[G.R. NO. 172238, September 17, 2008]

MA. LIZA FRANCO-CRUZ, Petitioner, v. THE COURT OF APPEALS, VICTORY LINER, INC., MARITES M. GANELO, CATHERINE C. SANTOS, AND MA. THERESA Q. FABIAN, Respondents.

D E C I S I O N 

CARPIO MORALES, J.: 

On January 4, 1998, a Franco Transit bus bearing license plate number AVC 228 collided with the rear portions of a bus and truck wrecker both owned by respondent Victory Liner, Inc. (Victory Liner) which were stalled “along kilometer 63, North Expressway, San Felipe, San Fernando, Pampanga.”  The collision damaged both vehicles of Victory Liner and killed Manuel Fabian, Rodel Ganelo, Caesar Santos, and Michael Figueroa.  The driver of the Franco Transit bus likewise died in the accident.

 On February 11, 1998, Victory Liner and respondents Marites M.

Ganelo, Catherine C. Santos, and Ma. Theresa Q. Fabian (Ma. Theresa) – the surviving spouses of Rodel Ganelo, Caesar Santos, and Manuel Fabian, respectively – filed before the Regional Trial Court (RTC) of Caloocan City a complaint (Civil Case No. C-18212),[1]  for damages against Maria[2] Liza Franco-Cruz (petitioner), alleged to be “the registered owner and operator of public transportation utilities and whose bus is known as and by the name of FRANCO TRANSIT and which she has been operating prior to January 4, 1998.”[3] 

 Respondents claimed that petitioner failed to exercise the diligence

of a good father of a family in the selection and supervision of the driver of the Franco Transit bus.[4]

 In her   Answer , [5]   petitioner, after denying the material allegations

of the Complaint, alleged as among her Affirmative Defenses that she is not the real party-in-interestand, therefore, the complaint stated no cause of action against her, hence, must be dismissed; that the owner and the management of the bus involved in the case have always exercised the due diligence of a good father of a family in the selection and supervision of their employees; and that the proximate cause of the collision was the negligence and recklessness of a third party, the driver of a Philippine Rabbit bus.[6]

 Petitioner and her counsel failed to appear during the pre-trial

scheduled on June 5, 1998 despite due notice thereof, albeit her counsel filed on even date an urgent motion to postpone.  The motion was denied, however, and petitioner was declared “as in default” [sic].  Respondents at once started presenting evidence ex-parte.[7] 

  On June 23, 1998, petitioner filed a Motion for

Reconsideration [8]  of the June 5, 1998 order declaring her “as in default,”

alleging that, inter alia, she had meritorious defenses that included her not being the real party-in-interest as she is   not   the registered owner of the Franco Transit bus [9]   but Felicisima R. Franco, in support of which she attached a Certificate of Registration issued on October 28, 1988 in the name of Felicisima R. Franco.[10] 

 Petitioner’s Motion for Reconsideration was denied by the trial court

by Order[11] of July 20, 1998 in this wise: 

Indeed, a cursory examination of the instant motion will readily show that it was filed in patent violation of the provision of the rules.

 While the movant alleged that [she] has a

meritorious defense which would justify the granting of [her] motion, [she] nevertheless failed to submit an Affidavit of Merit.  Worst, the motion was not even verified.[12]  (Emphasis and underscoring supplied)

  Petitioner thereafter filed an Omnibus Motion[13] alleging that it was

error to declare her “as in default” for the declaration “as in default” of a defendant who fails to attend pre-trial had been eliminated in the 1997 Rules of Civil Procedure.  She thus prayed that she be allowed to participate in the proceedings and to   present evidence on her affirmative defenses.  The Omnibus Motion was denied for failure of petitioner’s counsel to appear at the hearing thereon.[14]

 After respondents rested their case, Branch 121 of the Caloocan

City RTC, by Decision[15] dated March 30, 1999, found that, inter alia, the negligence of the driver of the Franco Transit bus resulted in the accident which “the defendant [-herein petitioner] failed to rebut” and that, moreover, “the defendant [-herein petitioner] totally failed to present evidence to overthrow the presumption of negligence against her pursuant to Article 2180 of the Civil Code.”[16]  It thus rendered judgment in favor of respondents,  disposing as follows:

 WHEREFORE, premises considered, judgment is

hereby rendered against MARIA LIZA FRANCO-CRUZ, operator of FRANCO TRANSIT, ordering her:

 1)            To pay P50,000.00 each by way of

actual damages and lost income to plaintiffs Marites M. Ganelo, Catherine C. Santos and Ma. Theresa Q. Fabian;

 2)            To pay moral damages to the above-

named plaintiffs in the amount of P100,000.00;

 

3)            To pay actual damages in the amount of P515,631.00 to plaintiff Victory Liner, Inc., and lost income in the amount of P50,000.00;

 4)            To pay attorney’s fees of P50,000.00

and the costs of the suit. 

SO ORDERED.[17]

  Respondent Ma. Theresa filed a Motion for Partial Reconsideration

and Clarification.[18]  Petitioner filed a Motion for Reconsideration [19]   of the trial court’s decisionreiterating her plea that she is not the real party-in-interest against whom the action should be brought, she again submitting the Certification of Registration of the bus in the name of Felicisima R. Franco, together with an Official Receipt of payment as Annex “A” to the motion.

 By Order[20] dated June 25, 1999, the trial court denied Ma.

Theresa’s partial motion for reconsideration but clarified that the attorney’s fees “should be divided according to the following proportion:  three-fourths (3/4) for Atty. Atilano Huaben B. Lim who represented three of the plaintiffs and one-fourth (1/4) for Atty. Roberto A. Unciano who represented plaintiff Ma. Theresa Q. Fabian.”[21] 

 Respecting petitioner’s Motion for Reconsideration of the decision,

the trial court denied the same for having been   filed beyond the 15-day reglementary period, it having been filed only on the 18 th day (May 17, 1999) following the receipt by petitioner’s counsel of a copy of the decision on April 29, 1999.[22] 

 On petitioner’s appeal,[23] the Court of Appeals, by

Decision[24] of September 22, 2005, dismissed the same after noting that her motion for reconsideration of the trial court’s decision was filed only on the 18th day following receipt by her counsel of a copy of the decision.  The appellate court thus held that the trial court’s decision had become final and executory.[25]

 Her Motion for Reconsideration[26] of the appellate court’s Decision

having been denied,[27] petitioner filed the present Petition for Certiorari.[28]

 One of the requirements for certiorari to lie is that there is no

appeal, or any plain, speedy, and adequate remedy in the ordinary course of law.[29]  Any judgment which finally disposes of a case, leaving nothing more for the court to do in respect thereto – such as the judgment of the Court of Appeals dismissing petitioner’s appeal as she had lost the right thereto – is appealable.[30]  Petitioner’s remedy is, therefore, appeal, not certiorari. 

As a general rule, the requirements for perfecting an appeal within the reglementary period specified in law must be strictly followed,[31]  appeal not being a constitutional right but a mere statutory privilege.[32] The perfection of an appeal in the manner and within the period permitted by law is thus not only mandatory, but also jurisdictional.[33]

 Petitioner argues, however, that: 

The ruling of the respondent Court of Appeals contained in its questioned Decision dated March 30, 1999 that the Petitioner had lost her right to appeal is a patent nullity. What the respondent Court of Appeals missed is the fact that before the period to appeal or file a Motion for Reconsideration expire[d], respondent Ma. Theresa Q. Fabian filed a Partial Motion for Reconsideration   of the Decision of the lower court dated March 30, 1999, which motion asserted that the lower court erred in not awarding indemnity for the death of each victims [sic] to the plaintiffs and that it failed to clarify the award of attorney’s fees of P50,000.00 as to its awardees and its division.  With the filing of such Partial Motion for Reconsideration by respondent Ma. Theresa Q. Fabian which prayed for the modification and clarification of the Decision dated March 30, 1999, then, the said decision did not become final.[34]  (Underscoring supplied)

  In the case at bar, the records show that petitioner’s counsel

indeed received notice of the trial court’s decision on April 29, 1999.[35]  Following Rule 37, Section 1 vis-à-vis Rule 41, Section 3 of the Rules of Court, petitioner had 15 days or until May 14, 1999 to file a motion for reconsideration or notice of appeal.  She filed a motion for reconsideration on May 17, 1999, thus rendering the trial court’s decision as to her final and executory.  Testate Estate of Manuel v. Biascan[36] so teaches:

 It is well-settled that judgments or orders

become final and executory by operation of law and not by judicial declaration.  Thus, finality of a judgment becomes a fact upon the lapse of the reglementary period of appeal if no appeal is perfected or [no] motion for reconsideration or new trial is filed.  The trial court need not even pronounce the finality of the order as the same becomes final by operation of law.  In fact, the trial court could not even validly entertain a motion for reconsideration after the lapse of the period for taking an appeal.     x x x   The subsequent filing of a motion for reconsideration cannot disturb the finality of the judgment or order.[37]  (Emphasis and underscoring supplied)

 

 The filing of a motion for reconsideration by respondent Ma.

Theresa within the reglementary period prevented, with respect to her, the decision from becoming final, but not with respect to petitioner. 

 In Bank of the Philippine Islands v. Far East Molasses Corporation,

[38] this Court, passing on Section 3, Rule 41 of the Rules of Court which provides that “[t]he appeal shall be taken within fifteen (15) days from notice of the judgment or final order appealed from” (underscoring supplied), held:  

 x x x  the commencement of the period to

appeal x x x should x x x be reckoned x x x from the respective dates each of the parties received a copy of the decision.  Therefore,   each party has a different period within which to appeal, unless, of course, all of them received their copies on the same date and none filed a motion for reconsideration.[39] (Emphasis and underscoring supplied) Since each party has a different period within which to appeal,

the timely filing of a motion for reconsideration by one party does not interrupt the other or another party’s period of appeal.

 In petitioner’s case, her Motion for Reconsideration of the trial

court’s decision was filed three days after the expiration of the reglementary period for the purpose, hence, the Court of Appeals’ dismissal of her appeal was in order.

 The faux pas or negligence of petitioner’s counsel, however, in

failing to file a timely motion for reconsideration should not be taken against her.  Ordinarily, the negligence of counsel binds the client.[40]  However, this Court has recognized the following exceptions to this rule:  (1) where reckless or gross negligence of counsel deprives the client of due process of law; (2) when its application will result in outright deprivation of the client’s liberty or property; or (3) where the interests of justice require. [41]  In the case at bar, the application of the rule would result in petitioner being held liable for the damages suffered by respondents even without them having established the basis of her liability, thus depriving her of due process of law. 

 Compounding petitioner’s plight is the trial court’s procedural error

which precluded petitioner from presenting evidence in her behalf. [42]  The trial court denied her motion for reconsideration of its order declaring her “as in default” on the ground that she failed to submit an affidavit of merit respecting her claim that she had meritorious defenses.  This ratio is, of course, erroneous, for an affidavit of merit is not required to support a motion for reconsideration of an order allowing the ex-parte presentation of evidence by the plaintiff, the defenses having already been laid down in the answer [43]  as in petitioner’s case. 

 Petitioner, early on in the Affirmative Defenses segment of

her Answer, already disclaimed the allegation in respondents’ complaint that she is the registered owner of the bus, hence, not a real party-in-interest-ground to dismiss the complaint for lack of cause of action.  She raised it again in her Motion for Reconsideration from the order declaring her “as in default,” to which motion she in fact attached the Certificate of Registration showing that the bus was registered in the name of Felicisima R. Franco.  Thus, petitioner had alleged and shown her meritorious defense by submitting the Certificate of Registration of the bus, which is evidence that she is not the registered owner of the bus, or that something would be gained by setting aside the order declaring her “as in default.”[44]

 On the merits of the case, a review of the evidence for respondents

shows that individual respondents took the witness stand to testify on the damages they suffered.[45] And they presented the Victory Liner bus inspector;[46] SPO2 Edgardo F. Balajadia (Balajadia) who investigated the site of the accident right after it happened;[47] the Victory Liner maintenance foreman regarding the damage sustained by the Victory Liner vehicles;[48] the death certificates of Rodel Ganelo and Caesar Santos; [49] the marriage certificate of respondent Marites Ganelo;[50] Balajadia’s Traffic Accident Report;[51] photographs of the damaged vehicles;[52] and the damage report showing the expenses incurred in repairing both damaged vehicles.[53] 

 There was no attempt, however, on the part of any of the witnesses

for respondents, to controvert petitioner’s affirmative defense that there is no cause of action against her,she not being the registered owner of the Franco Transit bus, even despite her submission of the bus’ Certificate of Registration in the name of   Felicisima R. Franco  which is conclusive proof of ownership.

 Respondents, in maintaining their cause of action against

petitioner, relied on the January 4, 1998 Traffic Accident Report[54] of Balajadia, who conducted a spot investigation after the occurrence of the accident,[55] wherein he stated that the Franco Transit bus was “[r]egistered under the name of Marializa Franco-Cruz of Batac, Ilocos Norte.”  (Emphasis supplied)  How Balajadia arrived at such statement, he did not indicate in his Report.  Neither did he pass on it when he took the witness stand onFebruary 11, 1999.[56]

 Rule 130, Section 44 of the Rules of Court, provides: 

SEC. 44.  Entries in official records. – Entries in official records made in the performance of his duty by a public officer of the Philippines, or by a person in the performance of a duty specially enjoined by law, are prima facie evidence of the facts therein stated.  (Italics in the original)

 

 For the entries in Balajadia’s Report to qualify as prima

facie evidence of the facts therein stated, the following conditions must be present: 

 x x x (a) that the entry was made by a public

officer, or by another person specially enjoined by the law to do so; (b) that it was made by the public officer in the performance of his duties or by such other person in the performance of a duty enjoined by law; and (c) that the public officer or other person had sufficient knowledge of the facts by him stated, which must have been acquired by him personally or through official information.[57]  (Underscoring supplied)

  Balajadia’s statement that the Franco Transit bus

was “[r]egistered under the name of Marializa Franco-Cruz of Batac, Ilocos Norte” was not shown, however, to have been based on his personal knowledge or that he had sufficient knowledge thereof acquired by him personally or officially. 

 It bears emphasis that the presentation by respondents of

evidence ex-parte did not relieve them of the burden of proving their claims against petitioner.

 As in other civil cases, the burden of proof rests

upon the party who, as determined by the pleadings or nature of the case, asserts an affirmative issue.  Contentions must be proved by competent evidence and reliance must be had on the strength of the party’s own evidence and not upon the weakness of the opponent’s defense.  This applies with more vigor where, as in the instant case, the plaintiff was allowed to present evidence   ex parte .  The plaintiff is not automatically entitled to the relief prayed for.  The law gives the defendant some measure of protection as the plaintiff must still prove the allegations in the complaint.  Favorable relief can be granted only after the court is convinced that the facts proven by the plaintiff warrant such relief.  Indeed, the party alleging a fact has the burden of proving it and a mere allegation is not evidence.[58]  (Emphasis and underscoring supplied)

  Respondents having failed to discharge the onus of proving that

petitioner was, at the time of the accident, the registered owner of the bus, it was error for the trial court to credit respondents’ evidence. 

 

Just as it was error for it to hold that “the defendant [-herein petitioner] failed 1) to rebut” the evidence showing the accident was the result of the negligence of the Franco Transit bus driver and 2) to present evidence to overthrow the presumption of negligence against her pursuant to Article 2180 of the Civil Code in light of its order allowing respondents to present evidence ex-parte and denying petitioner’s pleas to be allowed to participate in the proceedings and present evidence on her affirmative defenses.

 The trial court’s decision in favor of respondents must thus be set

aside.  Given the attendant facts and circumstances, in the interest of

justice, this Court resolves to remand the case to the trial court to afford petitioner her right to due process.

 WHEREFORE, the petition is GRANTED.  The decision of the

Court of Appeals dated September 22, 2005 dismissing petitioner’s appeal from the decision of Branch 121 of the Caloocan City Regional Trial Court is SET ASIDE.  The decision of the trial court is vacated.  Civil Case No. C-18212 is REMANDED to Branch 121 of theRegional Trial Court of Caloocan City which is hereby directed to allow petitioner to present evidence on her affirmative defenses and/or rebut respondents’ evidence and to allow respondents to submit additional evidence if necessary and/or they so desire.

 SO ORDERED.    

G.R. No. 179848             November 27, 2008

NESTOR A. JACOT, petitioner, vs.ROGEN T. DAL and COMMISSION ON ELECTIONS, respondents.

D E C I S I O N

CHICO-NAZARIO, J.:

Petitioner Nestor A. Jacot assails the Resolution1 dated 28 September 2007 of the Commission on Elections (COMELEC) En Banc in SPA No. 07-361, affirming the Resolution dated 12 June 2007 of the COMELEC Second Division2 disqualifying him from running for the position of Vice-Mayor of

Catarman, Camiguin, in the 14 May 2007 National and Local Elections, on the ground that he failed to make a personal renouncement of his United States (US) citizenship.

Petitioner was a natural born citizen of the Philippines, who became a naturalized citizen of the US on 13 December 1989. 3

Petitioner sought to reacquire his Philippine citizenship under Republic Act No. 9225, otherwise known as the Citizenship Retention and Re-Acquisition Act. He filed a request for the administration of his Oath of Allegiance to the Republic of the Philippines with the Philippine Consulate General (PCG) of Los Angeles, California. The Los Angeles PCG issued on 19 June 2006 an Order of Approval4 of petitioner’s request, and on the same day, petitioner took his Oath of Allegiance to the Republic of the Philippines before Vice Consul Edward C. Yulo. 5 On 27 September 2006, the Bureau of Immigration issued Identification Certificate No. 06-12019 recognizing petitioner as a citizen of the Philippines.6

Six months after, on 26 March 2007, petitioner filed his Certificate of Candidacy for the Position of Vice-Mayor of the Municipality of Catarman, Camiguin. 7

On 2 May 2007, respondent Rogen T. Dal filed a Petition for Disqualification8 before the COMELEC Provincial Office in Camiguin against petitioner, arguing that the latter failed to renounce his US citizenship, as required under Section 5(2) of Republic Act No. 9225, which reads as follows:

Section 5. Civil and Political Rights and Liabilities.–Those who retain or reacquire Philippine citizenship under this Act shall enjoy full civil and political rights and be subject to all attendant liabilities and responsibilities under existing laws of the Philippines and the following conditions:

x x x x

(2) Those seeking elective public office in the Philippines shall meet the qualifications for holding such public office as required by the Constitution and existing laws and, at the time of the filing of the certificate of candidacy, make a personal and sworn renunciation of any and all foreign citizenship before any public officer authorized to administer an oath.

In his Answer9 dated 6 May 2007 and Position Paper10 dated 8 May 2007, petitioner countered that his Oath of Allegiance to the Republic of the Philippines made before the Los Angeles PCG and the oath contained in his Certificate of Candidacy operated as an effective renunciation of his foreign citizenship.

In the meantime, the 14 May 2007 National and Local Elections were held. Petitioner garnered the highest number of votes for the position of Vice Mayor.

On 12 June 2007, the COMELEC Second Division finally issued its Resolution11 disqualifying the petitioner from running for the position of Vice-Mayor of Catarman, Camiguin, for failure to make the requisite renunciation of his US citizenship. The COMELEC Second Division explained that the reacquisition of Philippine citizenship under Republic Act No. 9225 does not automatically bestow upon any person the privilege to run for any elective public office. It additionally ruled that the filing of a Certificate of Candidacy cannot be considered as a renunciation of foreign citizenship. The COMELEC Second Division did not consider Valles v. COMELEC12 and Mercado v. Manzano13applicable to the instant case, since Valles and Mercado were dual citizens since birth, unlike the petitioner who lost his Filipino citizenship by means of naturalization. The COMELEC, thus, decreed in the aforementioned Resolution that:

ACCORDINGLY, NESTOR ARES JACOT is DISQUALIFIED to run for the position of Vice-Mayor of Catarman, Camiguin for the May 14, 2007 National and Local Elections. If proclaimed, respondent cannot thus assume the Office of Vice-Mayor of said municipality by virtue of such disqualification.14

Petitioner filed a Motion for Reconsideration on 29 June 2007 reiterating his position that his Oath of Allegiance to the Republic of the Philippines before the Los Angeles PCG and his oath in his Certificate of Candidacy sufficed as an effective renunciation of his US citizenship. Attached to the said Motion was an "Oath of Renunciation of Allegiance to the United States and Renunciation of Any and All Foreign Citizenship" dated 27 June 2007, wherein petitioner explicitly renounced his US citizenship.15 The COMELEC en banc dismissed petitioner’s Motion in a Resolution16 dated 28 September 2007 for lack of merit.

Petitioner sought remedy from this Court via the present Special Civil Action for Certiorari under Rule 65 of the Revised Rules of Court, where he presented for the first time an "Affidavit of Renunciation of Allegiance to the United States and Any and All Foreign Citizenship"17 dated 7 February 2007. He avers that he executed an act of renunciation of his US citizenship, separate from the Oath of Allegiance to the Republic of the Philippines he took before the Los Angeles PCG and his filing of his Certificate of Candidacy, thereby changing his theory of the case during the appeal. He attributes the delay in the presentation of the affidavit to his former counsel, Atty. Marciano Aparte, who allegedly advised him that said piece of evidence was unnecessary but who, nevertheless, made him execute an identical document entitled "Oath of Renunciation of Allegiance to the United States and Renunciation of Any and All Foreign Citizenship" on 27 June 2007 after he had already filed his Certificate of Candidacy.18

Petitioner raises the following issues for resolution of this Court:

I

WHETHER OR NOT PUBLIC RESPONDENT EXERCISED GRAVE ABUSE OF DISCRETION WHEN IT HELD THAT PETITIONER FAILED TO COMPLY WITH THE PROVISIONS OF R.A. 9225, OTHERWISE KNOWN AS THE "CITIZENSHIP RETENTION AND RE-ACQUISITION ACT OF 2003," SPECIFICALLY SECTION 5(2) AS TO THE REQUIREMENTS FOR THOSE SEEKING ELECTIVE PUBLIC OFFICE;

II

WHETHER OR NOT PUBLIC RESPONDENT EXERCISED GRAVE ABUSE OF DISCRETION WHEN IT HELD THAT PETITIONER FAILED TO COMPLY WITH THE PROVISIONS OF THE COMELEC RULES OF PROCEDURE AS REGARDS THE PAYMENT OF THE NECESSARY MOTION FEES; AND

III

WHETHER OR NOT UPHOLDING THE DECISION OF PUBLIC RESPONDENT WOULD RESULT IN THE FRUSTRATION OF THE WILL OF THE PEOPLE OF CATARMAN, CAMIGUIN.19

The Court determines that the only fundamental issue in this case is whether petitioner is disqualified from running as a candidate in the 14 May 2007 local elections for his failure to make a personal and sworn renunciation of his US citizenship.

This Court finds that petitioner should indeed be disqualified.

Contrary to the assertions made by petitioner, his oath of allegiance to the Republic of the Philippines made before the Los Angeles PCG and his Certificate of Candidacy do not substantially comply with the requirement of a personal and sworn renunciation of foreign citizenship because these are distinct requirements to be complied with for different purposes.

Section 3 of Republic Act No. 9225 requires that natural-born citizens of the Philippines, who are already naturalized citizens of a foreign country, must take the following oath of allegiance to the Republic of the Philippines to reacquire or retain their Philippine citizenship:

SEC. 3. Retention of Philippine Citizenship.–Any provision of law to the contrary notwithstanding, natural-born citizens of the Philippines who have lost their Philippine citizenship by reason of their naturalization as citizens of a foreign country are hereby deemed to have reacquired Philippine citizenship upon taking the following oath of allegiance to the Republic:

"I __________ solemnly swear (or affirm) that I will support and defend the Constitution of the Republic of the Philippines and obey the laws and legal orders promulgated by the duly constituted authorities of the Philippines; and I hereby declare that I recognize and accept the supreme authority of the Philippines and will maintain true faith and allegiance thereto; and that I impose this obligation upon myself voluntarily, without mental reservation or purpose of evasion."

Natural-born citizens of the Philippines who, after the effectivity of this Act, become citizens of a foreign country shall retain their Philippine citizenship upon taking the aforesaid oath.

By the oath dictated in the afore-quoted provision, the Filipino swears allegiance to the Philippines, but there is nothing therein on his renunciation of foreign citizenship. Precisely, a situation might arise under Republic Act No. 9225 wherein said Filipino has dual citizenship by also reacquiring or retaining his Philippine citizenship, despite his foreign citizenship.

The afore-quoted oath of allegiance is substantially similar to the one contained in the Certificate of Candidacy which must be executed by any person who wishes to run for public office in Philippine elections. Such an oath reads:

I am eligible for the office I seek to be elected. I will support and defend the Constitution of the Philippines and will maintain true faith and allegiance thereto; that I will obey the laws, legal orders and decrees promulgated by the duly constituted authorities of the Republic of the Philippines; and that I impose this obligation upon myself voluntarily, without mental reservation or purpose of evasion. I hereby certify that the facts stated herein are true and correct of my own personal knowledge.

Now, Section 5(2) of Republic Act No. 9225 specifically provides that:

Section 5. Civil and Political Rights and Liabilities.–Those who retain or reacquire Philippine citizenship under this Act shall enjoy full civil and political rights and be subject to all attendant liabilities and responsibilities under existing laws of the Philippines and the following conditions:

x x x x

(2) Those seeking elective public office in the Philippines shall meet the qualifications for holding such public office as required by the Constitution and existing laws and, at the time of the filing of the certificate of candidacy, make a personal and sworn renunciation of any and all foreign citizenship before any public officer authorized to administer an oath.

The law categorically requires persons seeking elective public office, who either retained their Philippine citizenship or those who reacquired it, to

make a personal and sworn renunciation of any and all foreign citizenship before a public officer authorized to administer an oath simultaneous with or before the filing of the certificate of candidacy.20

Hence, Section 5(2) of Republic Act No. 9225 compels natural-born Filipinos, who have been naturalized as citizens of a foreign country, but who reacquired or retained their Philippine citizenship (1) to take the oath of allegiance under Section 3 of Republic Act No. 9225, and (2) for those seeking elective public offices in the Philippines, to additionally execute a personal and sworn renunciation of any and all foreign citizenship before an authorized public officer prior or simultaneous to the filing of their certificates of candidacy, to qualify as candidates in Philippine elections.

Clearly Section 5(2) of Republic Act No. 9225 (on the making of a personal and sworn renunciation of any and all foreign citizenship) requires of the Filipinos availing themselves of the benefits under the said Act to accomplish an undertaking other than that which they have presumably complied with under Section 3 thereof (oath of allegiance to the Republic of the Philippines). This is made clear in the discussion of the Bicameral Conference Committee on Disagreeing Provisions of House Bill No. 4720 and Senate Bill No. 2130 held on 18 August 2003 (precursors of Republic Act No. 9225), where the Hon. Chairman Franklin Drilon and Hon. Representative Arthur Defensor explained to Hon. Representative Exequiel Javier that the oath of allegiance is different from the renunciation of foreign citizenship:

CHAIRMAN DRILON. Okay. So, No. 2. "Those seeking elective public office in the Philippines shall meet the qualifications for holding such public office as required by the Constitution and existing laws and, at the time of the filing of the certificate of candidacy, make a personal and sworn renunciation of any and all foreign citizenship before any public officer authorized to administer an oath." I think it’s very good, ha? No problem?

REP. JAVIER. … I think it’s already covered by the oath.

CHAIRMAN DRILON. Renouncing foreign citizenship.

REP. JAVIER. Ah… but he has taken his oath already.

CHAIRMAN DRILON. No…no, renouncing foreign citizenship.

x x x x

CHAIRMAN DRILON. Can I go back to No. 2. What’s your problem, Boy? Those seeking elective office in the Philippines.

REP. JAVIER. They are trying to make him renounce his citizenship thinking that ano…

CHAIRMAN DRILON. His American citizenship.

REP. JAVIER. To discourage him from running?

CHAIRMAN DRILON. No.

REP. A.D. DEFENSOR. No. When he runs he will only have one citizenship. When he runs for office, he will have only one. (Emphasis ours.)

There is little doubt, therefore, that the intent of the legislators was not only for Filipinos reacquiring or retaining their Philippine citizenship under Republic Act No. 9225 to take their oath of allegiance to the Republic of the Philippines, but also to explicitly renounce their foreign citizenship if they wish to run for elective posts in the Philippines. To qualify as a candidate in Philippine elections, Filipinos must only have one citizenship, namely, Philippine citizenship.

By the same token, the oath of allegiance contained in the Certificate of Candidacy, which is substantially similar to the one contained in Section 3 of Republic Act No. 9225, does not constitute the personal and sworn renunciation sought under Section 5(2) of Republic Act No. 9225. It bears to emphasize that the said oath of allegiance is a general requirement for all those who wish to run as candidates in Philippine elections; while the renunciation of foreign citizenship is an additional requisite only for those who have retained or reacquired Philippine citizenship under Republic Act No. 9225 and who seek elective public posts, considering their special circumstance of having more than one citizenship.

Petitioner erroneously invokes the doctrine in Valles21 and Mercado,22 wherein the filing by a person with dual citizenship of a certificate of candidacy, containing an oath of allegiance, was already considered a renunciation of foreign citizenship. The ruling of this Court in Valles and Mercado is not applicable to the present case, which is now specially governed by Republic Act No. 9225, promulgated on 29 August 2003.

In Mercado, which was cited in Valles, the disqualification of therein private respondent Manzano was sought under another law, Section 40(d) of the Local Government Code, which reads:

SECTION 40. Disqualifications. The following persons are disqualified from running for any elective local position:

x x x x

(d) Those with dual citizenship.

The Court in the aforesaid cases sought to define the term "dual citizenship" vis-à-vis the concept of "dual allegiance." At the time this Court decided the cases of Valles and Mercado on 26 May 1999 and 9 August 2000, respectively, the more explicitly worded requirements of Section 5(2) of Republic Act No. 9225 were not yet enacted by our legislature.23

Lopez v. Commission on Elections24 is the more fitting precedent for this case since they both share the same factual milieu. In Lopez, therein petitioner Lopez was a natural-born Filipino who lost his Philippine citizenship after he became a naturalized US citizen. He later reacquired his Philippine citizenship by virtue of Republic Act No. 9225. Thereafter, Lopez filed his candidacy for a local elective position, but failed to make a personal and sworn renunciation of his foreign citizenship. This Court unequivocally declared that despite having garnered the highest number of votes in the election, Lopez is nonetheless disqualified as a candidate for a local elective position due to his failure to comply with the requirements of Section 5(2) of Republic Act No. 9225.

Petitioner presents before this Court for the first time, in the instant Petition for Certiorari, an "Affidavit of Renunciation of Allegiance to the United States and Any and All Foreign Citizenship,"25 which he supposedly executed on 7 February 2007, even before he filed his Certificate of Candidacy on 26 March 2007. With the said Affidavit, petitioner puts forward in the Petition at bar a new theory of his case–that he complied with the requirement of making a personal and sworn renunciation of his foreign citizenship before filing his Certificate of Candidacy. This new theory constitutes a radical change from the earlier position he took before the COMELEC–that he complied with the requirement of renunciation by his oaths of allegiance to the Republic of the Philippines made before the Los Angeles PCG and in his Certificate of Candidacy, and that there was no more need for a separate act of renunciation.

As a rule, no question will be entertained on appeal unless it has been raised in the proceedings below. Points of law, theories, issues and arguments not brought to the attention of the lower court, administrative agency or quasi-judicial body need not be considered by a reviewing court, as they cannot be raised for the first time at that late stage. Basic considerations of fairness and due process impel this rule.26 Courts have neither the time nor the resources to accommodate parties who chose to go to trial haphazardly.27

Likewise, this Court does not countenance the late submission of evidence.28 Petitioner should have offered the Affidavit dated 7 February 2007 during the proceedings before the COMELEC.

Section 1 of Rule 43 of the COMELEC Rules of Procedure provides that "In the absence of any applicable provisions of these Rules, the pertinent provisions of the Rules of Court in the Philippines shall be applicable by analogy or in suppletory character and effect." Section 34 of Rule 132 of

the Revised Rules of Court categorically enjoins the admission of evidence not formally presented:

SEC. 34. Offer of evidence. - The court shall consider no evidence which has not been formally offered. The purpose for which the evidence is offered must be specified.

Since the said Affidavit was not formally offered before the COMELEC, respondent had no opportunity to examine and controvert it. To admit this document would be contrary to due process. 29Additionally, the piecemeal presentation of evidence is not in accord with orderly justice.30

The Court further notes that petitioner had already presented before the COMELEC an identical document, "Oath of Renunciation of Allegiance to the United States and Renunciation of Any and All Foreign Citizenship" executed on 27 June 2007, subsequent to his filing of his Certificate of Candidacy on 26 March 2007. Petitioner attached the said Oath of 27 June 2007 to his Motion for Reconsideration with the COMELEC en banc. The COMELEC en banc eventually refused to reconsider said document for being belatedly executed. What was extremely perplexing, not to mention suspect, was that petitioner did not submit the Affidavit of 7 February 2007 or mention it at all in the proceedings before the COMELEC, considering that it could have easily won his case if it was actually executed on and in existence before the filing of his Certificate of Candidacy, in compliance with law.

The justification offered by petitioner, that his counsel had advised him against presenting this crucial piece of evidence, is lame and unconvincing. If the Affidavit of 7 February 2007 was in existence all along, petitioner’s counsel, and even petitioner himself, could have easily adduced it to be a crucial piece of evidence to prove compliance with the requirements of Section 5(2) of Republic Act No. 9225. There was no apparent danger for petitioner to submit as much evidence as possible in support of his case, than the risk of presenting too little for which he could lose.

And even if it were true, petitioner’s excuse for the late presentation of the Affidavit of 7 February 2007 will not change the outcome of petitioner’s case.

It is a well-settled rule that a client is bound by his counsel’s conduct, negligence, and mistakes in handling the case, and the client cannot be heard to complain that the result might have been different had his lawyer proceeded differently.31 The only exceptions to the general rule -- that a client is bound by the mistakes of his counsel -- which this Court finds acceptable are when the reckless or gross negligence of counsel deprives the client of due process of law, or when the application of the rule results in the outright deprivation of one’s property through a technicality.32 These exceptions are not attendant in this case.

The Court cannot sustain petitioner’s averment that his counsel was grossly negligent in deciding against the presentation of the Affidavit of 7 February 2007 during the proceedings before the COMELEC. Mistakes of attorneys as to the competency of a witness; the sufficiency, relevancy or irrelevancy of certain evidence; the proper defense or the burden of proof, failure to introduce evidence, to summon witnesses and to argue the case -- unless they prejudice the client and prevent him from properly presenting his case -- do not constitute gross incompetence or negligence, such that clients may no longer be bound by the acts of their counsel.33

Also belying petitioner’s claim that his former counsel was grossly negligent was the fact that petitioner continuously used his former counsel’s theory of the case. Even when the COMELEC already rendered an adverse decision, he persistently argues even to this Court that his oaths of allegiance to the Republic of the Philippines before the Los Angeles PCG and in his Certificate of Candidacy amount to the renunciation of foreign citizenship which the law requires. Having asserted the same defense in the instant Petition, petitioner only demonstrates his continued reliance on and complete belief in the position taken by his former counsel, despite the former’s incongruous allegations that the latter has been grossly negligent.

Petitioner himself is also guilty of negligence. If indeed he believed that his counsel was inept, petitioner should have promptly taken action, such as discharging his counsel earlier and/or insisting on the submission of his Affidavit of 7 February 2007 to the COMELEC, instead of waiting until a decision was rendered disqualifying him and a resolution issued dismissing his motion for reconsideration; and, thereupon, he could have heaped the blame on his former counsel. Petitioner could not be so easily allowed to escape the consequences of his former counsel’s acts, because, otherwise, it would render court proceedings indefinite, tentative, and subject to reopening at any time by the mere subterfuge of replacing counsel. 34

Petitioner cites De Guzman v. Sandiganbayan,35 where therein petitioner De Guzman was unable to present a piece of evidence because his lawyer proceeded to file a demurrer to evidence, despite the Sandiganbayan’s denial of his prior leave to do so. The wrongful insistence of the lawyer in filing a demurrer to evidence had totally deprived De Guzman of any chance to present documentary evidence in his defense. This was certainly not the case in the Petition at bar.

Herein, petitioner was in no way deprived of due process. His counsel actively defended his suit by attending the hearings, filing the pleadings, and presenting evidence on petitioner’s behalf. Moreover, petitioner’s cause was not defeated by a mere technicality, but because of a mistaken reliance on a doctrine which is not applicable to his case. A case lost due to an untenable legal position does not justify a deviation from the rule that clients are bound by the acts and mistakes of their counsel.36

Petitioner also makes much of the fact that he received the highest number of votes for the position of Vice-Mayor of Catarman during the 2007 local elections. The fact that a candidate, who must comply with the election requirements applicable to dual citizens and failed to do so, received the highest number of votes for an elective position does not dispense with, or amount to a waiver of, such requirement.37 The will of the people as expressed through the ballot cannot cure the vice of ineligibility, especially if they mistakenly believed that the candidate was qualified. The rules on citizenship qualifications of a candidate must be strictly applied. If a person seeks to serve the Republic of the Philippines, he must owe his loyalty to this country only, abjuring and renouncing all fealty and fidelity to any other state.38 The application of the constitutional and statutory provisions on disqualification is not a matter of popularity.39

WHEREFORE, the instant appeal is DISMISSED. The Resolution dated 28 September 2007 of the COMELEC en banc in SPA No. 07-361, affirming the Resolution dated 12 June 2007 of the COMELEC Second Division, is AFFIRMED. Petitioner is DISQUALIFIED to run for the position of Vice-Mayor of Catarman, Camiguin in the 14 May 2007 National and Local Elections, and if proclaimed, cannot assume the Office of Vice-Mayor of said municipality by virtue of such disqualification. Costs against petitioner.

SO ORDERED.

PHILIPPINE BANK OF COMMERCE, now absorbed by PHILIPPINE COMMERCIAL INTERNATIONAL BANK, ROGELIO LACSON, DIGNA DE LEON, MARIA ANGELITA PASCUAL, et al., petitioners, vs.THE COURT OF APPEALS, ROMMEL'S MARKETING CORP., represented by ROMEO LIPANA, its President & General Manager, respondents.

HERMOSISIMA, JR., J.:

Challenged in this petition for review is the Decision dated February 28, 1991 1 rendered by 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 Industrial Bank."

The case stemmed from a complaint filed by the private respondent Rommel's Marketing Corporation (RMC for brevity), represented by its President and General Manager Romeo Lipana, to recover from the former Philippine Bank of Commerce (PBC for brevity), now absorbed by the

Philippine Commercial International Bank, the sum of P304,979.74 representing various deposits it had made in its current account with said bank but which were not credited to its account, and were instead deposited to the account 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. 53-01980-3 and 53-01748-7, with the Pasig Branch of PBC in connection with its business of selling appliances.

In the ordinary and usual course of banking operations, current account deposits are accepted by the bank on the basis of deposit slips prepared and signed by the depositor, or the latter's agent or representative, who indicates therein the current account number to which the deposit is to be credited, the name of the depositor or current 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 and given to the depositor or his agent; the lower portion is retained by the bank. In some instances, however, the deposit slips are prepared in duplicate by the depositor. The original of the deposit slip is retained by the bank, while the duplicate copy is returned or given to the depositor.

From May 5, 1975 to July 16, 1976, petitioner Romeo Lipana claims to have entrusted RMC funds in the form of cash totalling P304,979.74 to his secretary, Irene Yabut, for the purpose of depositing said funds in the current accounts of RMC with PBC. It turned out, however, that these deposits, on all occasions, were not credited to RMC's account but were instead deposited to Account No. 53-01734-7 of Yabut's husband, Bienvenido Cotas 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 the practice of Romeo Lipana to check these monthly statements of account reposing complete trust and confidence on petitioner bank.

Irene Yabut's modus operandi is far from complicated. She would accomplish two (2) copies of the deposit slip, an original and a duplicate. The original showed the name of her husband as depositor and his current account number. On the duplicate copy was written the account number of her husband but the name of the account holder was left blank. PBC's teller, Azucena Mabayad, would, however, validate and stamp both the original and the duplicate of these deposit slips retaining only the original copy despite the 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 of RMC in the space left blank in the duplicate copy and change the account number written thereon, which is that of her husband's, and make it appear to be RMC's account number, i.e., C.A. No. 53-01980-3. With the daily remittance records also

prepared by Ms. Yabut and submitted to private respondent RMC together with the validated duplicate slips with the latter's name and account number, she made her company believe that all the while the amounts she deposited were being credited to its account when, in truth and in fact, they were being deposited by her and credited by the petitioner 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 return of its money, but as its demand went unheeded, it filed a collection suit before the Regional Trial Court of Pasig, Branch 160. The trial court found petitioner bank negligent and ruled as follows:

WHEREFORE, judgment is hereby rendered sentencing defendant Philippine Bank of Commerce, now absorbed by defendant Philippine Commercial & Industrial Bank, and defendant Azucena Mabayad to pay the plaintiff, jointly and severally, and without prejudice 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 at the 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

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

WHEREFORE, the decision appealed from herein is MODIFIED in the sense that the awards of exemplary damages and attorney's fees specified therein are eliminated and instead, appellants are ordered to pay plaintiff, in addition to the principal sum of P304,979.74 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 this Court. 3

Hence, this petition anchored on the following grounds:

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

2) The failure of respondent Rommel Marketing Corporation to cross-check the bank's statements 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 and misappropriation committed by Ms. Irene Yabut.

3) The duplicate copies of the deposit slips presented by respondent Rommel Marketing Corporation are falsified and are not proof that the amounts appearing thereon were deposited 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 her fraudulent acts against respondent Rommel Marketing Corporation, and not as records of deposits 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's negligence or that of private respondent's?

Petitioners submit that the proximate cause of the loss is the negligence of respondent RMC and Romeo Lipana in entrusting cash to a dishonest employee in the person of Ms. Irene Yabut. 5 According to them, it was impossible for the bank to know that the money deposited by Ms. Irene Yabut belong to RMC; neither was the bank forewarned by RMC that Yabut will be depositing cash to its account. Thus, it was impossible for the bank to know the fraudulent design of Yabut considering that her husband, Bienvenido Cotas, also maintained an account with the bank. For the bank to inquire into the ownership 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 which provided Ms. Irene Yabut the opportunity to defraud RMC. 6

Private respondent, on the other hand, maintains that the proximate cause of the loss was the negligent act of the bank, thru its teller Ms. Azucena Mabayad, in validating the deposit 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.

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 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.

There are three elements of a quasi-delict: (a) damages suffered by the plaintiff; (b) fault or 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 the defendant and the damages incurred by the plaintiff. 7

In the case at bench, there is no dispute as to the damage suffered by the private respondent (plaintiff in the trial court) RMC in the amount of P304,979.74. It is in ascribing 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 those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would do. The seventy-eight (78)-year-old, yet still relevant, case of Picart v. Smith, 8 provides the test by which to determine the existence of negligence in a particular case which may be stated as follows: Did the defendant in doing the alleged negligent act use that reasonable care and 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 standard supposed 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 reference to the personal judgment of the actor in the situation before him. The law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by that.

Applying the above test, it appears that the bank's teller, Ms. Azucena Mabayad, was negligent in validating, officially stamping and signing all the deposit slips prepared and presented by Ms. Yabut, despite the glaring fact that the duplicate copy was not completely accomplished contrary to the self-imposed procedure of the bank with respect to the proper validation of deposit slips, original or duplicate, as testified to by Ms. 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 and encashments.

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

A: The client or depositor or the authorized representative prepares a deposit slip by filling up the deposit slip with the name, the account number, the date, the cash breakdown, if it is deposited for cash, and the check 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 our clients 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 of the 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 it with the deposit slip?

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

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

A: We see to it that the deposit slip 9 is properly accomplished and then we 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 clients validated?

A: Yes, sir. 10 [Emphasis ours]

Clearly, Ms. Mabayad failed to observe this very important procedure. The fact that the duplicate slip was not compulsorily required by the bank in accepting deposits should not relieve the petitioner bank of responsibility. The odd circumstance alone that such duplicate copy lacked one vital information — that of the name of the account holder — should have already put Ms. Mabayad on guard. Rather than readily validating the incomplete duplicate copy, she should have proceeded more cautiously by being more probing as to the true reason why the name of the account holder in the duplicate slip was left blank while that in the original was filled up. She should not have been so naive in accepting hook, line and sinker the too shallow excuse of Ms. Irene Yabut to the effect that since the duplicate copy was only for her personal record, she would simply fill up the blank space later on. 11 A "reasonable man of ordinary prudence" 12 would not have given credence to such explanation and would have insisted that the space left blank be filled up as a condition for validation. Unfortunately, this was not how bank teller Mabayad proceeded thus resulting in huge losses to the private respondent.

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

Q: Did he ever tell you that one of your cashiers affixed the stamp mark of the bank on the deposit slips and they validated the same with the machine, the fact that those deposit slips were unfilled up, is there any report 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 cashiers validated 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 of more than seven (7) years counted from the period when the funds in question were deposited in plaintiff's accounts (May, 1975 to July, 1976) that bank manager Bonifacio admittedly became aware of the practice of his teller Mabayad of validating blank deposit slips. Undoubtedly, this is gross, wanton, and inexcusable negligence in the appellant bank's supervision of its employees. 14

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

Proximate cause is determined on the facts of each case upon mixed considerations of logic, common sense, policy and precedent. 15 Vda. de Bataclan v. Medina, 16 reiterated in the case of Bank of the Phil. Islands v. Court of Appeals, 17 defines proximate cause as "that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred. . . ." In this case, absent the act of Ms. Mabayad in negligently validating the incomplete duplicate copy of the deposit slip, Ms. Irene Yabut would not have the facility with which to perpetrate her fraudulent scheme with impunity. Apropos, once again, is the pronouncement made by the respondent appellate court, to wit:

. . . . Even if Yabut had the fraudulent intention to misappropriate the funds entrusted to her by plaintiff, she would not have been able to deposit those funds in her husband's current account, and then make plaintiff believe that it was in the latter's accounts wherein she had deposited them, had it not been for bank teller Mabayad's aforesaid gross 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 the monthly statements of account being sent to it by appellant bank could not have prevented the fraud and misappropriation which Irene Yabut had already completed when she deposited plaintiff's money to the account of her husband instead of to the latter'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 the culpable 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 it is impossible to determine whose fault or negligence should be attributed to the incident, the one who had the last clear opportunity to avoid the impending harm and failed to do so is chargeable with the consequences thereof.19 Stated differently, the rule would also mean that an antecedent negligence of a person does not preclude the recovery of damages for the supervening negligence of, or bar a defense against liability sought by another, if the latter, who had thelast fair chance, could have avoided the impending harm by the exercise of due diligence. 20 Here, assuming that private respondent RMC was negligent in entrusting cash to a dishonest employee, thus providing the latter with the opportunity to defraud the company, as advanced by the petitioner, yet it cannot be denied that the petitioner bank, thru its teller, had the last clear opportunity to avert the injury incurred by its client, simply by faithfully observing their 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 diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. When negligence shows bad faith, the provisions of articles 1171 and 2201, paragraph 2, shall apply.

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

In the case of banks, however, the degree of diligence required is more than that of a good 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 highest degree of care. 21

As elucidated in Simex International (Manila), Inc. v. Court of Appeals, 22 in every case, the depositor expects the bank to treat his account with the utmost fidelity, whether such account consists only of a few hundred pesos or of millions. The bank must record every single transaction accurately, down to the last centavo, and as promptly as possible. This has to be done if the account is to reflect at any given time the amount of money the depositor can dispose as he sees fit, confident that the bank will deliver it as and to whomever he directs. A blunder on the part of the bank, such as the failure to duly 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 of its functions, the bank is under obligation to treat the accounts of its depositors with meticulous care, always having in mind the fiduciary nature of their relationship. In the case before us, it is apparent that the petitioner bank was remiss in that duty and violated that relationship.

Petitioners nevertheless aver that the failure of respondent RMC to cross-check the bank's statements 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 and misappropriation committed by Ms. Irene Yabut.

We do not agree.

While it is true that had private respondent checked the monthly statements of account sent 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 of the private respondent does not change the fact that were it not for the wanton and reckless negligence of the petitioners' employee in validating the incomplete duplicate deposit 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 not have been possible without any form of collusion between Ms. Yabut and bank teller Mabayad. Ms. Mabayad was negligent in the performance of her duties as bank teller nonetheless. Thus, the petitioners are entitled to claim reimbursement from her for whatever they shall be ordered to pay in this case.

The foregoing notwithstanding, it cannot be denied that, indeed, private respondent was likewise negligent in not checking its monthly statements of account. Had it done so, the company would have been alerted to the series of frauds being committed against RMC by its secretary. The damage would definitely not have ballooned to such an amount if only RMC, particularly Romeo Lipana, had exercised even a little vigilance in their financial affairs. This omission by RMC amounts to contributory negligence which shall mitigate the damages that may be awarded to the private respondent 23 under Article 2179 of the New Civil Code, to wit:

. . . When the plaintiff's own negligence was the immediate and proximate cause of his injury, he cannot recover damages. But if his negligence was only contributory, the immediate and proximate cause of the injury being the defendant's lack of due care, the plaintiff 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 by allocating the damage on a 60-40 ratio. Thus, 40% of the damage awarded by the 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 be paid 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 reducing the amount of actual damages private respondent is entitled to by 40%. Petitioners may recover 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.

METROPOLITAN BANK & TRUST CO. (METROBANK), represented by ROSELLA A. SANTIAGO, Petitioner, -versus- ANTONINO O. TOBIAS III, Respondent.

D E C I S I O N

BERSAMIN, J.:

This appeal assails the adverse decision of the Court of Appeals (CA)1 that dismissed the petition for certiorari brought by the petitioner to nullify and set aside the resolutions issued by the Secretary of Justice on July 20, 20042 and November 18, 20053 directing the City Prosecutor of Malabon City to withdraw the information in Criminal Case No. 27020 entitledPeople v. Antonino O. Tobias III.

We affirm the CA in keeping with the principle of non-interference with the prerogative of the Secretary of Justice to review the resolutions of the public prosecutor in the latter’s determination of the existence of probable cause, absent any showing that the Secretary of Justice thereby commits grave abuse of his discretion.

Antecedents

In 1997, Rosella A. Santiago, then the OIC-Branch Head of Metropolitan Bank & Trust Company (METROBANK) in Valero Street, Makati City, was introduced to respondent Antonino O. Tobias III (Tobias) by one Jose Eduardo Gonzales, a valued client of METROBANK. Subsequently, Tobias opened a savings/current account for and in the name of Adam Merchandising, his frozen meat business. Six months later, Tobias applied

for a loan from METROBANK, which in due course conducted trade and credit verification of Tobias that resulted in negative findings. METROBANK next proceeded to appraise the property Tobias offered as collateral by asking him for a photocopy of the title and other related documents.4 The property consisted of four parcels of land located in Malabon City, Metro Manila with a total area of 6,080 square meters and covered by Transfer Certificate of Title (TCT) No. M-16751.5 Based on the financial statements submitted by Tobias, METROBANK approved a credit line for P40,000,000.00. On August 15, 1997, Joselito Bermeo Moreno, Lead Internal Affairs Investigator of METROBANK, proceeded to the Registry of Deeds of Malabon to cause the annotation of the deed of real estate mortgage on TCT No. M-16751. The annotation was Entry No. 26897.6

Thereafter, Tobias initially availed himself of P20,000,000, but took out the balance within six months.7 He paid the interest on the loan for about a year before defaulting. His loan was restructured to 5-years upon his request. Yet, after two months, he again defaulted. Thus, the mortgage was foreclosed, and the property was sold to METROBANK as the lone bidder.8On June 11, 1999, the certificate of sale was issued in favor of METROBANK.9

When the certificate of sale was presented for registration to the Registry of Deeds of Malabon, no corresponding original copy of TCT No. M-16751 was found in the registry vault. Atty. Sarah Principe-Bido, Deputy Register of Deeds of Malabon, went on to verify TCT No. M-16751 and learned that Serial No. 4348590 appearing therein had been issued for TCT No. M-15363 in the name of one Alberto Cruz; while TCT No. 16751 (now TCT No. 390146) appeared to have been issued in the name of Eugenio S. Cruz and Co. for a parcel of land located in Navotas.10

Given such findings, METROBANK requested the Presidential Anti-Organized Crime Task Force (PAOCTF) to investigate.11 In its report dated May 29, 2000,12 PAOCTF concluded that TCT No. M-16751 and the tax declarations submitted by Tobias were fictitious. PAOCTF recommended the filing against Tobias of a criminal complaint for estafa through falsification of public documents under paragraph 2 (a) of Article 315, in relation to Articles 172(1) and 171(7) of the Revised Penal Code.13

The Office of the City Prosecutor of Malabon ultimately charged Tobias with estafa through falsification of public documents through the following information,14 viz:

xxx

That on or about the 15th day of August, 1997 in the Municipality of Malabon, Philippines and within the jurisdiction of this Honorable Court, the above-named

accused, by means of deceit, false pretense, fraudulent acts and misrepresentation executed prior to or simultaneous with the commission of fraud, represented to METROBANK, as represented by MS. ROSELLA S. SANTIAGO, that he is the registered owner of a parcel of land covered by TCT No. M-16751 which he represented to be true and genuine when he knew the Certificate of Title No. M-16751 is fake and spurious and executed a Real Estate Mortgage in favor of Metrobank and offered the same as collateral for a loan and Rosella S. Santiago relying on said misrepresentation gave to accused, the amount of P20,000,000.00 and once in possession of the amount, with intent to defraud, willfully, unlawfully and feloniously failed to deliver the land covered by spurious title and misappropriate, misapply and converted the said amount of P20,000,000.00 to his own personal use and benefit and despite repeated demands accused failed and refused and still fails and refuses to return the amount to complainant METROBANK, and/or delivered the land covered in the spurious title in the aforementioned amount of P20,000,000.00.

CONTRARY TO LAW.15

Tobias filed a motion for re-investigation,16 which was granted.

In his counter-affidavit submitted during the re-investigation,17 Tobias averred that he had bought the property from one Leonardo Fajardo through real estate brokers Augusto Munsuyac and Carmelito Pilapil; that Natalio Bartolome, his financial consultant from Carwin International, had convinced him to purchase the property due to its being an ideal site for his meat processing plant and cold storage business; that the actual inspection of the property as well as the verification made in the Registry of Deeds of Malabon City had ascertained the veracity of TCT No. 106083 under the name of Leonardo Fajardo; that he had applied for the loan from METROBANK to pay the purchase price by offering the property as collateral; that in order for the final application to be processed and the loan proceeds to be released, METROBANK had advised him to have the title first transferred to his name; that he had executed a deed of absolute sale with Fajardo covering the property, and that said instrument had been properly registered in the Registry of Deeds; that the transfer of the title, being under the account of the seller, had been processed by seller Fajardo and his brokers Munsuyac and Pilapil; that his title and the property had been inspected and verified by METROBANK’s personnel; and that he did not have any intention to defraud METROBANK.

Nonetheless, on December 27, 2002, the City Prosecutor of Malabon still found probable cause against Tobias, and recommended his being charged with estafa through falsification of public document.18

Tobias appealed to the Department of Justice (DOJ).

On July 20, 2004, then Acting Secretary of Justice Ma. Merceditas N. Gutierrez issued a resolution directing the withdrawal of the information filed against Tobias,19 to wit:

WHEREFORE, the assailed resolution is hereby REVERSED and SET ASIDE. The City Prosecutor of Malabon City is directed to cause the withdrawal of the Information in Crim. Case No. 27020 against respondent Antonino O. Tobias III, and report the action taken thereon within ten (10) days from receipt hereof.

SO ORDERED.

Acting Secretary of Justice Gutierrez opined that Tobias had sufficiently established his good faith in purchasing the property; that he had even used part of the proceeds of the loan to pay the seller; that it was METROBANK that had caused the annotation of the mortgage on the TCT, thereby creating an impression that the title had been existing in the Registry of Deeds at that time; that, accordingly, the presumption that the possessor of a falsified document was the author of the falsification did not apply because it was always subject to the qualification or reference as to the approximate time of the commission of the falsification.

METROBANK moved to reconsider,20 arguing that Tobias had employed deceit or false pretense in offering the property as collateral by using a fake title; and that the presumption that the possessor of the document was the author of the falsification applied because no other person could have falsified the TCT and would have benefitted therefrom except Tobias himself.

On November 18, 2005, Secretary of Justice Raul M. Gonzalez denied METROBANK’s motion for reconsideration.21

Ruling of the CA

METROBANK challenged the adverse resolutions through certiorari.

On December 29, 2006, the CA promulgated its decision,22 dismissing METROBANK’s petition for certiorari by holding that the presumption of authorship might be disputed through a satisfactory explanation, viz:

We are not unaware of the established presumption and rule that when it is proved that a person has in his possession a falsified document and makes use of the same, the presumption or inference is that such person is the forger (Serrano vs. Court of Appeals, 404 SCRA 639, 651 [2003]), citing Koh Tieck Heng vs. People, 192 SCRA 533, 546-547 [1990]). Yet, the Supreme Court declared that in the absence of satisfactory explanation, one who is found in possession of a forged document and who used it is presumed to be the forger (citing People vs. Sendaydiego, 81 SCRA 120, 141 [1978]). Very clearly then, a satisfactory explanation could render ineffective the presumption which, after all, is merely a disputable one.

It is in this score that We affirm the resolution of the Department of Justice finding no probable cause against private respondent Tobias for estafa thru falsification of public document. The record speaks well of Tobias’ good faith and lack of criminal intention and liability. Consider:

(a) Tobias has in his favor a similar presumption that good faith is always presumed. Therefore, he who claims bad faith must prove it (Prinsipio vs. The Honorable Oscar Barrientos, G.R. 167025, December 19, 2005). No such evidence of bad faith of Tobias appears on record;

(b) Tobias’ actuation in securing the loan belies any criminal intent on his part to deceive petitioner Bank. He was not in a hurry to obtain the loan. He had to undergo the usual process of the investigative arm or machine of the Bank not only on the location and the physical appearance of the property but likewise the veracity of its title. Out of the approvedP40,000,000.00 loan he only availed of P20,000,000.00, for his frozen meat business which upon investigation of the Bank failed to give negative results;

(c) Tobias paid the necessary interests for one (1) year on the loan and two (2) installments on the restructured loan; and

(d) More importantly, the loan was not released to him until after the mortgage was duly registered with the Registry of Deeds of Malabon City and even paid the amount ofP90,000.00 for the registration fees therefor.

These actuations, for sure, can only foretell that Tobias has the least intention to deceive the Bank in obtaining the loan. It may not be surprising to find that Tobias could even be a victim himself

by another person in purchasing the properties he offered as security for the loan.23

The CA stressed that the determination of probable cause was an executive function within the discretion of the public prosecutor and, ultimately, of the Secretary of Justice, and the courts of law could not interfere with such determination;24 that the private complainant in a criminal action was only concerned with its civil aspect; that should the State choose not to file the criminal action, the private complainant might initiate a civil action based on Article 35 of the Civil Code, to wit:

In the eventuality that the Secretary of Justice refuses to file the criminal complaint, the complainant, whose only interest is the civil aspect of the case and not the criminal aspect thereof, is not left without a remedy. In Vda. De Jacob vs. Puno, 131 SCRA 144, 149 [1984], the Supreme Court has this for an answer:

“The remedy of complainant in a case where the Minister of Justice would not allow the filing of a criminal complaint against an accused because it is his opinion that the evidence is not sufficient to sustain an information for the complaint with which the respondents are charged of, is to file a civil action as indicated in Article 35 of the Civil Code, which provides:

‘Art. 35. When a person, claiming to be injured by a criminal offense, charges another with the same, for which no independent civil action is granted in this Code or any special law, but the justice of the peace finds no reasonable grounds to believe that a crime has been committed, or the prosecuting attorney refuses or fails to institute criminal proceedings, the complainant may bring a civil action for damages against the alleged offender. Such civil action may be supported by a preponderance of evidence. Upon the defendant’s motion, the court may require the plaintiff to file a bond to indemnify the defendant in case the complainant should be found to be malicious.

‘If during the pendency of the civil action, an information should be presented by the prosecuting attorney, the civil action shall be suspended until the termination of the criminal proceedings.’”25

METROBANK sought reconsideration, but the CA denied its motion for that purpose, emphasizing that the presumption that METROBANK firmly relied upon was overcome by Tobias sufficiently establishing his good faith and lack of criminal intent. The CA relevantly held:

Petitioner should be minded that the subject presumption that the possessor and user of a forged or falsified document is presumed to be the falsifier or forger is a mere disputable presumption and not a conclusive one. Under the law on evidence, presumptions are divided into two (2) classes: conclusive and rebuttable. Conclusive or absolute presumptions are rules determining the quantity of evidence requisite for the support of any particular averment which is not permitted to be overcome by any proof that the fact is otherwise, if the basis facts are established (1 Greenleaf, Ev 44; 29 Am Jur 2d, Evidence 164; 1 Jones on Evidence 6 ed, page 132). Upon the other hand, a disputable presumption has been defined as species of evidence that may be accepted and acted on when there is no other evidence to uphold the contention for which it stands, or one which may be overcome by other evidence (31A C.J.S., p. 197; People v. de Guzman, G.R. No. 106025, Feb. 9, 1994; Herrera, Remedial Law, Vol. VI, 1999 Edition, pp. 40-41). In fact, Section 3 of Rule 131 provides that the disputable presumptions therein enumerated are satisfactory if uncontradicted but may be contradicted and overcome by other evidence. Thus, as declared in Our decision in this case, private respondent had shown evidence of good faith and lack of criminal intention and liability that can overthrow the controversial disputable presumption.26

Issue

In this appeal, METROBANK raises the lone issue of—

WHETHER OR NOT THE HONORABLE COURT OF APPEALS HAS DECIDED A QUESTION OF SUBSTANCE PROBABLY NOT IN ACCORD WITH LAW OR WITH THE APPLICABLE DECISIONS OF THIS HONORABLE COURT AND THUS, COMMITTED PATENT ERROR IN RENDERING THE ASSAILED DECISION DATED 29 DECEMBER 2006, DISMISSING METROBANK’S PETITION FOR CERTIORARI AND AFFIRMING THE RESOLUTIONS DATED 20 JULY 2004 AND 18 NOVEMBER 2005 OF THE HON. SECRETARY OF JUDTICE AND IN DENYING METROBANK’S MOTION FOR RECONSIDERATION.

METROBANK submits that the presumption of authorship was sufficient to establish probable cause to hold Tobias for trial; that the presumption applies when a person is found in possession of the forged instrument, makes use of it, and benefits from it; that contrary to the ruling of the CA, there is no requirement that the legal presumption shall only apply in the absence of a valid explanation from the person found to have possessed, used and benefited from the forged document; that the CA erred in declaring that Tobias was in good faith, because good faith was merely evidentiary and best raised in the trial on the merits; and that Tobias was

heavily involved in a modus operandi of using fake titles because he was also being tried for a similar crime in the RTC, Branch 133, in Makati City.

METROBANK maintains that what the Secretary of Justice did was to determine the innocence of the accused, which should not be done during the preliminary investigation; and that the CA disregarded such lapse.

On the other hand, Tobias posits that the core function of the Department of Justice is to prosecute the guilty in criminal cases, not to persecute; that although the prosecutors are given latitude to determine the existence of probable cause, the review power of the Secretary of Justice prevents overzealous prosecutors from persecuting the innocent; that in reversing the resolution of Malabon City Assistant Prosecutor Ojer Pacis, the Secretary of Justice only acted within his authority; that, indeed, the Secretary of Justice was correct in finding that there was lack of evidence to prove that the purported fake title was the very cause that had induced the petitioner to grant the loan; and that the Secretary likewise appropriately found that Tobias dealt with the petitioner in good faith because of lack of proof that he had employed fraud and deceit in securing the loan.

Lastly, Tobias argues that the presumption of forgery could not be applied in his case because it was METROBANK, through a representative, who had annotated the real estate mortgage with the Registry of Deeds; and that he had no access to and contact with the Registry of Deeds, and whatever went wrong after the annotation was beyond his control.

Ruling

The appeal has no merit.

Under the doctrine of separation of powers, the courts have no right to directly decide matters over which full discretionary authority has been delegated to the Executive Branch of the Government,27 or to substitute their own judgments for that of the Executive Branch,28 represented in this case by the Department of Justice. The settled policy is that the courts will not interfere with the executive determination of probable cause for the purpose of filing an information, in the absence of grave abuse of discretion.29 That abuse of discretion must be so patent and gross as to amount to an evasion of a positive duty or a virtual refusal to perform a duty enjoined by law or to act at all in contemplation of law, such as where the power is exercised in an arbitrary and despotic manner by reason of passion or hostility.30 For instance, in Balanganan v. Court of Appeals, Special Nineteenth Division, Cebu City,31 the Court ruled that the Secretary of Justice exceeded his jurisdiction when he required “hard facts and solid evidence” in order to hold the defendant liable for criminal prosecution when such requirement should have been left to the court after the conduct of a trial.

In this regard, we stress that a preliminary investigation for the purpose of determining the existence of probable cause is not part of a trial.32 At a preliminary investigation, the investigating prosecutor or the Secretary of Justice only determines whether the act or omission complained of constitutes the offense charged.33 Probable cause refers to facts and circumstances that engender a well-founded belief that a crime has been committed and that the respondent is probably guilty thereof.34 There is no definitive standard by which probable cause is determined except to consider the attendant conditions; the existence of probable cause depends upon the finding of the public prosecutor conducting the examination, who is called upon not to disregard the facts presented, and to ensure that his finding should not run counter to the clear dictates of reason.35

Tobias was charged with estafa through falsification of public document the elements of which are: (a) the accused uses a fictitious name, or falsely pretends to possess power, influence, qualifications, property, credit, agency, business or imaginary transactions, or employs other similar deceits; (b) such false pretense, fraudulent act or fraudulent means must be made or executed prior to or simultaneously with the commission of the fraud; (c) the offended party must have relied on the false pretense, fraudulent act or fraudulent means, that is, he was induced to part with his money or property because of the false pretense, fraudulent act or fraudulent means; and (d) as a result thereof, the offended party suffered damage.36It is required that the false statement or fraudulent representation constitutes the very cause or the only motive that induced the complainant to part with the thing.37

METROBANK urges the application of the presumption of authorship against Tobias based on his having offered the duplicate copy of the spurious title to secure the loan; and posits that there is no requirement that the presumption shall apply only when there is absence of a valid explanation from the person found to have possessed, used and benefited from the forged document.

We cannot sustain METROBANK’s urging.

Firstly, a presumption affects the burden of proof that is normally lodged in the State.38 The effect is to create the need of presenting evidence to overcome the prima facie case that shall prevail in the absence of proof to the contrary.39 As such, a presumption of law is material during the actual trial of the criminal case where in the establishment thereof the party against whom the inference is made should adduce evidence to rebut the presumption and demolish the prima facie case.40 This is not so in a preliminary investigation, where the investigating prosecutor only

determines the existence of a prima facie case that warrants the prosecution of a criminal case in court.41

Secondly, the presumption of authorship, being disputable, may be accepted and acted upon where no evidence upholds the contention for which it stands.42 It is not correct to say, consequently, that the investigating prosecutor will try to determine the existence of the presumption during preliminary investigation, and then to disregard the evidence offered by the respondent. The fact that the finding of probable cause during a preliminary investigation is an executive function does not excuse the investigating prosecutor or the Secretary of Justice from discharging the duty to weigh the evidence submitted by the parties. Towards that end, the investigating prosecutor, and, ultimately, the Secretary of Justice have ample discretion to determine the existence of probable cause,43 a discretion that must be used to file only a criminal charge that the evidence and inferences can properly warrant.

The presumption that whoever possesses or uses a spurious document is its forger applies only in the absence of a satisfactory explanation.44 Accordingly, we cannot hold that the Secretary of Justice erred in dismissing the information in the face of the controverting explanation by Tobias showing how he came to possess the spurious document. Much less can we consider the dismissal as done with abuse of discretion, least of all grave. We concur with the erudite exposition of the CA on the matter, to wit:

It would seem that under the above proposition of the petitioner, the moment a person has in his possession a falsified document and has made use of it, probable cause or prima facie is already established and that no amount of satisfactory explanation will prevent the filing of the case in court by the investigating officer, for any such good explanation or defense can only be threshed out in the trial on the merit. We are not to be persuaded. To give meaning to such argumentation will surely defeat the very purpose for which preliminary investigation is required in this jurisdiction.

A preliminary investigation is designed to secure the respondent involved against hasty, malicious and oppressive prosecution. A preliminary investigation is an inquiry to determine whether (a) a crime has been committed, and (b) whether there is probable cause to believe that the accused is guilty thereof (De Ocampo vs. Secretary of Justice, 480 SCRA 71 [2006]). It is a means of discovering the person or persons who may be reasonably charged with a crime (Preferred Home Specialties, Inc. vs. Court of

Appeals, 478 SCRA 387, 410 [2005]). Prescindingly, under Section 3 of Rule 112 of the Rules of Criminal Procedure, the respondent must be informed of the accusation against him and shall have the right to examine the evidence against him and submit his counter-affidavit to disprove criminal liability. By far, respondent in a criminal preliminary investigation is legally entitled to explain his side of the accusation.

We are not unaware of the established presumption and rule that when it is proved that a person has in his possession a falsified document and makes use of the same the presumption or inference is that such person is the forger (Serrano vs. Court of Appeals, 404 SCRA 639, 651 [2003]), citing Koh Tieck Heng vs. People, 192 SCRA 533, 546-547 [1990]). Yet, the Supreme Court declared that in the absence of satisfactory explanation, one who is found in possession of a forged document and who used it is presumed to be the forger (citing People vs. Sendaydiego, 81 SCRA 120, 141 [1978]). Very clearly then, a satisfactory explanation could render ineffective the presumption which, after all, is merely a disputable one.45

We do not lose sight of the fact that METROBANK, a commercial bank dealing in real property, had the duty to observe due diligence to ascertain the existence and condition of the realty as well as the validity and integrity of the documents bearing on the realty.46 Its duty included the responsibility of dispatching its competent and experience representatives to the realty to assess its actual location and condition, and of investigating who was its real owner.47 Yet, it is evident that METROBANK did not diligently perform a thorough check on Tobias and the circumstances surrounding the realty he had offered as collateral. As such, it had no one to blame but itself. Verily, banks are expected to exercise greater care and prudence than others in their dealings because their business is impressed with public interest.48 Their failure to do so constitutes negligence on its part.49 

WHEREFORE, the Court DENIES the petition for review on certiorari, and AFFIRMS the decision of the Court of Appeals promulgated on December 29, 2006. The petitioner shall pay the costs of suit.

SO ORDERED.

SALUD VILLANUEVA VDA. DE BATACLAN and the minors NORMA, LUZVIMINDA, ELENITA, OSCAR and ALFREDO BATACLAN, represented by their Natural guardian, SALUD VILLANUEVA VDA. DE BATACLAN, plaintiffs-appellants, vs.MARIANO MEDINA, defendant-appellant.

MONTEMAYOR, J.:

Shortly after midnight, on September 13, 1952 bus no. 30 of the Medina Transportation, operated by its owner defendant Mariano Medina under a certificate of public convenience, left the town of Amadeo, Cavite, on its way to Pasay City, driven by its regular chauffeur, Conrado Saylon. There were about eighteen passengers, including the driver and conductor. Among the passengers were Juan Bataclan, seated beside and to the right of the driver, Felipe Lara, sated to the right of Bataclan, another passenger apparently from the Visayan Islands whom the witnesses just called Visaya, apparently not knowing his name, seated in the left side of the driver, and a woman named Natalia Villanueva, seated just behind the four last mentioned. At about 2:00 o'clock that same morning, while the bus was running within the jurisdiction of Imus, Cavite, one of the front tires burst and the vehicle began to zig-zag until it fell into a canal or ditch on the right side of the road and turned turtle. Some of the passengers managed to leave the bus the best way they could, others had to be helped or pulled out, while the three passengers seated beside the driver, named Bataclan, Lara and the Visayan and the woman behind them named Natalia Villanueva, could not get out of the overturned bus. Some of the passengers, after they had clambered up to the road, heard groans and moans from inside the bus, particularly, shouts for help from Bataclan and Lara, who said they could not get out of the bus. There is nothing in the

evidence to show whether or not the passengers already free from the wreck, including the driver and the conductor, made any attempt to pull out or extricate and rescue the four passengers trapped inside the vehicle, but calls or shouts for help were made to the houses in the neighborhood. After half an hour, came about ten men, one of them carrying a lighted torch made of bamboo with a wick on one end, evidently fueled with petroleum. These men presumably approach the overturned bus, and almost immediately, a fierce fire started, burning and all but consuming the bus, including the four passengers trapped inside it. It would appear that as the bus overturned, gasoline began to leak and escape from the gasoline tank on the side of the chassis, spreading over and permeating the body of the bus and the ground under and around it, and that the lighted torch brought by one of the men who answered the call for help set it on fire.

That same day, the charred bodies of the four deemed passengers inside the bus were removed and duly identified that of Juan Bataclan. By reason of his death, his widow, Salud Villanueva, in her name and in behalf of her five minor children, brought the present suit to recover from Mariano Medina compensatory, moral, and exemplary damages and attorney's fees in the total amount of P87,150. After trial, the Court of First Instance of Cavite awarded P1,000 to the plaintiffs plus P600 as attorney's fee, plus P100, the value of the merchandise being carried by Bataclan to Pasay City for sale and which was lost in the fire. The plaintiffs and the defendants appealed the decision to the Court of Appeals, but the latter endorsed the appeal to us because of the value involved in the claim in the complaint.

Our new Civil Code amply provides for the responsibility of common carrier to its passengers and their goods. For purposes of reference, we are reproducing the pertinent codal provisions:

ART. 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe extraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them, according to all the circumstances of each case.

Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the extra ordinary diligence for the safety of the passengers is further set forth in articles 1755 and 1756.

ART. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all the circumstances.

ART. 1756. In case of death of or injuries to passengers, common carriers are presumed to have been at fault or to have acted negligently, unless they prove that they observed extraordinary diligence as prescribed in articles 1733 and 1755

ART. 1759. Common carriers are liable for the death of or injuries to passengers through the negligence or willful acts of the former's employees, although such employees may have acted beyond the scope of their authority or in violation of the order of the common carriers.

This liability of the common carriers does not cease upon proof that they exercised all the diligence of a good father of a family in the selection and supervision of their employees.

ART. 1763. A common carrier responsible for injuries suffered by a passenger on account of the willful acts or negligence of other passengers or of strangers, if the common carrier's employees through the exercise of the diligence of a good father of a family could have prevented or stopped the act or omission.

We agree with the trial court that the case involves a breach of contract of transportation for hire, the Medina Transportation having undertaken to carry Bataclan safely to his destination, Pasay City. We also agree with the trial court that there was negligence on the part of the defendant, through his agent, the driver Saylon. There is evidence to show that at the time of the blow out, the bus was speeding, as testified to by one of the passengers, and as shown by the fact that according to the testimony of the witnesses, including that of the defense, from the point where one of the front tires burst up to the canal where the bus overturned after zig-zaging, there was a distance of about 150 meters. The chauffeur, after the blow-out, must have applied the brakes in order to stop the bus, but because of the velocity at which the bus must have been running, its momentum carried it over a distance of 150 meters before it fell into the canal and turned turtle.

There is no question that under the circumstances, the defendant carrier is liable. The only question is to what degree. The trial court was of the opinion that the proximate cause of the death of Bataclan was not the overturning of the bus, but rather, the fire that burned the bus, including himself and his co-passengers who were unable to leave it; that at the time the fire started, Bataclan, though he must have suffered physical injuries, perhaps serious, was still alive, and so damages were awarded, not for his death, but for the physical injuries suffered by him. We disagree. A satisfactory definition of proximate cause is found in Volume 38, pages 695-696 of American jurisprudence, cited by plaintiffs-appellants in their brief. It is as follows:

. . . 'that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without which the result would not have occurred.' And more comprehensively, 'the proximate legal cause is that acting first and producing the injury, either immediately or by setting other events in motion, all constituting a natural and continuous chain of events, each having a close causal connection with its immediate predecessor, the final event in the chain immediately effecting the injury as a natural and probable result of the cause which first acted, under such circumstances that the person responsible for the first event should, as an ordinary prudent and intelligent person, have reasonable ground to expect at the moment of his act or default that an injury to some person might probably result therefrom.

It may be that ordinarily, when a passenger bus overturns, and pins down a passenger, merely causing him physical injuries, if through some event, unexpected and extraordinary, the overturned bus is set on fire, say, by lightning, or if some highwaymen after looting the vehicle sets it on fire, and the passenger is burned to death, one might still contend that the proximate cause of his death was the fire and not the overturning of the vehicle. But in the present case under the circumstances obtaining in the same, we do not hesitate to hold that the proximate cause was the overturning of the bus, this for the reason that when the vehicle turned not only on its side but completely on its back, the leaking of the gasoline from the tank was not unnatural or unexpected; that the coming of the men with a lighted torch was in response to the call for help, made not only by the passengers, but most probably, by the driver and the conductor themselves, and that because it was dark (about 2:30 in the morning), the rescuers had to carry a light with them, and coming as they did from a rural area where lanterns and flashlights were not available; and what was more natural than that said rescuers should innocently approach the vehicle to extend the aid and effect the rescue requested from them. In other words, the coming of the men with a torch was to be expected and was a natural sequence of the overturning of the bus, the trapping of some of its passengers and the call for outside help. What is more, the burning of the bus can also in part be attributed to the negligence of the carrier, through is driver and its conductor. According to the witness, the driver and the conductor were on the road walking back and forth. They, or at least, the driver should and must have known that in the position in which the overturned bus was, gasoline could and must have leaked from the gasoline tank and soaked the area in and around the bus, this aside from the fact that gasoline when spilled, specially over a large area, can be smelt and directed even from a distance, and yet neither the driver nor the conductor would appear to have cautioned or taken steps to warn the rescuers not to bring the lighted torch too near the bus. Said negligence on the part of the agents of the carrier come under the codal provisions above-reproduced, particularly, Articles 1733, 1759 and 1763.

As regard the damages to which plaintiffs are entitled, considering the earning capacity of the deceased, as well as the other elements entering into a damage award, we are satisfied that the amount of SIX THOUSAND (P6,000) PESOS would constitute satisfactory compensation, this to include compensatory, moral, and other damages. We also believe that plaintiffs are entitled to attorney's fees, and assessing the legal services rendered by plaintiffs' attorneys not only in the trial court, but also in the course of the appeal, and not losing sight of the able briefs prepared by them, the attorney's fees may well be fixed at EIGHT HUNDRED (P800) PESOS for the loss of merchandise carried by the deceased in the bus, is adequate and will not be disturbed.

There is one phase of this case which disturbs if it does not shock us. According to the evidence, one of the passengers who, because of the injuries suffered by her, was hospitalized, and while in the hospital, she was visited by the defendant Mariano Medina, and in the course of his visit, she overheard him speaking to one of his bus inspectors, telling said inspector to have the tires of the bus changed immediately because they were already old, and that as a matter of fact, he had been telling the driver to change the said tires, but that the driver did not follow his instructions. If this be true, it goes to prove that the driver had not been diligent and had not taken the necessary precautions to insure the safety of his passengers. Had he changed the tires, specially those in front, with new ones, as he had been instructed to do, probably, despite his speeding, as we have already stated, the blow out would not have occurred. All in all, there is reason to believe that the driver operated and drove his vehicle negligently, resulting in the death of four of his passengers, physical injuries to others, and the complete loss and destruction of their goods, and yet the criminal case against him, on motion of the fiscal and with his consent, was provisionally dismissed, because according to the fiscal, the witnesses on whose testimony he was banking to support the complaint, either failed or appear or were reluctant to testify. But the record of the case before us shows the several witnesses, passengers, in that bus, willingly and unhesitatingly testified in court to the effect of the said driver was negligent. In the public interest the prosecution of said erring driver should be pursued, this, not only as a matter of justice, but for the promotion of the safety of passengers on public utility buses. Let a copy of this decision be furnished the Department of Justice and the Provincial Fiscal of Cavite.

In view of the foregoing, with the modification that the damages awarded by the trial court are increased from ONE THOUSAND (P1,000) PESOS TO SIX THOUSAND (P6,000) PESOS, and from SIX HUNDRED PESOS TO EIGHT HUNDRED (P800) PESOS, for the death of Bataclan and for the attorney's fees, respectively, the decision appealed is from hereby affirmed, with costs.

Paras, C. J., Bengzon, Padilla, Reyes, A., Bautista Angelo, Labrador, Concepcion, Reyes, J. B. L., Endencia, and Felix, JJ., concur.

MERCURY DRUG CORPORATION, Petitioner, vs.SEBASTIAN M. BAKING, Respondent.

D E C I S I O N

SANDOVAL-GUTIERREZ, J.:

For our resolution is the instant Petition for Review on Certiorari1 assailing the Decision2 dated May 30, 2002 and Resolution dated November 5, 2002 of the Court of Appeals in CA-G.R. CV No. 57435, entitled "Sebastian M. Baking, plaintiff-appellee, versus Mercury Drug Co. Inc., defendant-appellant."

The facts are:

On November 25, 1993, Sebastian M. Baking, respondent, went to the clinic of Dr. Cesar Sy for a medical check-up. On the following day, after undergoing an ECG, blood, and hematology examinations and urinalysis, Dr. Sy found that respondent’s blood sugar and triglyceride were above normal levels. Dr. Sy then gave respondent two medical prescriptions – Diamicron for his blood sugar and Benalize tablets for his triglyceride.

Respondent then proceeded to petitioner Mercury Drug Corporation (Alabang Branch) to buy the prescribed medicines. However, the saleslady misread the prescription for Diamicron as a prescription for Dormicum. Thus, what was sold to respondent was Dormicum, a potent sleeping tablet.

Unaware that what was given to him was the wrong medicine, respondent took one pill of Dormicum on three consecutive days –November 6, 1993 at 9:00 p.m., November 7 at 6:00 a.m., and November 8 at 7:30 a.m.

On November 8 or on the third day he took the medicine, respondent figured in a vehicular accident. The car he was driving collided with the car of one Josie Peralta. Respondent fell asleep while driving. He could not remember anything about the collision nor felt its impact.

Suspecting that the tablet he took may have a bearing on his physical and mental state at the time of the collision, respondent returned to Dr. Sy’s clinic. Upon being shown the medicine, Dr. Sy was shocked to find that what was sold to respondent was Dormicum, instead of the prescribed Diamicron.

Thus, on April 14, 1994, respondent filed with the Regional Trial Court (RTC), Branch 80 of Quezon City a complaint for damages against petitioner, docketed as Civil Case No. Q-94-20193.

After hearing, the trial court rendered its Decision dated March 18, 1997 in favor of respondent, thus:

WHEREFORE, premises considered, by preponderance of evidence, the Court hereby renders judgment in favor of the plaintiff and against the defendant ordering the latter to pay mitigated damages as follows:

1. P250,000.00 as moral damages;

2. P20,000.00 as attorney’s fees and litigation expenses;

3. plus ½% of the cost of the suit.

SO ORDERED.

On appeal, the Court of Appeals, in its Decision, affirmed in toto the RTC judgment. Petitioner filed a motion for reconsideration but it was denied in a Resolution dated November 5, 2002.

Hence, this petition.

Petitioner contends that the Decision of the Court of Appeals is not in accord with law or prevailing jurisprudence.

Respondent, on the other hand, maintains that the petition lacks merit and, therefore, should be denied.

The issues for our resolution are:

1. Whether petitioner was negligent, and if so, whether such negligence was the proximate cause of respondent’s accident; and

2. Whether the award of moral damages, attorney’s fees, litigation expenses, and cost of the suit is justified.

Article 2176 of the New 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. 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.

To sustain a claim based on the above provision, the following requisites must concur: (a) damage suffered by the plaintiff; (b) fault or negligence of the defendant; and, (c) connection of cause and effect between the fault or negligence of the defendant and the damage incurred by the plaintiff.3

There is no dispute that respondent suffered damages.

It is generally recognized that the drugstore business is imbued with public interest. The health and safety of the people will be put into jeopardy if drugstore employees will not exercise the highest degree of care and diligence in selling medicines. Inasmuch as the matter of negligence is a question of fact, we defer to the findings of the trial court affirmed by the Court of Appeals.

Obviously, petitioner’s employee was grossly negligent in selling to respondent Dormicum, instead of the prescribed Diamicron. Considering that a fatal mistake could be a matter of life and death for a buying patient, the said employee should have been very cautious in dispensing medicines. She should have verified whether the medicine she gave respondent was indeed the one prescribed by his physician. The care required must be commensurate with the danger involved, and the skill employed must correspond with the superior knowledge of the business which the law demands.41awphi1.nét

Petitioner contends that the proximate cause of the accident was respondent’s negligence in driving his car.

We disagree.

Proximate cause is defined as any cause that produces injury in a natural and continuous sequence, unbroken by any efficient intervening cause,

such that the result would not have occurred otherwise. Proximate cause is determined from the facts of each case, upon a combined consideration of logic, common sense, policy, and precedent.5

Here, the vehicular accident could not have occurred had petitioner’s employee been careful in reading Dr. Sy’s prescription. Without the potent effects of Dormicum, a sleeping tablet, it was unlikely that respondent would fall asleep while driving his car, resulting in a collision.

Complementing Article 2176 is Article 2180 of the same Code which states:

ART. 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.

x x x

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.

x x x

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

It is thus clear that the employer of a negligent employee is liable for the damages caused by the latter. When an injury is caused by the negligence of an employee, there instantly arises a presumption of the law that there has been negligence on the part of the employer, either in the selection of his employee or in the supervision over him, after such selection. The presumption, however, may be rebutted by a clear showing on the part of the employer that he has exercised the care and diligence of a good father of a family in the selection and supervision of his employee.6 Here, petitioner's failure to prove that it exercised the due diligence of a good father of a family in the selection and supervision of its employee will make it solidarily liable for damages caused by the latter.

As regards the award of moral damages, we hold the same to be in order. Moral damages may be awarded whenever the defendant’s wrongful act or omission is the proximate cause of the plaintiff’s physical suffering, mental anguish, fright, serious anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar injury in the cases specified or analogous to those provided in Article 2219 of the Civil Code.7

Respondent has adequately established the factual basis for the award of moral damages when he testified that he suffered mental anguish and anxiety as a result of the accident caused by the negligence of petitioner’s employee.

There is no hard-and-fast rule in determining what would be a fair and reasonable amount of moral damages, since each case must be governed by its own peculiar facts. However, it must be commensurate to the loss or injury suffered.8 Taking into consideration the attending circumstances here, we are convinced that the amount awarded by the trial court is exorbitant. Thus, we reduce the amount of moral damages from P250,000.00 toP50,000.00 only.

In addition, we also deem it necessary to award exemplary damages. Article 2229 allows the grant of exemplary damages by way of example or correction for the public good. As mentioned earlier, the drugstore business is affected with public interest. Petitioner should have exerted utmost diligence in the selection and supervision of its employees. On the part of the employee concerned, she should have been extremely cautious in dispensing pharmaceutical products. Due to the sensitive nature of its business, petitioner must at all times maintain a high level of meticulousness. Therefore, an award of exemplary damages in the amount of P25,000.00 is in order.1awphi1.nét

On the matter of attorney’s fees and expenses of litigation, it is settled that the reasons or grounds for the award thereof must be set forth in the decision of the court.9 Since the trial court’s decision did not give the basis of the award, the same must be deleted. In Vibram Manufacturing Corporation v. Manila Electric Company,10 we held:

Likewise, the award for attorney’s fees and litigation expenses should be deleted. Well-enshrined is that "an award for attorney’s fees must be stated in the text of the court’s decision and not in the dispositive portion only"(Consolidated Bank and Trust Corporation (Solidbank) v. Court of Appeals, 246 SCRA 193 [1995] and Keng Hua Paper Products, Inc. v. Court of Appeals, 286 SCRA 257 [1998]). This is also true with the litigation expenses where the body of the decision discussed nothing for its basis.

WHEREFORE, we DENY the petition. The challenged Decision and Resolution of the Court of Appeals in CA-G.R. CV No. 57435 are AFFIRMED

with modification in the sense that (a) the award of moral damages to respondent is reduced from P250,000.00 to P50,000.00; (b) petitioner is likewise ordered to pay said respondent exemplary damages in the amount of P25,000.00; and (c) the award of attorney’s fees and litigation expenses is deleted.

Costs against petitioner.

SO ORDERED.

CONSOLACION GABETO, in her own right and as guardian ad litem of her three children, plaintiff-appellee,vs.AGATON ARANETA, defendant-appellant.

 STREET, J.:

This action was instituted in the Court of First Instance of Iloilo by Consolacion Gabeto, in her own right as widow of Proceso Gayetano, and as guardian ad litem of the three children, Conchita Gayetano, Rosita Gayetano, and Fermin Gayetano, for the purpose of recovering damages incurred by the plaintiff as a result of the death of the said Proceso Gayetano, supposedly cause by the wrongful act of the defendant Agaton Araneta. Upon hearing the evidence, his Honor, Judge L. M. Southworth, awarded damages to the plaintiff in the amount of P3,000, from which judgment the defendant appealed.

It appears in evidence that on August 4, 1918. Basilio Ilano and Proceso Gayetano took a carromata near Plaza Gay, in the City of Iloilo, with a view to going to a cockpit on Calle Ledesma in the same City. When the driver of the carromata had turned his horse and started in the direction indicated, the defendant, Agaton Araneta, stepped out into the street, and laying his hands on the reins, stopped the horse, at the same time protesting to the driver that he himself had called this carromata first. The driver, one Julio Pagnaya, replied to the effect that he had not heard or seen the call of Araneta, and that he had taken up the two passengers then in the carromata as the first who had offered employment. At or about the same time Pagnaya pulled on the reins of the bridle to free the horse from the control of Agaton Araneta, in order that the vehicle might pass on. Owing, however, to the looseness of the bridle on the horse's head or to the rottenness of the material of which it was made, the bit came out of the horse's mouth; and it became necessary for the driver to get out, which he did, in order to find the bridle. The horse was then pulled over to near the curb, by one or the other — it makes no difference which — and Pagnaya tried to fix the bridle.

While he was thus engaged, the horse, being free from the control of the bit, became disturbed and moved forward, in doing which he pulled one of the wheels of the carromata up on the sidewalk and pushed Julio Pagnaya over. After going a few years further the side of the carromata struck a police telephone box which was fixed to a post on the sidewalk, upon which the box came down with a crash and frightened the horse to such an extent that he set out at full speed up the street.

Meanwhile one of the passengers, to wit. Basilio Ilano, had alighted while the carromata was as yet alongside the sidewalk; but the other, Proceso Gayetano, had unfortunately retained his seat, and after the runaway horse

had proceeded up the street to a point in front of the Mission Hospital, the said Gayetano jumped or fell from the rig, and in so doing received injuries from which he soon died.

As to the facts above stated the evidence cannot be said to be materially in conflict; but there is decided conflict upon the point of the exact relation of the defendant Agaton Araneta, to the runaway. The evidence for the plaintiff on this point consists chiefly of the testimony of Julio Pagnaya and of Basilio Ilano. They both say that while yet in the middle of the street, the defendant jerked the bridle, which caused the bit to come out of the horse's mouth, and Julio says that at that juncture the throat latch of the bridle was broken. Be this as it may, we are of the opinion that the mere fact that the defendant interfered with the carromata by stopping the horse in the manner stated would not make him liable for the death of Proceso Gayetano; because it is admitted by Julio Pagnaya that he afterwards got out of the carromata and went to the horse's head to fix the bridle. The evidence is furthermore convincing to the effect that, after Julio Pagnaya alighted, the horse was conducted to the curb and that an appreciable interval of time elapsed — same witnesses say several minutes — before the horse started on his career up the street. 1awph!l.net

It is therefore evident that the stopping of the rig by Agaton Araneta in the middle of the street was too remote from the accident that presently ensued to be considered the legal or proximate cause thereof. Moreover, by getting out and taking his post at the head of the horse, the driver was the person primarily responsible for the control of the animal, and the defendant cannot be charged with liability for the accident resulting from the action of the horse thereafter.

Julio Pagnaya testifies to one fact which, if it were fully accredited, would possibly put a different complexion on the case; for he says that when the horse was pulled over to the curb, the defendant, by way of emphasizing his verbal denunciation of Pagnaya, gesticulated with one of his arms and incidentally brought his hand down on the horse's nose. This, according to Pagnaya, is what made the horse run away. There is no other witness who testifies to this; and it is noteworthy that Basilio Ilano does not mention it. A decided preponderance of the evidence in our opinion is against it.

The evidence indicates that the bridle was old, and the leather of which it was made was probably so weak as to be easily broken. Julio Pagnaya had a natural interest in refuting this fact, as well as in exculpating himself in other respects; and we are of the opinion that the several witnesses who testified for the defendant gave a more credible account of the affair than the witnesses for the plaintiff. According to the witnesses for the defendant, it was Julio who jerked the rein, thereby causing the bit it come out of the horse's mouth; and they say that Julio, after alighting, led the horse over to the curb, and proceeded to fix the bridle; and that in so doing the bridle

was slipped entirely off, when the horse, feeling himself free from control, started to go away as previously stated.

Upon the whole we are constrained to hold that the defendant is not legally responsible for the death of Proceso Gayetano; and though reluctant to interfere with the findings of fact of a trial court when there is a conflict of testimony, the evidence in this case so clearly preponderates in favor of the defendant, that we have no recourse but to reverse the judgment.

The judgment will therefore be reversed, and the defendant will be absolved from the complaint; and it is so ordered, without express finding as to costs of either instance. So ordered.

Johnson, Araullo, Avanceña and Villamor, JJ., concur.

PHILIPPINE NATIONAL CONSTRUCTION CORPORATION, petitioner, vs. HON. COURT OF APPEALS, RODRIGO ARNAIZ, REGINA LATAGAN, RICARDO GENERALAO and PAMPANGA SUGAR DEVELOPMENT COMPANY, INC., CORPORATION, respondents.

D E C I S I O N

CALLEJO, SR., J.:

This is a petition for review on certiorari of the Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 47699 affirming, with modification, the decision of the Regional Trial Court (RTC) of Manila in Civil Case No. 93-64803.

The Antecedents

Pampanga Sugar Development Company, Inc. (PASUDECO) transports sugarcane from Mabalacat and Magalang, Pampanga.  When the Mount Pinatubo eruption of 1991 heavily damaged the national bridges along Abacan-Angeles and Sapang Maragul via Magalang, Pampanga, it requested permission from the Toll Regulatory Board (TRB) for its trucks to enter and pass through the North Luzon Expressway (NLEX) via Dau-Sta. Ines from Mabalacat, and via Angeles from Magalang, and exit at San Fernando going to its milling factory.[2] The TRB furnished the Philippine National Construction Corporation (PNCC) (the franchisee that operates and maintains the toll facilities in the North and South Luzon Toll Expressways) with a copy of the said request for it to comment thereon.[3]

On November 5, 1991, TRB and PASUDECO entered into a Memorandum of Agreement[4] (MOA), where the latter was allowed to enter and pass through the NLEX on the following terms and conditions:

1.     PASUDECO trucks should move in convoy;2.     Said trucks will stay on the right lane;3.     A vehicle with blinking lights should be assigned at the rear

end of the convoy with a sign which should read as follows: Caution: CONVOY AHEAD!!!;

4.     Tollway safety measures should be properly observed;5.     Accidents or damages to the toll facilities arising out of any

activity related to this approval shall be the responsibility of PASUDECO;

6.     PASUDECO shall be responsible in towing their stalled trucks immediately to avoid any inconvenience to the other motorists;

7.     This request will be in force only while the national bridges along Abacan-Angeles and Sapang Maragul via Magalang remain impassable.

PASUDECO furnished the PNCC with a copy of the MOA.[5] In a Letter[6] dated October 22, 1992, the PNCC informed PASUDECO that it interposed no objection to the MOA.

At around 2:30 a.m. on January 23, 1993, Alex Sendin, the PNCC security supervisor, and his co-employees Eduardo Ducusin and Vicente Pascual were patrolling Km. 72 going north of the NLEX.  They saw a pile of sugarcane in the middle portion of the north and southbound lanes of the

road.[7] They placed lit cans with diesel oil in the north and southbound lanes, including lane dividers with reflectorized markings, to warn motorists of the obstruction.  Sendin, Ducusin and Pascual proceeded to the PASUDECO office, believing that the pile of sugarcane belonged to it since it was the only milling company in the area.  They requested for a payloader or grader to clear the area.  However, Engineer Oscar Mallari, PASUDECO’s equipment supervisor and transportation superintendent, told them that no equipment operator was available as it was still very early. [8] Nonetheless, Mallari told them that he would send someone to clear the affected area.  Thereafter, Sendin and company went back to Km. 72 and manned the traffic.  At around 4:00 a.m., five (5) PASUDECO men arrived, and started clearing the highway of the sugarcane.  They stacked the sugarcane at the side of the road.  The men left the area at around 5:40 a.m., leaving a few flattened sugarcanes scattered on the road.  As the bulk of the sugarcanes had been piled and transferred along the roadside, Sendin thought there was no longer a need to man the traffic.  As dawn was already approaching, Sendin and company removed the lighted cans and lane dividers.[9] Sendin went to his office in Sta. Rita, Guiguinto, Bulacan, and made the necessary report.[10]

At about 6:30 a.m., Rodrigo S. Arnaiz, a certified mechanic and marketing manager of JETTY Marketing, Inc.,[11] was driving his two-door Toyota Corolla with plate number FAG 961 along the NLEX at about 65 kilometers per hour.[12] He was with his sister Regina Latagan, and his friend Ricardo Generalao; they were on their way to Baguio to attend their grandmother’s first death anniversary.[13] As the vehicle ran over the scattered sugarcane, it flew out of control and turned turtle several times.  The accident threw the car about fifteen paces away from the scattered sugarcane.

Police Investigator Demetrio Arcilla investigated the matter and saw black and white sugarcanes on the road, on both lanes, which appeared to be flattened.[14]

On March 4, 1993, Arnaiz, Latagan and Generalao filed a complaint[15] for damages against PASUDECO and PNCC in the RTC of Manila, Branch 16.  The case was docketed as Civil Case No. 93-64803.  They alleged, inter alia, that through its negligence, PNCC failed to keep and maintain the NLEX safe for motorists when it allowed PASUDECO trucks with uncovered and unsecured sugarcane to pass through it; that PASUDECO negligently spilled sugarcanes on the NLEX, and PNCC failed to put up emergency devices to sufficiently warn approaching motorists of the existence of such spillage; and that the combined gross negligence of PASUDECO and PNCC was the direct and proximate cause of the injuries sustained by Latagan and the damage to Arnaiz’s car.  They prayed, thus:

WHEREFORE, it is respectfully prayed that, after due hearing, judgment be rendered for the plaintiffs, ordering the defendants jointly and severally:

(a)  To pay unto plaintiff Rodrigo Arnaiz the sum of P100,000.00 representing the value of his car which was totally wrecked;

(b)  to pay unto plaintiff Regina Latagan the sum of P100,000.00 by way of reimbursement for medical expenses, the sum of P50,000.00 by way of moral damages, and the sum of P30,000.00 by way of exemplary damages;

(c)  To pay unto plaintiffs Rodrigo Arnaiz and Ricardo Generalao the sum of P5,000.00 by way of reimbursement for medical expenses; and

(d)  To pay unto the plaintiffs the sum of P30,000.00 by way of attorney’s fees; plus the costs of suit.

Plaintiffs pray for other reliefs which the Honorable Court may find due them in the premises.[16]

In its Answer,[17] PNCC admitted that it was under contract to manage the North Luzon Expressway, to keep it safe for motorists.  It averred that the mishap was due to the “unreasonable speed” at which Arnaiz’s car was running, causing it to turn turtle when it passed over some pieces of flattened sugarcane.  It claimed that the proximate cause of the mishap was PASUDECO’s gross negligence in spilling the sugarcane, and its failure to clear and mop up the area completely.  It also alleged that Arnaiz was guilty of contributory negligence in driving his car at such speed.

The PNCC interposed a compulsory counterclaim[18] against the plaintiffs and cross-claim[19] against its co-defendant PASUDECO.

PASUDECO adduced evidence that aside from it, there were other sugarcane mills in the area, like the ARCAM Sugar Central (formerly known as Pampanga Sugar Mills) and the Central Azucarrera de Tarlac; [20] it was only through the expressway that a vehicle could access these three (3) sugar centrals;[21] and PASUDECO was obligated to clear spillages whether the planters’ truck which caused the spillage was bound for PASUDECO, ARCAM or Central Azucarera.[22]

On rebuttal, PNCC adduced evidence that only planters’ trucks with “PSD” markings were allowed to use the tollway;[23] that all such trucks would surely enter the PASUDECO compound.  Thus, the truck which spilled sugarcane in January 1993 in Km. 72 was on its way to the PASUDECO compound.[24]

On November 11, 1994, the RTC rendered its decision[25] in favor of Latagan, dismissing that of Arnaiz and Generalao for insufficiency of

evidence.  The case as against the PNCC was, likewise, dismissed.  The decretal portion of the decision reads:

WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered:

I.    ORDERING defendant PASUDECO:

1. To pay plaintiff Regina Latagan:

a. P25,000 = for actual damagesb. P15,000 = for moral damagesc. P 10,000  = for attorney’s fees    P50,000

2. To pay costs of suit.

II.   The case is DISMISSED as to defendant PNCC. No pronouncement as to costs. Its counterclaim is, likewise, DISMISSED.

III.  The claims for damages of plaintiffs Rodrigo Arnaiz and Ricardo Generalao are hereby DISMISSED for insufficiency of evidence.

SO ORDERED.[26]

Both the plaintiffs Arnaiz, Latagan and Generalao and defendant PASUDECO appealed the decision to the CA.  Since the plaintiffs failed to file their brief, the CA dismissed their appeal.[27]

Resolving PASUDECO’s appeal, the CA rendered judgment on April 29, 2003, affirming the RTC decision with modification.  The appellate court ruled that Arnaiz was negligent in driving his car, but that such negligence was merely contributory to the cause of the mishap, i.e., PASUDECO’s failure to properly supervise its men in clearing the affected area.  Its supervisor, Mallari, admitted that he was at his house while their men were clearing Km. 72.  Thus, the appellate court held both PASUDECO and PNCC, jointly and severally, liable to Latagan.  The decretal portion of the decision reads:

WHEREFORE, premises considered, the assailed DECISION is hereby MODIFIED and judgment is hereby rendered declaring PASUDECO and PNCC, jointly and solidarily, liable:

1.       To pay plaintiff Regina Latagan:a. P25,000 = for actual damagesb. P15,000 = for moral damagesc. P10,000 = for attorney’s fees

2.       To pay costs of suit.

SO ORDERED. [28]

The PNCC, now the petitioner, filed a petition for review on certiorari under Rule 45 of the Revised Rules of Court, alleging that:

THE HONORABLE COURT OF APPEALS ERRED IN MODIFYING THE DECISION OF THE TRIAL COURT AND MAKING PETITIONER PNCC, JOINTLY AND [SOLIDARILY], LIABLE WITH PRIVATE RESPONDENT PASUDECO.[29]

The petitioner asserts that the trial court was correct when it held that PASUDECO should be held liable for the mishap, since it had assumed such responsibility based on the MOA between it and the TRB.  The petitioner relies on the trial court’s finding that only PASUDECO was given a permit to pass through the route.

The petitioner insists that the respondents failed to prove that it was negligent in the operation and maintenance of the NLEX.  It maintains that it had done its part in clearing the expressway of sugarcane piles, and that there were no more piles of sugarcane along the road when its men left Km. 72; only a few scattered sugarcanes flattened by the passing motorists were left.  Any liability arising from any mishap related to the spilled sugarcanes should be borne by PASUDECO, in accordance with the MOA which provides that “accidents or damages to the toll facilities arising out of any activity related to this approval shall be the responsibility of PASUDECO.”

The petitioner also argues that the respondents should bear the consequences of their own fault or negligence, and that the proximate and immediate cause of the mishap in question was respondent Arnaiz’s reckless imprudence or gross negligence.

The Court notes that the issues raised in the petition are factual in nature.  Under Rule 45 of the Rules of Court, only questions of law may be raised in this Court, and while there are exceptions to the rule, no such exception is present in this case.  On this ground alone, the petition is destined to fail.  The Court, however, has reviewed the records of the case, and finds that the petition is bereft of merit.

The petitioner is the grantee of a franchise, giving it the right, privilege and authority to construct, operate and maintain toll facilities covering the expressways, collectively known as the NLEX.[30] Concomitant

thereto is its right to collect toll fees for the use of the said expressways and its obligation to keep it safe for motorists.

There are three elements of a quasi-delict: (a) damages suffered by the plaintiff; (b) fault or 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 the defendant and the damages incurred by the plaintiff.[31] Article 2176 of the New 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.  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.

Negligence is the omission to do something which a reasonable man, guided by those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of something which a prudent and reasonable man would do.[32] It also refers to the conduct which creates undue risk of harm to another, the failure to observe that degree of care, precaution and vigilance that the circumstance justly demand, whereby that other person suffers injury.[33] The Court declared the test by which to determine the existence of negligence inPicart v. Smith,[34] viz:

The test by which to determine the existence of negligence in a particular case may be stated as follows:  Did the defendant in doing the alleged negligent act use that reasonable care and caution which an 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 standard supposed 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 reference to the personal judgment of the actor in the situation before him.  The law considers what would be reckless, blameworthy, or negligent in the man of ordinary intelligence and prudence and determines liability by that.

The test for determining whether a person is negligent in doing an act whereby injury or damage results to the person or property of another is this: could a prudent man, in the position of the person to whom negligence is attributed, foresee harm to the person injured as a reasonable consequence of the course actually pursued?  If so, the law imposes a duty on the actor to refrain from that course or to take precautions to guard against its mischievous results, and the failure to do so constitutes negligence.  Reasonable foresight of harm, followed by the ignoring of the admonition born of this provision, is always necessary before negligence can be held to exist.[35]

In the case at bar, it is clear that the petitioner 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 flattened sugarcanes lay scattered on the ground.[36] The highway was still wet from the juice and sap of the flattened sugarcanes.[37] The petitioner should have foreseen that the wet condition of the highway would endanger motorists passing by at night or in the wee hours of the morning.

The petitioner cannot escape liability under the MOA between PASUDECO and TRB, since respondent Latagan was not a party thereto.  We agree with the following ruling of the CA:

Both defendants, appellant PASUDECO and appellee PNCC, should be held liable. PNCC, in charge of the maintenance of the expressway, has been negligent in the performance of its duties.  The obligation of PNCC should not be relegated to, by virtue of a private agreement, to other parties.

PNCC declared the area free from obstruction since there were no piles of sugarcane, but evidence shows there were still pieces of sugarcane stalks left flattened by motorists.  There must be an observance of that degree of care, precaution, and vigilance which the situation demands.  There should have been sufficient warning devices considering that there were scattered sugarcane stalks still left along the tollway.

The records show, and as admitted by the parties, that Arnaiz’s car ran over scattered sugarcanes spilled from a hauler truck.[38]

Moreover, the MOA refers to accidents or damages to the toll facilities.  It does not cover damages to property or injuries caused to motorists on the NLEX who are not privies to the MOA.

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 Latagan’s injuries.  As such, PASUDECO and PNCC are jointly and severally liable.  As the Court held in the vintage case of Sabido v. Custodio:[39]

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 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 tort-feasor. ...

In Far Eastern Shipping Company v. Court of Appeals,[40] the Court declared that the liability of joint tortfeasors is joint and solidary, to wit:

It may be said, as a general rule, that negligence in order to render a person liable need not be the sole cause of an injury.  It is sufficient that his negligence, concurring with one or more efficient causes other than plaintiff's, is the proximate cause of the injury.  Accordingly, where several causes combine to produce injuries, a person is not relieved from liability because he is responsible for only one of them, it being sufficient that the negligence of the person charged with injury is an efficient cause without which the injury would not have resulted to as great an extent, and that such cause is not attributable to the person injured.  It is no defense to one of the concurrent tortfeasors that the injury would not have resulted from his negligence alone, without the negligence or wrongful acts of the other concurrent tortfeasors.  Where several causes producing an injury are concurrent and each is an efficient cause without which the injury would not have happened, the injury may be attributed to all or any of the causes and recovery may be had against any or all of the responsible persons although under the circumstances of the case, it may appear that one of them was more culpable, and that the duty owed by them to the injured person was not the same.  No actor's negligence ceases to be a proximate cause merely because it does not exceed the negligence of other actors.  Each wrongdoer is responsible for the entire result and is liable as though his acts were the sole cause of the injury.

There is no contribution between joint tortfeasors whose liability is solidary since both of them are liable for the total damage.  Where the concurrent or successive negligent acts or omissions of two or more persons, although acting independently, are in combination with the direct and proximate cause of a single injury to a third person, it is impossible to determine in what proportion each contributed to the injury and either of them is responsible for the whole injury. Where their concurring negligence resulted in injury or damage to a third party, they become joint tortfeasors and are solidarily liable for the resulting damage under Article 2194 of the Civil Code.

Thus, with PASUDECO’s and the petitioner’s successive negligent acts, they are joint tortfeasors who are solidarily liable for the resulting damage under Article 2194 of the New Civil Code.[41]

Anent respondent Arnaiz’s negligence in driving his car, both the trial court and the CA agreed that it was only contributory, and considered the same in mitigating the award of damages in his favor as provided under Article 2179[42] of the New Civil Code.  Contributory negligence is conduct on the part of the injured party, contributing as a legal cause to the harm he has suffered, which falls below the standard to which he is required to conform for his own protection.[43] Even the petitioner itself described Arnaiz’s negligence as contributory.  In its Answer to the complaint filed with the trial court, the petitioner asserted that “the direct and proximate

cause of the accident was the gross negligence of PASUDECO personnel which resulted in the spillage of sugarcane and the apparent failure of the PASUDECO workers to clear and mop up the area completely, coupled with the contributory negligence of Arnaiz in driving his car at an unreasonable speed.”[44] However, the petitioner changed its theory in the present recourse, and now claims that the proximate and immediate cause of the mishap in question was the reckless imprudence or gross negligence of respondent Arnaiz.[45] Such a change of theory cannot be allowed.  When a party adopts a certain theory in the trial court, he will not be permitted to change his theory on appeal, for to permit him to do so would not only be unfair to the other party but it would also be offensive to the basic rules of fair play, justice and due process.[46]

IN LIGHT OF ALL THE FOREGOING, the present petition is hereby DENIED for lack of merit.  The Decision of the Court of Appeals in CA-G.R. CV No. 47699, dated April 29, 2003, is AFFIRMED.  Costs against the petitioner.

SO ORDERED.

LOADMASTERS CUSTOMS SERVICES, INC., Petitioner, - versus - GLODEL BROKERAGE CORPORATION  andR&B INSURANCE CORPORATION, Respondents.

 

 X -------------------------------------------------------------------------------------- X

 D E C I S I O N

  MENDOZA, J.: 

          This is a petition for review on certiorari under Rule 45 of the Revised Rules of Court assailing the August 24, 2007 Decision[1] of the Court of Appeals (CA) in CA-G.R. CV No. 82822, entitled “R&B Insurance Corporation v. Glodel Brokerage Corporation and Loadmasters Customs Services, Inc.,” which held petitioner Loadmasters Customs Services, Inc. (Loadmasters) liable to respondent Glodel Brokerage Corporation (Glodel) in the amount of P1,896,789.62 representing the insurance indemnity which R&B Insurance Corporation (R&B Insurance) paid to the insured-consignee, Columbia Wire and Cable Corporation (Columbia).  THE FACTS:            On August 28, 2001, R&B Insurance issued Marine Policy No. MN-00105/2001 in favor of Columbia to insure the shipment of 132 bundles of electric copper cathodes against All Risks.  On August 28, 2001, the cargoes were shipped on board the vessel “Richard Rey” from Isabela, Leyte, to Pier 10, North Harbor, Manila.  They arrived on the same date. 

Columbia engaged the services of Glodel for the release and withdrawal of the cargoes from the pier and the subsequent delivery to its warehouses/plants.  Glodel, in turn, engaged the services of Loadmasters for the use of its delivery trucks to transport the cargoes to Columbia’s warehouses/plants in Bulacan and Valenzuela City.

 The goods were loaded on board twelve (12) trucks owned by

Loadmasters, driven by its employed drivers and accompanied by its employed truck helpers.  Six (6) truckloads of copper cathodes were to be delivered to Balagtas, Bulacan, while the other six (6) truckloads were destined for Lawang Bato, Valenzuela City.  The cargoes in six truckloads for Lawang Bato were duly delivered in Columbia’s warehouses there.  Of the six (6) trucks en route to Balagtas, Bulacan, however, only five (5) reached the destination.  One (1) truck, loaded with 11 bundles or 232 pieces of copper cathodes, failed to deliver its cargo.           Later on, the said truck, an Isuzu with Plate No. NSD-117, was recovered but without the copper cathodes.  Because of this incident, Columbia filed with R&B Insurance a claim for insurance indemnity in the amount of P1,903,335.39.  After the requisite investigation and adjustment, R&B Insurance paid Columbia the amount of P1,896,789.62 as insurance indemnity. 

R&B Insurance, thereafter, filed a complaint for damages against both Loadmasters and Glodel before the Regional Trial Court, Branch 14, Manila (RTC), docketed as Civil Case No. 02-103040.  It sought reimbursement of the amount it had paid to Columbia for the loss of the subject cargo.  It claimed that it had been subrogated “to the right of the

consignee to recover from the party/parties who may be held legally liable for the loss.”[2]

           On November 19, 2003, the RTC rendered a decision[3] holding Glodel liable for damages for the loss of the subject cargo and dismissing Loadmasters’ counterclaim for damages and attorney’s fees against R&B Insurance.  The dispositive portion of the decision reads: 

WHEREFORE, all premises considered, the plaintiff having established by preponderance of evidence its claims against defendant Glodel Brokerage Corporation, judgment is hereby rendered ordering the latter:

  1.       To pay plaintiff R&B Insurance

Corporation the sum of P1,896,789.62 as actual and compensatory damages, with interest from the date of complaint until fully paid;

 2.      To pay plaintiff R&B Insurance

Corporation the amount equivalent to 10% of the principal amount recovered as and for attorney’s fees plus P1,500.00 per appearance in Court;

 3.      To pay plaintiff R&B Insurance

Corporation the sum of P22,427.18 as litigation expenses.

  WHEREAS, the defendant Loadmasters Customs

Services, Inc.’s counterclaim for damages and attorney’s fees against plaintiff are hereby dismissed.

 With costs against defendant Glodel Brokerage

Corporation.SO ORDERED.[4]

                           

Both R&B Insurance and Glodel appealed the RTC decision to the CA.  

On August 24, 2007, the CA rendered the assailed decision which reads in part:

 

Considering that appellee is an agent of appellant Glodel, whatever liability the latter owes to appellant R&B Insurance Corporation as insurance indemnity must likewise be the amount it shall be paid by appellee Loadmasters.

 WHEREFORE, the foregoing considered, the

appeal is PARTLY GRANTED in that the appellee Loadmasters is likewise held liable to appellant Glodel in the amount ofP1,896,789.62 representing the insurance indemnity appellant Glodel has been held liable to appellant R&B Insurance Corporation.

 Appellant Glodel’s appeal to absolve it from any

liability is herein DISMISSED. SO ORDERED.[5]

 Hence, Loadmasters filed the present petition for review on

certiorari before this Court presenting the following 

ISSUES 

1.  Can Petitioner Loadmasters be held liable to Respondent      Glodel in spite of the fact that the latter respondent Glodel did not file a cross-claim against it (Loadmasters)? 2.  Under the set of facts established and undisputed in the case, can petitioner Loadmasters be legally considered as an Agent of respondent Glodel?[6]

To totally exculpate itself from responsibility for the lost goods, Loadmasters argues that it cannot be considered an agent of Glodel because it never represented the latter in its dealings with the consignee. At any rate, it further contends that Glodel has no recourse against it for its (Glodel’s) failure to file a cross-claim pursuant to Section 2, Rule 9 of the 1997 Rules of Civil Procedure.             Glodel, in its Comment,[7] counters that Loadmasters is liable to it under its cross-claim because the latter was grossly negligent in the transportation of the subject cargo. With respect to Loadmasters’ claim that it is already estopped from filing a cross-claim, Glodel insists that it can still do so even for the first time on appeal because there is no rule that provides otherwise.  Finally, Glodel argues that its relationship with Loadmasters is that of Charter wherein the transporter (Loadmasters) is only hired for the specific job of delivering the merchandise.  Thus, the diligence required in this case is merely ordinary diligence or that of a good father of the family, not the extraordinary diligence required of common carriers.

           R&B Insurance, for its part, claims that Glodel is deemed to have interposed a cross-claim against Loadmasters because it was not prevented from presenting evidence to prove its position even without amending its Answer.  As to the relationship between Loadmasters and Glodel, it contends that a contract of agency existed between the two corporations.[8]

 Subrogation is the substitution of one person in the place of

another with reference to a lawful claim or right, so that he who is substituted succeeds to the rights of the other in relation to a debt or claim, including its remedies or securities.[9] Doubtless, R&B Insurance is subrogated to the rights of the insured to the extent of the amount it paid the consignee under the marine insurance, as provided under Article 2207 of the Civil Code, which reads:

  ART. 2207.  If the plaintiff’s property has been

insured, and he has received indemnity from the insurance company for the injury or loss arising out of the wrong or breach of contract complained of, the insurance company shall be subrogated to the rights of the insured against the wrong-doer or the person who has violated the contract.  If the amount paid by the insurance company does not fully cover the injury or loss, the aggrieved party shall be entitled to recover the deficiency from the person causing the loss or injury.

 As subrogee of the rights and interest of the consignee, R&B

Insurance has the right to seek reimbursement from either Loadmasters or Glodel or both for breach of contract and/or tort.           The issue now is who, between Glodel and Loadmasters, is liable to pay R&B Insurance for the amount of the indemnity it paid Columbia.           At the outset, it is well to resolve the issue of whether Loadmasters and Glodel are common carriers to determine their liability for the loss of the subject cargo.  Under Article 1732 of the Civil Code, common carriers are persons, corporations, firms, or associations engaged in the business of carrying or transporting passenger or goods, or both by land, water or air for compensation, offering their services to the public.                                                                                                                                                                                                                                                                                                                                                                                                        

Based on the aforecited definition, Loadmasters is a common carrier because it is engaged in the business of transporting goods by land, through its trucking service.  It is acommon carrier as distinguished from a private carrier wherein the carriage is generally undertaken by special agreement and it does not hold itself out to carry goods for the general public.[10]  The distinction is significant in the sense that “the rights and

obligations of the parties to a contract of private carriage are governed principally by their stipulations, not by the law on common carriers.”[11]     

In the present case, there is no indication that the undertaking in the contract between Loadmasters and Glodel was private in character.  There is no showing that Loadmasters solely and exclusively rendered services to Glodel. 

 In fact, Loadmasters admitted that it is a common carrier.[12]

 In the same vein, Glodel is also considered a common carrier

within the context of Article 1732.  In its Memorandum,[13] it states that it “is a corporation duly organized and existing under the laws of the Republic of the Philippines and is engaged in the business of customs brokering.”  It cannot be considered otherwise because as held by this Court in Schmitz Transport & Brokerage Corporation v. Transport Venture, Inc., [14] a customs broker is also regarded as a common carrier, the transportation of goods being an integral part of its business.

 Loadmasters and Glodel, being both common carriers, are

mandated from the nature of their business and for reasons of public policy, to observe the extraordinary diligence in the vigilance over the goods transported by them according to all the circumstances of such case, as required by Article 1733 of the Civil Code.  When the Court speaks of extraordinary diligence, it is that extreme measure of care and caution which persons of unusual prudence and circumspection observe for securing and preserving their own property or rights.[15]  This exacting standard imposed on common carriers in a contract of carriage of goods is intended to tilt the scales in favor of the shipper who is at the mercy of the common carrier once the goods have been lodged for shipment.[16] Thus, in case of loss of the goods, the common carrier is presumed to have been at fault or to have acted negligently.[17]  This presumption of fault or negligence, however, may be rebutted by proof that the common carrier has observed extraordinary diligence over the goods.     

With respect to the time frame of this extraordinary responsibility, the Civil Code provides that the exercise of extraordinary diligence lasts from the time the goods are unconditionally placed in the possession of, and received by, the carrier for transportation until the same are delivered, actually or constructively, by the carrier to the consignee, or to the person who has a right to receive them.[18] 

 Premises considered, the Court is of the view that both

Loadmasters and Glodel are jointly and severally liable to R & B Insurance for the loss of the subject cargo.  Under Article 2194 of the New Civil Code, “the responsibility of two or more persons who are liable for a quasi-delict is solidary.”

  Loadmasters’ claim that it was never privy to the contract entered

into by Glodel with the consignee Columbia or R&B Insurance as subrogee,

is not a valid defense.  It may not have a direct contractual relation with Columbia, but it is liable for tort under the provisions of Article 2176 of the Civil Code on quasi-delicts which expressly provide:

 ART. 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. 

   

Pertinent is the ruling enunciated in the case of Mindanao Terminal and Brokerage Service, Inc. v. Phoenix Assurance Company of New York,/McGee & Co., Inc.[19]where this Court held that a tort may arise despite the absence of a contractual relationship, to wit:

             We agree with the Court of Appeals that the complaint filed by Phoenix and McGee against Mindanao Terminal, from which the present case has arisen, states a cause of action. The present action is based on quasi-delict, arising from the negligent and careless loading and stowing of the cargoes belonging to Del Monte Produce. Even assuming that both Phoenix and McGee have only been subrogated in the rights of Del Monte Produce, who is not a party to the contract of service between Mindanao Terminal and Del Monte, still the insurance carriers may have a cause of action in light of the Court’s consistent ruling that the act that breaks the contract may be also a tort.  In fine, a liability for tort may arise even under a contract, where tort is that which breaches the contract.  In the present case, Phoenix and McGee are not suing for damages for injuries arising from the breach of the contract of service but from the alleged negligent manner by which Mindanao Terminal handled the cargoes belonging to Del Monte Produce. Despite the absence of contractual relationship between Del Monte Produce and Mindanao Terminal, the allegation of negligence on the part of the defendant should be sufficient to establish a cause of action arising from quasi-delict.  [Emphases supplied]

  

In connection therewith, Article 2180 provides: ART. 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.

 x x x x

 Employers shall be liable for the damages

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

  It is not disputed that the subject cargo was lost while in the

custody of Loadmasters whose employees (truck driver and helper) were instrumental in the hijacking or robbery of the shipment.  As employer, Loadmasters should be made answerable for the damages caused by its employees who acted within the scope of their assigned task of delivering the goods safely to the warehouse. 

 Whenever an employee’s negligence causes damage or injury to

another, there instantly arises a presumption juris tantum that the employer failed to exercise diligentissimi patris families in the selection (culpa in eligiendo) or supervision (culpa in vigilando) of its employees.[20]  To avoid liability for a quasi-delict committed by its employee, an employer must overcome the presumption by presenting convincing proof that he exercised the care and diligence of a good father of a family in the selection and supervision of his employee. [21]  In this regard, Loadmasters failed. 

Glodel is also liable because of its failure to exercise extraordinary diligence.  It failed to ensure that Loadmasters would fully comply with the undertaking to safely transport the subject cargo to the designated destination.  It should have been more prudent in entrusting the goods to Loadmasters by taking precautionary measures, such as providing escorts to accompany the trucks in delivering the cargoes.  Glodel should, therefore, be held liable with Loadmasters.  Its defense of force majeure is unavailing.

  At this juncture, the Court clarifies that there exists no principal-

agent relationship between Glodel and Loadmasters, as erroneously found by the CA.  Article 1868 of the Civil Code provides: “By the contract of agency a person binds himself to render some service or to do something in representation or on behalf of another, with the consent or authority of the latter.” The elements of a contract of agency are: (1) consent, express or implied, of the parties to establish the relationship; (2) the object is the execution of a juridical act in relation to a third person; (3) the agent acts as a representative and not for himself; (4) the agent acts within the scope of his authority.[22]

 Accordingly, there can be no contract of agency between the

parties.  Loadmasters never represented Glodel.  Neither was it ever authorized to make such representation. It is a settled rule that the basis for agency is representation, that is, the agent acts for and on behalf of the

principal on matters within the scope of his authority and said acts have the same legal effect as if they were personally executed by the principal.  On the part of the principal, there must be an actual intention to appoint or an intention naturally inferable from his words or actions, while on the part of the agent, there must be an intention to accept the appointment and act on it.[23]  Such mutual intent is not obtaining in this case.

 What then is the extent of the respective liabilities of Loadmasters

and Glodel?  Each wrongdoer is liable for the total damage suffered by R&B Insurance. Where there are several causes for the resulting damages, a party is not relieved from liability, even partially.  It is sufficient that the negligence of a party is an efficient cause without which the damage would not have resulted.  It is no defense to one of the concurrent tortfeasors that the damage would not have resulted from his negligence alone, without the negligence or wrongful acts of the other concurrent tortfeasor.  As stated in the case of Far Eastern Shipping v. Court of Appeals,[24]

 X x x. Where several causes producing an injury

are concurrent and each is an efficient cause without which the injury would not have happened, the injury may be attributed to all or any of the causes and recovery may be had against any or all of the responsible persons although under the circumstances of the case, it may appear that one of them was more culpable, and that the duty owed by them to the injured person was not the same. No actor's negligence ceases to be a proximate cause merely because it does not exceed the negligence of other actors. Each wrongdoer is responsible for the entire result and is liable as though his acts were the sole cause of the injury.

There is no contribution between joint tortfeasors whose liability is solidary since both of them are liable for the total damage. Where the concurrent or successive negligent acts or omissions of two or more persons, although acting independently, are in combination the direct and proximate cause of a single injury to a third person, it is impossible to determine in what proportion each contributed to the injury and either of them is responsible for the whole injury. Where their concurring negligence resulted in injury or damage to a third party, they become joint tortfeasors and are solidarily liable for the resulting damage under Article 2194 of the Civil Code. [Emphasis supplied]

  The Court now resolves the issue of whether Glodel can collect

from Loadmasters, it having failed to file a cross-claim against the latter.   

Undoubtedly, Glodel has a definite cause of action against Loadmasters for breach of contract of service as the latter is primarily liable for the loss of the subject cargo.  In this case, however, it cannot succeed in seeking judicial sanction against Loadmasters because the records disclose that it did not properly interpose a cross-claim against the latter.   Glodel did not even pray that Loadmasters be liable for any and all claims that it may be adjudged liable in favor of R&B Insurance.  Under the Rules, a compulsory counterclaim, or a cross-claim, not set up shall be barred.[25]  Thus, a cross-claim cannot be set up for the first time on appeal.  

For the consequence, Glodel has no one to blame but itself.  The Court cannot come to its aid on equitable grounds.  “Equity, which has been aptly described as ‘a justice outside legality,’ is applied only in the absence of, and never against, statutory law or judicial rules of procedure.”[26] The Court cannot be a lawyer and take the cudgels for a party who has been at fault or negligent. 

   WHEREFORE, the petition is PARTIALLY GRANTED.  The August

24, 2007 Decision of the Court of Appeals is MODIFIED to read as follows: 

WHEREFORE, judgment is rendered declaring petitioner Loadmasters Customs Services, Inc. and respondent Glodel Brokerage Corporation jointly and severally liable to respondent R&B Insurance Corporation for the insurance indemnity it paid to consignee Columbia Wire & Cable Corporation and ordering both parties to pay, jointly and severally, R&B Insurance Corporation a] the amount of P1,896,789.62 representing the insurance indemnity; b] the amount equivalent to ten (10%) percent thereof for attorney’s fees; and c] the amount of P22,427.18 for litigation expenses.  

 The cross-claim belatedly prayed for by

respondent Glodel Brokerage Corporation against petitioner Loadmasters Customs Services, Inc. is DENIED.

 SO ORDERED.