Frias v. San Diego-Sison

BOBIE ROSE FRIAS v. FLORA SAN DIEGO-SISON 

2007 / Austria-Martinez

On 7 Dec 1990, Bobie Rose Frias and Dr. Flora San-Diego Sison entered into a MOA over Frias’ property

• MOA consideration is 3M
• Sison has 6 months from the date of contract’s execution to notify Frias of her intention to purchase the property with the improvements at 6.4M
• Prior to this 6 month period, Frias may still offer the property to other persons, provided that 3M shall be paid to Sison including interest based on prevailing compounded bank interest + amount of sale in excess of 7M [should the property be sold at a price greater than 7M]
• In case Frias has no other buyer within 6 months from the contract’s execution, no interest shall be charged by Sison on the 3M
• In the event that on the 6^th month, Sison would decide not to purchase the property, Frias has 6 months to pay 3M (amount shall earn compounded bank interest for the last 6 months only)
• 3M treated as a loan and the property considered as the security for the mortgage
• Upon notice of intention to purchase, Sison has 6 months to pay the balance of 3.4M (6.4M less 3M MOA consideration)

Frias received from Sison 3M (2M in cash; 1M post-dated check dated February 28, 1990, instead of 1991, which rendered the check stale). Frias gave Sison the TCT and the Deed of Absolute Sale over the property. Sison decided not to purchase the property, so she notified Frias through a letter dated March 20, 1991 [Frias received it only on June 11, 1991], and Sison reminded Frias of their agreement that the 2M Sison paid should be considered as a loan payable within 6 months. Frias failed to pay this amount.
Sison filed a complaint for sum of money with preliminary attachment. Sison averred that Frias tried to deprive her of the security for the loan by making a false report of the loss of her owner’s copy of TCT, executing an affidavit of loss and by filing a petition[1] for the issuance of a new owner’s duplicate copy. RTC issued a writ of preliminary attachment upon the filing of a 2M bond.

RTC found that Frias was under obligation to pay Sison 2M with compounded interest pursuant to their MOA. RTC ordered Frias to pay Sison: 

• 2M + 32% annual interest beginning December 7, 1991 until fully paid
• 70k representing premiums paid by Sison on the attachment bond with legal interest counted from the date of this decision until fully paid
• 100k moral, corrective, exemplary damages [liable for moral damages because of Frias’ fraudulent scheme]
• 100k attorney’s fees + cost of litigation

CA affirmed RTC with modification—32% reduced to 25%. CA said that there was no basis for Frias to say that the interest should be charged for 6 months only. It said that a loan always bears interest; otherwise, it is not a loan. The interest should commence on June 7, 1991 until fully paid, with compounded bank interest prevailing at the time [June 1991] the 2M was considered as a loan (as certified by the bank). 

ISSUES & HOLDING – Ratio only discusses topic of INTEREST (as per syllabus) 

• WON compounded bank interest should be limited to 6 months as contained in the MOA. NO 
• WON Sison is entitled to moral damages. YES 
• WON the grant of attorney’s fees is proper, even if not mentioned in the body of the decision. NO

CA committed no error in awarding an annual 25% interest on the 2M even beyond the 6-month stipulated period. In this case, the phrase "for the last six months only" should be taken in the context of the entire agreement.

SC notes that the agreement speaks of two (2) periods of 6 months each (see FACTS—words in bold & underline). No interest will be charged for the 1^st 6-month period [while Sison was making up her mind], but only for the 2^nd 6-month period after Sison decided not to buy the property. There is nothing in the MOA that suggests that interest will be charged for 6 months only even if it takes forever for Frias to pay the loan.

The payment of regular interest constitutes the price or cost of the use of money, and until the principal sum due is returned to the creditor, regular interest continues to accrue since the debtor continues to use such principal amount. For a debtor to continue in possession of the principal of the loan and to continue to use the same after maturity of the loan without payment of the monetary interest constitutes unjust enrichment on the part of the debtor at the expense of the creditor.

CA DECISION AND RESOLUTION AFFIRMED WITH MODIFICATION—Award of attorney’s fees deleted

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[1] At first, Frias’ petition was granted, but it was eventually set aside, since RTC granted Sison’s petition for relief from judgment (as Sison was in possession of the owner’s duplicate copy).

Quisaba v. Sta. Ines-Melale Veneer and Plywood

JOVITO QUISABA v. STA. INES-MELALE VENEER & PLYWOOD [SIMVP]

1974 / Castro

FACTS

Quisaba was an internal auditor of SIMVP for 18 years. On January 1973, SIMVP VP Robert Hyde instructed him to purchase logs for the company's plant, but Quisaba, he refused to do so, saying that such task is inconsistent with his position. The next day, Hyde informed Quisaba of his temporary relief as internal auditor so that he could carry out the instructions given. Hyde warned him that failure to comply would be considered a ground for his dismissal.

Quisaba filed a complaint for moral damages, exemplary damages, termination pay and attorney's fees against SIMVP and its VP Robert Hyde. Quisaba was NOT asking for backwages nor reinstatement. Quisaba alleged that due to SIMVP’s acts, he suffered mental anguish, serious anxiety, besmirched reputation, wounded feelings, moral shock and social humiliation.

SIMVP moved to dismiss the complaint on the ground of lack of jurisdiction of the CFI, asserting that the proper forum is the NLRC. Quisaba opposed this, and he informed the court that an NLRC representative said that NLRC has no jurisdiction over claims or suits for damages arising out of employee-employer relationship. Nonetheless, CFI granted the motion to dismiss on the ground that the complaint involves an employee-employer relation.

ISSUE & HOLDING

Who has jurisdiction over the case? CFI has jurisdiction. This is a CIVIL dispute, not a labor dispute.

RATIO

This case is concerned with a civil (not a labor) dispute, as it has to do with an alleged violation of Quisaba's rights as a member of society, and it does not involve an existing employee-employer relation within the meaning of PD 21, Sec. 2(1).

Civil law consists of that mass of precepts that determine or regulate the relations that exist between members of a society for the protection of private interests.

NLRC jurisdiction is defined by PD 21, Sec. 2.

• All matters involving employee-employer relations including all disputes and grievances which may otherwise lead to strikes and lockouts under RA 875
• All strikes overtaken by Proc. 1081
• All pending cases in the Bureau of Labor Relations.

Although the acts complained of seemingly appear to constitute "matters involving employee-employer relations," Quisaba’s complaint is grounded on the manner of his dismissal and the consequent effects of such dismissal, not on his dismissal per se, as he does not ask for reinstatement or backwages.

The "right" of SIMVP to dismiss Quisaba should not be confused with the manner in which the right was exercised and the effects flowing therefrom. If the dismissal was done anti-socially or oppressively, then SIMVP violated the following:

• NCC 1701 – prohibits acts of oppression by either capital or labor against the other
• NCC 21 – makes a person liable for damages if he willfully causes loss or injury to another in a manner that is contrary to morals, good customs or public policy

Moral damages may be recovered in acts and actions referred to in NCC 21. [NCC 2219 (10)]

ORDER SET ASIDE; CASE REMANDED FOR FURTHER PROCEEDINGS

Que v. IAC

MAGTANGGOL QUE v. IAC and ANTONIO NICOLAS

1989 / Cruz

Human Relations Torts > Acts Contra Bonus Mores

In 1975, Antonio Nicolas ordered from Magtanggol Que canvass strollers, and Nicolas issued to Que 5 post-dated checks with a total face value of P7,600.00. Nicolas ordered a "stop payment" because of defects in the articles sold which Que had not corrected, so Que was unable to encash the checks.

Que filed a complaint for estafa against Nicolas. The charge was dismissed for lack of merit, as the investigating fiscal held that it was an accounting matter, which did not necessarily involve deceit on Nicolas’ part of Nicolas.

In 1976, Nicolas filed his own complaint for damages against Que for malicious prosecution. Que averred that Nicolas had maliciously filed the complaint in Bulacan although he was a resident of Caloocan City, and Nicolas was indebted to him in any case, and that it was he [Que] who suffered damages due to the unwarranted suit.

Judge Puno held in favor of Nicolas, finding that Que acted maliciously in filing the estafa charge and in alleging that Nicolas issued the dishonored checks with deceit. Que’s MfR was denied. A 2^nd MfR was filed, and Que averred the mere dismissal of the charge in the fiscal's office was not a ground for damages nor did it constitute an actionable wrong. The trial court reversed the original decision, so Que won.

Nicolas contended that the amended decision was null and void for several technical reasons. IAC reinstated the original decision of Judge Puno—so Nicolas won.

QUE NOT GUILTY OF MALICIOUS PROSECUTION

To constitute malicious prosecution, there must be proof that the prosecution was prompted by a sinister design to vex and humiliate a person that it was initiated deliberately by the defendant knowing that his charges were false and groundless. The mere act of submitting a case to the authorities for prosecution does not make one liable for malicious prosecution.

One cannot be held liable in damages for maliciously instituting a prosecution where he acted with probable cause. The presence of probable cause signifies as a legal consequence the absence of malice. If the charge, although false, was made with an honest belief in its truth and justice, and there were reasonable grounds on which such a belief could be founded, the accusation could not be held to have been false in the legal sense. [Buchanan v. Esteban]

Proof and motive that the prosecution or institution of the action was prompted by a sinister design to vex and humiliate a person and to cast dishonor and disgrace must be clearly and preponderantly established to entitle the victims to damages and other rights granted by law. Otherwise, there would always be a civil action for damages after the prosecution's failure to prove its cause. The adverse result of an action does not per se make the act wrongful and subject the actor to the payment of moral damages. The law could not have meant to impose a penalty on the right to litigate; such right is so precious that moral damages may not be charged on those who may exercise it erroneously.

Considering that the checks could not be encashed and the supposedly defective goods had not been returned, Que had reason to believe that Nicolas intended to deceive him. Que was not motivated by ill feeling but only by an anxiety to protect his rights. Even if the fiscal found that no deceit was involved and that Que’s claim was unfounded, the mistaken charge was not malicious.

The mere dismissal of the criminal complaint by the fiscal's office did not create a cause of action. What was inquired into was WON there was a prima facie showing of estafa. Nowhere in the fiscal's investigation report is there any statement imputing malice to Que.

SC finds Que’s claim of harassment more plausible. However, inasmuch as good faith is presumed, absent sufficient rebuttable evidence, neither of them is guilty of malice. SC denied both parties their respective claims for damages. Each of them must bear the financial consequences of one’s own acts, including the litigation expenses.

IAC DECISION SET ASIDE; AMENDED DECISION OF TRIAL COURT REINSTATED

Philippine Rabbit Bus Lines v. Phil-American Forwarders

PHILIPPINE RABBIT BUS LINES and FELIX PANGALANGAN v. PHIL-AMERICAN FORWARDERS, ARCHIMEDES BALINGIT, and FERNANDO PINEDA

1975 / Aquino / Appeal from CFI order

FACTS

Pineda recklessly drove a freight truck [owned by Phil-American Forwarders] along the national highway at Pampanga, and the truck bumped the PRBL bus driven by Pangalangan. As a result, Pangalangan suffered injuries and the bus was damaged and could not be used for 79 days, thus depriving PRBL of earnings amounting to P8,665.51. Balingit was the manager of Phil-American Forwarders.

PRBL and Pangalangan filed a complaint for damages against Phil-American Forwarders, Balingit, and Pineda. Defendants said Balingit was not Pineda's employer. Balingit moved that the complaint against him be dismissed on the ground that PRBL and Pangalangan had no cause of action against him. CFI dismissed the complaint against Balingit, on the ground that he is not the manager of an establishment as contemplated in NCC 2180.

ISSUE AND HOLDING

WON the terms "employers" and "owners and managers of an establishment or enterprise" embrace the manager of a corporation owning a truck, the reckless operation of which allegedly resulted in the vehicular accident from which the damage arose. NO.

RATIO

Those terms do not include the manager of a corporation. It may be gathered from the context of NCC 2180 that the term "manager" ("director" in the Spanish version) is used in the sense of "employer". Hence, no tortious or quasi-delictual liability can be imposed on Balingit as manager of Phil-American Forwarders, in connection with the vehicular accident in question, because he himself may be regarded as an employee or dependiente of Phil-American Forwarders.

CFI AFFIRMED

Amadora v. CA

AMADORA v. CA

G.R. No. L-44745, Apr. 15, 1988

The setting is the Colegio-de San Jose Recoletos, which was NOT a school of arts and trades but an academic institution of learning. A few days before the commencement exercises, student Alfredo Amadora went to school to finish his physics experiment as a prerequisite for graduation. When he was in the auditorium, he was shot to death by his classmate Pablito Daffon.

Pablito was convicted of homicide thru reckless imprudence. Alfredo’s parents filed a civil action for damages under NCC 2180 against the school, its rector, the high school principal, the dean of boys, the physics teacher, together with Pablito and two other students, through their parents. The complaint against the students was dropped.

CONTENTIONS ON CUSTODY

• PETITIONERS: AMADORA UNDER SCHOOL’S CUSTODY. He was in school to show his physics experiment as a graduation prerequisite.
• RESPONDENTS: AMADORA NOT UNDER SCHOOL’S CUSTODY. Semester already ended.

THE GUN ISSUE

Days before the incident, the dean of the boys confiscated from Gumban an unlicensed pistol but later returned it to him without making a report to the principal or taking any further action. PETITIONERS contend that this was the same pistol, as Gumban was one of Daffon’s companions when the latter fired the gun that killed Amadora, and that Amadora would not have been killed if the gun was not returned by the dean of the boys.

RULING OF COURTS

CFI held the remaining defendants liable. CA, however, reversed CFI and all defendants were absolved. CA found that NCC 2180 was not applicable since the school was not a school of arts and trades. It also held that the students were not in the school’s custody at the time of the incident since the semester already ended. In addition, there was no clear identification of the gun, and that the defendant exercised the necessary diligence in preventing injury.

ISSUES & HELD (aka QUICK SUMMARY OF FINDINGS)

1. Does NCC 2180 also cover establishments that are NOT schools of arts and trades? – YES
2. When is the offending student supposed to be in the school’s custody? – As long as he is under the control and influence of the school and within its premises, whether the semester has not yet begun or has already ended. Alfredo still under custody
3. Who is liable for the injury? – None of the respondents is liable for the injury inflicted by Pablito on Alfredo

RULING

1.     The school CANNOT be held directly liable under NCC 2180.

Three cases were cited: Exconde, Mercado, and Palisoc.

What you need to know in Exconde

• Student boarded a jeep, took over its wheel and drove it recklessly that it turned turtle, resulting to the death of two of its passengers.
• This decision, penned by Justice Angelo exculpated the school on the ground that it was not a school of arts and trades.
• Justice Reyes said that the school authorities should be held liable.
• Liability was imposed on teachers in general, and heads of schools of arts and trades in particular. The clause “of establishments of arts and trades” should apply only to heads.

What you need to know in Mercado

• A student cut a classmate with a razor blade during recess time in school.
• Exconde was reiterated in this case (the school was exculpated on the ground that it was not a school of arts and trades).
• The custody requirement was not proved as it “contemplates a situation where the student lives and boards with the teacher, such that the control, direction and influences on the pupil supersede those of the parent.”

What you need to know in Palisoc

• A student was killed by a classmate with fist blows in the laboratory of the school.
• The head of the school and the teacher-in-charge were held liable together with the wrongdoer, even though the latter was not boarding in the school.
• The ponencia, Justice Teehankee, said, “There is nothing in the law that requires that for such liability to attach, the pupil or student who commits the tortious act must live an board in the school,” as erroneously held in Exconde and Mercado.

 The case at hand – Amadora

• The school has been directly impleaded unlike in Exconde and Mercado.
• The school is an academic institution of learning, unlike in Palisoc wherein the school was an arts and trade school.

 Q: Does NCC 2180 also cover establishments that are NOT schools of arts and trades? – YES

GENERAL RULE. Where the school is academic rather than technical or vocational in nature, responsibility for the tort committed by the student will attach to the teacher in charge of the student, following the first part of NCC 2180. In the case of establishments of arts and trades, it is the head that should be answerable as an exception to the general rule.

                Following the canon of reddendo singula singulis, “teachers” should apply to the words “pupils and students” and “heads of establishments of arts and trades” to the word “apprentices.”

On the differences between academic and non-academic schools

There is no substantial distinction between the academic and the non-academic schools insofar as torts committed by their students are concerned. The same vigilance is expected from the teacher over the students under his control and supervision, whatever the nature of the school where he is teaching. The teacher should not be able to excuse himself by simply showing that he is teaching in an academic school where, on the other hand, the head would be held liable if the school were non-academic.

                HOWEVER, why is it that for academic schools, the teacher is the one held liable, while for non-academic / arts and trade schools, the head is the one held liable? The answer can be traced to the fact that historically, the head exercised a closer tutelage over his pupils than the head of an academic school because of the apprenticeship system they employed. This distinction no longer holds at present but until NCC 2180 is changed, it should be interpreted according to its clear and original mandate.

2.     At the time the incident occurred, Alfredo was still in the custody of the school authorities.

Q: When is the offending student supposed to be in the school’s custody? – As long as he is under the control and influence of the school and within its premises, whether the semester has not yet begun or has already ended

On the teacher-in-charge and custody

The teacher-in-charge, who is the one designated by a superior to exercise supervision over pupils for a particular subject or section, is the one who must be held liable, in the same way that parents are responsible for the child when he is in their custody. It is not necessary that at the time of the injury, the teacher is physically present to be in a position to prevent it. Custody refers to the influence exerted on the child and the discipline instilled in him because of such influence. For the injuries caused by the student, the teacher and not the parent shall be held responsible if the tort was committed within the premises of the school at any time when its authority could be validly exercised over him.

                The rector, high school principal and the dean of boys CANNOT be held liable because none of them was the teacher-in-charge as defined, and they were only exercising general authority over the student body. Evidence did not disclose who the teacher-in-charge of Pablito was. The mere fact that Alfredo went to school to finish / submit his physics project DID NOT necessarily make the physics teacher the teacher-in-charge.

                In the absence of a teacher-in-charge, it is probably the dean of boys who should be held liable, since there was evidence that he had earlier confiscated an unlicensed gun from a student and returned it to the latter without reporting to authorities. HOWEVER, it has not been showed that said gun was the same that Pablito used to shoot Alfredo; hence, said fact does not necessarily link the dean to the shooting.

On the defense of exercising due diligence of a good father of a family

The school, teacher-in-charge, or the head may exculpate themselves by proving that they exercised the diligence of a good father of a family or bonus paterfamilias. The school can show this in selecting the head or its teachers and the appropriate supervision over them in the custody and instruction of the pupils pursuant to the rules and regulations for the maintenance of discipline among them.

Such defense is also available to the teacher or the head of the school of arts and trades directly held to answer for the tort committed by the student. As long as the defendant can show that he had taken the necessary precautions to prevent the injury complained of, he can exonerate himself from the liability imposed by Article 2180. The teacher will be held liable not only when he is acting in loco parentis for the law does not require that the offending student be of minority age. Unlike the parent, who will be liable only if his child is still a minor, the teacher is held answerable by the law for the act of the student under him regardless of the student's age. The Court is disposed not to expect from the teacher the same measure of responsibility imposed on the parent for their influence over the child is not equal in degree. The parent can expect more obedience from the child because the latter's dependence on him is greater than on the teacher.

                However, assuming that the physics teacher was the teacher-in-charge, there is NO SHOWING that he was negligent in enforcing discipline upon Pablito or that he waived observance or condoned the non-observance of school rules and regulations. Respondents have proved that they had exercised due diligence, through the enforcement of the school regulations, in maintaining that discipline.

OPINIONS

Concurring and dissenting opinion of Justice Melencio-Herrera

• Disagrees with the restricted meaning given to the term teacher as “teacher-in-charge”
• The philosophy of law is that whoever stands in loco parentis will have the same duties and obligations as parents whenever in such a standing. As long as pupils and students remain in their custody, they shall be held liable for the former’s tortious acts.

 Concurring opinion of Justice Gutierrez

• There is a need for a major amendment, if not a complete scrapping, of the paragraph in NCC 2180 that refers to teachers or heads of establishments of arts and trades in relation to pupils and students or apprentices
• No more masters, apprentices in schools of arts and trades
• Teachers are often no longer objects of veneration who are given due to substitute parents

Tamargo v. CA

MACARIO, CELSO, and AURELIA TAMARGO v. CA, RTC JUDGE RUBIO, VICTOR and CLARA BUNDOC

1992 / Feliciano / Petition for review of CA decision

In 1981, Sps. Rapisura filed a petition to adopt 10 year old Adelberto Bundoc. A year later, on October 1982, Adelberto shot Jennifer Tamargo with an air rifle causing injuries that led to her death. The adoption petition was granted on November 1982.

A civil complaint for damages was filed against Sps. Bundoc [Adelberto’s natural parents with whom he was living at the time of the incident] by Jennifer’s adopting parent, Macario, as well as her natural parents, Sps. Tamargo. Criminal information for homicide through reckless imprudence was filed against Adelberto, but he was acquitted and exempted from criminal liability since he acted without discernment.

                Sps. Bundoc claim that Sps. Rapisura [adopting parents] are the indispensable parties to the action since parental authorities shifted to the latter from the moment the petition for adoption was filed. However, Sps. Tamargo claim that parental authority of Sps. Bundoc had not ceased nor been relinquished by the filing and granting of the petition since Adelberto was then living with his natural parents.

                RTC dismissed Sps. Tamargo’s complaint and ruled that Sps. Bundoc were not indispensable parties to the action. CA dismissed Sps. Tamargo’s petition, since they lost their right to appeal.

PARENTAL LIABILITY UNDER VICARIOUS LIABILITY OR “IMPUTED NEGLIGENCE”

• Law imposes civil liability upon father (or mother, if father is dead or incapacitated) for any damages that may be caused by a minor child who lives with them [NCC 2180]
•  – A person is not only liable for torts he committed, but also for torts committed by others with whom he has a certain relationship and for whom he is responsible
• Cangco cited to explain basis for doctrine of vicarious liability
• Legislature elected to limit extra-contractual liability to cases in which moral culpability can be directly imputed to persons to be charged; failure to exercise due care in one’s own acts, selecting, controlling agents or servants, controlling persons who, by reason of their status, occupy a position of dependency with respect to the person made liable for their conduct
• Civil law assumes that when an unemancipated child living with its parents commits a tortious act, the parents were negligent in the performance of their legal and natural duty to closely  supervise the child who is in their custody and control à Parental liability anchored upon parental authority coupled with presumed parental dereliction (willful negligence) in the discharge of the duties accompanying such authority

« SPS. BUNDOC [NATURAL PARENTS] WERE INDISPENSABLE PARTIES TO THE ACTION

• Adelberto’s voluntary act of shooting Jennifer gave rise to a cause of action on quasi-delict against him [NCC 2176]
• Shooting occurred when parental authority was still lodged in Sps. Bundoc [natural parents], so they are the indispensable parties to the action since they had actual custody of Adelberto
• Court did not give credence to the following contentions / legal bases of Sps. Bundoc
• PD 603 (Child and Youth Welfare Code), Article 36 – Decree of adoption shall be entered, which shall be effective as of the date the original petition was filed
• PD 603, Article 39 – An effect of adoption is the dissolution of the authority vested in the natural parents
• Court’s legal bases
• PD 603, Article 58 – Torts—Parents and guardians are responsible for the damage caused by the child under their parental authority in accordance with the Civil Code
• FC 221 – Parents […] exercising parental authority shall be civilly liable for the injuries and damages caused by the acts or omissions of their unemancipated children living in their company […]

« NO PRESUMPTION OF PARENTAL DERELICTION ON THE PART OF THE ADOPTING PARENTS COULD HAVE ARISEN SINCE ADELBERTO WAS NOT SUBJECT TO THEIR CONTROL AT THE TIME THE TORT WAS COMMITTED

• PD 603, Article 58 provides that parental authority is provisionally vested in the adopting parents during the period of trial custody because the adopting parents are given actual custody of the child during such period
• In this case, trial custody period had NOT YET BEGUN or had NOT YET BEEN COMPLETED at the time of the shooting; in any case, actual custody was then with his NATURAL PARENTS

PETITION GRANTED; CA DECISION REVERSED AND SET ASIDE; CASE REMANDED TO RTC

Canlas v. CA

SPS. OSMUNDO and ANGELINA CANLAS v. CA, ASIAN SAVINGS BANK, MAXIMO CONTRERAS and VICENTE MAÑOSCA / 2000 / Purisima / Petition for review on certiorari of a CA decision

Canlas and Mañosca decided to venture in business. To raise capital, Canlas executed an SPA authorizing Mañosca to mortgage 2 parcels of land. Eventually, Canlas agreed to sell these to Mañosca for 850k. Canlas delivered the TCTs, and Mañosca issued postdated checks (40k, 460k), but the check for 460k was not sufficiently funded.

            Mañosca was able to mortgage the parcels of land to an Atty. Magno with the help of impostors who misrepresented themselves as Sps. Canlas [fake couple]. Mañosca was granted a 500k loan by Asian Savings Bank [ASB] with the involvement of the fake couple. [TOWARDS THE END OF THE CASE, it was said that Canlas was with Mañosca when the latter submitted documents for the loan application. Mañosca showed Canlas several TCTs, which were collaterals for the loan, and Canlas was confident that his parcels of land were not involved. However, Mañosca used Sps. Canlas’ parcels of land as collaterals. A 200k check was released, and Canlas received it as payment of the parcels of land he sold to Mañosca.]

The loan was not paid so the mortgage was foreclosed. Canlas wrote to ASB, saying that the execution of the mortgage was without their authority, so steps should be taken to annul the mortgage. Canlas also wrote the sheriff to cancel the auction sale; however, the sale pushed through.

            Sps. Canlas instituted a case for annulment of deed of real estate mortgage [REM], with prayer for the issuance of a writ of preliminary injunction. RTC issued an order restraining the sheriff from issuing the Certificate of Sheriff’s Sale, and it annulled the REM. CA reversed RTC, holding that the REM was valid, that Sps. Canlas are not entitled to relief because of their negligence. CA said ASB exercised due diligence in granting loan application, and that it did not act with bad faith.

ASB DID NOT OBSERVE REQUIRED DILIGENCE IN VERIFYING COUPLE’S IDENTITY

• Degree of diligence required of banks more than that of a good father of a family in keeping with their responsibility to exercise necessary care and prudence in dealing even on a registered or titled property.
• Business of a bank affected with public interest. Banks hold in trust their depositors’ money, so banks should guard against loss due to negligence or bad faith. Hence, banks would be denied the protective mantle of the land registration law, which is accorded only to purchasers or mortgagees for value and in good faith.
• Impostors did not present any ID to show their identity, yet ASB acted on their representations simply based on the residence certificates, bearing signatures that matched the affixed signatures on the REM to Atty. Magno. [According to the testimony of ASB’s AVP, the loan was already approved (basis is Mañosca’s FS), and the REM was just used as basis to check the genuineness of the signatures.] What is worse is that the REM did not bear the spouses’ tax account number, as well as Angelina Canlas’ Community Tax Certificate.

LAST CLEAR CHANCE DOCTRINE APPLICABLE; ASB MUST SUFFER RESULTING LOSS

• LONG DEFINITION. Where both parties are negligent, but the negligent act of one is appreciably later in point of time than that of the other, or where it is impossible to determine whose fault or negligence brought about the occurrence of the incident, the one who had the last clear opportunity to avoid the impending harm but failed to do so, is chargeable with the consequence arising therefrom
• SHORT DEFINITION. The antecedent negligence of a person does not preclude recovery of damages caused by the supervening negligence of the latter, who had the last fair chance to prevent the impending harm by the exercise of due diligence.
• Assuming Canlas was negligent, what was his fault? He gave Mañosca the opportunity to perpetrate the fraud by entrusting to the latter TCTs of the parcels of land (even though Mañosca did not pay yet!). HOWEVER, ASB had the last clear chance to prevent the fraud, by faithfully complying with the bank requirement of ascertaining the identity of persons transacting with them.
• Canlas’ negligence made him undeserving of an award of attorney’s fees.

PROPERTY LESSON: A CONTRACT OF MORTGAGE MUST BE CONSTITUTED ONLY BY THE PROPERTY’S ABSOLUTE OWNER, SO A MORTGAGE CONSTITUTED BY AN IMPOSTOR IS VOID

Pilipinas Bank v. CA

PILIPINAS BANK v. CA and FLORENCIO REYES

1994 / Puno / Petition for review of a CA decision

The cause > Different categories > Proximate

Florencio Reyes issued postdated checks to Winner Industrial Corporation (20k~) and Vincent Tui (11k~) as payments for the purchased shoe materials and rubber shoes. To cover the face value of the checks, Reyes requested PCIB Money Shop’s manager to effect the withdrawal of 32k from his savings account and have it deposited with his current account with Pilipinas Bank. Roberto Santos was requested to make the deposit.

In depositing in the name of Reyes, Santos inquired from the teller Reyes’ current account number to complete the deposit slip he was accomplishing. He was informed that it was “815” so that was the number he placed on the slip. Noting that the account number coincided with the name “Florencio,” Efren Alagasi [Pilipinas Bank Current Account Bookkeeper] thought it was for Florencio Amador, so he posted the deposit in the account of Amador.

The check in favor of Winner was presented for payment. Since Reyes’ ledger indicated that his account only had 4k~ balance, the check was dishonored. This check was redeposited 4 days later but it was dishonored again. This also happened with the check issued in Tui’s favor. Tui returned the check to Reyes and demanded a cash payment of its face value.

Furious over the incident, Reyes proceeded to Pilipinas Bank and urged an immediate verification of his account. It was then that the bank noticed the error. The 32k posted in Amador’s account was transferred to Reyes’ account upon being cleared by the former that he did not effect a deposit of 32k. The bank then honored the check.

RTC ordered Pilipinas Bank to pay damages to Reyes, and the CA affirmed the RTC.

PROXIMATE CAUSE OF INJURY: ALAGASI’S NEGLIGENCE IN ERRONEOUSLY POSTING REYES’ CASH DEPOSIT IN THE NAME OF ANOTHER DEPOSITOR HAVING THE SAME FIRST NAME

• For NCC 2179 to apply, it must be established that Reyes’ own negligence was the immediate and proximate cause of his injury.
• Proximate cause – any cause which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces the result complained of and without which would not have occurred and from which it ought to have been foreseen or reasonably anticipated by a person of ordinary case that the injury complained of or some similar injury, would result therefrom as a natural and probable consequence.

Alagasi failed to exercise degree of care required in the performance of his duties

• He posted the cash deposit in Amador’s account from the assumption that the name Florencio appearing on the ledger without going through the full name, is the same Florencio stated in the deposit slip
• He should have continuously gone beyond mere assumption and proceeded with clear certainty, considering the amount involved and the repercussions it would create --> checks issued by Reyes were dishonored because his ledger indicated an insufficient balance

Mercury Drug v. Baking

MERCURY DRUG CORPORATION v. SEBASTIAN BAKING

2007 / Sandoval-Gutierrez / Petition for review on certiorari of CA decision and resolution

The cause > Different categories > Proximate

Sebastian Baking went to Dr. Cesar Sy’s clinic for a medical check-up. The next day, after undergoing several tests, Dr. Sy found that Baking’s blood sugar and triglyceride levels were above normal, so he gave him 2 medical prescriptions—Diamicron (blood sugar) and Benalize (triglyceride). Baking went to Mercury Drug Alabang branch to buy the medicines. However, the saleslady misread the prescription as Dormicum, a potent sleeping tablet, so that was what was sold to Baking. Unaware that he was given the wrong medicine, Baking took one Dormicum pill a day for 3 days.

On the 3^rd day of taking the medicine, Baking figured in a vehicular accident, as his car collided with Josie Peralta’s car. Baking fell asleep while driving, and he could not remember anything about the collision nor felt its impact. Suspecting that the tablet he took may have a bearing on his state at the time of the collision, he returned to Dr. Sy, who was shocked to find that what was sold to Baking was Dormicum.

Baking filed a complaint for damages against Mercury Drug. RTC rendered its decision in favor of Baking. CA affirmed RTC.

MERCURY DRUG EMPLOYEE GROSSLY NEGLIGENT IN SELLING DORMICUM

To sustain a claim based on NCC 2176, the following requisites must concur:

• Damage suffered by plaintiff
• Fault or negligence of defendant
• Connection of cause and effect between A & B

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. 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.

            Considering that a fatal mistake could be a matter of life and death for a buying patient, the employee should have been very cautious in dispensing medicines. She should have verified WON the medicine she gave was what was prescribed by Dr. Sy.

MERCURY DRUG ALSO LIABLE UNDER NCC 2180

It failed to prove that it exercised the due diligence of a good father of a family in the selection and supervision of the employee

PROXIMATE CAUSE OF THE ACCIDENT – NEGLIGENCE OF DRUGSTORE EMPLOYEE

• Proximate cause – 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; determined from the facts of each case, upon a combined consideration of logic, common sense, policy and precedent
• Vehicular accident could not have occurred had the drugstore employee been careful in reading the prescription; without the potent effects of Dormicum, a sleeping tablet, it was unlikely that Baking would fall asleep while driving his car, resulting in a collision

AWARD – 50k moral damages, 25k exemplary damages

Nikko Hotel v. Reyes

NIKKO HOTEL MANILA GARDEN and RUBY LIM v. ROBERTO REYES

2005 / Chico-Nazario / Petition for review on certiorari of CA decision and resolution

Defenses against charge of negligence > Plaintiff’s assumption of risk / volenti non fit injuria

Cause of action was one for damages brought under the human relations provisions of NCC.

Roberto Reyes[1] said he was spotted by his friend Dr. Violeta Filart in the hotel lobby who approached him. She invited him to join her in the GM’s birthday party at the penthouse. He carried Filart’s present—a basket of fruits. When dinner was ready, Reyes lined up at the table but to his embarrassment, he was stopped by Ruby Lim (Hotel Executive Secretary). In a loud voice and within the presence and hearing of other guests, Lim told him to leave—huwag ka nang kumain, hindi ka imbitado, bumaba ka na lang. Reyes tried to explain that he was invited by Dr. Filart, but the latter ignored him. He was escorted out by a police officer.

                Ruby Lim said she was the hotel’s executive secretary for 20 years, and that she was tasked to organize the GM’s birthday party. Mindful of the GM’s request to keep the party intimate, she requested 2 people to tell Reyes to leave, but Reyes still lingered. She had the chance to talk to Reyes when he was starting to eat, so she told him, Alam ninyo, hindi ho kayo dapat nandito. Pero total nakakuha na ho kayo ng pagkain, ubusin na lang ninyo at pagkatapos kung pwede lang po umalis na kayo. Reyes made a scene by screaming and he threatened to dump food on her.

                Dr. Filart said Reyes volunteered to carry the basket of fruits as he was going to the elevator as well. When they reached the penthouse, she told him to go down as he was not invited. She thought Reyes already left but she saw him at the bar. When there was a commotion, she saw Reyes shouting, and she ignored him, as she did not want the GM to think that she invited him.

                Reyes claimed damages (1M actual damages, 1M moral and/or exemplary damages, 200k attorney’s fees). RTC dismissed the complaint, giving more credence to Lim’s testimony. RTC also said that Reyes assumed the risk of being thrown out of the party as he was not invited. CA reversed RTC, believing Reyes’ version of the facts.    Lim and Hotel Nikko contend that they cannot be made liable for damages under the doctrine of volenti non fit injuria as Reyes assumed the risk of being asked to leave (and being embarrassed and humiliated in the process) as he was a “gate-crasher.”

DOCTRINE OF VOLENTI NON FIT INJURIA DOES NOT FIND APPLICATION IN THIS CASE

• Volenti non fit injuria (to which a person assents is not esteemed in law as injury)—Self-inflicted injury or consent to injury which precludes the recovery of damages by one who has knowingly and voluntarily exposed himself to danger, even if he is not negligent in doing so
• Even if Reyes assumed the risk of being asked to leave the party, petitioners were still under obligation to treat him fairly in order not to expose him to unnecessary ridicule and shame. [NCC 19, 21]

SC FINDS RTC’S FINDINGS OF FACT MORE CREDIBLE—Lim did not abuse her right to ask Reyes to leave the party as she talked to him politely and discreetly

• Lim, mindful of GM’s instruction to keep the party intimate, would naturally want to get rid of Reyes in the most hush-hush manner so as not to call attention
• Reyes was not able to explain why Lim would make a scene; Reyes admitted that when Lim talked to him, she was so close enough for him to kiss à unlikely that she would shout at him at such a close distance (SC also noted the fact that she has been in the hotel business long enough as to imbibe virtues of politeness and discreteness)
• Reyes was not able to present witnesses to back up his story; all his witnesses proved only that Filart invited him to the party

LIM AND HOTEL NIKKO NOT LIABLE TO PAY FOR DAMAGES UNDER NCC 19 AND 21

• NCC 19 (principle of abuse of rights) is not a panacea for all human hurts and social grievances; NCC 19’s object is to set certain standards which must be observed not only in the exercise of one’s rights but also in the performance of one’s duties; its elements are the following:
• Legal right or duty
• Exercised in bad faith
• For the sole intent of prejudicing or injuring another
• NCC 21 refers to acts contra bonus mores and has the following elements:
• There is an act which is legal
• But it is contrary to morals, good custom, public order, public policy
• And it is done with intent to injure
• Common theme running through NCC 19 and 21–act must be INTENTIONAL
• Reyes has not shown that Lim was driven by animosity against him; he had a lame argument: Lim, being single at 44, had a very strong bias and prejudice against him possibly influenced by her associates in her work at the hotel with foreign businessmen
• Manner by which Lim asked Reyes to leave was acceptable and humane

Any damage which Reyes might have suffered through Lim’s exercise of a legitimate right done within the bounds of propriety and good faith must be his to bear alone.

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[1] Actor of long standing; co-host of radio program; board member of Music Singer Composer chaired by Imelda Papin; showbiz coordinator of Citizen Crime Watch; 1992 official candidate for Bohol governor