Professional Documents
Culture Documents
Dra. dela Llana did not appear to have suffered from any other visible
physical injuries.6
The traffic investigation report dated March 30, 2000 identified the
truck driver as Joel Primero. It stated that Joel was recklessly
imprudent in driving the truck.7 Joel later revealed that his employer
was respondent Rebecca Biong, doing business under the name and
style of
Pongkay Tradingand was engaged in a gravel and sand
business.8
In the first week of May 2000, Dra. dela Llana began to feel mild to
moderate pain on the left side of her neck and shoulder. The pain
became more intense as days passed by. Her injury became more
severe. Her health deteriorated to the extent that she could no longer
move her left arm. On June 9, 2000, she consulted with Dr. Rosalinda
Milla, a rehabilitation medicine specialist, to examine her condition.
Dr. Milla told her that she suffered from a whiplash injury, an injury
caused by the compression of the nerve running to her left arm and
hand. Dr. Milla required her to undergo physical therapy to alleviate
her condition.
Dra. dela Llana
s condition did not improve despite three months of
extensive physical therapy.9 She then consulted other doctors,
namely, Drs. Willie Lopez, Leonor Cabral-Lim and Eric Flores, in
search for a cure. Dr. Flores, a neuro-surgeon, finally suggested that
she undergo a cervical spine surgery to release the compression of
her nerve. On October 19, 2000, Dr. Flores operated on her spine
and neck, between the C5 and the C6 vertebrae.10 The operation
released the impingement of the nerve, but incapacitated Dra. dela
Llana from the practice of her profession since June 2000 despite the
surgery.11
Dra. dela Llana, on October 16, 2000, demanded from Rebecca
compensation for her injuries, but Rebecca refused to pay.12 Thus,
on May 8, 2001, Dra. dela Llana sued Rebecca for damages before
the Regional Trial Court of Quezon City (RTC). She alleged that she
lost the mobility of her arm as a result of the vehicular accident and
claimed P150,000.00 for her medical expenses (as of the filing of the
complaint) and an average monthly income of P30,000.00 since June
2000. She further prayed for actual, moral, and exemplary damages
as well as attorney
s fees.13
In defense, Rebecca maintained that Dra. dela Llana had no cause of
action against her as no reasonable relation existed between the
vehicular accident and Dra. dela Llana
s injury. She pointed out that
Dra. dela Llana
s illness became manifest one month and one week
from the date of the vehicular accident. As a counterclaim, she
demanded the payment of attorney
s fees and costs of the suit.14
At the trial, Dra. dela Llana presented herself as an ordinary
witness15 and Joel as a hostile witness.16 Dra. dela Llana reiterated
that she lost the mobility of her arm because of the vehicular
accident. To prove her claim, she identified and authenticated
a medical certificate dated November 20, 2000 issued by Dr. Milla.
The medical certificate stated that Dra. dela Llana suffered from a
whiplash injury. It also chronicled her clinical history and physical
examinations.17Meanwhile, Joel testified that his truck hit the car
because the truck
s brakes got stuck.18
In defense, Rebecca testified that Dra. dela Llana was physically fit
and strong when they met several days after the vehicular accident.
She also asserted that she observed the diligence of a good father of
a family in the selection and supervision of Joel. She pointed out that
she required Joel to submit a certification of good moral character as
well as barangay, police, and NBI clearances prior to his employment.
She also stressed that she only hired Primero after he successfully
passed the driving skills test conducted by Alberto Marcelo, a licensed
driver-mechanic.19
Alberto also took the witness stand. He testified that he checked the
truck in the morning of March 30, 2000. He affirmed that the truck
was in good condition prior to the vehicular accident. He opined that
the cause of the vehicular accident was a damaged compressor.
According to him, the absence of air inside the tank damaged the
compressor.20chanroblesvirtualawlibrary
RTC Ruling
The RTC ruled in favor of Dra. dela Llana and held that the proximate
cause of Dra. dela Llana
s whiplash injury to be Joel
s reckless
reckless driving and the resulting collision in fact caused Dra. dela
Llana
s injury.
It also declared that courts cannot take judicial notice that vehicular
accidents cause whiplash injuries. It observed that Dra. dela Llana
did not immediately visit a hospital to check if she sustained internal
injuries after the accident. Moreover, her failure to present expert
witnesses was fatal to her claim. It also gave no weight to the
medical certificate. The medical certificate did not explain how and
why the vehicular accident caused the
injury.24chanroblesvirtualawlibrary
The Petition
Dra. dela Llana points out in her petition before this Court
that Nutrimix is inapplicable in the present case. She stresses
that Nutrimix involved the application of Article 1561 and 1566 of the
Civil Code, provisions governing hidden defects. Furthermore, there
was absolutely no evidence in Nutrimix that showed that poisonous
animal feeds were sold to the respondents in that case.
As opposed to the respondents in Nutrimix, Dra. dela Llana asserts
that she has established by preponderance of evidence that Joel
s
negligent act was the proximate cause of her whiplash injury. First,
pictures of her damaged car show that the collision was strong. She
posits that it can be reasonably inferred from these pictures that the
massive impact resulted in her whiplash injury. Second, Dr. Milla
categorically stated in the medical certificate that Dra. dela Llana
suffered from whiplash injury. Third, her testimony that the vehicular
accident caused the injury is credible because she was a surgeon.
Dra. dela Llana further asserts that the medical certificate has
probative value. Citing several cases, she posits that an
uncorroborated medical certificate is credible if
uncontroverted.25 She points out that expert opinion is unnecessary
if the opinion merely relates to matters of common knowledge. She
maintains that a judge is qualified as an expert to determine the
causation between Joel
s reckless driving and her whiplash injury.
Trial judges are aware of the fact that whiplash injuries are common
in vehicular collisions.
The Respondent
s Position
In her Comment,26 Rebecca points out that Dra. dela Llana raises a
factual issue which is beyond the scope of a petition for review
on certiorari under Rule 45 of the Rules of Court. She maintains that
the CA
s findings of fact are final and conclusive. Moreover, she
stresses that Dra. dela Llana
s arguments are not substantial to merit
this Court
s consideration.
The Issue
The sole issue for our consideration in this case is whether Joel
s
reckless driving is the proximate cause of Dra. dela Llana
s whiplash
injury.
Our Ruling
We find the petition unmeritorious.
The Supreme Court may review questions of fact in a petition for
review on certiorari when the findings of fact by the lower courts are
conflicting
The issue before us involves a question of fact and this Court is not a
trier of facts. As a general rule, the CA
s findings of fact are final and
conclusive and this Court will not review them on appeal. It is not the
function of this Court to examine, review or evaluate the evidence in
a petition for review on certiorari under Rule 45 of the Rules of Court.
We can only review the presented evidence, by way of exception,
when the conflict exists in findings of the RTC and the CA.27 We see
this exceptional situation here and thus accordingly examine the
relevant evidence presented before the trial court.
Dra. dela Llana failed to establish her case by preponderance of
evidence
Article 2176 of the Civil Code provides that
[w]hoever 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
that Joel
s negligence, in its natural and continuous sequence,
unbroken by any efficient intervening cause, produced her whiplash
injury, and without which her whiplash injury would not have
occurred. 36
Notably, Dra. dela Llana anchors her claim mainly on three pieces of
evidence: (1) the pictures of her damaged car, (2) the medical
certificate dated November 20, 2000, and (3) her testimonial
evidence. However, none of these pieces of evidence show the causal
relation between the vehicular accident and the whiplash injury. In
other words, Dra. dela Llana, during trial, did not adduce the factum
probans or the evidentiary facts by which the factum probandum or
the ultimate fact can be established, as fully discussed
below.37ChanRoblesVirtualawlibrary
A. The pictures of the damaged car only demonstrate the impact of
the collision
Dra. dela Llana contends that the pictures of the damaged car show
that the massive impact of the collision caused her whiplash injury.
We are not persuaded by this bare claim. Her insistence that these
pictures show the causation grossly belies common logic. These
pictures indeed demonstrate the impact of the collision. However, it is
a far-fetched assumption that the whiplash injury can also be inferred
from these pictures.
B. The medical certificate cannot be considered because it was not
admitted in evidence
Furthermore, the medical certificate, marked as Exhibit
Hduring
trial, should not be considered in resolving this case for the reason
that it was not admitted in evidence by the RTC in an order dated
September 23, 2004.38 Thus, the CA erred in even considering this
documentary evidence in its resolution of the case. It is a basic rule
that evidence which has not been admitted cannot be validly
considered by the courts in arriving at their judgments.
However, even if we consider the medical certificate in the disposition
of this case, the medical certificate has no probative value for being
hearsay. It is a basic rule that evidence, whether oral or documentary,
Q:
Did your physician tell you, more or less, what was the reason why
you were feeling that pain in your left arm?
A:
Well, I got a certificate from her and in that certificate, she stated
that my condition was due to a compression of the nerve, which
supplied my left arm and my left hand.
Court:
By the way, what is the name of this physician, Dra.?
Witness:
Her name is Dra. Rosalinda Milla. She is a Rehabilitation Medicine
Specialist.
Atty. Yusingco:
You mentioned that this Dra. Rosalinda Milla made or issued a
medical certificate. What relation does this medical certificate,
September 2, 1994
ROMERO, J.:
In Criminal Case No. C-3217 filed before Branch 16, RTC Roxas City,
Rogelio Bayotas y Cordova was charged with Rape and eventually
convicted thereof on June 19, 1991 in a decision penned by Judge
Manuel E. Autajay. Pending appeal of his conviction, Bayotas died on
February 4, 1992 at
the National Bilibid Hospital due to cardio respiratory arrest
secondary to hepatic encephalopathy secondary to hipato carcinoma
gastric malingering. Consequently, the Supreme Court in its
Resolution of May 20, 1992 dismissed the criminal aspect of the
appeal. However, it required the Solicitor General to file its comment
with regard to Bayotas' civil liability arising from his commission of
the offense charged.
In his comment, the Solicitor General expressed his view that the
death of accused-appellant did not extinguish his civil liability as a
result of his commission of the offense charged. The Solicitor General,
relying on the case ofPeople v Sendaydiego 1 insists that the appeal
should still be resolved for the purpose of reviewing his conviction by
the lower court on which the civil liability is based.
Counsel for the accused-appellant, on the other hand, opposed the
view of the Solicitor General arguing that the death of the accused
while judgment of conviction is pending appeal extinguishes both his
criminal and civil penalties. In support of his position, said counsel
invoked the ruling of the Court of Appeals in People v Castillo and
Ocfemia 2 which held that the civil obligation in a criminal case takes
root in the criminal liability and, therefore, civil liability is extinguished
if accused should die before final judgment is rendered.
We are thus confronted with a single issue: Does death of the
accused pending appeal of his conviction extinguish his civil liability?
In the aforementioned case of People v Castillo, this issue was settled
in the affirmative. This same issue posed therein was phrased thus:
Does the death of Alfredo Castillo affect both his criminal
responsibility and his civil liability as a consequence of the alleged
crime?
It resolved this issue thru the following disquisition:
xxx
xxx
former, the issue decided by this court was: Whether the civil liability
of one accused of physical injuries who died before final judgment is
extinguished by his demise to the extent of barring any claim
therefore against his estate. It was the contention of the
administrator-appellant therein that the death of the accused prior to
final judgment extinguished all criminal and civil liabilities resulting
from the offense, in view of Article 89, paragraph 1 of the Revised
Penal Code. However, this court ruled therein:
We see no merit in the plea that the civil liability has been
extinguished, in view of the provisions of the Civil Code of the
Philippines of 1950 (Rep. Act No. 386) that became operative
eighteen years after the revised Penal Code. As pointed out by the
Court below, Article 33 of the Civil Code establishes a civil action for
damages on account of physical injuries, entirely separate and
distinct from the criminal action.
Art. 33.
In cases of defamation, fraud, and physical injuries, a
civil action for damages, entirely separate and distinct from the
criminal action, may be brought by the injured party. Such civil action
shall proceed independently of the criminal prosecution, and shall
require only a preponderance of evidence.
Assuming that for lack of express reservation, Belamala's civil action
for damages was to be considered instituted together with the
criminal action still, since both proceedings were terminated without
final adjudication, the civil action of the offended party under Article
33 may yet be enforced separately.
In Torrijos, the Supreme Court held that:
xxx
xxx
xxx
in instant case wherein the civil liability springs neither solely nor
originally from the crime itself but from a civil contract of purchase
and sale. (Emphasis ours)
xxx
xxx
xxx
In the above case, the court was convinced that the civil liability of
the accused who was charged with estafa could likewise trace its
genesis to Articles 19, 20 and 21 of the Civil Code since said accused
had swindled the first and second vendees of the property subject
matter of the contract of sale. It therefore concluded: "Consequently,
while the death of the accused herein extinguished his criminal
liability including fine, his civil liability based on the laws of human
relations remains."
Thus it allowed the appeal to proceed with respect to the civil liability
of the accused, notwithstanding the extinction of his criminal liability
due to his death pending appeal of his conviction.
To further justify its decision to allow the civil liability to survive, the
court relied on the following ratiocination: Since Section 21, Rule 3 of
the Rules of Court 9 requires the dismissal of all money claims
against the defendant whose death occurred prior to the final
judgment of the Court of First Instance (CFI), then it can be inferred
that actions for recovery of money may continue to be heard on
appeal, when the death of the defendant supervenes after the CFI
had rendered its judgment. In such case, explained this tribunal, "the
name of the offended party shall be included in the title of the case
as plaintiff-appellee and the legal representative or the heirs of the
deceased-accused should be substituted as defendants-appellants."
It is, thus, evident that as jurisprudence evolved from Castillo to
Torrijos, the rule established was that the survival of the civil liability
depends on whether the same can be predicated on sources of
obligations other than delict. Stated differently, the claim for civil
liability is also extinguished together with the criminal action if it were
solely based thereon, i., civil liability ex delicto.
However, the Supreme Court in People v. Sendaydiego, et
al. 10 departed from this long-established principle of law. In this
The accountable public officer may still be civilly liable for the funds
improperly disbursed although he has no criminal liability (U.S. vs.
Elvina, 24 Phil. 230; Philippine National Bank vs. Tugab, 66 Phil. 583).
In view of the foregoing, notwithstanding the dismissal of the appeal
of the deceased Sendaydiego insofar as his criminal liability is
concerned, the Court Resolved to continue exercising appellate
jurisdiction over his possible civil liability for the money claims of the
Province of Pangasinan arising from the alleged criminal acts
complained of, as if no criminal case had been instituted against him,
thus making applicable, in determining his civil liability, Article 30 of
the Civil Code . . . and, for that purpose, his counsel is directed to
inform this Court within ten (10) days of the names and addresses of
the decedent's heirs or whether or not his estate is under
administration and has a duly appointed judicial administrator. Said
heirs or administrator will be substituted for the deceased insofar as
the civil action for the civil liability is concerned (Secs. 16 and 17,
Rule 3, Rules of Court).
Succeeding cases 11 raising the identical issue have maintained
adherence to our ruling in Sendaydiego; in other words, they were a
reaffirmance of our abandonment of the settled rule that a civil
liability solely anchored on the criminal (civil liability ex delicto) is
extinguished upon dismissal of the entire appeal due to the demise of
the accused.
But was it judicious to have abandoned this old ruling? A reexamination of our decision in Sendaydiego impels us to revert to the
old ruling.
To restate our resolution of July 8, 1977 in Sendaydiego: The
resolution of the civil action impliedly instituted in the criminal action
can proceed irrespective of the latter's extinction due to death of the
accused pending appeal of his conviction, pursuant to Article 30 of
the Civil Code and Section 21, Rule 3 of the Revised Rules of Court.
Article 30 of the Civil Code provides:
When a separate civil action is brought to demand civil liability arising
from a criminal offense, and no criminal proceedings are instituted
xxx
xxx
separate one, the prosecution of which does not even necessitate the
filing of criminal proceedings. 12One would be hard put to pinpoint
the statutory authority for such a transformation. It is to be borne in
mind that in recovering civil liability ex delicto, the same has perforce
to be determined in the criminal action, rooted as it is in the court's
pronouncement of the guilt or innocence of the accused. This is but
to render fealty to the intendment of Article 100 of the Revised Penal
Code which provides that "every person criminally liable for a felony
is also civilly liable." In such cases, extinction of the criminal action
due to death of the accused pending appeal inevitably signifies the
concomitant extinction of the civil liability. Mors Omnia Solvi. Death
dissolves all things.
In sum, in pursuing recovery of civil liability arising from crime, the
final determination of the criminal liability is a condition precedent to
the prosecution of the civil action, such that when the criminal action
is extinguished by the demise of accused-appellant pending appeal
thereof, said civil action cannot survive. The claim for civil liability
springs out of and is dependent upon facts which, if true, would
constitute a crime. Such civil liability is an inevitable consequence of
the criminal liability and is to be declared and enforced in the criminal
proceeding. This is to be distinguished from that which is
contemplated under Article 30 of the Civil Code which refers to the
institution of a separate civil action that does not draw its life from a
criminal proceeding. The Sendaydiego resolution of July 8, 1977,
however, failed to take note of this fundamental distinction when it
allowed the survival of the civil action for the recovery of civil
liability ex delicto by treating the same as a separate civil action
referred to under Article 30. Surely, it will take more than just a
summary judicial pronouncement to authorize the conversion of said
civil action to an independent one such as that contemplated under
Article 30.
Ironically however, the main decision in Sendaydiego did not apply
Article 30, the resolution of July 8, 1977 notwithstanding. Thus, it
was held in the main decision:
Sendaydiego's appeal will be resolved only for the purpose of
showing his criminal liability which is the basis of the civil liability for
which his estate would be liable. 13
In other words, the Court, in resolving the issue of his civil liability,
concomitantly made a determination on whether Sendaydiego, on the
basis of evidenced adduced, was indeed guilty beyond reasonable
doubt of committing the offense charged. Thus, it upheld
Sendaydiego's conviction and pronounced the same as the source of
his civil liability. Consequently, although Article 30 was not applied in
the final determination of Sendaydiego's civil liability, there was a
reopening of the criminal action already extinguished which served as
basis for Sendaydiego's civil liability. We reiterate: Upon death of the
accused pending appeal of his conviction, the criminal action is
extinguished inasmuch as there is no longer a defendant to stand as
the accused; the civil action instituted therein for recovery of civil
liability ex delicto is ipso facto extinguished, grounded as it is on the
criminal.
Section 21, Rule 3 of the Rules of Court was also invoked to serve as
another basis for the Sendaydiego resolution of July 8, 1977. In citing
Sec. 21, Rule 3 of the Rules of Court, the Court made the inference
that civil actions of the type involved in Sendaydiego consist of
money claims, the recovery of which may be continued on appeal if
defendant dies pending appeal of his conviction by holding his estate
liable therefor. Hence, the Court's conclusion:
"When the action is for the recovery of money" "and the defendant
dies before final judgment in the court of First Instance, it shall be
dismissed to be prosecuted in the manner especially provided" in
Rule 87 of the Rules of Court (Sec. 21, Rule 3 of the Rules of Court).
The implication is that, if the defendant dies after a money judgment
had been rendered against him by the Court of First Instance, the
action survives him. It may be continued on appeal.
Sadly, reliance on this provision of law is misplaced. From the
standpoint of procedural law, this course taken inSendaydiego cannot
be sanctioned. As correctly observed by Justice Regalado:
xxx
xxx
xxx
Law 20
b)
Contracts
c)
Quasi-contracts
d)
...
e)
Quasi-delicts
3.
Where the civil liability survives, as explained in Number 2
above, an action for recovery therefor may be pursued but only by
way of filing a separate civil action and subject to Section 1, Rule 111
of the 1985 Rules on Criminal Procedure as amended. This separate
civil action may be enforced either against the executor/administrator
or the estate of the accused, depending on the source of obligation
upon which the same is based as explained above.
4.
Finally, the private offended party need not fear a forfeiture
of his right to file this separate civil action by prescription, in cases
where during the prosecution of the criminal action and prior to its
extinction, the private-offended party instituted together therewith
the civil action. In such case, the statute of limitations on the civil
liability is deemed interrupted during the pendency of the criminal
case, conformably with provisions of Article 1155 21 of the Civil Code,
that should thereby avoid any apprehension on a possible privation of
right by prescription. 22
Applying this set of rules to the case at bench, we hold that the death
of appellant Bayotas extinguished his criminal liability and the civil
liability based solely on the act complained of, i., rape. Consequently,
the appeal is hereby dismissed without qualification.
WHEREFORE, the appeal of the late Rogelio Bayotas is DISMISSED
with costs de oficio.
SO ORDERED.
SECOND DIVISION
ROMERO, J.:
This case originated from a libel suit filed by then Assemblyman
Antonio V. Raquiza against then Manila Mayor Antonio J. Villegas,
who allegedly publicly imputed to him acts constituting violations of
the Anti-Graft and Corrupt Practices Act. He did this on several
occasions in August 1968 through (a) a speech before the Lion's Club
of Malasiqui, Pangasinan on August 10; (b) public statements in
Manila on August 13 and in Davao on August 17, which was coupled
with a radio-TV interview; and (c) a public statement shortly prior to
his appearance before the Senate Committee on Public Works (the
Committee) on August 20 to formally submit a letter-complaint
implicating Raquiza, among other government officials.
The Committee, however, observed that all the allegations in the
complaint were based mainly on the uncorroborated testimony of a
b)
c)
Forty-nine Million Eight Hundred Thousand Pesos
(P49,800,00000) as exemplary damages and
d)
Fortunately, this Court has already settled this issue with the
promulgation of the case of People v. Bayotas (G.R. No. 102007) on
September 2, 1994, 4 viz
It is thus evident that as jurisprudence evolved from Castillo 5 to
Torrijos, 6 the rule established was thatthe survival of the civil liability
depends on whether the same can be predicated on sources of
obligations other than delict. Stated differently, the claim for civil
liability is also extinguished together with the criminal action if it were
solely based thereon, i., civil liability ex delicto
xxx
xxx
xxx
xxx
xxx
a)
Law
b)
Contracts
c)
Quasi-contracts
d)
xxx
e)
Quasi-delicts
xxx
xxx
3.
Where the civil liability survives, as explained in Number 2
above, an action for recovery therefor may be pursued but only by
way of filing a separate civil action and subject to Section 1, Rule 111
of the 1985 Rules on Criminal Procedure as amended 8 This separate
civil action may be enforced either against the executor/administrator
o(f) the estate of the accused, depending on the source of obligation
upon which the same is based as explained above
4.
Finally, the private offended party need not fear a forfeiture
of his right to file this separate civil action by prescription, in cases
where during the prosecution of the criminal action and prior to its
extinction, the private offended party instituted together therewith
the civil action. In such case, the statute of limitations on the civil
liability is deemed interrupted during the pendency of the criminal
case, conformably with (the) provisions of Article 1155 of the Civil
Code, that should thereby avoid any apprehension on a possible
privation of right by prescription. (Emphasis supplied).
The source of Villegas' civil liability in the present case is the
felonious act of libel he allegedly committed. Yet, this act could also
be deemed a quasi-delict within the purview of Article 33 9 in relation
to Article 1157 of the Civil Code. If the Court ruled in Bayotas that
the death of an accused during the pendency of his appeal
extinguishes not only his criminal but also his civil liability unless the
latter can be predicated on a source of obligation other than the act
or omission complained of, with more reason should it apply to the
case at bar where the accused died shortly after the prosecution had
rested its case and before he was able to submit his memorandum
and all this before any decision could even be reached by the trial
court.
Sec.17.
Death of party. After a party dies and the claim is not
there extinguished, the court shall order upon proper notice the legal
representative of the deceased to appear and to be substituted for
the deceased, within a period of thirty (30) days, or within such time
as may begranted. . . . The heirs of the deceased may be allowed to
be for the deceased, without requiring the appointment of an
executor or administrator and the court may appoint guardian ad
litem for the minor heirs.
Rule 87
Sec. 1.
Actions which may and which may not be brought
against or executor or administrator. No action upon a claim for
the recovery of money or debt or interest thereon shall be
commenced against the executor or administrator; but actions to
recover real or personal property, or an interest therein, from the
estate, or to enforce a lien thereon, and actions to recover damages
for an injury to person or property, real or personal may be
commenced against him.
Accordingly, the Court sees no more necessity in resolving the other
issues used by both parties in these petitions.
WHEREFORE, the petition in G.R. No. 82562 is GRANTED and the
petition in G.R. No. 82592 is DENIED. The decisions of the Court of
Appeals in CA-G.R. CR No. 82186 dated March 15, 1988, and of the
Manila Regional Trial Court, Branch 44, dated March 7, 1985, as
amended, are hereby REVERSED and SET ASIDE, without prejudice
to the right of the private offended party Antonio V Raquiza, to file
the appropriate civil action for damages against the executor or
administrator of the estate or the heirs of the late Antonto J Villegas
in accordance with the foregoing procedure.
SO ORDERED.
Factual Antecedents
Petitioner Metropolitan Bank and Trust Company is a domestic
banking corporation duly organized and existing under the laws of
the Philippines.6 Respondent Ana Grace Rosales (Rosales) is the
owner of China Golden Bridge Travel Services,7 a travel
agency.8 Respondent Yo Yuk To is the mother of respondent
Rosales.9
In 2000, respondents opened a Joint Peso Account10 with petitioner
s
Pritil-Tondo Branch.11 As of August 4, 2004, respondents
Joint Peso
Account showed a balance of P
In May 2002, respondent Rosales accompanied her client Liu Chiu
Fang, a Taiwanese National applying for a retiree
s visa from the
Philippine Leisure and Retirement Authority (PLRA), to petitioner
s
branch in Escolta to open a savings account, as required by the
PLRA.13 Since Liu Chiu Fang could speak only in Mandarin,
respondent Rosales acted as an interpreter for her.14
On March 3, 2003, respondents opened with petitioner
s Pritil-Tondo
Branch a Joint Dollar Account15 with an initial deposit of
US$14,000.00.16
On July 31, 2003, petitioner issued a "Hold Out" order against
respondents
accounts.17
On September 3, 2003, petitioner, through its Special Audit
Department Head Antonio Ivan Aguirre, filed before the Office of the
Prosecutor of Manila a criminal case for Estafa through False
Pretences, Misrepresentation, Deceit, and Use of Falsified Documents,
docketed as I.S. No. 03I-25014,18 against respondent
Rosales.19 Petitioner accused respondent Rosales and an unidentified
woman as the ones responsible for the unauthorized and fraudulent
withdrawal of US$75,000.00 from Liu Chiu Fang
s dollar account with
petitioner
s Escolta Branch.20Petitioner alleged that on February 5,
2003, its branch in Escolta received from the PLRA a Withdrawal
Clearance for the dollar account of Liu Chiu Fang;21 that in the
afternoon of the same day, respondent Rosales went to petitioner
s
Escolta Branch to inform its Branch Head, Celia A. Gutierrez
(Gutierrez), that Liu Chiu Fang was going to withdraw her dollar
deposits in cash;22 that Gutierrez told respondent Rosales to come
back the following day because the bank did not have enough
dollars;23 that on February 6, 2003, respondent Rosales
accompanied an unidentified impostor of Liu Chiu Fang to the
bank;24 that the impostor was able to withdraw Liu Chiu Fang
s
dollar deposit in the amount of US$75,000.00;25 that on March 3,
2003, respondents opened a dollar account with petitioner; and that
the bank later discovered that the serial numbers of the dollar notes
deposited by respondents in the amount of US$11,800.00 were the
same as those withdrawn by the impostor.26
Respondent Rosales, however, denied taking part in the fraudulent
and unauthorized withdrawal from the dollar account of Liu Chiu
Fang.27 Respondent Rosales claimed that she did not go to the bank
on February 5, 2003.28Neither did she inform Gutierrez that Liu Chiu
Fang was going to close her account.29 Respondent Rosales further
claimed that after Liu Chiu Fang opened an account with petitioner,
she lost track of her.30 Respondent Rosales
version of the events
that transpired thereafter is as follows:
On February 6, 2003, she received a call from Gutierrez informing her
that Liu Chiu Fang was at the bank to close her account.31 At noon
of the same day, respondent Rosales went to the bank to make a
transaction.32 While she was transacting with the teller, she caught a
glimpse of a woman seated at the desk of the Branch Operating
Officer, Melinda Perez (Perez).33 After completing her transaction,
respondent Rosales approached Perez who informed her that Liu Chiu
Fang had closed her account and had already left.34 Perez then gave
a copy of the Withdrawal Clearance issued by the PLRA to
respondent Rosales.35 On June 16, 2003, respondent Rosales
received a call from Liu Chiu Fang inquiring about the extension of
her PLRA Visa and her dollar account.36 It was only then that Liu
Chiu Fang found out that her account had been closed without her
knowledge.37 Respondent Rosales then went to the bank to inform
Gutierrez and Perez of the unauthorized withdrawal.38 On June 23,
2003, respondent Rosales and Liu Chiu Fang went to the PLRA Office,
where they were informed that the Withdrawal Clearance was issued
on the basis of a Special Power of Attorney (SPA) executed by Liu
Chiu Fang in favor of a certain Richard So.39 Liu Chiu Fang, however,
Issues
Hence, this recourse by petitioner raising the following issues:
A. THE [CA] ERRED IN RULING THAT THE "HOLD-OUT" PROVISION
IN THE APPLICATION AND AGREEMENT FOR DEPOSIT ACCOUNT
DOES NOT APPLY IN THIS CASE.
B. THE [CA] ERRED WHEN IT RULED THAT PETITIONER
S
EMPLOYEES WERE NEGLIGENT IN RELEASING LIU CHIU FANG
S
FUNDS.
C. THE [CA] ERRED IN AFFIRMING THE AWARD OF MORAL
DAMAGES, EXEMPLARY DAMAGES, AND ATTORNEY
S FEES.63
Petitioner
s Arguments
Petitioner contends that the CA erred in not applying the "Hold Out"
clause stipulated in the Application and Agreement for Deposit
Account.64 It posits that the said clause applies to any and all kinds
of obligation as it does not distinguish between obligations arising ex
contractu or ex delictu.65 Petitioner also contends that the fraud
committed by respondent Rosales was clearly established by
evidence;66 thus, it was justified in issuing the "Hold-Out"
order.67 Petitioner likewise denies that its employees were negligent
in releasing the dollars.68 It claims that it was the deception
employed by respondent Rosales that caused petitioner
s employees
to release Liu Chiu Fang
s funds to the impostor.69
Lastly, petitioner puts in issue the award of moral and exemplary
damages and attorney
s fees. It insists that respondents failed to
prove that it acted in bad faith or in a wanton, fraudulent, oppressive
or malevolent manner.70
RespondentsArguments
Respondents, on the other hand, argue that there is no legal basis for
petitioner to withhold their deposits because they have no monetary
obligation to petitioner.71 They insist that petitioner miserably failed
under the control of the Bank, whether left with the Bank for
safekeeping or otherwise, or coming into the hands of the Bank in
any way, for so much thereof as will be sufficient to pay any or all
obligations incurred by Depositor under the Account or by reason of
any other transactions between the same parties now existing or
hereafter contracted, to sell in any public or private sale any of such
properties or securities of Depositor, and to apply the proceeds to the
payment of any Depositor
s obligations heretofore mentioned.
xxxx
JOINT ACCOUNT
xxxx
The Bank may, at any time in its discretion and with or without notice
to all of the Depositors, assert a lien on any balance of the Account
and apply all or any part thereof against any indebtedness, matured
or unmatured, that may then be owing to the Bank by any or all of
the Depositors. It is understood that if said indebtedness is only
owing from any of the Depositors, then this provision constitutes the
consent by all of the depositors to have the Account answer for the
said indebtedness to the extent of the equal share of the debtor in
the amount credited to the Account.78
Petitioner
s reliance on the "Hold Out" clause in the Application and
Agreement for Deposit Account is misplaced.
The "Hold Out" clause applies only if there is a valid and existing
obligation arising from any of the sources of obligation enumerated in
Article 115779 of the Civil Code, to wit: law, contracts, quasicontracts, delict, and quasi-delict. In this case, petitioner failed to
show that respondents have an obligation to it under any law,
contract, quasi-contract, delict, or quasi-delict. And although a
criminal case was filed by petitioner against respondent Rosales, this
is not enough reason for petitioner to issue a "Hold Out" order as the
case is still pending and no final judgment of conviction has been
rendered against respondent Rosales. In fact, it is significant to note
that at the time petitioner issued the "Hold Out" order, the criminal
complaint had not yet been filed. Thus, considering that respondent
Rosales is not liable under any of the five sources of obligation, there
was no legal basis for petitioner to issue the "Hold Out" order.
Accordingly, we agree with the findings of the RTC and the CA that
the "Hold Out" clause does not apply in the instant case.
In view of the foregoing, we find that petitioner is guilty of breach of
contract when it unjustifiably refused to release respondentsdeposit
despite demand. Having breached its contract with respondents,
petitioner is liable for damages.
Respondents are entitled to moral and
exemplary damages and attorney
s fees.1wphi1
In cases of breach of contract, moral damages may be recovered
only if the defendant acted fraudulently or in bad faith,80 or is "guilty
of gross negligence amounting to bad faith, or in wanton disregard of
his contractual obligations."81
In this case, a review of the circumstances surrounding the issuance
of the "Hold Out" order reveals that petitioner issued the "Hold Out"
order in bad faith. First of all, the order was issued without any legal
basis. Second, petitioner did not inform respondents of the reason for
the "Hold Out."82 Third, the order was issued prior to the filing of the
criminal complaint. Records show that the "Hold Out" order was
issued on July 31, 2003,83 while the criminal complaint was filed only
on September 3, 2003.84 All these taken together lead us to
conclude that petitioner acted in bad faith when it breached its
contract with respondents. As we see it then, respondents are
entitled to moral damages.
As to the award of exemplary damages, Article 222985 of the Civil
Code provides that exemplary damages may be imposed "by way of
example or correction for the public good, in addition to the moral,
temperate, liquidated or compensatory damages." They are awarded
only if the guilty party acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner.86
In this case, we find that petitioner indeed acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner when it
refused to release the deposits of respondents without any legal basis.
We need not belabor the fact that the banking industry is impressed
with public interest.87 As such, "the highest degree of diligence is
expected, and high standards of integrity and performance are even
required of it."88 It must therefore "treat the accounts of its
depositors with meticulous care and always to have in mind the
fiduciary nature of its relationship with them."89 For failing to do this,
an award of exemplary damages is justified to set an example.
The award of attorney's fees is likewise proper pursuant to paragraph
1, Article 220890 of the Civil Code.
In closing, it must be stressed that while we recognize that petitioner
has the right to protect itself from fraud or suspicions of fraud, the
exercise of his right should be done within the bounds of the law and
in accordance with due process, and not in bad faith or in a wanton
disregard of its contractual obligation to respondents.
WHEREFORE, the Petition is hereby DENIED. The assailed April 2,
2008 Decision and the May 30, 2008 Resolution of the Court of
Appeals in CA-G.R. CV No. 89086 are hereby AFFIRMED. SO
ORDERED.
MARIANO C. DEL CASTILLO
Associate Justice
WE CONCUR:
ANTONIO T. CARPIO
Associate Justice
Chairperson
ARTURO D. BRION
Associate JusticeJOSE PORTUGAL PEREZ
Associate Justice
ESTELA M. PERLAS-BERNABE
Associate Justice
AT TE STA TION
I attest that the conclusions in the above Decision had been reached
in consultation before the case was assigned to the writer of the
opinion of the Court
s Division.
ANTONIO T CARPIO
Associate Justice
Chairperson
C E R T I F IC A T I O N
Pursuant to Section 13, Article VIII of the Constitution and the
Division Chairperson s Attestation, I certify that the conclusions in the
above Decision had been reached in consultation before the case was
assigned to the writer of the opinion of the Court
s Division.
MARIA LOURDES P. A. SERENO
Chief Justice