Somewhere Albacite

Section: Plato

A. Citytrust Banking Corporation (Petitioner) v. Carlos Romulo N. Cruz (Respondent)

GR No. 157049

The respondent, an architect and businessman, maintained savings and checking

accounts at the petitioner’s Loyola Heights Branch. The savings account was
considered closed due to the oversight committed by one of the latter’s tellers. The
closure resulted in the extreme embarrassment of the respondent, for checks that he
had issued could not be honored although his savings account was sufficiently funded
and the accounts were maintained under the petitioner’s check-o-matic arrangement
(whereby the current account was maintained at zero balance and the funds from the
savings account were automatically transferred to the current account to cover checks
issued by the depositor like the respondent).

Unmoved by the petitioner’s apologies and the adjustment made on his accounts by its
employees, the respondent sued in the RTC to claim damages from the petitioner.

The RTC found that the petitioner had failed to properly supervise its teller; and that the
petitioner’s negligence had made the respondent suffer serious anxiety, embarrassment
and humiliation, entitling him to damages.

The CA said that the negligence of the petitioner’s personnel was the proximate cause
that had set in motion the events leading to the damage caused to the respondent;
hence, the RTC correctly opined that "while a bank is not expected to be infallible, it
must bear the blame for not discovering the mistake of its teller for lack of proper
supervision."

Issue:

Whether the RTC erred in ordering the petitioner to pay moral and exemplary damages.

Rule:

No. Unquestionably, the petitioner, being a banking institution, had the direct obligation
to supervise very closely the employees handling its depositors’ accounts, and should
always be mindful of the fiduciary nature of its relationship with the depositors. If it fell
short of that obligation, it should bear the responsibility for the consequences to the
depositors, who, like the respondent, suffered particular embarrassment and disturbed
peace of mind from the negligence in the handling of the accounts.

The CA properly affirmed the RTC’s award of exemplary damages and attorney’s fees. It
is never overemphasized that the public always relies on a bank’s profession of
diligence and meticulousness in rendering irreproachable service. Its failure to exercise
diligence and meticulousness warranted its liability for exemplary damages and for
reasonable attorney’s fees.

The Supreme Court denied the petition and affirmed CA’s decision.

B. Metropolitan Bank and Trust Company (Petitioner) v. Larry Marinas (Respondent)

GR No. 179105

Respondent Larry Mariñas opened a personal dollar savings account by depositing

US$100,000.00 with petitioner Metropolitan Bank and Trust Company. On April 13,
1998, respondent obtained a loan from petitioner in the amount of P2,300,000.00,
evidenced by Promissory Note No. 355873. From the initial deposit of US$100,000.00,
respondent withdrew US$67,227.95,then deposited it under Account No. 0-26400171-6
(Foreign Currency Deposit [FCD] No. 505671), which he used as security for
the P2,300,000.00 loan.

Respondent subsequently opened two more foreign currency accounts ― Account No.
0-26400244-5 (FCD No. 505688) and Account No. 0-264-00357-3 (FCD No. 739809) ―
depositing therein US$25,000.00 and US$17,000.00, respectively. On April 30, 1999,
respondent obtained a second loan of P645,150.00, secured by Account No. 0-264-
00357-3 (FCD No. 739809).

When he inquired about his dollar deposits, respondent discovered that petitioner made
deductions against the former’s accounts. Respondent, through his counsel, demanded
from petitioner a proper and complete accounting of his dollar deposits, and the
restoration of his deposits to their proper amount without the deductions. In response,
petitioner explained that the deductions made from respondent’s dollar accounts were
used to pay the interest due on the latter’s loan with the former. These deductions,
according to petitioner, were authorized by respondent through the Deeds of
Assignment with Power of Attorney voluntarily executed by respondent.

Respondent filed a case claiming that when he signed the loan documents, they were all
in blank and they were actually filled up by petitioner. Aside from the complete
accounting of his dollar accounts and the restoration of the true amounts of his deposits,
respondent sought the payment of P400,000.00 as moral damages, P100,000.00 as
exemplary damages, and P100,000.00 as attorney’s fees.

On its part, petitioner insisted that respondent freely and voluntarily signed the loan
documents. While admitting the full payment of respondent’s P2,300,000.00
and P645,150.00 loans, petitioner claimed that the payments were made using the
former’s US$67,227.95, US$25,000.00, and US$17,000.00 time deposits. Accordingly,
there was nothing to account for and restore.

The RTC and CA rendered a decision in favor of respondent, ordering the said
defendants to account for the dollar deposits of the plaintiff in the amounts of
US$30,000.00 and US$25,000.00, respectively, and then return the same, including the
interests due thereon reckoned from 31 May 1999 until fully paid.
Issue:

Whether the petitioner is liable to respondent for moral and exemplary damages, as
well as attorney’s fees because it did not exercised the diligence required in banks

Rule:

Yes. When we consider the total amount of respondent’s deposits in his dollar
accounts inclusive of interests earned vis-à-vis his total obligations to petitioner, we
find that the total depletion of his accounts is not warranted. Hence, we find no
reason to disturb the CA conclusion on the award of damages. This whole incident
would have been avoided had petitioner adhered to the standard of diligence
expected of one engaged in the banking business. A depositor has the right to
recover reasonable moral damages even if the bank’s negligence may not have
been attended with malice and bad faith, if the former suffered mental anguish,
serious anxiety, embarrassment and humiliation. Moral damages are not meant to
enrich a complainant at the expense of defendant. It is only intended to alleviate the
moral suffering she has undergone. The award of exemplary damages is justified, on
the other hand, when the acts of the bank are attended by malice, bad faith or gross
negligence. The award of reasonable attorney’s fees is proper where exemplary
damages are awarded. It is proper where depositors are compelled to litigate to
protect their interest.

Hence, the CA decision was affirmed with modifications.

C. The Heirs of Redentor Completo (Petitioner) v. Sgt. Amando C. Albayda

(Respondent)

GR No. 172200

Facts:

Albayda (a Master Sergeant of the Philippine Air Force) testified that, while he was on
his way to the office to report for duty, riding a bicycle along 11th Street, the taxi driven
by Completo bumped and sideswiped him, causing serious physical injuries. Albayda
was brought to the Philippine Air Force General Hospital (PAFGH) inside VAB.
However, he was immediately transferred to the Armed Forces of the Philippines
Medical Center (AFPMC) because there was no orthopedic doctor available at PAFGH.

Albayda filed a complaint for physical injuries through reckless imprudence against
Completo. He alleged that the proximate cause of the incident which necessitated his
stay in the hospital for approximately seven (7) months was the negligence of Completo
who, at the time of the accident, was in the employ of Abiad. He claimed payment for
actual damages and moral damages. He likewise asked for exemplary damages

Completo filed a counter-charge of damage to property through reckless imprudence

against Albayda. Completo alleged that, he was carefully driving the taxicab along 8th
Street, VAB, when suddenly he heard a strange sound from the rear right side of the
taxicab. When he stopped to investigate, he found Albayda lying on the road and
holding his left leg. He immediately rendered assistance and brought Albayda to PAFGH
for emergency treatment. He asserted that he had already reduced his speed to twenty
(20) kilometers per hour even before reaching the intersection of 8th and 11th Streets. In
contrast, Albayda rode his bicycle at a very high speed.

Abiad testified that, he exercised diligence that is required of him. When he hired
Completo, Abiad required Completo to show his bio-data, NBI clearance, and driver’s
license. Completo never figured in a vehicular accident since the time he was employed
in February 1997. Abiad averred that Completo was a good driver and a good man.
Being the operator of taxicab, Abiad would wake up early and personally check all the
taxicabs.

The trial court rendered judgment in favor of the plaintiff [Albayda]. The court awarded
the plaintiff actual and moral damages and attorney’s fees. Completo and Abiad filed an
appeal on the Court of Appeals. The CA denied the appeal.

Issue:

1. Whether the CA erred in finding that Completo was the one who caused the
collision
2. Whether Abiad failed to prove that he observed the diligence of a good father of
the family

Rule:

1. No. It was proven by a preponderance of evidence that Completo failed to exercise

reasonable diligence in driving the taxicab because he was over-speeding at the time he
hit the bicycle ridden by Albayda. Such negligence was the sole and proximate cause of
the serious physical injuries sustained by Albayda. Completo did not slow down even
when he approached the intersection of 8th and 11th Streets of VAB. It was also proven
that Albayda had the right of way, considering that he reached the intersection ahead of
Completo.

The bicycle occupies a legal position that is at least equal to that of other vehicles
lawfully on the highway, and it is fortified by the fact that usually more will be required of
a motorist than a bicyclist in discharging his duty of care to the other because of the
physical advantages the automobile has over the bicycle. The physical advantages that
the motor vehicle has over the bicycle make it more dangerous to the bicyclist than vice
versa.

2. Yes. In the selection of prospective employees, employers are required to examine

them as to their qualifications, experience, and service records. On the other hand, with
respect to the supervision of employees, employers should formulate standard operating
procedures, monitor their implementation, and impose disciplinary measures for
breaches thereof. To establish these factors in a trial involving the issue of vicarious
liability, employers must submit concrete proof, including documentary evidence.
The protestation of Abiad to escape liability is short of the diligence required under the
law. Abiad’s evidence consisted entirely of testimonial evidence, and the
unsubstantiated and self-serving testimony of Abiad was insufficient to overcome the
legal presumption that he was negligent in the selection and supervision of his driver.

D. OMC Carriers Inc. (Petitioners) v. Spouses Nabua (Respondents)

GR No. 148974

Facts :

An Isuzu private tanker, owned by and registered in the name of petitioner OMC
Carriers, Inc. and then being driven by its employee Jerry P. Añalucas, hit a private
vehicle, an Isuzu Gemini, which was making a left turn towards a nearby Caltex gasoline
station. The impact heavily damaged the right side portion of the latter motor and
mortally injured its 18-year-old driver, Reggie T. Nabua, who was later pronounced dead
on arrival at the Fairview Polymedic Hospital.

Respondent spouses Berlino and Rosario Nabua, the parents of the victim, filed a
Complaint for damages against petitioners and the General Manager of OMC Carriers,
Chito Calauag, before the RTC of Quezon City, Branch 224.

Accordingly, therefore, the Court finds and renders judgment in favor of the plaintiffs as
against defendants and ordering the latter to pay the plaintiffs, jointly and solidarily.

Issues:
1. Whether the proximate and immediate cause of the accident was the negligence of
the victim, Reggie Nabua.

2. Whether the petitioner company exercised due diligence in the selection and
supervision of their employees.

Rule:

1.) No. Both the RTC and CA had correctly found that the proximate cause of the
accident was the negligence of petitioner Añalucas. The testimony of eyewitness Marlon
Betiranta shows that the victim, Reggie Nabua, was driving at a slow pace when he was
entering the Caltex station. Another eyewitness corroborated the testimony of Betiranta
that the victim was slowly driving his car towards the gas station. He also emphasized
that the truck which bumped the Gemini car was very fast. Lastly, even petitioners’ own
witness, PO3 Edgardo Talacay, testified that petitioners’ truck left skid marks, which
would not be present if the truck was running in a normal speed.

2.) No. The introduction of evidence showing the employer exercised the required
amount of care in selecting its employees, is only half of the employer’s burden is (sic)
overcome. The question of diligent supervision depends on the circumstances of
employment, which, in the instant case was not sufficiently proved by the appellants.
After a thorough and extensive review of the records, this Court is unconvinced that
petitioner company had satisfactorily discharged its burden. The alleged Memorandum
(Exhibit 6) alluded to by petitioner company amounts to nothing more than a "reminder
memo on offenses punishable by dismissal," wherein specific offenses are spelled out to
which erring employees may be punished by the company. Likewise, the alleged
circulars from Petron amount to nothing more than minutes of the "Haulers Meeting," a
list of "Hot Spots" and a "Table of Penalties." These circulars do not, in any way,
concern safety procedures to prevent accident or damage to property or injury to people
on the road. It bears to stress that the existence of supervisory policies cannot be
casually invoked to overturn the presumption of negligence on the part of the employer.

The testimonies relating to the checking of damages during carbarn time, the inspection
if drivers were given traffic violation tickets and inspection of the validity of the drivers’
licenses are all oral evidence without any object or documentary evidence to support
them. The alleged daily inspections conducted were not supported by any evidence on
record. Moreover, even the seminars regarding safety and driving, allegedly conducted
by petitioners’ witness, Max Pagsaligan, were not satisfactorily established in evidence.
Specifically, there is no record that petitioner Añalucas attended such seminars.

Hence, the petitioner company was liable for the accident.

E. Saludo (Petitioner) v. Security Bank (Respondent)

GR No. 184041

Facts:

On 30 May 1996, Booklight was extended an omnibus line credit facility by SBC in the
amount of P10,000,000.00. Said loan was covered by a Credit Agreement and a
Continuing Suretyship with petitioner.

Booklight drew several availments of the approved credit facility from 1996 to 1997 and
faithfully complied with the terms of the loan. On 30 October 1997, SBC approved the
renewal of credit facility of Booklight in the amount ofP10,000,000.00 under the
prevailing security lending rate. From August 3 to 14, 1998, Booklight executed nine (9)
promissory notes in favor of SBC in the aggregate amount of P9,652,725.00. For failure
to settle the loans upon maturity, demands were made on Booklight and petitioner for
the payment of the obligation but the duo failed to pay. As of 15 May 2000, the
obligation of Booklight stood at P10,487,875.41, inclusive of interest past due and
penalty.

SBC filed against Booklight and herein petitioner an action for collection of sum of
money with the RTC. Booklight petitioned asserting that the amount demanded by SBC
was not based on the omnibus credit line facility of 30 May 1996, but rather on the
amendment of the credit facilities on 15 October 1996 increasing the loan line
fromP8,000,000.00 to P10,000,000.00.

The petitioner countered that he came to know that Booklight offered to pay SBC the
partial payment of the loan and proposed the restructuring of the obligation. Petitioner
argued that said offer to pay constitutes a valid tender of payment which discharged
Booklight’s obligation to the extent of the offer. Petitioner also averred that the
imposition of the penalty on the supposed due and unpaid principal obligation based on
the penalty rate of 2% per month is clearly unconscionable.

After trial, the RTC ruled that petitioner is jointly and solidarily liable with Booklight under
the Continuing Suretyship Agreement. The court ordered the defendants Booklight, Inc.
and Aniceto G. Saludo, Jr. to pay the plaintiff [sic], with 20.189% on the principal
amounts with attorney’s fee of P100,000.00 plus cost of suit.

Issue:

Whether 20.178% interest rate imposed by the RTC is unconscionable.

Rule:

No. In Development Bank of the Philippines v. Family Foods Manufacturing Co. Ltd., the
Supreme Court upheld the validity of the imposition of 18% and 22% stipulated rates of
interest in the two (2) promissory notes. Likewise in Spouses Bacolor v. Banco Filipino
Savings and Mortgage Bank, the 24% interest rate agreed upon by parties was held as
not violative of the Usury Law, as amended by Presidential Decree No. 116.

Hence, the petition is DENIED. CA decision affirmed.

F. Benny Hung (Petitioner) v. BPI Card Finance Group (Respondent)

GR No. 182398

Facts:

Guess? Footwear and BPI Express Card Corporation entered into two merchant
agreements, whereby Guess? Footwear agreed to honor validly issued BPI Express
Credit Cards presented by cardholders in the purchase of its goods and services. In the
first agreement, petitioner Benny Hung signed as owner and manager of Guess?
Footwear. He signed the second agreement as president of Guess? Footwear which he
also referred to as B & R Sportswear Enterprises.

Respondent BPI mistakenly credited, through three hundred fifty-two (352) checks,
Three Million Four Hundred Eighty Thousand Four Hundred Twenty-Seven Pesos and
23/100 (P3,480,427.23) to the account of Guess? Footwear. When informed of the
overpayments, petitioner Benny Hung transferred Nine Hundred Sixty-Three Thousand
Six Hundred Four Pesos and 03/100 (P963,604.03) from the bank account of B & R
Sportswear Enterprises to BPI’s account as partial payment.

In a letter dated 27 September 1999, BPI demanded the balance payment amounting to
Two Million Five Hundred Sixteen Thousand Eight Hundred Twenty-Six Pesos and
68/100 (P2,516,826.68), but Guess? Footwear failed to pay.
BPI filed a collection suit before the RTC of Makati City naming as defendant B & R
Sportswear Distributor, Inc. The RTC rendered a decision ordering defendant B & R
Sportswear Distributor, Inc., to pay the plaintiff (BPI) P2,516,826.68 with 6% interest
from 4 October 1999. The RTC ruled that the overpayment ofP3,480,427.43 was proven
by checks credited to the account of Guess? Footwear and the P963,604.03 partial
payment proved that defendant ought to pay P2,516,826.68 more.

Issue:

Whether the interest for the payment starts at the date the letter of demand was
presumably received by the defendant.

Rule:

Yes. Where the demand is established with reasonable certainty, the interest shall begin
to run from the time the claim is made judicially or extrajudicially (Art. 1169, Civil Code).
Since this case before us involves an obligation not arising from a loan or forbearance of
money, the applicable interest rate is 6% per annum. The legal interest rate of 6% shall
be computed from 4 October 1999, the date the letter of demand was presumably
received by the defendant.

F. Asian Cathay Finance and Leasing Corporation (Petitioner) v. Spouses Gravador

(Respondent)

GR No. 186550

Petitioner Asian Cathay Finance and Leasing Corporation (ACFLC) extended a loan of
Eight Hundred Thousand Pesos (P800,000.00) to respondent Cesario Gravador, with
respondents Norma de Vera and Emma Concepcion Dumigpi as co-makers. The loan
was payable in sixty (60) monthly installments of P24,400.00 each. To secure the loan,
respondent Cesario executed a real estate mortgage over his property in Sta. Maria,
Bulacan, covered by Transfer Certificate of Title No. T-29234.

Respondents paid the initial installment due in November 1999. However, they were
unable to pay the subsequent ones. Consequently, on February 1, 2000, respondents
received a letter demanding payment of P1,871,480.00 within five (5) days from receipt
thereof. Respondents requested for an additional period to settle their account, but
ACFLC denied the request. Petitioner filed a petition for extrajudicial foreclosure of
mortgage with the Office of the Deputy Sheriff of Malolos, Bulacan.

The CA rendered the assailed Decision, reversing the RTC. It held that the amount
of P1,871,480.00 demanded by ACFLC from respondents is unconscionable and
excessive. Thus, it declared respondents’ principal loan to be P800,000.00, and fixed
the interest rate at 12% per annum and reduced the penalty charge to 1% per month.

Issue:

Whether the interest charged by petitioner to respondents was usurious.

Rule:

No. Interest rates, whenever unconscionable, may be equitably reduced or even

invalidated. In several cases, this Court had declared as null and void stipulations on
interest and charges that were found excessive, iniquitous and unconscionable. ACFLC
failed to show any computation on how much interest was imposed and on the penalties
charged. Thus, we fully agree with the CA that the amount claimed by ACFLC is
unconscionable.

Hence, petition is denied. CA decision is affirmed.

G. Pasco (Petitioner) v. Heirs of de Guzman (Respondent)

GR No. 165554

On February 7, 1997, petitioners obtained a loan in the amount of P140,000.00 from

Filomena (now deceased). To secure the petitioners’ loan, Lauro executed a chattel
mortgage on his Isuzu Jeep in favor of Filomena. Upon her death, her heirs sought to
collect from the petitioners, to no avail. Despite numerous demands, petitioners refused
to either pay the balance of the loan or surrender the Isuzu Jeep to the respondents.
Thus, respondents were constrained to file the collection case to compel the petitioners
to pay the principal amount of P140,000.00 plus damages in the amount of 5% monthly
interest from February 7, 1997, 25% attorney’s fees, exemplary damages, and expenses
of litigation.

Issue:

Whether an interest pegged at 5% per month is valid.

Rule:

No. In this case, the 5% monthly interest rate, or 60% per annum, compounded monthly,
stipulated in the Kasulatan is even higher than the 3% monthly interest rate imposed in
the Ruiz case. Thus, we similarly hold the 5% monthly interest to be excessive,
iniquitous, unconscionable and exorbitant, contrary to morals, and the law. It is therefore
void ab initio for being violative of Article 1306 of the Civil Code. Accordingly, the legal
interest of 12% per annum must be imposed in lieu of the excessive interest stipulated in
the agreement.

G. Solidbank Corporation (Petitioner) v. Permanent Homes, Inc. (Respondent)

GR No. 171925

Facts:

PERMANENT HOMES, a real estate development company, applied and was

subsequently granted by SOLIDBANK with an "Omnibus Line" credit facility in the total
amount of SIXTY MILLION PESOS to finance its housing project known as the "Buena
Vida Townhomes".

There was a standing agreement by the parties that any increase or decrease in interest
rates shall be subject to the mutual agreement of the parties.

For the first loan availment of PERMANENT HOMES on March 20, 1997, in the amount
of 19.6 MILLION, from the initial interest rate of 14.25% per annum (p.a.), the same was
increased 15% p.a. effective May 19, 1997; it was again increased to 26% p.a. effective
July 18, 1997. It was thereafter reduced to 20% p.a. effective August 18, 1997, and then
increased to 24% p.a. effective September 17, 1997. The rate was increased further
to 30% p.a.effective October 17, 1997, then decreased to 27% p.a. on November 17,
1997, and again increased to 34% p.a.effective December 17, 1997. The rate then
decreased to 30% p.a. on January 16, 1998. For the second loan and third loan
availment, interest rates also varied at different time periods.

It is [Permanent’s] stand that SOLIDBANK unilaterally and arbitrarily accelerated the

interest rates without any declared basis of such increases, of which PERMANENT
HOMES had not agreed to, or at the very least, been informed of.

[Permanent] thus filed a case before the trial court. SOLIDBANK, on the other hand,
avers that PERMANENT HOMES has no cause of action against it. It claims that in
accordance with said provisions, SOLIDBANK was authorized to, upon due notice,
periodically adjust the interest rates on PERMANENT HOMES’ loan availments during
the monthly interest repricing dates, depending on the changes in prevailing interest
rates in the local and international capital markets.

The trial court promulgated its Decision in favor of Solidbank. The appellate court
granted Permanent’s appeal. It recognized the validity of escalation clauses, but also
underscored the necessity of a basis for the increase in interest rates and of the
principle of mutuality of contracts.

Issues:

Whether the Honorable Court of Appeals was correct in ruling that the increases in the
interest rates on [Permanent’s] loans are void for having been unilaterally imposed
without basis.

Rule:

No. The Usury Law had been rendered legally ineffective. In imposing interest rates, the
lender and the borrower should agree on the imposed rate, and such imposed rate
should be in writing. In this case, the stipulations on interest rate repricing are valid
because (1) the parties mutually agreed on said stipulations; (2) repricing takes effect
only upon Solidbank’s written notice to Permanent of the new interest rate; and (3)
Permanent has the option to prepay its loan if Permanent and Solidbank do not agree
on the new interest rate. Also, there was no showing that either Solidbank or Permanent
coerced each other to enter into the loan agreements. The terms of the Omnibus Line
Agreement and the promissory notes were mutually and freely agreed upon by the
parties. Thus, the contract is valid.

H. Marsman Drysdale v. Philippine Geoanalytics, et al

GR No. 183374

Facts: Marsman Drysdale, Inc. (Marsman) and Gotesco Properties, Inc. (Gotesco) entered into
a joint venture agreement for the construction and development of an office building on a land
owned by Marsman. They agreed on a 50-50 ratio on the proceeds of the project, but did not
agree on how losses would be divided. The joint venture engaged the services of Philippine
Geoanalytics, Inc. (PGI) to provide subsurface soil exploration, seismic study and geotechnical
engineering. PGI completed its seismic study but failed to complete its subsurface soil
exploration because the area where drilling was to be made had not been cleared. The building
project was subsequently shelved due to unfavorable economic conditions. PGI billed the joint
venture for work done, but was not paid despite its repeated demands. PGI, thus, filed a
collection case against Marsman and Gotesco. Marsman passed the obligation to Gotesco
because under the joint venture agreement, Gotesco was solely liable for the monetary expenses
of the project, and Marsman’s participation was limited to the land. Gotesco, on the other hand,
asserted that PGI had no cause of action against it as PGI had yet to complete the services in its
contract, and it was Marsman’s failure to clear the property of debris which prevented PGI from
completing its work.

Issue: Whether Marsman and Gotesco are jointly liable to pay PGI its unpaid claims.

Held:Marsman and Gotesco are jointly liable to PGI.

PGI was never a party to the joint venture agreement. While the joint venture agreement clearly
spelled out the capital contributions of Marsman (land) and Gotesco (cash) and the funding
mechanism, it cannot be used to defeat the lawful claim of PGI against the two joint venturers
partners.
PGI’s contract clearly listed the joint venturers Marsman and Gotesco as the
beneficial owner of the project, and all billing invoices indicated the consortium as the client.
When there are two or more debtors, the obligation is presumed to be joint unless the law or the
obligation expressly states that the liability is solidary, or unless the nature of the obligation
requires solidary liability (Articles 1207 and 1208, Civil Code). In this case, since solidary
liability was not required by law, or the contract, or by the nature of the obligation, the
obligation to PGI was presumed to be joint between Marsman and Gotesco.
A joint venture being a form of partnership, it is to be governed by the laws on partnership.
Under the laws on partnership, particularly Article 1797 of the Civil Code, the losses and profits
shall be distributed in accordance with the agreement; if only the share of each partner in the
profits has been agreed upon, the share of each in the losses shall be in the same
proportion.
In the joint venture agreement, Marsman and Gotesco agreed on a 50-50 ratio on the proceeds
of the project, but did not provide for the splitting of losses. Applying Article 1797, the same

ratio applies in splitting the obligation-loss of the joint venture to PGI.

I. Macedo (Petitioner) v. DBP (Respondent)

GR No. 174979

Facts:

Plaintiff Bonifacio Maceda, Jr. (Maceda) obtained a loan from the defendant DBP in the
amount of P7.3 million to finance the expansion of the Old Gran Hotel in Leyte. Upon
approval of said loan, plaintiff Maceda executed a promissory note and a mortgage of
real estate. Project cost of the New Gran Hotel wasP10.5M. DBP imposed the condition
that they would choose the building contractor, namely, Moreman Builders Co.
(Moreman). The contractor would directly receive the loan releases from DBP, after
verification by DBP of the construction progress.

In essence, Maceda’s complaint before the Makati RTC alleged that DBP conspired with
the contractor, Moreman, by approving anomalous loan releases to the latter despite
exaggerated charges and valuation made by said contractor on the hotel project. When
plaintiff Maceda himself tried to resume the completion and construction of the hotel
project, after the building contract with Moreman was already rescinded by the CFI
Manila, defendant allegedly blocked efforts of the plaintiff by delaying the release of
funds from his loan with the DBP and imposing onerous conditions which made it
difficult for plaintiff to pursue the construction of the New Gran Hotel. Due to such delays
on the part of the DBP, the loan had expired. The construction of the hotel was never
finished.

The trial court promulgated its decision in favor of Maceda. DBP is ordered to
immediately release in favor of plaintiff Maceda the unreleased loan balance
ofP1,952,489.10. In addition, as to the portion thereof amounting to P1.003M, DBP is
further directed to pay interest thereon at the rate of 12% per annum beginning and
counted from January, 1978. Also, the sum of P797,988.95 representing the
interest/other charges for the period October 31, 1979 to April 1, 1980 was ordered to be
returned. The Court of Appeals affirmed the decision.

Issues:

Whether the Honorable Court of Appeals was correct in upholding the trial court:

1. In imposing interest on the unreleased portion of the loan

2. For the return of interests paid on the loan already released to Maceda

Rule:

Yes. DBP was also at fault in not releasing the amount of P1.003 Million which had
already been approved for release as early as January 1978. We agree with the RTC
that it is apparent that such delay in the release of plaintiff’s loan is directly attributable
to DBP and contributed to the construction delay, such that radical rise in construction
cost and prices of materials had already caught up with the hotel project. The P7.3
million loan is a "straight loan" as described in the document dated March 7, 1977 by
A.S. Martinez, a DBP managerial officer. In releasing other sums but not the P1.003
million, and in failing to release the bigger sum of P1,952,489.10 which is the total
unreleased balance of the loan, DBP treated its prestation according to its likes and
dislikes.

J. ASJ Corporation (Petitioner) v. Efren and Maura Evangelista (Respondent)

Facts:

Respondents, under the name and style of R.M. Sy Chicks, are engaged in the large-scale business of
buying broiler eggs, hatching them, and selling their hatchlings (chicks) and egg by-products in
Bulacan and Nueva Ecija. For the incubation and hatching of these eggs, respondents availed of the
hatchery services of ASJ Corp., a corporation duly registered in the name of San Juan and his family.

Because of delayed payments of respondents, petitioner refused to deliver the hatch eggs and their by-
products and utter threats to the former. Despite the fact that the deposited hatcheries were enough for
the withholding balance, the petitioners refused to do their obligations (release hatched eggs and by-
products) because their services were not fully paid. The parties tried to settle amicably their
differences before police authorities, but to no avail. Thus, respondents filed with the RTC an action
for damages based on petitioners’ retention of the chicks and by-products covered by Setting Report
Nos. 108 to 113.

RTC ruled in favor of respondents and made the following findings: (1) as of Setting Report No. 107,
respondents owed petitioners P102,336.80; (2) petitioners withheld the release of the chicks and by-
products covered by Setting Report Nos. 108-113;and (3) the retention of the chicks and by-products
was unjustified and accompanied by threats and intimidations on respondents. The RTC disregarded
the corporate fiction of ASJ Corp., and held it and San Juan solidarily liable to respondents
for P529,644.80 as actual damages, P100,000.00 as moral damages, P50,000.00 as attorney’s fees,
plus interests and costs of suit.

Issue:

Whether respondents were also liable to the petitioners because of their delayed
payments.

Rule:

1.) Yes. It was respondents who violated the very essence of reciprocity in contracts,
consequently giving rise to petitioners’ right of retention. This case is clearly one among
the species of non-performance of a reciprocal obligation. Since respondents are guilty
of delay in the performance of their obligations, they are liable to pay petitioners actual
damages of P183,416.80, computed as follows: From respondents’ outstanding balance
of P102,336.80, as of Setting Report No. 107, we add the corresponding services fees
of P81,080.00 for Setting Report Nos. 108 to 113 which had remain unpaid.

Nonetheless, San Juan’s subsequent acts of threatening respondents should not remain
among those treated with impunity. Here, while petitioners had the right to withhold
delivery, the high-handed and oppressive acts of petitioners, as aptly found by the two
courts below, had no legal leg to stand on. Since it was established that respondents
suffered some pecuniary loss anchored on petitioners’ abuse of rights, although the
exact amount of actual damages cannot be ascertained, temperate damages are
recoverable. Petitioners are obliged to pay respondents P408,852.10 for temperate
damages which is equivalent to the value of the chicks and by-products, which
respondents, on the average, are expected to derive.

Hence, the petition was partly granted. CA’s decision was modified.

K. BPI (Petitioner) v. Court of Appeals and Jimmy Go (Respondent)

GR No. 142731

Petitioner, BPI, granted a total of eight (8) loans to Noah’s Arc Merchandising (Noah’s
Ark, for brevity). The said loans were evidenced by identical Promissory Notes all signed
by Albert T. Looyuko, private respondent Jimmy T. Go and one Wilson Go. Likewise, all
loans were secured by real estate mortgage constituted over a parcel of land registered
in the names of Mr. Looyuko and herein private respondent. Petitioner, claiming that
Noah’s Ark defaulted in its obligations, extrajudicially foreclosed the mortgage. The
private respondent filed a complaint for damages with prayer [for] issuance of TRO
and/or writ of preliminary injunction seeking [to] enjoin the auction sale.

Private respondent claimed that demand was not made upon him, in spite of the fact
that he co-signed the promissory notes. He also argues that only four of the eight
promissory notes secured by the mortgage had become due. However, the promissory
notes contain an acceleration clause, to wit:

Upon the happening of any of the following events, FAR EAST BANK AND TRUST
COMPANY (BPI) or the holder, may at its option, forthwith accelerate maturity and
the unpaid balance of the principal, as well as interest and other charges which have
accrued,shall become due and payable without demand or notice[:](1) default in
payment or performance of any obligation of any of the undersigned to FAR EAST
BANK AND TRUST COMPANY or its affiliated companies;

I/We hereby waive any diligence, presentment, demand, protest or notice of non-
payment o[r] dishonor with respect to this note or any extension thereof.

Issue:

Whether Noah’s Ark Merchandising was already in default.

Rule:

Yes. The Civil Code in Article 1169 provides that one incurs in delay or is in default from
the time the obligor demands the fulfillment of the obligation from the obligee. However,
the law expressly provides that demand is not necessary under certain circumstances,
and one of these circumstances is when the parties expressly waive demand. Hence,
since the co-signors expressly waived demand in the promissory notes, demand was
unnecessary for them to be in default.
Hence, the petition is GRANTED.

L. Guevent Industrial Devt Corp. (Petitioner) v. Philippine Lexus Amusement Corp

(Respondent)

GR No. 159279

Facts:

Respondent leased petitioner's warehouse for the storage of its video machines. On
September 25, 1994, heavy rains flooded Libertad St. and damaged the video
machines.

United Adjustment Company (UAC), commissioned by respondent, concluded that the

clogged storm drainage and sewer pipes installed underground along petitioner's private
road caused the flooding. On the basis of this report, respondent demanded the
payment of the value of the damage from petitioner. When petitioner refused,
respondent filed a complaint for damages with the Regional Trial Court (RTC) of Pasig
City.

In its Answer, petitioner averred that it was the clogged public drainage of Mandaluyong
City that caused the flood. It said that it was respondent's fault that it did not insure its
machines as stipulated in their lease contract. During trial, petitioner showed evidence
that it had regularly de-clogged its private drainage and had constantly requested the
city to de-clog and rehabilitate the public sewers.

RTC dismissed the case. It ruled that petitioner was not negligent. The RTC found that
the damage was caused by a fortuitous event and exempted petitioner from liability.

Court of Appeals reversed the trial court. It ruled that the flooding was not due to a
fortuitous event but caused by the clogging of petitioner's internal drainage system as
reported by UAC. It further ruled that respondent's failure to insure the machines did not
excuse petitioner from liability. Petitioner sought reconsideration but the same was
denied.

Issue:

Whether the petitioner is liable for damages because of its negligence.

Rule:

No. First, It is worth stressing that UAC was commissioned by respondent, and UAC is
not an independent, impartial nor neutral investigator. Second, petitioner showed that it
had maintained and regularly de-clogged its own drainage as evidenced by its Daily
Deployment of Personnel Report. We note also that there was proof that the public
drainage system needed de-clogging. Petitioner also presented a barangay certification
that the area is always flooded whenever there is heavy downpour. The Office of the
City Mayor also does not deny that the public drainage system needed rehabilitation. All
these lead us to conclude that the poor condition of the public drainage, and not the
private pipes, primarily caused the flooding. Conformably then, we cannot hold petitioner
negligent, for the record reveals that it had constantly requested the local government to
dredge and de-clog the public sewers.

The maintenance of the public drainage system could not have been contemplated by
the lease contract when it provided that the lessor shall maintain the premises in good
and tenantable condition. The law on contract does not force the performance of
impossible obligations by the parties, and the maintenance of the public sewers is
something impossible to expect from the lessor.The petitioner is accountable only for its
pipes, and it should not be held responsible for the maintenance of the public sewers.

Hence, the petition is GRANTED.

M. Manila Electric Co v. Ramoy

GR No. 158911

N. Villa (Petitioner) v. Altavas (Respondents)

GR No. 162028

Facts:

Enrique Altavas II, Erlinda Liboro and Maria de Jesus (respondents), in their capacity as
heirs of Enrique Altavas (Enrique), filed a Complaint for ejectment with the 2nd Municipal
Circuit Trial Court (MCTC) of Pontevedra-Panay in the Province of Capiz against Dr. Lorna
Villa (petitioner) together with Virginia Bermejo (Virginia) and Rolito Roxas (Roxas),
alleging that respondents are heirs of the deceased Enrique, the registered owner of two
parcels of fishpond designated as Lot No. 2816 and Lot No. 2817, who have been in actual
possession through their administrator, overseer and representative, the late councilor
Mussolini C. Bermejo, the husband of Virgina; that on January 31, 1994, after the death of
Mussolini, Virgina took over the possession of the premises in question without the consent
or permission of respondents; that Virginia leased in favor of petitioner a portion of about
five hectares of Lot No. 2816, without any right whatsoever to do so; that on October 21,
1997, respondents through counsel formally sent demand letters to Virginia and petitioner to
vacate the respective portions occupied by them; and that despite said demands, they
persisted in continuing their illegal possession of the premises.

On the petitioner’s part, she contended that: she is in lawful possession of the area possessed
and developed by her as lessee. Respondents have no cause of action against her, as they
(respondents) are no longer the owners of the said lots, it appearing that the same were
already conveyed by the original owners during their lifetime; and the complaint was
premature, as there was still a pending case in court involving the ownership of the properties
in question.

The MCTC rendered a Decision in favor of respondents. Petitioner filed an appeal with the
RTC of Roxas City. However, the RTC dismissed the appeal of petitioner pursuant to Section
7, Rule 40 of the Rules of Court for her failure to file her appeal memorandum. Petitioner
then filed a special civil action for certiorari with the CA contending that the RTC
committed grave abuse of discretion in dismissing her appeal on technical ground.

Issue:
Whether the petitioner was negligent in failing to submit her appeal memorandum on time.

Rule:
Yes. He who seeks to avail of the right to appeal must play by the rules. This the petitioner
failed to do when she did not submit her memorandum of appeal as required by Rule 40,
Section 7 of the 1997 Rules of Civil Procedure. The Court is not persuaded by petitioner's
contention that because of a typhoon that hit Roxas City, her counsel was not able to go to
work on December 7, 2000 and finish the preparation of her memorandum which was due on
December 8, 2000. The 45-day extension given to petitioner was an ample period for her
counsel to prepare the required memorandum. Secondly, petitioner's counsel should have
finished the memorandum on December 8 instead of filing a motion for extension.
The Court is also not persuaded by petitioner's contention that her failure to submit her
appeal memorandum was because her counsel also had to prepare a memorandum required
by this Court in another case which was due for submission on December 10, 2000.
Petitioner's counsel should have prioritized the preparation of the memorandum required by
the RTC because of its earlier deadline. Clearly, petitioner's counsel is guilty of simple
negligence.

O. Central Shipping Co. (petitioner) v. Insurance Company of North America (respondent)

Facts:

The [petitioner] received on board its vessel, the M/V ‘Central Bohol’, 376 pieces [of] Philippine
Apitong Round Logs and undertook to transport said shipment to Manila for delivery to Alaska
Lumber Co., Inc. The cargo was insured for P3,000,000.00 against total loss. While enroute to
Manila, the vessel tilted to several degrees, due to the shifting of logs in the hold. The vessel
eventually sank and the cargo was totally lost. Respondent, being the insurer, paid for the sum of
P3,000,000.00 to the consignee and now seeks to be subrogated to all the rights and actions of the
consignee as against the [petitioner].

The petitioner interposed the defense that the vessel was fully manned, fully equipped and in all
respects seaworthy; that all the logs were properly loaded and secured; that the vessel’s master
exercised due diligence to prevent or minimize the loss before, during and after the occurrence of the
storm. It raised as its main defense that the proximate and only cause of the sinking of its vessel and
the loss of its cargo was a natural disaster, a tropical storm which neither [petitioner] nor the captain
of its vessel could have foreseen.

The RTC was unconvinced that the sinking of M/V Central Bohol had been caused by the weather or
any other caso fortuito. It noted that monsoons, which were common occurrences during the months
of July to December, could have been foreseen and provided for by an ocean-going vessel. Applying
the rule of presumptive fault or negligence against the carrier, the trial court held petitioner liable for
the loss of the cargo. Thus, the RTC rendered in favor of the [respondent] and against the [petitioner]
ordering the latter to pay the former.

Issues:

(1) Whether the loss of the cargo was due to a natural disaster only.
(2) Whether the doctrine of limited liability is applicable.

Rule:
1.) No. Even if the weather encountered by the ship is to be deemed a natural disaster under Article
1739 of the Civil Code, petitioner failed to show that such natural disaster or calamity was the
proximate and only cause of the loss. We also find no reason to disturb the CA’s finding that the loss
of the vessel was caused not only by the southwestern monsoon, but also by the shifting of the logs in
the hold. Such shifting could have been due only to improper stowage. It is obvious, as a matter of
common sense, that the manner of stowage in the lower hold was not sufficient to secure the logs in
the event the ship should roll in heavy weather. Notably, they were of different lengths ranging from
3.7 to 12.7 meters. Being clearly prone to shifting, the round logs should not have been stowed with
nothing to hold them securely in place. Each pile of logs should have been lashed together by cable
wire, and the wire fastened to the side of the hold. By force of gravity, those on top of the pile would
naturally roll towards the bottom of the ship. The evidence indicated that strong southwest monsoons
were common occurrences during the month of July. Thus, the officers and crew of M/V Central
Bohol should have reasonably anticipated heavy rains, strong winds and rough seas. They should then
have taken extra precaution in stowing the logs in the hold, in consonance with their duty of
observing extraordinary diligence in safeguarding the goods. But the carrier took a calculated risk in
improperly securing the cargo. Having lost that risk, it cannot now escape responsibility for the loss.

2.) No. The doctrine of limited liability under Article 587 of the Code of Commerce is not applicable
to the present case. This rule does not apply to situations in which the loss or the injury is due to the
concurrent negligence of the shipowner and the captain. "Closer supervision on the part of the
shipowner could have prevented this fatal miscalculation." As such, the shipowner was equally
negligent. It cannot escape liability by virtue of the limited liability rule.

P. Thermochem Inc. And Jerome Castro v Naval and The Court of Appeals

Facts:

Prior to the collision, a “Luring taxi”, was parked along the right side of Ortigas Avenue, not far from
the Rosario Bridge, to unload a passenger. Thereafter, the driver executed a U-turn to traverse the
same road, going to the direction of EDSA. At this point, the Nissan Pathfinder traveling along the
same road going to the direction of Cainta collided with the taxicab. The point of impact was so great
that the taxicab was hit in the middle portion and was pushed sideward, causing the driver to lose
control of the vehicle. The taxicab was then dragged into the nearby Question Tailoring Shop, thus,
causing damage to the said tailoring shop, and its driver, Eduardo Eden, sustained injuries as a result
of the incident.

Private respondent, as owner of the taxi, filed a damage suit against petitioner, Thermochem
Incorporated, as the owner of the Nissan Pathfinder, and its driver, petitioner Jerome Castro. After
trial, the lower court adjudged petitioner Castro negligent and ordered petitioners, jointly and
severally, to pay private respondent actual, compensatory and exemplary damages plus attorney's fees
and costs of suit. The petitioners filed for review on certiorari.
Issues:
1.) Whether or not the collision resulted from the negligence of the driver of the Nissan
Pathfinder
2.) Whether or not Eduardo Edem, driver of the taxi, was contributorily liable for the
collision

Rule:

1.) Yes. From petitioner Castro's testimonial admissions, it is established that he was driving at a
speed faster than 50 kilometers per hour because it was a downhill slope coming from the Rosario
bridge. But as he allegedly stepped on the brake, it locked causing his Nissan Pathfinder to skid to the
left and consequently hit the taxicab. The sudden malfunction of the vehicle's brake system is the
usual excuse of drivers involved in collisions which are the result of speedy driving, particularly
when the road is downhill.

Malfunction or loss of brake is not a fortuitous event. A mechanically defective vehicle should avoid
the streets. As petitioner's vehicle was moving downhill, the driver should have slowed down since a
downhill drive would naturally cause the vehicle to accelerate. Moreover, the record shows that the
Nissan Pathfinder was on the wrong lane when the collision occurred. This was a disregard of traffic
safety rules. The law considers what would be reckless, blameworthy or negligent in a man of
ordinary diligence and prudence and determines liability by that. Even assuming arguendo that loss of
brakes is an act of God, by reason of their negligence, the fortuitous event became humanized,
rendering the Nissan driver liable for the ensuing damages.

2.) Yes. The driver of the taxi is contributorily liable. U-turns are not generally advisable particularly
on major streets. The taxi was hit on its side which means that it had not yet fully made a turn to the
other lane. The driver of the taxi ought to have known that vehicles coming from the Rosario bridge
are on a downhill slope. Obviously, there was lack of foresight on his part, making him contributorily
liable.

Hence, the Supreme Court modified CA’s decision. Considering the contributory negligence of the
driver of private respondent's taxi, the award of P47,850.00, for the repair of the taxi, should be
reduced in half. All other awards for damages are deleted for lack of merit.

Q. Aboitiz Shipping Corporation (Petitioner) v. New India Assurance (Respondent)

GR No. 156978

Facts:

A cargo of textiles and auxiliary chemicals from France on board a vessel owned by
Franco-Belgian Services, Inc. The cargo was consigned to General Textile, Inc., in
Manila and insured by respondent New India Assurance Company, Ltd. While in
Hongkong, the cargo was transferred to M/V P. Aboitiz for transshipment to Manila.
Before departing, the vessel was advised by the Japanese Meteorological Center that it
was safe to travel to its destination. But while at sea, the vessel received a report of a
typhoon moving within its general path. To avoid the typhoon, the vessel changed its
course. However, it was still at the fringe of the typhoon when its hull leaked. The vessel
sank, but the captain and his crew were saved.

Respondent paid General Textile and was subrogated to the rights of the latter. A
surveyor, Perfect, Lambert and Company, investigated the cause of the sinking. In It
was found that the cause was the flooding of the holds brought about by the vessel’s
questionable seaworthiness. Consequently, respondent filed a complaint for damages
against petitioner Aboitiz, Franco-Belgian Services and the latter’s local agent, F.E.
Zuellig, Inc. (Zuellig). Respondent added, defendants therein breached their contract of
carriage.

Franco-Belgian Services and Zuellig claimed its vessel was seaworthy and the
proximate cause of the loss of cargo was a fortuitous event. They claimed that the
liability should rest with petitioner.

The petitioner alleged that the sinking of M/V P. Aboitiz was due to an unforeseen event
and without fault or negligence on its part. It also alleged that in accordance with the real
and hypothecary nature of maritime law, the sinking of M/V P. Aboitiz extinguished its
liability on the loss of the cargoes.

Meanwhile, the Board of Marine Inquiry (BMI) conducted its own investigation to
determine whether the captain and crew were administratively liable. However,
petitioner neither informed respondent nor the trial court of the investigation. The BMI
declared the vessel seaworthy and concluded that the sinking was due to the vessel’s
exposure to the approaching typhoon.

The trial court ruled in favor of respondent. It held petitioner liable for the total value of
the lost cargo plus legal interest.The complaint with respect to Franco and Zuellig is
dismissed and their counterclaim against New India was likewise dismissed.

Issue:

Whether the limited liability doctrine, which limits respondent’s award of damages to its
pro-rata share in the insurance proceeds, applies in this case.

Rule:

No. Petitioner failed to show that it exercised extraordinary diligence in the transport of
the goods It initially attributed the sinking to the typhoon and relied on the BMI findings
that it was not at fault. However, both the trial and the appellate courts, in this case,
found that the sinking was not due to the typhoon but to its unseaworthiness. Evidence
on record showed that the weather was moderate when the vessel sank. These factual
findings of the Court of Appeals, affirming those of the trial court are not to be disturbed
on appeal, but must be accorded great weight.
In contrast, the findings of the BMI are not deemed always binding on the
courts. Besides, exoneration of the vessel’s officers and crew by the BMI merely
concerns their respective administrative liabilities. It does not in any way operate to
absolve the common carrier from its civil liabilities arising from its failure to exercise
extraordinary diligence, the determination of which properly belongs to the courts.
Where the shipowner fails to overcome the presumption of negligence, the doctrine of
limited liability cannot be applied.

Hence, petitioner is liable for the total value of the lost cargo.

R. St. Joseph’s College et al (Petitioner) v. Jayson Miranda (Respondent)

GR No.182353

Facts:

Inside St. Joseph College’s [SJC’s] premises, the class to which [respondent Jayson Val
Miranda] belonged was conducting a science experiment under the subject teacher
Rosalinda Tabugo, an employee of [petitioner] SJC. The adviser of [Jayson’s] class is
Estefania Abdan.

Tabugo left her class while it was doing the experiment without having adequately
secured it from any untoward incident or occurrence. While doing the experiment,
Jayson’s eyes were hit by chemicals spurting out from the test tube. As a result thereof,
[Jayson’s] eyes were chemically burned, particularly his left eye, for which he had to
undergo surgery and had to spend for his medication. Jason and his family filed a case
against petitioners.

On the other hand, [petitioners SJC, Sr. Josephini Ambatali, SFIC, and Tabugo] claimed
that Tabugo exercise due diligence in the supervision of the class. [Jayson] and his
classmates were given strict instructions to follow the written procedure for the
experiment however, Jason and his classmates violated such instructions.

Jayson’s family demanded the school to pay the expenses for Jayson’s medication.
Since SJC did not accede to the demand, Rodolfo, Jayson’s father, on Jayson’s behalf,
sued petitioners for damages.

RTC rendered judgment in favor of [Jayson] and against [petitioners]. The Court ordered
petitioner to pay respondents in the form of damages. CA affirmed RTC’s decision.

Issue:

Whether the petitioners were liable for the accident.

Rule:

Yes. As found by both lower courts, the proximate cause of Jayson’s injury was the
concurrent failure of petitioners to prevent the foreseeable mishap that occurred during
the conduct of the science experiment. Petitioners were negligent by failing to exercise
the higher degree of care, caution and foresight incumbent upon the school, its
administrators and teachers. "The defense of due diligence of a good father of a family
raised by [petitioner] St. Joseph College will not exculpate it from liability because it has
been shown that it was guilty of inexcusable laxity in the supervision of its teachers
(despite an apparent rigid screening process for hiring) and in the maintenance of what
should have been a safe and secured environment for conducting dangerous
experiments. [Petitioner] school is still liable for the wrongful acts of the teachers and
employees because it had full information on the nature of dangerous science
experiments but did not take affirmative steps to avert damage and injury to students.
The fact that there has never been any accident in the past during the conduct of
science experiments is not a justification to be complacent in just preserving the status
quo and do away with creative foresight to install safety measures to protect the
students. Schools should not simply install safety reminders and distribute safety
instructional manuals. More importantly, schools should provide protective gears and
devices to shield students from expected risks and anticipated dangers.