolution of 27 December 1991. 14

Petitioners thus filed the instant petition on 21 February 1992.

After the Comment to the petition was filed by the private respondents and the Reply thereto was filed bythe petitioners, We gave due course to the petition on 17 June 1992 and directed the parties to submittheir respective Memoranda, 15 which they subsequently complied with.

The petitioners raised the following errors allegedly committed by the respondent Court :

I. THE COURT OF APPEALS ERRED IN APPLYING THE RULING OF NAKPIL & SONSV. COURT OF APPEALS AND HOLDING THAT PETITIONERS WERE GUILTY OFNEGLIGENCE.

II. THE COURT OF APPEALS ERRED IN HOLDING THAT THE WRITTEN NOTICESOF WARNING ISSUED BY PETITIONERS WERE INSUFFICIENT.

III. THE COURT OF APPEALS ERRED IN HOLDING THAT THE DAMAGE SUFFEREDBY PRIVATE RESPONDENTS WAS NOT DAMNUM ABSQUE INJURIA.

IV. THE COURT OF APPEALS ERRED IN NOT AWARDING THE COUNTERCLAIM OFPETITIONERS FOR ATTORNEY'S FEES AND EXPENSES OF LITIGATION. 16

These same errors were raised by herein petitioners in G.R. No. 96410, entitled National PowerCorporation, et al., vs. Court of Appeals, et al., 17 which this Court decided on 3 July 1992. The said caseinvolved the very same incident subject of the instant petition. In no uncertain terms, We declared thereinthat the proximate cause of the loss and damage sustained by the plaintiffs therein who were similarlysituated as the private respondents herein was the negligence of the petitioners, and that the 24October 1978 "early warning notice" supposedly sent to the affected municipalities, the same noticeinvolved in the case at bar, was insufficient. We thus cannot now rule otherwise not only because such adecision binds this Court with respect to the cause of the inundation of the town of Norzagaray, Bulacanon 26-27 October 1978 which resulted in the loss of lives and the destruction to property in both cases,but also because of the fact that on the basis of its meticulous analysis and evaluation of the evidenceadduced by the parties in the cases subject of CA-G.R. CV Nos. 27290-93, public respondent found asconclusively established that indeed, the petitioners were guilty of "patent gross and evident lack of

foresight, imprudence and negligence in the management and operation of Angat Dam," and that "theextent of the opening of the spillways, and the magnitude of the water released, are all but products ofdefendants-appellees' headlessness, slovenliness, and carelessness." 18 Its findings and conclusions arebiding upon Us, there being no showing of the existence of any of the exceptions to the general rule thatfindings of fact of the Court of Appeals are conclusive upon this Court. 19 Elsewise stated, the challengeddecision can stand on its own merits independently of Our decision in G.R. No. 96410. In any event, Wereiterate here in Our pronouncement in the latter case that Juan F. Nakpil & Sons vs. Court of Appeals 20is still good law as far as the concurrent liability of an obligor in the case offorce majeure is concerned. Inthe Nakpilcase, We held:


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To exempt the obligor from liability under Article 1174 of the Civil Code, for a breach ofan obligation due to an "act of God," the following must concur: (a) the cause of thebreach of the obligation must be independent of the will of the debtor; (b) the event mustbe either unforseeable or unavoidable; (c) the event must be such as to render itimpossible for the debtor to fulfill his obligation in a moral manner; and (d) the debtormust be free from any participation in, or aggravation of the injury to the creditor.(Vasquez v. Court of Appeals, 138 SCRA 553; Estrada v. Consolacion, 71 SCRA 423;

Austria v. Court of Appeals, 39 SCRA 527; Republic of the Phil. v. Luzon StevedoringCorp., 21 SCRA 279; Lasam v. Smith, 45 Phil. 657).

Thus, if upon the happening of a fortuitous event or an act of God, there concurs acorresponding fraud, negligence, delay or violation or contravention in any manner of thetenor of the obligation as provided for in Article 1170 of the Civil Code, which results inloss or damage, the obligor cannot escape liability.

The principle embodied in the act of God doctrine strictly requires that the act must beone occasioned exclusively by the violence of nature and all human agencies are to beexcluded from creating or entering into the cause of the mischief. When the effect, thecause of which is to be considered, is found to be in part the result of the participation of

man, whether it be from active intervention or neglect, or failure to act, the wholeoccurrence is thereby humanized, as it were, and removed from the rules applicable tothe acts of God. (1 Corpus Juris, pp. 1174-1175).

Thus it has been held that when the negligence of a person concurs with an act of God inproducing a loss, such person is not exempt from liability by showing that the immediatecause of the damage was the act of God. To be exempt from liability for loss because ofan act of God, he must be free from any previous negligence or misconduct by which thatloss or damage may have been occasioned. (Fish & Elective Co. v. Phil. Motors, 55 Phil.129; Tucker v. Milan, 49 O.G. 4379; Limpangco & Sons v. Yangco Steamship Co., 34Phil. 594, 604; Lasam v. Smith, 45 Phil. 657). 21

Accordingly, petitioners cannot be heard to invoke the act of God orforce majeure to escape liability for

the loss or damage sustained by private respondents since they, the petitioners, were guilty ofnegligence. The event then was not occasioned exclusively by an act of God orforce majeure; a humanfactor negligence or imprudence had intervened. The effect then of the force majeure in questionmay be deemed to have, even if only partly, resulted from the participation of man. Thus, the wholeoccurrence was thereby humanized, as it were, and removed from the laws applicable to acts of God.

WHEREFORE, for want of merit, the instant petition is hereby DISMISSED and the ConsolidatedDecision of the Court of Appeals in CA-G.R. CV Nos. 27290-93 is AFFIRMED, with costs against thepetitioners.

SO ORDERED.

Feliciano, Bidin, Romero and Melo, JJ., concur.

G.R. No. 126389 July 10, 1998

SOUTHEASTERN COLLEGE INC., petitioner,

vs.


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COURT OF APPEALS, JUANITA DE JESUS VDA. DE DIMAANO, EMERITADIMAANO, REMEDIOS DIMAANO, CONSOLACION DIMAANO and MILAGROSDIMAANO, respondents.

PURISIMA, J.:

Petition for review under Rule 45 of the Rules of Court seeking to set aside the Decision1 promulgated on July 31, 1996, and Resolution 2 dated September 12, 1996 of theCourt of Appeals 3 in CA-G.R. No. 41422, entitled "Juanita de Jesus vda. de Dimaano,et al. vs. Southeastern College, Inc.", which reduced the moral damages awarded belowfrom P1,000,000.00 to P200,000.00. 4 The Resolution under attack denied petitioner'smotion for reconsideration.

Private respondents are owners of a house at 326 College Road, Pasay City, while

petitioner owns a four-storey school building along the same College Road. On October11, 1989, at about 6:30 in the morning, a powerful typhoon "Saling" hit Metro Manila.Buffeted by very strong winds, the roof of petitioner's building was partly ripped off andblown away, landing on and destroying portions of the roofing of private respondents'house. After the typhoon had passed, an ocular inspection of the destroyed buildingwas conducted by a team of engineers headed by the city building official, Engr. JesusL. Reyna. Pertinent aspects of the latter's Report 5 dated October 18, 1989 stated, asfollows:

5. One of the factors that may have led to this calamitous event is the formation of thebuilding in the area and the general direction of the wind. Situated in the peripheral lot isan almost U-shaped formation of 4-storey building. Thus, with the strong winds having a

westerly direction, the general formation of the building becomes a big funnel-likestructure, the one situated along College Road, receiving the heaviest impact of thestrong winds. Hence, there are portions of the roofing, those located on both ends of thebuilding, which remained intact after the storm.

6. Another factor and perhaps the most likely reason for the dislodging of the roofingstructural trusses is the improper anchorage of the said trusses to the roof beams. The1/2' diameter steel bars embedded on the concrete roof beams which serve as trussanchorage are not bolted nor nailed to the trusses. Still, there are other steel bars whichwere not even bent to the trusses, thus, those trusses are not anchored at all to the roofbeams.

It then recommended that "to avoid any further loss and damage to lives, limbsand property of persons living in the vicinity," the fourth floor of subject schoolbuilding be declared as a "structural hazard."

In their Complaint 6 before the Regional Trial Court of Pasay City, Branch 117, fordamages based on culpa aquiliana, private respondents alleged that the damage totheir house rendered the same uninhabitable, forcing them to stay temporarily in others'houses. And so they sought to recover from petitioner P117,116.00, as actual damages,


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P1,000,000.00, as moral damages, P300,000.00, as exemplary damages andP100,000.00, for and as attorney's fees; plus costs.

In its Answer, petitioner averred that subject school building had withstood severaldevastating typhoons and other calamities in the past, without its roofing or any portion

thereof giving way; that it has not been remiss in its responsibility to see to it that saidschool building, which houses school children, faculty members, and employees, is "intip-top condition"; and furthermore, typhoon "Saling" was "an act of God and thereforebeyond human control" such that petitioner cannot be answerable for the damageswrought thereby, absent any negligence on its part.

The trial court, giving credence to the ocular inspection report to the effect that subjectschool building had a "defective roofing structure," found that, while typhoon "Saling"was accompanied by strong winds, the damage to private respondents' houses "couldhave been avoided if the construction of the roof of [petitioner's] building was not faulty."The dispositive portion of the lower court's decision 7 reads, thus:

WHEREFORE, in view of the foregoing, the Court renders judgment (sic) in favor of theplaintiff (sic) and against the defendants, (sic) ordering the latter to pay jointly andseverally the former as follows:

a) P117,116.00, as actual damages, plus litigationexpenses;

b) P1,000,000.00 as moral damages;

c) P100,000.00 as attorney's fees;

d) Costs of the instant suit.

The claim for exemplary damages is denied for the reason that the defendants (sic) did ina wanton fraudulent, reckless, oppressive or malevolent manner.

In its appeal to the Court of Appeals, petitioner assigned as errors, 8 that:

I

THE TRIAL COURT ERRED IN HOLDING THAT TYPHOON "SALING", AS AN ACT OFGOD, IS NOT "THE SOLE AND ABSOLUTE REASON" FOR THE RIPPING-OFF OFTHE SMALL PORTION OF THE ROOF OF SOUTHEASTERN'S FOUR (4) STOREYSCHOOL BUILDING.

II

THE TRIAL COURT ERRED IN HOLDING THAT "THE CONSTRUCTION OF THEROOF OF DEFENDANT'S SCHOOL BUILDING WAS FAULTY" NOTWITHSTANDINGTHE ADMISSION THAT THERE WERE TYPHOONS BEFORE BUT NOT AS GRAVE

AS TYPHOON "SALING" WHICH IS THE DIRECT AND PROXIMATE CAUSE OF THEINCIDENT.


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III

THE TRIAL COURT ERRED IN AWARDING ACTUAL AND MORAL DAMAGES ASWELL AS ATTORNEY'S FEES AND LITIGATION EXPENSES AND COSTS OF SUITTO DIMAANOS WHEN THEY HAVE NOT INCURRED ACTUAL DAMAGES AT ALL ASDIMAANOS HAVE ALREADY SOLD THEIR PROPERTY, AN INTERVENING EVENT

THAT RENDERS THIS CASE MOOT AND ACADEMIC.

IV

THE TRIAL COURT ERRED IN ORDERING THE ISSUANCE OF THE WRIT OFEXECUTION INSPITE OF THE PERFECTION OF SOUTHEASTERN'S APPEAL WHENTHERE IS NO COMPELLING REASON FOR THE ISSUANCE THERETO.

As mentioned earlier, respondent Court of Appeals affirmed with modification the trialcourt's disposition by reducing the award of moral damages from P1,000,000.00 toP200,000.00. Hence, petitioner's resort to this Court, raising for resolution the issues of:

1. Whether or not the award of actual damages [sic] to respondent Dimaanos on thebasis of speculation or conjecture, without proof or receipts of actual damage, [sic] legallyfeasible or justified.

2. Whether or not the award of moral damages to respondent Dimaanos, with the latterhaving suffered, actual damage has legal basis.

3. Whether or not respondent Dimaanos who are no longer the owner of the property,subject matter of the case, during its pendency, has the right to pursue their complaintagainst petitioner when the case was already moot and academic by the sale of theproperty to third party.

4. Whether or not the award of attorney's fees when the case was already moot

academic [sic] legally justified.

5. Whether or not petitioner is liable for damage caused to others by typhoon "Saling"being an act of God.

6. Whether or not the issuance of a writ of execution pending appeal, ex-parte or withouthearing, has support in law.

The pivot of inquiry here, determinative of the other issues, is whether the damage onthe roof of the building of private respondents resulting from the impact of the fallingportions of the school building's roof ripped off by the strong winds of typhoon "Saling",was, within legal contemplation, due to fortuitous event? If so, petitioner cannot be heldliable for the damages suffered by the private respondents. This conclusion findssupport in Article 1174 of Civil Code, which provides:

Art 1174. Except in cases expressly specified by the law, or when it is otherwise declaredby stipulation, or when the nature of the obligation requires the assumption of risk, noperson shall be responsible for those events which could not be foreseen, or which,though foreseen, were inevitable.


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The antecedent of fortuitous event orcaso fortuito is found in the Partidas which definesit as "an event which takes place by accident and could not have been foreseen." 9Escriche elaborates it as "an unexpected event or act of God which could neither beforeseen nor resisted." 10 Civilist Arturo M. Tolentino adds that "[f]ortuitous events maybe produced by two general causes: (1) by nature, such as earthquakes, storms, floods,

epidemics, fires, etc. and (2) by the act of man, such as an armed invasion, attack bybandits, governmental prohibitions, robbery, etc." 11

In order that a fortuitous event may exempt a person from liability, it is necessary thathe be free from any previous negligence or misconduct by reason of which the loss mayhave been occasioned. 12 An act of God cannot be invoked for the protection of a personwho has been guilty of gross negligence in not trying to forestall its possible adverseconsequences. When a person's negligence concurs with an act of God in producingdamage or injury to another, such person is not exempt from liability by showing that theimmediate or proximate cause of the damages or injury was a fortuitous event. Whenthe effect is found to be partly the result of the participation of man whether it be from

active intervention, or neglect, or failure to act the whole occurrence is herebyhumanized, and removed from the rules applicable to acts of God. 13

In the case under consideration, the lower court accorded full credence to the finding ofthe investigating team that subject school building's roofing had "no sufficient anchorageto hold it in position especially when battered by strong winds." Based on such finding,the trial court imputed negligence to petitioner and adjudged it liable for damages toprivate respondents.

After a thorough study and evaluation of the evidence on record, this Court believesotherwise, notwithstanding the general rule that factual findings by the trail court,

especially when affirmed by the appellate court, are binding and conclusive upon thisCourt. 14 After a careful scrutiny of the records and the pleadings submitted by theparties, we find exception to this rule and hold that the lower courts misappreciated theevidence proffered.

There is no question that a typhoon or storm is a fortuitous event, a natural occurrencewhich may be foreseen but is unavoidable despite any amount of foresight, diligence orcare. 15 In order to be exempt from liability arising from any adverse consequenceengendered thereby, there should have been no human participation amounting to anegligent act. 16 In other words; the person seeking exoneration from liability must not beguilty of negligence. Negligence, as commonly understood, is conduct which naturally orreasonably creates undue risk or harm to others. It may be the failure to observe thatdegree of care, precaution, and vigilance which the circumstances justify demand, 17 orthe omission to do something which a prudent and reasonable man, guided byconsiderations which ordinarily regulate the conduct of human affairs, woulddo. 18 From these premises, we proceed to determine whether petitioner was negligent,such that if it were not, the damage caused to private respondents' house could havebeen avoided?


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At the outset, it bears emphasizing that a person claiming damages for the negligenceof another has the burden of proving the existence of fault or negligence causative ofhis injury or loss. The facts constitutive of negligence must be affirmatively establishedby competent evidence, 19 not merely by presumptions and conclusions without basis infact. Private respondents, in establishing the culpability of petitioner, merely relied on

the aforementioned report submitted by a team which made an ocularinspection ofpetitioner's school building after the typhoon. As the term imparts, an ocularinspectionis one by means of actual sight or viewing. 20 What is visual to the eye through, is notalways reflective of the real cause behind. For instance, one who hears a gunshot andthen sees a wounded person, cannot always definitely conclude that a third person shotthe victim. It could have been self-inflicted or caused accidentally by a stray bullet. Therelationship of cause and effect must be clearly shown.

In the present case, other than the said ocular inspection, no investigation wasconducted to determine the real cause of the partial unroofing of petitioner's schoolbuilding. Private respondents did not even show that the plans, specifications and

design of said school building were deficient and defective. Neither did they prove anysubstantial deviation from the approved plans and specifications. Nor did theyconclusively establish that the construction of such building was basically flawed. 21

On the other hand, petitioner elicited from one of the witnesses of private respondents,city building official Jesus Reyna, that the original plans and design of petitioner's schoolbuilding were approved prior to its construction. Engr. Reyna admitted that it was a legalrequirement before the construction of any building to obtain a permit from the citybuilding official (city engineer, prior to the passage of the Building Act of 1977). In likemanner, after construction of the building, a certification must be secured from the sameofficial attesting to the readiness for occupancy of the edifice. Having obtained both

building permit and certificate of occupancy, these are, at the very least, prima facieevidence of the regular and proper construction of subject school building. 22

Furthermore, when part of its roof needed repairs of the damage inflicted by typhoon"Saling", the same city official gave the go-signal for such repairs without anydeviation from the original design and subsequently, authorized the use of the entirefourth floor of the same building. These only prove that subject building suffers from nostructural defect, contrary to the report that its "U-shaped" form was "structurallydefective." Having given his unqualified imprimatur, the city building official is presumedto have properly performed his duties 23 in connection therewith.

In addition, petitioner presented its vice president for finance and administration whotestified that an annual maintenance inspection and repair of subject school buildingwere regularly undertaken. Petitioner was even willing to present its maintenancesupervisor to attest to the extent of such regular inspection but private respondentsagreed to dispense with his testimony and simply stipulated that it would becorroborative of the vice president's narration.


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Moreover, the city building official, who has been in the city government service since1974, admitted in open court that no complaint regarding any defect on the samestructure has ever been lodged before his office prior to the institution of the case atbench. It is a matter of judicial notice that typhoons are common occurrences in thiscountry. If subject school building's roofing was not firmly anchored to its trusses,

obviously, it could not have withstood long years and several typhoons even strongerthan "Saling."

In light of the foregoing, we find no clear and convincing evidence to sustain thejudgment of the appellate court. We thus hold that petitioner has not been shownnegligent or at fault regarding the construction and maintenance of its school building inquestion and that typhoon "Saling" was the proximate cause of the damage suffered byprivate respondents' house.

With this disposition on the pivotal issue, private respondents' claim for actual and moraldamages as well as attorney's fees must fail. 24 Petitioner cannot be made to answer for

a purely fortuitous event.25

More so because no bad faith or willful act to cause damagewas alleged and proven to warrant moral damages.

Private respondents failed to adduce adequate and competent proof of the pecuniaryloss they actually incurred. 26 It is not enough that the damage be capable of proof butmust be actually proved with a reasonable degree of certainty, pointing out specific factsthat afford a basis for measuring whatever compensatory damages are borne. 27 Privaterespondents merely submitted an estimated amount needed for the repair of the rooftheir subject building. What is more, whether the "necessary repairs" were causedONLY by petitioner's alleged negligence in the maintenance of its school building, orincluded the ordinary wear and tear of the house itself, is an essential question that

remains indeterminable.

The Court deems unnecessary to resolve the other issues posed by petitioner.

As regards the sixth issue, however, the writ of execution issued on April 1, 1993 by thetrial court is hereby nullified and set aside. Private respondents are ordered toreimburse any amount or return to petitioner any property which they may havereceived by virtue of the enforcement of said writ.

WHEREFORE, the petition is GRANTED and the challenged Decision is REVERSED.The complaint of private respondents in Civil Case No. 7314 before the trial court a quo

is ordered DISMISSED and the writ of execution issued on April 1, 1993 in said case isSET ASIDE. Accordingly, private respondents are ORDERED to return to petitioner anyamount or property received by them by virtue of said writ. Costs against the privaterespondents.

SO ORDERED.

Narvasa, C.J., Romero and Kapunan, JJ., concur.


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G.R. No. L-53401 November 6, 1989

THE ILOCOS NORTE ELECTRIC COMPANY, petitioner,vs.

HONORABLE COURT OF APPEALS, (First Division) LILIAN JUAN LUIS, JANE JUAN YABES,VIRGINIA JUAN CID, GLORIA JUAN CARAG, and PURISIMA JUAN, respondents.

Herman D. Coloma for petitioner.

Glicerio S. Ferrer for private respondents.

PARAS, J.:

Sought to be reversed in this petition is the Decision * of the respondent Court of Appeals' First Division,

setting aside the judgment of the then Court of First Instance (CFI) of Ilocos Norte, with the followingdispositive portion:

WHEREFORE, the appealed judgment is hereby set aside and another rendered in its stead whereby defendant ishereby sentenced to pay plaintiffs actual damages of P30,229.45; compensatory damages of P50,000.00; exemplarydamages of P10,000.00; attorney's fees of P3,000.00; plus the costs of suit in both instances. (p. 27 Rollo)

Basically, this case involves a clash of evidence whereby both patties strive for the recognition of theirrespective versions of the scenario from which the disputed claims originate. The respondent Court of

Appeals (CA) summarized the evidence of the parties as follows:

From the evidence of plaintiffs i t appears that in the evening of June 28 until the early morning of June 29, 1967 astrong typhoon by the code name "Gening" buffeted the province of Ilocos Norte, bringing heavy rains and consequentflooding in its wake. Between 5:30 and 6:00 A.M. on June 29, 1967, after the typhoon had abated and when the

floodwaters were beginning to recede the deceased Isabel Lao Juan, fondly called Nana Belen, ventured out of thehouse of her son-in-law, Antonio Yabes, on No. 19 Guerrero Street, Laoag City, and proceeded northward towards thedirection of the Five Sisters Emporium, of which she was the owner and proprietress, to look after the merchandisetherein that might have been damaged. Wading in waist-deep flood on Guerrero, the deceased was followed by AidaBulong, a Salesgirl at the Five Sisters Grocery, also owned by the deceased, and by Linda Alonzo Estavillo, a ticketseller at the YJ Cinema, which was partly owned by the deceased. Aida and Linda walked side by side at a distance ofbetween 5 and 6 meters behind the deceased, Suddenly, the deceased screamed "Ay" and quickly sank into the water.The two girls attempted to help, but fear dissuaded them from doing so because on the spot where the deceased sankthey saw an electric wire dangling from a post and moving in snake-like fashion in the water. Upon their shouts for help,Ernesto dela Cruz came out of the house of Antonio Yabes. Ernesto tried to go to the deceased, but at four metersaway from her he turned back shouting that the water was grounded. Aida and Linda prodded Ernesto to seek helpfrom Antonio Yabes at the YJ Cinema building which was four or five blocks away.

When Antonio Yabes was informed by Ernesto that his mother-in law had been electrocuted, he acted immediately.With his wife Jane, together with Ernesto and one Joe Ros, Yabes passed by the Ci ty Hall of Laoag to request thepolice to ask the people of defendant Ilocos Norte Electric Company or INELCO to cut off the electric current. Then theparty waded to the house on Guerrero Street. The floodwater was receding and the lights inside the house were out

indicating that the electric current had been cut off in Guerrero. Yabes instructed his boys to fish for the body of thedeceased. The body was recovered about two meters from an electric post.

In another place, at about 4:00 A.M. on that fateful date, June 29, 1967, Engineer Antonio Juan, Power Plant Engineerof the National Power Corporation at the Laoag Diesel-Electric Plant, noticed certain fluctuations in their electric meterwhich indicated such abnormalities as grounded or short-circuited lines. Between 6:00 and 6:30 A.M., he set out of theLaoag NPC Compound on an inspection. On the way, he saw grounded and disconnected lines. Electric lines were

hanging from the posts to the ground. Since he could not see any INELCO lineman, he decided to go to the INELCOOffice at the Life Theatre on Rizal Street by way of Guerrero. As he turned right at the intersection of Guerrero andRizal, he saw an electric wire about 30 meters long strung across the street "and the other end was seeming to playwith the current of the water." (p. 64, TSN, Oct. 24, 1972) Finding the Office of the INELCO still closed, and seeing no

lineman therein, he returned to the NPC Compound.


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At about 8:10 A.M., Engr. Juan went out of the compound again on another inspection trip. Having learned of the deathof Isabel Lao Juan, he passed by the house of the deceased at the corner of Guerrero and M.H. del Pilar streets towhich the body had been taken. Using the resuscitator which was a standard equipment in his jeep and employing theskill he acquired from an in service training on resuscitation, he tried to revive the deceased. His efforts proved futile.Rigor mortis was setting in. On the left palm of the deceased, Engr. Juan noticed a hollow wound. Proceeding to theINELCO Office, he met two linemen on the way. He told them about the grounded lines of the INELCO In the afternoon

of the same day, he went on a third inspection trip preparatory to the restoration of power. The dangling wire he saw onGuerrero early in the morning of June 29, 1967 was no longer there.

Many people came to the house at the corner of Guerrero and M.H. del Pilar after learning that the deceased had beenelectrocuted. Among the sympathizers was Dr. Jovencio Castro, Municipal Health Officer of Sarrat, Ilocos Norte. Uponthe request of the relatives of the deceased, Dr. Castro examined the body at about 8:00 A.M. on June 29, 1967. Theskin was grayish or, in medical parlance, cyanotic, which indicated death by electrocution. On the left palm, the doctorfound an "electrically charged wound" (Exh. C-1: p. 101, TSN, Nov. 28, 1972) or a first degree burn. About the base ofthe thumb on the left hand was a burned wound. (Exh. C-2, pp. 102-103, Ibid.) The certificate of death prepared by Dr.Castro stated the cause of' death as , 'circulatory shock electrocution" (Exh. I; p. 103, Ibid.).

In defense and exculpation, defendant presented the testimonies of i ts officers and employees, namely, Conrado Asis,electric engineer; Loreto Abijero, collector-inspector; Fabico Abijero, lineman; and Julio Agcaoili, president-manager ofINELCO Through the testimonies of these witnesses, defendant sought to prove that on and even before June 29,1967 the electric service system of the INELCO in the whole franchise area, including Area No. 9 which covered theresidence of Antonio Yabes at No. 18 Guerrero Street, did not suffer from any defect that might constitute a hazard tolife and property. The service lines, devices and other INELCO equipment in Area No. 9 had been newly-installed priorto the date in question. As a public service operator and in line with its business of supplying electric current to thepublic, defendant had installed safety devices to prevent and avoid injuries to persons and damage to property in case

of natural calamities such as floods, typhoons, fire and others. Defendant had 12 linesmen charged with the duty ofmaking a round-the-clock check-up of the areas respectively assigned to them.

Defendant asserts that although a strong typhoon struck the province of Ilocos Norte on June 29, 1967, putting tostreets of Laoag City under water, only a few known places in Laoag were reported to have suffered damaged electriclines, namely, at the southern approach of the Marcos Bridge which was washed away and where the INELCO linesand posts collapsed; in the eastern part near the residence of the late Governor Simeon Mandac; in the far

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