G.R. No.

L-12219            March 15, 1918

AMADO PICART, plaintiff-appellant,
vs.
FRANK SMITH, JR., defendant-appellee.

Alejo Mabanag for appellant.

G. E. Campbell for appellee.

STREET, J.:

In this action the plaintiff, Amado Picart, seeks to recover of the defendant, Frank Smith, jr., the sum of
P31,000, as damages alleged to have been caused by an automobile driven by the defendant. From a
judgment of the Court of First Instance of the Province of La Union absolving the defendant from liability
the plaintiff has appealed.

The occurrence which gave rise to the institution of this action took place on December 12, 1912, on the
Carlatan Bridge, at San Fernando, La Union. It appears that upon the occasion in question the plaintiff
was riding on his pony over said bridge. Before he had gotten half way across, the defendant
approached from the opposite direction in an automobile, going at the rate of about ten or twelve miles
per hour. As the defendant neared the bridge he saw a horseman on it and blew his horn to give
warning of his approach. He continued his course and after he had taken the bridge he gave two more
successive blasts, as it appeared to him that the man on horseback before him was not observing the
rule of the road.

The plaintiff, it appears, saw the automobile coming and heard the warning signals. However, being
perturbed by the novelty of the apparition or the rapidity of the approach, he pulled the pony closely up
against the railing on the right side of the bridge instead of going to the left. He says that the reason he
did this was that he thought he did not have sufficient time to get over to the other side. The bridge is
shown to have a length of about 75 meters and a width of 4.80 meters. As the automobile approached,
the defendant guided it toward his left, that being the proper side of the road for the machine. In so
doing the defendant assumed that the horseman would move to the other side. The pony had not as yet
exhibited fright, and the rider had made no sign for the automobile to stop. Seeing that the pony was
apparently quiet, the defendant, instead of veering to the right while yet some distance away or slowing
down, continued to approach directly toward the horse without diminution of speed. When he had gotten
quite near, there being then no possibility of the horse getting across to the other side, the defendant
quickly turned his car sufficiently to the right to escape hitting the horse alongside of the railing where it
as then standing; but in so doing the automobile passed in such close proximity to the animal that it
became frightened and turned its body across the bridge with its head toward the railing. In so doing, it
as struck on the hock of the left hind leg by the flange of the car and the limb was broken. The horse fell
and its rider was thrown off with some violence. From the evidence adduced in the case we believe that
when the accident occurred the free space where the pony stood between the automobile and the
railing of the bridge was probably less than one and one half meters. As a result of its injuries the horse
died. The plaintiff received contusions which caused temporary unconsciousness and required medical
attention for several days.

The question presented for decision is whether or not the defendant in maneuvering his car in the
manner above described was guilty of negligence such as gives rise to a civil obligation to repair the
damage done; and we are of the opinion that he is so liable. As the defendant started across the bridge,
he had the right to assume that the horse and the rider would pass over to the proper side; but as he
moved toward the center of the bridge it was demonstrated to his eyes that this would not be done; and
he must in a moment have perceived that it was too late for the horse to cross with safety in front of the
moving vehicle. In the nature of things this change of situation occurred while the automobile was yet
some distance away; and from this moment it was not longer within the power of the plaintiff to escape
being run down by going to a place of greater safety. The control of the situation had then passed
entirely to the defendant; and it was his duty either to bring his car to an immediate stop or, seeing that
there were no other persons on the bridge, to take the other side and pass sufficiently far away from the
horse to avoid the danger of collision. Instead of doing this, the defendant ran straight on until he was
almost upon the horse. He was, we think, deceived into doing this by the fact that the horse had not yet
exhibited fright. But in view of the known nature of horses, there was an appreciable risk that, if the
animal in question was unacquainted with automobiles, he might get exited and jump under the
conditions which here confronted him. When the defendant exposed the horse and rider to this danger
he was, in our opinion, negligent in the eye of the law.
The test by which to determine the existence of negligence in a particular case may be stated as
follows: Did the defendant in doing the alleged negligent act use that person would have used in the
same situation? If not, then he is guilty of negligence. The law here in effect adopts the standard
supposed to be supplied by the imaginary conduct of the discreet paterfamilias of the Roman law. The
existence of negligence in a given case is not determined by reference to the personal judgment of the
actor in the situation before him. The law considers what would be reckless, blameworthy, or negligent
in the man of ordinary intelligence and prudence and determines liability by that.

The question as to what would constitute the conduct of a prudent man in a given situation must of
course be always determined in the light of human experience and in view of the facts involved in the
particular case. Abstract speculations cannot here be of much value but this much can be profitably
said: Reasonable men govern their conduct by the circumstances which are before them or known to
them. They are not, and are not supposed to be, omniscient of the future. Hence they can be expected
to take care only when there is something before them to suggest or warn of danger. Could a prudent
man, in the case under consideration, foresee harm as a result of the course actually pursued? If so, it
was the duty of the actor to take precautions to guard against that harm. Reasonable foresight of harm,
followed by ignoring of the suggestion born of this prevision, is always necessary before negligence can
be held to exist. Stated in these terms, the proper criterion for determining the existence of negligence in
a given case is this: Conduct is said to be negligent when a prudent man in the position of the tortfeasor
would have foreseen that an effect harmful to another was sufficiently probable to warrant his foregoing
conduct or guarding against its consequences.

Applying this test to the conduct of the defendant in the present case we think that negligence is clearly
established. A prudent man, placed in the position of the defendant, would in our opinion, have
recognized that the course which he was pursuing was fraught with risk, and would therefore have
foreseen harm to the horse and the rider as reasonable consequence of that course. Under these
circumstances the law imposed on the defendant the duty to guard against the threatened harm.

It goes without saying that the plaintiff himself was not free from fault, for he was guilty of antecedent
negligence in planting himself on the wrong side of the road. But as we have already stated, the
defendant was also negligent; and in such case the problem always is to discover which agent is
immediately and directly responsible. It will be noted that the negligent acts of the two parties were not
contemporaneous, since the negligence of the defendant succeeded the negligence of the plaintiff by an
appreciable interval. Under these circumstances the law is that the person who has the last fair chance
to avoid the impending harm and fails to do so is chargeable with the consequences, without reference
to the prior negligence of the other party.

The decision in the case of Rkes vs. Atlantic, Gulf and Pacific Co. (7 Phil. Rep., 359) should perhaps be
mentioned in this connection. This Court there held that while contributory negligence on the part of the
person injured did not constitute a bar to recovery, it could be received in evidence to reduce the
damages which would otherwise have been assessed wholly against the other party. The defendant
company had there employed the plaintiff, as a laborer, to assist in transporting iron rails from a barge in
Manila harbor to the company's yards located not far away. The rails were conveyed upon cars which
were hauled along a narrow track. At certain spot near the water's edge the track gave way by reason of
the combined effect of the weight of the car and the insecurity of the road bed. The car was in
consequence upset; the rails slid off; and the plaintiff's leg was caught and broken. It appeared in
evidence that the accident was due to the effects of the typhoon which had dislodged one of the
supports of the track. The court found that the defendant company was negligent in having failed to
repair the bed of the track and also that the plaintiff was, at the moment of the accident, guilty of
contributory negligence in walking at the side of the car instead of being in front or behind. It was held
that while the defendant was liable to the plaintiff by reason of its negligence in having failed to keep the
track in proper repair nevertheless the amount of the damages should be reduced on account of the
contributory negligence in the plaintiff. As will be seen the defendant's negligence in that case consisted
in an omission only. The liability of the company arose from its responsibility for the dangerous condition
of its track. In a case like the one now before us, where the defendant was actually present and
operating the automobile which caused the damage, we do not feel constrained to attempt to weigh the
negligence of the respective parties in order to apportion the damage according to the degree of their
relative fault. It is enough to say that the negligence of the defendant was in this case the immediate
and determining cause of the accident and that the antecedent negligence of the plaintiff was a more
remote factor in the case.

A point of minor importance in the case is indicated in the special defense pleaded in the defendant's
answer, to the effect that the subject matter of the action had been previously adjudicated in the court of
a justice of the peace. In this connection it appears that soon after the accident in question occurred, the
plaintiff caused criminal proceedings to be instituted before a justice of the peace charging the
defendant with the infliction of serious injuries (lesiones graves). At the preliminary investigation the
defendant was discharged by the magistrate and the proceedings were dismissed. Conceding that the
acquittal of the defendant at the trial upon the merits in a criminal prosecution for the offense mentioned
would be res adjudicata upon the question of his civil liability arising from negligence -- a point upon
which it is unnecessary to express an opinion -- the action of the justice of the peace in dismissing the
criminal proceeding upon the preliminary hearing can have no effect. (See U. S. vs. Banzuela and
Banzuela, 31 Phil. Rep., 564.)

From what has been said it results that the judgment of the lower court must be reversed, and judgment
is her rendered that the plaintiff recover of the defendant the sum of two hundred pesos (P200), with
costs of other instances. The sum here awarded is estimated to include the value of the horse, medical
expenses of the plaintiff, the loss or damage occasioned to articles of his apparel, and lawful interest on
the whole to the date of this recovery. The other damages claimed by the plaintiff are remote or
otherwise of such character as not to be recoverable. So ordered.

Arellano, C.J., Torres, Carson, Araullo, Avanceña, and Fisher, JJ., concur.

Johnson, J., reserves his vote.

Separate Opinions

MALCOLM, J.,  concurring:

After mature deliberation, I have finally decided to concur with the judgment in this case. I do so
because of my understanding of the "last clear chance" rule of the law of negligence as particularly
applied to automobile accidents. This rule cannot be invoked where the negligence of the plaintiff is
concurrent with that of the defendant. Again, if a traveler when he reaches the point of collision is in a
situation to extricate himself and avoid injury, his negligence at that point will prevent a recovery. But
Justice Street finds as a fact that the negligent act of the interval of time, and that at the moment the
plaintiff had no opportunity to avoid the accident. Consequently, the "last clear chance" rule is
applicable. In other words, when a traveler has reached a point where he cannot extricate himself and
vigilance on his part will not avert the injury, his negligence in reaching that position becomes the
condition and not the proximate cause of the injury and will not preclude a recovery. (Note especially
Aiken vs. Metcalf [1917], 102 Atl., 330.)

G.R. No. 126297             January 31, 2007

PROFESSIONAL SERVICES, INC., Petitioner,

vs.
NATIVIDAD and ENRIQUE AGANA, Respondents.

x-----------------------x

G.R. No. 126467            January 31, 2007

NATIVIDAD (Substituted by her children MARCELINO AGANA III, ENRIQUE AGANA, JR., EMMA
AGANA ANDAYA, JESUS AGANA, and RAYMUND AGANA) and ENRIQUE AGANA, Petitioners,
vs.
JUAN FUENTES, Respondent.

x- - - - - - - - - - - - - - - - - - - -- - - - x

G.R. No. 127590            January 31, 2007

MIGUEL AMPIL, Petitioner,
vs.
NATIVIDAD AGANA and ENRIQUE AGANA, Respondents.
 DECISION

SANDOVAL-GUTIERREZ, J.:

Hospitals, having undertaken one of mankind’s most important and delicate endeavors, must assume
the grave responsibility of pursuing it with appropriate care. The care and service dispensed through this
high trust, however technical, complex and esoteric its character may be, must meet standards of
responsibility commensurate with the undertaking to preserve and protect the health, and indeed, the
very lives of those placed in the hospital’s keeping.1

Assailed in these three consolidated petitions for review on certiorari is the Court of Appeals’
Decision2 dated September 6, 1996 in CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198 affirming with
modification the Decision3 dated March 17, 1993 of the Regional Trial Court (RTC), Branch 96, Quezon
City in Civil Case No. Q-43322 and nullifying its Order dated September 21, 1993.

The facts, as culled from the records, are:

On April 4, 1984, Natividad Agana was rushed to the Medical City General Hospital (Medical City
Hospital) because of difficulty of bowel movement and bloody anal discharge. After a series of medical
examinations, Dr. Miguel Ampil, petitioner in G.R. No. 127590, diagnosed her to be suffering from
"cancer of the sigmoid."

On April 11, 1984, Dr. Ampil, assisted by the medical staff4 of the Medical City Hospital, performed an
anterior resection surgery on Natividad. He found that the malignancy in her sigmoid area had spread
on her left ovary, necessitating the removal of certain portions of it. Thus, Dr. Ampil obtained the
consent of Natividad’s husband, Enrique Agana, to permit Dr. Juan Fuentes, respondent in G.R. No.
126467, to perform hysterectomy on her.

After Dr. Fuentes had completed the hysterectomy, Dr. Ampil took over, completed the operation and
closed the incision.

However, the operation appeared to be flawed. In the corresponding Record of Operation dated April
11, 1984, the attending nurses entered these remarks:

"sponge count lacking 2

"announced to surgeon searched (sic) done but to no avail continue for closure."

On April 24, 1984, Natividad was released from the hospital. Her hospital and medical bills, including the
doctors’ fees, amounted to P60,000.00.

After a couple of days, Natividad complained of excruciating pain in her anal region. She consulted both
Dr. Ampil and Dr. Fuentes about it. They told her that the pain was the natural consequence of the
surgery. Dr. Ampil then recommended that she consult an oncologist to examine the cancerous nodes
which were not removed during the operation.

On May 9, 1984, Natividad, accompanied by her husband, went to the United States to seek further
treatment. After four months of consultations and laboratory examinations, Natividad was told she was
free of cancer. Hence, she was advised to return to the Philippines.

On August 31, 1984, Natividad flew back to the Philippines, still suffering from pains. Two weeks
thereafter, her daughter found a piece of gauze protruding from her vagina. Upon being informed about
it, Dr. Ampil proceeded to her house where he managed to extract by hand a piece of gauze measuring
1.5 inches in width. He then assured her that the pains would soon vanish.

Dr. Ampil’s assurance did not come true. Instead, the pains intensified, prompting Natividad to seek
treatment at the Polymedic General Hospital. While confined there, Dr. Ramon Gutierrez detected the
presence of another foreign object in her vagina -- a foul-smelling gauze measuring 1.5 inches in width
which badly infected her vaginal vault. A recto-vaginal fistula had formed in her reproductive organs
which forced stool to excrete through the vagina. Another surgical operation was needed to remedy the
damage. Thus, in October 1984, Natividad underwent another surgery.
On November 12, 1984, Natividad and her husband filed with the RTC, Branch 96, Quezon City a
complaint for damages against the Professional Services, Inc. (PSI), owner of the Medical City Hospital,
Dr. Ampil, and Dr. Fuentes, docketed as Civil Case No. Q-43322. They alleged that the latter are liable
for negligence for leaving two pieces of gauze inside Natividad’s body and malpractice for concealing
their acts of negligence.

Meanwhile, Enrique Agana also filed with the Professional Regulation Commission (PRC) an
administrative complaint for gross negligence and malpractice against Dr. Ampil and Dr. Fuentes,
docketed as Administrative Case No. 1690. The PRC Board of Medicine heard the case only with
respect to Dr. Fuentes because it failed to acquire jurisdiction over Dr. Ampil who was then in the United
States.

On February 16, 1986, pending the outcome of the above cases, Natividad died and was duly
substituted by her above-named children (the Aganas).

On March 17, 1993, the RTC rendered its Decision in favor of the Aganas, finding PSI, Dr. Ampil and
Dr. Fuentes liable for negligence and malpractice, the decretal part of which reads:

WHEREFORE, judgment is hereby rendered for the plaintiffs ordering the defendants PROFESSIONAL
SERVICES, INC., DR. MIGUEL AMPIL and DR. JUAN FUENTES to pay to the plaintiffs, jointly and
severally, except in respect of the award for exemplary damages and the interest thereon which are the
liabilities of defendants Dr. Ampil and Dr. Fuentes only, as follows:

1. As actual damages, the following amounts:

a. The equivalent in Philippine Currency of the total of US$19,900.00 at the rate of P21.60-US$1.00, as
reimbursement of actual expenses incurred in the United States of America;

b. The sum of P4,800.00 as travel taxes of plaintiffs and their physician daughter;

c. The total sum of P45,802.50, representing the cost of hospitalization at Polymedic Hospital, medical
fees, and cost of the saline solution;

2. As moral damages, the sum of P2,000,000.00;

3. As exemplary damages, the sum of P300,000.00;

4. As attorney’s fees, the sum of P250,000.00;

5. Legal interest on items 1 (a), (b), and (c); 2; and 3 hereinabove, from date of filing of the complaint
until full payment; and

6. Costs of suit.

SO ORDERED.

Aggrieved, PSI, Dr. Fuentes and Dr. Ampil interposed an appeal to the Court of Appeals, docketed as
CA-G.R. CV No. 42062.

Incidentally, on April 3, 1993, the Aganas filed with the RTC a motion for a partial execution of its
Decision, which was granted in an Order dated May 11, 1993. Thereafter, the sheriff levied upon certain
properties of Dr. Ampil and sold them for P451,275.00 and delivered the amount to the Aganas.

Following their receipt of the money, the Aganas entered into an agreement with PSI and Dr. Fuentes to
indefinitely suspend any further execution of the RTC Decision. However, not long thereafter, the
Aganas again filed a motion for an alias writ of execution against the properties of PSI and Dr. Fuentes.
On September 21, 1993, the RTC granted the motion and issued the corresponding writ, prompting Dr.
Fuentes to file with the Court of Appeals a petition for certiorari and prohibition, with prayer for
preliminary injunction, docketed as CA-G.R. SP No. 32198. During its pendency, the Court of Appeals
issued a Resolution5 dated October 29, 1993 granting Dr. Fuentes’ prayer for injunctive relief.
On January 24, 1994, CA-G.R. SP No. 32198 was consolidated with CA-G.R. CV No. 42062.

Meanwhile, on January 23, 1995, the PRC Board of Medicine rendered its Decision6 in Administrative
Case No. 1690 dismissing the case against Dr. Fuentes. The Board held that the prosecution failed to
show that Dr. Fuentes was the one who left the two pieces of gauze inside Natividad’s body; and that he
concealed such fact from Natividad.

On September 6, 1996, the Court of Appeals rendered its Decision jointly disposing of CA-G.R. CV No.
42062 and CA-G.R. SP No. 32198, thus:

WHEREFORE, except for the modification that the case against defendant-appellant Dr. Juan Fuentes
is hereby DISMISSED, and with the pronouncement that defendant-appellant Dr. Miguel Ampil is liable
to reimburse defendant-appellant Professional Services, Inc., whatever amount the latter will pay or had
paid to the plaintiffs-appellees, the decision appealed from is hereby AFFIRMED and the instant appeal
DISMISSED.

Concomitant with the above, the petition for certiorari and prohibition filed by herein defendant-appellant
Dr. Juan Fuentes in CA-G.R. SP No. 32198 is hereby GRANTED and the challenged order of the
respondent judge dated September 21, 1993, as well as the alias writ of execution issued pursuant
thereto are hereby NULLIFIED and SET ASIDE. The bond posted by the petitioner in connection with
the writ of preliminary injunction issued by this Court on November 29, 1993 is hereby cancelled.

Costs against defendants-appellants Dr. Miguel Ampil and Professional Services, Inc.

SO ORDERED.

Only Dr. Ampil filed a motion for reconsideration, but it was denied in a Resolution7 dated December 19,
1996.

Hence, the instant consolidated petitions.

In G.R. No. 126297, PSI alleged in its petition that the Court of Appeals erred in holding that: (1) it is
estopped from raising the defense that Dr. Ampil is not its employee; (2) it is solidarily liable with Dr.
Ampil; and (3) it is not entitled to its counterclaim against the Aganas. PSI contends that Dr. Ampil is not
its employee, but a mere consultant or independent contractor. As such, he alone should answer for his
negligence.

In G.R. No. 126467, the Aganas maintain that the Court of Appeals erred in finding that Dr. Fuentes is
not guilty of negligence or medical malpractice, invoking the doctrine of res ipsa loquitur. They contend
that the pieces of gauze are prima facie proofs that the operating surgeons have been negligent.

Finally, in G.R. No. 127590, Dr. Ampil asserts that the Court of Appeals erred in finding him liable for
negligence and malpractice sans evidence that he left the two pieces of gauze in Natividad’s vagina. He
pointed to other probable causes, such as: (1) it was Dr. Fuentes who used gauzes in performing the
hysterectomy; (2) the attending nurses’ failure to properly count the gauzes used during surgery; and (3)
the medical intervention of the American doctors who examined Natividad in the United States of
America.

For our resolution are these three vital issues: first, whether the Court of Appeals erred in holding Dr.
Ampil liable for negligence and malpractice; second, whether the Court of Appeals erred in absolving Dr.
Fuentes of any liability; and third, whether PSI may be held solidarily liable for the negligence of Dr.
Ampil.

I - G.R. No. 127590

Whether the Court of Appeals Erred in Holding Dr. Ampil

Liable for Negligence and Malpractice.

Dr. Ampil, in an attempt to absolve himself, gears the Court’s attention to other possible causes of
Natividad’s detriment. He argues that the Court should not discount either of the following possibilities:
first, Dr. Fuentes left the gauzes in Natividad’s body after performing hysterectomy; second, the
attending nurses erred in counting the gauzes; and third, the American doctors were the ones who
placed the gauzes in Natividad’s body.

Dr. Ampil’s arguments are purely conjectural and without basis. Records show that he did not present
any evidence to prove that the American doctors were the ones who put or left the gauzes in Natividad’s
body. Neither did he submit evidence to rebut the correctness of the record of operation, particularly the
number of gauzes used. As to the alleged negligence of Dr. Fuentes, we are mindful that Dr. Ampil
examined his (Dr. Fuentes’) work and found it in order.

The glaring truth is that all the major circumstances, taken together, as specified by the Court of
Appeals, directly point to Dr. Ampil as the negligent party, thus:

First, it is not disputed that the surgeons used gauzes as sponges to control the bleeding of the patient
during the surgical operation.

Second, immediately after the operation, the nurses who assisted in the surgery noted in their report
that the ‘sponge count (was) lacking 2’; that such anomaly was ‘announced to surgeon’ and that a
‘search was done but to no avail’ prompting Dr. Ampil to ‘continue for closure’ x x x.

Third, after the operation, two (2) gauzes were extracted from the same spot of the body of Mrs. Agana
where the surgery was performed.

An operation requiring the placing of sponges in the incision is not complete until the sponges are
properly removed, and it is settled that the leaving of sponges or other foreign substances in the wound
after the incision has been closed is at least prima facie negligence by the operating surgeon.8 To put it
simply, such act is considered so inconsistent with due care as to raise an inference of negligence.
There are even legions of authorities to the effect that such act is negligence per se.9

Of course, the Court is not blind to the reality that there are times when danger to a patient’s life
precludes a surgeon from further searching missing sponges or foreign objects left in the body. But this
does not leave him free from any obligation. Even if it has been shown that a surgeon was required by
the urgent necessities of the case to leave a sponge in his patient’s abdomen, because of the dangers
attendant upon delay, still, it is his legal duty to so inform his patient within a reasonable time thereafter
by advising her of what he had been compelled to do. This is in order that she might seek relief from the
effects of the foreign object left in her body as her condition might permit. The ruling in Smith v.
Zeagler10 is explicit, thus:

The removal of all sponges used is part of a surgical operation, and when a physician or surgeon fails to
remove a sponge he has placed in his patient’s body that should be removed as part of the operation,
he thereby leaves his operation uncompleted and creates a new condition which imposes upon him the
legal duty of calling the new condition to his patient’s attention, and endeavoring with the means he has
at hand to minimize and avoid untoward results likely to ensue therefrom.

Here, Dr. Ampil did not inform Natividad about the missing two pieces of gauze. Worse, he even misled
her that the pain she was experiencing was the ordinary consequence of her operation. Had he been
more candid, Natividad could have taken the immediate and appropriate medical remedy to remove the
gauzes from her body. To our mind, what was initially an act of negligence by Dr. Ampil has ripened into
a deliberate wrongful act of deceiving his patient.

This is a clear case of medical malpractice or more appropriately, medical negligence. To successfully
pursue this kind of case, a patient must only prove that a health care provider either failed to do
something which a reasonably prudent health care provider would have done, or that he did something
that a reasonably prudent provider would not have done; and that failure or action caused injury to the
patient.11 Simply put, the elements are duty, breach, injury and proximate causation. Dr, Ampil, as the
lead surgeon, had the duty to remove all foreign objects, such as gauzes, from Natividad’s body before
closure of the incision. When he failed to do so, it was his duty to inform Natividad about it. Dr. Ampil
breached both duties. Such breach caused injury to Natividad, necessitating her further examination by
American doctors and another surgery. That Dr. Ampil’s negligence is the proximate cause 12 of
Natividad’s injury could be traced from his act of closing the incision despite the information given by the
attending nurses that two pieces of gauze were still missing. That they were later on extracted from
Natividad’s vagina established the causal link between Dr. Ampil’s negligence and the injury. And what
further aggravated such injury was his deliberate concealment of the missing gauzes from the
knowledge of Natividad and her family.

II - G.R. No. 126467

Whether the Court of Appeals Erred in Absolving

Dr. Fuentes of any Liability

The Aganas assailed the dismissal by the trial court of the case against Dr. Fuentes on the ground that
it is contrary to the doctrine of res ipsa loquitur. According to them, the fact that the two pieces of gauze
were left inside Natividad’s body is a prima facie evidence of Dr. Fuentes’ negligence.

We are not convinced.

Literally, res ipsa loquitur means "the thing speaks for itself." It is the rule that the fact of the occurrence
of an injury, taken with the surrounding circumstances, may permit an inference or raise a presumption
of negligence, or make out a plaintiff’s prima facie case, and present a question of fact for defendant to
meet with an explanation.13 Stated differently, where the thing which caused the injury, without the fault
of the injured, is under the exclusive control of the defendant and the injury is such that it should not
have occurred if he, having such control used proper care, it affords reasonable evidence, in the
absence of explanation that the injury arose from the defendant’s want of care, and the burden of proof
is shifted to him to establish that he has observed due care and diligence.14

From the foregoing statements of the rule, the requisites for the applicability of the doctrine of res ipsa
loquitur are: (1) the occurrence of an injury; (2) the thing which caused the injury was under the control
and management of the defendant; (3) the occurrence was such that in the ordinary course of things,
would not have happened if those who had control or management used proper care; and (4) the
absence of explanation by the defendant. Of the foregoing requisites, the most instrumental is the
"control and management of the thing which caused the injury."15

We find the element of "control and management of the thing which caused the injury" to be wanting.
Hence, the doctrine of res ipsa loquitur will not lie.

It was duly established that Dr. Ampil was the lead surgeon during the operation of Natividad. He
requested the assistance of Dr. Fuentes only to perform hysterectomy when he (Dr. Ampil) found that
the malignancy in her sigmoid area had spread to her left ovary. Dr. Fuentes performed the surgery and
thereafter reported and showed his work to Dr. Ampil. The latter examined it and finding everything to
be in order, allowed Dr. Fuentes to leave the operating room. Dr. Ampil then resumed operating on
Natividad. He was about to finish the procedure when the attending nurses informed him that two pieces
of gauze were missing. A "diligent search" was conducted, but the misplaced gauzes were not found.
Dr. Ampil then directed that the incision be closed. During this entire period, Dr. Fuentes was no longer
in the operating room and had, in fact, left the hospital.

Under the "Captain of the Ship" rule, the operating surgeon is the person in complete charge of the
surgery room and all personnel connected with the operation. Their duty is to obey his orders.16 As
stated before, Dr. Ampil was the lead surgeon. In other words, he was the "Captain of the Ship." That he
discharged such role is evident from his following conduct: (1) calling Dr. Fuentes to perform a
hysterectomy; (2) examining the work of Dr. Fuentes and finding it in order; (3) granting Dr. Fuentes’
permission to leave; and (4) ordering the closure of the incision. To our mind, it was this act of ordering
the closure of the incision notwithstanding that two pieces of gauze remained unaccounted for, that
caused injury to Natividad’s body. Clearly, the control and management of the thing which caused the
injury was in the hands of Dr. Ampil, not Dr. Fuentes.

In this jurisdiction, res ipsa loquitur is not a rule of substantive law, hence, does not per se create or
constitute an independent or separate ground of liability, being a mere evidentiary rule. 17 In other words,
mere invocation and application of the doctrine does not dispense with the requirement of proof of
negligence. Here, the negligence was proven to have been committed by Dr. Ampil and not by Dr.
Fuentes.

III - G.R. No. 126297

Whether PSI Is Liable for the Negligence of Dr. Ampil

The third issue necessitates a glimpse at the historical development of hospitals and the resulting
theories concerning their liability for the negligence of physicians.

Until the mid-nineteenth century, hospitals were generally charitable institutions, providing medical
services to the lowest classes of society, without regard for a patient’s ability to pay. 18 Those who could
afford medical treatment were usually treated at home by their doctors. 19 However, the days of house
calls and philanthropic health care are over. The modern health care industry continues to distance itself
from its charitable past and has experienced a significant conversion from a not-for-profit health care to
for-profit hospital businesses. Consequently, significant changes in health law have accompanied the
business-related changes in the hospital industry. One important legal change is an increase in hospital
liability for medical malpractice. Many courts now allow claims for hospital vicarious liability under the
theories of respondeat superior, apparent authority, ostensible authority, or agency by estoppel. 20

In this jurisdiction, the statute governing liability for negligent acts is Article 2176 of the Civil Code, which
reads:

Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.

A derivative of this provision is Article 2180, the rule governing vicarious liability under the doctrine of
respondeat superior, thus:

ART. 2180. The obligation imposed by Article 2176 is demandable not only for one’s own acts or
omissions, but also for those of persons for whom one is responsible.

x x x x x x

The owners and managers of an establishment or enterprise are likewise responsible for damages
caused by their employees in the service of the branches in which the latter are employed or on the
occasion of their functions.

Employers shall be liable for the damages caused by their employees and household helpers acting
within the scope of their assigned tasks even though the former are not engaged in any business or
industry.

x x x x x x

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

A prominent civilist commented that professionals engaged by an employer, such as physicians,

dentists, and pharmacists, are not "employees" under this article because the manner in which they
perform their work is not within the control of the latter (employer). In other words, professionals are
considered personally liable for the fault or negligence they commit in the discharge of their duties, and
their employer cannot be held liable for such fault or negligence. In the context of the present case, "a
hospital cannot be held liable for the fault or negligence of a physician or surgeon in the treatment or
operation of patients."21

The foregoing view is grounded on the traditional notion that the professional status and the very nature
of the physician’s calling preclude him from being classed as an agent or employee of a hospital,
whenever he acts in a professional capacity.22 It has been said that medical practice strictly involves
highly developed and specialized knowledge,23 such that physicians are generally free to exercise their
own skill and judgment in rendering medical services sans interference. 24 Hence, when a doctor
practices medicine in a hospital setting, the hospital and its employees are deemed to subserve him in
his ministrations to the patient and his actions are of his own responsibility.25

The case of Schloendorff v. Society of New York Hospital26 was then considered an authority for this
view. The "Schloendorff doctrine" regards a physician, even if employed by a hospital, as an
independent contractor because of the skill he exercises and the lack of control exerted over his work.
Under this doctrine, hospitals are exempt from the application of the respondeat superior principle for
fault or negligence committed by physicians in the discharge of their profession.

However, the efficacy of the foregoing doctrine has weakened with the significant developments in
medical care. Courts came to realize that modern hospitals are increasingly taking active role in
supplying and regulating medical care to patients. No longer were a hospital’s functions limited to
furnishing room, food, facilities for treatment and operation, and attendants for its patients. Thus, in Bing
v. Thunig,27 the New York Court of Appeals deviated from the Schloendorff doctrine, noting that modern
hospitals actually do far more than provide facilities for treatment. Rather, they regularly employ, on a
salaried basis, a large staff of physicians, interns, nurses, administrative and manual workers. They
charge patients for medical care and treatment, even collecting for such services through legal action, if
necessary. The court then concluded that there is no reason to exempt hospitals from the universal rule
of respondeat superior.

In our shores, the nature of the relationship between the hospital and the physicians is rendered
inconsequential in view of our categorical pronouncement in Ramos v. Court of Appeals 28 that for
purposes of apportioning responsibility in medical negligence cases, an employer-employee relationship
in effect exists between hospitals and their attending and visiting physicians. This Court held:

"We now discuss the responsibility of the hospital in this particular incident. The unique practice (among
private hospitals) of filling up specialist staff with attending and visiting "consultants," who are allegedly
not hospital employees, presents problems in apportioning responsibility for negligence in medical
malpractice cases. However, the difficulty is more apparent than real.

In the first place, hospitals exercise significant control in the hiring and firing of consultants and in the
conduct of their work within the hospital premises. Doctors who apply for ‘consultant’ slots, visiting or
attending, are required to submit proof of completion of residency, their educational qualifications,
generally, evidence of accreditation by the appropriate board (diplomate), evidence of fellowship in most
cases, and references. These requirements are carefully scrutinized by members of the hospital
administration or by a review committee set up by the hospital who either accept or reject the
application. x x x.

After a physician is accepted, either as a visiting or attending consultant, he is normally required to

attend clinico-pathological conferences, conduct bedside rounds for clerks, interns and residents,
moderate grand rounds and patient audits and perform other tasks and responsibilities, for the privilege
of being able to maintain a clinic in the hospital, and/or for the privilege of admitting patients into the
hospital. In addition to these, the physician’s performance as a specialist is generally evaluated by a
peer review committee on the basis of mortality and morbidity statistics, and feedback from patients,
nurses, interns and residents. A consultant remiss in his duties, or a consultant who regularly falls short
of the minimum standards acceptable to the hospital or its peer review committee, is normally politely
terminated.

In other words, private hospitals, hire, fire and exercise real control over their attending and visiting
‘consultant’ staff. While ‘consultants’ are not, technically employees, x x x, the control exercised, the
hiring, and the right to terminate consultants all fulfill the important hallmarks of an employer-employee
relationship, with the exception of the payment of wages. In assessing whether such a relationship in
fact exists, the control test is determining. Accordingly, on the basis of the foregoing, we rule that for the
purpose of allocating responsibility in medical negligence cases, an employer-employee relationship in
effect exists between hospitals and their attending and visiting physicians. "

But the Ramos pronouncement is not our only basis in sustaining PSI’s liability. Its liability is also
anchored upon the agency principle of apparent authority or agency by estoppel and the doctrine of
corporate negligence which have gained acceptance in the determination of a hospital’s liability for
negligent acts of health professionals. The present case serves as a perfect platform to test the
applicability of these doctrines, thus, enriching our jurisprudence.

Apparent authority, or what is sometimes referred to as the "holding

out" theory, or doctrine of ostensible agency or agency by estoppel,29 has its origin from the law of
agency. It imposes liability, not as the result of the reality of a contractual relationship, but rather
because of the actions of a principal or an employer in somehow misleading the public into believing
that the relationship or the authority exists.30 The concept is essentially one of estoppel and has been
explained in this manner:
"The principal is bound by the acts of his agent with the apparent authority which he knowingly permits
the agent to assume, or which he holds the agent out to the public as possessing. The question in every
case is whether the principal has by his voluntary act placed the agent in such a situation that a person
of ordinary prudence, conversant with business usages and the nature of the particular business, is
justified in presuming that such agent has authority to perform the particular act in question.31

The applicability of apparent authority in the field of hospital liability was upheld long time ago in Irving v.
Doctor Hospital of Lake Worth, Inc.32 There, it was explicitly stated that "there does not appear to be any
rational basis for excluding the concept of apparent authority from the field of hospital liability." Thus, in
cases where it can be shown that a hospital, by its actions, has held out a particular physician as its
agent and/or employee and that a patient has accepted treatment from that physician in the reasonable
belief that it is being rendered in behalf of the hospital, then the hospital will be liable for the physician’s
negligence.

Our jurisdiction recognizes the concept of an agency by implication or estoppel. Article 1869 of the Civil
Code reads:

ART. 1869. Agency may be express, or implied from the acts of the principal, from his silence or lack of
action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without
authority.

In this case, PSI publicly displays in the lobby of the Medical City Hospital the names and
specializations of the physicians associated or accredited by it, including those of Dr. Ampil and Dr.
Fuentes. We concur with the Court of Appeals’ conclusion that it "is now estopped from passing all the
blame to the physicians whose names it proudly paraded in the public directory leading the public to
believe that it vouched for their skill and competence." Indeed, PSI’s act is tantamount to holding out to
the public that Medical City Hospital, through its accredited physicians, offers quality health care
services. By accrediting Dr. Ampil and Dr. Fuentes and publicly advertising their qualifications, the
hospital created the impression that they were its agents, authorized to perform medical or surgical
services for its patients. As expected, these patients, Natividad being one of them, accepted the
services on the reasonable belief that such were being rendered by the hospital or its employees,
agents, or servants. The trial court correctly pointed out:

x x x regardless of the education and status in life of the patient, he ought not be burdened with the
defense of absence of employer-employee relationship between the hospital and the independent
physician whose name and competence are certainly certified to the general public by the hospital’s act
of listing him and his specialty in its lobby directory, as in the case herein. The high costs of today’s
medical and health care should at least exact on the hospital greater, if not broader, legal responsibility
for the conduct of treatment and surgery within its facility by its accredited physician or surgeon,
regardless of whether he is independent or employed."33

The wisdom of the foregoing ratiocination is easy to discern. Corporate entities, like PSI, are capable of
acting only through other individuals, such as physicians. If these accredited physicians do their job well,
the hospital succeeds in its mission of offering quality medical services and thus profits financially.
Logically, where negligence mars the quality of its services, the hospital should not be allowed to
escape liability for the acts of its ostensible agents.

We now proceed to the doctrine of corporate negligence or corporate responsibility.

One allegation in the complaint in Civil Case No. Q-43332 for negligence and malpractice is that PSI as
owner, operator and manager of Medical City Hospital, "did not perform the necessary supervision nor
exercise diligent efforts in the supervision of Drs. Ampil and Fuentes and its nursing staff, resident
doctors, and medical interns who assisted Drs. Ampil and Fuentes in the performance of their duties as
surgeons."34 Premised on the doctrine of corporate negligence, the trial court held that PSI is directly
liable for such breach of duty.

We agree with the trial court.

Recent years have seen the doctrine of corporate negligence as the judicial answer to the problem of
allocating hospital’s liability for the negligent acts of health practitioners, absent facts to support the
application of respondeat superior or apparent authority. Its formulation proceeds from the judiciary’s
acknowledgment that in these modern times, the duty of providing quality medical service is no longer
the sole prerogative and responsibility of the physician. The modern hospitals have changed structure.
Hospitals now tend to organize a highly professional medical staff whose competence and performance
need to be monitored by the hospitals commensurate with their inherent responsibility to provide quality
medical care.35

The doctrine has its genesis in Darling v. Charleston Community Hospital.36 There, the Supreme Court
of Illinois held that "the jury could have found a hospital negligent, inter alia, in failing to have a sufficient
number of trained nurses attending the patient; failing to require a consultation with or examination by
members of the hospital staff; and failing to review the treatment rendered to the patient." On the basis
of Darling, other jurisdictions held that a hospital’s corporate negligence extends to permitting a
physician known to be incompetent to practice at the hospital.37 With the passage of time, more duties
were expected from hospitals, among them: (1) the use of reasonable care in the maintenance of safe
and adequate facilities and equipment; (2) the selection and retention of competent physicians; (3) the
overseeing or supervision of all persons who practice medicine within its walls; and (4) the formulation,
adoption and enforcement of adequate rules and policies that ensure quality care for its patients. 38 Thus,
in Tucson Medical Center, Inc. v. Misevich,39 it was held that a hospital, following the doctrine of
corporate responsibility, has the duty to see that it meets the standards of responsibilities for the care of
patients. Such duty includes the proper supervision of the members of its medical staff. And in Bost v.
Riley,40 the court concluded that a patient who enters a hospital does so with the reasonable expectation
that it will attempt to cure him. The hospital accordingly has the duty to make a reasonable effort to
monitor and oversee the treatment prescribed and administered by the physicians practicing in its
premises.

In the present case, it was duly established that PSI operates the Medical City Hospital for the purpose
and under the concept of providing comprehensive medical services to the public. Accordingly, it has
the duty to exercise reasonable care to protect from harm all patients admitted into its facility for medical
treatment. Unfortunately, PSI failed to perform such duty. The findings of the trial court are convincing,
thus:

x x x PSI’s liability is traceable to its failure to conduct an investigation of the matter reported in the nota
bene of the count nurse. Such failure established PSI’s part in the dark conspiracy of silence and
concealment about the gauzes. Ethical considerations, if not also legal, dictated the holding of an
immediate inquiry into the events, if not for the benefit of the patient to whom the duty is primarily owed,
then in the interest of arriving at the truth. The Court cannot accept that the medical and the healing
professions, through their members like defendant surgeons, and their institutions like PSI’s hospital
facility, can callously turn their backs on and disregard even a mere probability of mistake or negligence
by refusing or failing to investigate a report of such seriousness as the one in Natividad’s case.

It is worthy to note that Dr. Ampil and Dr. Fuentes operated on Natividad with the assistance of the
Medical City Hospital’s staff, composed of resident doctors, nurses, and interns. As such, it is
reasonable to conclude that PSI, as the operator of the hospital, has actual or constructive knowledge of
the procedures carried out, particularly the report of the attending nurses that the two pieces of gauze
were missing. In Fridena v. Evans,41 it was held that a corporation is bound by the knowledge acquired
by or notice given to its agents or officers within the scope of their authority and in reference to a matter
to which their authority extends. This means that the knowledge of any of the staff of Medical City
Hospital constitutes knowledge of PSI. Now, the failure of PSI, despite the attending nurses’ report, to
investigate and inform Natividad regarding the missing gauzes amounts to callous negligence. Not only
did PSI breach its duties to oversee or supervise all persons who practice medicine within its walls, it
also failed to take an active step in fixing the negligence committed. This renders PSI, not only
vicariously liable for the negligence of Dr. Ampil under Article 2180 of the Civil Code, but also directly
liable for its own negligence under Article 2176. In Fridena, the Supreme Court of Arizona held:

x x x In recent years, however, the duty of care owed to the patient by the hospital has expanded. The
emerging trend is to hold the hospital responsible where the hospital has failed to monitor and review
medical services being provided within its walls. See Kahn Hospital Malpractice Prevention, 27 De
Paul . Rev. 23 (1977).

Among the cases indicative of the ‘emerging trend’ is Purcell v. Zimbelman, 18 Ariz. App. 75,500 P. 2d
335 (1972). In Purcell, the hospital argued that it could not be held liable for the malpractice of a medical
practitioner because he was an independent contractor within the hospital. The Court of Appeals
pointed out that the hospital had created a professional staff whose competence and performance was
to be monitored and reviewed by the governing body of the hospital, and the court held that a hospital
would be negligent where it had knowledge or reason to believe that a doctor using the facilities was
employing a method of treatment or care which fell below the recognized standard of care.
Subsequent to the Purcell decision, the Arizona Court of Appeals held that a hospital has certain
inherent responsibilities regarding the quality of medical care furnished to patients within its walls and it
must meet the standards of responsibility commensurate with this undertaking. Beeck v. Tucson
General Hospital, 18 Ariz. App. 165, 500 P. 2d 1153 (1972). This court has confirmed the rulings of the
Court of Appeals that a hospital has the duty of supervising the competence of the doctors on its staff. x
x x.

x x x x x x

In the amended complaint, the plaintiffs did plead that the operation was performed at the hospital with
its knowledge, aid, and assistance, and that the negligence of the defendants was the proximate cause
of the patient’s injuries. We find that such general allegations of negligence, along with the evidence
produced at the trial of this case, are sufficient to support the hospital’s liability based on the theory of
negligent supervision."

Anent the corollary issue of whether PSI is solidarily liable with Dr. Ampil for damages, let it be
emphasized that PSI, apart from a general denial of its responsibility, failed to adduce evidence showing
that it exercised the diligence of a good father of a family in the accreditation and supervision of the
latter. In neglecting to offer such proof, PSI failed to discharge its burden under the last paragraph of
Article 2180 cited earlier, and, therefore, must be adjudged solidarily liable with Dr. Ampil. Moreover, as
we have discussed, PSI is also directly liable to the Aganas.

One final word. Once a physician undertakes the treatment and care of a patient, the law imposes on
him certain obligations. In order to escape liability, he must possess that reasonable degree of learning,
skill and experience required by his profession. At the same time, he must apply reasonable care and
diligence in the exercise of his skill and the application of his knowledge, and exert his best judgment.

WHEREFORE, we DENY all the petitions and AFFIRM the challenged Decision of the Court of Appeals
in CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198.

Costs against petitioners PSI and Dr. Miguel Ampil.

SO ORDERED.

G.R. No. 126297             January 31, 2007

PROFESSIONAL SERVICES, INC., Petitioner,

vs.
NATIVIDAD and ENRIQUE AGANA, Respondents.

x-----------------------x

G.R. No. 126467            January 31, 2007

NATIVIDAD (Substituted by her children MARCELINO AGANA III, ENRIQUE AGANA, JR., EMMA
AGANA ANDAYA, JESUS AGANA, and RAYMUND AGANA) and ENRIQUE AGANA, Petitioners,
vs.
JUAN FUENTES, Respondent.

x- - - - - - - - - - - - - - - - - - - -- - - - x

G.R. No. 127590            January 31, 2007

MIGUEL AMPIL, Petitioner,
vs.
NATIVIDAD AGANA and ENRIQUE AGANA, Respondents.

DECISION

SANDOVAL-GUTIERREZ, J.:
Hospitals, having undertaken one of mankind’s most important and delicate endeavors, must assume
the grave responsibility of pursuing it with appropriate care. The care and service dispensed through this
high trust, however technical, complex and esoteric its character may be, must meet standards of
responsibility commensurate with the undertaking to preserve and protect the health, and indeed, the
very lives of those placed in the hospital’s keeping.1

Assailed in these three consolidated petitions for review on certiorari is the Court of Appeals’
Decision2 dated September 6, 1996 in CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198 affirming with
modification the Decision3 dated March 17, 1993 of the Regional Trial Court (RTC), Branch 96, Quezon
City in Civil Case No. Q-43322 and nullifying its Order dated September 21, 1993.

The facts, as culled from the records, are:

On April 4, 1984, Natividad Agana was rushed to the Medical City General Hospital (Medical City
Hospital) because of difficulty of bowel movement and bloody anal discharge. After a series of medical
examinations, Dr. Miguel Ampil, petitioner in G.R. No. 127590, diagnosed her to be suffering from
"cancer of the sigmoid."

On April 11, 1984, Dr. Ampil, assisted by the medical staff4 of the Medical City Hospital, performed an
anterior resection surgery on Natividad. He found that the malignancy in her sigmoid area had spread
on her left ovary, necessitating the removal of certain portions of it. Thus, Dr. Ampil obtained the
consent of Natividad’s husband, Enrique Agana, to permit Dr. Juan Fuentes, respondent in G.R. No.
126467, to perform hysterectomy on her.

After Dr. Fuentes had completed the hysterectomy, Dr. Ampil took over, completed the operation and
closed the incision.

However, the operation appeared to be flawed. In the corresponding Record of Operation dated April
11, 1984, the attending nurses entered these remarks:

"sponge count lacking 2

"announced to surgeon searched (sic) done but to no avail continue for closure."

On April 24, 1984, Natividad was released from the hospital. Her hospital and medical bills, including the
doctors’ fees, amounted to P60,000.00.

After a couple of days, Natividad complained of excruciating pain in her anal region. She consulted both
Dr. Ampil and Dr. Fuentes about it. They told her that the pain was the natural consequence of the
surgery. Dr. Ampil then recommended that she consult an oncologist to examine the cancerous nodes
which were not removed during the operation.

On May 9, 1984, Natividad, accompanied by her husband, went to the United States to seek further
treatment. After four months of consultations and laboratory examinations, Natividad was told she was
free of cancer. Hence, she was advised to return to the Philippines.

On August 31, 1984, Natividad flew back to the Philippines, still suffering from pains. Two weeks
thereafter, her daughter found a piece of gauze protruding from her vagina. Upon being informed about
it, Dr. Ampil proceeded to her house where he managed to extract by hand a piece of gauze measuring
1.5 inches in width. He then assured her that the pains would soon vanish.

Dr. Ampil’s assurance did not come true. Instead, the pains intensified, prompting Natividad to seek
treatment at the Polymedic General Hospital. While confined there, Dr. Ramon Gutierrez detected the
presence of another foreign object in her vagina -- a foul-smelling gauze measuring 1.5 inches in width
which badly infected her vaginal vault. A recto-vaginal fistula had formed in her reproductive organs
which forced stool to excrete through the vagina. Another surgical operation was needed to remedy the
damage. Thus, in October 1984, Natividad underwent another surgery.

On November 12, 1984, Natividad and her husband filed with the RTC, Branch 96, Quezon City a
complaint for damages against the Professional Services, Inc. (PSI), owner of the Medical City Hospital,
Dr. Ampil, and Dr. Fuentes, docketed as Civil Case No. Q-43322. They alleged that the latter are liable
for negligence for leaving two pieces of gauze inside Natividad’s body and malpractice for concealing
their acts of negligence.

Meanwhile, Enrique Agana also filed with the Professional Regulation Commission (PRC) an
administrative complaint for gross negligence and malpractice against Dr. Ampil and Dr. Fuentes,
docketed as Administrative Case No. 1690. The PRC Board of Medicine heard the case only with
respect to Dr. Fuentes because it failed to acquire jurisdiction over Dr. Ampil who was then in the United
States.

On February 16, 1986, pending the outcome of the above cases, Natividad died and was duly
substituted by her above-named children (the Aganas).

On March 17, 1993, the RTC rendered its Decision in favor of the Aganas, finding PSI, Dr. Ampil and
Dr. Fuentes liable for negligence and malpractice, the decretal part of which reads:

WHEREFORE, judgment is hereby rendered for the plaintiffs ordering the defendants PROFESSIONAL
SERVICES, INC., DR. MIGUEL AMPIL and DR. JUAN FUENTES to pay to the plaintiffs, jointly and
severally, except in respect of the award for exemplary damages and the interest thereon which are the
liabilities of defendants Dr. Ampil and Dr. Fuentes only, as follows:

1. As actual damages, the following amounts:

a. The equivalent in Philippine Currency of the total of US$19,900.00 at the rate of P21.60-US$1.00, as
reimbursement of actual expenses incurred in the United States of America;

b. The sum of P4,800.00 as travel taxes of plaintiffs and their physician daughter;

c. The total sum of P45,802.50, representing the cost of hospitalization at Polymedic Hospital, medical
fees, and cost of the saline solution;

2. As moral damages, the sum of P2,000,000.00;

3. As exemplary damages, the sum of P300,000.00;

4. As attorney’s fees, the sum of P250,000.00;

5. Legal interest on items 1 (a), (b), and (c); 2; and 3 hereinabove, from date of filing of the complaint
until full payment; and

6. Costs of suit.

SO ORDERED.

Aggrieved, PSI, Dr. Fuentes and Dr. Ampil interposed an appeal to the Court of Appeals, docketed as
CA-G.R. CV No. 42062.

Incidentally, on April 3, 1993, the Aganas filed with the RTC a motion for a partial execution of its
Decision, which was granted in an Order dated May 11, 1993. Thereafter, the sheriff levied upon certain
properties of Dr. Ampil and sold them for P451,275.00 and delivered the amount to the Aganas.

Following their receipt of the money, the Aganas entered into an agreement with PSI and Dr. Fuentes to
indefinitely suspend any further execution of the RTC Decision. However, not long thereafter, the
Aganas again filed a motion for an alias writ of execution against the properties of PSI and Dr. Fuentes.
On September 21, 1993, the RTC granted the motion and issued the corresponding writ, prompting Dr.
Fuentes to file with the Court of Appeals a petition for certiorari and prohibition, with prayer for
preliminary injunction, docketed as CA-G.R. SP No. 32198. During its pendency, the Court of Appeals
issued a Resolution5 dated October 29, 1993 granting Dr. Fuentes’ prayer for injunctive relief.

On January 24, 1994, CA-G.R. SP No. 32198 was consolidated with CA-G.R. CV No. 42062.
Meanwhile, on January 23, 1995, the PRC Board of Medicine rendered its Decision6 in Administrative
Case No. 1690 dismissing the case against Dr. Fuentes. The Board held that the prosecution failed to
show that Dr. Fuentes was the one who left the two pieces of gauze inside Natividad’s body; and that he
concealed such fact from Natividad.

On September 6, 1996, the Court of Appeals rendered its Decision jointly disposing of CA-G.R. CV No.
42062 and CA-G.R. SP No. 32198, thus:

WHEREFORE, except for the modification that the case against defendant-appellant Dr. Juan Fuentes
is hereby DISMISSED, and with the pronouncement that defendant-appellant Dr. Miguel Ampil is liable
to reimburse defendant-appellant Professional Services, Inc., whatever amount the latter will pay or had
paid to the plaintiffs-appellees, the decision appealed from is hereby AFFIRMED and the instant appeal
DISMISSED.

Concomitant with the above, the petition for certiorari and prohibition filed by herein defendant-appellant
Dr. Juan Fuentes in CA-G.R. SP No. 32198 is hereby GRANTED and the challenged order of the
respondent judge dated September 21, 1993, as well as the alias writ of execution issued pursuant
thereto are hereby NULLIFIED and SET ASIDE. The bond posted by the petitioner in connection with
the writ of preliminary injunction issued by this Court on November 29, 1993 is hereby cancelled.

Costs against defendants-appellants Dr. Miguel Ampil and Professional Services, Inc.

SO ORDERED.

Only Dr. Ampil filed a motion for reconsideration, but it was denied in a Resolution7 dated December 19,
1996.

Hence, the instant consolidated petitions.

In G.R. No. 126297, PSI alleged in its petition that the Court of Appeals erred in holding that: (1) it is
estopped from raising the defense that Dr. Ampil is not its employee; (2) it is solidarily liable with Dr.
Ampil; and (3) it is not entitled to its counterclaim against the Aganas. PSI contends that Dr. Ampil is not
its employee, but a mere consultant or independent contractor. As such, he alone should answer for his
negligence.

In G.R. No. 126467, the Aganas maintain that the Court of Appeals erred in finding that Dr. Fuentes is
not guilty of negligence or medical malpractice, invoking the doctrine of res ipsa loquitur. They contend
that the pieces of gauze are prima facie proofs that the operating surgeons have been negligent.

Finally, in G.R. No. 127590, Dr. Ampil asserts that the Court of Appeals erred in finding him liable for
negligence and malpractice sans evidence that he left the two pieces of gauze in Natividad’s vagina. He
pointed to other probable causes, such as: (1) it was Dr. Fuentes who used gauzes in performing the
hysterectomy; (2) the attending nurses’ failure to properly count the gauzes used during surgery; and (3)
the medical intervention of the American doctors who examined Natividad in the United States of
America.

For our resolution are these three vital issues: first, whether the Court of Appeals erred in holding Dr.
Ampil liable for negligence and malpractice; second, whether the Court of Appeals erred in absolving Dr.
Fuentes of any liability; and third, whether PSI may be held solidarily liable for the negligence of Dr.
Ampil.

I - G.R. No. 127590

Whether the Court of Appeals Erred in Holding Dr. Ampil

Liable for Negligence and Malpractice.

Dr. Ampil, in an attempt to absolve himself, gears the Court’s attention to other possible causes of
Natividad’s detriment. He argues that the Court should not discount either of the following possibilities:
first, Dr. Fuentes left the gauzes in Natividad’s body after performing hysterectomy; second, the
attending nurses erred in counting the gauzes; and third, the American doctors were the ones who
placed the gauzes in Natividad’s body.
Dr. Ampil’s arguments are purely conjectural and without basis. Records show that he did not present
any evidence to prove that the American doctors were the ones who put or left the gauzes in Natividad’s
body. Neither did he submit evidence to rebut the correctness of the record of operation, particularly the
number of gauzes used. As to the alleged negligence of Dr. Fuentes, we are mindful that Dr. Ampil
examined his (Dr. Fuentes’) work and found it in order.

The glaring truth is that all the major circumstances, taken together, as specified by the Court of
Appeals, directly point to Dr. Ampil as the negligent party, thus:

First, it is not disputed that the surgeons used gauzes as sponges to control the bleeding of the patient
during the surgical operation.

Second, immediately after the operation, the nurses who assisted in the surgery noted in their report
that the ‘sponge count (was) lacking 2’; that such anomaly was ‘announced to surgeon’ and that a
‘search was done but to no avail’ prompting Dr. Ampil to ‘continue for closure’ x x x.

Third, after the operation, two (2) gauzes were extracted from the same spot of the body of Mrs. Agana
where the surgery was performed.

An operation requiring the placing of sponges in the incision is not complete until the sponges are
properly removed, and it is settled that the leaving of sponges or other foreign substances in the wound
after the incision has been closed is at least prima facie negligence by the operating surgeon.8 To put it
simply, such act is considered so inconsistent with due care as to raise an inference of negligence.
There are even legions of authorities to the effect that such act is negligence per se.9

Of course, the Court is not blind to the reality that there are times when danger to a patient’s life
precludes a surgeon from further searching missing sponges or foreign objects left in the body. But this
does not leave him free from any obligation. Even if it has been shown that a surgeon was required by
the urgent necessities of the case to leave a sponge in his patient’s abdomen, because of the dangers
attendant upon delay, still, it is his legal duty to so inform his patient within a reasonable time thereafter
by advising her of what he had been compelled to do. This is in order that she might seek relief from the
effects of the foreign object left in her body as her condition might permit. The ruling in Smith v.
Zeagler10 is explicit, thus:

The removal of all sponges used is part of a surgical operation, and when a physician or surgeon fails to
remove a sponge he has placed in his patient’s body that should be removed as part of the operation,
he thereby leaves his operation uncompleted and creates a new condition which imposes upon him the
legal duty of calling the new condition to his patient’s attention, and endeavoring with the means he has
at hand to minimize and avoid untoward results likely to ensue therefrom.

Here, Dr. Ampil did not inform Natividad about the missing two pieces of gauze. Worse, he even misled
her that the pain she was experiencing was the ordinary consequence of her operation. Had he been
more candid, Natividad could have taken the immediate and appropriate medical remedy to remove the
gauzes from her body. To our mind, what was initially an act of negligence by Dr. Ampil has ripened into
a deliberate wrongful act of deceiving his patient.

This is a clear case of medical malpractice or more appropriately, medical negligence. To successfully
pursue this kind of case, a patient must only prove that a health care provider either failed to do
something which a reasonably prudent health care provider would have done, or that he did something
that a reasonably prudent provider would not have done; and that failure or action caused injury to the
patient.11 Simply put, the elements are duty, breach, injury and proximate causation. Dr, Ampil, as the
lead surgeon, had the duty to remove all foreign objects, such as gauzes, from Natividad’s body before
closure of the incision. When he failed to do so, it was his duty to inform Natividad about it. Dr. Ampil
breached both duties. Such breach caused injury to Natividad, necessitating her further examination by
American doctors and another surgery. That Dr. Ampil’s negligence is the proximate cause 12 of
Natividad’s injury could be traced from his act of closing the incision despite the information given by the
attending nurses that two pieces of gauze were still missing. That they were later on extracted from
Natividad’s vagina established the causal link between Dr. Ampil’s negligence and the injury. And what
further aggravated such injury was his deliberate concealment of the missing gauzes from the
knowledge of Natividad and her family.

II - G.R. No. 126467

Whether the Court of Appeals Erred in Absolving

Dr. Fuentes of any Liability

The Aganas assailed the dismissal by the trial court of the case against Dr. Fuentes on the ground that
it is contrary to the doctrine of res ipsa loquitur. According to them, the fact that the two pieces of gauze
were left inside Natividad’s body is a prima facie evidence of Dr. Fuentes’ negligence.

We are not convinced.

Literally, res ipsa loquitur means "the thing speaks for itself." It is the rule that the fact of the occurrence
of an injury, taken with the surrounding circumstances, may permit an inference or raise a presumption
of negligence, or make out a plaintiff’s prima facie case, and present a question of fact for defendant to
meet with an explanation.13 Stated differently, where the thing which caused the injury, without the fault
of the injured, is under the exclusive control of the defendant and the injury is such that it should not
have occurred if he, having such control used proper care, it affords reasonable evidence, in the
absence of explanation that the injury arose from the defendant’s want of care, and the burden of proof
is shifted to him to establish that he has observed due care and diligence.14

From the foregoing statements of the rule, the requisites for the applicability of the doctrine of res ipsa
loquitur are: (1) the occurrence of an injury; (2) the thing which caused the injury was under the control
and management of the defendant; (3) the occurrence was such that in the ordinary course of things,
would not have happened if those who had control or management used proper care; and (4) the
absence of explanation by the defendant. Of the foregoing requisites, the most instrumental is the
"control and management of the thing which caused the injury."15

We find the element of "control and management of the thing which caused the injury" to be wanting.
Hence, the doctrine of res ipsa loquitur will not lie.

It was duly established that Dr. Ampil was the lead surgeon during the operation of Natividad. He
requested the assistance of Dr. Fuentes only to perform hysterectomy when he (Dr. Ampil) found that
the malignancy in her sigmoid area had spread to her left ovary. Dr. Fuentes performed the surgery and
thereafter reported and showed his work to Dr. Ampil. The latter examined it and finding everything to
be in order, allowed Dr. Fuentes to leave the operating room. Dr. Ampil then resumed operating on
Natividad. He was about to finish the procedure when the attending nurses informed him that two pieces
of gauze were missing. A "diligent search" was conducted, but the misplaced gauzes were not found.
Dr. Ampil then directed that the incision be closed. During this entire period, Dr. Fuentes was no longer
in the operating room and had, in fact, left the hospital.

Under the "Captain of the Ship" rule, the operating surgeon is the person in complete charge of the
surgery room and all personnel connected with the operation. Their duty is to obey his orders.16 As
stated before, Dr. Ampil was the lead surgeon. In other words, he was the "Captain of the Ship." That he
discharged such role is evident from his following conduct: (1) calling Dr. Fuentes to perform a
hysterectomy; (2) examining the work of Dr. Fuentes and finding it in order; (3) granting Dr. Fuentes’
permission to leave; and (4) ordering the closure of the incision. To our mind, it was this act of ordering
the closure of the incision notwithstanding that two pieces of gauze remained unaccounted for, that
caused injury to Natividad’s body. Clearly, the control and management of the thing which caused the
injury was in the hands of Dr. Ampil, not Dr. Fuentes.

In this jurisdiction, res ipsa loquitur is not a rule of substantive law, hence, does not per se create or
constitute an independent or separate ground of liability, being a mere evidentiary rule. 17 In other words,
mere invocation and application of the doctrine does not dispense with the requirement of proof of
negligence. Here, the negligence was proven to have been committed by Dr. Ampil and not by Dr.
Fuentes.

III - G.R. No. 126297

Whether PSI Is Liable for the Negligence of Dr. Ampil

The third issue necessitates a glimpse at the historical development of hospitals and the resulting
theories concerning their liability for the negligence of physicians.
Until the mid-nineteenth century, hospitals were generally charitable institutions, providing medical
services to the lowest classes of society, without regard for a patient’s ability to pay. 18 Those who could
afford medical treatment were usually treated at home by their doctors. 19 However, the days of house
calls and philanthropic health care are over. The modern health care industry continues to distance itself
from its charitable past and has experienced a significant conversion from a not-for-profit health care to
for-profit hospital businesses. Consequently, significant changes in health law have accompanied the
business-related changes in the hospital industry. One important legal change is an increase in hospital
liability for medical malpractice. Many courts now allow claims for hospital vicarious liability under the
theories of respondeat superior, apparent authority, ostensible authority, or agency by estoppel. 20

In this jurisdiction, the statute governing liability for negligent acts is Article 2176 of the Civil Code, which
reads:

Art. 2176. Whoever by act or omission causes damage to another, there being fault or negligence, is
obliged to pay for the damage done. Such fault or negligence, if there is no pre-existing contractual
relation between the parties, is called a quasi-delict and is governed by the provisions of this Chapter.

A derivative of this provision is Article 2180, the rule governing vicarious liability under the doctrine of
respondeat superior, thus:

ART. 2180. The obligation imposed by Article 2176 is demandable not only for one’s own acts or
omissions, but also for those of persons for whom one is responsible.

x x x x x x

The owners and managers of an establishment or enterprise are likewise responsible for damages
caused by their employees in the service of the branches in which the latter are employed or on the
occasion of their functions.

Employers shall be liable for the damages caused by their employees and household helpers acting
within the scope of their assigned tasks even though the former are not engaged in any business or
industry.

x x x x x x

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

A prominent civilist commented that professionals engaged by an employer, such as physicians,

dentists, and pharmacists, are not "employees" under this article because the manner in which they
perform their work is not within the control of the latter (employer). In other words, professionals are
considered personally liable for the fault or negligence they commit in the discharge of their duties, and
their employer cannot be held liable for such fault or negligence. In the context of the present case, "a
hospital cannot be held liable for the fault or negligence of a physician or surgeon in the treatment or
operation of patients."21

The foregoing view is grounded on the traditional notion that the professional status and the very nature
of the physician’s calling preclude him from being classed as an agent or employee of a hospital,
whenever he acts in a professional capacity.22 It has been said that medical practice strictly involves
highly developed and specialized knowledge,23 such that physicians are generally free to exercise their
own skill and judgment in rendering medical services sans interference. 24 Hence, when a doctor
practices medicine in a hospital setting, the hospital and its employees are deemed to subserve him in
his ministrations to the patient and his actions are of his own responsibility.25

The case of Schloendorff v. Society of New York Hospital26 was then considered an authority for this
view. The "Schloendorff doctrine" regards a physician, even if employed by a hospital, as an
independent contractor because of the skill he exercises and the lack of control exerted over his work.
Under this doctrine, hospitals are exempt from the application of the respondeat superior principle for
fault or negligence committed by physicians in the discharge of their profession.

However, the efficacy of the foregoing doctrine has weakened with the significant developments in
medical care. Courts came to realize that modern hospitals are increasingly taking active role in
supplying and regulating medical care to patients. No longer were a hospital’s functions limited to
furnishing room, food, facilities for treatment and operation, and attendants for its patients. Thus, in Bing
v. Thunig,27 the New York Court of Appeals deviated from the Schloendorff doctrine, noting that modern
hospitals actually do far more than provide facilities for treatment. Rather, they regularly employ, on a
salaried basis, a large staff of physicians, interns, nurses, administrative and manual workers. They
charge patients for medical care and treatment, even collecting for such services through legal action, if
necessary. The court then concluded that there is no reason to exempt hospitals from the universal rule
of respondeat superior.

In our shores, the nature of the relationship between the hospital and the physicians is rendered
inconsequential in view of our categorical pronouncement in Ramos v. Court of Appeals 28 that for
purposes of apportioning responsibility in medical negligence cases, an employer-employee relationship
in effect exists between hospitals and their attending and visiting physicians. This Court held:

"We now discuss the responsibility of the hospital in this particular incident. The unique practice (among
private hospitals) of filling up specialist staff with attending and visiting "consultants," who are allegedly
not hospital employees, presents problems in apportioning responsibility for negligence in medical
malpractice cases. However, the difficulty is more apparent than real.

In the first place, hospitals exercise significant control in the hiring and firing of consultants and in the
conduct of their work within the hospital premises. Doctors who apply for ‘consultant’ slots, visiting or
attending, are required to submit proof of completion of residency, their educational qualifications,
generally, evidence of accreditation by the appropriate board (diplomate), evidence of fellowship in most
cases, and references. These requirements are carefully scrutinized by members of the hospital
administration or by a review committee set up by the hospital who either accept or reject the
application. x x x.

After a physician is accepted, either as a visiting or attending consultant, he is normally required to

attend clinico-pathological conferences, conduct bedside rounds for clerks, interns and residents,
moderate grand rounds and patient audits and perform other tasks and responsibilities, for the privilege
of being able to maintain a clinic in the hospital, and/or for the privilege of admitting patients into the
hospital. In addition to these, the physician’s performance as a specialist is generally evaluated by a
peer review committee on the basis of mortality and morbidity statistics, and feedback from patients,
nurses, interns and residents. A consultant remiss in his duties, or a consultant who regularly falls short
of the minimum standards acceptable to the hospital or its peer review committee, is normally politely
terminated.

In other words, private hospitals, hire, fire and exercise real control over their attending and visiting
‘consultant’ staff. While ‘consultants’ are not, technically employees, x x x, the control exercised, the
hiring, and the right to terminate consultants all fulfill the important hallmarks of an employer-employee
relationship, with the exception of the payment of wages. In assessing whether such a relationship in
fact exists, the control test is determining. Accordingly, on the basis of the foregoing, we rule that for the
purpose of allocating responsibility in medical negligence cases, an employer-employee relationship in
effect exists between hospitals and their attending and visiting physicians. "

But the Ramos pronouncement is not our only basis in sustaining PSI’s liability. Its liability is also
anchored upon the agency principle of apparent authority or agency by estoppel and the doctrine of
corporate negligence which have gained acceptance in the determination of a hospital’s liability for
negligent acts of health professionals. The present case serves as a perfect platform to test the
applicability of these doctrines, thus, enriching our jurisprudence.

Apparent authority, or what is sometimes referred to as the "holding

out" theory, or doctrine of ostensible agency or agency by estoppel,29 has its origin from the law of
agency. It imposes liability, not as the result of the reality of a contractual relationship, but rather
because of the actions of a principal or an employer in somehow misleading the public into believing
that the relationship or the authority exists.30 The concept is essentially one of estoppel and has been
explained in this manner:

"The principal is bound by the acts of his agent with the apparent authority which he knowingly permits
the agent to assume, or which he holds the agent out to the public as possessing. The question in every
case is whether the principal has by his voluntary act placed the agent in such a situation that a person
of ordinary prudence, conversant with business usages and the nature of the particular business, is
justified in presuming that such agent has authority to perform the particular act in question.31
The applicability of apparent authority in the field of hospital liability was upheld long time ago in Irving v.
Doctor Hospital of Lake Worth, Inc.32 There, it was explicitly stated that "there does not appear to be any
rational basis for excluding the concept of apparent authority from the field of hospital liability." Thus, in
cases where it can be shown that a hospital, by its actions, has held out a particular physician as its
agent and/or employee and that a patient has accepted treatment from that physician in the reasonable
belief that it is being rendered in behalf of the hospital, then the hospital will be liable for the physician’s
negligence.

Our jurisdiction recognizes the concept of an agency by implication or estoppel. Article 1869 of the Civil
Code reads:

ART. 1869. Agency may be express, or implied from the acts of the principal, from his silence or lack of
action, or his failure to repudiate the agency, knowing that another person is acting on his behalf without
authority.

In this case, PSI publicly displays in the lobby of the Medical City Hospital the names and
specializations of the physicians associated or accredited by it, including those of Dr. Ampil and Dr.
Fuentes. We concur with the Court of Appeals’ conclusion that it "is now estopped from passing all the
blame to the physicians whose names it proudly paraded in the public directory leading the public to
believe that it vouched for their skill and competence." Indeed, PSI’s act is tantamount to holding out to
the public that Medical City Hospital, through its accredited physicians, offers quality health care
services. By accrediting Dr. Ampil and Dr. Fuentes and publicly advertising their qualifications, the
hospital created the impression that they were its agents, authorized to perform medical or surgical
services for its patients. As expected, these patients, Natividad being one of them, accepted the
services on the reasonable belief that such were being rendered by the hospital or its employees,
agents, or servants. The trial court correctly pointed out:

x x x regardless of the education and status in life of the patient, he ought not be burdened with the
defense of absence of employer-employee relationship between the hospital and the independent
physician whose name and competence are certainly certified to the general public by the hospital’s act
of listing him and his specialty in its lobby directory, as in the case herein. The high costs of today’s
medical and health care should at least exact on the hospital greater, if not broader, legal responsibility
for the conduct of treatment and surgery within its facility by its accredited physician or surgeon,
regardless of whether he is independent or employed."33

The wisdom of the foregoing ratiocination is easy to discern. Corporate entities, like PSI, are capable of
acting only through other individuals, such as physicians. If these accredited physicians do their job well,
the hospital succeeds in its mission of offering quality medical services and thus profits financially.
Logically, where negligence mars the quality of its services, the hospital should not be allowed to
escape liability for the acts of its ostensible agents.

We now proceed to the doctrine of corporate negligence or corporate responsibility.

One allegation in the complaint in Civil Case No. Q-43332 for negligence and malpractice is that PSI as
owner, operator and manager of Medical City Hospital, "did not perform the necessary supervision nor
exercise diligent efforts in the supervision of Drs. Ampil and Fuentes and its nursing staff, resident
doctors, and medical interns who assisted Drs. Ampil and Fuentes in the performance of their duties as
surgeons."34 Premised on the doctrine of corporate negligence, the trial court held that PSI is directly
liable for such breach of duty.

We agree with the trial court.

Recent years have seen the doctrine of corporate negligence as the judicial answer to the problem of
allocating hospital’s liability for the negligent acts of health practitioners, absent facts to support the
application of respondeat superior or apparent authority. Its formulation proceeds from the judiciary’s
acknowledgment that in these modern times, the duty of providing quality medical service is no longer
the sole prerogative and responsibility of the physician. The modern hospitals have changed structure.
Hospitals now tend to organize a highly professional medical staff whose competence and performance
need to be monitored by the hospitals commensurate with their inherent responsibility to provide quality
medical care.35

The doctrine has its genesis in Darling v. Charleston Community Hospital.36 There, the Supreme Court
of Illinois held that "the jury could have found a hospital negligent, inter alia, in failing to have a sufficient
number of trained nurses attending the patient; failing to require a consultation with or examination by
members of the hospital staff; and failing to review the treatment rendered to the patient." On the basis
of Darling, other jurisdictions held that a hospital’s corporate negligence extends to permitting a
physician known to be incompetent to practice at the hospital.37 With the passage of time, more duties
were expected from hospitals, among them: (1) the use of reasonable care in the maintenance of safe
and adequate facilities and equipment; (2) the selection and retention of competent physicians; (3) the
overseeing or supervision of all persons who practice medicine within its walls; and (4) the formulation,
adoption and enforcement of adequate rules and policies that ensure quality care for its patients. 38 Thus,
in Tucson Medical Center, Inc. v. Misevich,39 it was held that a hospital, following the doctrine of
corporate responsibility, has the duty to see that it meets the standards of responsibilities for the care of
patients. Such duty includes the proper supervision of the members of its medical staff. And in Bost v.
Riley,40 the court concluded that a patient who enters a hospital does so with the reasonable expectation
that it will attempt to cure him. The hospital accordingly has the duty to make a reasonable effort to
monitor and oversee the treatment prescribed and administered by the physicians practicing in its
premises.

In the present case, it was duly established that PSI operates the Medical City Hospital for the purpose
and under the concept of providing comprehensive medical services to the public. Accordingly, it has
the duty to exercise reasonable care to protect from harm all patients admitted into its facility for medical
treatment. Unfortunately, PSI failed to perform such duty. The findings of the trial court are convincing,
thus:

x x x PSI’s liability is traceable to its failure to conduct an investigation of the matter reported in the nota
bene of the count nurse. Such failure established PSI’s part in the dark conspiracy of silence and
concealment about the gauzes. Ethical considerations, if not also legal, dictated the holding of an
immediate inquiry into the events, if not for the benefit of the patient to whom the duty is primarily owed,
then in the interest of arriving at the truth. The Court cannot accept that the medical and the healing
professions, through their members like defendant surgeons, and their institutions like PSI’s hospital
facility, can callously turn their backs on and disregard even a mere probability of mistake or negligence
by refusing or failing to investigate a report of such seriousness as the one in Natividad’s case.

It is worthy to note that Dr. Ampil and Dr. Fuentes operated on Natividad with the assistance of the
Medical City Hospital’s staff, composed of resident doctors, nurses, and interns. As such, it is
reasonable to conclude that PSI, as the operator of the hospital, has actual or constructive knowledge of
the procedures carried out, particularly the report of the attending nurses that the two pieces of gauze
were missing. In Fridena v. Evans,41 it was held that a corporation is bound by the knowledge acquired
by or notice given to its agents or officers within the scope of their authority and in reference to a matter
to which their authority extends. This means that the knowledge of any of the staff of Medical City
Hospital constitutes knowledge of PSI. Now, the failure of PSI, despite the attending nurses’ report, to
investigate and inform Natividad regarding the missing gauzes amounts to callous negligence. Not only
did PSI breach its duties to oversee or supervise all persons who practice medicine within its walls, it
also failed to take an active step in fixing the negligence committed. This renders PSI, not only
vicariously liable for the negligence of Dr. Ampil under Article 2180 of the Civil Code, but also directly
liable for its own negligence under Article 2176. In Fridena, the Supreme Court of Arizona held:

x x x In recent years, however, the duty of care owed to the patient by the hospital has expanded. The
emerging trend is to hold the hospital responsible where the hospital has failed to monitor and review
medical services being provided within its walls. See Kahn Hospital Malpractice Prevention, 27 De
Paul . Rev. 23 (1977).

Among the cases indicative of the ‘emerging trend’ is Purcell v. Zimbelman, 18 Ariz. App. 75,500 P. 2d
335 (1972). In Purcell, the hospital argued that it could not be held liable for the malpractice of a medical
practitioner because he was an independent contractor within the hospital. The Court of Appeals
pointed out that the hospital had created a professional staff whose competence and performance was
to be monitored and reviewed by the governing body of the hospital, and the court held that a hospital
would be negligent where it had knowledge or reason to believe that a doctor using the facilities was
employing a method of treatment or care which fell below the recognized standard of care.

Subsequent to the Purcell decision, the Arizona Court of Appeals held that a hospital has certain
inherent responsibilities regarding the quality of medical care furnished to patients within its walls and it
must meet the standards of responsibility commensurate with this undertaking. Beeck v. Tucson
General Hospital, 18 Ariz. App. 165, 500 P. 2d 1153 (1972). This court has confirmed the rulings of the
Court of Appeals that a hospital has the duty of supervising the competence of the doctors on its staff. x
x x.
x x x x x x

In the amended complaint, the plaintiffs did plead that the operation was performed at the hospital with
its knowledge, aid, and assistance, and that the negligence of the defendants was the proximate cause
of the patient’s injuries. We find that such general allegations of negligence, along with the evidence
produced at the trial of this case, are sufficient to support the hospital’s liability based on the theory of
negligent supervision."

Anent the corollary issue of whether PSI is solidarily liable with Dr. Ampil for damages, let it be
emphasized that PSI, apart from a general denial of its responsibility, failed to adduce evidence showing
that it exercised the diligence of a good father of a family in the accreditation and supervision of the
latter. In neglecting to offer such proof, PSI failed to discharge its burden under the last paragraph of
Article 2180 cited earlier, and, therefore, must be adjudged solidarily liable with Dr. Ampil. Moreover, as
we have discussed, PSI is also directly liable to the Aganas.

One final word. Once a physician undertakes the treatment and care of a patient, the law imposes on
him certain obligations. In order to escape liability, he must possess that reasonable degree of learning,
skill and experience required by his profession. At the same time, he must apply reasonable care and
diligence in the exercise of his skill and the application of his knowledge, and exert his best judgment.

WHEREFORE, we DENY all the petitions and AFFIRM the challenged Decision of the Court of Appeals
in CA-G.R. CV No. 42062 and CA-G.R. SP No. 32198.

Costs against petitioners PSI and Dr. Miguel Ampil.

SO ORDERED.

G.R. No. 149454             May 28, 2004

BANK OF THE PHILIPPINE ISLANDS, petitioner,

vs.
CASA MONTESSORI INTERNATIONALE LEONARDO T. YABUT, respondents.

x ----------------------------- x

G.R. No. 149507             May 28, 2004

CASA MONTESSORI INTERNATIONALE, petitioner,

vs.
BANK OF THE PHILIPPINE ISLANDS, respondent.

DECISION

PANGANIBAN, J.:

By the nature of its functions, a bank is required to take meticulous care of the deposits of its clients,
who have the right to expect high standards of integrity and performance from it.

Among its obligations in furtherance thereof is knowing the signatures of its clients. Depositors are not
estopped from questioning wrongful withdrawals, even if they have failed to question those errors in the
statements sent by the bank to them for verification.

The Case

Before us are two Petitions for Review1 under Rule 45 of the Rules of Court, assailing the March 23,
2001 Decision2 and the August 17, 2001 Resolution3 of the Court of Appeals (CA) in CA-GR CV No.
63561. The decretal portion of the assailed Decision reads as follows:
"WHEREFORE, upon the premises, the decision appealed from is AFFIRMED with the modification that
defendant bank [Bank of the Philippine Islands (BPI)] is held liable only for one-half of the value of the
forged checks in the amount of ₱547,115.00 after deductions subject to REIMBURSEMENT from third
party defendant Yabut who is likewise ORDERED to pay the other half to plaintiff corporation [Casa
Montessori Internationale (CASA)]."4

The assailed Resolution denied all the parties’ Motions for Reconsideration.

The Facts

The facts of the case are narrated by the CA as follows:

"On November 8, 1982, plaintiff CASA Montessori International5 opened Current Account No. 0291-
0081-01 with defendant BPI[,] with CASA’s President Ms. Ma. Carina C. Lebron as one of its authorized
signatories.

"In 1991, after conducting an investigation, plaintiff discovered that nine (9) of its checks had been
encashed by a certain Sonny D. Santos since 1990 in the total amount of ₱782,000.00, on the following
dates and amounts:

‘Check
Date Amount
No.
1. 839700 April 24, 1990 ₱ 43,400.00
2. 839459 Nov. 2, 1990 110,500.00
3. 839609 Oct. 17, 1990 47,723.00
4. 839549 April 7, 1990 90,700.00
Sept. 23,
5. 839569 52,277.00
1990
6. 729149 Mar. 22, 1990 148,000.00
7. 729129 Mar. 16, 1990 51,015.00
8. 839684 Dec. 1, 1990 140,000.00
9. 729034 Mar. 2, 1990 98,985.00

Total -- ₱ 782,600.006

"It turned out that ‘Sonny D. Santos’ with account at BPI’s Greenbelt Branch [was] a fictitious name used
by third party defendant Leonardo T. Yabut who worked as external auditor of CASA. Third party
defendant voluntarily admitted that he forged the signature of Ms. Lebron and encashed the checks.
"The PNP Crime Laboratory conducted an examination of the nine (9) checks and concluded that the
handwritings thereon compared to the standard signature of Ms. Lebron were not written by the latter.

"On March 4, 1991, plaintiff filed the herein Complaint for Collection with Damages against defendant
bank praying that the latter be ordered to reinstate the amount of ₱782,500.00 7 in the current and
savings accounts of the plaintiff with interest at 6% per annum.

"On February 16, 1999, the RTC rendered the appealed decision in favor of the plaintiff."8

Ruling of the Court of Appeals

Modifying the Decision of the Regional Trial Court (RTC), the CA apportioned the loss between BPI and
CASA. The appellate court took into account CASA’s contributory negligence that resulted in the
undetected forgery. It then ordered Leonardo T. Yabut to reimburse BPI half the total amount claimed;
and CASA, the other half. It also disallowed attorney’s fees and moral and exemplary damages.

Hence, these Petitions.9

 Issues

In GR No. 149454, Petitioner BPI submits the following issues for our consideration:

"I. The Honorable Court of Appeals erred in deciding this case NOT in accord with the applicable
decisions of this Honorable Court to the effect that forgery cannot be presumed; that it must be
proved by clear, positive and convincing evidence; and that the burden of proof lies on the party alleging
the forgery.

"II. The Honorable Court of Appeals erred in deciding this case not in accord with applicable laws, in
particular the Negotiable Instruments Law (NIL) which precludes CASA, on account of its own
negligence, from asserting its forgery claim against BPI, specially taking into account the absence of
any negligence on the part of BPI."10

In GR No. 149507, Petitioner CASA submits the following issues:

"1. The Honorable Court of Appeals erred when it ruled that ‘there is no showing that [BPI], although
negligent, acted in bad faith x x x’ thus denying the prayer for the award of attorney’s fees, moral
damages and exemplary damages to [CASA]. The Honorable Court also erred when it did not order
[BPI] to pay interest on the amounts due to [CASA].

"2. The Honorable Court of Appeals erred when it declared that [CASA] was likewise negligent in the
case at bar, thus warranting its conclusion that the loss in the amount of ₱547,115.00 be ‘apportioned
between [CASA] and [BPI] x x x.’"11

These issues can be narrowed down to three. First, was there forgery under the Negotiable Instruments
Law (NIL)? Second, were any of the parties negligent and therefore precluded from setting up forgery as
a defense? Third, should moral and exemplary damages, attorney’s fees, and interest be awarded?

The Court’s Ruling

The Petition in GR No. 149454 has no merit, while that in GR No. 149507 is partly meritorious.

First Issue:

Forged Signature Wholly Inoperative

Section 23 of the NIL provides:

"Section 23. Forged signature; effect of. -- When a signature is forged or made without the authority of
the person whose signature it purports to be, it is wholly inoperative, and no right x x x to enforce
payment thereof against any party thereto, can be acquired through or under such signature, unless the
party against whom it is sought to enforce such right is precluded from setting up the forgery or want of
authority."12

Under this provision, a forged signature is a real13 or absolute defense,14 and a person whose signature
on a negotiable instrument is forged is deemed to have never become a party thereto and to have never
consented to the contract that allegedly gave rise to it.15

The counterfeiting of any writing, consisting in the signing of another’s name with intent to defraud, is
forgery.16

In the present case, we hold that there was forgery of the drawer’s signature on the check.

First, both the CA17 and the RTC18 found that Respondent Yabut himself had voluntarily admitted,
through an Affidavit, that he had forged the drawer’s signature and encashed the checks. 19 He never
refuted these findings.20 That he had been coerced into admission was not corroborated by any
evidence on record.21

Second, the appellate and the trial courts also ruled that the PNP Crime Laboratory, after its
examination of the said checks,22 had concluded that the handwritings thereon -- compared to the
standard signature of the drawer -- were not hers.23 This conclusion was the same as that in the
Report24 that the PNP Crime Laboratory had earlier issued to BPI -- the drawee bank -- upon the latter’s
request.

Indeed, we respect and affirm the RTC’s factual findings, especially when affirmed by the CA, since
these are supported by substantial evidence on record.25

Voluntary Admission Not Violative of Constitutional Rights

The voluntary admission of Yabut did not violate his constitutional rights (1) on custodial investigation,
and (2) against self-incrimination.

In the first place, he was not under custodial investigation. 26 His Affidavit was executed in private and
before private individuals.27 The mantle of protection under Section 12 of Article III of the 1987
Constitution28 covers only the period "from the time a person is taken into custody for investigation of his
possible participation in the commission of a crime or from the time he is singled out as a suspect in the
commission of a crime although not yet in custody."29

Therefore, to fall within the ambit of Section 12, quoted above, there must be an arrest or a deprivation
of freedom, with "questions propounded on him by the police authorities for the purpose of eliciting
admissions, confessions, or any information."30 The said constitutional provision does "not apply to
spontaneous statements made in a voluntary manner"31 whereby an individual orally admits to
authorship of a crime.32 "What the Constitution proscribes is the compulsory or coercive disclosure of
incriminating facts."33

Moreover, the right against self-incrimination34 under Section 17 of Article III35 of the Constitution, which
is ordinarily available only in criminal prosecutions, extends to all other government proceedings --
including civil actions, legislative investigations,36 and administrative proceedings that possess a criminal
or penal aspect37 -- but not to private investigations done by private individuals. Even in such
government proceedings, this right may be waived,38 provided the waiver is certain; unequivocal; and
intelligently, understandingly and willingly made.39

If in these government proceedings waiver is allowed, all the more is it so in private investigations. It is
of no moment that no criminal case has yet been filed against Yabut. The filing thereof is entirely up to
the appropriate authorities or to the private individuals upon whom damage has been caused. As we
shall also explain later, it is not mandatory for CASA -- the plaintiff below -- to implead Yabut in the civil
case before the lower court.

Under these two constitutional provisions, "[t]he Bill of Rights40 does not concern itself with the relation
between a private individual and another individual. It governs the relationship between the individual
and the State."41 Moreover, the Bill of Rights "is a charter of liberties for the individual and a limitation
upon the power of the [S]tate."42 These rights43 are guaranteed to preclude the slightest coercion by the
State that may lead the accused "to admit something false, not prevent him from freely and voluntarily
telling the truth."44

Yabut is not an accused here. Besides, his mere invocation of the aforesaid rights "does not
automatically entitle him to the constitutional protection."45 When he freely and voluntarily executed46 his
Affidavit, the State was not even involved. Such Affidavit may therefore be admitted without violating his
constitutional rights while under custodial investigation and against self-incrimination.

Clear, Positive and Convincing Examination and Evidence

The examination by the PNP, though inconclusive, was nevertheless clear, positive and convincing.

Forgery "cannot be presumed."47 It must be established by clear, positive and convincing

evidence.48 Under the best evidence rule as applied to documentary evidence like the checks in
question, no secondary or substitutionary evidence may inceptively be introduced, as the original writing
itself must be produced in court.49 But when, without bad faith on the part of the offeror, the original
checks have already been destroyed or cannot be produced in court, secondary evidence may be
produced.50 Without bad faith on its part, CASA proved the loss or destruction of the original checks
through the Affidavit of the one person who knew of that fact51 -- Yabut. He clearly admitted to
discarding the paid checks to cover up his misdeed. 52 In such a situation, secondary evidence like
microfilm copies may be introduced in court.
The drawer’s signatures on the microfilm copies were compared with the standard signature. PNP
Document Examiner II Josefina de la Cruz testified on cross-examination that two different persons had
written them.53 Although no conclusive report could be issued in the absence of the original
checks,54 she affirmed that her findings were 90 percent conclusive. 55 According to her, even if the
microfilm copies were the only basis of comparison, the differences were evident.56 Besides, the RTC
explained that although the Report was inconclusive, no conclusive report could have been given by the
PNP, anyway, in the absence of the original checks.57 This explanation is valid; otherwise, no such
report can ever be relied upon in court.

Even with respect to documentary evidence, the best evidence rule applies only when the contents of a
document -- such as the drawer’s signature on a check -- is the subject of inquiry. 58 As to whether the
document has been actually executed, this rule does not apply; and testimonial as well as any other
secondary evidence is admissible.59 Carina Lebron herself, the drawer’s authorized signatory, testified
many times that she had never signed those checks. Her testimonial evidence is admissible; the checks
have not been actually executed. The genuineness of her handwriting is proved, not only through the
court’s comparison of the questioned handwritings and admittedly genuine specimens thereof,60 but
above all by her.

The failure of CASA to produce the original checks neither gives rise to the presumption of suppression
of evidence61 nor creates an unfavorable inference against it.62 Such failure merely authorizes the
introduction of secondary evidence63 in the form of microfilm copies. Of no consequence is the fact that
CASA did not present the signature card containing the signatures with which those on the checks were
compared.64 Specimens of standard signatures are not limited to such a card. Considering that it was
not produced in evidence, other documents that bear the drawer’s authentic signature may be resorted
to.65 Besides, that card was in the possession of BPI -- the adverse party.

We have held that without the original document containing the allegedly forged signature, one cannot
make a definitive comparison that would establish forgery;66 and that a comparison based on a mere
reproduction of the document under controversy cannot produce reliable results.67 We have also said,
however, that a judge cannot merely rely on a handwriting expert’s testimony,68 but should also exercise
independent judgment in evaluating the authenticity of a signature under scrutiny.69 In the present case,
both the RTC and the CA conducted independent examinations of the evidence presented and arrived
at reasonable and similar conclusions. Not only did they admit secondary evidence; they also appositely
considered testimonial and other documentary evidence in the form of the Affidavit.

The best evidence rule admits of exceptions and, as we have discussed earlier, the first of these has
been met.70 The result of examining a questioned handwriting, even with the aid of experts and scientific
instruments, may be inconclusive;71 but it is a non sequitur to say that such result is not clear, positive
and convincing. The preponderance of evidence required in this case has been satisfied.72

Second Issue:

Negligence Attributable to BPI Alone

Having established the forgery of the drawer’s signature, BPI -- the drawee -- erred in making payments
by virtue thereof. The forged signatures are wholly inoperative, and CASA -- the drawer whose
authorized signatures do not appear on the negotiable instruments -- cannot be held liable thereon.
Neither is the latter precluded from setting up forgery as a real defense.

Clear Negligence in Allowing Payment Under a Forged Signature

We have repeatedly emphasized that, since the banking business is impressed with public interest, of
paramount importance thereto is the trust and confidence of the public in general. Consequently, the
highest degree of diligence73 is expected,74 and high standards of integrity and performance are even
required, of it.75 By the nature of its functions, a bank is "under obligation to treat the accounts of its
depositors with meticulous care,76 always having in mind the fiduciary nature of their relationship."77

BPI contends that it has a signature verification procedure, in which checks are honored only when the
signatures therein are verified to be the same with or similar to the specimen signatures on the
signature cards. Nonetheless, it still failed to detect the eight instances of forgery. Its negligence
consisted in the omission of that degree of diligence required78 of a bank. It cannot now feign ignorance,
for very early on we have already ruled that a bank is "bound to know the signatures of its customers;
and if it pays a forged check, it must be considered as making the payment out of its own funds, and
cannot ordinarily charge the amount so paid to the account of the depositor whose name was
forged."79 In fact, BPI was the same bank involved when we issued this ruling seventy years ago.

Neither Waiver nor Estoppel Results from Failure to Report Error in Bank Statement

The monthly statements issued by BPI to its clients contain a notice worded as follows: "If no error is
reported in ten (10) days, account will be correct."80 Such notice cannot be considered a waiver, even if
CASA failed to report the error. Neither is it estopped from questioning the mistake after the lapse of the
ten-day period.

This notice is a simple confirmation81 or "circularization" -- in accounting parlance -- that requests client-
depositors to affirm the accuracy of items recorded by the banks.82 Its purpose is to obtain from the
depositors a direct corroboration of the correctness of their account balances with their respective
banks.83 Internal or external auditors of a bank use it as a basic audit procedure84 -- the results of which
its client-depositors are neither interested in nor privy to -- to test the details of transactions and
balances in the bank’s records.85 Evidential matter obtained from independent sources outside a bank
only serves to provide greater assurance of reliability86 than that obtained solely within it for purposes of
an audit of its own financial statements, not those of its client-depositors.

Furthermore, there is always the audit risk that errors would not be detected87 for various
reasons. One, materiality is a consideration in audit planning;88 and two, the information obtained from
such a substantive test is merely presumptive and cannot be the basis of a valid waiver.89 BPI has no
right to impose a condition unilaterally and thereafter consider failure to meet such condition a waiver.
Neither may CASA renounce a right90 it has never possessed.91

Every right has subjects -- active and passive. While the active subject is entitled to demand its
enforcement, the passive one is duty-bound to suffer such enforcement.92

On the one hand, BPI could not have been an active subject, because it could not have demanded from
CASA a response to its notice. Besides, the notice was a measly request worded as follows: "Please
examine x x x and report x x x." 93 CASA, on the other hand, could not have been a passive subject,
either, because it had no obligation to respond. It could -- as it did -- choose not to respond.

Estoppel precludes individuals from denying or asserting, by their own deed or representation, anything
contrary to that established as the truth, in legal contemplation. 94 Our rules on evidence even make
a juris et de jure presumption95 that whenever one has, by one’s own act or omission, intentionally and
deliberately led another to believe a particular thing to be true and to act upon that belief, one cannot --
in any litigation arising from such act or omission -- be permitted to falsify that supposed truth.96

In the instant case, CASA never made any deed or representation that misled BPI. The former’s
omission, if any, may only be deemed an innocent mistake oblivious to the procedures and
consequences of periodic audits. Since its conduct was due to such ignorance founded upon an
innocent mistake, estoppel will not arise.97 A person who has no knowledge of or consent to a
transaction may not be estopped by it.98 "Estoppel cannot be sustained by mere argument or doubtful
inference x x x."99 CASA is not barred from questioning BPI’s error even after the lapse of the period
given in the notice.

Loss Borne by Proximate Source of Negligence

For allowing payment100 on the checks to a wrongful and fictitious payee, BPI -- the drawee bank --
becomes liable to its depositor-drawer. Since the encashing bank is one of its branches, 101 BPI can
easily go after it and hold it liable for reimbursement.102 It "may not debit the drawer’s account103 and is
not entitled to indemnification from the drawer."104 In both law and equity, when one of two innocent
persons "must suffer by the wrongful act of a third person, the loss must be borne by the one whose
negligence was the proximate cause of the loss or who put it into the power of the third person to
perpetrate the wrong."105

Proximate cause is determined by the facts of the case. 106 "It is that cause which, in natural and
continuous sequence, unbroken by any efficient intervening cause, produces the injury, and without
which the result would not have occurred."107

Pursuant to its prime duty to ascertain well the genuineness of the signatures of its client-depositors on
checks being encashed, BPI is "expected to use reasonable business prudence." 108 In the performance
of that obligation, it is bound by its internal banking rules and regulations that form part of the contract it
enters into with its depositors.109

Unfortunately, it failed in that regard. First, Yabut was able to open a bank account in one of its
branches without privity;110 that is, without the proper verification of his corresponding identification
papers. Second, BPI was unable to discover early on not only this irregularity, but also the marked
differences in the signatures on the checks and those on the signature card. Third, despite the
examination procedures it conducted, the Central Verification Unit111 of the bank even passed off these
evidently different signatures as genuine. Without exercising the required prudence on its part, BPI
accepted and encashed the eight checks presented to it. As a result, it proximately contributed to the
fraud and should be held primarily liable112 for the "negligence of its officers or agents when acting within
the course and scope of their employment."113 It must bear the loss.

CASA Not Negligent in Its Financial Affairs

In this jurisdiction, the negligence of the party invoking forgery is recognized as an exception114 to the
general rule that a forged signature is wholly inoperative.115 Contrary to BPI’s claim, however, we do not
find CASA negligent in handling its financial affairs. CASA, we stress, is not precluded from setting up
forgery as a real defense.

Role of Independent Auditor

The major purpose of an independent audit is to investigate and determine objectively if the financial
statements submitted for audit by a corporation have been prepared in accordance with the appropriate
financial reporting practices116 of private entities. The relationship that arises therefrom is both legal and
moral.117 It begins with the execution of the engagement letter118 that embodies the terms and conditions
of the audit and ends with the fulfilled expectation of the auditor’s ethical 119 and competent performance
in all aspects of the audit.120

The financial statements are representations of the client; but it is the auditor who has the responsibility
for the accuracy in the recording of data that underlies their preparation, their form of presentation, and
the opinion121 expressed therein.122 The auditor does not assume the role of employee or of
management in the client’s conduct of operations123 and is never under the control or supervision124 of
the client.

Yabut was an independent auditor125 hired by CASA. He handled its monthly bank reconciliations and
had access to all relevant documents and checkbooks.126 In him was reposed the client’s127 trust and
confidence128 that he would perform precisely those functions and apply the appropriate procedures in
accordance with generally accepted auditing standards.129 Yet he did not meet these expectations.
Nothing could be more horrible to a client than to discover later on that the person tasked to detect fraud
was the same one who perpetrated it.

Cash Balances Open to Manipulation

It is a non sequitur to say that the person who receives the monthly bank statements, together with the
cancelled checks and other debit/credit memoranda, shall examine the contents and give notice of any
discrepancies within a reasonable time. Awareness is not equipollent with discernment.

Besides, in the internal accounting control system prudently installed by CASA, 130 it was Yabut who
should examine those documents in order to prepare the bank reconciliations. 131 He owned his working
papers,132 and his output consisted of his opinion as well as the client’s financial statements and
accompanying notes thereto. CASA had every right to rely solely upon his output -- based on the terms
of the audit engagement -- and could thus be unwittingly duped into believing that everything was in
order. Besides, "[g]ood faith is always presumed and it is the burden of the party claiming otherwise to
adduce clear and convincing evidence to the contrary."133

Moreover, there was a time gap between the period covered by the bank statement and the date of its
actual receipt. Lebron personally received the December 1990 bank statement only in January 1991134 --
when she was also informed of the forgery for the first time, after which she immediately requested a
"stop payment order." She cannot be faulted for the late detection of the forged December check. After
all, the bank account with BPI was not personal but corporate, and she could not be expected to monitor
closely all its finances. A preschool teacher charged with molding the minds of the youth cannot be
burdened with the intricacies or complexities of corporate existence.
There is also a cutoff period such that checks issued during a given month, but not presented for
payment within that period, will not be reflected therein.135 An experienced auditor with intent to defraud
can easily conceal any devious scheme from a client unwary of the accounting processes involved by
manipulating the cash balances on record -- especially when bank transactions are numerous, large and
frequent. CASA could only be blamed, if at all, for its unintelligent choice in the selection and
appointment of an auditor -- a fault that is not tantamount to negligence.

Negligence is not presumed, but proven by whoever alleges it.136 Its mere existence "is not sufficient
without proof that it, and no other cause,"137 has given rise to damages.138 In addition, this fault is
common to, if not prevalent among, small and medium-sized business entities, thus leading the
Professional Regulation Commission (PRC), through the Board of Accountancy (BOA), to require today
not only accreditation for the practice of public accountancy,139 but also the registration of firms in the
practice thereof. In fact, among the attachments now required upon registration are the code of good
governance140 and a sworn statement on adequate and effective training.141

The missing checks were certainly reported by the bookkeeper142 to the accountant143 -- her immediate
supervisor -- and by the latter to the auditor. However, both the accountant and the auditor, for reasons
known only to them, assured the bookkeeper that there were no irregularities.

The bookkeeper144 who had exclusive custody of the checkbooks 145 did not have to go directly to
CASA’s president or to BPI. Although she rightfully reported the matter, neither an investigation was
conducted nor a resolution of it was arrived at, precisely because the person at the top of the helm was
the culprit. The vouchers, invoices and check stubs in support of all check disbursements could be
concealed or fabricated -- even in collusion -- and management would still have no way to verify its cash
accountabilities.

Clearly then, Yabut was able to perpetrate the wrongful act through no fault of CASA. If auditors may be
held liable for breach of contract and negligence,146 with all the more reason may they be charged with
the perpetration of fraud upon an unsuspecting client. CASA had the discretion to pursue BPI alone
under the NIL, by reason of expediency or munificence or both. Money paid under a mistake may
rightfully be recovered,147 and under such terms as the injured party may choose.

Third Issue:

Award of Monetary Claims

Moral Damages Denied

We deny CASA’s claim for moral damages.

In the absence of a wrongful act or omission, 148 or of fraud or bad faith,149 moral damages cannot be
awarded.150 The adverse result of an action does not per se make the action wrongful, or the party liable
for it. One may err, but error alone is not a ground for granting such damages.151 While no proof of
pecuniary loss is necessary therefor -- with the amount to be awarded left to the court’s discretion 152 --
the claimant must nonetheless satisfactorily prove the existence of its factual basis 153 and causal
relation154 to the claimant’s act or omission.155

Regrettably, in this case CASA was unable to identify the particular instance -- enumerated in the Civil
Code -- upon which its claim for moral damages is predicated. 156 Neither bad faith nor negligence so
gross that it amounts to malice157 can be imputed to BPI. Bad faith, under the law, "does not simply
connote bad judgment or negligence;158 it imports a dishonest purpose or some moral obliquity and
conscious doing of a wrong, a breach of a known duty through some motive or interest or ill will that
partakes of the nature of fraud."159

As a general rule, a corporation -- being an artificial person without feelings, emotions and senses, and
having existence only in legal contemplation -- is not entitled to moral damages, 160 because it cannot
experience physical suffering and mental anguish.161 However, for breach of the fiduciary duty required
of a bank, a corporate client may claim such damages when its good reputation is besmirched by such
breach, and social humiliation results therefrom.162 CASA was unable to prove that BPI had debased the
good reputation of,163 and consequently caused incalculable embarrassment to, the former. CASA’s
mere allegation or supposition thereof, without any sufficient evidence on record,164 is not enough.

Exemplary Damages Also Denied

We also deny CASA’s claim for exemplary damages.

Imposed by way of correction165 for the public good,166 exemplary damages cannot be recovered as a

matter of right.167 As we have said earlier, there is no bad faith on the part of BPI for paying the checks
of CASA upon forged signatures. Therefore, the former cannot be said to have acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner.168 The latter, having no right to moral damages,
cannot demand exemplary damages.169

Attorney’s Fees Granted

Although it is a sound policy not to set a premium on the right to litigate, 170 we find that CASA is entitled
to reasonable attorney’s fees based on "factual, legal, and equitable justification."171

When the act or omission of the defendant has compelled the plaintiff to incur expenses to protect the
latter’s interest,172 or where the court deems it just and equitable,173 attorney’s fees may be recovered. In
the present case, BPI persistently denied the claim of CASA under the NIL to recredit the latter’s
account for the value of the forged checks. This denial constrained CASA to incur expenses and exert
effort for more than ten years in order to protect its corporate interest in its bank account. Besides, we
have already cautioned BPI on a similar act of negligence it had committed seventy years ago, but it has
remained unrelenting. Therefore, the Court deems it just and equitable to grant ten percent (10%)174 of
the total value adjudged to CASA as attorney’s fees.

Interest Allowed

For the failure of BPI to pay CASA upon demand and for compelling the latter to resort to the courts to
obtain payment, legal interest may be adjudicated at the discretion of the Court, the same to run from
the filing175 of the Complaint.176 Since a court judgment is not a loan or a forbearance of recovery, the
legal interest shall be at six percent (6%) per annum.177 "If the obligation consists in the payment of a
sum of money, and the debtor incurs in delay, the indemnity for damages, there being no stipulation to
the contrary, shall be the payment of x x x legal interest, which is six percent per annum."178 The actual
base for its computation shall be "on the amount finally adjudged,"179 compounded180 annually to make
up for the cost of money181 already lost to CASA.

Moreover, the failure of the CA to award interest does not prevent us from granting it upon damages
awarded for breach of contract.182 Because BPI evidently breached its contract of deposit with CASA,
we award interest in addition to the total amount adjudged. Under Section 196 of the NIL, any case not
provided for shall be "governed by the provisions of existing legislation or, in default thereof, by the rules
of the law merchant."183 Damages are not provided for in the NIL. Thus, we resort to the Code of
Commerce and the Civil Code. Under Article 2 of the Code of Commerce, acts of commerce shall be
governed by its provisions and, "in their absence, by the usages of commerce generally observed in
each place; and in the absence of both rules, by those of the civil law."184 This law being silent, we look
at Article 18 of the Civil Code, which states: "In matters which are governed by the Code of Commerce
and special laws, their deficiency shall be supplied" by its provisions. A perusal of these three statutes
unmistakably shows that the award of interest under our civil law is justified.

WHEREFORE, the Petition in GR No. 149454 is hereby DENIED, and that in GR No. 149507 PARTLY

GRANTED. The assailed Decision of the Court of Appeals is AFFIRMED with modification: BPI is held
liable for ₱547,115, the total value of the forged checks less the amount already recovered by CASA
from Leonardo T. Yabut, plus interest at the legal rate of six percent (6%) per annum -- compounded
annually, from the filing of the complaint until paid in full; and attorney’s fees of ten percent (10%)
thereof, subject to reimbursement from Respondent Yabut for the entire amount, excepting attorney’s
fees. Let a copy of this Decision be furnished the Board of Accountancy of the Professional Regulation
Commission for such action as it may deem appropriate against Respondent Yabut. No costs.

SO ORDERED.

G.R. No. 129792 December 21, 1999

JARCO MARKETING CORPORATION, LEONARDO KONG, JOSE TIOPE and ELISA

PANELO, petitioners,
vs.
HONORABLE COURT OF APPEALS, CONRADO C. AGUILAR and CRISELDA R.
AGUILAR, respondents.
 

DAVIDE, JR., J.:

In this petition for review on certiorari under Rule 45 of the Rules of Court, petitioners seek the reversal
of the 17 June 1996 decision 1 of the Court of Appeals in C.A. G.R. No. CV 37937 and the
resolution 2 denying their motion for reconsideration. The assailed decision set aside the 15 January
1992 judgment of the Regional Trial Court (RTC), Makati City, Branch 60 in Civil Case No. 7119 and
ordered petitioners to pay damages and attorney's fees to private respondents Conrado and Criselda
(CRISELDA) Aguilar.

Petitioner Jarco Marketing Corporation is the owner of Syvel's Department Store, Makati City.
Petitioners Leonardo Kong, Jose Tiope and Elisa Panelo are the store's branch manager, operations
manager, and supervisor, respectively. Private respondents are spouses and the parents of Zhieneth
Aguilar (ZHIENETH).

In the afternoon of 9 May 1983, CRISELDA and ZHIENETH were at the 2nd floor of Syvel's Department
Store, Makati City. CRISELDA was signing her credit card slip at the payment and verification counter
when she felt a sudden gust of wind and heard a loud thud. She looked behind her. She then beheld her
daughter ZHIENETH on the floor, her young body pinned by the bulk of the store's gift-wrapping
counter/structure. ZHIENETH was crying and screaming for help. Although shocked, CRISELDA was
quick to ask the assistance of the people around in lifting the counter and retrieving ZHIENETH from the
floor. 3

ZHIENETH was quickly rushed to the Makati Medical Center where she was operated on. The next day
ZHIENETH lost her speech and thereafter communicated with CRISELDA by writing on a magic slate.
The injuries she sustained took their toil on her young body. She died fourteen (14) days after the
accident or on 22 May 1983, on the hospital bed. She was six years old. 4

The cause of her death was attributed to the injuries she sustained. The provisional medical
certificate 5 issued by ZHIENETH's attending doctor described the extent of her injuries:

Diagnoses:

1. Shock, severe, sec. to intra-abdominal injuries due to blunt injury

2. Hemorrhage, massive, intraperitoneal sec. to laceration, (L) lobe liver

3. Rupture, stomach, anterior & posterior walls

4. Complete transection, 4th position, duodenum

5. Hematoma, extensive, retroperitoneal

6. Contusion, lungs, severe

CRITICAL

After the burial of their daughter, private respondents demanded upon petitioners the reimbursement of
the hospitalization, medical bills and wake and funeral expenses 6 which they had incurred. Petitioners
refused to pay. Consequently, private respondents filed a complaint for damages, docketed as Civil
Case No. 7119 wherein they sought the payment of P157,522.86 for actual damages, P300,000 for
moral damages, P20,000 for attorney's fees and an unspecified amount for loss of income and
exemplary damages.

In their answer with counterclaim, petitioners denied any liability for the injuries and consequent death of
ZHIENETH. They claimed that CRISELDA was negligent in exercising care and diligence over her
daughter by allowing her to freely roam around in a store filled with glassware and appliances.
ZHIENETH too, was guilty of contributory negligence since she climbed the counter, triggering its
eventual collapse on her. Petitioners also emphasized that the counter was made of sturdy wood with a
strong support; it never fell nor collapsed for the past fifteen years since its construction.
Additionally, petitioner Jarco Marketing Corporation maintained that it observed the diligence of a good
father of a family in the selection, supervision and control of its employees. The other petitioners
likewise raised due care and diligence in the performance of their duties and countered that the
complaint was malicious for which they suffered besmirched reputation and mental anguish. They
sought the dismissal of the complaint and an award of moral and exemplary damages and attorney's
fees in their favor.

In its decision 7 the trial court dismissed the complaint and counterclaim after finding that the
preponderance of the evidence favored petitioners. It ruled that the proximate cause of the fall of the
counter on ZHIENETH was her act of clinging to it. It believed petitioners' witnesses who testified that
ZHIENETH clung to the counter, afterwhich the structure and the girl fell with the structure falling on top
of her, pinning her stomach. In contrast, none of private respondents' witnesses testified on how the
counter fell. The trial court also held that CRISELDA's negligence contributed to ZHIENETH's accident.

In absolving petitioners from any liability, the trial court reasoned that the counter was situated at the
end or corner of the 2nd floor as a precautionary measure hence, it could not be considered as an
attractive nuisance. 8 The counter was higher than ZHIENETH. It has been in existence for fifteen years.
Its structure was safe and well-balanced. ZHIENETH, therefore, had no business climbing on and
clinging to it.

Private respondents appealed the decision, attributing as errors of the trial court its findings that: (1) the
proximate cause of the fall of the counter was ZHIENETH's misbehavior; (2) CRISELDA was negligent
in her care of ZHIENETH; (3) petitioners were not negligent in the maintenance of the counter; and (4)
petitioners were not liable for the death of ZHIENETH.

Further, private respondents asserted that ZHIENETH should be entitled to the conclusive presumption
that a child below nine (9) years is incapable of contributory negligence. And even if ZHIENETH, at six
(6) years old, was already capable of contributory negligence, still it was physically impossible for her to
have propped herself on the counter. She had a small frame (four feet high and seventy pounds) and
the counter was much higher and heavier than she was. Also, the testimony of one of the store's former
employees, Gerardo Gonzales, who accompanied ZHIENETH when she was brought to the emergency
room of the Makati Medical Center belied petitioners' theory that ZHIENETH climbed the counter.
Gonzales claimed that when ZHIENETH was asked by the doctor what she did, ZHIENETH replied,
"[N]othing, I did not come near the counter and the counter just fell on me." 9 Accordingly, Gonzales'
testimony on ZHIENETH's spontaneous declaration should not only be considered as part of res
gestae but also accorded credit.

Moreover, negligence could not be imputed to CRISELDA for it was reasonable for her to have let go of
ZHIENETH at the precise moment that she was signing the credit card slip.

Finally, private respondents vigorously maintained that the proximate cause of ZHIENETH's death, was
petitioners' negligence in failing to institute measures to have the counter permanently nailed.

On the other hand, petitioners argued that private respondents raised purely factual issues which could
no longer be disturbed. They explained that ZHIENETH's death while unfortunate and tragic, was an
accident for which neither CRISELDA nor even ZHIENETH could entirely be held faultless and
blameless. Further, petitioners adverted to the trial court's rejection of Gonzales' testimony as unworthy
of credence.

As to private respondent's claim that the counter should have been nailed to the ground, petitioners
justified that it was not necessary. The counter had been in existence for several years without any prior
accident and was deliberately placed at a corner to avoid such accidents. Truth to tell, they acted
without fault or negligence for they had exercised due diligence on the matter. In fact, the criminal
case 10 for homicide through simple negligence filed by private respondents against the individual
petitioners was dismissed; a verdict of acquittal was rendered in their favor.

The Court of Appeals, however, decided in favor of private respondents and reversed the appealed
judgment. It found that petitioners were negligent in maintaining a structurally dangerous counter. The
counter was shaped like an inverted "L" 11 with a top wider than the base. It was top heavy and the
weight of the upper portion was neither evenly distributed nor supported by its narrow base. Thus, the
counter was defective, unstable and dangerous; a downward pressure on the overhanging portion or a
push from the front could cause the counter to fall. Two former employees of petitioners had already
previously brought to the attention of the management the danger the counter could cause. But the
latter ignored their concern. The Court of Appeals faulted the petitioners for this omission, and
concluded that the incident that befell ZHIENETH could have been avoided had petitioners repaired the
defective counter. It was inconsequential that the counter had been in use for some time without a prior
incident.

The Court of Appeals declared that ZHIENETH, who was below seven (7) years old at the time of the
incident, was absolutely incapable of negligence or other tort. It reasoned that since a child under nine
(9) years could not be held liable even for an intentional wrong, then the six-year old ZHIENETH could
not be made to account for a mere mischief or reckless act. It also absolved CRISELDA of any
negligence, finding nothing wrong or out of the ordinary in momentarily allowing ZHIENETH to walk
while she signed the document at the nearby counter.

The Court of Appeals also rejected the testimonies of the witnesses of petitioners. It found them biased
and prejudiced. It instead gave credit to the testimony of disinterested witness Gonzales. The Court of
Appeals then awarded P99,420.86 as actual damages, the amount representing the hospitalization
expenses incurred by private respondents as evidenced by the hospital's statement of account. 12 It
denied an award for funeral expenses for lack of proof to substantiate the same. Instead, a
compensatory damage of P50,000 was awarded for the death of ZHIENETH.

We quote the dispositive portion of the assailed decision, 13 thus:

WHEREFORE, premises considered, the judgment of the lower court is SET ASIDE and another one is
entered against [petitioners], ordering them to pay jointly and severally unto [private respondents] the
following:

1. P50,000.00 by way of compensatory damages for the death of Zhieneth Aguilar, with legal interest
(6% p.a.) from 27 April 1984;

2. P99,420.86 as reimbursement for hospitalization expenses incurred; with legal interest (6% p.a.) from
27 April 1984;

3. P100,000.00 as moral and exemplary damages;

4. P20,000.00 in the concept of attorney's fees; and

5. Costs.

Private respondents sought a reconsideration of the decision but the same was denied in the Court of
Appeals' resolution 14 of 16 July 1997.

Petitioners now seek the reversal of the Court of Appeals' decision and the reinstatement of the
judgment of the trial court. Petitioners primarily argue that the Court of Appeals erred in disregarding the
factual findings and conclusions of the trial court. They stress that since the action was based on tort,
any finding of negligence on the part of the private respondents would necessarily negate their claim for
damages, where said negligence was the proximate cause of the injury sustained. The injury in the
instant case was the death of ZHIENETH. The proximate cause was ZHIENETH's act of clinging to the
counter. This act in turn caused the counter to fall on her. This and CRISELDA's contributory
negligence, through her failure to provide the proper care and attention to her child while inside the
store, nullified private respondents' claim for damages. It is also for these reasons that parents are
made accountable for the damage or injury inflicted on others by their minor children. Under these
circumstances, petitioners could not be held responsible for the accident that befell ZHIENETH.

Petitioners also assail the credibility of Gonzales who was already separated from Syvel's at the time he
testified; hence, his testimony might have been tarnished by ill-feelings against them.

For their part, private respondents principally reiterated their arguments that neither ZHIENETH nor
CRISELDA was negligent at any time while inside the store; the findings and conclusions of the Court of
Appeals are substantiated by the evidence on record; the testimony of Gonzales, who heard ZHIENETH
comment on the incident while she was in the hospital's emergency room should receive credence; and
finally, ZHIENETH's part of the res gestae declaration "that she did nothing to cause the heavy structure
to fall on her" should be considered as the correct version of the gruesome events.

We deny the petition.

The two issues to be resolved are: (1) whether the death of ZHIENETH was accidental or attributable to
negligence; and (2) in case of a finding of negligence, whether the same was attributable to private
respondents for maintaining a defective counter or to CRISELDA and ZHIENETH for failing to exercise
due and reasonable care while inside the store premises.

An accident pertains to an unforeseen event in which no fault or negligence attaches to the

defendant. 15 It is "a fortuitous circumstance, event or happening; an event happening without any
human agency, or if happening wholly or partly through human agency, an event which under the
circumstances is unusual or unexpected by the person to whom it happens." 16

On the other hand, negligence is the omission to do something which a reasonable man, guided by
those considerations which ordinarily regulate the conduct of human affairs, would do, or the doing of
something which a prudent and reasonable man would not do. 17 Negligence is "the failure to observe,
for the protection of the interest of another person, that degree of care, precaution and vigilance which
the circumstances justly demand, whereby such other person suffers injury." 18

Accident and negligence are intrinsically contradictory; one cannot exist with the other. Accident occurs
when the person concerned is exercising ordinary care, which is not caused by fault of any person and
which could not have been prevented by any means suggested by common prudence. 19

The test in determining the existence of negligence is enunciated in the landmark case of Plicart v.
Smith, 20 thus: Did the defendant in doing the alleged negligent act use that reasonable care and caution
which an ordinarily prudent person would have used in the same situation? If not, then he is guilty of
negligence. 21

We rule that the tragedy which befell ZHIENETH was no accident and that ZHIENETH's death could
only be attributed to negligence.

We quote the testimony of Gerardo Gonzales who was at the scene of the incident and accompanied
CRISELDA and ZHIENETH to the hospital:

Q While at the Makati Medical Center, did you hear or notice anything while the child was being treated?

A At the emergency room we were all surrounding the child. And when the doctor asked the child "what
did you do," the child said "nothing, I did not come near the counter and the counter just fell on me."

Q (COURT TO ATTY. BELTRAN)

You want the words in Tagalog to be translated?

ATTY. BELTRAN

Yes, your Honor.

COURT

Granted. Intercalate "wala po, hindi po ako lumapit doon. Basta bumagsak." 22

This testimony of Gonzales pertaining to ZHIENETH's statement formed (and should be admitted as)
part of the res gestae under Section 42, Rule 130 of the Rules of Court, thus:

Part of res gestae. Statements made by a person while a startling occurrence is taking place or
immediately prior or subsequent thereto with respect to the circumstances thereof, may be given in
evidence as part of the res gestae. So, also, statements accompanying an equivocal act material to the
issue, and giving it a legal significance, may be received as part of the res gestae.

It is axiomatic that matters relating to declarations of pain or suffering and statements made to a
physician are generally considered declarations and admissions. 23 All that is required for their
admissibility as part of the res gestae is that they be made or uttered under the influence of a startling
event before the declarant had the time to think and concoct a falsehood as witnessed by the person
who testified in court. Under the circumstances thus described, it is unthinkable for ZHIENETH, a child
of such tender age and in extreme pain, to have lied to a doctor whom she trusted with her life. We
therefore accord credence to Gonzales' testimony on the matter, i.e., ZHIENETH performed no act that
facilitated her tragic death. Sadly, petitioners did, through their negligence or omission to secure or
make stable the counter's base.

Gonzales' earlier testimony on petitioners' insistence to keep and maintain the structurally unstable gift-
wrapping counter proved their negligence, thus:

Q When you assumed the position as gift wrapper at the second floor, will you please describe the gift
wrapping counter, were you able to examine?

A Because every morning before I start working I used to clean that counter and since not nailed and it
was only standing on the floor, it was shaky.

x x x           x x x          x x x

Q Will you please describe the counter at 5:00 o'clock [sic] in the afternoon on [sic] May 9 1983?

A At that hour on May 9, 1983, that counter was standing beside the verification counter. And since the
top of it was heavy and considering that it was not nailed, it can collapse at anytime, since the top is
heavy.

x x x           x x x          x x x

Q And what did you do?

A I informed Mr. Maat about that counter which is [sic] shaky and since Mr. Maat is fond of putting
display decorations on tables, he even told me that I would put some decorations. But since I told him
that it not [sic] nailed and it is shaky he told me "better inform also the company about it." And since the
company did not do anything about the counter, so I also did not do anything about the
counter. 24 [Emphasis supplied]

Ramon Guevarra, another former employee, corroborated the testimony of Gonzales, thus:

Q Will you please described [sic] to the honorable Court the counter where you were assigned in
January 1983?

x x x           x x x          x x x

A That counter assigned to me was when my supervisor ordered me to carry that counter to another
place. I told him that the counter needs nailing and it has to be nailed because it might cause injury or
accident to another since it was shaky.

Q When that gift wrapping counter was transferred at the second floor on February 12, 1983, will you
please describe that to the honorable Court?

A I told her that the counter wrapper [sic] is really in good [sic] condition; it was shaky. I told her that we
had to nail it.

Q When you said she, to whom are you referring to [sic]?

A I am referring to Ms. Panelo, sir.

Q And what was the answer of Ms. Panelo when you told her that the counter was shaky?

A She told me "Why do you have to teach me. You are only my subordinate and you are to teach me?"
And she even got angry at me when I told her that.

x x x           x x x          x x x
Q From February 12, 1983 up to May 9, 1983, what if any, did Ms. Panelo or any employee of the
management do to that (sic)

x x x           x x x          x x x

Witness:

None, sir. They never nailed the counter. They only nailed the counter after the accident
happened. 25 [Emphasis supplied]

Without doubt, petitioner Panelo and another store supervisor were personally informed of the danger
posed by the unstable counter. Yet, neither initiated any concrete action to remedy the situation nor
ensure the safety of the store's employees and patrons as a reasonable and ordinary prudent man
would have done. Thus, as confronted by the situation petitioners miserably failed to discharge the due
diligence required of a good father of a family.

On the issue of the credibility of Gonzales and Guevarra, petitioners failed to establish that the former's
testimonies were biased and tainted with partiality. Therefore, the allegation that Gonzales and
Guevarra's testimonies were blemished by "ill feelings" against petitioners — since they (Gonzales and
Guevarra) were already separated from the company at the time their testimonies were offered in court
— was but mere speculation and deserved scant consideration.

It is settled that when the issue concerns the credibility of witnesses, the appellate courts will not as a
general rule disturb the findings of the trial court, which is in a better position to determine the same.
The trial court has the distinct advantage of actually hearing the testimony of and observing the
deportment of the witnesses. 26 However, the rule admits of exceptions such as when its evaluation was
reached arbitrarily or it overlooked or failed to appreciate some facts or circumstances of weight and
substance which could affect the result of the case. 27 In the instant case, petitioners failed to bring their
claim within the exception.

Anent the negligence imputed to ZHIENETH, we apply the conclusive presumption that favors children
below nine (9) years old in that they are incapable of contributory negligence. In his book, 28 former
Judge Cezar S. Sangco stated:

In our jurisdiction, a person under nine years of age is conclusively presumed to have acted without
discernment, and is, on that account, exempt from criminal liability. The same presumption and a like
exemption from criminal liability obtains in a case of a person over nine and under fifteen years of age,
unless it is shown that he has acted with discernment. Since negligence may be a felony and a quasi-
delict and required discernment as a condition of liability, either criminal or civil, a child under nine years
of age is, by analogy, conclusively presumed to be incapable of negligence; and that the presumption of
lack of discernment or incapacity for negligence in the case of a child over nine but under fifteen years
of age is a rebuttable one, under our law. The rule, therefore, is that a child under nine years of age
must be conclusively presumed incapable of contributory negligence as a matter of law. [Emphasis
supplied]

Even if we attribute contributory negligence to ZHIENETH and assume that she climbed over the
counter, no injury should have occurred if we accept petitioners' theory that the counter was stable and
sturdy. For if that was the truth, a frail six-year old could not have caused the counter to collapse. The
physical analysis of the counter by both the trial court and Court of Appeals and a scrutiny of the
evidence 29 on record reveal otherwise, i.e., it was not durable after all. Shaped like an inverted "L," the
counter was heavy, huge, and its top laden with formica. It protruded towards the customer waiting area
and its base was not secured. 30

CRISELDA too, should be absolved from any contributory negligence. Initially, ZHIENETH held on to
CRISELDA's waist, later to the latter's hand. 31 CRISELDA momentarily released the child's hand from
her clutch when she signed her credit card slip. At this precise moment, it was reasonable and usual for
CRISELDA to let go of her child. Further, at the time ZHIENETH was pinned down by the counter, she
was just a foot away from her mother; and the gift-wrapping counter was just four meters away from
CRISELDA. 32 The time and distance were both significant. ZHIENETH was near her mother and did not
loiter as petitioners would want to impress upon us. She even admitted to the doctor who treated her at
the hospital that she did not do anything; the counter just fell on her.
WHEREFORE, in view of all the foregoing, the instant petition is DENIED and the challenged decision
of the Court of Appeals of 17 June 1996 in C.A. G.R. No. CV 37937 is hereby AFFIRMED.

Costs against petitioners.

SO ORDERED.

G.R. No. L-3422             June 13, 1952

HIDALGO ENTERPRISES, INC., petitioner,

vs.
GUILLERMO BALANDAN, ANSELMA ANILA and THE COURT OF APPEALS, respondents.

Quisumbing, Sycip, Quisumbing and Salazar for petitioner.

Antonio M. Moncado for respondents.

BENGZON, J.:

This is an appeal by certiorari, from a decision of the Court of Appeals requiring Hidalgo Enterprises,
Inc. to pay Guillermo Balandan and his wife, damages in the sum of P2,000 for the death of their son
Mario.

It appears that the petitioner Hidalgo Enterprises, Inc. "was the owner of an ice-plant factory in the City
of San Pablo, Laguna, in whose premises were installed two tanks full of water, nine feet deep, for
cooling purposes of its engine. While the factory compound was surrounded with fence, the tanks
themselves were not provided with any kind of fence or top covers. The edges of the tanks were barely
a foot high from the surface of the ground. Through the wide gate entrance, which is continually open,
motor vehicles hauling ice and persons buying said commodity passed, and any one could easily enter
the said factory, as he pleased. There was no guard assigned on the gate. At about noon of April 16,
1948, plaintiff's son, Mario Balandan, a boy barely 8 years old, while playing with and in company of
other boys of his age entered the factory premises through the gate, to take a bath in one of said tanks;
and while thus bathing, Mario sank to the bottom of the tank, only to be fished out later, already a
cadaver, having been died of "asphyxia secondary to drowning."

The Court of Appeals, and the Court of First Instance of Laguna, took the view that the petitioner
maintained an attractive nuisance (the tanks), and neglected to adopt the necessary precautions to
avoid accidents to persons entering its premises. It applied the doctrine of attractive nuisance, of
American origin, recognized in this Jurisdiction in Taylor vs. Manila Electric  16 Phil., 8.

The doctrine may be stated, in short, as follows: One who maintains on his premises dangerous
instrumentalities or appliances of a character likely to attract children in play, and who fails to exercise
ordinary care to prevent children from playing therewith or resorting thereto, is liable to a child of tender
years who is injured thereby, even if the child is technically a trespasser in the premises. (See  65
C.J.S., p. 455.)

The principle reason for the doctrine is that the condition or appliance in question although its danger is
apparent to those of age, is so enticing or alluring to children of tender years as to induce them to
approach, get on or use it, and this attractiveness is an implied invitation to such children (65 C.J.S., p.
458).

Now, is a swimming pool or water tank an instrumentality or appliance likely to attract the little children
in play? In other words is the body of water an attractive nuisance?

The great majority of American decisions say no.

The attractive nuisance doctrine generally is not applicable to bodies of water, artificial as well as
natural, in the absence of some unusual condition or artificial feature other than the mere water and its
location.

There are numerous cases in which the attractive nuisance doctrine has not been held not to be
applicable to ponds or reservoirs, pools of water, streams, canals, dams, ditches, culverts, drains,
cesspools or sewer pools, . . . (65 C.J.S., p. 476 et seg. citing decisions of California, Georgia, Idaho,
Illinois, Kansas, Iowa, Louisiana, Miss., Missouri, Montana, Oklahoma, Pennsylvania, Tennessee,
Texas, Nebraska, Wisconsin.)

In fairness to the Court of Appeals it should be stated that the above volume of Corpus Juris Secundum
was published in 1950, whereas its decision was promulgated on September 30, 1949.

The reason why a swimming pool or pond or reservoir of water is not considered an attractive nuisance
was lucidly explained by the Indiana Appellate Court as follows:

Nature has created streams, lakes and pools which attract children. Lurking in their waters is always the
danger of drowning. Against this danger children are early instructed so that they are sufficiently
presumed to know the danger; and if the owner of private property creates an artificial pool on his own
property, merely duplicating the work of nature without adding any new danger, . . . (he) is not liable
because of having created an "attractive nuisance." Anderson vs. Reith-Riley Const. Co., N. E., 2nd,
184, 185; 112 Ind. App., 170.

Therefore, as petitioner's tanks are not classified as attractive nuisance, the question whether the
petitioner had taken reasonable precautions becomes immaterial. And the other issue submitted by
petitioner — that the parents of the boy were guilty of contributory negligence precluding recovery,
because they left for Manila on that unlucky day leaving their son under the care of no responsible
individual — needs no further discussion.

The appealed decision is reversed and the Hidalgo Enterprises, Inc. is absolved from liability. No costs.

Feria, Padilla, Tuason, Montemayor, and Bautista Angelo, JJ., concur.

G.R. No. 72964 January 7, 1988

FILOMENO URBANO, petitioner,
vs.
HON. INTERMEDIATE APPELLATE COURT AND PEOPLE OF THE PHILIPPINES, respondents.

GUTIERREZ, JR., J.:

This is a petition to review the decision of the then Intermediate Appellate Court which affirmed the
decision of the then Circuit Criminal Court of Dagupan City finding petitioner Filomeno Urban guilty
beyond reasonable doubt of the crime of homicide.

The records disclose the following facts of the case.

At about 8:00 o'clock in the morning of October 23, 1980, petitioner Filomeno Urbano went to his
ricefield at Barangay Anonang, San Fabian, Pangasinan located at about 100 meters from the tobacco
seedbed of Marcelo Javier. He found the place where he stored his palay flooded with water coming
from the irrigation canal nearby which had overflowed. Urbano went to the elevated portion of the canal
to see what happened and there he saw Marcelo Javier and Emilio Erfe cutting grass. He asked them
who was responsible for the opening of the irrigation canal and Javier admitted that he was the one.
Urbano then got angry and demanded that Javier pay for his soaked palay. A quarrel between them
ensued. Urbano unsheathed his bolo (about 2 feet long, including the handle, by 2 inches wide) and
hacked Javier hitting him on the right palm of his hand, which was used in parrying the bolo hack. Javier
who was then unarmed ran away from Urbano but was overtaken by Urbano who hacked him again
hitting Javier on the left leg with the back portion of said bolo, causing a swelling on said leg. When
Urbano tried to hack and inflict further injury, his daughter embraced and prevented him from hacking
Javier.

Immediately thereafter, Antonio Erfe, Emilio Erfe, and Felipe Erfe brought Javier to his house about 50
meters away from where the incident happened. Emilio then went to the house of Barangay Captain
Menardo Soliven but not finding him there, Emilio looked for barrio councilman Felipe Solis instead.
Upon the advice of Solis, the Erfes together with Javier went to the police station of San Fabian to report
the incident. As suggested by Corporal Torio, Javier was brought to a physician. The group went to Dr.
Guillermo Padilla, rural health physician of San Fabian, who did not attend to Javier but instead
suggested that they go to Dr. Mario Meneses because Padilla had no available medicine.

After Javier was treated by Dr. Meneses, he and his companions returned to Dr. Guillermo Padilla who
conducted a medico-legal examination. Dr. Padilla issued a medico-legal certificate (Exhibit "C" dated
September 28, 1981) which reads:

TO WHOM IT MAY CONCERN:

This is to certify that I have examined the wound of Marcelo Javier, 20 years of age, married, residing at
Barangay Anonang, San Fabian, Pangasinan on October 23, 1980 and found the following:

1 -Incised wound 2 inches in length at the upper portion of the lesser palmar prominence, right.

As to my observation the incapacitation is from (7-9) days period. This wound was presented to me only
for medico-legal examination, as it was already treated by the other doctor. (p. 88, Original Records)

Upon the intercession of Councilman Solis, Urbano and Javier agreed to settle their differences. Urbano
promised to pay P700.00 for the medical expenses of Javier. Hence, on October 27, 1980, the two
accompanied by Solis appeared before the San Fabian Police to formalize their amicable settlement.
Patrolman Torio recorded the event in the police blotter (Exhibit A), to wit:

xxx xxx xxx

Entry Nr 599/27 Oct '80/103OH/ Re entry Nr 592 on page 257 both parties appeared before this Station
accompanied by brgy. councilman Felipe Solis and settled their case amicably, for they are neighbors
and close relatives to each other. Marcelo Javier accepted and granted forgiveness to Filomeno Urbano
who shoulder (sic) all the expenses in his medical treatment, and promising to him and to this Office that
this will never be repeated anymore and not to harbour any grudge against each other. (p. 87, Original
Records.)

Urbano advanced P400.00 to Javier at the police station. On November 3, 1980, the additional P300.00
was given to Javier at Urbano's house in the presence of barangay captain Soliven.

At about 1:30 a.m. on November 14, 1980, Javier was rushed to the Nazareth General Hospital in a
very serious condition. When admitted to the hospital, Javier had lockjaw and was having convulsions.
Dr. Edmundo Exconde who personally attended to Javier found that the latter's serious condition was
caused by tetanus toxin. He noticed the presence of a healing wound in Javier's palm which could have
been infected by tetanus.

On November 15, 1980 at exactly 4:18 p.m., Javier died in the hospital. The medical findings of Dr.
Exconde are as follows:

Date Diagnosis

11-14-80 ADMITTED due to trismus

adm. at DX TETANUS

1:30 AM Still having frequent muscle spasm. With diffi-

#35, 421 culty opening his mouth. Restless at times. Febrile

11-15-80 Referred. Novaldin 1 amp. inj. IM. Sudden cessa-

tion of respiration and HR after muscular spasm.

02 inhalation administered. Ambo bag resuscita-

tion and cardiac massage done but to no avail.

Pronounced dead by Dra. Cabugao at 4:18 P.M.

PMC done and cadaver brought home by rela-

tives. (p. 100, Original Records)

In an information dated April 10, 1981, Filomeno Urbano was charged with the crime of homicide before
the then Circuit Criminal Court of Dagupan City, Third Judicial District.

Upon arraignment, Urbano pleaded "not guilty." After trial, the trial court found Urbano guilty as charged.
He was sentenced to suffer an indeterminate prison term of from TWELVE (12) YEARS of prision
mayor, as minimum to SEVENTEEN (17) years, FOUR (4) MONTHS and ONE (1) DAY of reclusion
temporal, as maximum, together with the accessories of the law, to indemnify the heirs of the victim,
Marcelo Javier, in the amount of P12,000.00 without subsidiary imprisonment in case of insolvency, and
to pay the costs. He was ordered confined at the New Bilibid Prison, in Muntinlupa, Rizal upon finality of
the decision, in view of the nature of his penalty.

The then Intermediate Appellate Court affirmed the conviction of Urbano on appeal but raised the award
of indemnity to the heirs of the deceased to P30,000.00 with costs against the appellant.

The appellant filed a motion for reconsideration and/or new trial. The motion for new trial was based on
an affidavit of Barangay Captain Menardo Soliven (Annex "A") which states:

That in 1980, I was the barrio captain of Barrio Anonang, San Fabian, Pangasinan, and up to the
present having been re-elected to such position in the last barangay elections on May 17, 1982;

That sometime in the first week of November, 1980, there was a typhoon that swept Pangasinan and
other places of Central Luzon including San Fabian, a town of said province;

That during the typhoon, the sluice or control gates of the Bued irrigation dam which irrigates the
ricefields of San Fabian were closed and/or controlled so much so that water and its flow to the canals
and ditches were regulated and reduced;

That due to the locking of the sluice or control gates of the dam leading to the canals and ditches which
will bring water to the ricefields, the water in said canals and ditches became shallow which was suitable
for catching mudfishes;

That after the storm, I conducted a personal survey in the area affected, with my secretary Perfecto
Jaravata;

That on November 5, 1980, while I was conducting survey, I saw the late Marcelo Javier catching fish in
the shallow irrigation canals with some companions;

That few days there after,or on November l5, l980, I came to know that said Marcelo Javier died of
tetanus. (p. 33, Rollo)

The motion was denied. Hence, this petition.

In a resolution dated July 16, 1986, we gave due course to the petition.

The case involves the application of Article 4 of the Revised Penal Code which provides that "Criminal
liability shall be incurred: (1) By any person committing a felony (delito) although the wrongful act done
be different from that which he intended ..." Pursuant to this provision "an accused is criminally
responsible for acts committed by him in violation of law and for all the natural and logical
consequences resulting therefrom." (People v. Cardenas, 56 SCRA 631).

The record is clear that Marcelo Javier was hacked by the petitioner who used a bolo as a result of
which Javier suffered a 2-inch incised wound on his right palm; that on November 14, 1981 which was
the 22nd day after the incident, Javier was rushed to the hospital in a very serious condition and that on
the following day, November 15, 1981, he died from tetanus.
Under these circumstances, the lower courts ruled that Javier's death was the natural and logical
consequence of Urbano's unlawful act. Hence, he was declared responsible for Javier's death. Thus,
the appellate court said:

The claim of appellant that there was an efficient cause which supervened from the time the deceased
was wounded to the time of his death, which covers a period of 23 days does not deserve serious
consideration. True, that the deceased did not die right away from his wound, but the cause of his death
was due to said wound which was inflicted by the appellant. Said wound which was in the process of
healing got infected with tetanus which ultimately caused his death.

Dr. Edmundo Exconde of the Nazareth General Hospital testified that the victim suffered lockjaw
because of the infection of the wound with tetanus. And there is no other way by which he could be
infected with tetanus except through the wound in his palm (tsn., p. 78, Oct. 5, 1981). Consequently, the
proximate cause of the victim's death was the wound which got infected with tetanus. And the settled
rule in this jurisdiction is that an accused is liable for all the consequences of his unlawful act. (Article 4,
par. 1, R.P.C. People v. Red, CA 43 O.G. 5072; People v. Cornel 78 Phil. 418).

Appellant's allegation that the proximate cause of the victim's death was due to his own negligence in
going back to work without his wound being properly healed, and lately, that he went to catch fish in
dirty irrigation canals in the first week of November, 1980, is an afterthought, and a desperate attempt
by appellant to wiggle out of the predicament he found himself in. If the wound had not yet healed, it is
impossible to conceive that the deceased would be reckless enough to work with a disabled hand. (pp.
20-21, Rollo)

The petitioner reiterates his position that the proximate cause of the death of Marcelo Javier was due to
his own negligence, that Dr. Mario Meneses found no tetanus in the injury, and that Javier got infected
with tetanus when after two weeks he returned to his farm and tended his tobacco plants with his bare
hands exposing the wound to harmful elements like tetanus germs.

The evidence on record does not clearly show that the wound inflicted by Urbano was infected with
tetanus at the time of the infliction of the wound. The evidence merely confirms that the wound, which
was already healing at the time Javier suffered the symptoms of the fatal ailment, somehow got infected
with tetanus However, as to when the wound was infected is not clear from the record.

In Vda. de Bataclan, et al. v. Medina (102 Phil. 1181), we adopted the following definition of proximate
cause:

xxx xxx xxx

... A satisfactory definition of proximate cause is found in Volume 38, pages 695-696 of American
Jurisprudence, cited by plaintiffs-appellants in their brief. It is as follows:

... "that cause, which, in natural and continuous sequence, unbroken by any efficient intervening cause,
produces the injury, and without which the result would not have occurred."And more comprehensively,
"the proximate legal cause is that acting first and producing the injury, either immediately or by setting
other events in motion, all constituting a natural and continuous chain of events, each having a close
causal connection with its immediate predecessor, the final event in the chain immediately effecting the
injury as a natural and probable result of the cause which first acted, under such circumstances that the
person responsible for the first event should, as an ordinarily prudent and intelligent person, have
reasonable ground to expect at the moment of his act or default that an injury to some person might
probably result therefrom." (at pp. 185-186)

The issue, therefore, hinges on whether or not there was an efficient intervening cause from the time
Javier was wounded until his death which would exculpate Urbano from any liability for Javier's death.

We look into the nature of tetanus-

The  incubation period of tetanus, i.e., the time between injury and the appearance of unmistakable
symptoms, ranges from 2 to 56 days. However, over 80 percent of patients become symptomatic within
14 days. A short incubation period indicates severe disease, and when symptoms occur within 2 or 3
days of injury the mortality rate approaches 100 percent.
Non-specific premonitory symptoms such as restlessness, irritability, and headache are encountered
occasionally, but the commonest presenting complaints are pain and stiffness in the jaw, abdomen, or
back and difficulty swallowing. As the progresses, stiffness gives way to rigidity, and patients often
complain of difficulty opening their mouths. In fact, trismus in the commonest manifestation of tetanus
and is responsible for the familiar descriptive name of lockjaw. As more muscles are involved, rigidity
becomes generalized, and sustained contractions called risus sardonicus. The intensity and sequence
of muscle involvement is quite variable. In a small proportion of patients, only local signs and symptoms
develop in the region of the injury. In the vast majority, however, most muscles are involved to some
degree, and the signs and symptoms encountered depend upon the major muscle groups affected.

Reflex spasm usually occur within 24 to 72 hours of the first symptom, an interval referred to as the
onset time. As in the case of the incubation period, a short onset time is associated with a poor
prognosis. Spasms are caused by sudden intensification of afferent stimuli arising in the periphery,
which increases rigidity and causes simultaneous and excessive contraction of muscles and their
antagonists. Spasms may be both painful and dangerous. As the disease progresses, minimal or
inapparent stimuli produce more intense and longer lasting spasms with increasing frequency.
Respiration may be impaired by laryngospasm or tonic contraction of respiratory muscles which prevent
adequate ventilation. Hypoxia may then lead to irreversible central nervous system damage and death.

Mild tetanus is characterized by an incubation period of at least 14 days and an onset time of more than
6 days. Trismus is usually present, but dysphagia is absent and generalized spasms are brief and mild.
Moderately severe tetanus has a somewhat shorter incubation period and onset time; trismus is
marked, dysphagia and generalized rigidity are present, but ventilation remains adequate even during
spasms. The criteria for severe tetanus include a short incubation time, and an onset time of 72 hrs., or
less, severe trismus, dysphagia and rigidity and frequent prolonged, generalized convulsive spasms.
(Harrison's Principle of Internal Medicine, 1983 Edition, pp. 1004-1005; Emphasis supplied)

Therefore, medically speaking, the reaction to tetanus found inside a man's body depends on the
incubation period of the disease.

In the case at bar, Javier suffered a 2-inch incised wound on his right palm when he parried the bolo
which Urbano used in hacking him. This incident took place on October 23, 1980. After 22 days, or on
November 14, 1980, he suffered the symptoms of tetanus, like lockjaw and muscle spasms. The
following day, November 15, 1980, he died.

If, therefore, the wound of Javier inflicted by the appellant was already infected by tetanus germs at the
time, it is more medically probable that Javier should have been infected with only a mild cause of
tetanus because the symptoms of tetanus appeared on the 22nd day after the hacking incident or more
than 14 days after the infliction of the wound. Therefore, the onset time should have been more than six
days. Javier, however, died on the second day from the onset time. The more credible conclusion is that
at the time Javier's wound was inflicted by the appellant, the severe form of tetanus that killed him was
not yet present. Consequently, Javier's wound could have been infected with tetanus after the hacking
incident. Considering the circumstance surrounding Javier's death, his wound could have been infected
by tetanus 2 or 3 or a few but not 20 to 22 days before he died.

The rule is that the death of the victim must be the direct, natural, and logical consequence of the
wounds inflicted upon him by the accused. (People v. Cardenas, supra) And since we are dealing with a
criminal conviction, the proof that the accused caused the victim's death must convince a rational
mind beyond reasonable doubt. The medical findings, however, lead us to a distinct possibility that the
infection of the wound by tetanus was an efficient intervening cause later or between the time Javier
was wounded to the time of his death. The infection was, therefore, distinct and foreign to the crime.
(People v. Rellin, 77 Phil. 1038).

Doubts are present. There is a likelihood that the wound was but the remote cause and its subsequent
infection, for failure to take necessary precautions, with tetanus may have been the proximate cause of
Javier's death with which the petitioner had nothing to do. As we ruled in Manila Electric Co. v.
Remoquillo, et al. (99 Phil. 118).

"A prior and remote cause cannot be made the be of an action if such remote cause did nothing more
than furnish the condition or give rise to the occasion by which the injury was made possible, if there
intervened between such prior or remote cause and the injury a distinct, successive, unrelated, and
efficient cause of the injury, even though such injury would not have happened but for such condition or
occasion. If no danger existed in the condition except because of the independent cause, such condition
was not the proximate cause. And if an independent negligent act or defective condition sets into
operation the instances which result in injury because of the prior defective condition, such subsequent
act or condition is the proximate cause." (45 C.J. pp. 931-932). (at p. 125)

It strains the judicial mind to allow a clear aggressor to go scot free of criminal liability. At the very least,
the records show he is guilty of inflicting slight physical injuries. However, the petitioner's criminal liability
in this respect was wiped out by the victim's own act. After the hacking incident, Urbano and Javier used
the facilities of barangay mediators to effect a compromise agreement where Javier forgave Urbano
while Urbano defrayed the medical expenses of Javier. This settlement of minor offenses is allowed
under the express provisions of Presidential Decree G.R. No. 1508, Section 2(3). (See also People v.
Caruncho, 127 SCRA 16).

We must stress, however, that our discussion of proximate cause and remote cause is limited to the
criminal aspects of this rather unusual case. It does not necessarily follow that the petitioner is also free
of civil liability. The well-settled doctrine is that a person, while not criminally liable, may still be civilly
liable. Thus, in the recent case of People v. Rogelio Ligon y Tria, et al. (G.R. No. 74041, July 29, 1987),
we said:

xxx xxx xxx

... While the guilt of the accused in a criminal prosecution must be established beyond reasonable
doubt, only a preponderance of evidence is required in a civil action for damages. (Article 29, Civil
Code). The judgment of acquittal extinguishes the civil liability of the accused only when it includes a
declaration that the facts from which the civil liability might arise did not exist. (Padilla v. Court of
Appeals, 129 SCRA 559).

The reason for the provisions of article 29 of the Civil Code, which provides that the acquittal of the
accused on the ground that his guilt has not been proved beyond reasonable doubt does not
necessarily exempt him from civil liability for the same act or omission, has been explained by the Code
Commission as follows:

The old rule that the acquittal of the accused in a criminal case also releases him from civil liability is
one of the most serious flaws in the Philippine legal system. It has given use to numberless instances of
miscarriage of justice, where the acquittal was due to a reasonable doubt in the mind of the court as to
the guilt of the accused. The reasoning followed is that inasmuch as the civil responsibility is derived
from the criminal offense, when the latter is not proved, civil liability cannot be demanded.

This is one of those causes where confused thinking leads to unfortunate and deplorable
consequences. Such reasoning fails to draw a clear line of demarcation between criminal liability and
civil responsibility, and to determine the logical result of the distinction. The two liabilities are separate
and distinct from each other. One affects the social order and the other, private rights. One is for the
punishment or correction of the offender while the other is for reparation of damages suffered by the
aggrieved party. The two responsibilities are so different from each other that article 1813 of the present
(Spanish) Civil Code reads thus: "There may be a compromise upon the civil action arising from a crime;
but the public action for the imposition of the legal penalty shall not thereby be extinguished." It is just
and proper that, for the purposes of the imprisonment of or fine upon the accused, the offense should be
proved beyond reasonable doubt. But for the purpose of indemnity the complaining party, why should
the offense also be proved beyond reasonable doubt? Is not the invasion or violation of every private
right to be proved only by a preponderance of evidence? Is the right of the aggrieved person any less
private because the wrongful act is also punishable by the criminal law?

"For these reasons, the Commission recommends the adoption of the reform under discussion. It will
correct a serious defect in our law. It will close up an inexhaustible source of injustice-a cause for
disillusionment on the part of the innumerable persons injured or wronged."

The respondent court increased the P12,000.00 indemnification imposed by the trial court to
P30,000.00. However, since the indemnification was based solely on the finding of guilt beyond
reasonable doubt in the homicide case, the civil liability of the petitioner was not thoroughly examined.
This aspect of the case calls for fuller development if the heirs of the victim are so minded.

WHEREFORE, the instant petition is hereby GRANTED. The questioned decision of the then
Intermediate Appellate Court, now Court of Appeals, is REVERSED and SET ASIDE. The petitioner is
ACQUITTED of the crime of homicide. Costs  de oficio.
SO ORDERED.