LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, conjunction with Article 2180, of the Civil Code.
le 2180, of the Civil Code. The premise, however,
petitioners, vs. MARJORIE NAVIDAD, Heirs of the Late
NICANOR NAVIDAD & PRUDENT SECURITY AGENCY,
respondents
G.R. No. 145804. February 6, 2003
Civil Law; Contracts; Contract of Carriage; The law requires common
carriers to carry passengers safely using the utmost diligence of very
cautious persons with due regard for all circumstances. The law
requires common carriers to carry passengers safely using the utmost
diligence of very cautious persons with due regard for all
circumstances. Such duty of a common carrier to provide safety to its
passengers so obligates it not only during the course of the trip but
for so long as the passengers are within its premises and where they
ought to be in pursuance to the contract of carriage.
Same; Same; Same; Instances when a common carrier becomes liable
for death of or injury to passengers. The statutory provisions render
a common carrier liable for death of or injury to passengers (a)
through the negligence or willful acts of its employees or b) on account
of willful acts or negligence of other passengers or of strangers if the
common carriers employees through the exercise of due diligence
could have prevented or stopped the act or omission.
Same; Same; Same; Presumption of Negligence; In case of such death
or injury, a carrier is presumed to have been at fault or been negligent.
I n case of such death or injury, a carrier is presumed to have been
at fault or been negligent, and by simple proof of injury, the passenger
is relieved of the duty to still establish the fault or negligence of the
carrier or of its employees and the burden shifts upon the carrier to
prove that the injury is due to an unforeseen event or to force
majeure.
Same; Obligations; Tort; The premise, however, for the employers
liability is negligence or fault on the part of the employee. Should
Prudent be made likewise liable? If at all, that liability could only be
for tort under the provisions of Article 2176 and related provisions, in
for the employers liability is negligence or fault on the part of the
employee. Once such fault is established, the employer can then be
made liable on the basis of the presumption juris tantum that the
employer failed to exercise diligentissimi patris families in the selection
and supervision of its employees. The liability is primary and can only
be negated by showing due diligence in the selection and supervision
of the employee, a factual matter that has not been shown.
Same; Same; Same; In fine, a liability for tort may arise even under a
contract, where tort is that which breaches the contract. A
contractual obligation can be breached by tort and when the same act
or omission causes the injury, one resulting in culpa contractual and
the other in culpa aquiliana, Article 2194 of the Civil Code can well
apply. In fine, a liability for tort may arise even under a contract,
where tort is that which breaches the contract. Stated differently,
when an act which constitutes a breach of contract would have itself
constituted the source of a quasi-delictual liability had no contract
existed between the parties, the contract can be said to have been
breached by tort, thereby allowing the rules on tort to apply.
Same; Damages; Nominal Damages; It is an established rule that
nominal damages cannot co-exist with compensatory damages. The
award of nominal damages in addition to actual damages is untenable.
Nominal damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered by him. It is an established rule that
nominal damages cannot co-exist with compensatory damages.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Office of the Government Corporate Counsel for petitioners.
Mario F. Estayan for private respondent.
144
 Arias Law Offices for M. Navidad and Heirs of the Late N. Navidad,
Jr.
VITUG, J.:
The case before the Court is an appeal from the decision and
resolution of the Court of Appeals, promulgated on 27 April 2000 and
10 October 2000, respectively, in CA-G.R. CV No. 60720, entitled
Marjorie Navidad and Heirs of the Late Nicanor Navidad vs. Rodolfo
Roman, et al., which has modified the decision of 11 August 1998 of
the Regional Trial Court, Branch 266, Pasig City, exonerating Prudent
Security Agency (Prudent) from liability and finding Light Rail Transit
Authority (LRTA) and Rodolfo Roman liable for damages on account
of the death of Nicanor Navidad.
On 14 October 1993, about half an hour past seven oclock in the
evening, Nicanor Navidad, then drunk, entered the EDSA LRT station
after purchasing a token (representing payment of the fare). While
Navidad was standing on the platform near the LRT tracks, Junelito
Escartin, the security guard assigned to the area approached Navidad.
A misunderstanding or an altercation between the two apparently
ensued that led to a fist fight. No evidence, however, was adduced to
indicate how the fight started or who, between the two, delivered the
first blow or how Navidad later fell on the LRT tracks. At the exact
moment that Navidad fell, an LRT train, operated by petitioner Rodolfo
Roman, was coming in. Navidad was struck by the moving train, and
he was killed instantaneously.
On 08 December 1994, the widow of Nicanor, herein respondent
Marjorie Navidad, along with her children, filed a complaint for
damages against Junelito Escartin, Rodolfo Roman, the LRTA, the
Metro Transit Organization, Inc. (Metro Transit), and Prudent for the
death of her husband. LRTA and Roman filed a counterclaim against
Navidad and a cross-claim against Escartin and Prudent. Prudent, in
its answer, denied liability and averred that it had exercised due
diligence in the selection and supervision of its security guards.
The LRTA and Roman presented their evidence while Prudent and
Escartin, instead of presenting evidence, filed a demurrer contending
that Navidad had failed to prove that Escartin was negligent in his
assigned task. On 11 August 1998, the trial court rendered its
decision; it adjudged:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs
and against the defendants Prudent Security and Junelito Escartin
ordering the latter to pay jointly and severally the plaintiffs the
following:
a) 1) Actual damages of P44,830.00;
2) Compensatory damages of P443,520.00;
3) Indemnity for the death of Nicanor Navidad in the sum of
P50,000.00;
b) Moral damages of P50,000.00;
c) Attorneys fees of P20,000;
d) Costs of suit.
The complaint against defendants LRTA and Rodolfo Roman are
dismissed for lack of merit.
The compulsory counterclaim of LRTA and Roman are likewise
dismissed.
Prudent appealed to the Court of Appeals. On 27 August 2000, the
appellate court promulgated its now assailed decision exonerating
Prudent from any liability for the death of Nicanor Navidad and,
instead, holding the LRTA and Roman jointly and severally liable
thusly:
WHEREFORE, the assailed judgment is hereby MODIFIED, by
exonerating the appellants from any liability for the death of Nicanor
Navidad, Jr. Instead, appellees Rodolfo Roman and the Light Rail
Transit Authority (LRTA) are held liable for his death and are hereby
directed to pay jointly and severally to the plaintiffs-appellees, the
following amounts:
a) P44,830.00 as actual damages;
145
b) P50,000.00 as nominal damages;
c) P50,000.00 as moral damages;
d) P50,000.00 as indemnity for the death of the deceased; and
e) P20,000.00 as and for attorneys fees.
The appellate court ratiocinated that while the deceased might not
have then as yet boarded the train, a contract of carriage theretofore
had already existed when the victim entered the place where
passengers were supposed to be after paying the fare and getting the
corresponding token therefor. In exempting Prudent from liability, the
court stressed that there was nothing to link the security agency to
the death of Navidad. It said that Navidad failed to show that Escartin
inflicted fist blows upon the victim and the evidence merely
established the fact of death of Navidad by reason of his having been
hit by the train owned and managed by the LRTA and operated at the
time by Roman. The appellate court faulted petitioners for their failure
to present expert evidence to establish the fact that the application of
emergency brakes could not have stopped the train.
The appellate court denied petitioners motion for reconsideration in
its resolution of 10 October 2000.
In their present recourse, petitioners recite alleged errors on the part
of the appellate court; viz.:
I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY
DISREGARDING THE FINDINGS OF FACTS BY THE TRIAL COURT
II.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING
THAT PETITIONERS ARE LIABLE FOR THE DEATH OF NICANOR
NAVIDAD, JR.
III.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING
THAT RODOLFO ROMAN IS AN EMPLOYEE OF LRTA.
Petitioners would contend that the appellate court ignored the
evidence and the factual findings of the trial court by holding them
liable on the basis of a sweeping conclusion that the presumption of
negligence on the part of a common carrier was not overcome.
Petitioners would insist that Escartins assault upon Navidad, which
caused the latter to fall on the tracks, was an act of a stranger that
could not have been foreseen or prevented. The LRTA would add that
the appellate courts conclusion on the existence of an employer-
employee relationship between Roman and LRTA lacked basis because
Roman himself had testified being an employee of Metro Transit and
not of the LRTA.
Respondents, supporting the decision of the appellate court,
contended that a contract of carriage was deemed created from the
moment Navidad paid the fare at the LRT station and entered the
premises of the latter, entitling Navidad to all the rights and protection
under a contractual relation, and that the appellate court had correctly
held LRTA and Roman liable for the death of Navidad in failing to
exercise extraordinary diligence imposed upon a common carrier.
Law and jurisprudence dictate that a common carrier, both from the
nature of its business and for reasons of public policy, is burdened
with the duty of exercising utmost diligence in ensuring the safety of
passengers. The Civil Code, governing the liability of a common carrier
for death of or injury to its passengers, provides:
Article 1755. A common carrier is bound to carry the passengers
safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with a due regard for all
the circumstances.
Article 1756. In case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence as prescribed in articles 1733 and 1755.
146
Article 1759. Common carriers are liable for the death of or injuries
to passengers through the negligence or willful acts of the formers
employees, although such employees may have acted beyond the
scope of their authority or in violation of the orders of the common
carriers.
This liability of the common carriers does not cease upon proof that
they exercised all the diligence of a good father of a family in the
selection and supervision of their employees.
Article 1763. A common carrier is responsible for injuries suffered by
a passenger on account of the willful acts or negligence of other
passengers or of strangers, if the common carriers employees through
the exercise of the diligence of a good father of a family could have
prevented or stopped the act or omission.
The law requires common carriers to carry passengers safely using the
utmost diligence of very cautious persons with due regard for all
circumstances. Such duty of a common carrier to provide safety to its
passengers so obligates it not only during the course of the trip but
for so long as the passengers are within its premises and where they
ought to be in pursuance to the contract of carriage. The statutory
provisions render a common carrier liable for death of or injury to
passengers (a) through the negligence or wilful acts of its employees
or b) on account of willful acts or negligence of other passengers or
of strangers if the common carriers employees through the exercise
of due diligence could have prevented or stopped the act or omission.
In case of such death or injury, a carrier is presumed to have been at
fault or been negligent, and by simple proof of injury, the passenger
is relieved of the duty to still establish the fault or negligence of the
carrier or of its employees and the burden shifts upon the carrier to
prove that the injury is due to an unforeseen event or to force
majeure. In the absence of satisfactory explanation by the carrier on
how the accident occurred, which petitioners, according to the
appellate court, have failed to show, the presumption would be that it
has been at fault, an exception from the general rule that negligence
must be proved.
The foundation of LRTAs liability is the contract of carriage and its
obligation to indemnify the victim arises from the breach of that
contract by reason of its failure to exercise the high diligence required
of the common carrier. In the discharge of its commitment to ensure
the safety of passengers, a carrier may choose to hire its own
employees or avail itself of the services of an outsider or an
independent firm to undertake the task. In either case, the common
carrier is not relieved of its responsibilities under the contract of
carriage.
Should Prudent be made likewise liable? If at all, that liability could
only be for tort under the provisions of Article 2176 and related
provisions, in conjunction with Article 2180, of the Civil Code. The
premise, however, for the employers liability is negligence or fault on
the part of the employee. Once such fault is established, the employer
can then be made liable on the basis of the presumption juris tantum
that the employer failed to exercise diligentissimi patris families in the
selection and supervision of its employees. The liability is primary and
can only be negated by showing due diligence in the selection and
supervision of the employee, a factual matter that has not been
shown. Absent such a showing, one might ask further, how then must
the liability of the common carrier, on the one hand, and an
independent contractor, on the other hand, be described? It would be
solidary. A contractual obligation can be breached by tort and when
the same act or omission causes the injury, one resulting in culpa
contractual and the other in culpa aquiliana, Article 2194 of the Civil
Code can well apply. In fine, a liability for tort may arise even under a
contract, where tort is that which breaches the contract. Stated
differently, when an act which constitutes a breach of contract would
have itself constituted the source of a quasi-delictual liability had no
contract existed between the parties, the contract can be said to have
been breached by tort, thereby allowing the rules on tort to apply.
Regrettably for LRT, as well as perhaps the surviving spouse and heirs
of the late Nicanor Navidad, this Court is concluded by the factual
finding of the Court of Appeals that there is nothing to link (Prudent)
to the death of Nicanor (Navidad), for the reason that the negligence
147
of its employee, Escartin, has not been duly proven x x x. This finding
of the appellate court is not without substantial justification in our own
review of the records of the case.

There being, similarly, no showing that petitioner Rodolfo Roman

himself is guilty of any culpable act or omission, he must also be
absolved from liability. Needless to say, the contractual tie between
the LRT and Navidad is not itself a juridical relation between the latter
and Roman; thus, Roman can be made liable only for his own fault or
negligence.

The award of nominal damages in addition to actual damages is

untenable. Nominal damages are adjudicated in order that a right of
the plaintiff, which has been violated or invaded by the defendant,
may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him. It is an
established rule that nominal damages cannot co-exist with
compensatory damages.

WHEREFORE, the assailed decision of the appellate court is AFFIRMED

with MODIFICATION but only in that (a) the award of nominal
damages is DELETED and (b) petitioner Rodolfo Roman is absolved
from liability. No costs.

SO ORDERED.

Davide, Jr. (C.J., Chairman), Ynares-Santiago, Carpio and Azcuna,

JJ., concur.

Judgment affirmed with modification.

Note. Where a common carrier failed to exercise the extraordinary

diligence required of it, which resulted in the death of a passenger, it
is deemed to have acted recklessly, and the heirs of the passenger
shall be entitled to exemplary damages. (Yobido vs. Court of Appeals,
281 SCRA 1 [1997]).

o0o

148
 NORTHWEST AIRLINES, petitioner, vs. DELFIN S.
CATAPANG, respondent
G.R. No. 174364. July 30, 2009
Damages; Common Carriers; So it is that any discourteous conduct on
the part of these employees toward a passenger gives the latter an
action for damages against the carrier. Passengers have the right
to be treated by a carriers employees with kindness, respect, courtesy
and due consideration. They are entitled to be protected against
personal misconduct, injurious language, indignities and abuses from
such employees. So it is that any discourteous conduct on the part of
these employees toward a passenger gives the latter an action for
damages against the carrier. The award of moral and exemplary
damages to respondent is thus justified.
Same; The inclusion of filing fees as part of the actual damages is
superfluous if not erroneous, the same being chargeable to the cost
of suit awarded by the trial court and affirmed by the appellate court.
The inclusion of filing fees as part of the actual damages is
superfluous, if not erroneous, the same being chargeable to the cost
of suit awarded by the trial court and affirmed by the appellate court.
Sections 8 and 10, Rule 142 of the Rules of Court enlighten: SEC. 8.
Costs, how taxed. In inferior courts, the costs shall be taxed by the
justice of the peace or municipal judge and included in the judgment.
In superior courts, costs shall be taxed by the clerk of the
corresponding court on five days written notice given by the prevailing
party to the adverse party. With this notice shall be served a statement
of the items of costs claimed by the prevailing party, verified by his
oath or that of his attorney. Objections to the taxation shall be made
in writing, specifying the items objected to. Either party may appeal
to the court from the clerks taxation. The costs shall be inserted in
the judgment if taxed before its entry, and payment thereof shall be
enforced by execution. x x x x SEC. 10. Costs in Courts of First
Instance.In an action or proceeding pending in a Court of First
Instance, the prevailing party may recover the following costs, and no
other: a) For the complaint or answer, fifteen pesos; b) For his own
attendance, and that of his attorney, down to and including final
judgment, twenty pesos; c) For each witness necessarily produced by
him, for each days necessary attendance of such witness at the trial,
two pesos, and his lawful traveling fees; d) For each deposition
lawfully taken by him, and produced in evidence, five pesos; e) For
original documents, deeds, or papers of any kind produced by him,
nothing; f) For official copies of such documents, deeds, or papers,
the lawful fees necessarily paid for obtaining such copies; g) The
lawful fees paid by him in entering and docketing the action or
recording the proceedings, for the service of any process in action,
and all lawful clerks fees paid by him.
Attorneys Fees; The transcript of stenographic notes of the lower
courts proceedings do not show that respondent adduced proof to
sustain his general averment of a retainer agreement in the amount
of P200,000.00. The award must be deleted. As for the award of
attorneys fees, the trial court did not state the factual and legal basis
thereof. The transcript of stenographic notes of the lower courts
proceedings do not show that respondent adduced proof to sustain
his general averment of a retainer agreement in the amount of
P200,000.00. The award must thus be deleted.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Quisumbing, Torres for petitioner.
D.S. Catapang, Jr. Law Office for respondent.
CARPIO-MORALES, J.:
Delfin S. Catapang (respondent), a lawyer and, at the time material to
the case at bar, Assistant Vice President and Head of the Special
Projects Department, Corporate Services Division of the United
Coconut Planters Bank (UCPB), was directed by UCPB to go to Paris
on a business trip. As he intended to proceed, after his trip to Paris,
to the United States to visit his siblings, he requested First United
149
Travel, Inc. (FUT) to issue him a ticket that would allow rebooking or
rerouting of flights within the United States.
Complying with respondents requirement, FUT informed him, via
telephone, that Northwest Airlines, Inc. (petitioner) was willing to
accommodate his request provided he would pay an additional US$50
for every rebooking or rerouting of flight. Respondent agreed with the
condition, hence, FUT, as petitioners authorized agent, issued
respondent a ticket covering the New York to Los Angeles via Detroit
and the Los Angeles to Manila segments of his travel, indicating
thereon the following details of his itinerary:
xxxx
12MAR LV NYC/LAGUARDIA 0935 NORTHWEST
AR LOS ANGELES 1433
VIA DETROIT MI
xxxx
The rebooking/rerouting scheme was annotated on the restriction
portion of the ticket issued to respondent bearing No. 012
6832392670 5 as follows:
No end./7 days adv. Purchase
US$50 rebooking/re-routing/cancellation fee (Underscoring
supplied)
On respondents arrival in New York, he called up by telephone
petitioners office which informed him that his ticket was not
rebookable or reroutable. He was, nevertheless, advised to go to
petitioners nearest branch office.
Respondent thus proceeded on March 10, 1992 to petitioners ticket
office at the World Trade Center where he was treated in a rude
manner by an employee who informed him that his ticket was not
rebookable or reroutable since it was of a restricted type, and that
unless he upgraded it by paying US$644.00, he could not rebook. Left
with no choice, respondent paid that amount for rebooking.
Upon his return to the Philippines, respondent, by letter of March 24,
1992, wrote petitioner:
At about 9:30 in the morning of March 11, 1992, I went to the sales
office in the World Trade Center where I explained to your black
woman representative my predicament. Your representative rudely
told me that my ticket is the restrictive type and that my flight can not
be rebooked or rerouted. I explained that the only restriction on my
ticket is that I should pay US$50.00 if I have to rebook or reroute my
flight and asked your representative to read the restriction. Your
representative rudely and impolitely retorted that I could not
understand English and that unless I pay the amount of US$644.00, I
cannot get a rebooking and rerouting. Despite my appeal and
protestation, she did not reconsider her decision. As I was badly
needed in Detroit on the evening of the same day and had to be back
in Manila on the 14th of March, I was compelled to pay, under protest,
the amount of US$644.00 using my American Express Card as my cash
was insufficient to cover the amount. It was only then that I was
issued ticket no. 012:4488:504:099.
Considering that my ticket was cleared with you prior to its issuance
and that FUT is your duly accredited agent, you are bound by the
terms of the ticket issued by FUT in your behalf. You have no right to
unilaterally change the tenor of your contract during its effectivity
without my consent.
Your airlines willful breach of the terms and conditions of my ticket
and the shabby treatment that I received from your personnel hurt
my feeling, humiliated and embarrassed me in the presence of my
brother-in-law and other people nearby who witnessed the incident.
The fact that your employee did that to a bank officer and a lawyer
like me only shows that your airline can also do the same to others,
not to mention the poor and hapless persons.
150
Because I could not bear my wounded feeling, the shabby treat-ment,
the humiliation and the embarrassment that I received from your
employee, I asked for the cancellation and refund of my ticket
covering my trip from Los Angeles to the Philippines for which I was
given a refund application slip no. 012 0230189256 3 by your ticket
counter at the Los Angeles airport on March 12, 1992.
To compensate me for the expenses that I incurred, and the wounded
feeling, humiliation and embarrassment that were caused by your
airlines willful breach of contract with me, I demand that you pay me
damages in the amount of P1,000,000.00 within a period of five (5)
days from your receipt hereof. Otherwise, I shall have no alternative
but to seek redress from our court of justice and to hold you liable for
all other expenses attendant thereto. (Underscoring supplied)
Respondents letter of demand remained unanswered, unheeded,
drawing him to file on July 1, 1992 with the Regional Trial Court (RTC)
of Makati a complaint for damages against petitioner.
Petitioner claimed in its Answer that respondents ticket was a
discounted one, subject to the rules which petitioners agents have to
abide by. Thus, with respect to the annotation on respondents ticket
of the US$50.00 rebooking charge, petitioner explained that the same
was subject to the rules of applicability, which rules could not be
reflected on the ticket.
By Decision of October 5, 2000, Branch 56 of the RTC Makati faulted
petitioner for breach of contract of carriage, disposing as follows:
WHEREFORE, all the foregoing considered, this Court declares
defendant liable to pay plaintiff and orders the latter to pay him the
following sums:
1. US$ 823.00 or its Peso equivalent at the time of the payment with
legal interest and Php7,372.50 for filing fees as actual damages;
2. P800,000.00 as moral damages;
3. P100,000.00 as exemplary damages;
4. P200,000.00 as and for attorneys fees; and
5. Cost of suit.
SO ORDERED.
On appeal, the Court of Appeals, by Decision of June 30, 2006 affirmed
the trial courts Decision with modification, thus:
WHEREFORE, except for the reduction of the award of moral
damages from P800,000.00 to P400,000.00, the appealed Decision
dated October 5, 2000 is affirmed in all other respects.
SO ORDERED. (Underscoring supplied)
Hence, the present petition which assails the award to respondent of
moral damages, petitioner positing that it was not guilty of breach of
contract. In any event, it assails the award to respondent of exemplary
damages, it positing that the same is not recoverable in cases of
breach of contract of carriage unless the carrier is guilty of wanton,
fraudulent, reckless, oppressive or malevolent conduct of which it is
not, so it claims.
Additionally, petitioner assails 1) the award of attorneys fees, positing
that under Article 2208 of the Civil Code, attorneys fees and expenses
of litigation cannot, as a general rule, be recovered, and of actual
damages for respondent did not suffer any pecuniary loss; 2) the order
for reimbursement of filing fees there being no basis; and 3) the award
of a total of P700,000.00 in damages for being excessive and
unprecedented.
The petition is bereft of merit.
When respondent inquired from petitioners agent FUT if he would be
allowed to rebook/reroute his flight, FUT advised him that he could,
on the condition that he would pay $50 for every rebooking. He was
151
not told by FUT and the ticket did not reflect it that the ticket being
issued to him was a restricted type to call for its upgrading before a
rebooking/ rerouting.
Petitioners reservation supervisor, Amelia Merris, in fact admitted
that, as the above-quoted entry on the restriction portion of the ticket
reads, the only restriction on respondents ticket pertains only to non-
endorsement.
A TTY. CATAPANG
Q. x x x Is it a fact that the only restriction on the first line is that no
end./7days advance purchase, is that correct? And what does that
phrase no.end/7days purchase means?
A. No end, means non endorsable, sir.
Q. When you say non endorsable you cannot transfer it to another
airline?
A. That is right, sir.
xxxx
Q. Based on the restriction, there is no such restriction?
A. Yes, sir. (Underscoring supplied)
Petitioners breach in this case was aggravated by the undenied
treatment received by respondent when he tried to rebook his ticket.
Instead of civilly informing respondent that his ticket could not be
rebooked, petitioners agent in New York exhibited rudeness in the
presence of respondents brother-in-law and other customers,
insulting respondent by telling him that he could not understand
English.
Passengers have the right to be treated by a carriers employees with
kindness, respect, courtesy and due consideration. They are entitled
to be protected against personal misconduct, injurious language,
indignities and abuses from such employees. So it is that any
discourteous conduct on the part of these employees toward a
passenger gives the latter an action for damages against the carrier.
The award of moral and exemplary damages to respondent is thus
justified.
The inclusion of filing fees as part of the actual damages is
superfluous, if not erroneous, the same being chargeable to the cost
of suit awarded by the trial court and affirmed by the appellate court.
Sections 8 and 10, Rule 142 of the Rules of Court enlighten:
SEC. 8. Costs, how taxed. In inferior courts, the costs shall be
taxed by the justice of the peace or municipal judge and included in
the judgment. In superior courts, costs shall be taxed by the clerk of
the corresponding court on five days written notice given by the
prevailing party to the adverse party. With this notice shall be served
a statement of the items of costs claimed by the prevailing party,
verified by his oath or that of his attorney. Objections to the taxation
shall be made in writing, specifying the items objected to. Either party
may appeal to the court from the clerks taxation. The costs shall be
inserted in the judgment if taxed before its entry, and payment thereof
shall be enforced by execution.
xxxx
SEC. 10. Costs in Courts of First Instance. In an action or
proceeding pending in a Court of First Instance, the prevailing party
may recover the following costs, and no other:
a) For the complaint or answer, fifteen pesos;
b) For his own attendance, and that of his attorney, down to and
including final judgment, twenty pesos;
152
c) For each witness necessarily produced by him, for each days
necessary attendance of such witness at the trial, two pesos, and his
lawful traveling fees;

d) For each deposition lawfully taken by him, and produced in

evidence, five pesos;

e) For original documents, deeds, or papers of any kind produced by

him, nothing;

f) For official copies of such documents, deeds, or papers, the lawful

fees necessarily paid for obtaining such copies;

g) The lawful fees paid by him in entering and docketing the action
or recording the proceedings, for the service of any process in action,
and all lawful clerks fees paid by him. (Emphasis and underscoring
supplied)

As for the award of attorneys fees, the trial court did not state the
factual and legal basis thereof.8 The transcript of stenographic notes
of the lower courts proceedings do not show that respondent adduced
proof to sustain his general averment of a retainer agreement in the
amount of P200,000.00. The award must thus be deleted.

WHEREFORE, the Court of Appeals Decision of June 30, 2006 is

AFFIRMED with MODIFICATION in that the award of attorneys fees is
deleted for lack of basis. And the award of actual damages of
P7,372.50 representing filing fees is deleted.

o0o

153
 JAPAN AIRLINES, petitioner, vs. THE COURT OF APPEALS,
ENRIQUE AGANA, MARIA ANGELA NINA AGANA, ADALIA B.
FRANCISCO and JOSE MIRANDA, respondents
G.R. No. 118664. August 7, 1998
Civil Law; Common Carriers; Damages; Common carriers are not
absolutely responsible for all injuries or damages even if the same
were caused by a fortuitous event. We are not unmindful of the
fact that in a plethora of cases we have consistently ruled that a
contract to transport passengers is quite different in kind and degree
from any other contractual relation. It is safe to conclude that it is a
relationship imbued with public interest. Failure on the part of the
common carrier to live up to the exacting standards of care and
diligence renders it liable for any damages that may be sustained by
its passengers. However, this is not to say that common carriers are
absolutely responsible for all injuries or damages even if the same
were caused by a fortuitous event. To rule otherwise would render the
defense of force majeure, as an exception from any liability, illusory
and ineffective.
Same; Same; Same; There is no question that when a party is unable
to fulfill his obligation because of force majeure, the general rule is
that he cannot be held liable for damages for non-performance.
Accordingly, there is no question that when a party is unable to fulfill
his obligation because of force majeure, the general rule is that he
cannot be held liable for damages for non-performance. Corollarily,
when JAL was prevented from resuming its flight to Manila due to the
effects of Mt. Pinatubo eruption, whatever losses or damages in the
form of hotel and meal expenses the stranded passengers incurred,
cannot be charged to JAL. Yet it is undeniable that JAL assumed the
hotel expenses of respondents for their unexpected overnight stay on
June 15, 1991. x x x Furthermore, it has been held that airline
passengers must take such risks incident to the mode of travel. In this
regard, adverse weather conditions or extreme climatic changes are
some of the perils involved in air travel, the consequences of which
the passenger must assume or expect. After all, common carriers are
not the insurer of all risks.
Same; Same; Same; If the fortuitous event was accompanied by
neglect and malfeasance by the carriers employees, an action for
damages against the carrier is permissible. The factual background
of the PAL case is different from the instant petition. In that case there
was indeed a fortuitous event resulting in the diversion of the PAL
flight. However, the unforeseen diversion was worsened when
private respondents (passenger) was left at the airport and could not
even hitch a ride in a Ford Fiera loaded with PAL personnel, not to
mention the apparent apathy of the PAL station manager as to the
predicament of the stranded passengers. In light of these
circumstances, we held that if the fortuitous event was accompanied
by neglect and malfeasance by the carriers employees, an action for
damages against the carrier is permissible. Unfortunately, for private
respondents, none of these conditions are present in the instant
petition.
Same; Same; Same; The award of nominal damages is in order;
Nominal damages are adjudicated in order that a right of a plaintiff,
which has been violated or invaded by the defendant, may be
vindicated or recognized and not for the purpose of indemnifying any
loss suffered by him. Consequently, the award of nominal damages
is in order. Nominal damages are adjudicated in order that a right of
a plaintiff, which has been violated or invaded by the defendant, may
be vindicated or recognized and not for the purpose of indemnifying
any loss suffered by him. The court may award nominal damages in
every obligation arising from any source enumerated in Article 1157,
or in every case where any property right has been invaded.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Quisumbing, Torres & Evangelista for petitioner.
Enrique, Agana & Associates for private respondents.
ROMERO, J.:
154
Before us is an appeal by certiorari filed by petitioner Japan Airlines,
Inc. (JAL) seeking the reversal of the decision of the Court of Appeals,
which affirmed with modification the award of damages made by the
trial court in favor of herein private respondents Enrique Agana, Maria
Angela Nina Agana, Adelia Francisco and Jose Miranda.
On June 13, 1991, private respondent Jose Miranda boarded JAL flight
No. JL 001 in San Francisco, California bound for Manila. Likewise, on
the same day private respondents Enrique Agana, Maria Angela Nina
Agana and Adelia Francisco left Los Angeles, California for Manila via
JAL flight No. JL 061. As an incentive for travelling on the said airline,
both flights were to make an overnight stopover at Narita, Japan, at
the airlines expense, thereafter proceeding to Manila the following
day.
Upon arrival at Narita, Japan on June 14, 1991, private respondents
were billeted at Hotel Nikko Narita for the night. The next day, private
respondents, on the final leg of their journey, went to the airport to
take their flight to Manila. However, due to the Mt. Pinatubo eruption,
unrelenting ashfall blanketed Ninoy Aquino International Airport
(NAIA), rendering it inaccessible to airline traffic. Hence, private
respondents trip to Manila was cancelled indefinitely.
To accommodate the needs of its stranded passengers, JAL rebooked
all the Manila-bound passengers on flight No. 741 due to depart on
June 16, 1991 and also paid for the hotel expenses for their
unexpected overnight stay. On June 16, 1991, much to the dismay of
the private respondents, their long-anticipated flight to Manila was
again cancelled due to NAIAs indefinite closure. At this point, JAL
informed the private respondents that it would no longer defray their
hotel and accommodation expense during their stay in Narita.
Since NAIA was only reopened to airline traffic on June 22, 1991,
private respondents were forced to pay for their accommodations and
meal expenses from their personal funds from June 16 to June 21,
1991. Their unexpected stay in Narita ended on June 22, 1991 when
they arrived in Manila on board JL flight No. 741.
Obviously, still reeling from the experience, private respondents, on
July 25, 1991, commenced an action for damages against JAL before
the Regional Trial Court of Quezon City, Branch 104. To support their
claim, private respondents asserted that JAL failed to live up to its
duty to provide care and comfort to its stranded passengers when it
refused to pay for their hotel and accommodation expenses from June
16 to 21, 1991 at Narita, Japan. In other words, they insisted that JAL
was obligated to shoulder their expenses as long as they were still
stranded in Narita. On the other hand, JAL denied this allegation and
averred that airline passengers have no vested right to these
amenities in case a flight is cancelled due to force majeure.
On June 18, 1992, the trial court rendered its judgment in favor of
private respondents holding JAL liable for damages, viz.:
WHEREFORE, judgment is rendered in favor of plaintiffs ordering the
defendant Japan Airlines to pay the plaintiffs Enrique Agana, Adalia B.
Francisco and Maria Angela Nina Agana the sum of One Million Two
Hundred Forty-Six Thousand Nine Hundred Thirty-Six Pesos
(P1,246,936.00) and Jose Miranda the sum of Three Hundred Twenty
Thousand Six Hundred Sixteen and 31/100 (P320,616.31) as actual,
moral and exemplary damages and pay attorneys fees in the amount
of Two Hundred Thousand Pesos (P200,000.00), and to pay the costs
of suit.
Undaunted, JAL appealed the decision before the Court of Appeals,
which, however, with the exception of lowering the damages awarded
affirmed the trial courts finding, thus:
Thus, the award of moral damages should be as it is hereby reduced
to P200,000.00 for each of the plaintiffs, the exemplary damages to
P300,000.00 and the attorneys fees to P100,000.00 plus the costs.
WHEREFORE, with the foregoing Modification, the judgment appealed
from is hereby AFFIRMED in all other respects.
JAL filed a motion for reconsideration which proved futile and
unavailing.
155

Failing in its bid to reconsider the decision, JAL has now filed this
instant petition.
The issue to be resolved is whether JAL, as a common carrier has the
obligation to shoulder the hotel and meal expenses of its stranded
passengers until they have reached their final destination, even if the
delay were caused by force majeure.
To begin with, there is no dispute that the Mt. Pinatubo eruption
prevented JAL from proceeding to Manila on schedule. Likewise,
private respondents concede that such event can be considered as
force majeure since their delayed arrival in Manila was not imputable
to JAL.
However, private respondents contend that while JAL cannot be held
responsible for the delayed arrival in Manila, it was nevertheless liable
for their living expenses during their unexpected stay in Narita since
airlines have the obligation to ensure the comfort and convenience of
its passengers. While we sympathize with the private respondents
plight, we are unable to accept this contention.
We are not unmindful of the fact that in a plethora of cases we have
consistently ruled that a contract to transport passengers is quite
different in kind and degree from any other contractual relation. It is
safe to conclude that it is a relationship imbued with public interest.
Failure on the part of the common carrier to live up to the exacting
standards of care and diligence renders it liable for any damages that
may be sustained by its passengers. However, this is not to say that
common carriers are absolutely responsible for all injuries or damages
even if the same were caused by a fortuitous event. To rule otherwise
would render the defense of force majeure, as an exception from
any liability, illusory and ineffective.
Accordingly, there is no question that when a party is unable to fulfill
his obligation because of force majeure, the general rule is that he
cannot be held liable for damages for non-performance. Corollarily,
when JAL was prevented from resuming its flight to Manila due to the
effects of Mt. Pinatubo eruption, whatever losses or damages in the
form of hotel and meal expenses the stranded passengers incurred,
cannot be charged to JAL. Yet it is undeniable that JAL assumed the
hotel expenses of respondents for their unexpected overnight stay on
June 15, 1991.
Admittedly, to be stranded for almost a week in a foreign land was an
exasperating experience for the private respondents. To be sure, they
underwent distress and anxiety during their unanticipated stay in
Narita, but their predicament was not due to the fault or negligence
of JAL but the closure of NAIA to international flights. Indeed, to hold
JAL, in the absence of bad faith or negligence, liable for the amenities
of its stranded passengers by reason of a fortuitous event is too much
of a burden to assume.
Furthermore, it has been held that airline passengers must take such
risks incident to the mode of travel. In this regard, adverse weather
conditions or extreme climatic changes are some of the perils involved
in air travel, the consequences of which the passenger must assume
or expect. After all, common carriers are not the insurer of all risks.
Paradoxically, the Court of Appeals, despite the presence of force
majeure, still ruled against JAL relying in our decision in PAL v. Court
of Appeals, thus:
The position taken by PAL in this case clearly illustrates its failure to
grasp the exacting standard required by law. Undisputably, PALs
diversion of its flight due to inclement weather was a fortuitous event.
Nonetheless, such occurrence did not terminate PALs contract with its
passengers. Being in the business of air carriage and the sole one to
operate in the country, PAL is deemed equipped to deal with situations
as in the case at bar. What we said in one case once again must be
stressed, i.e., the relation of carrier and passenger continues until the
latter has been landed at the port of destination and has left the
carriers premises. Hence, PAL necessarily would still have to exercise
extraordinary diligence in safeguarding the comfort, convenience and
safety of its stranded passengers until they have reached their final
destination. On this score, PAL grossly failed considering the then
156
ongoing battle between government forces and Muslim rebels in
Cotabato City and the fact that the private respondent was a stranger
to the place.
The reliance is misplaced. The factual background of the PAL case is
different from the instant petition. In that case there was indeed a
fortuitous event resulting in the diversion of the PAL flight. However,
the unforeseen diversion was worsened when private respondents
(passenger) was left at the airport and could not even hitch a ride in
a Ford Fiera loaded with PAL personnel, not to mention the apparent
apathy of the PAL station manager as to the predicament of the
stranded passengers. In light of these circumstances, we held that if
the fortuitous event was accompanied by neglect and malfeasance by
the carriers employees, an action for damages against the carrier is
permissible. Unfortunately, for private respondents, none of these
conditions are present in the instant petition.
We are not prepared, however, to completely absolve petitioner JAL
from any liability. It must be noted that private respondents bought
tickets from the United States with Manila as their final destination.
While JAL was no longer required to defray private respondents living
expenses during their stay in Narita on account of the fortuitous event,
JAL had the duty to make the necessary arrangements to transport
private respondents on the first available connecting flight to Manila.
Petitioner JAL reneged on its obligation to look after the comfort and
convenience of its passengers when it declassified private respondents
from transit passengers to new passengers as a result of which
private respondents were obliged to make the necessary
arrangements themselves for the next flight to Manila. Private
respondents were placed on the waiting list from June 20 to June 24.
To assure themselves of a seat on an available flight, they were
compelled to stay in the airport the whole day of June 22, 1991 and it
was only at 8:00 p.m. of the aforesaid date that they were advised
that they could be accommodated in said flight which flew at about
9:00 a.m. the next day.
We are not oblivious to the fact that the cancellation of JAL flights to
Manila from June 15 to June 21, 1991 caused considerable disruption
in passenger booking and reservation. In fact, it would be
unreasonable to expect, considering NAIAs closure, that JAL flight
operations would be normal on the days affected. Nevertheless, this
does not excuse JAL from its obligation to make the necessary
arrangements to transport private respondents on its first available
flight to Manila. After all, it had a contract to transport private
respondents from the United States to Manila as their final destination.
Consequently, the award of nominal damages is in order. Nominal
damages are adjudicated in order that a right of a plaintiff, which has
been violated or invaded by the defendant, may be vindicated or
recognized and not for the purpose of indemnifying any loss suffered
by him. The court may award nominal damages in every obligation
arising from any source enumerated in Article 1157, or in every case
where any property right has been invaded.
WHEREFORE, in view of the foregoing, the decision of the Court of
Appeals dated December 22, 1993 is hereby MODIFIED. The award of
actual, moral and exemplary damages is hereby DELETED. Petitioner
JAL is ordered to pay each of the private respondents nominal
damages in the sum of P100,000.00 each including attorneys fees of
P50,000.00 plus costs.
SO ORDERED.
Narvasa (C.J., Chairman), Kapunan and Purisima, JJ., concur.
Judgment modified.
Note.A contract of air carriage generates a relation attended with a
public duty and any discourteous conduct on the part of a carriers
employee toward a passenger gives the latter an action for damages
and more so where there is bad faith. (Philippine Airlines, Inc. vs.
Court of Appeals, 257 SCRA 33 [1996])
o0o
157
MR. & MRS. ENGRACIO FABRE, JR.** and PORFIRIO CABIL,
petitioners, vs. COURT OF APPEALS, THE WORD FOR THE
WORLD CHRISTIAN FELLOWSHIP, INC., AMYLINE ANTONIO,
JOHN RICHARDS, GONZALO GONZALES, VICENTE V. QUE,
JR., ICLI CORDOVA, ARLENE GOJOCCO, ALBERTO ROXAS
CORDERO, RICHARD BAUTISTA, JOCELYN GARCIA,
YOLANDA CORDOVA, NOEL ROQUE, EDWARD TAN, ERNESTO
NARCISO, ENRIQUETA LOCSIN, FRANCIS NORMAN O.
LOPEZ, JULIUS CAESAR GARCIA, ROSARIO MA. V. ORTIZ,
MARIETTA C. CLAVO, ELVIE SENIEL, ROSARIO MARA-MARA,
TERESITA REGALA, MELINDA TORRES, MARELLA MIJARES,
JOSEFA CABATINGAN, MARA NADOC, DIANE MAYO, TESS
PLATA, MAYETTE JOCSON, ARLENE Y. MORTIZ, LIZA MAYO,
CARLOS RANARIO, ROSAMARIA T. RADOC and BERNADETTE
FERRER, respondents
G.R. No. 111127. July 26, 1996
Civil Law; Negligence; Damages; Cabil was grossly negligent and
should be held liable for the injuries suffered by private respondent
Amyline Antonio.Considering the foregoingthe fact that it was
raining and the road was slippery, that it was dark, that he drove his
bus at 50 kilometers an hour when even on a good day the normal
speed was only 20 kilometers an hour, and that he was unfamiliar with
the terrain, Cabil was grossly negligent and should be held liable for
the injuries suffered by private respondent Amyline Antonio.
Same; Same; Same; Cabils negligence gave rise to the presumption
that his employers, the Fabres, were themselves negligent in the
selection and supervision of their employee.Pursuant to Arts. 2176
and 2180 of the Civil Code his negligence gave rise to the presumption
that his employers, the Fabres, were themselves negligent in the
selection and supervision of their employee.
Same; Same; Same; Employer should also examine the applicant for
his qualifications, experience and record of service.Due diligence in
selection of employees is not satisfied by finding that the applicant
possessed a professional drivers license. The employer should also
examine the applicant for his qualifications, experience and record of
service. Due diligence in supervision, on the other hand, requires the
formulation of rules and regulations for the guidance of employees
and the issuance of proper instructions as well as actual
implementation and monitoring of consistent compliance with the
rules.
Same; Same; Same; The existence of hiring procedures and
supervisory policies cannot be casually invoked to overturn the
presumption of negligence on the part of an employer.In the case
at bar, the Fabres, in allowing Cabil to drive the bus to La Union,
apparently did not consider the fact that Cabil had been driving for
school children only, from their homes to the St. Scholasticas College
in Metro Manila. They had hired him only after a two-week
apprenticeship. They had tested him for certain matters, such as
whether he could remember the names of the children he would be
taking to school, which were irrelevant to his qualification to drive on
a long distance travel, especially considering that the trip to La Union
was his first. The existence of hiring procedures and supervisory
policies cannot be casually invoked to overturn the presumption of
negligence on the part of an employer.
Same; Same; Same; As common carriers, the Fabres were bound to
exercise extraordinary diligence for the safe transportation of the
passengers to their destination.As common carriers, the Fabres
were bound to exercise extraordinary diligence for the safe
transportation of the passengers to their destination. This duty of care
is not excused by proof that they exercised the diligence of a good
father of the family in the selection and supervision of their employee.
Same; Same; Same; On the theory that petitioners are liable for
breach of contract of carriage, the award of moral damages is
authorized by Art. 1764, in relation to Art. 2220, since Cabils gross
negligence amounted to bad faith.With respect to the other awards,
while the decisions of the trial court and the Court of Appeals do not
sufficiently indicate the factual and legal basis for them, we find that
they are nevertheless supported by evidence in the records of this
case. Viewed as an action for quasi delict, this case falls squarely
158
within the purview of Art. 2219(2) providing for the payment of moral
damages in cases of quasi delict. On the theory that petitioners are
liable for breach of contract of carriage, the award of moral damages
is authorized by Art. 1764, in relation to Art. 2220, since Cabils gross
negligence amounted to bad faith. Amyline Antonios testimony, as
well as the testimonies of her father and copassengers, fully establish
the physical suffering and mental anguish she endured as a result of
the injuries caused by petitioners negligence.
Same; Same; Same; In Dangwa Trans. Co., Inc. vs. Court of Appeals,
the Court held the bus company and the driver jointly and severally
liable for damages for injuries suffered by a passenger.The decision
of the Court of Appeals can be sustained either on the theory of quasi
delict or on that of breach of contract. The question is whether, as the
two courts below held, petitioners, who are the owners and driver of
the bus, may be made to respond jointly and severally to private
respondent. We hold that they may be. In Dangwa Trans. Co., Inc. v.
Court of Appeals, on facts similar to those in this case, this Court held
the bus company and the driver jointly and severally liable for
damages for injuries suffered by a passenger. Again, in Bachelor
Express, Inc. v. Court of Appeals a driver found negligent in failing to
stop the bus in order to let off passengers when a fellow passenger
ran amuck, as a result of which the passengers jumped out of the
speeding bus and suffered injuries, was held also jointly and severally
liable with the bus company to the injured passengers.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Maria del Valle for petitioners.
Eduardo Claudio II for private respondents.
MENDOZA, J.:
This is a petition for review on certiorari of the decision of the Court
of Appeals in CA-GR No. 28245, dated September 30, 1992, which
affirmed with modification the decision of the Regional Trial Court of
Makati, Branch 58, ordering petitioners jointly and severally to pay
damages to private respondent Amyline Antonio, and its resolution
which denied petitioners motion for reconsideration for lack of merit.
Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982
model Mazda minibus. They used the bus principally in connection
with a bus service for school children which they operated in Manila.
The couple had a driver, Porfirio J. Cabil, whom they hired in 1981,
after trying him out for two weeks. His job was to take school children
to and from the St. Scholasticas College in Malate, Manila.
On November 2, 1984 private respondent Word for the World Christian
Fellowship, Inc. (WWCF) arranged with petitioners for the
transportation of 33 members of its Young Adults Ministry from Manila
to La Union and back in consideration of which private respondent
paid petitioners the amount of P3,000.00.
The group was scheduled to leave on November 2, 1984, at 5:00
oclock in the afternoon. However, as several members of the party
were late, the bus did not leave the Tropical Hut at the corner of
Ortigas Avenue and EDSA until 8:00 oclock in the evening. Petitioner
Porfirio Cabil drove the minibus.
The usual route to Caba, La Union was through Carmen, Pangasinan.
However, the bridge at Carmen was under repair, so that petitioner
Cabil, who was unfamiliar with the area (it being his first trip to La
Union), was forced to take a detour through the town of Ba-ay in
Lingayen, Pangasinan.
At 11:30 that night, petitioner Cabil came upon a sharp curve on the
highway, running on a south to east direction, which he described as
siete. The road was slippery because it was raining, causing the bus,
which was running at the speed of 50 kilometers per hour, to skid to
the left road shoulder. The bus hit the left traffic steel brace and sign
along the road and rammed the fence of one Jesus Escano, then
turned over and landed on its left side, coming to a full stop only after
159
a series of impacts. The bus came to rest off the road. A coconut tree
which it had hit fell on it and smashed its front portion.
Several passengers were injured. Private respondent Amyline Antonio
was thrown on the floor of the bus and pinned down by a wooden
seat which came off after being unscrewed. It took three persons to
safely remove her from this position. She was in great pain and could
not move.
The driver, petitioner Cabil, claimed he did not see the curve until it
was too late. He said he was not familiar with the area and he could
not have seen the curve despite the care he took in driving the bus,
because it was dark and there was no sign on the road. He said that
he saw the curve when he was already within 15 to 30 meters of it.
He allegedly slowed down to 30 kilometers per hour, but it was too
late.
The Lingayen police investigated the incident the next day, November
3, 1984. On the basis of their finding they filed a criminal complaint
against the driver, Porfirio Cabil. The case was later filed with the
Lingayen Regional Trial Court. Petitioners Fabre paid Jesus Escano
P1,500.00 for the damage to the latters fence. On the basis of
Escanos affidavit of desistance the case against petitioners Fabre was
dismissed.
Amyline Antonio, who was seriously injured, brought this case in the
RTC of Makati, Metro Manila. As a result of the accident, she is now
suffering from paraplegia and is permanently paralyzed from the waist
down. During the trial she described the operations she underwent
and adduced evidence regarding the cost of her treatment and
therapy. Immediately after the accident, she was taken to the
Nazareth Hospital in Ba-ay, Lingayen. As this hospital was not
adequately equipped, she was transferred to the Sto. Nio Hospital,
also in the town of Ba-ay, where she was given sedatives. An x-ray
was taken and the damage to her spine was determined to be too
severe to be treated there. She was therefore brought to Manila, first
to the Philippine General Hospital and later to the Makati Medical
Center where she underwent an operation to correct the dislocation
of her spine.
In its decision dated April 17, 1989, the trial court found that:
No convincing evidence was shown that the minibus was properly
checked for travel to a long distance trip and that the driver was
properly screened and tested before being admitted for employment.
Indeed, all the evidence presented have shown the negligent act of
the defendants which ultimately resulted to the accident subject of
this case.
Accordingly, it gave judgment for private respondents holding:
Considering that plaintiffs Word for the World Christian Fellowship,
Inc. and Ms. Amyline Antonio were the only ones who adduced
evidence in support of their claim for damages, the Court is therefore
not in a position to award damages to the other plaintiffs.
WHEREFORE, premises considered, the Court hereby renders
judgment against defendants Mr. & Mrs. Engracio Fabre, Jr. and
Porfirio Cabil y Jamil pursuant to articles 2176 and 2180 of the Civil
Code of the Philippines and said defendants are ordered to pay jointly
and severally to the plaintiffs the following amount:
1) P93,657.11 as compensatory and actual damages;
2) P500,000.00 as the reasonable amount of loss of earning capacity
of plaintiff Amyline Antonio;
3) P20,000.00 as moral damages;
4) P20,000.00 as exemplary damages; and
5) 25% of the recoverable amount as attorneys fees;
6) Costs of suit.
SO ORDERED.
The Court of Appeals affirmed the decision of the trial court with
respect to Amyline Antonio but dismissed it with respect to the other
plaintiffs on the ground that they failed to prove their respective
160
claims. The Court of Appeals modified the award of damages as
follows:
1) P93,657.11 as actual damages;
2) P600,000.00 as compensatory damages;
3) P50,000.00 as moral damages;
4) P20,000.00 as exemplary damages;
5) P10,000.00 as attorneys fees; and
6) Costs of suit.
The Court of Appeals sustained the trial courts finding that petitioner
Cabil failed to exercise due care and precaution in the operation of his
vehicle considering the time and the place of the accident. The Court
of Appeals held that the Fabres were themselves presumptively
negligent. Hence, this petition. Petitioners raise the following issues:
I. WHETHER OR NOT PETITIONERS WERE NEGLIGENT.
II. WHETHER OR NOT PETITIONERS WERE LIABLE FOR THE
INJURIES SUFFERED BY PRIVATE RESPONDENTS.
III. WHETHER OR NOT DAMAGES CAN BE AWARDED AND IN THE
POSITIVE, UP TO WHAT EXTENT.
Petitioners challenge the propriety of the award of compensatory
damages in the amount of P600,000.00. It is insisted that, on the
assumption that petitioners are liable, an award of P600,000.00 is
unconscionable and highly speculative. Amyline Antonio testified that
she was a casual employee of a company called Suaco, earning
P1,650.00 a month, and a dealer of Avon products, earning an average
of P1,000.00 monthly. Petitioners contend that as casual employees
do not have security of tenure, the award of P600,000.00, considering
Amyline Antonios earnings, is without factual basis as there is no
assurance that she would be regularly earning these amounts.
With the exception of the award of damages, the petition is devoid of
merit.
First, it is unnecessary for our purpose to determine whether to decide
this case on the theory that petitioners are liable for breach of contract
of carriage or culpa contractual or on the theory of quasi delict or culpa
aquiliana as both the Regional Trial Court and the Court of Appeals
held, for although the relation of passenger and carrier is contractual
both in origin and nature, nevertheless the act that breaks the
contract may be also a tort. In either case, the question is whether
the bus driver, petitioner Porfirio Cabil, was negligent.
The finding that Cabil drove his bus negligently, while his employer,
the Fabres, who owned the bus, failed to exercise the diligence of a
good father of the family in the selection and supervision of their
employee is fully supported by the evidence on record. These factual
findings of the two courts we regard as final and conclusive, supported
as they are by the evidence. Indeed, it was admitted by Cabil that on
the night in question, it was raining, and, as a consequence, the road
was slippery, and it was dark. He averred these facts to justify his
failure to see that there lay a sharp curve ahead. However, it is
undisputed that Cabil drove his bus at the speed of 50 kilometers per
hour and only slowed down when he noticed the curve some 15 to 30
meters ahead. By then it was too late for him to avoid falling off the
road. Given the conditions of the road and considering that the trip
was Cabils first one outside of Manila, Cabil should have driven his
vehicle at a moderate speed. There is testimony that the vehicles
passing on that portion of the road should only be running 20
kilometers per hour, so that at 50 kilometers per hour, Cabil was
running at a very high speed.
Considering the foregoingthe fact that it was raining and the road
was slippery, that it was dark, that he drove his bus at 50 kilometers
an hour when even on a good day the normal speed was only 20
kilometers an hour, and that he was unfamiliar with the terrain, Cabil
was grossly negligent and should be held liable for the injuries suffered
by private respondent Amyline Antonio.
Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave
rise to the presumption that his employers, the Fabres, were
themselves negligent in the selection and supervision of their
employee.
161
Due diligence in selection of employees is not satisfied by finding that
the applicant possessed a professional drivers license. The employer
should also examine the applicant for his qualifications, experience
and record of service. Due diligence in supervision, on the other hand,
requires the formulation of rules and regulations for the guidance of
employees and the issuance of proper instructions as well as actual
implementation and monitoring of consistent compliance with the
rules.
In the case at bar, the Fabres, in allowing Cabil to drive the bus to La
Union, apparently did not consider the fact that Cabil had been driving
for school children only, from their homes to the St. Scholasticas
College in Metro Manila. They had hired him only after a two-week
apprenticeship. They had tested him for certain matters, such as
whether he could remember the names of the children he would be
taking to school, which were irrelevant to his qualification to drive on
a long distance travel, especially considering that the trip to La Union
was his first. The existence of hiring procedures and supervisory
policies cannot be casually invoked to overturn the presumption of
negligence on the part of an employer.
Petitioners argue that they are not liable because (1) an earlier
departure (made impossible by the congregations delayed meeting)
could have averted the mishap and (2) under the contract, the WWCF
was directly responsible for the conduct of the trip. Neither of these
contentions hold water. The hour of departure had not been fixed.
Even if it had been, the delay did not bear directly on the cause of the
accident. With respect to the second contention, it was held in an early
case that:
[A] person who hires a public automobile and gives the driver
directions as to the place to which he wishes to be conveyed, but
exercises no other control over the conduct of the driver, is not
responsible for acts of negligence of the latter or prevented from
recovering for injuries suffered from a collision between the
automobile and a train, caused by the negligence either of the
locomotive engineer or the automobile driver.
As already stated, this case actually involves a contract of carriage.
Petitioners, the Fabres, did not have to be engaged in the business of
public transportation for the provisions of the Civil Code on common
carriers to apply to them. As this Court has held:
Art. 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air for compensation,
offering their services to the public.
The above article makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one
who does such carrying only as an ancillary activity (in local idiom, as
a sideline). Article 1732 also carefully avoids making any distinction
between a person or enterprise offering transportation service on a
regular or scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the general
public, i.e., the general community or population, and one who offers
services or solicits business only from a narrow segment of the general
population. We think that Article 1732 deliberately refrained from
making such distinctions.
As common carriers, the Fabres were bound to exercise extraordinary
diligence for the safe transportation of the passengers to their
destination. This duty of care is not excused by proof that they
exercised the diligence of a good father of the family in the selection
and supervision of their employee. As Art. 1759 of the Code provides:
Common carriers are liable for the death of or injuries to passengers
through the negligence or wilful acts of the formers employees,
although such employees may have acted beyond the scope of their
authority or in violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that
they exercised all the diligence of a good father of a family in the
selection and supervision of their employees.
162
The same circumstances detailed above, supporting the finding of the
trial court and of the appellate court that petitioners are liable under
Arts. 2176 and 2180 for quasi delict, fully justify finding them guilty of
breach of contract of carriage under Arts. 1733, 1755 and 1759 of the
Civil Code.
Secondly, we sustain the award of damages in favor of Amyline
Antonio. However, we think the Court of Appeals erred in increasing
the amount of compensatory damages because private respondents
did not question this award as inadequate. To the contrary, the award
of P500,000.00 for compensatory damages which the Regional Trial
Court made is reasonable considering the contingent nature of her
income as a casual employee of a company and as distributor of
beauty products and the fact that the possibility that she might be
able to work again has not been foreclosed. In fact she testified that
one of her previous employers had expressed willingness to employ
her again.
With respect to the other awards, while the decisions of the trial court
and the Court of Appeals do not sufficiently indicate the factual and
legal basis for them, we find that they are nevertheless supported by
evidence in the records of this case. Viewed as an action for quasi
delict, this case falls squarely within the purview of Art. 2219(2)
providing for the payment of moral damages in cases of quasi delict.
On the theory that petitioners are liable for breach of contract of
carriage, the award of moral damages is authorized by Art. 1764, in
relation to Art. 2220, since Cabils gross negligence amounted to bad
faith. Amyline Antonios testimony, as well as the testimonies of her
father and copassengers, fully establish the physical suffering and
mental anguish she endured as a result of the injuries caused by
petitioners negligence.
The award of exemplary damages and attorneys fees was also
properly made. However, for the same reason that it was error for the
appellate court to increase the award of compensatory damages, we
hold that it was also error for it to increase the award of moral
damages and reduce the award of attorneys fees, inasmuch as private
respondents, in whose favor the awards were made, have not
appealed.
As above stated, the decision of the Court of Appeals can be sustained
either on the theory of quasi delict or on that of breach of contract.
The question is whether, as the two courts below held, petitioners,
who are the owners and driver of the bus, may be made to respond
jointly and severally to private respondent. We hold that they may be.
In Dangwa Trans. Co., Inc. v. Court of Appeals, on facts similar to
those in this case, this Court held the bus company and the driver
jointly and severally liable for damages for injuries suffered by a
passenger. Again, in Bachelor Express, Inc. v. Court of Appeals a
driver found negligent in failing to stop the bus in order to let off
passengers when a fellow passenger ran amuck, as a result of which
the passengers jumped out of the speeding bus and suffered injuries,
was held also jointly and severally liable with the bus company to the
injured passengers.
The same rule of liability was applied in situations where the
negligence of the driver of the bus on which plaintiff was riding
concurred with the negligence of a third party who was the driver of
another vehicle, thus causing an accident. In Anuran v. Buo,
Batangas Laguna Tayabas Bus Co. v. Intermediate Appellate Court,
and Metro Manila Transit Corporation v. Court of Appeals, the bus
company, its driver, the operator of the other vehicle and the driver
of the vehicle were jointly and severally held liable to the injured
passenger or the latters heirs. The basis of this allocation of liability
was explained in Viluan v. Court of Appeals, thus:
Nor should it make any difference that the liability of petitioner [bus
owner] springs from contract while that of respondents [owner and
driver of other vehicle] arises from quasi-delict. As early as 1913, we
already ruled in Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of
injury to a passenger due to the negligence of the driver of the bus
on which he was riding and of the driver of another vehicle, the drivers
as well as the owners of the two vehicles are jointly and severally liable
for damages. Some members of the Court, though, are of the view
that under the circumstances they are liable on quasi-delict.
163
 1) P93,657.11 as actual damages;
It is true that in Philippine Rabbit Bus Lines, Inc. v. Court of Appeals 2) P500,000.00 as the reasonable amount of loss of earning capacity
this Court exonerated the jeepney driver from liability to the injured of plaintiff Amyline Antonio;
passengers and their families while holding the owners of the jeepney 3) P20,000.00 as moral damages;
jointly and severally liable, but that is because that case was expressly 4) P20,000.00 as exemplary damages;
tried and decided exclusively on the theory of culpa contractual. As 5) 25% of the recoverable amount as attorneys fees; and
this Court there explained: 6) costs of suit.
SO ORDERED.
The trial court was therefore right in finding that Manalo [the driver]
and spouses Mangune and Carreon [the jeepney owners] were Regalado (Chairman), Romero, Puno and Torres, Jr., JJ., concur.
negligent. However, its ruling that spouses Mangune and Carreon are
jointly and severally liable with Manalo is erroneous. The driver cannot Judgment affirmed with modification.
be held jointly and severally liable with the carrier in case of breach of
the contract of carriage. The rationale behind this is readily Note.Responsibility arising from negligence in the performance of
discernible. Firstly, the contract of carriage is between the carrier and every kind of obligation is demandable. (Metropolitan Bank and Trust
the passenger, and in the event of contractual liability, the carrier is Company vs. Court of Appeals, 237 SCRA 761 [1994])
exclusively responsible therefore to the passenger, even if such breach
be due to the negligence of his driver (see Viluan v. The Court of o0o
Appeals, et al., G.R. Nos. L-21477-81, April 29, 1966, 16 SCRA 742) .
..

As in the case of BLTB, private respondents in this case and her

coplaintiffs did not stake out their claim against the carrier and the
driver exclusively on one theory, much less on that of breach of
contract alone. After all, it was permitted for them to allege alternative
causes of action and join as many parties as may be liable on such
causes of action so long as private respondent and her coplaintiffs do
not recover twice for the same injury. What is clear from the cases is
the intent of the plaintiff there to recover from both the carrier and
the driver, thus justifying the holding that the carrier and the driver
were jointly and severally liable because their separate and distinct
acts concurred to produce the same injury.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED with

MODIFICATION as to the award of damages. Petitioners are
ORDERED to PAY jointly and severally the private respondent Amyline
Antonio the following amounts:

164
SPOUSES DANTE CRUZ and LEONORA CRUZ, petitioners, vs.
SUN HOLIDAYS, INC., respondent
G.R. No. 186312. June 29, 2010
Civil Law; Common Carriers; Definition of Common Carriers.As De
Guzman instructs, Article 1732 of the Civil Code defining common
carriers has deliberately refrained from making distinctions on
whether the carrying of persons or goods is the carriers principal
business, whether it is offered on a regular basis, or whether it is
offered to the general public. The intent of the law is thus to not
consider such distinctions. Otherwise, there is no telling how many
other distinctions may be concocted by unscrupulous businessmen
engaged in the carrying of persons or goods in order to avoid the legal
obligations and liabilities of common carriers.
Same; Same; Degree of Diligence Required; From the nature of their
business and for reasons of public policy, common carriers are bound
to observe extraordinary diligence for the safety of the passengers
transported by them, according to all the circumstances of each
case.Under the Civil Code, common carriers, from the nature of their
business and for reasons of public policy, are bound to observe
extraordinary diligence for the safety of the passengers transported
by them, according to all the circumstances of each case. They are
bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious
persons, with due regard for all the circumstances.
Same; Same; Negligence; Presumption of Negligence; When a
passenger dies or is injured in the discharge of a contract of carriage,
it is presumed that the common carrier is at fault or negligent.When
a passenger dies or is injured in the discharge of a contract of carriage,
it is presumed that the common carrier is at fault or negligent. In fact,
there is even no need for the court to make an express finding of fault
or negligence on the part of the common carrier. This statutory
presumption may only be overcome by evidence that the carrier
exercised extraordinary diligence.
Same; Same; Same; Fortuitous Event; Element of a Fortuitous
Event.The elements of a fortuitous event are: (a) the cause of
the unforeseen and unexpected occurrence, or the failure of the
debtors to comply with their obligations, must have been independent
of human will; (b) the event that constituted the caso fortuito must
have been impossible to foresee or, if foreseeable, impossible to
avoid; (c) the occurrence must have been such as to render it
impossible for the debtors to fulfill their obligation in a normal manner;
and (d) the obligor must have been free from any participation in the
aggravation of the resulting injury to the creditor.
Same; Same; Same; Same; To fully free a common carrier from any
liability, the fortuitous event must have been the proximate and only
cause of the loss.To fully free a common carrier from any liability,
the fortuitous event must have been the proximate and only cause of
the loss. And it should have exercised due diligence to prevent or
minimize the loss before, during and after the occurrence of the
fortuitous event.
Same; Same; Same; Damages; Liability of a common carrier in breach
of its contract of carriage resulting in the death of a passenger.
Article 1764 vis--vis Article 2206 of the Civil Code holds the common
carrier in breach of its contract of carriage that results in the death of
a passenger liable to pay the following: (1) indemnity for death, (2)
indemnity for loss of earning capacity and (3) moral damages
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Fortun, Narvasa & Salazar for petitioners.
Sycip, Salazar, Hernandez & Gatmaitan for respondent.
CARPIO-MORALES, J.:
Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on
January 25, 200 against Sun Holidays, Inc. (respondent) with the
165
Regional Trial Court (RTC) of Pasig City for damages arising from the
death of their son Ruelito C. Cruz (Ruelito) who perished with his wife
on September 11, 2000 on board the boat M/B Coco Beach III that
capsized en route to Batangas from Puerto Galera, Oriental Mindoro
where the couple had stayed at Coco Beach Island Resort (Resort)
owned and operated by respondent.
The stay of the newly wed Ruelito and his wife at the Resort from
September 9 to 11, 2000 was by virtue of a tour package-contract
with respondent that included transportation to and from the Resort
and the point of departure in Batangas.
Miguel C. Matute (Matute), a scuba diving instructor and one of the
survivors, gave his account of the incident that led to the filing of the
complaint as follows:
Matute stayed at the Resort from September 8 to 11, 2000. He was
originally scheduled to leave the Resort in the afternoon of September
10, 2000, but was advised to stay for another night because of strong
winds and heavy rains.
On September 11, 2000, as it was still windy, Matute and 25 other
Resort guests including petitioners son and his wife trekked to the
other side of the Coco Beach mountain that was sheltered from the
wind where they boarded M/B Coco Beach III, which was to ferry them
to Batangas.
Shortly after the boat sailed, it started to rain. As it moved farther
away from Puerto Galera and into the open seas, the rain and wind
got stronger, causing the boat to tilt from side to side and the captain
to step forward to the front, leaving the wheel to one of the crew
members.
The waves got more unwieldy. After getting hit by two big waves
which came one after the other, M/B Coco Beach III capsized putting
all passengers underwater.
The passengers, who had put on their life jackets, struggled to get out
of the boat. Upon seeing the captain, Matute and the other passengers
who reached the surface asked him what they could do to save the
people who were still trapped under the boat. The captain replied
Iligtas niyo na lang ang sarili niyo (Just save yourselves).
Help came after about 45 minutes when two boats owned by Asia
Divers in Sabang, Puerto Galera passed by the capsized M/B Coco
Beach III. Boarded on those two boats were 22 persons, consisting of
18 passengers and four crew members, who were brought to Pisa
Island. Eight passengers, including petitioners son and his wife, died
during the incident.
At the time of Ruelitos death, he was 28 years old and employed as
a contractual worker for Mitsui Engineering & Shipbuilding Arabia, Ltd.
in Saudi Arabia, with a basic monthly salary of $900.
Petitioners, by letter of October 26, 2000, demanded indemnification
from respondent for the death of their son in the amount of at least
P4,000,000.
Replying, respondent, by letter dated November 7, 2000, denied any
responsibility for the incident which it considered to be a fortuitous
event. It nevertheless offered, as an act of commiseration, the amount
of P10,000 to petitioners upon their signing of a waiver.
As petitioners declined respondents offer, they filed the Complaint, as
earlier reflected, alleging that respondent, as a common carrier, was
guilty of negligence in allowing M/B Coco Beach III to sail
notwithstanding storm warning bulletins issued by the Philippine
Atmospheric, Geophysical and
Astronomical Services Administration (PAGASA) as early as 5:00 a.m.
of September 11, 2000.
In its Answer, respondent denied being a common carrier, alleging
that its boats are not available to the general public as they only ferry
Resort guests and crew members. Nonetheless, it claimed that it
exercised the utmost diligence in ensuring the safety of its passengers;
166
contrary to petitioners allegation, there was no storm on September
11, 2000 as the Coast Guard in fact cleared the voyage; and M/B Coco
Beach III was not filled to capacity and had sufficient life jackets for
its passengers. By way of Counterclaim, respondent alleged that it is
entitled to an award for attorneys fees and litigation expenses
amounting to not less than P300,000.
Carlos Bonquin, captain of M/B Coco Beach III, averred that the Resort
customarily requires four conditions to be met before a boat is allowed
to sail, to wit: (1) the sea is calm, (2) there is clearance from the Coast
Guard, (3) there is clearance from the captain and (4) there is
clearance from the Resorts assistant manager. He added that M/B
Coco Beach III met all four conditions on September 11, 2000, but a
subasco or squall, characterized by strong winds and big waves,
suddenly occurred, causing the boat to capsize.
By Decision of February 16, 2005, Branch 267 of the Pasig RTC
dismissed petitioners Complaint and respondents Counterclaim.
Petitioners Motion for Reconsideration having been denied by Order
dated September 2, 2005, they appealed to the Court of Appeals.
By Decision of August 19, 2008, the appellate court denied petitioners
appeal, holding, among other things, that the trial court correctly ruled
that respondent is a private carrier which is only required to observe
ordinary diligence; that respondent in fact observed extraordinary
diligence in transporting its guests on board M/B Coco Beach III; and
that the proximate cause of the incident was a squall, a fortuitous
event.
Petitioners Motion for Reconsideration having been denied by
Resolution dated January 16, 2009, they filed the present Petition for
Review.
Petitioners maintain the position they took before the trial court,
adding that respondent is a common carrier since by its tour package,
the transporting of its guests is an integral part of its resort business.
They inform that another division of the appellate court in fact held
respondent liable for damages to the other survivors of the incident.
Upon the other hand, respondent contends that petitioners failed to
present evidence to prove that it is a common carrier; that the Resorts
ferry services for guests cannot be considered as ancillary to its
business as no income is derived therefrom; that it exercised
extraordinary diligence as shown by the conditions it had imposed
before allowing M/B Coco Beach III to sail; that the incident was
caused by a fortuitous event without any contributory negligence on
its part; and that the other case wherein the appellate court held it
liable for damages involved different plaintiffs, issues and evidence.
The petition is impressed with merit.
Petitioners correctly rely on De Guzman v. Court of Appeals in
characterizing respondent as a common carrier.
The Civil Code defines common carriers in the following terms:
Article 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air for compensation,
offering their services to the public.
The above article makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one
who does such carrying only as an ancillary activity (in local idiom, as
a sideline). Article 1732 also carefully avoids making any distinction
between a person or enterprise offering transportation service on a
regular or scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the general
public, i.e., the general community or population, and one who offers
services or solicits business only from a narrow segment of the general
population. We think that Article 1733 deliberately refrained from
making such distinctions.
167
So understood, the concept of common carrier under Article 1732
may be seen to coincide neatly with the notion of public service,
under the Public Service Act (Commonwealth Act No. 1416, as
amended) which at least partially supplements the law on common
carriers set forth in the Civil Code. Under Section 13, paragraph (b) of
the Public Service Act, public service includes:
. . . every person that now or hereafter may own, operate, manage,
or control in the Philippines, for hire or compensation, with general or
limited clientele, whether permanent, occasional or accidental, and
done for general business purposes, any common carrier, railroad,
street railway, traction railway, subway motor vehicle, either for
freight or passenger, or both, with or without fixed route and whatever
may be its classification, freight or carrier service of any class, express
service, steamboat, or steamship line, pontines, ferries and water
craft, engaged in the transportation of passengers or freight or both,
shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration
plant, canal, irrigation system, gas, electric light, heat and power,
water supply and power petroleum, sewerage system, wire or wireless
communications systems, wire or wireless broadcasting stations and
other similar public services . . . (emphasis and underscoring
supplied.)
Indeed, respondent is a common carrier. Its ferry services are so
intertwined with its main business as to be properly considered
ancillary thereto. The constancy of respondents ferry services in its
resort operations is underscored by its having its own Coco Beach
boats. And the tour packages it offers, which include the ferry services,
may be availed of by anyone who can afford to pay the same. These
services are thus available to the public.
That respondent does not charge a separate fee or fare for its ferry
services is of no moment. It would be imprudent to suppose that it
provides said services at a loss. The Court is aware of the practice of
beach resort operators offering tour packages to factor the
transportation fee in arriving at the tour package price. That guests
who opt not to avail of respondents ferry services pay the same
amount is likewise inconsequential. These guests may only be deemed
to have overpaid.
As De Guzman instructs, Article 1732 of the Civil Code defining
common carriers has deliberately refrained from making distinctions
on whether the carrying of persons or goods is the carriers principal
business, whether it is offered on a regular basis, or whether it is
offered to the general public. The intent of the law is thus to not
consider such distinctions. Otherwise, there is no telling how many
other distinctions may be concocted by unscrupulous businessmen
engaged in the carrying of persons or goods in order to avoid the legal
obligations and liabilities of common carriers.
Under the Civil Code, common carriers, from the nature of their
business and for reasons of public policy, are bound to observe
extraordinary diligence for the safety of the passengers transported
by them, according to all the circumstances of each case. They are
bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious
persons, with due regard for all the circumstances.
When a passenger dies or is injured in the discharge of a contract of
carriage, it is presumed that the common carrier is at fault or
negligent. In fact, there is even no need for the court to make an
express finding of fault or negligence on the part of the common
carrier. This statutory presumption may only be overcome by evidence
that the carrier exercised extraordinary diligence.
Respondent nevertheless harps on its strict compliance with the
earlier mentioned conditions of voyage before it allowed M/B Coco
Beach III to sail on September 11, 2000. Respondents position does
not impress.
The evidence shows that PAGASA issued 24-hour public weather
forecasts and tropical cyclone warnings for shipping on September 10
and 11, 2000 advising of tropical depressions in Northern Luzon which
would also affect the province of Mindoro. By the testimony of Dr.
168
Frisco Nilo, supervising weather specialist of PAGASA, squalls are to
be expected under such weather condition.
A very cautious person exercising the utmost diligence would thus not
brave such stormy weather and put other peoples lives at risk. The
extraordinary diligence required of common carriers demands that
they take care of the goods or lives entrusted to their hands as if they
were their own. This respondent failed to do.
Respondents insistence that the incident was caused by a fortuitous
event does not impress either.
The elements of a fortuitous event are: (a) the cause of the
unforeseen and unexpected occurrence, or the failure of the debtors
to comply with their obligations, must have been independent of
human will; (b) the event that constituted the caso fortuito must have
been impossible to foresee or, if foreseeable, impossible to avoid; (c)
the occurrence must have been such as to render it impossible for the
debtors to fulfill their obligation in a normal manner; and (d) the
obligor must have been free from any participation in the aggravation
of the resulting injury to the creditor.
To fully free a common carrier from any liability, the fortuitous event
must have been the proximate and only cause of the loss. And it
should have exercised due diligence to prevent or minimize the loss
before, during and after the occurrence of the fortuitous event.
Respondent cites the squall that occurred during the voyage as the
fortuitous event that overturned M/B Coco Beach III. As reflected
above, however, the occurrence of squalls was expected under the
weather condition of September 11, 2000. Moreover, evidence shows
that M/B Coco Beach III suffered engine trouble before it capsized and
sank. The incident was, therefore, not completely free from human
intervention.
The Court need not belabor how respondents evidence likewise fails
to demonstrate that it exercised due diligence to prevent or minimize
the loss before, during and after the occurrence of the squall.
Article 1764 vis--vis Article 2206 of the Civil Code holds the common
carrier in breach of its contract of carriage that results in the death of
a passenger liable to pay the following: (1) indemnity for death, (2)
indemnity for loss of earning capacity and (3) moral damages.
Petitioners are entitled to indemnity for the death of Ruelito which is
fixed at P50,000.
As for damages representing unearned income, the formula for its
computation is:
Net Earning Capacity = life expectancy x (gross annual income -
reasonable and necessary living expenses).
Life expectancy is determined in accordance with the formula:
2 / 3 x [80 age of deceased at the time of death]
The first factor, i.e., life expectancy, is computed by applying the
formula (2/3 x [80 age at death]) adopted in the American
Expectancy Table of Mortality or the Actuarial of Combined Experience
Table of Mortality.
The second factor is computed by multiplying the life expectancy by
the net earnings of the deceased, i.e., the total earnings less expenses
necessary in the creation of such earnings or income and less living
and other incidental expenses. The loss is not equivalent to the entire
earnings of the deceased, but only such portion as he would have
used to support his dependents or heirs. Hence, to be deducted from
his gross earnings are the necessary expenses supposed to be used
by the deceased for his own needs.
In computing the third factornecessary living expense, Smith Bell
Dodwell Shipping Agency Corp. v. Borja teaches that when, as in this
case, there is no showing that the living expenses constituted the
smaller percentage of the gross income, the living expenses are fixed
at half of the gross income.
169
Applying the above guidelines, the Court determines Ruelitos life
expectancy as follows:
Life expectancy = 2/3 x [80 - age of deceased at the time of death]
2/3 x [80 - 28]
2/3 x [52]
Life expectancy = 35
Documentary evidence shows that Ruelito was earning a basic
monthly salary of $900 which, when converted to Philippine peso
applying the annual average exchange rate of $1 = P44 in 2000,
amounts to P39,600. Ruelitos net earning capacity is thus computed
as follows:
Net Earning Capacity = life expectancy x (gross annual income -
reasonable and necessary living expenses).
= 35 x (P475,200 - P237,600)
= 35 x (P237,600)
Net Earning Capacity = P8,316,000
Respecting the award of moral damages, since respondent common
carriers breach of contract of carriage resulted in the death of
petitioners son, following Article 1764 vis--vis Article 2206 of the Civil
Code, petitioners are entitled to moral damages.
Since respondent failed to prove that it exercised the extraordinary
diligence required of common carriers, it is presumed to have acted
recklessly, thus warranting the award too of exemplary damages,
which are granted in contractual obligations if the defendant acted in
a wanton, fraudulent, reckless, oppressive or malevolent manner.
Under the circumstances, it is reasonable to award petitioners the
amount of P100,000 as moral damages and P100,000 as exemplary
damages.
Pursuant to Article 2208 of the Civil Code, attorney's fees may also be
awarded where exemplary damages are awarded. The Court finds that
10% of the total amount adjudged against respondent is reasonable
for the purpose.
Finally, Eastern Shipping Lines, Inc. v. Court of Appeals teaches that
when an obligation, regardless of its source, i.e., law, contracts, quasi-
contracts, delicts or quasi-delicts is breached, the contravenor can be
held liable for payment of interest in the concept of actual and
compensatory damages, subject to the following rules, to wit
1. When the obligation is breached, and it consists in the payment
of a sum of money, i.e., a loan or forbearance of money, the interest
due should be that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the
time it is judicially demanded. In the absence of stipulation, the rate
of interest shall be 12% per annum to be computed from default, i.e.,
from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of
money, is breached, an interest on the amount of damages awarded
may be imposed at the discretion of the court at the rate of 6% per
annum. No interest, however, shall be adjudged on unliquidated
claims or damages except when or until the demand can be
established with reasonable certainty. Accordingly, where the demand
is established with reasonable certainty, the interest shall begin to run
from the time the claim is made judicially or extrajudicially (Art. 1169,
Civil Code) but when such certainty cannot be so reasonably
established at the time the demand is made, the interest shall begin
to run only from the date the judgment of the court is made (at which
time the quantification of damages may be deemed to have been
reasonably ascertained). The actual base for the computation of legal
interest shall, in any case, be on the amount finally adjudged.
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3. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest, whether the
case falls under paragraph 1 or paragraph 2, above, shall be 12% per
annum from such finality until its satisfaction, this interim period being
deemed to be by then an equivalent to a forbearance of credit.
(emphasis supplied).

Since the amounts payable by respondent have been determined with

certainty only in the present petition, the interest due shall be
computed upon the finality of this decision at the rate of 12% per
annum until satisfaction, in accordance with paragraph number 3 of
the immediately cited guideline in Eastern Shipping Lines, Inc.

WHEREFORE, the Court of Appeals Decision of August 19, 2008 is

REVERSED and SET ASIDE. Judgment is rendered in favor of
petitioners ordering respondent to pay petitioners the following: (1)
P50,000 as indemnity for the death of Ruelito Cruz; (2) P8,316,000 as
indemnity for Ruelitos loss of earning capacity; (3) P100,000 as moral
damages; (4) P100,000 as exemplary damages; (5) 10% of the total
amount adjudged against respondent as attorneys fees; and (6) the
costs of suit.

The total amount adjudged against respondent shall earn interest at

the rate of 12% per annum computed from the finality of this decision
until full payment.

SO ORDERED.

Brion, Bersamin, Abad** and Villarama, Jr., JJ., concur.

Judgment reversed and set aside.

Note.A common carrier is bound by law to exercise extraordinary

diligence and utmost care in ensuring for the safety and welfare of its
passengers with due regard for all the circumstances. (Philippine
Airlines, Inc vs. Court of Appeals, 566 SCRA 124 [2008])

o0o

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 SPOUSES FERNANDO and LOURDES VILORIA, petitioners,
vs. CONTINENTAL AIRLINES, INC., respondent
G.R. No. 188288. January 16, 2012
Civil Law; Agency; Essential Elements of Agency.In Rallos v. Felix
Go Chan & Sons Realty Corporation, 81 SCRA 251 (1978), this Court
explained the nature of an agency and spelled out the essential
elements thereof: Out of the above given principles, sprung the
creation and acceptance of the relationship of agency whereby one
party, called the principal (mandante), authorizes another, called the
agent (mandatario), to act for and in his behalf in transactions with
third persons. The essential elements of agency are: (1) there is
consent, express or implied of the parties to establish the relationship;
(2) the object is the execution of a juridical act in relation to a third
person; (3) the agent acts as a representative and not for himself, and
(4) the agent acts within the scope of his authority. Agency is basically
personal, representative, and derivative in nature. The authority of the
agent to act emanates from the powers granted to him by his
principal; his act is the act of the principal if done within the scope of
the authority. Qui facit per alium facit se. He who acts through
another acts himself.
Same; Same; Sale and Agency, Distinguished.The distinctions of carriage, the aggrieved party does not have to prove that the
between a sale and an agency are not difficult to discern and this
Court, as early as 1970, had already formulated the guidelines that
would aid in differentiating the two (2) contracts. In Commissioner of
Internal Revenue v. Constantino, 31 SCRA 779 (1970), this Court
extrapolated that the primordial differentiating consideration between
the two (2) contracts is the transfer of ownership or title over the
property subject of the contract. In an agency, the principal retains
ownership and control over the property and the agent merely acts on
the principals behalf and under his instructions in furtherance of the
objectives for which the agency was established. On the other hand,
the contract is clearly a sale if the parties intended that the delivery of
the property will effect a relinquishment of title, control and ownership
in such a way that the recipient may do with the property as he
pleases.
Same; Common Carriers; Quasi-delicts; Air Transportation; Vicarious
Liability; An airline company is not completely exonerated from any
liability for the tort committed by its agents employees.An airline
company is not completely exonerated from any liability for the tort
committed by its agents employees. A prior determination of the
nature of the passengers cause of action is necessary. If the
passengers cause of action against the airline company is premised
on culpa aquiliana or quasi-delict for a tort committed by the employee
of the airline companys agent, there must be an independent showing
that the airline company was at fault or negligent or has contributed
to the negligence or tortuous conduct committed by the employee of
its agent. The mere fact that the employee of the airline companys
agent has committed a tort is not sufficient to hold the airline company
liable. There is no vinculum juris between the airline company and its
agents employees and the contractual relationship between the airline
company and its agent does not operate to create a juridical tie
between the airline company and its agents employees. Article 2180
of the Civil Code does not make the principal vicariously liable for the
tort committed by its agents employees and the principal-agency
relationship per se does not make the principal a party to such tort;
hence, the need to prove the principals own fault or negligence.
Same; Same; Same; Same; In an action based on a breach of contract
common carrier was at fault or was negligent. All that he has to prove
is the existence of the contract and the fact of its non-performance by
the carrier.If the passengers cause of action for damages against
the airline company is based on contractual breach or culpa
contractual, it is not necessary that there be evidence of the airline
companys fault or negligence. As this Court previously stated in China
Air Lines and reiterated in Air France vs. Gillego, 638 SCRA 472 (2010),
in an action based on a breach of contract of carriage, the aggrieved
party does not have to prove that the common carrier was at fault or
was negligent. All that he has to prove is the existence of the contract
and the fact of its non-performance by the carrier.
Same; Contracts; Voidable Contracts; Fraud; Prescription; If the
consent of the contracting parties was obtained through fraud, the
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contract is considered voidable and may be annulled within four (4)
years from the time of the discovery of the fraud.Article 1390, in
relation to Article 1391 of the Civil Code, provides that if the consent
of the contracting parties was obtained through fraud, the contract is
considered voidable and may be annulled within four (4) years from
the time of the discovery of the fraud. Once a contract is annulled, the
parties are obliged under Article 1398 of the same Code to restore to
each other the things subject matter of the contract, including their
fruits and interest.
Same; Same; Same; Same; There is fraud when, through insidious
words or machinations of one of the contracting parties, the other is
induced to enter into a contract which, without them, he would not
have agreed to.Under Article 1338 of the Civil Code, there is fraud
when, through insidious words or machinations of one of the
contracting parties, the other is induced to enter into a contract which,
without them, he would not have agreed to. In order that fraud may
vitiate consent, it must be the causal (dolo causante), not merely the
incidental (dolo incidente), inducement to the making of the contract.
In Samson v. Court of Appeals, 238 SCRA 397 (1994), causal fraud
was defined as a deception employed by one party prior to or
simultaneous to the contract in order to secure the consent of the
other. Also, fraud must be serious and its existence must be
established by clear and convincing evidence.
Same; Same; Same; Voidable contracts may be ratified expressly or
impliedly. Implied ratification may take diverse forms, such as by
silence or acquiescence; by acts showing approval or adoption of the
contract; or by acceptance and retention of benefits flowing
therefrom.Ratification of a voidable contract is defined under Article
1393 of the Civil Code as follows: Art. 1393. Ratification may be
effected expressly or tacitly. It is understood that there is a tacit
ratification if, with knowledge of the reason which renders the contract
voidable and such reason having ceased, the person who has a right
to invoke it should execute an act which necessarily implies an
intention to waive his right. Implied ratification may take diverse
forms, such as by silence or acquiescence; by acts showing approval
or adoption of the contract; or by acceptance and retention of benefits
flowing therefrom.
Same; Same; Same; A party cannot rely on the contract and claim
rights or obligations under it and at the same time impugn its
existence or validity.Annulment under Article 1390 of the Civil Code
and rescission under Article 1191 are two (2) inconsistent remedies.
In resolution, all the elements to make the contract valid are present;
in annulment, one of the essential elements to a formation of a
contract, which is consent, is absent. In resolution, the defect is in the
consummation stage of the contract when the parties are in the
process of performing their respective obligations; in annulment, the
defect is already present at the time of the negotiation and perfection
stages of the contract. Accordingly, by pursuing the remedy of
rescission under Article 1191, the Vilorias had impliedly admitted the
validity of the subject contracts, forfeiting their right to demand their
annulment. A party cannot rely on the contract and claim rights or
obligations under it and at the same time impugn its existence or
validity. Indeed, litigants are enjoined from taking inconsistent
positions.
Same; Common Carriers; As a common carrier whose business is
imbued with public interest, the exercise of extraordinary diligence
requires the airline company to inform all of its passengers of all the
terms and conditions governing their contract of carriage.Contrary
to CAIs claim, that the subject tickets are non-transferable cannot be
implied from a plain reading of the provision printed on the subject
tickets stating that [t]o the extent not in conflict with the foregoing
carriage and other services performed by each carrier are subject to:
(a) provisions contained in this ticket, x x x (iii) carriers conditions of
carriage and related regulations which are made part hereof (and are
available on application at the offices of carrier) x x x. As a common
carrier whose business is imbued with public interest, the exercise of
extraordinary diligence requires CAI to inform Spouses Viloria, or all
of its passengers for that matter, of all the terms and conditions
governing their contract of carriage. CAI is proscribed from taking
advantage of any ambiguity in the contract of carriage to impute
knowledge on its passengers of and demand compliance with a certain
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condition or undertaking that is not clearly stipulated. Since the
prohibition on transferability is not written on the face of the subject
tickets and CAI failed to inform Spouses Viloria thereof, CAI cannot
refuse to apply the value of Lourdes ticket as payment for Fernandos
purchase of a new ticket.
Same; Contracts; Rescission; The general rule is that rescission of a
contract will not be permitted for a slight or casual breach, but only
for such substantial and fundamental violations as would defeat the
very object of the parties in making the agreement.The right to
rescind a contract for non-performance of its stipulations is not
absolute. The general rule is that rescission of a contract will not be
permitted for a slight or casual breach, but only for such substantial
and fundamental violations as would defeat the very object of the
parties in making the agreement. Whether a breach is substantial is
largely determined by the attendant circumstances.
Remedial Law; Evidence; Newspaper Clippings; Hearsay Evidence
Rule; Newspaper clippings are hearsay if they were offered for the
purpose of proving the truth of the matter alleged.The only evidence
the petitioners presented to prove that the price of a round trip ticket
between Manila and Los Angeles at that time was only $856.00 is a
newspaper advertisement for another airline company, which is
inadmissible for being hearsay evidence, twice removed. Newspaper
clippings are hearsay if they were offered for the purpose of proving
the truth of the matter alleged. As ruled in Feria v. Court of Appeals,
325 SCRA 525 (2000): [N]ewspaper articles amount to hearsay
evidence, twice removed and are therefore not only inadmissible but
without any probative value at all whether objected to or not, unless
offered for a purpose other than proving the truth of the matter
asserted. In this case, the news article is admissible only as evidence
that such publication does exist with the tenor of the news therein
stated.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Quasha, Ancheta, Pea & Nolasco for petitioners.
Quisumbing, Torres for respondent.
REYES, J.:
This is a petition for review under Rule 45 of the Rules of Court from
the January 30, 2009 Decision of the Special Thirteenth Division of the
Court of Appeals (CA) in CA-G.R. CV No. 88586 entitled Spouses
Fernando and Lourdes Viloria v. Continental Airlines, Inc., the
dispositive portion of which states:
WHEREFORE, the Decision of the Regional Trial Court, Branch 74,
dated 03 April 2006, awarding US$800.00 or its peso equivalent at the
time of payment, plus legal rate of interest from 21 July 1997 until
fully paid, [P]100,000.00 as moral damages, [P]50,000.00 as
exemplary damages, [P]40,000.00 as attorneys fees and costs of suit
to plaintiffs-appellees is hereby REVERSED and SET ASIDE.
Defendant-appellants counterclaim is DENIED.
Costs against plaintiffs-appellees.
SO ORDERED.
On April 3, 2006, the Regional Trial Court of Antipolo City, Branch 74
(RTC) rendered a Decision, giving due course to the complaint for sum
of money and damages filed by petitioners Fernando Viloria
(Fernando) and Lourdes Viloria (Lourdes), collectively called Spouses
Viloria, against respondent Continental Airlines, Inc. (CAI). As culled
from the records, below are the facts giving rise to such complaint.
On or about July 21, 1997 and while in the United States, Fernando
purchased for himself and his wife, Lourdes, two (2) round trip airline
tickets from San Diego, California to Newark, New Jersey on board
Continental Airlines. Fernando purchased the tickets at US$400.00
each from a travel agency called Holiday Travel and was attended
to by a certain Margaret Mager (Mager). According to Spouses Viloria,
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Fernando agreed to buy the said tickets after Mager informed them
that there were no available seats at Amtrak, an intercity passenger
train service provider in the United States. Per the tickets, Spouses
Viloria were scheduled to leave for Newark on August 13, 1997 and
return to San Diego on August 21, 1997.
Subsequently, Fernando requested Mager to reschedule their flight to
Newark to an earlier date or August 6, 1997. Mager informed him that
flights to Newark via Continental Airlines were already fully booked
and offered the alternative of a round trip flight via Frontier Air. Since
flying with Frontier Air called for a higher fare of US$526.00 per
passenger and would mean traveling by night, Fernando opted to
request for a refund. Mager, however, denied his request as the
subject tickets are non-refundable and the only option that Continental
Airlines can offer is the re-issuance of new tickets within one (1) year
from the date the subject tickets were issued. Fernando decided to
reserve two (2) seats with Frontier Air.
As he was having second thoughts on traveling via Frontier Air,
Fernando went to the Greyhound Station where he saw an Amtrak
station nearby. Fernando made inquiries and was told that there are
seats available and he can travel on Amtrak anytime and any day he
pleased. Fernando then purchased two (2) tickets for Washington,
D.C.
From Amtrak, Fernando went to Holiday Travel and confronted Mager
with the Amtrak tickets, telling her that she had misled them into
buying the Continental Airlines tickets by misrepresenting that Amtrak
was already fully booked. Fernando reiterated his demand for a refund
but Mager was firm in her position that the subject tickets are non-
refundable.
Upon returning to the Philippines, Fernando sent a letter to CAI on
February 11, 1998, demanding a refund and alleging that Mager had
deluded them into purchasing the subject tickets.
In a letter dated February 24, 1998, Continental Micronesia informed
Fernando that his complaint had been referred to the Customer
Refund Services of Continental Airlines at Houston, Texas.
In a letter dated March 24, 1998, Continental Micronesia denied
Fernandos request for a refund and advised him that he may take the
subject tickets to any Continental ticketing location for the re-issuance
of new tickets within two (2) years from the date they were issued.
Continental Micronesia informed Fernando that the subject tickets may
be used as a form of payment for the purchase of another Continental
ticket, albeit with a re-issuance fee.
On June 17, 1999, Fernando went to Continentals ticketing office at
Ayala Avenue, Makati City to have the subject tickets replaced by a
single round trip ticket to Los Angeles, California under his name.
Therein, Fernando was informed that Lourdes ticket was non-
transferable, thus, cannot be used for the purchase of a ticket in his
favor. He was also informed that a round trip ticket to Los Angeles
was US$1,867.40 so he would have to pay what will not be covered
by the value of his San Diego to Newark round trip ticket.
In a letter dated June 21, 1999, Fernando demanded for the refund
of the subject tickets as he no longer wished to have them replaced.
In addition to the dubious circumstances under which the subject
tickets were issued, Fernando claimed that CAIs act of charging him
with US$1,867.40 for a round trip ticket to Los Angeles, which other
airlines priced at US$856.00, and refusal to allow him to use Lourdes
ticket, breached its undertaking under its March 24, 1998 letter.
On September 8, 2000, Spouses Viloria filed a complaint against CAI,
praying that CAI be ordered to refund the money they used in the
purchase of the subject tickets with legal interest from July 21, 1997
and to pay P1,000,000.00 as moral damages, P500,000.00 as
exemplary damages and P250,000.00 as attorneys fees.
CAI interposed the following defenses: (a) Spouses Viloria have no
right to ask for a refund as the subject tickets are non-refundable; (b)
Fernando cannot insist on using the ticket in Lourdes name for the
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purchase of a round trip ticket to Los Angeles since the same is non-
transferable; (c) as Mager is not a CAI employee, CAI is not liable for
any of her acts; (d) CAI, its employees and agents did not act in bad
faith as to entitle Spouses Viloria to moral and exemplary damages
and attorneys fees. CAI also invoked the following clause printed on
the subject tickets:
3. To the extent not in conflict with the foregoing carriage and other
services performed by each carrier are subject to: (i) provisions
contained in this ticket, (ii) applicable tariffs, (iii) carriers conditions
of carriage and related regulations which are made part hereof (and
are available on application at the offices of carrier), except in
transportation between a place in the United States or Canada and
any place outside thereof to which tariffs in force in those countries
apply.
According to CAI, one of the conditions attached to their contract of
carriage is the non-transferability and non-refundability of the subject
tickets.
The RTCs Ruling
Following a full-blown trial, the RTC rendered its April 3, 2006
Decision, holding that Spouses Viloria are entitled to a refund in view
of Magers misrepresentation in obtaining their consent in the
purchase of the subject tickets. The relevant portion of the April 3,
2006 Decision states:
Continental Airlines agent Ms. Mager was in bad faith when she was
less candid and diligent in presenting to plaintiffs spouses their
booking options. Plaintiff Fernando clearly wanted to travel via
AMTRAK, but defendants agent misled him into purchasing
Continental Airlines tickets instead on the fraudulent
misrepresentation that Amtrak was fully booked. In fact, defendant
Airline did not specifically denied (sic) this allegation.
Plainly, plaintiffs spouses, particularly plaintiff Fernando, were tricked
into buying Continental Airline tickets on Ms. Magers misleading
misrepresentations. Continental Airlines agent Ms. Mager further
relied on and exploited plaintiff Fernandos need and told him that
they must book a flight immediately or risk not being able to travel at
all on the couples preferred date. Unfortunately, plaintiffs spouses fell
prey to the airlines and its agents unethical tactics for baiting trusting
customers.
Citing Articles 1868 and 1869 of the Civil Code, the RTC ruled that
Mager is CAIs agent, hence, bound by her bad faith and
misrepresentation. As far as the RTC is concerned, there is no issue
as to whether Mager was CAIs agent in view of CAIs implied
recognition of her status as such in its March 24, 1998 letter.
The act of a travel agent or agency being involved here, the following
are the pertinent New Civil Code provisions on agency:
Art. 1868. By the contract of agency a person binds himself to
render some service or to do something in representation or on behalf
of another, with the consent or authority of the latter.
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.
Agency may be oral, unless the law requires a specific form.
As its very name implies, a travel agency binds itself to render some
service or to do something in representation or on behalf of another,
with the consent or authority of the latter. This court takes judicial
notice of the common services rendered by travel agencies that
represent themselves as such, specifically the reservation and booking
of local and foreign tours as well as the issuance of airline tickets for
a commission or fee.
The services rendered by Ms. Mager of Holiday Travel agency to the
plaintiff spouses on July 21, 1997 were no different from those offered
in any other travel agency. Defendant airline impliedly if not expressly
176
acknowledged its principal-agent relationship with Ms. Mager by its
offer in the letter dated March 24, 1998an obvious attempt to
assuage plaintiffs spouses hurt feelings.
Furthermore, the RTC ruled that CAI acted in bad faith in reneging on
its undertaking to replace the subject tickets within two (2) years from
their date of issue when it charged Fernando with the amount of
US$1,867.40 for a round trip ticket to Los Angeles and when it refused
to allow Fernando to use Lourdes ticket. Specifically:
Tickets may be reissued for up to two years from the original date of
issue. When defendant airline still charged plaintiffs spouses
US$1,867.40 or more than double the then going rate of US$856.00
for the unused tickets when the same were presented within two (2)
years from date of issue, defendant airline exhibited callous treatment
of passengers.
The Appellate Courts Ruling
On appeal, the CA reversed the RTCs April 3, 2006 Decision, holding
that CAI cannot be held liable for Magers act in the absence of any
proof that a principal-agent relationship existed between CAI and
Holiday Travel. According to the CA, Spouses Viloria, who have the
burden of proof to establish the fact of agency, failed to present
evidence demonstrating that Holiday Travel is CAIs agent.
Furthermore, contrary to Spouses Vilorias claim, the contractual
relationship between Holiday Travel and CAI is not an agency but that
of a sale.
Plaintiffs-appellees assert that Mager was a sub-agent of Holiday
Travel who was in turn a ticketing agent of Holiday Travel who was in
turn a ticketing agent of Continental Airlines. Proceeding from this
premise, they contend that Continental Airlines should be held liable
for the acts of Mager. The trial court held the same view.
We do not agree. By the contract of agency, a person binds
him/herself to render some service or to do something in
representation or on behalf of another, with the consent or authority
of the latter. The elements of agency are: (1) consent, express or
implied, of the parties to establish the relationship; (2) the object is
the execution of a juridical act in relation to a third person; (3) the
agent acts as a representative and not for him/herself; and (4) the
agent acts within the scope of his/her authority. As the basis of agency
is representation, there must be, on the part of the principal, an actual
intention to appoint, an intention naturally inferable from the
principals words or actions. In the same manner, there must be an
intention on the part of the agent to accept the appointment and act
upon it. Absent such mutual intent, there is generally no agency. It is
likewise a settled rule that persons dealing with an assumed agent are
bound at their peril, if they would hold the principal liable, to ascertain
not only the fact of agency but also the nature and extent of authority,
and in case either is controverted, the burden of proof is upon them
to establish it. Agency is never presumed, neither is it created by the
mere use of the word in a trade or business name. We have perused
the evidence and documents so far presented. We find nothing except
bare allegations of plaintiffs-appellees that Mager/Holiday Travel was
acting in behalf of Continental Airlines. From all sides of legal prism,
the transaction in issue was simply a contract of sale, wherein Holiday
Travel buys airline tickets from Continental Airlines and then, through
its employees, Mager included, sells it at a premium to clients.
The CA also ruled that refund is not available to Spouses Viloria as the
word non-refundable was clearly printed on the face of the subject
tickets, which constitute their contract with CAI. Therefore, the grant
of their prayer for a refund would violate the proscription against
impairment of contracts.
Finally, the CA held that CAI did not act in bad faith when they charged
Spouses Viloria with the higher amount of US$1,867.40 for a round
trip ticket to Los Angeles. According to the CA, there is no compulsion
for CAI to charge the lower amount of US$856.00, which Spouses
Viloria claim to be the fee charged by other airlines. The matter of
fixing the prices for its services is CAIs prerogative, which Spouses
Viloria cannot intervene. In particular:
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It is within the respective rights of persons owning and/or operating
business entities to peg the premium of the services and items which
they provide at a price which they deem fit, no matter how expensive
or exhorbitant said price may seem vis--vis those of the competing
companies. The Spouses Viloria may not intervene with the business
judgment of Continental Airlines.
The Petitioners Case
In this Petition, this Court is being asked to review the findings and
conclusions of the CA, as the latters reversal of the RTCs April 3, 2006
Decision allegedly lacks factual and legal bases. Spouses Viloria claim
that CAI acted in bad faith when it required them to pay a higher
amount for a round trip ticket to Los Angeles considering CAIs
undertaking to re-issue new tickets to them within the period stated
in their March 24, 1998 letter. CAI likewise acted in bad faith when it
disallowed Fernando to use Lourdes ticket to purchase a round trip to
Los Angeles given that there is nothing in Lourdes ticket indicating
that it is non-transferable. As a common carrier, it is CAIs duty to
inform its passengers of the terms and conditions of their contract and
passengers cannot be bound by such terms and conditions which they
are not made aware of. Also, the subject contract of carriage is a
contract of adhesion; therefore, any ambiguities should be construed
against CAI. Notably, the petitioners are no longer questioning the
validity of the subject contracts and limited its claim for a refund on
CAIs alleged breach of its undertaking in its March 24, 1998 letter.
The Respondents Case
In its Comment, CAI claimed that Spouses Vilorias allegation of bad
faith is negated by its willingness to issue new tickets to them and to
credit the value of the subject tickets against the value of the new
ticket Fernando requested. CAI argued that Spouses Vilorias sole
basis to claim that the price at which CAI was willing to issue the new
tickets is unconscionable is a piece of hearsay evidencean
advertisement appearing on a newspaper stating that airfares from
Manila to Los Angeles or San Francisco cost US$818.00. Also, the
advertisement pertains to airfares in September 2000 and not to
airfares prevailing in June 1999, the time when Fernando asked CAI
to apply the value of the subject tickets for the purchase of a new one.
CAI likewise argued that it did not undertake to protect Spouses Viloria
from any changes or fluctuations in the prices of airline tickets and its
only obligation was to apply the value of the subject tickets to the
purchase of the newly issued tickets.
With respect to Spouses Vilorias claim that they are not aware of CAIs
restrictions on the subject tickets and that the terms and conditions
that are printed on them are ambiguous, CAI denies any ambiguity
and alleged that its representative informed Fernando that the subject
tickets are non-transferable when he applied for the issuance of a new
ticket. On the other hand, the word non-refundable clearly appears
on the face of the subject tickets.
CAI also denies that it is bound by the acts of Holiday Travel and
Mager and that no principal-agency relationship exists between them.
As an independent contractor, Holiday Travel was without capacity to
bind CAI.
Issues
To determine the propriety of disturbing the CAs January 30, 2009
Decision and whether Spouses Viloria have the right to the reliefs they
prayed for, this Court deems it necessary to resolve the following
issues:
a. Does a principal-agent relationship exist between CAI and Holiday
Travel?
b. Assuming that an agency relationship exists between CAI and
Holiday Travel, is CAI bound by the acts of Holiday Travels agents
and employees such as Mager?
c. Assuming that CAI is bound by the acts of Holiday Travels agents
and employees, can the representation of Mager as to unavailability
of seats at Amtrak be considered fraudulent as to vitiate the consent
of Spouse Viloria in the purchase of the subject tickets?
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d. Is CAI justified in insisting that the subject tickets are non-
transferable and non-refundable?
e. Is CAI justified in pegging a different price for the round trip ticket
to Los Angeles requested by Fernando?
f. Alternatively, did CAI act in bad faith or renege its obligation to
Spouses Viloria to apply the value of the subject tickets in the purchase
of new ones when it refused to allow Fernando to use Lourdes ticket
and in charging a higher price for a round trip ticket to Los Angeles?
This Courts Ruling
I. A principal-agent relationship exists between CAI and Holiday
Travel.
With respect to the first issue, which is a question of fact that would
require this Court to review and re-examine the evidence presented
by the parties below, this Court takes exception to the general rule
that the CAs findings of fact are conclusive upon Us and our
jurisdiction is limited to the review of questions of law. It is well-settled
to the point of being axiomatic that this Court is authorized to resolve
questions of fact if confronted with contrasting factual findings of the
trial court and appellate court and if the findings of the CA are
contradicted by the evidence on record.
According to the CA, agency is never presumed and that he who
alleges that it exists has the burden of proof. Spouses Viloria, on
whose shoulders such burden rests, presented evidence that fell short
of indubitably demonstrating the existence of such agency.
We disagree. The CA failed to consider undisputed facts, discrediting
CAIs denial that Holiday Travel is one of its agents. Furthermore, in
erroneously characterizing the contractual relationship between CAI
and Holiday Travel as a contract of sale, the CA failed to apply the
fundamental civil law principles governing agency and differentiating
it from sale.
In Rallos v. Felix Go Chan & Sons Realty Corporation, this Court
explained the nature of an agency and spelled out the essential
elements thereof:
Out of the above given principles, sprung the creation and acceptance
of the relationship of agency whereby one party, called the principal
(mandante), authorizes another, called the agent (mandatario), to act
for and in his behalf in transactions with third persons. The essential
elements of agency are: (1) there is consent, express or implied of the
parties to establish the relationship; (2) the object is the execution of
a juridical act in relation to a third person; (3) the agent acts as a
representative and not for himself, and (4) the agent acts within the
scope of his authority.
Agency is basically personal, representative, and derivative in nature.
The authority of the agent to act emanates from the powers granted
to him by his principal; his act is the act of the principal if done within
the scope of the authority. Qui facit per alium facit se. He who acts
through another acts himself.
Contrary to the findings of the CA, all the elements of an agency exist
in this case. The first and second elements are present as CAI does
not deny that it concluded an agreement with Holiday Travel, whereby
Holiday Travel would enter into contracts of carriage with third
persons on CAIs behalf. The third element is also present as it is
undisputed that Holiday Travel merely acted in a representative
capacity and it is CAI and not Holiday Travel who is bound by the
contracts of carriage entered into by Holiday Travel on its behalf. The
fourth element is also present considering that CAI has not made any
allegation that Holiday Travel exceeded the authority that was granted
to it. In fact, CAI consistently maintains the validity of the contracts of
carriage that Holiday Travel executed with Spouses Viloria and that
Mager was not guilty of any fraudulent misrepresentation. That CAI
admits the authority of Holiday Travel to enter into contracts of
carriage on its behalf is easily discernible from its February 24, 1998
and March 24, 1998 letters, where it impliedly recognized the validity
of the contracts entered into by Holiday Travel with Spouses Viloria.
When Fernando informed CAI that it was Holiday Travel who issued
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to them the subject tickets, CAI did not deny that Holiday Travel is its
authorized agent.
Prior to Spouses Vilorias filing of a complaint against it, CAI never
refuted that it gave Holiday Travel the power and authority to conclude
contracts of carriage on its behalf. As clearly extant from the records,
CAI recognized the validity of the contracts of carriage that Holiday
Travel entered into with Spouses Viloria and considered itself bound
with Spouses Viloria by the terms and conditions thereof; and this
constitutes an unequivocal testament to Holiday Travels authority to
act as its agent. This Court cannot therefore allow CAI to take an
altogether different position and deny that Holiday Travel is its agent
without condoning or giving imprimatur to whatever damage or
prejudice that may result from such denial or retraction to Spouses
Viloria, who relied on good faith on CAIs acts in recognition of Holiday
Travels authority. Estoppel is primarily based on the doctrine of good
faith and the avoidance of harm that will befall an innocent party due
to its injurious reliance, the failure to apply it in this case would result
in gross travesty of justice. Estoppel bars CAI from making such
denial.
As categorically provided under Article 1869 of the Civil Code,
[a]gency 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.
Considering that the fundamental hallmarks of an agency are present,
this Court finds it rather peculiar that the CA had branded the
contractual relationship between CAI and Holiday Travel as one of
sale. The distinctions between a sale and an agency are not difficult
to discern and this Court, as early as 1970, had already formulated
the guidelines that would aid in differentiating the two (2) contracts.
In Commissioner of Internal Revenue v. Constantino, this Court
extrapolated that the primordial differentiating consideration between
the two (2) contracts is the transfer of ownership or title over the
property subject of the contract. In an agency, the principal retains
ownership and control over the property and the agent merely acts on
the principals behalf and under his instructions in furtherance of the
objectives for which the agency was established. On the other hand,
the contract is clearly a sale if the parties intended that the delivery of
the property will effect a relinquishment of title, control and ownership
in such a way that the recipient may do with the property as he
pleases.
Since the company retained ownership of the goods, even as it
delivered possession unto the dealer for resale to customers, the price
and terms of which were subject to the companys control, the
relationship between the company and the dealer is one of agency,
tested under the following criterion:
The difficulty in distinguishing between contracts of sale and the
creation of an agency to sell has led to the establishment of rules by
the application of which this difficulty may be solved. The decisions
say the transfer of title or agreement to transfer it for a price paid or
promised is the essence of sale. If such transfer puts the transferee in
the attitude or position of an owner and makes him liable to the
transferor as a debtor for the agreed price, and not merely as an agent
who must account for the proceeds of a resale, the transaction is a
sale; while the essence of an agency to sell is the delivery to an agent,
not as his property, but as the property of the principal, who remains
the owner and has the right to control sales, fix the price, and terms,
demand and receive the proceeds less the agents commission upon
sales made. 1 Mechem on Sales, Sec. 43; 1 Mechem on Agency, Sec.
48; Williston on Sales, 1; Tiedeman on Sales, 1. (Salisbury v. Brooks,
94 SE 117, 118-119)
As to how the CA have arrived at the conclusion that the contract
between CAI and Holiday Travel is a sale is certainly confounding,
considering that CAI is the one bound by the contracts of carriage
embodied by the tickets being sold by Holiday Travel on its behalf. It
is undisputed that CAI and not Holiday Travel who is the party to the
contracts of carriage executed by Holiday Travel with third persons
who desire to travel via Continental Airlines, and this conclusively
indicates the existence of a principal-agent relationship. That the
principal is bound by all the obligations contracted by the agent within
the scope of the authority granted to him is clearly provided under
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Article 1910 of the Civil Code and this constitutes the very notion of
agency.
II. In actions based on quasi-delict, a principal can only be held liable
for the tort committed by its agents employees if it has been
established by preponderance of evidence that the principal was
also at fault or negligent or that the principal exercise control and
supervision over them.
Considering that Holiday Travel is CAIs agent, does it necessarily
follow that CAI is liable for the fault or negligence of Holiday Travels
employees? Citing China Air Lines, Ltd. v. Court of Appeals, et al., CAI
argues that it cannot be held liable for the actions of the employee of
its ticketing agent in the absence of an employer-employee
relationship.
An examination of this Courts pronouncements in China Air Lines will
reveal that an airline company is not completely exonerated from any
liability for the tort committed by its agents employees. A prior
determination of the nature of the passengers cause of action is
necessary. If the passengers cause of action against the airline
company is premised on culpa aquiliana or quasi-delict for a tort
committed by the employee of the airline companys agent, there must
be an independent showing that the airline company was at fault or
negligent or has contributed to the negligence or tortuous conduct
committed by the employee of its agent. The mere fact that the
employee of the airline companys agent has committed a tort is not
sufficient to hold the airline company liable. There is no vinculum juris
between the airline company and its agents employees and the
contractual relationship between the airline company and its agent
does not operate to create a juridical tie between the airline company
and its agents employees. Article 2180 of the Civil Code does not
make the principal vicariously liable for the tort committed by its
agents employees and the principal-agency relationship per se does
not make the principal a party to such tort; hence, the need to prove
the principals own fault or negligence.
On the other hand, if the passengers cause of action for damages
against the airline company is based on contractual breach or culpa
contractual, it is not necessary that there be evidence of the airline
companys fault or negligence. As this Court previously stated in China
Air Lines and reiterated in Air France vs. Gillego, in an action based
on a breach of contract of carriage, the aggrieved party does not have
to prove that the common carrier was at fault or was negligent. All
that he has to prove is the existence of the contract and the fact of its
non-performance by the carrier.
Spouses Vilorias cause of action on the basis of Magers alleged
fraudulent misrepresentation is clearly one of tort or quasi-delict, there
being no pre-existing contractual relationship between them.
Therefore, it was incumbent upon Spouses Viloria to prove that CAI
was equally at fault.
However, the records are devoid of any evidence by which CAIs
alleged liability can be substantiated. Apart from their claim that CAI
must be held liable for Magers supposed fraud because Holiday Travel
is CAIs agent, Spouses Viloria did not present evidence that CAI was
a party or had contributed to Magers complained act either by
instructing or authorizing Holiday Travel and Mager to issue the said
misrepresentation.
It may seem unjust at first glance that CAI would consider Spouses
Viloria bound by the terms and conditions of the subject contracts,
which Mager entered into with them on CAIs behalf, in order to deny
Spouses Vilorias request for a refund or Fernandos use of Lourdes
ticket for the re-issuance of a new one, and simultaneously claim that
they are not bound by Magers supposed misrepresentation for
purposes of avoiding Spouses Vilorias claim for damages and
maintaining the validity of the subject contracts. It may likewise be
argued that CAI cannot deny liability as it benefited from Magers acts,
which were performed in compliance with Holiday Travels obligations
as CAIs agent.
However, a persons vicarious liability is anchored on his possession
of control, whether absolute or limited, on the tortfeasor. Without such
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control, there is nothing which could justify extending the liability to a
person other than the one who committed the tort. As this Court
explained in Cangco v. Manila Railroad Co.:
With respect to extra-contractual obligation arising from negligence,
whether of act or omission, it is competent for the legislature to elect
and our Legislature has so electedto limit such liability to cases in
which the person upon whom such an obligation is imposed is morally
culpable or, on the contrary, for reasons of public policy, to extend
that liability, without regard to the lack of moral culpability, so as to
include responsibility for the negligence of those persons whose acts
or omissions are imputable, by a legal fiction, to others who are in a
position to exercise an absolute or limited control over them. The
legislature which adopted our Civil Code has elected to limit extra-
contractual liabilitywith certain well-defined exceptionsto cases in
which moral culpability can be directly imputed to the persons to be
charged. This moral responsibility may consist in having failed to
exercise due care in ones own acts, or in having failed to exercise due
care in the selection and control of ones agent or servants, or in the
control of persons who, by reasons of their status, occupy a position
of dependency with respect to the person made liable for their
conduct. (emphasis supplied)
It is incumbent upon Spouses Viloria to prove that CAI exercised
control or supervision over Mager by preponderant evidence. The
existence of control or supervision cannot be presumed and CAI is
under no obligation to prove its denial or nugatory assertion. Citing
Belen v. Belen, this Court ruled in Jayme v. Apostol, that:
In Belen v. Belen, this Court ruled that it was enough for defendant
to deny an alleged employment relationship. The defendant is under
no obligation to prove the negative averment. This Court said:
It is an old and well-settled rule of the courts that the burden of
proving the action is upon the plaintiff, and that if he fails satisfactorily
to show the facts upon which he bases his claim, the defendant is
under no obligation to prove his exceptions. This [rule] is in harmony
with the provisions of Section 297 of the Code of Civil Procedure
holding that each party must prove his own affirmative allegations,
etc. (citations omitted)
Therefore, without a modicum of evidence that CAI exercised control
over Holiday Travels employees or that CAI was equally at fault, no
liability can be imposed on CAI for Magers supposed
misrepresentation.
III. Even on the assumption that CAI may be held liable for the acts
of Mager, still, Spouses Viloria are not entitled to a refund. Magers
statement cannot be considered a causal fraud that would justify
the annulment of the subject contracts that would oblige CAI to
indemnify Spouses Viloria and return the money they paid for the
subject tickets.
Article 1390, in relation to Article 1391 of the Civil Code, provides that
if the consent of the contracting parties was obtained through fraud,
the contract is considered voidable and may be annulled within four
(4) years from the time of the discovery of the fraud. Once a contract
is annulled, the parties are obliged under Article 1398 of the same
Code to restore to each other the things subject matter of the contract,
including their fruits and interest.
On the basis of the foregoing and given the allegation of Spouses
Viloria that Fernandos consent to the subject contracts was
supposedly secured by Mager through fraudulent means, it is plainly
apparent that their demand for a refund is tantamount to seeking for
an annulment of the subject contracts on the ground of vitiated
consent.
Whether the subject contracts are annullable, this Court is required to
determine whether Magers alleged misrepresentation constitutes
causal fraud. Similar to the dispute on the existence of an agency,
whether fraud attended the execution of a contract is factual in nature
and this Court, as discussed above, may scrutinize the records if the
findings of the CA are contrary to those of the RTC.
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Under Article 1338 of the Civil Code, there is fraud when, through
insidious words or machinations of one of the contracting parties, the
other is induced to enter into a contract which, without them, he would
not have agreed to. In order that fraud may vitiate consent, it must
be the causal (dolo causante), not merely the incidental (dolo
incidente), inducement to the making of the contract. In Samson v.
Court of Appeals, causal fraud was defined as a deception employed
by one party prior to or simultaneous to the contract in order to secure
the consent of the other.
Also, fraud must be serious and its existence must be established by
clear and convincing evidence. As ruled by this Court in Sierra v. Hon.
Court of Appeals, et al., mere preponderance of evidence is not
adequate:
Fraud must also be discounted, for according to the Civil Code:
Art. 1338. There is fraud when, through insidious words or
machinations of one of the contracting parties, the other is induced to
enter into a contract which without them, he would not have agreed
to.
Art. 1344. In order that fraud may make a contract voidable, it
should be serious and should not have been employed by both
contracting parties.
To quote Tolentino again, the misrepresentation constituting the
fraud must be established by full, clear, and convincing evidence, and
not merely by a preponderance thereof. The deceit must be serious.
The fraud is serious when it is sufficient to impress, or to lead an
ordinarily prudent person into error; that which cannot deceive a
prudent person cannot be a ground for nullity. The circumstances of
each case should be considered, taking into account the personal
conditions of the victim.
After meticulously poring over the records, this Court finds that the
fraud alleged by Spouses Viloria has not been satisfactorily established
as causal in nature to warrant the annulment of the subject contracts.
In fact, Spouses Viloria failed to prove by clear and convincing
evidence that Magers statement was fraudulent. Specifically, Spouses
Viloria failed to prove that (a) there were indeed available seats at
Amtrak for a trip to New Jersey on August 13, 1997 at the time they
spoke with Mager on July 21, 1997; (b) Mager knew about this; and
(c) that she purposely informed them otherwise.
This Court finds the only proof of Magers alleged fraud, which is
Fernandos testimony that an Amtrak had assured him of the perennial
availability of seats at Amtrak, to be wanting. As CAI correctly pointed
out and as Fernando admitted, it was possible that during the
intervening period of three (3) weeks from the time Fernando
purchased the subject tickets to the time he talked to said Amtrak
employee, other passengers may have cancelled their bookings and
reservations with Amtrak, making it possible for Amtrak to
accommodate them. Indeed, the existence of fraud cannot be proved
by mere speculations and conjectures. Fraud is never lightly inferred;
it is good faith that is. Under the Rules of Court, it is presumed that
a person is innocent of crime or wrong and that private transactions
have been fair and regular. Spouses Viloria failed to overcome this
presumption.
IV. Assuming the contrary, Spouses Viloria are nevertheless deemed
to have ratified the subject contracts.
Even assuming that Magers representation is causal fraud, the subject
contracts have been impliedly ratified when Spouses Viloria decided
to exercise their right to use the subject tickets for the purchase of
new ones. Under Article 1392 of the Civil Code, ratification
extinguishes the action to annul a voidable contract.
Ratification of a voidable contract is defined under Article 1393 of the
Civil Code as follows:
Art. 1393. Ratification may be effected expressly or tacitly. It is
understood that there is a tacit ratification if, with knowledge of the
reason which renders the contract voidable and such reason having
183
ceased, the person who has a right to invoke it should execute an act
which necessarily implies an intention to waive his right.
Implied ratification may take diverse forms, such as by silence or
acquiescence; by acts showing approval or adoption of the contract;
or by acceptance and retention of benefits flowing therefrom.
Simultaneous with their demand for a refund on the ground of
Fernandos vitiated consent, Spouses Viloria likewise asked for a
refund based on CAIs supposed bad faith in reneging on its
undertaking to replace the subject tickets with a round trip ticket from
Manila to Los Angeles.
In doing so, Spouses Viloria are actually asking for a rescission of the
subject contracts based on contractual breach. Resolution, the action
referred to in Article 1191, is based on the defendants breach of faith,
a violation of the reciprocity between the parties and in Solar Harvest,
Inc. v. Davao Corrugated Carton Corporation, this Court ruled that a
claim for a reimbursement in view of the other partys failure to comply
with his obligations under the contract is one for rescission or
resolution.
However, annulment under Article 1390 of the Civil Code and
rescission under Article 1191 are two (2) inconsistent remedies. In
resolution, all the elements to make the contract valid are present; in
annulment, one of the essential elements to a formation of a contract,
which is consent, is absent. In resolution, the defect is in the
consummation stage of the contract when the parties are in the
process of performing their respective obligations; in annulment, the
defect is already present at the time of the negotiation and perfection
stages of the contract. Accordingly, by pursuing the remedy of
rescission under Article 1191, the Vilorias had impliedly admitted the
validity of the subject contracts, forfeiting their right to demand their
annulment. A party cannot rely on the contract and claim rights or
obligations under it and at the same time impugn its existence or
validity. Indeed, litigants are enjoined from taking inconsistent
positions.
V. Contracts cannot be rescinded for a slight or casual breach.
CAI cannot insist on the non-transferability of the subject tickets.
Considering that the subject contracts are not annullable on the
ground of vitiated consent, the next question is: Do Spouses Viloria
have the right to rescind the contract on the ground of CAIs supposed
breach of its undertaking to issue new tickets upon surrender of the
subject tickets?
Article 1191, as presently worded, states:
The power to rescind obligations is implied in reciprocal ones, in case
one of the obligors should not comply with what is incumbent upon
him.
The injured party may choose between the fulfilment and the
rescission of the obligation, with the payment of damages in either
case. He may also seek rescission, even after he has chosen
fulfillment, if the latter should become impossible.
The court shall decree the rescission claimed, unless there be just
cause authorizing the fixing of a period.
This is understood to be without prejudice to the rights of third
persons who have acquired the thing, in accordance with articles 1385
and 1388 and the Mortgage Law.
According to Spouses Viloria, CAI acted in bad faith and breached the
subject contracts when it refused to apply the value of Lourdes ticket
for Fernandos purchase of a round trip ticket to Los Angeles and in
requiring him to pay an amount higher than the price fixed by other
airline companies.
In its March 24, 1998 letter, CAI stated that non-refundable tickets
may be used as a form of payment toward the purchase of another
Continental ticket for $75.00, per ticket, reissue fee ($50.00, per
ticket, for tickets purchased prior to October 30, 1997).
184
Clearly, there is nothing in the above-quoted section of CAIs letter
from which the restriction on the non-transferability of the subject
tickets can be inferred. In fact, the words used by CAI in its letter
supports the position of Spouses Viloria, that each of them can use
the ticket under their name for the purchase of new tickets whether
for themselves or for some other person.
Moreover, as CAI admitted, it was only when Fernando had expressed
his interest to use the subject tickets for the purchase of a round trip
ticket between Manila and Los Angeles that he was informed that he
cannot use the ticket in Lourdes name as payment.
Contrary to CAIs claim, that the subject tickets are non-transferable
cannot be implied from a plain reading of the provision printed on the
subject tickets stating that [t]o the extent not in conflict with the
foregoing carriage and other services performed by each carrier are
subject to: (a) provisions contained in this ticket, x x x (iii) carriers
conditions of carriage and related regulations which are made part
hereof (and are available on application at the offices of carrier) x x
x. As a common carrier whose business is imbued with public interest,
the exercise of extraordinary diligence requires CAI to inform Spouses
Viloria, or all of its passengers for that matter, of all the terms and
conditions governing their contract of carriage. CAI is proscribed from
taking advantage of any ambiguity in the contract of carriage to
impute knowledge on its passengers of and demand compliance with
a certain condition or undertaking that is not clearly stipulated. Since
the prohibition on transferability is not written on the face of the
subject tickets and CAI failed to inform Spouses Viloria thereof, CAI
cannot refuse to apply the value of Lourdes ticket as payment for
Fernandos purchase of a new ticket.
CAIs refusal to accept Lourdes ticket for the purchase of a new ticket
for Fernando is only a casual breach.
Nonetheless, the right to rescind a contract for non-performance of its
stipulations is not absolute. The general rule is that rescission of a
contract will not be permitted for a slight or casual breach, but only
for such substantial and fundamental violations as would defeat the
very object of the parties in making the agreement. Whether a breach
is substantial is largely determined by the attendant circumstances.
While CAIs refusal to allow Fernando to use the value of Lourdes
ticket as payment for the purchase of a new ticket is unjustified as the
non-transferability of the subject tickets was not clearly stipulated, it
cannot, however be considered substantial. The endorsability of the
subject tickets is not an essential part of the underlying contracts and
CAIs failure to comply is not essential to its fulfillment of its
undertaking to issue new tickets upon Spouses Vilorias surrender of
the subject tickets. This Court takes note of CAIs willingness to
perform its principal obligation and this is to apply the price of the
ticket in Fernandos name to the price of the round trip ticket between
Manila and Los Angeles. CAI was likewise willing to accept the ticket
in Lourdes name as full or partial payment as the case may be for the
purchase of any ticket, albeit under her name and for her exclusive
use. In other words, CAIs willingness to comply with its undertaking
under its March 24, 1998 cannot be doubted, albeit tainted with its
erroneous insistence that Lourdes ticket is non-transferable.
Moreover, Spouses Vilorias demand for rescission cannot prosper as
CAI cannot be solely faulted for the fact that their agreement failed to
consummate and no new ticket was issued to Fernando. Spouses
Viloria have no right to insist that a single round trip ticket between
Manila and Los Angeles should be priced at around $856.00 and refuse
to pay the difference between the price of the subject tickets and the
amount fixed by CAI. The petitioners failed to allege, much less prove,
that CAI had obliged itself to issue to them tickets for any flight
anywhere in the world upon their surrender of the subject tickets. In
its March 24, 1998 letter, it was clearly stated that [n]on-refundable
tickets may be used as a form of payment toward the purchase of
another Continental ticket and there is nothing in it suggesting that
CAI had obliged itself to protect Spouses Viloria from any fluctuation
in the prices of tickets or that the surrender of the subject tickets will
be considered as full payment for any ticket that the petitioners intend
to buy regardless of actual price and destination. The CA was correct
in holding that it is CAIs right and exclusive prerogative to fix the
185
prices for its services and it may not be compelled to observe and
maintain the prices of other airline companies.
The conflict as to the endorsability of the subject tickets is an
altogether different matter, which does not preclude CAI from fixing
the price of a round trip ticket between Manila and Los Angeles in an
amount it deems proper and which does not provide Spouses Viloria
an excuse not to pay such price, albeit subject to a reduction coming
from the value of the subject tickets. It cannot be denied that Spouses
Viloria had the concomitant obligation to pay whatever is not covered
by the value of the subject tickets whether or not the subject tickets
are transferable or not.
There is also no showing that Spouses Viloria were discriminated
against in bad faith by being charged with a higher rate. The only
evidence the petitioners presented to prove that the price of a round
trip ticket between Manila and Los Angeles at that time was only
$856.00 is a newspaper advertisement for another airline company,
which is inadmissible for being hearsay evidence, twice removed.
Newspaper clippings are hearsay if they were offered for the purpose
of proving the truth of the matter alleged. As ruled in Feria v. Court of
Appeals:
[N]ewspaper articles amount to hearsay evidence, twice removed
and are therefore not only inadmissible but without any probative
value at all whether objected to or not, unless offered for a purpose
other than proving the truth of the matter asserted. In this case, the
news article is admissible only as evidence that such publication does
exist with the tenor of the news therein stated. (citations omitted)
The records of this case demonstrate that both parties were equally
in default; hence, none of them can seek judicial redress for the
cancellation or resolution of the subject contracts and they are
therefore bound to their respective obligations thereunder. As the 1st
sentence of Article 1192 provides:
Art. 1192. In case both parties have committed a breach of the
obligation, the liability of the first infractor shall be equitably tempered
by the courts. If it cannot be determined which of the parties first
violated the contract, the same shall be deemed extinguished, and
each shall bear his own damages. (emphasis supplied)
Therefore, CAIs liability for damages for its refusal to accept Lourdes
ticket for the purchase of Fernandos round trip ticket is offset by
Spouses Vilorias liability for their refusal to pay the amount, which is
not covered by the subject tickets. Moreover, the contract between
them remains, hence, CAI is duty bound to issue new tickets for a
destination chosen by Spouses Viloria upon their surrender of the
subject tickets and Spouses Viloria are obliged to pay whatever
amount is not covered by the value of the subject tickets.
This Court made a similar ruling in Central Bank of the Philippines v.
Court of Appeals. Thus:
Since both parties were in default in the performance of their
respective reciprocal obligations, that is, Island Savings Bank failed to
comply with its obligation to furnish the entire loan and Sulpicio M.
Tolentino failed to comply with his obligation to pay his P17,000.00
debt within 3 years as stipulated, they are both liable for damages.
Article 1192 of the Civil Code provides that in case both parties have
committed a breach of their reciprocal obligations, the liability of the
first infractor shall be equitably tempered by the courts. WE rule that
the liability of Island Savings Bank for damages in not furnishing the
entire loan is offset by the liability of Sulpicio M. Tolentino for
damages, in the form of penalties and surcharges, for not paying his
overdue P17,000.00 debt. x x x.
Another consideration that militates against the propriety of holding
CAI liable for moral damages is the absence of a showing that the
latter acted fraudulently and in bad faith. Article 2220 of the Civil Code
requires evidence of bad faith and fraud and moral damages are
generally not recoverable in culpa contractual except when bad faith
had been proven. The award of exemplary damages is likewise not
warranted. Apart from the requirement that the defendant acted in a
186
wanton, oppressive and malevolent manner, the claimant must prove
his entitlement to moral damages.

WHEREFORE, premises considered, the instant Petition is DENIED.

SO ORDERED.

Carpio (Chairperson), Perez, Sereno and Perlas-Bernabe,** JJ.,

concur.

Petition denied.

Notes.Although initially, the burden of proof was with the passenger

to prove that there was a breach of contract of carriage, the burden
of evidence shifted to the airline when the former adduced sufficient
evidence to prove the facts he had allegedat that point, the airline
had the burden of going forward to controvert Chiongs prima facie
case, the burden of evidence to establish its claim. (Northwest Airlines,
Inc. vs. Chiong, 543 SCRA 308 [2008])

Article 1874 of the Civil Code requires a written authority before an

agent can sell an immovable property, likewise, a special power of
attorney is necessary to enter into any contract by which the
ownership of an immovable is transmitted or acquired for a valuable
consideration. (Alcantara vs. Nido, 618 SCRA 333 [2010])

Where the cause of action against the driver was based on delict, it is
error to hold the employer jointly and severally liable with him, based
on quasi-delict under Articles 2176 and 2180 of the Civil Codethese
legal provisions pertain to the vicarious liability of an employer for
quasi-delicts that an employee has committed and do not apply to civil
liability arising from delict; If at all, the employers liability may only
be subsidiary. (Calang vs. People, 626 SCRA 679 [2010])

o0o

187
 WILLIAM TIU, doing business under the name and style of
D Rough Riders, and VIRGILIO TE LASPIAS, petitioners,
vs. PEDRO A. ARRIESGADO, BENJAMIN CONDOR, SERGIO
PEDRANO and PHILIPPINE PHOENIX SURETY AND
INSURANCE, INC., respondents
G.R. No. 138060. September 1, 2004
Civil Law; Contracts; Contracts of Carriage; Common Carriers;
Extraordinary Diligence; A man must use common sense, and exercise
due reflection in all his actsit is his duty to be cautious, careful and
prudent, if not from instinct, then through fear of recurring
punishment.A man must use common sense, and exercise due
reflection in all his acts; it is his duty to be cautious, careful and
prudent, if not from instinct, then through fear of recurring
punishment. He is responsible for such results as anyone might
foresee and for acts which no one would have performed except
through culpable abandon. Otherwise, his own person, rights and
property, and those of his fellow beings, would ever be exposed to all
manner of danger and injury.
Same; Same; Same; Same; Same; Negligence; Upon the happening
of the accident, the presumption of negligence at once arises, and it
becomes the duty of a common carrier to prove that he observed
extraordinary diligence in the care of his pasengers.Under the said
contract of carriage, the petitioners assumed the express obligation to
transport the respondent and his wife to their destination safely and
to observe extraordinary diligence with due regard for all
circumstances. Any injury suffered by the passengers in the course
thereof is immediately attributable to the negligence of the carrier.
Upon the happening of the accident, the presumption of negligence
at once arises, and it becomes the duty of a common carrier to prove
that he observed extraordinary diligence in the care of his passengers.
It must be stressed that in requiring the highest possible degree of
diligence from common carriers and in creating a presumption of
negligence against them, the law compels them to curb the
recklessness of their drivers.
Same; Same; Same; Same; Same; Same; The carrier must show the
utmost diligence of very cautious persons as far as human care and
foresight can provide, or that the accident was caused by fortuitous
event. While evidence may be submitted to overcome such
presumption of negligence, it must be shown that the carrier observed
the required extraordinary diligence, which means that the carrier
must show the utmost diligence of very cautious persons as far as
human care and foresight can provide, or that the accident was caused
by fortuitous event.
Same; Same; Same; Same; Same; Same; Principle of Last Clear
Chance; Contrary to the petitioners contention, the principle of last
clear chance is inapplicable in the instant case, as it only applies in a
suit between the owners and drivers of colliding vehicles.Contrary
to the petitioners contention, the principle of last clear chance is
inapplicable in the instant case, as it only applies in a suit between the
owners and drivers of two colliding vehicles. It does not arise where a
passenger demands responsibility from the carrier to enforce its
contractual obligations, for it would be inequitable to exempt the
negligent driver and its owner on the ground that the other driver was
likewise guilty of negligence. The common law notion of last clear
chance permitted courts to grant recovery to a plaintiff who has also
been negligent provided that the defendant had the last clear chance
to avoid the casualty and failed to do so. Accordingly, it is difficult to
see what role, if any, the common law of last clear chance doctrine
has to play in a jurisdiction where the common law concept of
contributory negligence as an absolute bar to recovery by the plaintiff,
has itself been rejected, as it has been in Article 2179 of the Civil Code.
Same; Same; Same; Same; Same; Same; Presumed Negligence; It is
such a firmly established principle, as to have virtually formed part of
the law itself, that the negligence of the employee gives rise to the
presumption of negligence on the part of the employer.It is such a
firmly established principle, as to have virtually formed part of the law
itself, that the negligence of the employee gives rise to the
presumption of negligence on the part of the employer. This is the
presumed negligence in the selection and supervision of employee.
The theory of presumed negligence, in contrast with the American
188
doctrine of respondeat superior, where the negligence of the
employee is conclusively presumed to be the negligence of the
employer, is clearly deducible from the last paragraph of Article 2180
of the Civil Code which provides that the responsibility therein
mentioned shall cease if the employers prove that they observed all
the diligence of a good father of a family to prevent damages. . . .
Same; Same; Same; Same; Same; Same; Indemnity; Compulsory
Vehicle Liability Insurance; The nature of Compulsory Motor Vehicle
Liability Insurance is such that it is primarily intended to provide
compensation for the death or bodily injuries suffered by innocent
third parties or pasengers as a result of the negligent operation and
use of motor vehicles.The nature of Compulsory Motor Vehicle
Liability Insurance is such that it is primarily intended to provide
compensation for the death or bodily injuries suffered by innocent
third parties or passengers as a result of the negligent operation and
use of motor vehicles. The victims and/or their dependents are
assured of immediate financial assistance, regardless of the financial
capacity of motor vehicle owners.
Same; Same; Same; Same; Same; Same; Same; Same; Extent;
Although the victim may proceed directly against the insurer for
indemnity, the third party liability is only up to the extent of the
insurance policy and those required by law.Although the victim may
proceed directly against the insurer for indemnity, the third party
liability is only up to the extent of the insurance policy and those
required by law. While it is true that where the insurance contract
provides for indemnity against liability to third persons, and such
persons can directly sue the insurer, the direct liability of the insurer
under indemnity contracts against third party liability does not mean
that the insurer can be held liable in solidum with the insured and/or
the other parties found at fault. For the liability of the insurer is based
on contract; that of the insured carrier or vehicle owner is based on
tort. . . .
Same; Same; Same; Same; Same; Same; Exemplary Damages; Article
2231 of the Civil Code explicitly authorizes the imposition of exemplary
damages in quasi-delicts if the defendant acted with gross
negligence. While the immediate beneficiaries of the standard of
extraordinary diligence are, of course, the passengers and owners of
cargo carried by a common carrier, they are not the only persons that
the law seeks to benefit. For if common carriers carefully observed the
statutory standard of extraordinary diligence in respect of their own
passengers, they cannot help but simultaneously benefit pedestrians
and the passengers of other vehicles who are equally entitled to the
safe and convenient use of our roads and highways. The law seeks to
stop and prevent the slaughter and maiming of people (whether
passengers or not) on our highways and buses, the very size and
power of which seem to inflame the minds of their drivers. Article 2231
of the Civil Code explicitly authorizes the imposition of exemplary
damages in cases of quasi-delicts if the defendant acted with gross
negligence. . . .
Same; Same; Same; Same; Same; Same; Solidary Liability; In case of
injury to a passenger due to the negligence of the driver of the bus
on which he was riding and of the driver of another vehicle, the drivers
as well as the owners of the two vehicles are jointly and severally liable
for damages. The same rule of liability was applied in situations
where the negligence of the driver of the bus on which plaintiff was
riding concurred with the negligence of a third party who was the
driver of another vehicle, thus causing an accident. In Anuran v. Buo,
Batangas Laguna Tayabas Bus Co. v. Intermediate Appellate Court,
and Metro Manila Transit Corporation v. Court of Appeals, the bus
company, its driver, the operator of the other vehicle and the driver
of the vehicle were jointly and severally held liable to the injured
passenger or the latters heirs. The basis of this allocation of liability
was explained in Viluan v. Court of Appeals, thus: Nor should it make
difference that the liability of petitioner [bus owner] springs from
contract while that of respondents [owner and driver of other vehicle]
arises from quasi-delict. As early as 1913, we already ruled in Gutierrez
vs. Gutierrez, 56 Phil. 177, that in case of injury to a passenger due
to the negligence of the driver of the bus on which he was riding and
of the driver of another vehicle, the drivers as well as the owners of
the two vehicles are jointly and severally liable for damages. Some
members of the Court, though, are of the view that under the
circumstances they are liable on quasi-delict.
189
PETITION for review on certiorari of the decision and resolution of the
Court of Appeals.
The facts are stated in the opinion of the Court.
Rufino L. Remoreras, Jr. and Sixto Rey M. Orig for petitioners.
Rogelio R. Corro for private respondent Pedro A. Arriesgado.
Glenn N. Jumao-as for respondent B. Condor.
Ma. Cristina G. Laderas for respondent PPSII.
CALLEJO, SR., J.:
This is a petition for review on certiorari under Rule 45 of the Rules of
Court from the Decision of the Court of Appeals in CA-G.R. CV No.
54354 affirming with modification the Decision of the Regional Trial
Court, 7th Judicial Region, Cebu City, Branch 20, in Civil Case No. CEB-
5963 for breach of contract of carriage, damages and attorneys fees,
and the Resolution dated February 26, 1999 denying the motion for
reconsideration thereof.
The following facts are undisputed:
At about 10:00 p.m. of March 15, 1987, the cargo truck marked
Condor Hollow Blocks and General Merchandise bearing plate
number GBP-675 was loaded with firewood in Bogo, Cebu and left for
Cebu City. Upon reaching Sitio Aggies, Poblacion, Compostela, Cebu,
just as the truck passed over a bridge, one of its rear tires exploded.
The driver, Sergio Pedrano, then parked along the right side of the
national highway and removed the damaged tire to have it vulcanized
at a nearby shop, about 700 meters away. Pedrano left his helper,
Jose Mitante, Jr. to keep watch over the stalled vehicle, and instructed
the latter to place a spare tire six fathoms away behind the stalled
truck to serve as a warning for oncoming vehicles. The trucks tail
lights were also left on. It was about 12:00 a.m., March 16, 1987.
At about 4:45 a.m., D Rough Riders passenger bus with plate number
PBP-724 driven by Virgilio Te Laspias was cruising along the national
highway of Sitio Aggies, Poblacion, Compostela, Cebu. The passenger
bus was also bound for Cebu City, and had come from Maya,
Daanbantayan, Cebu. Among its passengers were the Spouses Pedro
A. Arriesgado and Felisa Pepito Arriesgado, who were seated at the
right side of the bus, about three (3) or four (4) places from the front
seat.
As the bus was approaching the bridge, Laspias saw the stalled truck,
which was then about 25 meters away. He applied the brakes and
tried to swerve to the left to avoid hitting the truck. But it was too
late; the bus rammed into the trucks left rear. The impact damaged
the right side of the bus and left several passengers injured. Pedro
Arriesgado lost consciousness and suffered a fracture in his right
colles. His wife, Felisa, was brought to the Danao City Hospital. She
was later transferred to the Southern Island Medical Center where she
died shortly thereafter.
Respondent Pedro A. Arriesgado then filed a complaint for breach of
contract of carriage, damages and attorneys fees before the Regional
Trial Court of Cebu City, Branch 20, against the petitioners, D Rough
Riders bus operator William Tiu and his driver, Virgilio Te Laspias on
May 27, 1987. The respondent alleged that the passenger bus in
question was cruising at a fast and high speed along the national road,
and that petitioner Laspias did not take precautionary measures to
avoid the accident. Thus:
6. That the accident resulted to the death of the plaintiffs wife, Felisa
Pepito Arriesgado, as evidenced by a Certificate of Death, a xerox copy
of which is hereto attached as integral part hereof and marked as
ANNEX A, and physical injuries to several of its passengers,
including plaintiff himself who suffered a COLLES FRACTURE RIGHT,
per Medical Certificate, a xerox copy of which is hereto attached as
integral part hereof and marked as ANNEX B hereof.
190
7. That due to the reckless and imprudent driving by defendant Virgilio
Te Laspias of the said Rough Riders passenger bus, plaintiff and his
wife, Felisa Pepito Arriesgado, failed to safely reach their destination
which was Cebu City, the proximate cause of which was defendant-
drivers failure to observe utmost diligence required of a very cautious
person under all circumstances.
8. That defendant William Tiu, being the owner and operator of the
said Rough Riders passenger bus which figured in the said accident,
wherein plaintiff and his wife were riding at the time of the accident,
is therefore directly liable for the breach of contract of carriage for his
failure to transport plaintiff and his wife safely to their place of
destination which was Cebu City, and which failure in his obligation to
transport safely his passengers was due to and in consequence of his
failure to exercise the diligence of a good father of the family in the
selection and supervision of his employees, particularly defendant-
driver Virgilio Te Laspias.
The respondent prayed that judgment be rendered in his favor and
that the petitioners be condemned to pay the following damages:
1). To pay to plaintiff, jointly and severally, the amount of P30,000.00
for the death and untimely demise of plaintiffs wife, Felisa Pepito
Arriesgado;
2). To pay to plaintiff, jointly and severally, the amount of P38,441.50,
representing actual expenses incurred by the plaintiff in connection
with the death/burial of plaintiffs wife;
3). To pay to plaintiff, jointly and severally, the amount of P1,113.80,
representing medical/hospitalization expenses incurred by plaintiff for
the injuries sustained by him;
4). To pay to plaintiff, jointly and severally, the amount of P50,000.00
for moral damages;
5). To pay to plaintiff, jointly and severally, the amount of P50,000.00
by way of exemplary damages;
6). To pay to plaintiff, jointly and severally, the amount of P20,000.00
for attorneys fees;
7). To pay to plaintiff, jointly and severally, the amount of P5,000.00
for litigation expenses.
PLAINTIFF FURTHER PRAYS FOR SUCH OTHER RELIEFS AND
REMEDIES IN LAW AND EQUITY.
The petitioners, for their part, filed a Third-Party Complaint on August
21, 1987 against the following: respondent Philippine Phoenix Surety
and Insurance, Inc. (PPSII), petitioner Tius insurer; respondent
Benjamin Condor, the registered owner of the cargo truck; and
respondent Sergio Pedrano, the driver of the truck. They alleged that
petitioner Laspias was negotiating the uphill climb along the national
highway of Sitio Aggies, Poblacion, Compostela, in a moderate and
normal speed. It was further alleged that the truck was parked in a
slanted manner, its rear portion almost in the middle of the highway,
and that no early warning device was displayed. Petitioner Laspias
promptly applied the brakes and swerved to the left to avoid hitting
the truck head-on, but despite his efforts to avoid damage to property
and physical injuries on the passengers, the right side portion of the
bus hit the cargo trucks left rear. The petitioners further alleged, thus:
5. That the cargo truck mentioned in the aforequoted paragraph is
owned and registered in the name of the third-party defendant
Benjamin Condor and was left unattended by its driver Sergio
Pedrano, one of the third-party defendants, at the time of the incident;
6. That third-party defendant Sergio Pedrano, as driver of the cargo
truck with marked (sic) Condor Hollow Blocks & General
Merchandise, with Plate No. GBP-675 which was recklessly and
imprudently parked along the national highway of Compostela, Cebu
during the vehicular accident in question, and third-party defendant
Benjamin Condor, as the registered owner of the cargo truck who
failed to exercise due diligence in the selection and supervision of
third-party defendant Sergio Pedrano, are jointly and severally liable
to the third-party plaintiffs for whatever liability that may be adjudged
191
against said third-party plaintiffs or are directly liable of (sic) the
alleged death of plaintiffs wife;
7. That in addition to all that are stated above and in the answer which
are intended to show reckless imprudence on the part of the third-
party defendants, the third-party plaintiffs hereby declare that during
the vehicular accident in question, third-party defendant was clearly
violating Section 34, par. (g) of the Land Transportation and Traffic
Code . . .
...
10. That the aforesaid passenger bus, owned and operated by third-
party plaintiff William Tiu, is covered by a common carrier liability
insurance with Certificate of Cover No. 054940 issued by Philippine
Phoenix Surety and Insurance, Inc., Cebu City Branch, in favor of
third-party plaintiff William Tiu which covers the period from July 22,
1986 to July 22, 1987 and that the said insurance coverage was valid,
binding and subsisting during the time of the aforementioned incident
(Annex A as part hereof);
11. That after the aforesaid alleged incident, third-party plaintiff
notified third-party defendant Philippine Phoenix Surety and
Insurance, Inc., of the alleged incident hereto mentioned, but to no
avail;
12. That granting, et arguendo et arguendi, if herein third-party
plaintiffs will be adversely adjudged, they stand to pay damages
sought by the plaintiff and therefore could also look up to the
Philippine Phoenix Surety and Insurance, Inc., for contribution,
indemnification and/or reimbursement of any liability or obligation that
they might [be] adjudged per insurance coverage duly entered into by
and between third-party plaintiff William Tiu and third-party defendant
Philippine Phoenix Surety and Insurance, Inc.; . . .
The respondent PPSII, for its part, admitted that it had an existing
contract with petitioner Tiu, but averred that it had already attended
to and settled the claims of those who were injured during the
incident. It could not accede to the claim of respondent Arriesgado,
as such claim was way beyond the scheduled indemnity as contained
in the contract of insurance.
After the parties presented their respective evidence, the trial court
ruled in favor of respondent Arriesgado. The dispositive portion of the
decision reads:
WHEREFORE, in view of the foregoing, judgment is hereby rendered
in favor of plaintiff as against defendant William Tiu ordering the latter
to pay the plaintiff the following amounts:
1The sum of FIFTY THOUSAND PESOS (P50,000.00) as moral
damages;
2The sum of FIFTY THOUSAND PESOS (P50,000.00) as exemplary
damages;
3The sum of THIRTY-EIGHT THOUSAND FOUR HUNDRED FORTY-
ONE PESOS (P38,441.00) as actual damages;
4The sum of TWENTY THOUSAND PESOS (P20,000.00) as
attorneys fees;
5The sum of FIVE THOUSAND PESOS (P5,000.00) as costs of suit;
SO ORDERED.
According to the trial court, there was no dispute that petitioner
William Tiu was engaged in business as a common carrier, in view of
his admission that D Rough Rider passenger bus which figured in the
accident was owned by him; that he had been engaged in the
transportation business for 25 years with a sole proprietorship; and
that he owned 34 buses. The trial court ruled that if petitioner Laspias
had not been driving at a fast pace, he could have easily swerved to
the left to avoid hitting the truck, thus, averting the unfortunate
incident. It then concluded that petitioner Laspias was negligent.
The trial court also ruled that the absence of an early warning device
near the place where the truck was parked was not sufficient to impute
negligence on the part of respondent Pedrano, since the tail lights of
the truck were fully on, and the vicinity was well lighted by street
lamps.16 It also found that the testimony of petitioner Tiu, that he
based the selection of his driver Laspias on efficiency and in-service
192
training, and that the latter had been so far an efficient and good
driver for the past six years of his employment, was insufficient to
prove that he observed the diligence of a good father of a family in
the selection and supervision of his employees.
After the petitioners motion for reconsideration of the said decision
was denied, the petitioners elevated the case to the Court of Appeals
on the following issues:
I WHETHER THIRD PARTY DEFENDANT SERGIO PEDRANO WAS
RECKLESS AND IMPRUDENT WHEN HE PARKED THE CARGO TRUCK
IN AN OBLIQUE MANNER;
II WHETHER THE THIRD PARTY DEFENDANTS ARE JOINTLY AND
SEVERALLY LIABLE DIRECTLY TO PLAINTIFF-APPELLEE OR TO
DEFENDANTS-APPELLANTS FOR WHATEVER LIABILITY THAT MAY BE
ADJUDGED TO THE SAID DEFENDANTS-APPELLANTS;
III WHETHER DEFENDANT-APPELLANT VIRGILIO TE LASPIAS WAS
GUILTY OF GROSS NEGLIGENCE;
IV WHETHER DEFENDANT-APPELLANT WILLIAM TIU HAD EXERCISED
THE DUE DILIGENCE OF A GOOD FATHER OF A FAMILY IN THE
SELECTION AND SUPERVISION OF HIS DRIVERS;
V GRANTING FOR THE SAKE OF ARGUMENT THAT DEFENDANT-
APPELLANT WILLIAM TIU IS LIABLE TO PLAINTIFF-APPELLEE,
WHETHER THERE IS LEGAL AND FACTUAL BASIS IN AWARDING
EXCESSIVE MORAL DAMAGES, EX[E]MPLARY DAMAGES, ATTORNEYS
FEES AND LITIGATION EXPENSES TO PLAINTIFF-APPELLEE;
VI WHETHER THIRD PARTY DEFENDANT PHILIPPINE PHOENIX
SURETY AND INSURANCE, INC. IS LIABLE TO DEFENDANT-
APPELLANT WILLIAM TIU.
The appellate court rendered judgment affirming the trial courts
decision with the modification that the awards for moral and
exemplary damages were reduced to P25,000. The dispositive portion
reads:
WHEREFORE, the appealed Decision dated November 6, 1995 is
hereby MODIFIED such that the awards for moral and exemplary
damages are each reduced to P25,000.00 or a total of P50,000.00 for
both. The judgment is AFFIRMED in all other respects.
SO ORDERED.
According to the appellate court, the action of respondent Arriesgado
was based not on quasi-delict but on breach of contract of carriage.
As a common carrier, it was incumbent upon petitioner Tiu to prove
that extraordinary diligence was observed in ensuring the safety of
passengers during transportation. Since the latter failed to do so, he
should be held liable for respondent Arriesgados claim. The CA also
ruled that no evidence was presented against the respondent PPSII,
and as such, it could not be held liable for respondent Arriesgados
claim, nor for contribution, indemnification and/or reimbursement in
case the petitioners were adjudged liable.
The petitioners now come to this Court and ascribe the following
errors committed by the appellate court:
I. THE HONORABLE COURT OF APPEALS ERRED IN NOT DECLARING
RESPONDENTS BENJAMIN CONDOR AND SERGIO PEDRANO GUILTY
OF NEGLIGENCE AND HENCE, LIABLE TO RESPONDENT PEDRO A.
ARRIESGADO OR TO PETITIONERS FOR WHATEVER LIABILITY THAT
MAY BE ADJUDGED AGAINST THEM.
II. THE HONORABLE COURT OF APPEALS ERRED IN FINDING
PETITIONERS GUILTY OF NEGLIGENCE AND HENCE, LIABLE TO
RESPONDENT PEDRO A. ARRIESGADO.
III. THE HONORABLE COURT OF APPEALS ERRED IN FINDING
PETITIONER WILLIAM TIU LIABLE FOR EXEMPLARY DAMAGES,
ATTORNEYS FEES AND LITIGATION EXPENSES.
IV. THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING
RESPONDENT PHILIPPINE PHOENIX SURETY AND INSURANCE, INC.
193
LIABLE TO RESPONDENT PEDRO A. ARRIESGADO OR TO
PETITIONER WILLIAM TIU.
According to the petitioners, the appellate court erred in failing to
appreciate the absence of an early warning device and/or built-in
reflectors at the front and back of the cargo truck, in clear violation of
Section 34, par. (g) of the Land Transportation and Traffic Code. They
aver that such violation is only a proof of respondent Pedranos
negligence, as provided under Article 2185 of the New Civil Code. They
also question the appellate courts failure to take into account that the
truck was parked in an oblique manner, its rear portion almost at the
center of the road. As such, the proximate cause of the incident was
the gross recklessness and imprudence of respondent Pedrano,
creating the presumption of negligence on the part of respondent
Condor in supervising his employees, which presumption was not
rebutted. The petitioners then contend that respondents Condor and
Pedrano should be held jointly and severally liable to respondent
Arriesgado for the payment of the latters claim.
The petitioners, likewise, aver that expert evidence should have been
presented to prove that petitioner Laspias was driving at a very fast
speed, and that the CA could not reach such conclusion by merely
considering the damages on the cargo truck. It was also pointed out
that petitioner Tiu presented evidence that he had exercised the
diligence of a good father of a family in the selection and supervision
of his drivers.
The petitioners further allege that there is no legal and factual basis
to require petitioner Tiu to pay exemplary damages as no evidence
was presented to show that the latter acted in a fraudulent, reckless
and oppressive manner, or that he had an active participation in the
negligent act of petitioner Laspias.
Finally, the petitioners contend that respondent PPSII admitted in its
answer that while it had attended to and settled the claims of the
other injured passengers, respondent Arriesgados claim remained
unsettled as it was beyond the scheduled indemnity under the
insurance contract. The petitioners argue that said respondent PPSII
should have settled the said claim in accordance with the scheduled
indemnity instead of just denying the same.
On the other hand, respondent Arriesgado argues that two of the
issues raised by the petitioners involved questions of fact, not
reviewable by the Supreme Court: the finding of negligence on the
part of the petitioners and their liability to him; and the award of
exemplary damages, attorneys fees and litigation expenses in his
favor. Invoking the principle of equity and justice, respondent
Arriesgado pointed out that if there was an error to be reviewed in the
CA decision, it should be geared towards the restoration of the moral
and exemplary damages to P50,000 each, or a total of P100,000 which
was reduced by the Court of Appeals to P25,000 each, or a total of
only P50,000.
Respondent Arriesgado also alleged that respondents Condor and
Pedrano, and respondent Phoenix Surety, are parties with whom he
had no contract of carriage, and had no cause of action against. It
was pointed out that only the petitioners needed to be sued, as driver
and operator of the ill-fated bus, on account of their failure to bring
the Arriesgado Spouses to their place of destination as agreed upon
in the contract of carriage, using the utmost diligence of very cautious
persons with due regard for all circumstances.
Respondents Condor and Pedrano point out that, as correctly ruled by
the Court of Appeals, the proximate cause of the unfortunate incident
was the fast speed at which petitioner Laspias was driving the bus
owned by petitioner Tiu. According to the respondents, the allegation
that the truck was not equipped with an early warning device could
not in any way have prevented the incident from happening. It was
also pointed out that respondent Condor had always exercised the due
diligence required in the selection and supervision of his employees,
and that he was not a party to the contract of carriage between the
petitioners and respondent Arriesgado.
Respondent PPSII, for its part, alleges that contrary to the allegation
of petitioner Tiu, it settled all the claims of those injured in accordance
with the insurance contract. It further avers that it did not deny
194
respondent Arriesgados claim, and emphasizes that its liability should
be within the scheduled limits of indemnity under the said contract.
The respondent concludes that while it is true that insurance contracts
are contracts of indemnity, the measure of the insurers liability is
determined by the insureds compliance with the terms thereof.
The Courts Ruling
At the outset, it must be stressed that this Court is not a trier of facts.
Factual findings of the Court of Appeals are final and may not be
reviewed on appeal by this Court, except when the lower court and
the CA arrived at diverse factual findings. The petitioners in this case
assail the finding of both the trial and the appellate courts that
petitioner Laspias was driving at a very fast speed before the bus
owned by petitioner Tiu collided with respondent Condors stalled
truck. This is clearly one of fact, not reviewable by the Court in a
petition for review under Rule 45.
On this ground alone, the petition is destined to fail.
However, considering that novel questions of law are likewise
involved, the Court resolves to examine and rule on the merits of the
case.
Petitioner Laspias Was negligent in driving The Ill-fated bus
In his testimony before the trial court, petitioner Laspias claimed that
he was traversing the two-lane road at Compostela, Cebu at a speed
of only forty (40) to fifty (50) kilometers per hour before the incident
occurred. He also admitted that he saw the truck which was parked in
an oblique position at about 25 meters before impact, and tried to
avoid hitting it by swerving to the left. However, even in the absence
of expert evidence, the damage sustained by the truck itself supports
the finding of both the trial court and the appellate court, that the D
Rough Rider bus driven by petitioner Laspias was traveling at a fast
pace. Since he saw the stalled truck at a distance of 25 meters,
petitioner Laspias had more than enough time to swerve to his left
to avoid hitting it; that is, if the speed of the bus was only 40 to 50
kilometers per hour as he claimed. As found by the Court of Appeals,
it is easier to believe that petitioner Laspias was driving at a very fast
speed, since at 4:45 a.m., the hour of the accident, there were no
oncoming vehicles at the opposite direction. Petitioner Laspias could
have swerved to the left lane with proper clearance, and, thus, could
have avoided the truck. Instinct, at the very least, would have
prompted him to apply the breaks to avert the impending disaster
which he must have foreseen when he caught sight of the stalled
truck. As we had occasion to reiterate:
A man must use common sense, and exercise due reflection in all his
acts; it is his duty to be cautious, careful and prudent, if not from
instinct, then through fear of recurring punishment. He is responsible
for such results as anyone might foresee and for acts which no one
would have performed except through culpable abandon. Otherwise,
his own person, rights and property, and those of his fellow beings,
would ever be exposed to all manner of danger and injury.
We agree with the following findings of the trial court, which were
affirmed by the CA on appeal:
A close study and evaluation of the testimonies and the documentary
proofs submitted by the parties which have direct bearing on the issue
of negligence, this Court as shown by preponderance of evidence that
defendant Virgilio Te Laspias failed to observe extraordinary diligence
as a driver of the common carrier in this case. It is quite hard to accept
his version of the incident that he did not see at a reasonable distance
ahead the cargo truck that was parked when the Rough Rider [Bus]
just came out of the bridge which is on an (sic) [more] elevated
position than the place where the cargo truck was parked. With its
headlights fully on, defendant driver of the Rough Rider was in a
vantage position to see the cargo truck ahead which was parked and
he could just easily have avoided hitting and bumping the same by
maneuvering to the left without hitting the said cargo truck. Besides,
it is (sic) shown that there was still much room or space for the Rough
Rider to pass at the left lane of the said national highway even if the
cargo truck had occupied the entire right lane thereof. It is not true
that if the Rough Rider would proceed to pass through the left lane it
195
would fall into a canal considering that there was much space for it to
pass without hitting and bumping the cargo truck at the left lane of
said national highway. The records, further, showed that there was no
incoming vehicle at the opposite lane of the national highway which
would have prevented the Rough Rider from not swerving to its left in
order to avoid hitting and bumping the parked cargo truck. But the
evidence showed that the Rough Rider instead of swerving to the still
spacious left lane of the national highway plowed directly into the
parked cargo truck hitting the latter at its rear portion; and thus, the
(sic) causing damages not only to herein plaintiff but to the cargo
truck as well.
Indeed, petitioner Laspias negligence in driving the bus is apparent
in the records. By his own admission, he had just passed a bridge and
was traversing the highway of Compostela, Cebu at a speed of 40 to
50 kilometers per hour before the collision occurred. The maximum
speed allowed by law on a bridge is only 30 kilometers per hour. And,
as correctly pointed out by the trial court, petitioner Laspias also
violated Section 35 of the Land Transportation and Traffic Code,
Republic Act No. 4136, as amended:
Sec. 35. Restriction as to speed.(a) Any person driving a motor
vehicle on a highway shall drive the same at a careful and prudent
speed, not greater nor less than is reasonable and proper, having due
regard for the traffic, the width of the highway, and or any other
condition then and there existing; and no person shall drive any motor
vehicle upon a highway at such speed as to endanger the life, limb
and property of any person, nor at a speed greater than will permit
him to bring the vehicle to a stop within the assured clear distance
ahead.
Under Article 2185 of the Civil Code, a person driving a vehicle is
presumed negligent if at the time of the mishap, he was violating any
traffic regulation.
Petitioner Tiu failed to Overcome the presumption Of negligence
against him as One engaged in the business Of common carriage
The rules which common carriers should observe as to the safety of
their passengers are set forth in the Civil Code, Articles 1733,32
175533 and 1756. In this case, respondent Arriesgado and his
deceased wife contracted with petitioner Tiu, as owner and operator
of D Rough Riders bus service, for transportation from Maya,
Daanbantayan, Cebu, to Cebu City for the price of P18.00. It is
undisputed that the respondent and his wife were not safely
transported to the destination agreed upon. In actions for breach of
contract, only the existence of such contract, and the fact that the
obligor, in this case the common carrier, failed to transport his
passenger safely to his destination are the matters that need to be
proved. This is because under the said contract of carriage, the
petitioners assumed the express obligation to transport the
respondent and his wife to their destination safely and to observe
extraordinary diligence with due regard for all circumstances. Any
injury suffered by the passengers in the course thereof is immediately
attributable to the negligence of the carrier. Upon the happening of
the accident, the presumption of negligence at once arises, and it
becomes the duty of a common carrier to prove that he observed
extraordinary diligence in the care of his passengers It must be
stressed that in requiring the highest possible degree of diligence from
common carriers and in creating a presumption of negligence against
them, the law compels them to curb the recklessness of their drivers.
While evidence may be submitted to overcome such presumption of
negligence, it must be shown that the carrier observed the required
extraordinary diligence, which means that the carrier must show the
utmost diligence of very cautious persons as far as human care and
foresight can provide, or that the accident was caused by fortuitous
event. As correctly found by the trial court, petitioner Tiu failed to
conclusively rebut such presumption. The negligence of petitioner
Laspias as driver of the passenger bus is, thus, binding against
petitioner Tiu, as the owner of the passenger bus engaged as a
common carrier.
The Doctrine of Last Clear Chance Is Inapplicable in the Case at Bar
196
Contrary to the petitioners contention, the principle of last clear
chance is inapplicable in the instant case, as it only applies in a suit
between the owners and drivers of two colliding vehicles. It does not
arise where a passenger demands responsibility from the carrier to
enforce its contractual obligations, for it would be inequitable to
exempt the negligent driver and its owner on the ground that the other
driver was likewise guilty of negligence. The common law notion of
last clear chance permitted courts to grant recovery to a plaintiff who
has also been negligent provided that the defendant had the last clear
chance to avoid the casualty and failed to do so. Accordingly, it is
difficult to see what role, if any, the common law of last clear chance
doctrine has to play in a jurisdiction where the common law concept
of contributory negligence as an absolute bar to recovery by the
plaintiff, has itself been rejected, as it has been in Article 2179 of the
Civil Code.
Thus, petitioner Tiu cannot escape liability for the death of respondent
Arriesgados wife due to the negligence of petitioner Laspias, his
employee, on this score.
Respondents Pedrano and Condor were likewise Negligent
In Phoenix Construction, Inc. v. Intermediate Appellate Court, where
therein respondent Dionisio sustained injuries when his vehicle
rammed against a dump truck parked askew, the Court ruled that the
improper parking of a dump truck without any warning lights or
reflector devices created an unreasonable risk for anyone driving
within the vicinity, and for having created such risk, the truck driver
must be held responsible. In ruling against the petitioner therein, the
Court elucidated, thus:
. . . In our view, Dionisios negligence, although later in point of time
than the truck drivers negligence, and therefore closer to the
accident, was not an efficient intervening or independent cause. What
the petitioners describe as an intervening cause was no more than
a foreseeable consequence of the risk created by the negligent
manner in which the truck driver had parked the dump truck. In other
words, the petitioner truck driver owed a duty to private respondent
Dionisio and others similarly situated not to impose upon them the
very risk the truck driver had created. Dionisios negligence was not
that of an independent and overpowering nature as to cut, as it were,
the chain of causation in fact between the improper parking of the
dump truck and the accident, nor to sever the juris vinculum of
liability. . . .
...
We hold that private respondent Dionisios negligence was only
contributory, that the immediate and proximate cause of the injury
remained the truck drivers lack of due care. . . .
In this case, both the trial and the appellate courts failed to consider
that respondent Pedrano was also negligent in leaving the truck
parked askew without any warning lights or reflector devices to alert
oncoming vehicles, and that such failure created the presumption of
negligence on the part of his employer, respondent Condor, in
supervising his employees properly and adequately. As we ruled in
Poblete v. Fabros:
It is such a firmly established principle, as to have virtually formed
part of the law itself, that the negligence of the employee gives rise
to the presumption of negligence on the part of the employer. This is
the presumed negligence in the selection and supervision of
employee. The theory of presumed negligence, in contrast with the
American doctrine of respondeat superior, where the negligence of
the employee is conclusively presumed to be the negligence of the
employer, is clearly deducible from the last paragraph of Article 2180
of the Civil Code which provides that the responsibility therein
mentioned shall cease if the employers prove that they observed all
the diligence of a good father of a family to prevent damages. . . .
The petitioners were correct in invoking respondent Pedranos failure
to observe Article IV, Section 34(g) of the Rep. Act No. 4136, which
provides:
197
(g) Lights when parked or disabled.Appropriate parking lights or SCHEDULED VEHICLE MODEL - Isuzu Forward
flares visible one hundred meters away shall be displayed at a corner MAKE TYPE OF BODY - Bus
of the vehicle whenever such vehicle is parked on highways or in COLOR - blue mixed
places that are not well-lighted or is placed in such manner as to BLT FILE NO.
endanger passing traffic. PLATE NO. PBP-724
SERIAL/CHASSIS NO. SER450-1584124
The manner in which the truck was parked clearly endangered MOTOR NO. 677836
oncoming traffic on both sides, considering that the tire blowout which AUTHORIZED CAPACITY 50
stalled the truck in the first place occurred in the wee hours of the UNLADEN WEIGHT - 6 Cyls. Kgs.
morning. The Court can only now surmise that the unfortunate
incident could have been averted had respondent Condor, the owner SECTION 1/11
of the truck, equipped the said vehicle with lights, flares, or, at the
very least, an early warning device. Hence, we cannot subscribe to *LIMITS OF LIABILITY
respondents Condor and Pedranos claim that they should be absolved
from liability because, as found by the trial and appellate courts, the PREMIUMS PAID - P540.00
proximate cause of the collision was the fast speed at which petitioner
Laspias drove the bus. To accept this proposition would be to come A. THIRD PARTY LIABILITY - P50,000.00
too close to wiping out the fundamental principle of law that a man
must respond for the foreseeable consequences of his own negligent B. PASSENGER LIABILITY
act or omission. Indeed, our law on quasi-delicts seeks to reduce the
risks and burdens of living in society and to allocate them among its Per Person - P12,000.00
members. To accept this proposition would be to weaken the very
bonds of society. Per Accident - P50,000

The Liability of Respondent PPSII as Insurer
The trial court in this case did not rule on the liability of respondent
PPSII, while the appellate court ruled that, as no evidence was
presented against it, the insurance company is not liable.
A perusal of the records will show that when the petitioners filed the
Third-Party Complaint against respondent PPSII, they failed to attach
a copy of the terms of the insurance contract itself. Only Certificate of
Cover No. 05494051 issued in favor of Mr. William Tiu, Lahug, Cebu
City signed by Cosme H. Boniel was appended to the third-party
complaint. The date of issuance, July 22, 1986, the period of
insurance, from July 22, 1986 to July 22, 1987, as well as the following
items, were also indicated therein:
In its Answer to the Third-Party Complaint, the respondent PPSII
admitted the existence of the contract of insurance, in view of its
failure to specifically deny the same as required under then Section
8(a), Rule 8 of the Rules of Court, which reads:
Sec. 8. How to contest genuineness of such documents.When an
action or defense is founded upon a written instrument copied in or
attached to the corresponding pleading as provided in the preceding
section, the genuineness and due execution of the instrument shall be
deemed admitted unless the adverse party, under oath, specifically
denies them, and sets forth what he claims to be the facts; but the
requirement of an oath does not apply when the adverse party does
not appear to be a party to the instrument or when compliance with
an order for inspection of the original instrument is refused.

198

In fact, respondent PPSII did not dispute the existence of such
contract, and admitted that it was liable thereon. It claimed, however,
that it had attended to and settled the claims of those injured during
the incident, and set up the following as special affirmative defenses:
Third party defendant Philippine Phoenix Surety and Insurance, Inc.
hereby reiterates and incorporates by way of reference the preceding
paragraphs and further states THAT:
8. It has attended to the claims of Vincent Canales, Asuncion Batiancila
and Neptali Palces who sustained injuries during the incident in
question. In fact, it settled financially their claims per vouchers duly
signed by them and they duly executed Affidavit[s] of Desistance to
that effect, xerox copies of which are hereto attached as Annexes 1,
2, 3, 4, 5, and 6 respectively;
9. With respect to the claim of plaintiff, herein answering third party
defendant through its authorized insurance adjuster attended to said
claim. In fact, there were negotiations to that effect. Only that it
cannot accede to the demand of said claimant considering that the
claim was way beyond the scheduled indemnity as per contract
entered into with third party plaintiff William Tiu and third party
defendant (Philippine Phoenix Surety and Insurance, Inc.). Third party
Plaintiff William Tiu knew all along the limitation as earlier stated, he
being an old hand in the transportation business; . . .
Considering the admissions made by respondent PPSII, the existence
of the insurance contract and the salient terms thereof cannot be
dispatched. It must be noted that after filing its answer, respondent
PPSII no longer objected to the presentation of evidence by
respondent Arriesgado and the insured petitioner Tiu.
Even in its Memorandum before the Court, respondent PPSII admitted
the existence of the contract, but averred as follows:
Petitioner Tiu is insisting that PPSII is liable to him for contribution,
indemnification and/or reimbursement. This has no basis under the
contract. Under the contract, PPSII will pay all sums necessary to
discharge liability of the insured subject to the limits of liability but not
to exceed the limits of liability as so stated in the contract. Also, it is
stated in the contract that in the event of accident involving indemnity
to more than one person, the limits of liability shall not exceed the
aggregate amount so specified by law to all persons to be indemnified.
As can be gleaned from the Certificate of Cover, such insurance
contract was issued pursuant to the Compulsory Motor Vehicle Liability
Insurance Law. It was expressly provided therein that the limit of the
insurers liability for each person was P12,000, while the limit per
accident was pegged at P50,000. An insurer in an indemnity contract
for third party liability is directly liable to the injured party up to the
extent specified in the agreement but it cannot be held solidarily liable
beyond that amount. The respondent PPSII could not then just deny
petitioner Tius claim; it should have paid P12,000 for the death of
Felisa Arriesgado, and respondent Arriesgados hospitalization
expenses of P1,113.80, which the trial court found to have been duly
supported by receipts. The total amount of the claims, even when
added to that of the other injured passengers which the respondent
PPSII claimed to have settled, would not exceed the P50,000 limit
under the insurance agreement.
Indeed, the nature of Compulsory Motor Vehicle Liability Insurance is
such that it is primarily intended to provide compensation for the
death or bodily injuries suffered by innocent third parties or
passengers as a result of the negligent operation and use of motor
vehicles. The victims and/or their dependents are assured of
immediate financial assistance, regardless of the financial capacity of
motor vehicle owners. As the Court, speaking through Associate
Justice Leonardo A. Quisumbing, explained in Government Service
Insurance System v. Court of Appeals:
However, although the victim may proceed directly against the insurer
for indemnity, the third-party liability is only up to the extent of the
insurance policy and those required by law. While it is true that where
the insurance contract provides for indemnity against liability to third
persons, and such persons can directly sue the insurer, the direct
liability of the insurer under indemnity contracts against third party
199
liability does not mean that the insurer can be held liable in solidum
with the insured and/or the other parties found at fault. For the liability
of the insurer is based on contract; that of the insured carrier or
vehicle owner is based on tort. . . .
Obviously, the insurer could be held liable only up to the extent of
what was provided for by the contract of insurance, in accordance with
the CMVLI law. At the time of the incident, the schedule of indemnities
for death and bodily injuries, professional fees and other charges
payable under a CMVLI coverage was provided for under the
Insurance Memorandum Circular (IMC) No. 5-78 which was approved
on November 10, 1978. As therein provided, the maximum indemnity
for death was twelve thousand (P12,000.00) pesos per victim. The
schedules for medical expenses were also provided by said IMC,
specifically in paragraphs (C) to (G).
Damages to be Awarded
The trial court correctly awarded moral damages in the amount of
P50,000 in favor of respondent Arriesgado. The award of exemplary
damages by way of example or correction of the public good, is
likewise in order. As the Court ratiocinated in Kapalaran Bus Line v.
Coronado:
. . . While the immediate beneficiaries of the standard of extraordinary
diligence are, of course, the passengers and owners of cargo carried
by a common carrier, they are not the only persons that the law seeks
to benefit. For if common carriers carefully observed the statutory
standard of extraordinary diligence in respect of their own passengers,
they cannot help but simultaneously benefit pedestrians and the
passengers of other vehicles who are equally entitled to the safe and
convenient use of our roads and highways. The law seeks to stop and
prevent the slaughter and maiming of people (whether passengers or
not) on our highways and buses, the very size and power of which
seem to inflame the minds of their drivers. Article 2231 of the Civil
Code explicitly authorizes the imposition of exemplary damages in
cases of quasi-delicts if the defendant acted with gross negligence.
...
The respondent Pedro A. Arriesgado, as the surviving spouse and heir
of Felisa Arriesgado, is entitled to indemnity in the amount of
P50,000.00.
The petitioners, as well as the respondents Benjamin Condor and
Sergio Pedrano are jointly and severally liable for said amount,
conformably with the following pronouncement of the Court in Fabre,
Jr. vs. Court of Appeals:
The same rule of liability was applied in situations where the
negligence of the driver of the bus on which plaintiff was riding
concurred with the negligence of a third party who was the driver of
another vehicle, thus causing an accident. In Anuran v. Buo,
Batangas Laguna Tayabas Bus Co. v. Intermediate Appellate Court,
and Metro Manila Transit Corporation v. Court of Appeals, the bus
company, its driver, the operator of the other vehicle and the driver
of the vehicle were jointly and severally held liable to the injured
passenger or the latters heirs. The basis of this allocation of liability
was explained in Viluan v. Court of Appeals, thus:
Nor should it make difference that the liability of petitioner [bus
owner] springs from contract while that of respondents [owner and
driver of other vehicle] arises from quasi-delict. As early as 1913, we
already ruled in Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of
injury to a passenger due to the negligence of the driver of the bus
on which he was riding and of the driver of another vehicle, the drivers
as well as the owners of the two vehicles are jointly and severally liable
for damages. Some members of the Court, though, are of the view
that under the circumstances they are liable on quasi-delict.
IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY
GRANTED. The Decision of the Court of Appeals is AFFIRMED with
MODIFICATIONS:
(1) Respondent Philippine Phoenix Surety and Insurance, Inc. and
petitioner William Tiu are ORDERED to pay, jointly and severally,
respondent Pedro A. Arriesgado the total amount of P13,113.80;
200
(2) The petitioners and the respondents Benjamin Condor and Sergio
Pedrano are ORDERED to pay, jointly and severally, respondent Pedro
A. Arriesgado P50,000.00 as indemnity; P26,441.50 as actual
damages; P50,000.00 as moral damages; P50,000.00 as exemplary
damages; and P20,000.00 as attorneys fees.

SO ORDERED.

Austria-Martinez (Actg. Chairman), Tinga and Chico-Nazario, JJ.,

concur.

Puno (Chairman), J., On Official Leave.

Petition partially granted, judgment affirmed with modifica tions.

Note.Neglect or malfeasance of the carriers employees naturally

could give ground for an action for damages. (Morris vs. Court of
Appeals, 352 SCRA 428 [2001])

o0o

201
 LUCIA S. PAJARITO, petitioner, vs. HON. ALBERTO V.
SEERIS, Presiding Judge of Branch II, Court of First
Instance of Zamboanga; JOSELITO AIZON, and FELIPE
AIZON, respondents
No. L-44627. December 14, 1978
Criminal Law; Action; Quasi-delict; Institution of criminal action carries
with it the institution of the civil action except where there has been
a reservation of the latter.Under Article 100 of the Revised Penal
Code, a person criminally liable for a felony is also civilly liable. As a
consequence, the institution of the criminal action carries with it the
institution of the civil action arising therefrom, except when there is a
separate civil action or reservation of the latter on the part of the
complainant. As explained in Ramcar, Incorporated v. De Leon: When
no civil action is expressly instituted, according to subsection (a) of
section 1 of Rule 107, it shall be impliedly jointly instituted with the
criminal action. That means as if two actions are joined in one as
twins, each one complete with the same completeness as any of the
two normal persons composing a twin. It means that the civil action
may be tried and prosecuted, with all the ancillary processes provided
by law.
Same; Same; Same; A judgment of conviction against an employee
for criminal negligence is conclusive upon the employer.Considering
that the judgment of conviction, sentencing a defendant employee to
pay an indemnity under Articles 102 and 103 of the Revised Penal
Code, is conclusive upon the employer not only with regard to the
latters civil liability but also with regard to its amount, this Court
stated in Rotea, that in the action to enforce the employers subsidiary
liability, the Court has no other function than to render decision based
upon the indemnity awarded in the criminal case and has no power to
amend or modify it even if in its opinion an error has been committed
in the decision. In view of the foregoing principles, and considering
that Felipe Aizon does not deny that he was the registered operator
of the bus but only claims now that he sold the bus to the father of
the accused, it would serve no important purpose to require petitioner
to file a separate and independent action against the employer for the
enforcement of the latters subsidiary civil liability. Under the
circumstances, it would not only prolong the litigation but would
require the heirs of the deceased victim to incur unnecessary
expenses.
Same; Same; Same; Judgment; Enforcement of subsidiary civil liability
of the employer in a criminal conviction of employee for negligence is
part of the proceeding for execution of judgment.The proceeding
for the enforcement of the subsidiary civil liability may be considered
as part of the proceeding for the execution of the judgment. A case in
which an execution has been issued is regarded as still pending so
that all proceedings on the execution are proceedings in the suit.
There is no question that the court which rendered the judgment has
a general supervisory control over its process of execution, and this
power carries with it the right to determine every question of fact and
law which may be involved in the execution.
Same; Same; Same; Same; Claim of alleged employer that he is not
the owner of the bus which figured in the accident resulting in the
conviction of its driver is a matter that can be resolved in the same
criminal case and as part of the proceeding for execution of judgment
rendered therein.The validity of the claim of Felipe Aizon that he is
no longer the owner and operator of the ill-fated bus as he sold it
already to Isaac Aizon, father of the accused Joselito Aizon, is a matter
that could be litigated and resolved in the same criminal case. In
support of his opposition to the motion of the complainant, served
upon him, for the purpose of the enforcement of his subsidiary liability,
Felipe Aizon may adduce all the evidence necessary for that purpose.
Indeed, the enforcement of the employers subsidiary civil liability may
be conveniently litigated within the same proceeding because the
execution of the judgment is a logical and integral part of the case
itself. This would certainly facilitate the application of justice to the
rival claims of the contending parties.
ORIGINAL SPECIAL CIVIL ACTION in this Court. Certiorari.
The facts are stated in the opinion of the Court.
202
 Geronimo Pajarito for petitioner.
Dominador L. Natividad for private respondents.
ANTONIO, J.:
Original special civil action for certiorari.
Private respondent Joselito Aizon was charged before the Court of First
Instance of Zamboanga City, Branch II (respondent Judge Alberto V.
Seeris, presiding), with Double Homicide Through Reckless
Imprudence or a violation of Section 48 of Republic Act No. 4136. The
pertinent portion of the Information reads as follows:
That on or about May 9, 1975, in the City of Zamboanga, Philippines,
and within the jurisdiction of this Honorable Court, the above-named
accused, being then the driver of an Isuzu Passenger Bus bearing Plate
No. SB-511 owned and operated by FELIPE AIZON, operating on the
public road, and without taking the necessary precautions, considering
the width, traffic, visibility, grades, crossing, curvatures, and other
conditions of the road, so as to avoid accident to persons or damage
to properties, did then and there, through reckless and fast driving,
caused the said Isuzu Passenger Bus to turn turtle, as a result of
which, the persons of MYRNA PAJARITO DE SAN LUIS and MUSA
BARING, both passengers on board the said Isuzu passenger bus
sustained injuries on their persons which caused their death. (Italics
supplied.)
Upon arraignment, said respondent entered a plea of guilty. In view
of said plea, the court rendered judgment convicting him of the
offense charged and sentencing him to indemnify the heirs of the late
Myrna Pajarito de San Luis the amount of P12,000.00 * * *.
After the judgment had become final and executory, a Writ of
Execution was issued against Joselito Aizon for the indemnity of
P12,000.00, but the same was returned unsatisfied because of his
insolvency. Whereupon, petitioner Lucia S. Pajarito, mother of the late
Myrna Pajarito de San Luis, filed with the court a quo a motion for the
issuance of Subsidiary Writ of Execution and served a copy thereof to
private respondent Felipe Aizon, employer of Joselito Aizon as alleged
in the Information. Felipe Aizon opposed the motion on the grounds,
to wit: (1) that he is not the employer of Joselito Aizon, the vehicle in
question having been sold already to Isaac Aizon, father of Joselito,
but that the deed of transfer has not been executed because the full
price has not yet been paid; and (2) that in case of insolvency, Joselito
has to suffer subsidiary imprisonment to satisfy the judgment insofar
as the indemnity is concerned.
The court denied petitioners motion for Subsidiary Writ of Execution
on the ground that Felipe Aizon, alleged employer of Joselito, was not
a party in the aforesaid criminal case. Said the court:
It is therefore, the well considered opinion of this Court that a
separate civil action must be filed by movant Lucia S. Pajarito against
Felipe Aizon in order to enforce the subsidiary liability of the latter
under Article 103 of the Revised Penal Code, as amended. Petitioner
moved for reconsideration of the foregoing ruling, but the same was
denied. Hence, this petition.
Petitioner contends that the enforcement of the subsidiary liability
under Article 103 of the Revised Penal Code may be filed under the
same criminal case, under which the subsidiary liability was granted;
that respondent Felipe Aizon, alleged employer of Joselito Aizon, was
given his day in court, as he was furnished a copy of the motion for
issuance of the Subsidiary Writ of Execution, to which he filed his
opposition; and that, although not made a party in the criminal case,
the employer, Felipe Aizon, should have taken active participation in
the defense of his employee, Joselito Aizon.
On the other hand, respondents, in their Comment to the petition
which We consider their Answer, maintain that to enforce the
subsidiary liability under Article 103 of the Revised Penal Code, as
amended, a separate civil action must be filed against the employer
because under our present judicial system, before one could he held
subsidiary liable, he should be made a party defendant to the action,
which in this case is not legally feasible because respondent Felipe
203
Aizon was not accused together with Joselito Aizon in Criminal Case
No. 512 (1313) for Double Homicide Through Reckless Imprudence.
Obviously, the question to be considered here is whether the
subsidiary civil liability established in Articles 102 and 103 of the
Revised Penal Code may be enforced in the same criminal case where
the award was made, or in a separate civil action.
Under Article 100 of the Revised Penal Code, a person criminally liable
for a felony is also civilly liable. As a consequence, the institution of
the criminal action carries with it the institution of the civil action
arising therefrom, except when there is a separate civil action or
reservation of the latter on the part of the complainant. As explained
in Ramcar, Incorporated v. De Leon: When no civil action is expressly
instituted, according to subsection (a) of section 1 of Rule 107, it shall
be impliedly jointly instituted with the criminal action. That means as
if two actions are joined in one as twins, each one complete with the
same completeness as any of the two normal persons composing a
twin. It means that the civil action may be tried and prosecuted, with
all the ancillary processes provided by law.
Pursuant to Article 103, in relation to Article 102, of the Revised Penal
Code, an employer may be subsidiary liable for the employees civil
liability in a criminal action when: (1) the employer is engaged in any
kind of industry; (2) the employee committed the offense in the
discharge of his duties; and (3) he is insolvent and has not satisfied
his civil liability. The subsidiary civil liability of the employer, however,
arises only after conviction of the employee in the criminal case. In
Martinez v. Barredo, this Court ruled that a judgment of conviction
sentencing a defendant employee to pay an indemnity, in the absence
of any collusion between the defendant and the offended party, is
conclusive upon the employer in an action for the enforcement of the
latters subsidiary liability.
* * * The stigma of a criminal conviction surpasses in effect and
implications mere civil liability. Common sense dictates that a finding
of guilt in a criminal case in which proof beyond reasonable doubt is
necessary, should not be nullified in a subsequent civil action requiring
only preponderance of evidence to support a judgment, unless those
who support the contrary rule should also hold that an absolution in a
civil case will operate to automatically set aside the verdict against the
defendant in the criminal case. It is anomalous, to say the least, to
suppose that the driver, excelling Dr. Jekyll and Mr. Hyde, could be
guilty of reckless negligence in so far as his obligation to pay indemnity
is concerned, and at the same time could be free from any blame
when said indemnity is sought to be collected from his employer,
although the right to the indemnity arose from and was based on one
and the same act of the driver.
The employer cannot be said to have been deprived of his day in
court, because the situation before us is not one wherein the employer
is sued for a primary liability under article 1903 of the Civil Code, but
one in which enforcement is sought of a subsidiary civil liability
incident to and dependent upon his drivers criminal negligence which
is a proper issue to be tried and decided only in a criminal action. In
other words, the employer becomes ipso facto subsidiarily liable upon
his drivers conviction and upon proof of the latters insolvency, in the
same way that acquittal wipes out not only the employees primary
civil liability but also his employers subsidiary liability for such criminal
negligence. (Almeida et al. vs. Abaroa, 8 Phil. 178, affirmed in 218
U.S. 476, 54 Law ed., 1116; Wise & Co. vs. Larion, 45 Phil. 314, 320;
Francisco vs. Onrubia, 46 Phil. 327; Province of Ilocos Sur vs.
Tolentino, G.R. No. 34186, 56 Phil. 829; Moran, Comments on the
Rules of Court, Vol. II, p. 403)
It is high time that the employer exercised the greatest care in
selecting his employees, taking real and deep interest in their welfare;
intervening in any criminal action brought against them by reason of
or as a result of the performance of their duties, if only in the way of
giving them the benefit of counsel; and consequently doing away with
the practice of leaving them to their fates. If these be done, the
American rule requiring notice on the part of the employer shall have
been satisfied. (At pp. 3-4)
In Miranda v. Malate Garage & Taxicab, Inc., this Court further
amplified the rule that the decision convicting the employee is binding
204
and conclusive upon the employer, not only with regard to (the
latters) civil liability but also with regard to its amount because the
liability of an employer cannot be separated but follows that of his
employee. That is why the law says that his liability is subsidiary
(Article 103, Revised Penal Code). To allow an employer to dispute the
civil liability fixed in the criminal case would be to amend, nullify, or
defeat a final judgment rendered by a competent court. And this
Court, in Miranda, further explained that the employer is in substance
and in effect a party to the criminal case, considering the subsidiary
liability imposed upon him by law.
It is true that an employer, strictly speaking, is not a party to the
criminal case instituted against his employee, but in substance and in
effect he is considering the subsidiary liability imposed upon him by
law. It is his concern, as well as of his employee, to see to it that his
interest be protected in the criminal case by taking virtual participation
in the defense of his employee. He cannot leave him to his own fate
because his failure is also his. And if because of his indifference or
inaction the employee is convicted and damages are awarded against
him, he cannot later be heard to complain, if brought to court, for the
enforcement of his subsidiary liability, that he was not given his day
in court. (At p. 675. Italics supplied.)
The conclusiveness upon the employer of the judgment of conviction
sentencing the employee to pay civil indemnity, for the enforcement
of the employers subsidiary civil liability under Article 103 was again
reiterated in Manalo and Salvador v. Robles Transportation Company,
Inc., where the Court ruled that the sheriffs return submitted in
evidence in the action against the employer, Robles Transportation
Company, Inc., showing that the two writs of execution were not
satisfied because of the insolvency of the driver, is a prima facie
evidence of the employees insolvency. Similarly, this Court ruled that
the defendants insolvency may be proven by the certificate of the
Director of Prisons that the employee is serving subsidiary
imprisonment; or by the certificate of the sheriff that the employee
has not satisfied his pecuniary liability and that no properties have
been found registered in his name.
Considering that the judgment of conviction, sentencing a defendant
employee to pay an indemnity under Articles 102 and 103 of the
Revised Penal Code, is conclusive upon the employer not only with
regard to the latters civil liability but also with regard to its amount,
this Court stated in Rotea, that in the action to enforce the employers
subsidiary liability, the court has no other function than to render
decision based upon the indemnity awarded in the criminal case and
has no power to amend or modify it even if in its opinion an error has
been committed in the decision.
In view of the foregoing principles, and considering that Felipe Aizon
does not deny that he was the registered operator of the bus but only
claims now that he sold the bus to the father of the accused, it would
serve no important purpose to require petitioner to file a separate and
independent action against the employer for the enforcement of the
latters subsidiary civil liability. Under the circumstances, it would not
only prolong the litigation but would require the heirs of the deceased
victim to incur unnecessary expenses. At any rate, the proceeding for
the enforcement of the subsidiary civil liability may be considered as
part of the proceeding for the execution of the judgment. A case in
which an execution has been issued is regarded as still pending so
that all proceedings on the execution are proceedings in the suit.
There is no question that the court which rendered the judgment has
a general supervisory control over its process of execution, and this
power carries with it the right to determine every question of fact and
law which may be involved in the execution.
The validity of the claim of Felipe Aizon that he is no longer the owner
and operator of the ill-fated bus as he sold it already to Isaac Aizon,
father of the accused Joselito Aizon, is a matter that could be litigated
and resolved in the same criminal case. In support of his opposition
to the motion of the complainant, served upon him, for the purpose
of the enforcement of his subsidiary liability, Felipe Aizon may adduce
all the evidence necessary for that purpose. Indeed, the enforcement
of the employers subsidiary civil liability may be conveniently litigated
within the same proceeding because the execution of the judgment is
a logical and integral part of the case itself. This would certainly
facilitate the application of justice to the rival claims of the contending
205
parties. The purpose of procedure, observed this Court in Manila
Railroad Co. v. Attorney General, is not to thwart justice. Its proper
aim is to facilitate the application of justice to the rival claims of the
contending parties. It was created not to hinder and delay but to
facilitate and promote the administration of justice. In proceedings to
apply justice, it is the duty of the courts to assist the parties in
obtaining just, speedy, and inexpensive determination of their rival
claims. Thus, the Rules require that they should be liberally construed
to promote their object and to assist the parties in obtaining just,
speedy, and inexpensive determination of every action and
proceeding.
WHEREFORE, the Orders of respondent Court in Criminal Case No.
512 (1313) dated July 27, 1978 and August 14, 1976 are hereby set
aside. The Court a quo is directed to hear and decide in the same
proceeding the subsidiary liability of the alleged owner and operator
of the passenger bus. Costs against private respondents.
Fernando (Chairman), Aquino, Concepcion Jr., and Santos, JJ.,
concur.
Barredo, J., concurs in a separate opinion.
BARREDO, J. Concurring:
I concur, but to make matters clearer, I must add that the only issues
open at the hearing to be held by the court a quo are: (1) whether or
not Felipe Aizon was the owner of the vehicle driven by the convicted
accused, Joselito Aizon, or, whether or not he was the employer of
said accused at the time of the commission of the offense on May 9,
1975, and (2) whether or not said Joselito Aizon is insolvent. As stated
in the main opinion, the judgment in the criminal case is conclusive
upon the employer not only with regard to his civil liability but also
with regard to its amount which is that found in the judgment of
conviction. In other words, what is to be decided by the trial court is
not strictly speaking the subsidiary liability of the employer, Felipe
Aizon, for the judgment in the criminal case is deemed to include that
liability, but only the two issues related to it that I have mentioned.
Orders set aside.
Notes.The civil liability may not be enforced in a criminal action
where the accused is acquitted. (People vs. Miranda, 5 SCRA 1067).
An employers subsidiary civil liability cannot be proved in a separate
action while the criminal case against the employee is still pending
because such liability is governed not by the Civil Code but by the
Revised Penal Code. (Joaquin vs. Aniceto, 12 SCRA 308.)
The extinction of the penal action does not carry with it the extinction
of the civil, unless the extinction proceeds from a declaration in a final
judgment that the fact from which the civil might arise did not exist.
(Faraon vs. Priela, 24 SCRA 582.)
Moral damages may be had where physical injuries ended in death.
(People vs. Medrosa, Jr., 62 SCRA 245.)
Employer is liable for damages caused by their employees. (Philippine
Rabbit Bus Lines, Inc. vs. Phil-American Forwarders, Inc., 63 SCRA
231.)
The financial standing of a person responsible for breach of carriage
is relevant to the evaluation of moral damages, although the financial
capacity does not determine liability for damage. (Pangasinan Trans.
Co. vs. Legaspi, 12 SCRA 592.)
Where the loss in question was due not to force majeure but to lack
of adequate precautions or measures taken by the carrier to prevent
the loss, the carrier is liable. (Compaia Maritima vs. Insurance
Company of North America, 12 SCRA 213.)
Life expectancy is an important in fixing of amount of damages
recoverable in death cases arising from negligence. (BLTB Co., Inc.
vs. Court of Appeals, 64 SCRA 427.)
A transportation company may be ordered to produce its general
ledgers and financial statements upon application of claimants under
206
Section 1, Rule 27 of the Rules of Court in an action for damages for
breach of contract of carriage. (Pangasinan Transportation Co. vs.
Legaspi, 12 SCRA 592; Yepes and Susaya vs. Samar Express Transit,
17 SCRA 91.)

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207
 LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN,
petitioners, vs. MARJORIE NAVIDAD, Heirs of the Late
NICANOR NAVIDAD & PRUDENT SECURITY AGENCY,
respondents
G.R. No. 145804. February 6, 2003
Civil Law; Contracts; Contract of Carriage; The law requires common
carriers to carry passengers safely using the utmost diligence of very
cautious persons with due regard for all circumstances. The law
requires common carriers to carry passengers safely using the utmost
diligence of very cautious persons with due regard for all
circumstances. Such duty of a common carrier to provide safety to its
passengers so obligates it not only during the course of the trip but
for so long as the passengers are within its premises and where they
ought to be in pursuance to the contract of carriage.
Same; Same; Same; Instances when a common carrier becomes liable
for death of or injury to passengers. The statutory provisions render
a common carrier liable for death of or injury to passengers (a)
through the negligence or willful acts of its employees or b) on account
of willful acts or negligence of other passengers or of strangers if the
common carriers employees through the exercise of due diligence
could have prevented or stopped the act or omission.
Same; Same; Same; Presumption of Negligence; In case of such death
or injury, a carrier is presumed to have been at fault or been negligent.
I n case of such death or injury, a carrier is presumed to have been
at fault or been negligent, and by simple proof of injury, the passenger
is relieved of the duty to still establish the fault or negligence of the
carrier or of its employees and the burden shifts upon the carrier to
prove that the injury is due to an unforeseen event or to force
majeure.
Same; Obligations; Tort; The premise, however, for the employers
liability is negligence or fault on the part of the employee.Should
Prudent be made likewise liable? If at all, that liability could only be
for tort under the provisions of Article 2176 and related provisions, in
conjunction with Article 2180, of the Civil Code. The premise, however,
for the employers liability is negligence or fault on the part of the
employee. Once such fault is established, the employer can then be
made liable on the basis of the presumption juris tantum that the
employer failed to exercise diligentissimi patris families in the selection
and supervision of its employees. The liability is primary and can only
be negated by showing due diligence in the selection and supervision
of the employee, a factual matter that has not been shown.
Same; Same; Same; In fine, a liability for tort may arise even under a
contract, where tort is that which breaches the contract.A
contractual obligation can be breached by tort and when the same act
or omission causes the injury, one resulting in culpa contractual and
the other in culpa aquiliana, Article 2194 of the Civil Code can well
apply. In fine, a liability for tort may arise even under a contract,
where tort is that which breaches the contract. Stated differently,
when an act which constitutes a breach of contract would have itself
constituted the source of a quasi-delictual liability had no contract
existed between the parties, the contract can be said to have been
breached by tort, thereby allowing the rules on tort to apply.
Same; Damages; Nominal Damages; It is an established rule that
nominal damages cannot co-exist with compensatory damages.The
award of nominal damages in addition to actual damages is untenable.
Nominal damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered by him. It is an established rule that
nominal damages cannot co-exist with compensatory damages.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Office of the Government Corporate Counsel for petitioners.
Mario F. Estayan for private respondent.
208
 Arias Law Offices for M. Navidad and Heirs of the Late N. Navidad,
Jr.
VITUG, J.:
The case before the Court is an appeal from the decision and
resolution of the Court of Appeals, promulgated on 27 April 2000 and
10 October 2000, respectively, in CA-G.R. CV No. 60720, entitled
Marjorie Navidad and Heirs of the Late Nicanor Navidad vs. Rodolfo
Roman, et al., which has modified the decision of 11 August 1998 of
the Regional Trial Court, Branch 266, Pasig City, exonerating Prudent
Security Agency (Prudent) from liability and finding Light Rail Transit
Authority (LRTA) and Rodolfo Roman liable for damages on account
of the death of Nicanor Navidad.
On 14 October 1993, about half an hour past seven oclock in the
evening, Nicanor Navidad, then drunk, entered the EDSA LRT station
after purchasing a token (representing payment of the fare). While
Navidad was standing on the platform near the LRT tracks, Junelito
Escartin, the security guard assigned to the area approached Navidad.
A misunderstanding or an altercation between the two apparently
ensued that led to a fist fight. No evidence, however, was adduced to
indicate how the fight started or who, between the two, delivered the
first blow or how Navidad later fell on the LRT tracks. At the exact
moment that Navidad fell, an LRT train, operated by petitioner Rodolfo
Roman, was coming in. Navidad was struck by the moving train, and
he was killed instantaneously.
On 08 December 1994, the widow of Nicanor, herein respondent
Marjorie Navidad, along with her children, filed a complaint for
damages against Junelito Escartin, Rodolfo Roman, the LRTA, the
Metro Transit Organization, Inc. (Metro Transit), and Prudent for the
death of her husband. LRTA and Roman filed a counterclaim against
Navidad and a cross-claim against Escartin and Prudent. Prudent, in
its answer, denied liability and averred that it had exercised due
diligence in the selection and supervision of its security guards.
The LRTA and Roman presented their evidence while Prudent and
Escartin, instead of presenting evidence, filed a demurrer contending
that Navidad had failed to prove that Escartin was negligent in his
assigned task. On 11 August 1998, the trial court rendered its
decision; it adjudged:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs
and against the defendants Prudent Security and Junelito Escartin
ordering the latter to pay jointly and severally the plaintiffs the
following:
a) 1) Actual damages of P44,830.00;
2) Compensatory damages of P443,520.00;
3) Indemnity for the death of Nicanor Navidad in the sum of
P50,000.00;
b) Moral damages of P50,000.00;
c) Attorneys fees of P20,000;
d) Costs of suit.
The complaint against defendants LRTA and Rodolfo Roman are
dismissed for lack of merit.
The compulsory counterclaim of LRTA and Roman are likewise
dismissed.
Prudent appealed to the Court of Appeals. On 27 August 2000, the
appellate court promulgated its now assailed decision exonerating
Prudent from any liability for the death of Nicanor Navidad and,
instead, holding the LRTA and Roman jointly and severally liable
thusly:
WHEREFORE, the assailed judgment is hereby MODIFIED, by
exonerating the appellants from any liability for the death of Nicanor
Navidad, Jr. Instead, appellees Rodolfo Roman and the Light Rail
Transit Authority (LRTA) are held liable for his death and are hereby
directed to pay jointly and severally to the plaintiffs-appellees, the
following amounts:
a) P44,830.00 as actual damages;
209
b) P50,000.00 as nominal damages;
c) P50,000.00 as moral damages;
d) P50,000.00 as indemnity for the death of the deceased; and
e) P20,000.00 as and for attorneys fees.
The appellate court ratiocinated that while the deceased might not
have then as yet boarded the train, a contract of carriage theretofore
had already existed when the victim entered the place where
passengers were supposed to be after paying the fare and getting the
corresponding token therefor. In exempting Prudent from liability, the
court stressed that there was nothing to link the security agency to
the death of Navidad. It said that Navidad failed to show that Escartin
inflicted fist blows upon the victim and the evidence merely
established the fact of death of Navidad by reason of his having been
hit by the train owned and managed by the LRTA and operated at the
time by Roman. The appellate court faulted petitioners for their failure
to present expert evidence to establish the fact that the application of
emergency brakes could not have stopped the train.
The appellate court denied petitioners motion for reconsideration in
its resolution of 10 October 2000.
In their present recourse, petitioners recite alleged errors on the part
of the appellate court; viz.:
I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY
DISREGARDING THE FINDINGS OF FACTS BY THE TRIAL COURT
II.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING
THAT PETITIONERS ARE LIABLE FOR THE DEATH OF NICANOR
NAVIDAD, JR.
III.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING
THAT RODOLFO ROMAN IS AN EMPLOYEE OF LRTA.
Petitioners would contend that the appellate court ignored the
evidence and the factual findings of the trial court by holding them
liable on the basis of a sweeping conclusion that the presumption of
negligence on the part of a common carrier was not overcome.
Petitioners would insist that Escartins assault upon Navidad, which
caused the latter to fall on the tracks, was an act of a stranger that
could not have been foreseen or prevented. The LRTA would add that
the appellate courts conclusion on the existence of an employer-
employee relationship between Roman and LRTA lacked basis because
Roman himself had testified being an employee of Metro Transit and
not of the LRTA.
Respondents, supporting the decision of the appellate court,
contended that a contract of carriage was deemed created from the
moment Navidad paid the fare at the LRT station and entered the
premises of the latter, entitling Navidad to all the rights and protection
under a contractual relation, and that the appellate court had correctly
held LRTA and Roman liable for the death of Navidad in failing to
exercise extraordinary diligence imposed upon a common carrier.
Law and jurisprudence dictate that a common carrier, both from the
nature of its business and for reasons of public policy, is burdened
with the duty of exercising utmost diligence in ensuring the safety of
passengers. The Civil Code, governing the liability of a common carrier
for death of or injury to its passengers, provides:
Article 1755. A common carrier is bound to carry the passengers
safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with a due regard for all
the circumstances.
Article 1756. In case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence as prescribed in articles 1733 and 1755.
210
Article 1759. Common carriers are liable for the death of or injuries
to passengers through the negligence or willful acts of the formers
employees, although such employees may have acted beyond the
scope of their authority or in violation of the orders of the common
carriers.
This liability of the common carriers does not cease upon proof that
they exercised all the diligence of a good father of a family in the
selection and supervision of their employees.
Article 1763. A common carrier is responsible for injuries suffered by
a passenger on account of the willful acts or negligence of other
passengers or of strangers, if the common carriers employees through
the exercise of the diligence of a good father of a family could have
prevented or stopped the act or omission.
The law requires common carriers to carry passengers safely using the
utmost diligence of very cautious persons with due regard for all
circumstances. Such duty of a common carrier to provide safety to its
passengers so obligates it not only during the course of the trip but
for so long as the passengers are within its premises and where they
ought to be in pursuance to the contract of carriage. The statutory
provisions render a common carrier liable for death of or injury to
passengers (a) through the negligence or wilful acts of its employees
or b) on account of willful acts or negligence of other passengers or
of strangers if the common carriers employees through the exercise
of due diligence could have prevented or stopped the act or omission.
In case of such death or injury, a carrier is presumed to have been at
fault or been negligent, and by simple proof of injury, the passenger
is relieved of the duty to still establish the fault or negligence of the
carrier or of its employees and the burden shifts upon the carrier to
prove that the injury is due to an unforeseen event or to force
majeure. In the absence of satisfactory explanation by the carrier on
how the accident occurred, which petitioners, according to the
appellate court, have failed to show, the presumption would be that it
has been at fault, an exception from the general rule that negligence
must be proved.
The foundation of LRTAs liability is the contract of carriage and its
obligation to indemnify the victim arises from the breach of that
contract by reason of its failure to exercise the high diligence required
of the common carrier. In the discharge of its commitment to ensure
the safety of passengers, a carrier may choose to hire its own
employees or avail itself of the services of an outsider or an
independent firm to undertake the task. In either case, the common
carrier is not relieved of its responsibilities under the contract of
carriage.
Should Prudent be made likewise liable? If at all, that liability could
only be for tort under the provisions of Article 2176 and related
provisions, in conjunction with Article 2180, of the Civil Code. The
premise, however, for the employers liability is negligence or fault on
the part of the employee. Once such fault is established, the employer
can then be made liable on the basis of the presumption juris tantum
that the employer failed to exercise diligentissimi patris families in the
selection and supervision of its employees. The liability is primary and
can only be negated by showing due diligence in the selection and
supervision of the employee, a factual matter that has not been
shown. Absent such a showing, one might ask further, how then must
the liability of the common carrier, on the one hand, and an
independent contractor, on the other hand, be described? It would be
solidary. A contractual obligation can be breached by tort and when
the same act or omission causes the injury, one resulting in culpa
contractual and the other in culpa aquiliana, Article 2194 of the Civil
Code can well apply. In fine, a liability for tort may arise even under a
contract, where tort is that which breaches the contract. Stated
differently, when an act which constitutes a breach of contract would
have itself constituted the source of a quasi-delictual liability had no
contract existed between the parties, the contract can be said to have
been breached by tort, thereby allowing the rules on tort to apply.
Regrettably for LRT, as well as perhaps the surviving spouse and heirs
of the late Nicanor Navidad, this Court is concluded by the factual
finding of the Court of Appeals that there is nothing to link (Prudent)
to the death of Nicanor (Navidad), for the reason that the negligence
211
of its employee, Escartin, has not been duly proven x x x. This finding
of the appellate court is not without substantial justification in our own
review of the records of the case.

There being, similarly, no showing that petitioner Rodolfo Roman

himself is guilty of any culpable act or omission, he must also be
absolved from liability. Needless to say, the contractual tie between
the LRT and Navidad is not itself a juridical relation between the latter
and Roman; thus, Roman can be made liable only for his own fault or
negligence.

The award of nominal damages in addition to actual damages is

untenable. Nominal damages are adjudicated in order that a right of
the plaintiff, which has been violated or invaded by the defendant,
may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him. It is an
established rule that nominal damages cannot co-exist with
compensatory damages.

WHEREFORE, the assailed decision of the appellate court is AFFIRMED

with MODIFICATION but only in that (a) the award of nominal
damages is DELETED and (b) petitioner Rodolfo Roman is absolved
from liability. No costs.

SO ORDERED.

Davide, Jr. (C.J., Chairman), Ynares-Santiago, Carpio and Azcuna,

JJ., concur.

Judgment affirmed with modification.

Note.Where a common carrier failed to exercise the extraordinary

diligence required of it, which resulted in the death of a passenger, it
is deemed to have acted recklessly, and the heirs of the passenger
shall be entitled to exemplary damages. (Yobido vs. Court of Appeals,
281 SCRA 1 [1997]).

o0o

212
 PHILTRANCO SERVICE ENTERPRISES, INC. and
ROGACIONES MANILHIG, petitioner, vs. COURT OF APPEALS
and HEIRS OF THE LATE RAMON ACUESTA, respondents
G.R. No. 120553. June 17, 1997
Civil Law; Quasi-Delict; Damages; The liability of the registered owner
of a public service vehicle, like petitioner Philtranco, for damages
arising from the tortious acts of the driver is primary, direct, and joint
and several or solidary with the driver.We have consistently held
that the liability of the registered owner of a public service vehicle, like
petitioner Philtranco, for damages arising from the tortious acts of the
driver is primary, direct, and joint and severally or solidary with the
driver. x x x Since the employers liability is primary, direct and
solidary, its only recourse if the judgment for damages is satisfied by
it is to recover what it has paid from its employee who committed the
fault or negligence which gave rise to the action based on quasi-delict.
Same; Same; Same; Award as indemnity for loss of earning capacity,
the same must be struck out for lack of basis.We concur with
petitioners view that the trial court intended the award of
P200,000.00 as death indemnity not as compensation for loss of
earning capacity. Even if the trial court intended the award is
indemnity for loss of earning capacity, the same must be struck out
for lack of basis. There is no evidence on the victims earning capacity
and life expectancy.
Same; Same; Same; Moral damages are emphatically not intended to
enrich a plaintiff at the expense of the defendant.Moral damages
are emphatically not intended to enrich a plaintiff at the expense of
the defendant. They are awarded only to allow the former to obtain
means, diversion, or amusements that will serve to alleviate the moral
suffering he has undergone due to the defendants culpable action and
must, perforce, be proportional to the suffering inflicted. In light of
the circumstances in this case, an award of P50,000 for moral
damages is in order.
Same; Same; Same; In quasi-delicts, exemplary damages may be
awarded if the party at fault acted with gross negligence.The award
of P500,000 for exemplary damages is also excessive. In quasi-delicts,
exemplary damages may be awarded if the party at fault acted with
gross negligence. The Court of Appeals found that there was gross
negligence on the part of petitioner Manilhig. Under Article 2229 of
the Civil Code, exemplary damages are imposed by way of example or
correction for the public good, in addition to the moral, temperate,
liquidated, or compensatory damages. Considering its purpose, it must
be fair and reasonable in every case and should not be awarded to
unjustly enrich a prevailing party. In the instant case, an award
P50,000 for the purpose would be adequate, fair, and reasonable.
Same; Same; Same; Attorneys Fees; The general rule is that
attorneys fees cannot be recovered as part of damages because of
the policy that no premium should be placed on the right to litigate.
Finally, the award of P50,000 for attorneys fees must be reduced. The
general rule is that attorneys fees cannot be recovered as part of
damages because of the policy that no premium should be placed on
the right to litigate. Stated otherwise, the grant of attorneys fees as
part of damages is the exception rather than the rule, as counsels
fees are not awarded every time a party prevails in a suit. Such
attorneys fees can be awarded in the cases enumerated in Article
2208 of the Civil Code, and in all cases it must be reasonable.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Bengzon, Narciso, Cudala, Pecson, Bengson and Jimenez for
petitioners.
Julio O. Acuesta for private respondent.
7DAVIDE, JR., J.:
The Petitioners interposed this appeal by way of a petition for review
under Rule 45 of the Rules of Court from the 31 January 1995 Decision
213
of the Court of Appeals in CA-G.R. CV No. 41140777 affirming the 22
January 1993 Decision of Branch 31 of the Regional Trial Court,
Calbayog City, in Civil Case No. 373, which ordered the petitioners to
pay the private respondents damages as a result of a vehicular
accident.
Civil Case No. 373 was an action against herein petitioners for
damages instituted by the heirs of Ramon A. Acuesta, namely,
Gregorio O. Acuesta; Julio O. Acuesta; Ramon O. Acuesta, Jr.; Baltazar
O. Acuesta; Rufino O. Acuesta; Maximo O. Acuesta; Neri O. Acuesta;
Luminado O. Acuesta; Rosario Acuesta-Sanz; and Pamfilo O. Acuesta.
Atty. Julio O. Acuesta also appeared as counsel for the plaintiffs
(herein private respondents). The private respondents alleged that the
petitioners were guilty of gross negligence, recklessness, violation of
traffic rules and regulations, abandonment of victim, and attempt to
escape from a crime.
To support their allegations, the private respondents presented eight
witnesses. On 10 February 1992, after the cross-examination of the
last witness, the private respondents counsel made a reservation to
present a ninth witness. The case was then set for continuation of the
trial on 30 and 31 March 1992. Because of the non-appearance of the
petitioners counsel, the 30 March 1992 hearing was cancelled. The
next day, private respondents counsel manifested that he would no
longer present the ninth witness. He thereafter made an oral offer of
evidence and rested the case. The trial court summarized private
respondents evidence in this wise:
[I]n the early morning of March 24, 1990, about 6:00 oclock, the
victim Ramon A. Acuesta was riding in his easy rider bicycle (Exhibit
O), along the Gomez Street of Calbayog City. The Gomez Street is
along the side of Nijaga Park. On the Magsaysay Blvd., also in
Calbayog City, defendant Philtranco Service Enterprises, Inc.
(Philtranco for brevity) Bus No. 4025 with plate No. EVA-725 driven
by defendant Rogasiones Manilhig y Dolira was being pushed by some
persons in order to start its engine. The Magsaysay Blvd. runs
perpendicular to Gomez St. and the said Philtranco bus 4025 was
heading in the general direction of the said Gomez Street. Some of
the persons who were pushing the bus were on its back, while the
others were on the sides. As the bus was pushed, its engine started
thereby the bus continued on its running motion and it occurred at the
time when Ramon A. Acuesta who was still riding on his bicycle was
directly in front of the said bus. As the engine of the Philtranco bus
started abruptly and suddenly, its running motion was also enhanced
by the said functioning engine, thereby the subject bus bumped on
the victim Ramon A. Acuesta who, as a result thereof fell and,
thereafter, was run over by the said bus. The bus did not stop
although it had already bumped and ran [sic] over the victim; instead,
it proceeded running towards the direction of the Rosales Bridge which
is located at one side of the Nijaga Park and towards one end of the
Gomez St., to which direction the victim was then heading when he
was riding on his bicycle. P/Sgt. Yabao who was then jogging thru the
Gomez Street and was heading towards the victim Ramon A. Acuesta
as the latter was riding on his bicycle, saw when the Philtranco bus
was being pushed by some passengers, when its engine abruptly
started and when the said bus bumped and ran over the victim. He
approached the bus driver defendant Manilhig herein and signalled to
him to stop, but the latter did not listen. So the police officer jumped
into the bus and introducing himself to the driver defendant as
policeman, ordered the latter to stop. The said defendant driver
stopped the Philtranco bus near the Nijaga Park and Sgt. Yabao
thereafter, told the driver to proceed to the Police Headquarter which
was only 100 meters away from Nijaga Park because he was
apprehensive that the said driver might be harmed by the relatives of
the victim who might come to the scene of the accident. Then Sgt.
Yabao cordoned the scene where the vehicular accident occurred and
had P/Cpl. Bartolome Bagot, the Traffic Investigator, conduct an
investigation and make a sketch of the crime scene. Sgt. Yambao
Yabao was only about 20 meters away when he saw the bus of
defendant Philtranco bumped [sic] and [sic] ran over the victim. From
the place where the victim was actually bumped by the bus, the said
vehicle still had run to a distance of about 15 meters away.
For their part, the petitioners filed an Answer wherein they alleged
that petitioner Philtranco exercised the diligence of a good father of a
family in the selection and supervision of its employees, including
214
petitioner Manilhig who had excellent record as a driver and had
undergone months of rigid training before he was hired. Petitioner
Manilhig had always been a prudent professional driver, religiously
observing traffic rules and regulations. In driving Philtrancos buses,
he exercised the diligence of a very cautions person.
As might be expected, the petitioners had a different version of the
incident. They alleged that in the morning of 24 March 1990, Manilhig,
in preparation for his trip back to Pasay City, warmed up the engine
of the bus and made a few rounds within the city proper of Calbayog.
While the bus was slowly and moderately cruising along Gomez Street,
the victim, who was biking towards the same direction as the bus,
suddenly overtook two tricycles and swerved left to the center of the
road. The swerving was abrupt and so sudden that even as Manilhig
applied the brakes and blew the bus horn, the victim was bumped
from behind and run over by the bus. It was neither willful nor
deliberate on Manilhigs part to proceed with the trip after his bus
bumped the victim, the truth being that when he looked at his rear-
view window, he saw people crowding around the victim, with others
running after his bus. Fearing that he might be mobbed, he moved
away from the scene of the accident and intended to report the
incident to the police. After a man boarded his bus and introduced
himself as a policeman, Manilhig gave himself up to the custody of the
police and reported the accident in question.
The petitioners further claimed that it was the negligence of the victim
in overtaking two tricycles, without taking precautions such as seeing
first that the road was clear, which caused the death of the victim.
The latter did not even give any signal of his intention to overtake.
The petitioners then counter-claimed for P50,000 as and for attorneys
fees; P1 million as moral damages; and P50,000 for litigation
expenses.
However, the petitioners were not able to present their evidence, as
they were deemed to have waived that right by the failure of their
counsel to appear at the scheduled hearings on 30 and 31 March 1992.
The trial court then issued an Order declaring the case submitted for
decision. Motions for the reconsideration of the said Order were both
denied.
On 22 January 1992, the trial court handed down a decision ordering
the petitioners to jointly and severally pay the private respondents the
following amounts:
1) P55,615.72 as actual damages;
2) P200,000 as death indemnity for the death of the victim Ramon A.
Acuesta;
3) P1 million as moral damages;
4) P500,000 by way of exemplary damages;
5) P50,000 as attorneys fees; and
6) the costs of suit.
Unsatisfied with the judgment, the petitioners appealed to the Court
of Appeals imputing upon the trial court the following errors:
(1) in preventing or barring them from presenting their evidence;
(2) in finding that petitioner Manilhig was at fault;
(3) in not finding that Ramon was the one at fault and his own fault
caused, or at least contributed to, his unfortunate accident;
(4) in awarding damages to the private respondents; and
(5) in finding that petitioner Philtranco was solidarily liable with
Manilhig for damages.
In its decision of 31 January 1995, the Court of Appeals affirmed the
decision of the trial court. It held that the petitioners were not denied
due process, as they were given an opportunity to present their
defense. The records show that they were notified of the assignment
of the case for 30 and 31 March 1992. Yet, their counsel did not appear
on the said dates. Neither did he file a motion for postponement of
the hearings, nor did he appeal from the denial of the motions for
reconsideration of the 31 March 1992 Order of the trial court. The
petitioners have thereby waived their right to present evidence. Their
expectation that they would have to object yet to a formal offer of
evidence by the private respondents was misplaced, for it was within
the sound discretion of the court to allow oral offer of evidence.
215
As to the second and their assigned errors, the respondent court
disposed as follows:
. . . We cannot help but accord with the lower courts finding on
appellant Manilhigs fault. First, it is not disputed that the bus driven
by appellant Manilhig was being pushed at the time of the unfortunate
happening. It is of common knowledge and experience that when a
vehicle is pushed to a jump-start, its initial movement is far from slow.
Rather, its movement is abrupt and jerky and it takes a while before
the vehicle attains normal speed. The lower court had thus enough
basis to conclude, as it did, that the bumping of the victim was due to
appellant Manilhigs actionable negligence and inattention. Prudence
should have dictated against jumpstart, was too obvious to be
overlooked. Verily, contrary to their bare arguments, there was gross
negligence on the part of appellants.
The doctrine of last clear chance theorized upon by appellants, is
inapplicable under the premises because the victim, who was bumped
from behind, obviously, did not of course anticipate a Philtranco bus
being pushed from a perpendicular street.
The respondent court sustained the awards of moral and exemplary
damages and of attorneys fees, for they are warranted under Articles
2206, 2231, and 2208(1), respectively, of the Civil Code. Anent the
solidary liability of petitioner Philtranco, the same finds support in
Articles 2180 and 2194 of the said Code. The defense that Philtranco
exercised the diligence of a good father of a family in the selection
and supervision of its employees crumbles in the face of the gross
negligence of its driver, which caused the untimely death of the victim.
Their motion for reconsideration having been denied, the petitioners
came to us claiming that the Court of Appeals gravely erred
I of said date; but then, during the last hearing, counsel was made to
. . . IN HOLDING THAT PETITIONERS WAIVED THEIR RIGHT TO
PRESENT THEIR EVIDENCE, AND THAT PETITIONERS WERE NOT
DENIED DUE PROCESS.
II
. . . IN APPLYING ART. 2194, INSTEAD OF ART. 2180, OF THE CIVIL
CODE, AND IN HOLDING THAT PETITIONER PHILTRANCO CAN NOT
INVOKE THE DEFENSE OF DILIGENCE OF A GOOD FATHER OF A
FAMILY.
III
. . . IN AWARDING DAMAGES TO RESPONDENTS AND/OR IN NOT
FINDING THE TRIAL COURTS AWARD OF DAMAGES EXCESSIVE.
We resolved to give due course to the petition and required the parties
to submit their respective memoranda after due consideration of the
allegations, issues, and arguments adduced in the petition, the
comment thereon by the private respondents, and the reply to the
comment filed by the petitioners. The petitioners filed their
memorandum in due time; while the private respondents filed theirs
only on 3 January 1997, after their counsel was fined in the amount
of P1,000 for failure to submit the required memorandum.
The first imputed error is without merit. The petitioners and their
counsel, Atty. Jose Buban, were duly notified in open court of the
order of the trial court of 10 February 1992 setting the case for hearing
on 30 and 31 March 1992. On both dates neither the petitioners nor
their counsel appeared. In his motion for reconsideration, Atty. Buban
gave the following reasons for his failure to appear on the said
hearings:
1. That when this case was called on March 27, 1992, counsel was
very much indisposed due to the rigors of a very hectic campaign as
he is a candidate for City Councilor of Tacloban; he wanted to leave
for Calbayog City, but he was seized with slight fever on the morning
understand that plaintiffs would formally offer their exhibits in writing,
for which reason, counsel for defendants waited for a copy of said
formal offer, but counsel did not receive any copy as counsel for
plaintiffs opted to formally offer their exhibits orally in open court;
216
2. That counsel for defendants, in good faith believed that he would
be given reasonable time within which to comment on the formal offer
in writing, only to know that counsel for plaintiffs orally offered their
exhibits in open court and that the same were admitted by the
Honorable Court; and that when this case was called on March 30 and
31, 1992, the undersigned counsel honestly believed that said
schedule would be cancelled, pending on the submission of the
comments made by the defendants on the formal offer; but it was not
so, as the exhibits were admitted in open court.
In its order of 26 May 1992, the trial court denied the motion, finding
it to be devoid of meritorious basis, as Atty. Buban could have filed
a motion for postponement. Atty. Buban then filed a motion to
reconsider the order of denial, which was likewise denied by the trial
court in its order of 12 August 1992. Nothing more was done by the
petitioners after receipt of the order of 12 August 1992. A perusal of
the first and second motions for reconsideration discloses absence of
any claim that the petitioners have meritorious defenses. Clearly,
therefore, the trial court committed no error in declaring the case
submitted for decision on the basis of private respondents evidence.
The second imputed error is without merit either.
Civil Case No. 373 is an action for damages based on quasidelict15
under Article 2176 and 2180 of the Civil Code against petitioner
Manilhig and his employer, petitioner Philtranco, respectively. These
articles pertinently provide:
ART. 2176. Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the damage done.
Such fault or negligence, if there is no pre-existing contractual relation
between the parties, is called a quasi-delict and is governed by the
provisions of this Chapter.
ART. 2180. The obligation imposed by Article 2176 is demandable not
only for ones own acts or omissions, but also for those of persons for
whom one is responsible.
...
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.
...
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.
_______________
15 Also called culpa aquiliana or culpa extra-contractual, V ARTURO
M. TOLENTINO, CIVIL CODE OF THE PHILIPPINES 591-592 (1992)
(hereafter V TOLENTINO).
We have consistently held that the liability of the registered owner of
a public service vehicle, like petitioner Philtranco, for damages arising
from the tortious acts of the driver is primary, direct, and joint and
several or solidary with the driver. As to solidarity, Article 2194
expressly provides:
ART. 2194. The responsibility of two or more persons who are liable
for a quasi-delict is solidary.
Since the employers liability is primary, direct and solidary, its only
recourse if the judgment for damages is satisfied by it is to recover
what it has paid from its employee who committed the fault or
negligence which gave rise to the action based on quasi-delict. Article
2181 of the Civil Code provides:
217

ART. 2181. Whoever pays for the damage caused by his dependents
or employees may recover from the latter what he has paid or
delivered in satisfaction of the claim.
There is, however, merit in the third imputed error.
The trial court erroneously fixed the death indemnity at P200,000.
The private respondents defended the award in their opposition to the
Motion for Reconsideration by saying that [i]n the case of Philippine
Airlines, Inc. vs. Court of Appeals, 185 SCRA 110, our Supreme Court
held that the award of damages for death is computed on the basis of
the life expectancy of the deceased. In that case, the death
indemnity was computed by multiplying the victims gross annual
income by his life expectancy, less his yearly living expenses. Clearly
then, the death indemnity referred to was the additional indemnity
for the loss of earning capacity mentioned in Article 2206(1) of the
Civil Code, and not the basic indemnity for death mentioned in the
first paragraph thereof. This article provides as follows:
ART. 2206. The amount of damages for death caused by a crime or
quasi-delict shall be at least three thousand pesos, even though there
may have been mitigating circumstances. In addition:
(1) The defendant shall be liable for the loss of the earning capacity
of the deceased, and the indemnity shall be paid to the heirs of the
latter; such indemnity shall in every case be assessed and awarded by
the court, unless the deceased on account of permanent physical
disability not caused by the defendant, had no earning capacity at the
time of his death;
(2) If the deceased was obliged to give support according to the
provisions of article 291, the recipient who is not an heir called to the
decedents inheritance by the law of testate or intestate succession,
may demand support from the person causing the death, for a period
of not exceeding five years, the exact duration to be fixed by the court;
(3) The spouse, legitimate and illegitimate descendants and
ascendants of the deceased may demand moral damage for mental
anguish by reason of the death of the deceased.
We concur with petitioners view that the trial court intended the
award of P200,000.00 as death indemnity not as compensation for
loss of earning capacity. Even if the trial court intended the award as
indemnity for loss of earning capacity, the same must be struck out
for lack of basis. There is no evidence on the victims earning capacity
and life expectancy.
Only indemnity for death under the opening paragraph of Article 2206
is due, the amount of which has been fixed by current jurisprudence
at P50,000.
The award of P1 million for moral damages to the heirs of Ramon
Acuesta has no sufficient basis and is excessive and unreasonable.
This was based solely on the testimony of one of the heirs, Atty. Julio
Acuesta, contained in his Direct Testimony. . . As Plaintiff, conducted
by Himself, to wit:
Q. What was your feeling or reaction as a result of the death of your
father Ramon A. Acuesta?
A. We, the family members, have suffered much from wounded
feelings, moral shock, mental anguish, sleepless nights, to which we
are entitled to moral damages at the reasonable amount of ONE
MILLION (P1,000,000.00) PESOS or at the sound discretion of this
Hon. Court.
Since the other heirs of the deceased did not take the witness stand,
the trial court had no basis for its award of moral damages to those
who did not testify thereon.
Moral damages are emphatically not intended to enrich a plaintiff at
the expense of the defendant. They are awarded only to allow the
former to obtain means, diversion, or amusements that will serve to
alleviate the moral suffering he has undergone due to the defendants
218
culpable action and must, perforce, be proportional to the suffering
inflicted. In light of the circumstances in this case, an award of
P50,000 for moral damages is in order.
The award of P500,000 for exemplary damages is also excessive. In
quasi-delicts, exemplary damages may be awarded if the party at fault
acted with gross negligence. The Court of Appeals found that there
was gross negligence on the part of petitioner Manilhig. Under Article
2229 of the Civil Code, exemplary damages are imposed by way of the
moral, temperate, liquidated, or compensatory damages. Considering
its purpose, it must be fair and reasonable in every case and should
not be awarded to unjustly enrich a prevailing party. In the instant
case, an award P50,000 for the purpose would be adequate, fair, and
reasonable.
IN VIEW OF THE FOREGOING, the petitioner is hereby partly granted
and the challenged decision of CA-G.R. CV No. 41140 is AFFIRMED,
subject to modifications as to the damages awarded, which are
reduced as follows:
(a) Death indemnity, from P200,000 to P50,000;
(b) Moral damages, from P1 million to P50,000;
(c) Exemplary damages, from P500,000 to P50,000; and
(d) Attorneys fees, from P50,000 to P25,000.
No pronouncement as to costs in this instance.
SO ORDERED.
Narvasa (C.J., Chairman), Melo and Panganiban, JJ., concur.

Finally, the award of P50,000 for attorneys fees must be reduced. The Francisco, J., On leave.
general rule is that attorneys fees cannot be recovered as part of
damages because of the policy that no premium should be placed on Judgment affirmed with modification.
the right to litigate. Stated otherwise, the grant of attorneys fees as
part of damages is the exception rather than the rule, as counsels Note.The responsibility of two or more persons or tortfeasors liable
fees are not awarded every time a party prevails in a suit. Such for a quasi-delict is joint and several and the sharing as between such
attorneys fees can be awarded in the cases enumerated in Article solidary debtors is pro-rata. (Singa-pore Airlines Limited vs. Court of
2208 of the Civil Code, and in all cases it must be reasonable. In the Appeals, 243 SCRA 143 [1995])
instant case, the counsel for the plaintiffs is himself a co-plaintiff; it is
then unlikely that he demanded from his brothers and sisters o0o
P100,000 as attorneys fees as alleged in the complaint and testified
to by him. He did not present any written contract for his fees. He is,
however, entitled to a reasonable amount for attorneys fees,
considering that exemplary damages are awarded. Among the
instances mentioned in Article 2208 of the Civil Code when attorneys
fees may be recovered is (1) when exemplary damages are
awarded. Under the circumstances in this case, an award of P25,000
for attorneys fees is reasonable.

The petitioners did not contest the award for actual damages fixed by
the trial court. Hence, such award shall stand.

219
 PAN AMERICAN WORLD AIRWAYS, INC., petitioner, vs.
INTERMEDIATE APPELLATE COURT, RENE V. PANGAN,
SOTANG BASTOS PRODUCTIONS and ARCHER
PRODUCTIONS, respondents
No. L-70462. August 11, 1988
Civil Law; Common Carrier; Liability for lost of baggage; Ruling in Ong
Yiu vs. Court of Appeals sustaining the validity of a printed stipulation
at the back of an airline ticket limiting liability of the carrier for lost
baggage to a specified amount and that the liability limited to said
amount since the passenger did not declare a higher value much less
pay additional charges squarely applicable to the instant case.We
find the ruling in Ong Yiu squarely applicable to the instant case. In
said case the Court, through Justice Melencio-Herrera, stated:
Petitioner further contends that respondent Court committed grave
error when it limited PALs carriage liability to the amount of P100.00
as stipulated at the back of the ticket. . . . We agree with the foregoing
finding. The pertinent Condition of Carnage printed at the back of the
plane ticket reads: 8 BAGGAGE LIABILITY. . . The total liability of the
Carrier for lost or damaged baggage of the passenger is LIMITED TO
P100.00 for each ticket unless a passenger declares a higher valuation
in excess of P100.00, but not in excess, however of a total valuation
of P1,000.00 and additional charges are paid pursuant to Carriers
tariffs. There is no dispute that petitioner did not declare any higher
value for his luggage, much less did he pay any additional
transportation charge.
Same; Same; Same; Same; Fact that petitioner had not signed the
plane ticket he is nevertheless bound by the provisions thereof.
While, it may be true that petitioner had not signed the plane ticket
(Exh. 12), he is nevertheless bound by the provisions thereof. Such
provisions have been held to be a part of the contract of carriage, and
valid and binding upon the passenger regardless of the latters lack of
knowledge or assent to the regulation. [Tannebaum v. National
Airline, Inc., 13 Misc. 2d 450, 176 N.Y.S. 2d 400; Lichten v. Eastern
Airlines, 87 Fed. Supp. 691; Migoski v. Eastern Air Lines, Inc., Fla., 63
So. 2d 634.] It is what is known as a contract of adhesion, in regards
which it has been said that contracts of adhesion wherein one party
imposes a ready made form of contract on the other, as the plane
ticket in the case at bar, are contracts not entirely prohibited, the one
who adheres to the contract is in reality free to reject it entirely; if he
adheres, he gives his consent [Tolentino, Civil Code, Vol IV, 1962 ed.,
p. 462, citing Mr. Justice J.B.L. Reyes, Lawyers Journal, Jan. 31, 1951,
p. 49]. And as held in Randolph v. American Airlines, 103 Ohio App.
172, 144 N.E. 2d 878; Rosenchein v. Trans World Airlines, Inc., 349
S.W. 2d 483, a contract limiting liability upon an agreed valuation
does not offend against the policy of the law forbidding one from
contracting against his own negligence.
Same; Same; Same; Ruling in Shewaram vs. PAL Inc. that the
stipulation limiting the carriers liability to a specified amount was
invalid finds no application in the instant case.On the other hand,
the ruling in Shewaram v. Philippine Air Lines, Inc. [G.R. No. L-20099,
July 2, 1966, 17 SCRA 606], where the court held that the stipulation
limiting the carriers liability to a specified amount was invalid, finds
no application in the instant case, as the ruling in said case was
premised on the finding that the conditions printed at the back of the
ticket were so small and hard to read that they would not warrant the
presumption that the passenger was aware of the conditions and that
he had freely and fairly agreed thereto. In the instant case, similar
facts that would make the case fall under the exception have not been
alleged, much less shown to exist.
Same; Same; Same; Damages; Court inable to agree with decision of
the trial court and affirmed by the Court of Appeals awarding private
respondents damages as and for lost profits.The Court finds itself
unable to agree with the decision of the trial court, and affirmed by
the Court of Appeals, awarding private respondents damages as and
for lost profits when their contracts to show the films in Guam and
San Francisco, California were cancelled. The rule laid down in
Mendoza v. Philippine Air Lines, Inc. [90 Phil. 836 (1952)] cannot be
any clearer:. . . Under Art. 1107 of the Civil Code, a debtor in good
faith like the defendant herein, may be held liable only for damages
that were foreseen or might have been foreseen at the time the
contract of transportation was entered into. The trial court correctly
220
found that the defendant company could not have foreseen the
damages that would be suffered by Mendoza upon failure to deliver
the can of film on the 17th of September, 1948 for the reason that the
plans of Mendoza to exhibit that film during the two fiesta and his
preparations, specially the announcement of said exhibition by posters
and advertisement in the newspaper, were not called to the
defendants attention.
Same; Same; Same; Same; Same; Petitioner cannot be held liable for
the cancellation of private respondents contract.Thus, applying the
foregoing ruling to the facts of the instant case, in the absence of a
showing that petitioners attention was called to the special
circumstances requiring prompt delivery of private respondent
Pangans luggages, petitioner cannot be held liable for the cancellation
of private respondents contracts as it could not have foreseen such
an eventuality when it accepted the luggages for transit.
Same; Same; Same; Attorneys fees; Award of Attorneys fees losses
support and must be set aside.With the Courts holding that
petitioners liability is limited to the amount stated in the ticket, the
award of attorneys fees, which is grounded on the alleged unjustified
refusal of petitioner to satisfy private respondents just and valid claim,
loses support and must be set aside.
PETITION to review the decision of the Intermediate Appellate Court.
The facts are stated in the opinion of the Court.
Guerrero & Torres for petitioner.
Jose B. Layug for private respondents.
CORTES, J.:
Before the Court is a petition filed by an international air carrier
seeking to limit its liability for lost baggage, containing promotional
and advertising materials for films to be exhibited in Guam and the
U.S.A., clutch bags, barong tagalogs and personal belongings, to the
amount specified in the airline ticket absent a declaration of a higher
valuation and the payment of additional charges.
The undisputed facts of the case, as found by the trial court and
adopted by the appellate court, are as follows:
On April 25, 1978, plaintiff Rene V. Pangan, president and general
manager of the plaintiffs Sotang Bastos and Archer Productions, while
in San Francisco, California and Primo Quesada of Prime Films, San
Francisco, California, entered into an agreement (Exh. A) whereby the
former, for and in consideration of the amount of US $2,500.00 per
picture, bound himself to supply the latter with three films. Ang
Mabait, Masungit at ang Pangit, Big Happening with Chikiting and
Iking, and Kambal Dragon for exhibition in the United States. It was
also their agreement that plaintiffs would provide the necessary
promotional and advertising materials for said films on or before May
30, 1978.
On his way home to the Philippines, plaintiff Pangan visited Guam
where he contacted Leo Slutchnick of the Hafa Adai Organization.
Plaintiff Pangan likewise entered into a verbal agreement with
Slutchnick for the exhibition of two of the films above-mentioned at
the Hafa Adai Theater in Guam on May 30, 1978 for the consideration
of P7,000.00 per picture (p. 11, tsn, June 20, 1979). Plaintiff Pangan
undertook to provide the necessary promotional and advertising
materials for said films on or before the exhibition date on May 30,
1978.
By virtue of the above agreements, plaintiff Pangan caused the
preparation of the requisite promotional handbills and still pictures for
which he paid the total sum of P12,900.00 (Exhs. B, B-1, C and C-1).
Likewise in preparation for his trip abroad to comply with his contracts,
plaintiff Pangan purchased fourteen clutch bags, four capiz lamps and
four barong tagalog, with a total value of P4,400.00 (Exhs. D, D-1, E,
and F).
On May 18, 1978, plaintiff Pangan obtained from defendant Pan Ams
Manila Office, through the Your Travel Guide, an economy class
221
airplane ticket with No. 0269207406324 (Exh. G) for passage from
Manila to Guam on defendants Flight No. 842 of May 27, 1978, upon
payment by said plaintiff of the regular fare. The Your Travel Guide is
a tour and travel office owned and managed by plaintiffs witness Mila
de la Rama.
On May 27, 1978, two hours before departure time plaintiff Pangan
was at the defendants ticket counter at the Manila International
Airport and presented his ticket and checked in his two luggages, for
which he was given baggage claim tickets Nos. 963633 and 963649
(Exhs. H and H-1). The two luggages contained the promotional and
advertising materials, the clutch bags, barong tagalog and his personal
belongings. Subsequently, Pangan was informed that his name was
not in the manifest and so he could not take Flight No. 842 in the
economy class. Since there was no space in the economy class,
plaintiff Pangan took the first class because he wanted to be on time
in Guam to comply with his commitment, paying an additional sum of
$112.00.
When plaintiff Pangan arrived in Guam on the date of May 27, 1978,
his two luggages did not arrive with his flight, as a consequence of
which his agreements with Slutchnick and Quesada for the exhibition
of the films in Guam and in the United States were cancelled (Exh. L).
Thereafter, he filed a written claim (Exh. J) for his missing luggages.
Upon arrival in the Philippines, Pangan contacted his lawyer, who
made the necessary representations to protest as to the treatment
which he received from the employees of the defendant and the loss
of his two luggages (Exh. M, O, Q, S, and T). Defendant Pan Am
assured plaintiff Pangan that his grievances would be investigated and
given its immediate consideration (Exhs. N, P and R). Due to the
defendants failure to communicate with Pangan about the action
taken on his protests, the present complaint was filed by the plaintiff.
(Pages 4-7, Record On Appeal). [Rollo, pp. 27-29.]
On the basis of these facts, the Court of First Instance found petitioner
liable and rendered judgment as follows:
(1) Ordering defendant Pan American World Airways, Inc. to pay all
the plaintiffs the sum of P83,000.00, for actual damages, with interest
thereon at the rate of 14% per annum from December 6, 1978, when
the complaint was filed, until the same is fully paid, plus the further
sum of P10,000.00 as attorneys fees;
(2) Ordering defendant Pan American World Airways, Inc. to pay
plaintiff Rene V. Pangan the sum of P8,123.34, for additional actual
damages, with interest thereon at the rate of 14% per annum from
December 6, 1978, until the same is fully paid;
(3) Dismissing the counterclaim interposed by defendant Pan
American World Airways, Inc.; and
(4) Ordering defendant Pan American World Airways, Inc. to pay the
costs of suit. [Rollo, pp. 106-107.]
On appeal, the then Intermediate Appellate Court affirmed the trial
court decision.
Hence, the instant recourse to this Court by petitioner.
The petition was given due course and the parties, as required,
submitted their respective memoranda. In due time the case was
submitted for decision.
In assailing the decision of the Intermediate Appellate Court petitioner
assigned the following errors:
1. The respondent court erred as a matter of law in affirming the trial
courts award of actual damages beyond the limitation of liability set
forth in the Warsaw Convention and the contract of carriage.
2. The respondent court erred as a matter of law in affirming the trial
courts award of actual damages consisting of alleged lost profits in
the face of this Courts ruling concerning special or consequential
damages as set forth in Mendoza v. Philippine Airlines [90 Phil. 836
(1952).]
The assigned errors shall be discussed seriatim.
1. The airline ticket (Exh. G) contains the following conditions:
222
NOTICE
If the passengers journey involves an ultimate destination or stop in
a country other than the country of departure the Warsaw Convention
may be applicable and the Convention governs and in most cases
limits the liability of carriers for death or personal injury and in respect
of loss of or damage to baggage. See also notice headed Advice to
International Passengers on Limitation of Liability.
CONDITIONS OF CONTRACT
1. As used in this contract ticket means this passenger ticket and
baggage check of which these conditions and the notices form part,
carriage is equivalent to transportation, carrier means all air
carriers that carry or undertake to carry the passenger or his baggage
hereunder or perform any other service incidental to such air carriage.
WARSAW CONVENTION means the convention for the Unification of
Certain Rules Relating to International Carriage by Air signed at
Warsaw, 12th October 1929, or that Convention as amended at The
Hague, 28th September 1955, whichever may be applicable.
2.Carriage hereunder is subject to the rules and limitations relating to
liability established by the Warsaw Convention unless such carriage is
not international carriage as defined by that Convention.
3. To the extent not in conflict with the foregoing carriage and other
services performed by each carrier are subject to: (i) provisions
contained in this ticket, (ii) applicable tariffs, (iii) carriers conditions
of carriage and related regulations which are made part hereof (and
are available on application at the offices of carrier), except in
transportation between a place in the United States or Canada and
any place outside thereof to which tariffs in force in those countries
apply.
xxx
NOTICE OF BAGGAGE LIABILITY LIMITATIONS
Liability for loss, delay, or damage to baggage is limited as follows
unless a higher value is declared in advance and additional charges
are paid: (1) for most international travel (including domestic portions
of international journeys) to approximately $9.07 per pound ($20.00
per kilo) for checked baggage and $400 per passenger for unchecked
baggage: (2) for travel wholly between U.S. points, to $750 per
passenger on most carriers (a few have lower limits). Excess valuation
may not be declared on certain types of valuable articles. Carriers
assume no liability for fragile or perishable articles, further information
may be obtained from the carrier. [Italics supplied.].
On the basis of the foregoing stipulations printed at the back of the
ticket, petitioner contends that its liability for the lost baggage of
private respondent Pangan is limited to $600.00 ($20.00 x 30 kilos) as
the latter did not declare a higher value for his baggage and pay the
corresponding additional charges.
To support this contention, petitioner cites the case of Ong Yiu v. Court
of Appeals [G.R. No. L-40597, June 29, 1979, 91 SCRA 223), where
the Court sustained the validity of a printed stipulation at the back of
an airline ticket limiting the liability of the carrier for lost baggage to a
specified amount and ruled that the carriers liability was limited to
said amount since the passenger did not declare a higher value, much
less pay additional charges.
We find the ruling in Ong Yiu squarely applicable to the instant case.
In said case, the Court, through Justice Melencio-Herrera, stated:
Petitioner further contends that respondent Court committed grave
error when it limited PALs carriage liability to the amount of P100.00
as stipulated at the back of the ticket. . . .
We agree with the foregoing finding. The pertinent Condition of
Carriage printed at the back of the plane ticket reads:
8. BAGGAGE LIABILITY . . . The total liability of the Carrier for lost or
damage baggage of the passenger is LIMITED TO P100.00 for each
ticket unless a passenger declares a higher valuation in excess of
P100.00, but not in excess, however, of a total valuation of P1,000.00
and additional charges are paid pursuant to Carriers tariffs.
223
There is no dispute that petitioner did not declare any higher value for
his luggage, much less did he pay any additional transportation
charge.
But petitioner argues that there is nothing in the evidence to show
that he had actually entered into a contract with PAL limiting the
latters liability for loss or delay of the baggage of its passengers, and
that Article 1750** of the Civil Code has not been complied with.
While it may be true that petitioner had not signed the plane ticket
(Exh. 12), he is nevertheless bound by the provisions thereof. Such
provisions have been held to be a part of the contract of carriage, and
valid and binding upon the passenger regardless of the latters lack of
knowledge or assent to the regulation. [Tannebaum v. National
Airline, Inc., 13 Misc. 2d 450, 176 N.Y.S. 2d 400; Lichten v. Eastern
Airlines, 87 Fed. Supp. 691; Migoski v. Eastern Air Lines, Inc., Fla., 63
So. 2d 634.] It is what is known as a contract of adhesion, in regards
which it has been said that contracts of adhesion wherein one party
imposes a ready made form of contract on the other, as the plane
ticket in the case at bar, are contracts not entirely prohibited. The one
who adheres to the contract is in reality free to reject it entirely; if he
adheres, he gives his consent [Tolentino, Civil Code, Vol. IV, 1962 ed.,
p. 462, citing Mr. Justice J.B.L. Reyes, Lawyers Journal, Jan. 31, 1951,
p. 49]. And as held in Randolph v. American Airlines, 103 Ohio App.
172, 144 N.E. 2d 878; Rosenchein v. Trans World Airlines, Inc., 349
S.W. 2d 483, a contract limiting liability upon an agreed valuation
does not offend against the policy of the law forbidding one from
contracting against his own negligence.
Considering, therefore, that petitioner had failed to declare a higher
value for his baggage, he cannot be permitted a recovery in excess of
P100.00. . . .
On the other hand, the ruling in Shewaram v. Philippine Air Lines, Inc.
[G.R. No. L-20099, July 2, 1966, 17 SCRA 606], where the Court held
that the stipulation limiting the carriers liability to a specified amount
was invalid, finds no application in the instant case, as the ruling in
said case was premised on the finding that the conditions printed at
the back of the ticket were so small and hard to read that they would
not warrant the presumption that the passenger was aware of the
conditions and that he had freely and fairly agreed thereto. In the
instant case, similar facts that would make the case fall under the
exception have not been alleged, much less shown to exist.
In view thereof petitioners liability for the lost baggage is limited to
$20.00 per kilo or $600.00, as stipulated at the back of the ticket.
At this juncture, in order to rectify certain misconceptions the Court
finds it necessary to state that the Court of Appeals reliance on a
quotation from Northwest Airlines, Inc. v. Cuenca [G.R. No. L-22425,
August 31, 1965, 14 SCRA 1063] to sustain the view that to apply the
Warsaw Convention which limits a carriers liability to US$9.07 per
pound or US$20.00 per kilo in cases of contractual breach of
carriage*** is against public policy is utterly misplaced, to say the
least. In said case, while the Court, as quoted in the Intermediate
Appellate Courts decision, said:
Petitioner argues that pursuant to those provisions, an air carrier is
liable only in the event of death of a passenger or injury suffered by
him, or of destruction or loss of, or damages to any checked baggage
or any goods, or of delay in the transportation by air of passengers,
baggage or goods. This pretense is not borne out by the language of
said Articles. The same merely declare the carrier liable for damages
in enumerated cases, if the conditions therein specified are present.
Neither said provisions nor others in the aforementioned Convention
regulate or exclude liability for other breaches of contract by the
carrier. Under petitioners theory, an air carrier would be exempt from
any liability for damages in the event of its absolute refusal, in bad
faith, to comply with a contract of carriage, which is absurd.
it prefaced this statement by explaining that:
. . . The case is now before us on petition for review by certiorari,
upon the ground that the lower court has erred: (1) in holding that
the Warsaw Convention of October 12, 1929, relative to transportation
by air is not in force in the Philippines: (2) in not holding that
224
respondent has no cause of action; and (3) in awarding P20,000 as
nominal damages.
We deem it unnecessary to pass upon the first assignment of error
because the same is the basis of the second assignment of error, and
the latter is devoid of merit, even if we assumed the former to be well-
taken. (Italics supplied.)
Thus, it is quite clear that the Court never intended to, and in fact
never did, rule against the validity of provisions of the Warsaw
Convention. Consequently, by no stretch of the imagination may said
quotation from Northwest be considered as supportive of the appellate
courts statement that the provisions of the Warsaw Convention
limited a carriers liability are against public policy.
2. The Court finds itself unable to agree with the decision of the trial
court, and affirmed by the Court of Appeals, awarding private
respondents damages as and for lost profits when their contracts to
show the films in Guam and San Francisco, California were cancelled.
The rule laid down in Mendoza v. Philippine Air Lines, Inc. [90 Phil.
836 (1952)] cannot be any clearer:
. . . Under Art. 1107 of the Civil Code, a debtor in good faith like the
defendant herein, may be held liable only for damages that were
foreseen or might have been foreseen at the time the contract of
transportation was entered into. The trial court correctly found that
the defendant company could not have foreseen the damages that
would be suffered by Mendoza upon failure to deliver the can of film
on the 17th of September, 1948 for the reason that the plans of
Mendoza to exhibit that film during the town fiesta and his
preparations, specially the announcement of said exhibition by posters
and advertisement in the newspaper, were not called to the
defendants attention.
In our research for authorities we have found a case very similar to
the one under consideration. In the case of Chapman vs. Fargo, L.R.A.
(1918 F) p. 1049, the plaintiff in Troy, New York, delivered motion
picture films to the defendant Fargo, an express company, consigned
and to be delivered to him in Utica. At the time of shipment the
attention of the express company was called to the fact that the
shipment involved motion picture films to be exhibited in Utica, and
that they should be sent to their destination, rush. There was delay in
their delivery and it was found that the plaintiff because of his failure
to exhibit the film in Utica due to the delay suffered damages or loss
of profits. But the highest court in the State of New York refused to
award him special damages. Said appellate court observed:
But before defendant could be held to special damages, such as the
present alleged loss of profits on account of delay or failure of delivery,
it must have appeared that he had notice at the time of delivery to
him of the particular circumstances attending the shipment, and which
probably would lead to such special loss if he defaulted. Or, as the
rule has been stated in another form, in order to impose on the
defaulting party further liability than for damages naturally and
directly, i.e., in the ordinary course of things, arising from a breach of
contract, such unusual or extraordinary damages must have been
brought within the contemplation of the parties as the probable result
of breach at the time of or prior to contacting. Generally, notice then
of any special circumstances which will show that the damages to be
anticipated from a breach would be enhanced has been held sufficient
for this effect.
As may be seen, that New York case is a stronger one than the present
case for the reason that the attention of the common carrier in said
case was called to the nature of the articles shipped, the purpose of
shipment, and the desire to rush the shipment, circumstances and
facts absent in the present case. [Italics supplied.]
Thus, applying the foregoing ruling to the facts of the instant case, in
the absence of a showing that petitioners attention was called to the
special circumstances requiring prompt delivery of private respondent
Pangans luggages, petitioner cannot be held liable for the cancellation
of private respondents contracts as it could not have foreseen such
an eventuality when it accepted the luggages for transit.
225
The Court is unable to uphold the Intermediate Appellate Courts value, is valid and binding. (St. Paul Fire and Marine Insurance Co. vs.
disregard of the rule laid down in Mendoza and affirmance of the trial Macondray and Co., 70 SCRA 122.)
courts conclusion that petitioner is liable for damages based on the
finding that [t]he undisputed fact is that the contracts of the plaintiffs Limitations of carriers liability for lose or damage to goods is valid.
for the exhibition of the films in Guam and California were cancelled (Servando vs. Philippine Steam Navigation Co., 117 SCRA 832.)
because of the loss of the two luggages in question. [Rollo, p. 36]
The evidence reveals that the proximate cause of the cancellation of o0o
the contracts was private respondent Pangans failure to deliver the
promotional and advertising materials on the dates agreed upon. For
this petitioner cannot be held liable. Private respondent Pangan had
not declared the value of the two luggages he had checked in and
paid additional charges. Neither was petitioner privy to respondents
contracts nor was its attention called to the condition therein requiring
delivery of the promotional and advertising materials on or before a
certain date.

3. With the Courts holding that petitioners liability is limited to the

amount stated in the ticket, the award of attorneys fees, which is
grounded on the alleged unjustified refusal of petitioner to satisfy
private respondents just and valid claim, loses support and must be
set aside.
WHEREFORE, the Petition is hereby GRANTED and the Decision of the
Intermediate Appellate Court is SET ASIDE and a new judgment is
rendered ordering petitioner to pay private respondents damages in
the amount of US$600.00 or its equivalent in Philippine currency at
the time of actual payment.

SO ORDERED.

Fernan, (C.J.), Feliciano and Bidin, JJ., concur.

Gutierrez, Jr., J., no part as I was on leave during the deliberation.

Petition granted. Decision set aside.

Notes.Stipulation in the bill of lading limiting carriers liability to the

value of goods appearing therein, unless shipper declares a quarter

226
 DANGWA TRANSPORTATION CO., INC. and THEODORE
LARDIZABAL y MALECDAN, petitioners, vs. COURT OF
APPEALS, INOCENCIA CUDIAMAT, EMILIA CUDIAMAT
BANDOY, FERNANDO CUDIAMAT, MARRIETA CUDIAMAT
NORMA CUDIAMAT, DANTE CUDIAMAT, SAMUEL CUDIAMAT
and LIGAYA CUDIAMAT, all Heirs of the late Pedrito
Cudiamat represented by Inocencia Cudiamat, respondents
G.R. No. 95582. October 7, 1991
Civil Law; Contract of carriage; Case at bar; The victim in the case at
bar, by stepping and standing on the platform of the bus, is already
considered a passenger and is entitled to all the rights and protection
pertaining to such a contractual relation.The victim herein, by
stepping and standing on the platform of the bus, is already
considered a passenger and is entitled to all the rights and protection
pertaining to such a contractual relation. Hence, it has been held that
the duty which the carrier of passengers owes to its patrons extends
to persons boarding the cars as well as to those alighting therefrom.
Common carriers, from the nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence for the
safety of the passengers transported by them, according to all the
circumstances of each case. A common carrier is bound to carry the
passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with a due regard
for all the circumstances.
Same; Same; Extraordinary diligence; By the contract of carriage, the
carrier assumes that express obligation to transport the passenger to
his destination safely and to observe extraordinary diligence with a
due regard for all the circumstances, and any injury that might be
suffered by the passenger is right away attributable to the fault or
negligence of the carrier.It has also been repeatedly held that in an
action based on a contract of carriage, the court need not make an
express finding of fault or negligence on the part of the carrier in order
to hold it responsible to pay the damages sought by the passenger,
By the contract of carriage, the carrier assumes the express obligation
to transport the passenger to his destination safely and to observe
extraordinary diligence with a due regard for all the circumstances,
and any injury that might be suffered by the passenger is right away
attributable to the fault or negligence of the carrier. This is an
exception to the general rule that negligence must be proved, and it
is therefore incumbent upon the carrier to prove that it has exercised
extraordinary diligence as prescribed in Articles 1733 and 1755 of the
Civil Code.
Same; Same; Same; Negligence; The failure of the driver and the
conductor to immediately bring the gravely injured victim to the
hospital for medical treatment is a patent and incontrovertible proof
of their negligence.Moreover, the circumstances under which the
driver and the conductor failed to bring the gravely injured victim
immediately to the hospital for medical treatment is a patent and
incontrovertible proof of their negligence. It defies understanding and
can even be stigmatized as callous indifference. The evidence shows
that after the accident the bus could have forthwith turned at Bunk 56
and thence to the hospital, but its driver instead opted to first proceed
to Bunk 70 to allow a passenger to alight and to deliver a refrigerator,
despite the serious condition of the victim. The vacuous reason given
by petitioners that it was the wife of the deceased who caused the
delay was tersely and correctly confuted by respondent court: "x x x
The pretension of the appellees that the delay was due to the fact that
they had to wait for about twenty minutes for Inocencia Cudiamat to
get dressed deserves scant consideration. It is rather scandalous and
deplorable for a wife whose husband is at the verge of dying to have
the luxury of dressing herself up for about twenty minutes before
attending to help her distressed and helpless husband."
Same; Same; Damages; The amount recoverable by the heirs of a
victim of a tort is not the loss of the entire earnings, but the loss of
that portion of the earnings which the beneficiary would have
received.With respect to the award of damages, an oversight was,
however, committed by respondent Court of Appeals in computing the
actual damages based on the gross income of the victim. The rule is
that the amount recoverable by the heirs of a victim of a tort is not
the loss of the entire earnings, but rather the loss of that portion of
the earnings which the beneficiary would have received. In other
227
words, only net earnings, not gross earnings, are to be considered,
that is, the total of the earnings less expenses necessary in the
creation of such earnings or income and minus living and other
incidental expenses.
PETITION to review the judgment and resolution of the Court of
Appeals.
The facts are stated in the opinion of the Court.
Francisco S. Reyes Law Office for petitioners.
Antonio C. de Guzman for private respondents.
REGALADO, J.:
On May 13, 1985, private respondents filed a complaint for damages
against petitioners for the death of Pedrito Cudiamat as a result of a
vehicular accident which occurred on March 25, 1985 at Marivic, Sapid,
Mankayan, Benguet. Among others, it was alleged that on said date,
while petitioner Theodore M. Lardizabal was driving a passenger bus
belonging to petitioner corporation in a reckless and imprudent
manner and without due regard to traffic rules and regulations and
safety to persons and property, it ran over its passenger, Pedrito
Cudiamat. However, instead of bringing Pedrito immediately to the
nearest hospital, the said driver, in utter bad faith and without regard
to the welfare of the victim, first brought his other passengers and
cargo to their respective destinations before bringing said victim to
the Lepanto Hospital where he expired.
On the other hand, petitioners alleged that they had observed and
continued to observe the extraordinary diligence required in the
operation of the transportation company and the supervision of the
employees, even as they add that they are not absolute insurers of
the safety of the public at large. Further, it was alleged that it was the
victim's own carelessness and negligence which gave rise to the
subject incident, hence they prayed for the dismissal of the complaint
plus an award of damages in their favor by way of a counterclaim.
On July 29, 1988, the trial court rendered a decision, effectively in
favor of petitioners, with this decretal portion:
"IN VIEW OF ALL THE FOREGOING, judgment is hereby pronounced
that Pedrito Cudiamat was negligent, which negligence was the
proximate cause of his death. Nonetheless, defendants in equity, are
hereby ordered to pay the heirs of Pedrito Cudiamat the sum of
P10,000.00 which approximates the amount defendants initially
offered said heirs for the amicable settlement of the case. No costs.
"SO ORDERED."
Not satisfied therewith, private respondents appealed to the Court of
Appeals which, in a decision in CA-G.R. CV No. 19504 promulgated on
August 14,1990, set aside the decision of the lower court, and ordered
petitioners to pay private respondents:
"1. The sum of Thirty Thousand (P30,000.00) Pesos by way of
indemnity for death of the victim Pedrito Cudiamat;
2. The sum of Twenty Thousand (P20,000.00) by way of moral
damages;
3. The sum of Two Hundred Eighty Eight Thousand (P288,000.00)
Pesos as actual and compensatory damages;
4. The costs of this suit."
Petitioners' motion for reconsideration was denied by the Court of
Appeals in its resolution dated October 4, 1990, hence this petition
with the central issue herein being whether respondent court erred in
reversing the decision of the trial court and in finding petitioners
negligent and liable for the damages claimed.
It is an established principle that the factual findings of the Court of
Appeals as a rule are final and may not be reviewed by this Court on
appeal. However, this is subject to settled exceptions, one of which is
when the findings of the appellate court are contrary to those of the
228
trial court, in which case a re-examination of the facts and evidence
may be undertaken.
In the case at bar, the trial court and the Court of Appeals have
discordant positions as to who between the petitioners and the victim
is guilty of negligence. Perforce, we have had to conduct an evaluation
of the evidence in this case for the proper calibration of their
conflicting factual findings and legal conclusions.
The lower court in declaring that the victim was negligent, made the
following findings:
"This Court is satisfied that Pedrito Cudiamat was negligent in trying
to board a moving vehicle, especially with one of his hands holding an
umbrella. And, without having given the driver or the conductor any
indication that he wishes to board the bus. But defendants can also
be found wanting of the necessary diligence. In this connection, it is
safe to assume that when the deceased Cudiamat attempted to board
defendants' bus, the vehicle's door was open instead of being closed.
This should be so, for it is hard to believe that one would even attempt
to board a vehicle (i)n motion if the door of said vehicle is closed. Here
lies the defendant's lack of diligence. Under such circumstances,
equity demands that there must be something given to the heirs of
the victim to assuage their feelings. This, also considering that initially,
defendant common carrier had made overtures to amicably settle the
case. It did offer a certain monetary consideration to the victim's
heirs."
However, respondent court, in arriving at a different opinion, declares
that:
"From the testimony of appellees' own witness in the person of
Vitaliano Safarita, it is evident that the subject bus was at full stop
when the victim Pedrito Cudiamat boarded the same as it was
precisely on this instance where a certain Miss Abenoja alighted from
the bus. Moreover, contrary to the assertion of the appellees, the
victim did indicate his intention to board the bus as can be seen from
the testimony of the said witness when he declared that Pedrito
Cudiamat was no longer walking and made a sign to board the bus
when the latter was still at a distance from him. It was at the instance
when Pedrito Cudiamat was closing his umbrella at the platform of the
bus when the latter made a sudden jerk movement (as) the driver
commenced to accelerate the bus.
"Evidently, the incident took place due to the gross negligence of the
appellee-driver in prematurely stepping on the accelerator and in not
waiting for the passenger to first secure his seat especially so when
we take into account that the platform of the bus was at the time
slippery and wet because of a drizzle. The defendants-appellees
utterly failed to observe their duty and obligation as common carrier
to the end that they should observe extra-ordinary diligence in the
vigilance over the goods and for the safety of the passengers
transported by them according to the circumstances of each case
(Article 1733, New Civil Code)."
After a careful review of the evidence on record, we find no reason to
disturb the above holding of the Court of Appeals. Its aforesaid
findings are supported by the testimony of petitioners' own witnesses.
One of them, Virginia Abalos, testified on cross-examination as
follows:
"Q: It is not a fact Madam witness, that at bunkhouse 54, that is before
the place of the incident, there is a crossing?
A: The way going to the mines but it is not being pass(ed) by the bus.
Q: And the incident happened before bunkhouse 56, is that not
correct?
A: It happened between 54 and 53 bunkhouses. "
The bus conductor, Martin Anglog, also declared:
"Q: When you arrived at Lepanto on March 25, 1985, will you please
inform this Honorable Court if there was any unusual incident that
occurred?
229

A: When we delivered a baggage at Marivic because a person alighted
there between Bunkhouse 53 and 54.
Q: What happened when you delivered this passenger at this
particular place in Lepanto?
A: When we reached the place, a passenger alighted and I signalled
my driver. When we stopped we went out because I saw an umbrella
about a split second and I signalled again the driver, so the driver
stopped and we went down and we saw Pedrito Cudiamat asking for
help because he was lying down.
Q: How far away was this certain person, Pedrito Cudiamat, when you
saw him lying downfrom the bus how far was he?
A: It is about two to three meters.
Q: On what direction of the bus was he found about three meters from
the bus, was it at the front or at the back?
A: At the back, sir." (Emphasis supplied.)
The foregoing testimonies show that the place of the accident and the
place where one of the passengers alighted were both between
Bunkhouses 53 and 54, hence the finding of the Court of Appeals that
the bus was at full stop when the victim boarded the same is correct.
They further confirm the conclusion that the victim fell from the
platform of the bus when it suddenly accelerated forward and was run
over by the rear right tires of the vehicle, as shown by the physical
evidence on where he was thereafter found in relation to the bus when
it stopped. Under such circumstances, it cannot be said that the
deceased was guilty of negligence.
The contention of petitioners that the driver and the conductor had no
knowledge that the victim would ride on the bus, since the latter had
supposedly not manifested his intention to board the same, does not
merit consideration. When the bus is not in motion there is no
necessity for a person who wants to ride the same to signal his
intention to board. A public utility bus, once it stops, is in effect making
a continuous offer to bus riders. Hence, it becomes the duty of the
driver and the conductor, every time the bus stops, to do no act that
would have the effect of increasing the peril to a passenger while he
was attempting to board the same. The premature acceleration of the
bus in this case was a breach of such duty.
It is the duty of common carriers of passengers, including common
carriers by railroad train, streetcar, or motorbus, to stop their
conveyances a reasonable length of time in order to afford passengers
an opportunity to board and enter, and they are liable for injuries
suffered by boarding passengers resulting from the sudden starting
up or jerking of their conveyances while they are doing so.
Further, even assuming that the bus was moving, the act of the victim
in boarding the same cannot be considered negligent under the
circumstances. As clearly explained in the testimony of the aforestated
witness for petitioners, Virginia Abalos, the bus had "just started" and
"was still in slow motion" at the point where the victim had boarded
and was on its platform.
It is not negligence per se, or as a matter of law, for one to attempt
to board a train or streetcar which is moving slowly. An ordinarily
prudent person would have made the attempt to board the moving
conveyance under the same or similar circumstances, The fact that
passengers board and alight from a slowly moving vehicle is a matter
of common experience and both the driver and conductor in this case
could not have been unaware of such an ordinary practice.
The victim herein, by stepping and standing on the platform of the
bus, is already considered a passenger and is entitled to all the rights
and protection pertaining to such a contractual relation. Hence, it has
been held that the duty which the carrier of passengers owes to its
patrons extends to persons boarding the cars as well as to those
alighting therefrom.
230
Common carriers, from the nature of their business and for reasons of
public policy, are bound to observe extraordinary diligence for the
safety of the passengers transported by them, according to all the
circumstances of each case. A common carrier is bound to carry the
passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with a due regard
for all the circumstances.
It has also been repeatedly held that in an action based on a contract
of carriage, the court need not make an express finding of fault or
negligence on the part of the carrier in order to hold it responsible to
pay the damages sought by the passenger. By the contract of carriage,
the carrier assumes the express obligation to transport the passenger
to his destination safely and to observe extraordinary diligence with a
due regard for all the circumstances, and any injury that might be
suffered by the passenger is right away attributable to the fault or
negligence of the carrier. This is an exception to the general rule that
negligence must be proved, and it is therefore incumbent upon the
carrier to prove that it has exercised extraordinary diligence as
prescribed in Articles 1733 and 1755 of the Civil Code.
Moreover, the circumstances under which the driver and the
conductor failed to bring the gravely injured victim immediately to the
hospital for medical treatment is a patent and incontrovertible proof
of their negligence. It defies understanding and can even be
stigmatized as callous indifference. The evidence shows that after the
accident the bus could have forthwith turned at Bunk 56 and thence
to the hospital, but its driver instead opted to first proceed to Bunk 70
to allow a passenger to alight and to deliver a refrigerator, despite the
serious condition of the victim. The vacuous reason given by
petitioners that it was the wife of the deceased who caused the delay
was tersely and correctly confuted by respondent court:
"x x x The pretension of the appellees that the delay was due to the
fact that they had to wait for about twenty minutes for Inocencia
Cudiamat to get dressed deserves scant consideration. It is rather
scandalous and deplorable for a wife whose husband is at the verge
of dying to have the luxury of dressing herself up for about twenty
minutes before attending to help her distressed and helpless
husband."
Further, it cannot be said that the main intention of petitioner
Lardizabal in going to Bunk 70 was to inform the victim's family of the
mishap, since it was not said bus driver nor the conductor but the
companion of the victim who informed his family thereof. In fact, it
was only after the refrigerator was unloaded that one of the
passengers thought of sending somebody to the house of the victim,
as shown by the testimony of
Virginia Abalos again, to wit:
"Q: Why, what happened to your refrigerator at that particular time?
A: I asked them to bring it down because that is the nearest place to
our house and when I went down and asked somebody to bring down
the refrigerator, I also asked somebody to call the family of Mr.
Cudiamat.
COURT:
Q: Why did you ask somebody to call the family of Mr. Cudiamat?
A: Because Mr. Cudiamat met an accident, so I ask somebody to call
for the family of Mr. Cudiamat.
Q: But nobody ask(ed) you to call for the family of Mr. Cudiamat?
A: No sir."
With respect to the award of damages, an oversight was, however,
committed by respondent Court of Appeals in computing the actual
damages based on the gross income of the victim. The rule is that the
amount recoverable by the heirs of a victim of a tort is not the loss of
the entire earnings, but rather the loss of that portion of the earnings
which the beneficiary would have received. In other words, only net
earnings, not gross earnings, are to be considered, that is, the total
231
of the earnings less expenses necessary in the creation of such
earnings or income and minus living and other incidental expenses.

We are of the opinion that the deductible living and other expense of
the deceased may fairly and reasonably be fixed at P500.00 a month
or P6,000.00 a year. In adjudicating the actual or compensatory
damages, respondent court found that the deceased was 48 years old,
in good health with a remaining productive life expectancy of 12 years,
and then earning P24,000.00 a year. Using the gross annual income
as the basis, and multiplying the same by 12 years, it accordingly
awarded P288,000. Applying the aforestated rule on computation
based on the net earnings, said award must be, as it hereby is,
rectified and reduced to P216,000.00. However, in accordance with
prevailing jurisprudence, the death indemnity is hereby increased to
P50,000.00.

WHEREFORE, subject to the above modifications, the challenged

judgment and resolution of respondent Court of Appeals are hereby
AFFIRMED in all other respects.

SO ORDERED.

Melencio-Herrera (Chairman), Paras, Padilla and Sarmiento, JJ.,

concur.

Judgment and resolution affirmed with modifications.

Note.A common carrier is required to exercise the highest degree of

care in the discharge of its business of carriage and transportation.
(Philippine Airlines, Inc. vs. Court of Appeals, 106 SCRA 391.)

o0o

232
 SWEET LINES, INC., petitioner vs. HON. BERNARDO TEVES,
Presiding Judge, CFI of Misamis Oriental, Branch VII,
LEOVIGILDO TANDOG, JR., and ROGELIO TIRO, respondents
No. L-37750. May 19, 1978
Civil Law; Common carriers; Contracts of adhesion, concept of.It
should be borne in mind, however, that with respect to the fourteen
(14) conditionsone of which is Condition No. 14 which is in issue
in this caseprinted at the back of the passage tickets, there are
commonly known as contracts of adhesion, the validity and/or
enforceability of which will have to be determined by the peculiar
circumstances obtaining in each case and the nature of the conditions
or terms sought to be enforced. For (W)hile generally, stipulations in
a contract come about after deliberate drafting by the parties thereto,
. . . there are certain contracts almost all the provisions of which have
been drafted only by one party, usually a corporation. Such contracts
are called contracts of adhesion, because the only participation of the
other party is the signing of his signature or his adhesion thereto.
Insurance contracts, bills of lading, contracts of sale of lots on the
installment plan fall into this category. By the peculiar circumstances
under which contracts of adhesion are entered intonamely, that it is
drafted only by one party, usually the corporation, and is sought to be
accepted or adhered to by the other party, in this instance the
passengers, private respondents, who cannot change the same and
who are thus made to adhere hereto on the take it or leave it basis
certain guidelines in the determination of their validity and/or
enforceability have been formulated in order to insure that justice and
fair play characterize the relationship of the contracting parties.
Same; Same; Acute shortage of interisland vessels taken judicial
notice of by courts; Passengers of interisland vessels not expected to
examine their ticket for printed conditions therein; Reason.It is a
matter of public knowledge, of which we can take judicial notice, that
there is a dearth of and acute shortage in inter-island vessels plying
between the countrys several islands, and the facilities they offer
leave much to be desired. Thus, even under ordinary circumstances,
the piers are congested with passengers and their cargo waiting to be
transported. The conditions are even worse at peak and/or the rainy
seasons, when passengers literally scramble to secure whatever
accommodations may be availed of, even through circuitous routes,
and/or at the risk of their safetytheir immediate concern, for the
moment, being to be able to board vessels with the hope of reaching
their destinations. The schedules areas often as not if not more so
delayed or altered. This was precisely the experience of private
respondents when they were relocated to M/S Sweet Town from M/S
Sweet Hope and then allegedly exposed to the scorching heat of
the sun and the dust coming from the ships cargo of corn grits,
because even the latter vessel was filled to capacity. Under these
circumstances, it is hardly just and proper to expect the passengers
to examine their tickets received from crowded/congested counters,
more often than not during rush hours, for conditions that may be
printed thereon, much less charge them with having consented to the
conditions, so printed, especially if there are a number of such
conditions in fine print, as in this case.
Same; Same; Condition 14 of shipping ticket which provides that all
actions arising out of conditions and provisions of the ticket
irrespective of where issued shall be filed in the City of Cebu is void
as it was prepared solely at petitioners instance without participation
of respondents; Courts take judicial notice of fact that passengers
availing of shipping facilities come from low income and less literate
groups.Again, it should be noted that Condition No. 14 was prepared
solely at the instance of the petitioner; respondents had no say in its
preparation. Neither did the latter have the opportunity to take the
same into account prior to the purchase of their tickets. For, unlike
the small print provisions of insurance contractsthe common
example of contracts of adherencewhich are entered into by the
insured in full awareness of said conditions, since the insured is
afforded the opportunity to examine and consider the same,
passengers of inter-island vessels do not have the same chance, since
their alleged adhesion is presumed only from the fact that they
purchased the passage tickets. It should also be stressed that shipping
companies are franchise holders of certificates of public convenience
and, therefore, possess a virtual monopoly over the business of
transporting passengers between the ports covered by their franchise.
233
This being so, shipping companies, like petitioner, engaged in inter-
island shipping, have a virtual monopoly of the business of
transporting passengers and may thus dictate their terms of passage,
leaving passengers with no choice but to buy their tickets and avail of
their vessels and facilities. Finally, judicial notice may be taken of the
fact that the bulk of those who board these inter-island vessels come
from the low-income groups and are less literate, and who have little
or no choice but to avail of petitioners vessels.
Same; Same; Condition 14 subversive of public policy on transfers of
venue of actions; Philosophy behind transfers of venue of actions;
Public policy, concept of.Condition No. 14 is subversive of public
policy on transfers of venue of actions. For, although venue may be
changed or transferred from one province to another by agreement of
the parties in writing pursuant to Rule 4, Section 3, of the Rules of
Court, such an agreement will not be held valid where it practically
negates the action of the claimants, such as the private respondents
herein. The philosophy underlying the provisions on transfer of venue
of actions is the convenience of the plaintiffs as well as his witnesses
and to promote the ends of justice. Considering the expense and
trouble a passenger residing outside of Cebu City would incur to
prosecute a claim in the City of Cebu, he would most probably decide
not to file the action at all. The condition will thus defeat, instead of
enhance, the ends of justice. Upon the other hand, petitioner had
branches or offices in the respective ports of call of its vessels and can
afford to litigate in any of these places. Hence, the filing of the suit in
the CFI of Misamis Oriental, as was done in the instant case, will not
cause inconvenience to, much less prejudice, petitioner. Public policy
is . . . that principle of the law which holds that no subject or citizen
can lawfully do that which has a tendency to be injurious to the public
or against the public good. . .. Under this principle . . . freedom of
contract or private dealing is restricted by law for the good of the
public. Clearly, Condition No. 14, if enforced, will be subversive of the
public good or interest, since it will frustrate in meritorious cases,
actions of passenger claimants outside of Cebu City, thus placing
petitioner company at a decided advantage over said persons, who
may have perfectly legitimate claims against it. The said condition
should, therefore, be declared void and unenforceable, as contrary to
public policyto make the courts accessible to all who may have need
of their services.
Barredo, J., Concurring
Remedial Law; Venue; Civil Law; Common Carriers; Tickets issued by
interisland vessel show that actually no written agreement as to venue
between the parties as contemplated by Sec. 3, Rule 4 of Rules of
Court; Where case already in respondent court and no showing that
petitioner with its resources would not suffer inconvenience, trial court
can continue proceedings started in said court.In Hoechst
Philippines, Inc. vs. Francisco Torres, et al., G. R. No. L-44351,
promulgated May 18, 1978, We made it clear that although generally,
agreements regarding change of venue are enforceable, there may be
instances where for equitable considerations and in the better interest
of justice, a court may justify the laying of the venue in the place fixed
by the rules instead of following the written stipulation of the parties.
In the particular case at bar, there is actually no written agreement as
to venue between the parties in the sense contemplated in Section 3
of Rule 4, which governs the matter. I take it that the importance that
a stipulation regarding change of the venue fixed by law entails is such
that nothing less than mutually conscious agreement as to it must be
what the rule means. In the instant case, as well pointed out in the
main opinion, the ticket issued to private respondents by petitioner
constitutes at best a contract of adhesion. x x x It is common
knowledge that individuals who avail of common carriers hardly read
the fine prints on such tickets to note anything more than the price
thereof and the destination designated therein. Under these
circumstances, it would seem that, since this case is already in
respondent court and there is no showing that, with its more or less
known resources as owner of several interisland vessels plying
between the different ports of the Philippines for sometime already,
petitioner would be greatly inconvenienced by submitting to the
jurisdiction of said respondent court, it is best to allow the proceedings
therein to continue.
ORIGINAL ACTION in the Supreme Court. Prohibition with preliminary
injunction.
234

The facts are stated in the opinion of the Court.
Filiberto Leonardo, Abelardo C. Almario & Samuel B. Abadiano for
petitioner.
Leovigildo Vallar for private respondents.
SANTOS, J.:
This is an original action for Prohibition with Preliminary Injunction
filed October 3, 1973 to restrain respondent Judge from proceeding
further with Civil Case No. 4091, entitled Leovigildo D. Tandog, Jr.
and Rogelio Tiro v. Sweet Lines, Inc. after he denied petitioners
Motion to Dismiss the complaint, and the Motion for Reconsideration
of said order.
Briefly, the facts of record follow. Private respondents Atty. Leovigildo
Tandog and Rogelio Tiro, a contractor by professions, bought tickets
Nos. 0011736 and 011737 for Voyage 90 on December 31, 1971 at
the branch office of petitioner, a shipping company transporting inter-
island passengers and cargoes, at Cagayan de Oro City. Respondents
were to board petitioners vessel, M/S Sweet Hope bound for
Tagbilaran City via the port of Cebu. Upon learning that the vessel was
not proceeding to Bohol, since many passengers were bound for
Surigao, private respondents per advice, went to the branch office for
proper relocation to M/S Sweet Town. Because the said vessel was
already filled to capacity, they were forced to agree to hide at the
cargo section to avoid inspection of the officers of the Philippine
Coastguard. Private respondents alleged that they were, during the
trip, exposed to the scorching heat of the sun and the dust coming
from the ships cargo of corn grits, and that the tickets they bought
at Cagayan de Oro City for Tagbilaran were not honored and they
were constrained to pay for other tickets. In view thereof, private
respondents sued petitioner for damages and for breach of contract
of carriage in the alleged sum of P110,000.00 before respondents
Court of First Instance of Misamis Oriental.
Petitioner moved to dismiss the complaint on the ground of improper
venue. This motion was premised on the condition printed at the back
of the tickets, i.e., Condition No. 14, which reads:
14. It is hereby agreed and understood that any and all actions arising
out of the conditions and provisions of this ticket, irrespective of where
it is issued, shall be filed in the competent courts in the City of Cebu.
The motion was denied by the trial court. Petitioner moved to
reconsider the order of denial, but to no avail. Hence, this instant
petition for prohibition with preliminary injunction, alleging that the
respondent judge had departed from the accepted and usual course
of judicial proceeding and had acted without or in excess or in error
of his jurisdiction or in gross abuse of discretion.
In Our resolution of November 20, 1973, We restrained respondent
Judge from proceeding further with the case and required respondents
to comment. On January 18, 1974, We gave due course to the petition
and required respondents to answer. Therefter, the parties submitted
their respective memoranda in support of their respective contentions.
Presented thus for Our resolution is a question which, to all
appearances, is one of first impression, to witIs Condition No. 14
printed at the back of the petitioners passage tickets purchased by
private respondents, which limits the venue of actions arising from the
contract of carriage to the Court of First Instance of Cebu, valid and
enforceable? Otherwise stated, may a common carrier engaged in
inter-island shipping stipulate thru a condition printed at the back of
passage tickets to its vessels that any and all actions arising out of the
contract of carriage should be filed only in a particular province or city,
in this case the City of Cebu, to the exclusion of all others?
Petitioner contends that Condition No. 14 is valid and enforceable,
since private respondents acceded to it when they purchased passage
tickets at its Cagayan de Oro branch office and took its vessel M/S
Sweet Town for passage to Tagbilaran, Bohol; that the condition
fixing the venue of actions in the City of Cebu is proper since venue
may be validly waived, citing cases; that is an effective waiver of
235
venue, valid and binding as such, since it is printed in bold and capital
letters and not in fine print and merely assigns the place where the
action arising from the contract is instituted, likewise citing cases; and
that condition No. 14 is unequivocal and mandatory, the words and
phrases any and all, irrespective of where it is issued, and shall object, which is the transportation of the passenger from the place of
leave no doubt that the intention of Condition No. 14 is to fix the venue
in the City of Cebu, to the exclusion of all other places; that the orders
of the respondent Judge are an unwarranted departure from
established jurisprudence governing the case; and that he acted
without or in excess of his jurisdiction in issuing the orders complained
of.
On the other hand, private respondents claim that Condition No. 14 is
not valid; that the same is not an essential element of the contract of
carriage, being in itself a different agreement which requires the
mutual consent of the parties to it; that they had no say in its
preparation, the existence of which they could not refuse, hence, they
had no choice but to pay for the tickets and to avail of petitioners
shipping facilities out of necessity; that the carrier has been exacting
too much from the public by inserting impositions in the passage
tickets too burdensome to bear; that the condition which was printed
in fine letters is an imposition on the riding public and does not bind
respondents, citing cases; that while venue of actions may be
transferred from one province to another, such arrangement requires
the written agreement of the parties, not to be imposed unilaterally;
and that assuming that the condition is valid, it is not exclusive and
does not, therefore, exclude the filing of the action in Misamis Oriental.
There is no question that there was a valid contract of carriage entered
into by petitioner and private respondents and that the passage
tickets, upon which the latter based their complaint, are the best
evidence thereof. All the essential elements of a valid contract, i.e.,
consent, cause or consideration and object, are present. As held in
Peralta de Guerrero, et al. v. Madrigal Shipping Co., Inc.,
It is a matter of common knowledge that whenever a passenger
boards a ship for transportation from one place to another he is issued
a ticket by the shipper which has all the elements of a written contract,
Namely: (1) the consent of the contracting parties manifested by the
fact that the passenger boards the ship and the shipper consents or
accepts him in the ship for transportation; (2) cause or consideration
which is the fare paid by the passenger as stated in the ticket; (3)
departure to the place of destination which are stated in the ticket.
It should be borne in mind, however, that with respect to the fourteen
(14) conditionsone of which is Condition No. 14 which is in issue
in this caseprinted at the back of the passage tickets, these are
commonly known as contracts of adhesion, the validity and/or
enforceability of which will have to be determined by the peculiar
circumstances obtaining in each case and the nature of the conditions
or terms sought to be enforced. For, (W)hile generally, stipulations
in a contract come about after deliberate drafting by the parties
thereto, . . . there are certain contracts almost all the provisions of
which have been drafted only by one party, usually a corporation.
Such contracts are called contracts of adhesion, because the only
participation of the party is the signing of his signature or his
adhesion thereto. Insurance contracts, bills of lading, contracts of
sale of lots on the installment plan fall into this category.
By the peculiar circumstances under which contracts of adhesion are
entered intonamely, that it is drafted only by one party, usually the
corporation, and is sought to be accepted or adhered to by the other
party, in this instance the passengers, private respondents, who
cannot change the same and who are thus made to adhere thereto on
the take it or leave it basiscertain guidelines in the determination
of their validity and/or enforceability have been formulated in order to
insure that justice and fair play characterize the relationship of the
contracting parties. Thus, this Court speaking through Justice J.B.L.
Reyes in Qua Chee Gan v. Law Union and Rock Insurance Co., and
later through Justice Fernando in Fieldman Insurance v. Vargas,
held
The courts cannot ignore that nowadays, monopolies, cartels and
concentration of capital, endowed with overwhelming economic
power, manage to impose upon parties dealing with them cunningly
236
prepared agreements that the weaker party may not change one
whit, his participation in the agreement being reduced to the
alternative to take it or leave it, labelled since Raymond Saleilles
contracts by adherence (contracts d adhesion) in contrast to those secure whatever accommodations may be availed of, even through
entered into by parties bargaining on an equal footing. Such contracts
(of which policies of insurance and international bill of lading are prime
examples) obviously call for greater strictness and vigilance on the
part of the courts of justice with a view to protecting the weaker party
from abuses and imposition, and prevent their becoming traps for the
unwary.
To the same effect and import, and, in recognition of the peculiar
character of contracts of this kind, the protection of the disadvantaged
is expressly enjoined by the New Civil Code
In all contractual, property or other relations, when one of the parties
is at a disadvantage on account of his moral dependence, ignorance,
indigence, mental weakness, tender age and other handicap,
the courts must be vigilant for his protection.
Considered in the light of the foregoing norms and in the context of
circumstances prevailing in the inter-island shipping industry in the
country today, We find and hold that Condition No. 14 printed at the
back of the passage tickets should be held as void and unenforceable
for the following reasonsfirst, under circumstances obtaining in the
inter-island shipping industry, it is not just and fair to bind passengers
to the terms of the conditions printed at the back of the passage
tickets, on which Condition No. 14 is printed in fine letters, and
second, Condition No. 14 subverts the public policy on transfer of
venue of proceedings of this nature, since the same will prejudice
rights and interests of innumerable passengers in different parts of
the country who, under Condition No. 14, will have to file suits against
petitioner only in the City of Cebu.
1. It is a matter of public knowledge, of which We can take judicial
notice, that there is a dearth of and acute shortage in inter island
vessels plying between the countrys several islands, and the facilities
they offer leave much to be desired. Thus, even under ordinary
circumstances, the piers are congested with passengers and their
cargo waiting to be transported. The conditions are even worse at
peak and/or the rainy seasons, when passengers literally scramble to
circuitous routes, and/or at the risk of their safetytheir immediate
concern, for the moment, being to be able to board vessels with the
hope of reaching their destinations. The schedules areas often as
not if not more sodelayed or altered. This was precisely the
experience of private respondents when they were relocated to M/S
Sweet Town from M/S Sweet Hope and then allegedly exposed to
the scorching heat of the sun and the dust coming from the ships
cargo of corn grits, because even the latter vessel was filled to
capacity.
Under these circumstances, it is hardly just and proper to expect the
passengers to examine their tickets received from crowded/congested
counters, more often than not during rush hours, for conditions that
may be printed thereon, much less charge them with having
consented to the conditions, so printed, especially if there are a
number of such conditions in fine print, as in this case.
Again, it should be noted that Condition No. 14 was prepared solely
at the instance of the petitioner; respondents had no say in its
preparation. Neither did the latter have the opportunity to take the
same into account prior to the purchase of their tickets. For, unlike
the small print provisions of insurance contractsthe common
example of contracts of adherencewhich are entered into by the
insured in full awareness of said conditions, since the insured is
afforded the opportunity to examine and consider the same,
passengers of inter-island vessels do not have the same chance, since
their alleged adhesion is presumed only from the fact that they
purchased the passage tickets.
It should also be stressed that shipping companies are franchise
holders of certificates of public convenience and, therefore, possess a
virtual monopoly over the business of transporting passengers
between the ports covered by their franchise. This being so, shipping
companies, like petitioner, engaged in inter-island shipping, have a
237
virtual monopoly of the business of transporting passengers and may
thus dictate their terms of passage, leaving passengers with no choice
but to buy their tickets and avail of their vessels and facilities. Finally,
judicial notice may be taken of the fact that the bulk of those who
board these inter-island vessels come from the low-income groups and
are less literate, and who have little or no choice but to avail of
petitioners vessels.
2. Condition No. 14 is subversive of public policy on transfers of venue
of actions. For, although venue may be changed or transferred from
one province to another by agreement of the parties in writing
pursuant to Rule 4, Section 3, of the Rules of Court, such an
agreement will not be held valid where it practically negates the action
of the claimants, such as the private respondents herein. The
philosophy underlying the provisions on transfer of venue of actions is
the convenience of the plaintiffs as well as his witnesses and to
promote the ends of justice.21 Considering the expense and trouble a
passenger residing outside of Cebu City would incur to prosecute a
claim in the City of Cebu, he would most probably decide not to file
the action at all. The condition will thus defeat, instead of enhance,
the ends of justice. Upon the other hand, petitioner has branches or
offices in the respective ports of call of its vessels and can afford to
litigate in any of these places. Hence, the filing of the suit in the CFI
of Misamis Oriental, as was done in the instant case, will not cause
inconvience to, much less prejudice, petitioner.
Public policy is . . . that principle of the law which holds that no
subject or citizen can lawfully do that which has a tendency to be
injurious to the public or against the public good. . ..22 Under this
principle . . . freedom of contract or private dealing is restricted by
law for the good of the public.23 Clearly, Condition No. 14, if
enforced, will be subversive of the public good or interest, since it will
frustrate in meritorious cases, actions of passenger claimants outside
of Cebu City, thus placing petitioner company at a decided advantage
over said persons, who may have perfectly legitimate claims against
it. The said condition should, therefore, be declared void and
unenforceable, as contrary to public policyto make the courts
accessible to all who may have need of their services.
WHEREFORE, the petition for prohibition is DISMISSED. The
restraining order issued on November 20, 1973, is hereby LIFTED and
SET ASIDE. Costs against petitioner.
Fernando (Chairman), Aquino, Concepcion Jr., JJ., concur.
Barredo, J., concurs with a separate opinion.
Antonio, J., reserves his vote.
Petition dismissed Order lifted and set aside.
BARREDO, J.: Concurring
I concur in the dismissal of the instant petition. Only a few days ago,
in Hoechst Philippines, Inc. vs. Francisco Torres, et al., G. R. No. L-
44351, promulgated May 18, 1978, We made it clear that although
generally, agreements regarding change of venue are enforceable,
there may be instances where for equitable considerations and in the
better interest of justice, a court may justify the laying of the venue
in the place fixed by the rules instead of following written stipulation
of the parties.
In the particular case at bar, there is actually no written agreement as
to venue between the parties in the sense contemplated in Section 3
of Rule 4, which governs the matter. I take it that the importance that
a stipulation regarding change of the venue fixed by law entails is such
that nothing less than mutually conscious agreement as to it must be
what the rule means. In the instant case, as well pointed out in the
main opinion, the ticket issued to private respondents by petitioner
constitutes at best a contract of adhesion. In other words, it is not
that kind of a contract where the parties sit down to deliberate, discuss
and agree specifically on all its terms, but rather, one which
respondents took no part at all in preparing, since it was just imposed
upon them when they paid for the fare for the freight they wanted to
ship. It is common knowledge that individuals who avail of common
238
carriers hardly read the fine prints on such tickets to note anything
more than the price thereof and the destination designated therein.
Under these circumstances, it would seem that, since this case is
already in respondent court and there is no showing that, with its more
or less known resources as owner of several interisland vessels plying
between the different ports of the Philippines for sometime already,
petitioner would be greatly inconvenienced by submitting to the
jurisdiction of said respondent court, it is best to allow the proceedings
therein to continue. I cannot conceive of any juridical injury such a
step can cause to anyone concerned.
I vote to dismiss the petition.
Petition dismissed Order lifted and set aside.
Notes.The contract of air carriage generates a relation attended with
a public duty. Neglect or malfeasance of the carriers employees could
give ground for an action for damages. (Zulueta vs. Pan American
World Airways, Inc., 43 SCRA 397).
In case of death of or injuries to passengers, common carriers are
presumed to have been at fault or to have acted negligently, unless
they prove that they observed extraordinary diligence as prescribed in
articles 1733 and 1744 of the New Civil Code. (Davila vs. Philippine Air
Lines, 49 SCRA 497).
The registered owner of a common carrier is liable for damages
resulting from a breach of contract of carriage. The transferee is,
however, liable to the registered owner of the vehicle for the damages
cause to passengers. (Perez vs. Gutier-rez, 53 SCRA 149).
A provisional claim filed before the delivery of the cargo, in anticipation
of any possible loss or damage while the cargo is in the arrastre
operators custody is premature and specualtive. (American Insurance
Company of Newark vs. Manila Port Service, 72 SCRA 18; Manila Port
Service vs. Fortune Insurance & Surety Co., Inc., 45 SCRA 65).
The 15-day notice to the arrastre operator of any damage or loss of
cargo is reckoned from the date the consignee or claimant learns of
the loss or damage or from the date when with the exercise of due
diligence, information regarding the loss or damage could have been
obtained. (New Zealand Insurance Co., Ltd. vs. Manila Port Service,
19 SCRA 801) The reason for this rule is that before the claimant or
consignee learns of the shortage or damage he is in no position to
make a claim since the goods are in the arrastre contractors custody;
otherwise the arrastre operator may escape liability by simply
withholding knowledge as to the loss or damage until after the
expiration of the 15-day period from the discharge of the last package
from the carrying vessel (Yu Kimteng Construction Corporation vs.
Manila Railroad Company, 15 SCRA 292).
1. Statutory Construction: General terras may be restricted by specific
words, with the result that the general language will be limited by
specific language which indicates the statutes object and purpose.
(Colgate Palmolive Philippines, Inc. vs. Gimenez, 1 SCRA 267.)
2. Contracts: Where the provisions of a contract are ambiguous, such
ambiguity must be construed against the party who drafted the same;
and it appearing that the contract in question must be construed
against appellant. (Coscolluela vs. Valderrama, 2 SCRA 1095.)
A written document speaks a uniform language; the spoken word
could be notoriously unreliable. If only to achieve stability in the
relations between passenger and air carrier, adherence to the terms
of a ticket is desirable. (Air France vs. Carrascoso, 18 SCRA 155.)
A contract between two persons cannot bind another not a party
thereto, merely because he is aiyare of such contract and fcog acted
with knowledge thereof. (Manila Port Service vs. Court of Appeals, 20
SCRA 1214.)
3. Venue: The venue of civil actions in the Court of First Instance is
where the plaintiff resides or where the defendant resides or found
(Section 1, Rule 5, Rules of Court), but the latter phrase (may be
239
found) applies only to cases where the defendant has no residence in
the Philippines. (Portillo vs. Reyes, 3 SCRA 311.)

The stipulation that the parties agree to sue and be sued in the courts
of Manila, does not preclude the filing of suits in the residence of
plaintiff or defendant under Section 2(b), Rule 4, Rules of Court, in
the absence of qualifying or restrictive words in the agreement which
would indicate that Manila alone is the venue agreed upon by the
parties (Polytrade Corporation vs. Blanco, 30 SCRA 187.)

o0o

240
 ABOITIZ SHIPPING CORPORATION, petitioner, vs. HON.
COURT OF APPEALS, ELEVENTH DIVISION, LUCILA C.
VIANA, SPS. ANTONIO VIANA and GORGONIA VIANA, and
PIONEER STEVEDORING CORPORATION, respondents
G.R. No. 84458. November 6, 1989
Torts and Damages; Common Carriers; Carrier-passenger relationship
continues until the passenger has been landed at the port of
destination and has left the vessel-owners premises.The rule is that
the relation of carrier and passenger continues until the passenger has
been landed at the port of destination and has left the vessel owners
dock or premises. Once created, the relationship will not ordinarily
terminate until the passenger has, after reaching his destination,
safely alighted from the carriers conveyance or had a reasonable
opportunity to leave the carriers premises. All persons who remain on
the premises a reasonable time after leaving the conveyance are to
be deemed passengers, and what is a reasonable time or a reasonable
delay within this rule is to be determined from all the circumstances,
and includes a reasonable time to see after his baggage and prepare
for his departure. The carrier-passenger relationship is not terminated
merely by the fact that the person transported has been carried to his
destination if, for example, such person remains in the carriers
premises to claim his baggage.
Same; Same; Same; Reasonableness of time should be made to
depend on the attending circumstances, such as the kind of common
carrier; the victims presence in the petitioners premises after the
lapse of one hour from the time he disembarked from the vessel is
justified, hence he is deemed still a passenger when the accident
occurred.It is apparent from the foregoing that what prompted the
Court to rule as it did in said case is the fact of the passengers
reasonable presence within the carriers premises. That
reasonableness of time should be made to depend on the attending
circumstances of the case, such as the kind of common carrier, the
nature of its business, the customs of the place, and so forth, and
therefore precludes a consideration of the time element per se without
taking into account such other factors. It is thus of no moment
whether in the cited case of La Mallorca there was no appreciable
interregnum for the passenger therein to leave the carriers premises
whereas in the case at bar, an interval of one (1) hour had elapsed
before the victim met the accident. The primary factor to be
considered is the existence of a reasonable cause as will justify the
presence of the victim on or near the petitioners vessel. We believe
there exists such a justifiable cause. It is of common knowledge that,
by the very nature of petitioners business as a shipper, the
passengers of vessels are allotted a longer period of time to disembark
from the ship than other common carriers such as a passenger bus. x
x x It is not definitely shown that one (1) hour prior to the incident,
the victim had already disembarked from the vessel. Petitioner failed
to prove this. What is clear to us is that at the time the victim was
taking his cargoes, the vessel had already docked an hour earlier. In
consonance with common shipping procedure as to the minimum time
of one (1) hour allowed for the passengers to disembark, it may be
presumed that the victim had just gotten off the vessel when he went
to retrieve his baggage. Yet, even if he had already disembarked an
hour earlier, his presence in petitioners premises was not without
cause. The victim had to claim his baggage which was possible only
one (1) hour after the vessel arrived since it was admittedly standard
procedure in the case of petitioners vessels that the unloading
operations shall start only after that time. Consequently, under the
foregoing circumstances, the victim Anacleto Viana is still deemed a
passenger of said carrier at the time of his tragic death.
Same; Same; Same; In an action for breach of contract of carriage all
that is required of plaintiff is to prove the existence of such contract
and its non-performance by the carrier by the latters failure to carry
the passenger safely to his destination.Under the law, common
carriers are, from the nature of their business and for reasons of public
policy, bound to observe extraordinary diligence in the vigilance over
the goods and for the safety of the passengers transported by them,
according to all the circumstances of each case. More particularly, a
common carrier is bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the circumstances.
Thus, where a passenger dies or is injured, the common carrier is
241
presumed to have been at fault or to have acted negligently. This gives
rise to an action for breach of contract of carriage where all that is
required of plaintiff is to prove the existence of the contract of carriage
and its non-performance by the carrier, that is, the failure of the
carrier to carry the passenger safely to his destination, which, in the
instant case, necessarily includes its failure to safeguard its passenger
with extraordinary diligence while such relation subsists.
Same; Same; Contributory Negligence; Proximate Cause; Petitioners
failure to exercise extra-ordinary diligence was the proximate and
direct cause of the victims death, thereby making them liable,
notwithstanding the victims contributory negligence.While the
victim was admittedly contributorily negligent, still petitioners
aforesaid failure to exercise extraordinary diligence was the proximate
and direct cause of, because it could definitely have prevented, the
formers death. Moreover, in paragraph 5.6 of its petition, at bar,
petitioner has expressly conceded the factual finding of respondent
Court of Appeals that petitioner did not present sufficient evidence in
support of its submission that the deceased Anacleto Viana was guilty
of gross negligence. Petitioner cannot now be heard to claim
otherwise.
APPEAL by certiorari from the decision of the Court of Appeals.
Lapena, Jr., J.
The facts are stated in the opinion of the Court.
Herenio E. Martinez for petitioner.
M.R. Villaluz Law Office for private respondent.
REGALADO, J.:
In this appeal by certiorari, petitioner Aboitiz Shipping Corporation
seeks a review of the decision of respondent Court of Appeals, dated
July 29, 1988, the decretal portion of which reads:
WHEREFORE, the judgment appealed from as modified by the order
of October 27, 1982, is hereby affirmed with the modification that
appellant Aboitiz Shipping is hereby ordered to pay plaintiff-appellees
the amount of P30,000.00 for the death of Anacleto Viana; actual
damages of P9,800.00; P150,000.00 for unearned income; P7,200.00
as support for deceaseds parents; P20,000.00 as moral damages;
P10,000.00 as attorneys fees; and to pay the costs.
The undisputed facts of the case, as found by the court a quo and
adopted by respondent court, are as follows:
The evidence disclosed that on May 11, 1975, Anacleto Viana boarded
the vessel M/V Antonia, owned by defendant, at the port at San Jose,
Occidental Mindoro, bound for Manila, having purchased a ticket (No.
117392) in the sum of P23.10 (Exh. B). On May 12, 1975, said vessel
arrived at Pier 4, North Harbor, Manila, and the passengers therein
disembarked, a gangplank having been provided connecting the side
of the vessel to the pier. Instead of using said gangplank, Anacleto
Viana disembarked on the third deck which was on the level with the
pier. After said vessel had landed, the Pioneer Stevedoring Corporation
took over the exclusive control of the cargoes loaded on said vessel
pursuant to the Memorandum of Agreement dated July 26, 1975 (Exh.
2) between the third party defendant Pioneer Stevedoring
Corporation and defendant Aboitiz Shipping Corporation.
The crane owned by the third party defendant and operated by its
crane operator Alejo Figueroa was placed alongside the vessel and
one (1) hour after the passengers of said vessel had disembarked, it
started operation by unloading the cargoes from said vessel. While the
crane was being operated, Anacleto Viana who had already
disembarked from said vessel obviously remembering that some of his
cargoes were still loaded in the vessel, went back to the vessel, and it
was while he was pointing to the crew of the said vessel to the place
where his cargoes were loaded that the crane hit him, pinning him
between the side of the vessel and the crane. He was thereafter
brought to the hospital where he later expired three (3) days
thereafter, on May 15, 1975, the cause of his death according to the
Death Certificate (Exh. C) being hypostatic pneumonia secondary to
242
traumatic fracture of the pubic bone lacerating the urinary bladder
(See also Exh. B). For his hospitalization, medical, burial and other
miscellaneous expenses, Anacletos wife, herein plaintiff, spent a total
of P9,800.00 (Exhibits E, E-1, to E-5). Anacleto Viana who was only
forty (40) years old when he met said fateful accident (Exh. E) was
in good health. His average annual income as a farmer or a farm
supervisor was 400 cavans of palay annually. His parents, herein
plaintiffs Antonio and Gorgonia Viana, prior to his death had been
recipient of twenty (20) cavans of palay as support or P120.00
monthly. Because of Anacletos death, plaintiffs suffered mental
anguish and extreme worry or moral damages. For the filing of the
instant case, they had to hire a lawyer for an agreed fee of ten
thousand (P10,000.00) pesos.
Private respondents Vianas filed a complaint for damages against
petitioner corporation (Aboitiz, for brevity) for breach of contract of
carriage.
In its answer, Aboitiz denied responsibility contending that at the time
of the accident, the vessel was completely under the control of
respondent Pioneer Stevedoring Corporation (Pioneer, for short) as
the exclusive stevedoring contractor of Aboitiz, which handled the
unloading of cargoes from the vessel of Aboitiz. It is also averred that
since the crane operator was not an employee of Aboitiz, the latter
cannot be held liable under the fellow-servant rule.
Thereafter, Aboitiz, as third-party plaintiff, filed a third-party complaint
against Pioneer imputing liability thereto for Anacleto Vianas death as
having been allegedly caused by the negligence of the crane operator
who was an employee of Pioneer under its exclusive control and
supervision.
Pioneer, in its answer to the third-party complaint, raised the defenses
that Aboitiz had no cause of action against Pioneer considering that
Aboitiz is being sued by the Vianas for breach of contract of carriage
to which Pioneer is not a party; that Pioneer had observed the
diligence of a good father of a family both in the selection and
supervision of its employees as well as in the prevention of damage
or injury to anyone including the victim Anacleto Viana; that Anacleto
Vianas gross negligence was the direct and proximate cause of his
death; and that the filing of the third-party complaint was premature
by reason of the pendency of the criminal case for homicide through
reckless imprudence filed against the crane operator, Alejo Figueroa.
In a decision rendered on April 17, 1980 by the trial court, Aboitiz was
ordered to pay the Vianas for damages incurred, and Pioneer was
ordered to reimburse Aboitiz for whatever amount the latter paid the
Vianas. The dispositive portion of said decision provides:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs:
(1) ordering defendant Aboitiz Shipping Corporation to pay to
plaintiffs the sum of P12,000.00 for the death of Anacleto Viana;
P9,800.00 as actual damages; P533,200.00 value of the 10,664
cavans of palay computed at P50.00 per cavan; P10,000.00 as
attorneys fees; P5,000.00, value of the 100 cavans of palay as support
for five (5) years for deceased (sic) parents, herein plaintiffs Antonio
and Gorgonia Viana computed at P50.00 per cavan; P7,200.00 as
support for deceaseds parents computed at P120.00 a month for five
years pursuant to Art. 2206, Par. 2, of the Civil Code; P20,000.00 as
moral damages, and costs; and
(2) ordering the third party defendant Pioneer Stevedoring
Corporation to reimburse defendant and third party plaintiff Aboitiz
Shipping Corporation the said amounts that it is ordered to pay to
herein plaintiffs.
Both Aboitiz and Pioneer filed separate motions for reconsideration
wherein they similarly raised the trial courts failure to declare that
Anacleto Viana acted with gross negligence despite the overwhelming
evidence presented in support thereof. In addition, Aboitiz alleged, in
opposition to Pioneers motion, that under the memorandum of
agreement the liability of Pioneer as contractor is automatic for any
damages or losses whatsoever occasioned by and arising from the
operation of its arrastre and stevedoring service.
243
In an order dated October 27, 1982, the trial court absolved Pioneer
from liability for failure of the Vianas and Aboitiz to preponderantly
establish a case of negligence against the crane operator which the
court a quo ruled is never presumed, aside from the fact that the
memorandum of agreement supposedly refers only to Pioneers
liability in case of loss or damage to goods handled by it but not in the
case of personal injuries, and, finally, that Aboitiz cannot properly
invoke the fellow-servant rule simply because its liability stems from a
breach of contract of carriage. The dispositive portion of said order
reads:
WHEREFORE, judgment is hereby modified insofar as third party
defendant Pioneer Stevedoring Corporation is concerned rendered in
favor of the plaintiffs:
(1) Ordering defendant Aboitiz Shipping Corporation to pay the
plaintiffs the sum of P12,000.00 for the death of Anacleto Viana;
P9,000.00 (sic) as actual damages; P533,200.00 value of the 10,664
cavans of palay computed at P50.00 per cavan; P10,000.00 as
attorneys fees; P5,000.00 value of the 100 cavans of palay as support
for five (5) years for deceaseds parents, herein plaintiffs Antonio and
Gorgonia Viana, computed at P50.00 per cavan; P7,200.00 as support
for deceaseds parents computed at P120.00 a month for five years
pursuant to Art. 2206, Par. 2, of the Civil Code; P20,000.00 as moral
damages, and costs; and
(2) Absolving third-party defendant Pioneer Stevedoring Corporation
for (sic) any liability for the death of Anacleto Viana, the passenger of
M/V Antonia owned by defendant third party plaintiff Aboitiz Shipping
Corporation it appearing that the negligence of its crane operator has
not been established therein.
Not satisfied with the modified judgment of the trial court, Aboitiz
appealed the same to respondent Court of Appeals which affirmed the
findings of the trial court except as to the amount of damages awarded
to the Vianas.
Hence, this petition wherein petitioner Aboitiz postulates that
respondent court erred:
(A) In holding that the doctrine laid down by this Honorable Court in
La Mallorca vs. Court of Appeals, et al. (17 SCRA 739, July 27, 1966)
is applicable to the case in the face of the undisputable fact that the
factual situation under the La Mallorca case is radically different from
the facts obtaining in this case;
(B) In holding petitioner liable for damages in the face of the finding
of the court a quo and confirmed by the Honorable respondent Court
of Appeals that the deceased, Anacleto Viana was guilty of
contributory negligence, which, we respectfully submit, contributory
negligence was the proximate cause of his death; specifically the
Honorable respondent Court of Appeals failed to apply Art. 1762 of
the New Civil Code;
(C) In the alternative assuming the holding of the Honorable
respondent Court of Appeals that petitioner may be legally condemned
to pay damages to the private respondents we respectfully submit that
it committed a reversible error when it dismissed petitioners third
party complaint against private respondent Pioneer Stevedoring
Corporation instead of compelling the latter to reimburse the petitioner
for whatever damages it may be compelled to pay to the private
respondents Vianas.
At threshold, it is to be observed that both the trial court and
respondent Court of Appeals found the victim Anacleto Viana guilty of
contributory negligence, but holding that it was the negligence of
Aboitiz in prematurely turning over the vessel to the arrastre operator
for the unloading of cargoes which was the direct, immediate and
proximate cause of the victims death.
I. Petitioner contends that since one (1) hour had already elapsed
from the time Anacleto Viana disembarked from the vessel and that
he was given more than ample opportunity to unload his cargoes prior
to the operation of the crane, his presence on the vessel was no longer
reasonable and he consequently ceased to be a passenger. Corollarily,
it insists that the doctrine in La Mallorca vs. Court of Appeals, et al. is
not applicable to the case at bar.
244
The rule is that the relation of carrier and passenger continues until
the passenger has been landed at the port of destination and has left
the vessel owners dock or premises. Once created, the relationship
will not ordinarily terminate until the passenger has, after reaching his
destination, safely alighted from the carriers conveyance or had a
reasonable opportunity to leave the carriers premises. All persons who
remain on the premises a reasonable time after leaving the
conveyance are to be deemed passengers, and what is a reasonable
time or a reasonable delay within this rule is to be determined from
all the circumstances, and includes a reasonable time to see after his
baggage and prepare for his departure. The carrier-passenger
relationship is not terminated merely by the fact that the person
transported has been carried to his destination if, for example, such
person remains in the carriers premises to claim his baggage.
It was in accordance with this rationale that the doctrine in the
aforesaid case of La Mallorca was enunciated, to wit:
It has been recognized as a rule that the relation of carrier and
passenger does not cease at the moment the passenger alights from
the carriers vehicle at a place selected by the carrier at the point of
destination, but continues until the passenger has had a reasonable
time or a reasonable opportunity to leave the carriers premises. And,
what is a reasonable time or a reasonable delay within this rule is to
be determined from all the circumstances. Thus, a person who, after
alighting from a train, walks along the station platform is considered
still a passenger. So also, where a passenger has alighted at his
destination and is proceeding by the usual way to leave the companys
premises, but before actually doing so is halted by the report that his
brother, a fellow passenger, has been shot, and he in good faith and
without intent of engaging in the difficulty, returns to relieve his
brother, he is deemed reasonably and necessarily delayed and thus
continues to be a passenger entitled as such to the protection of the
railroad company and its agents.
In the present case, the father returned to the bus to get one of his
baggages which was not unloaded when they alighted from the bus.
Racquel, the child that she was, must have followed the father.
However, although the father was still on the running board of the bus
waiting for the conductor to hand him the bag or bayong, the bus
started to run, so that even he (the father) had to jump down from
the moving vehicle. It was at this instance that the child, who must be
near the bus, was run over and killed. In the circumstances, it cannot
be claimed that the carriers agent had exercised the utmost diligence
of a very cautious person required by Article 1755 of the Civil Code
to be observed by a common carrier in the discharge of its obligation
to transport safely its passengers. x x x The presence of said
passengers near the bus was not unreasonable and they are,
therefore, to be considered still as passengers of the carrier, entitled
to the protection under their contract of carriage.
It is apparent from the foregoing that what prompted the Court to rule
as it did in said case is the fact of the passengers reasonable presence
within the carriers premises. That reasonableness of time should be
made to depend on the attending circumstances of the case, such as
the kind of commom carrier, the nature of its business, the customs
of the place, and so forth, and therefore precludes a consideration of
the time element per se without taking into account such other factors.
It is thus of no moment whether in the cited case of La Mallorca there
was no appreciable interregnum for the passenger therein to leave the
carriers premises whereas in the case at bar, an interval of one (1)
hour had elapsed before the victim met the accident. The primary
factor to be considered is the existence of a reasonable cause as will
justify the presence of the victim on or near the petitioners vessel.
We believe there exists such a justifiable cause.
It is of common knowledge that, by the very nature of petitioners
business as a shipper, the passengers of vessels are allotted a longer
period of time to disembark from the ship than other common carriers
such as a passenger bus. With respect to the bulk of cargoes and the
number of passengers it can load, such vessels are capable of
accommodating a bigger volume of both as compared to the capacity
of a regular commuter bus. Consequently, a ship passenger will need
at least an hour as is the usual practice, to disembark from the vessel
and claim his baggage whereas a bus passenger can easily get off the
bus and retrieve his luggage in a very short period of time. Verily,
245
petitioner cannot categorically claim, through the bare expedient of
comparing the period of time entailed in getting the passengers
cargoes, that the ruling in La Mallorca is inapplicable to the case at
bar. On the contrary, if we are to apply the doctrine enunciated therein
to the instant petition, we cannot in reason doubt that the victim
Anacleto Viana was still a passenger at the time of the incident. When
the accident occurred, the victim was in the act of unloading his
cargoes, which he had every right to do, from petitioners vessel. As
earlier stated, a carrier is duty bound not only to bring its passengers
safely to their destination but also to afford them a reasonable time
to claim their baggage.
It is not definitely shown that one (1) hour prior to the incident, the
victim had already disembarked from the vessel. Petitioner failed to
prove this. What is clear to us is that at the time the victim was taking
his cargoes, the vessel had already docked an hour earlier. In
consonance with common shipping procedure as to the minimum time
of one (1) hour allowed for the passengers to disembark, it may be
presumed that the victim had just gotten off the vessel when he went
to retrieve his baggage. Yet, even if he had already disembarked an
hour earlier, his presence in petitioners premises was not without
cause. The victim had to claim his baggage which was possible only
one (1) hour after the vessel arrived since it was admittedly standard
procedure in the case of petitioners vessels that the unloading
operations shall start only after that time. Consequently, under the
foregoing circumstances, the victim Anacleto Viana is still deemed a
passenger of said carrier at the time of his tragic death.
II. Under the law, common carriers are, from the nature of their
business and for reasons of public policy, bound to observe
extraordinary diligence in the vigilance over the goods and for the
safety of the passengers transported by them, according to all the
circumstances of each case. More particularly, a common carrier is
bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious
persons, with a due regard for all the circumstances. Thus, where a
passenger dies or is injured, the common carrier is presumed to have
been at fault or to have acted negligently. This gives rise to an action
for breach of contract of carriage where all that is required of plaintiff
is to prove the existence of the contract of carriage and its non-
performance by the carrier, that is, the failure of the carrier to carry
the passenger safely to his destination, which, in the instant case,
necessarily includes its failure to safeguard its passenger with
extraordinary diligence while such relation subsists.
The presumption is, therefore, established by law that in case of a
passengers death or injury the operator of the vessel was at fault or
negligent, having failed to exercise extraordinary diligence, and it is
incumbent upon it to rebut the same. This is in consonance with the
avowed policy of the State to afford full protection to the passengers
of common carriers which can be carried out only by imposing a
stringent statutory obligation upon the latter. Concomitantly, this
Court has likewise adopted a rigid posture in the application of the law
by exacting the highest degree of care and diligence from common
carriers, bearing utmost in mind the welfare of the passengers who
often become hapless victims of indifferent and profit-oriented
carriers. We cannot in reason deny that petitioner failed to rebut the
presumption against it. Under the facts obtaining in the present case,
it cannot be gainsaid that petitioner had inadequately complied with
the required degree of diligence to prevent the accident from
happening.
As found by the Court of Appeals, the evidence does not show that
there was a cordon of drums around the perimeter of the crane, as
claimed by petitioner. It also adverted to the fact that the alleged
presence of visible warning signs in the vicinity was disputable and not
indubitably established. Thus, we are not inclined to accept
petitioners explanation that the victim and other passengers were
sufficiently warned that merely venturing into the area in question was
fraught with serious peril. Definitely, even assuming the existence of
the supposed cordon of drums loosely placed around the unloading
area and the guards admonitions against entry therein, these were at
most insufficient precautions which pale into insignificance if
considered vis-a-vis the gravity of the danger to which the deceased
was exposed. There is no showing that petitioner was extraordinarily
diligent in requiring or seeing to it that said precautionary measures
246
were strictly and actually enforced to subserve their purpose of
preventing entry into the forbidden area. By no stretch of liberal
evaluation can such perfunctory acts approximate the utmost
diligence of very cautious persons to be exercised as far as human
care and foresight can provide which is required by law of common
carriers with respect to their passengers.
that on the contrary, the failure of Aboitiz to exercise extraordinary
diligence for the safety of its passenger is the rationale for our finding
on its liability.
WHEREFORE, the petition is DENIED and the judgment appealed from
is hereby AFFIRMED in toto.

While the victim was admittedly contributorily negligent, still SO ORDERED.

petitioners aforesaid failure to exercise extraordinary diligence was
the proximate and direct cause of, because it could definitely have Melencio-Herrera (Chairman), Paras, Padilla and Sarmiento, JJ.,
prevented, the formers death. Moreover, in paragraph 5.6 of its concur.
petition, at bar, petitioner has expressly conceded the factual finding
of respondent Court of Appeals that petitioner did not present Petition denied. Judgment affirmed in toto.
sufficient evidence in support of its submission that the deceased
Anacleto Viana was guilty of gross negligence. Petitioner cannot now Note.It is the duty of a common carrier to overcome the
be heard to claim otherwise. presumption of negligence that accrues once its passenger dies of an
accident. (Philippine National Railways vs. Court of Appeals, 139 SCRA
No excepting circumstance being present, we are likewise bound by 87).
respondent courts declaration that there was no negligence on the
part of Pioneer Stevedoring Corporation, a confirmation of the trial o0o
courts finding to that effect, hence our conformity to Pioneers being
absolved of any liability.

As correctly observed by both courts, Aboitiz joined Pioneer in proving

the alleged gross negligence of the victim, hence its present
contention that the death of the passenger was due to the negligence
of the crane operator cannot be sustained both on grounds of estoppel
and for lack of evidence on its present theory. Even in its answer filed
in the court below it readily alleged that Pioneer had taken the
necessary safeguards insofar as its unloading operations were
concerned, a fact which appears to have been accepted by the plaintiff
therein by not impleading Pioneer as a defendant, and likewise
inceptively by Aboitiz by filing its third-party complaint only after ten
(10) months from the institution of the suit against it. Parenthetically,
Pioneer is not within the ambit of the rule on extraordinary diligence
required of, and the corresponding presumption of negligence foisted
on, common carriers like Aboitiz. This, of course, does not detract from
what we have said that no negligence can be imputed to Pioneer but,

247
 LA MALLORCA, petitioner, vs. HONORABLE COURT OF
APPEALS, MARIANO BELTRAN, ET AL., respondents
No. L-20761. July 27, 1966
Common carriers; When relationship of carrier and passenger is
terminated; Reasonable time to leave carriers premises construed.
Plaintiffs, husband and wife together with their minor daughters,
namely, Milagros, 13 years old, Raquel, about 4 years old, and Fe,
over 2 years old, boarded a Pambusco Bus, Upon reaching their
destination, plaintiffs and all their daughters alighted from the bus and
the father led his compa-nions to a shaded spot about four or f ive
meters away f rom the vehicle. Father returned to the bus to get a
piece of baggage which was not unloaded when they alighted from
the bus. Raquel, the child that she was, must have followed the father.
However although the father was still on the running board of the bus
awaiting for the conductor to give him the bag or bayong, the bus
started to run, so that the father had to jump down from the moving
vehicle. It was at this instance that the child, who must be near the
bus, was run over and killed. Held: In the circumstances, it cannot be
said that the carriers agent had exercised to utmost diligence of a
very cautions person required by Article 1755 of the Civil Code to be
observed by a common carrier in the discharge of its obligation to
transport safely its passengers. In the first place, the driver, although
stopping the bus, nevertheless did not put off the engine. Secondly,
he started to run the bus even before the bus conductor gave him the
signal to go and while the latter was still unloading part of the baggage
of the passengers Mariano Beltran and family. The presence of said
passengers near the bus was not unreasonable and they are,
therefore, to be considered still passengers of the carrier, entitled to
protection under their contract of carriage.
Actions; Quasi-delicts; Pleadings; Averment thereof is permissible
under Rules of Court although incompatible with claim of contract of
carriage.The complaint contained an allegation for quasi-delict. The
inclusion of this averment for quasi-delict, while incompatible with the
other claim under the contract of carriage, is permissible under Section
2 of Rule 8 of the New Rules of Court, which allows a plaintiff f to
allege causes of action in the alternative, be they compatible with each
other or not, to the end that the real matter in controversy may be
resolved and determined. Thus, even assuming arguendo that the
contract of carriage had terminated, herein petitioner can be held
liable for the negligence of its driver. The presentation of proof of the
negligence of its driver gave rise to the presumption that the
defendant employer did not exercise the diligence of a good father of
the family in the selection and supervision of its employees. The
petitioner had failed to overcome such presumption. Consequently,
the petitioner must be adjudged pecuniarily liable for the death of the
child.
Appeals; Only questions raised in appellants brief can be passed
upon.The increase of the award of damages from P3,000.00 to
P6,000.00 by the Court of Appeals, however, cannot be sustained.
Generally, the appellate court can only pass upon and consider
questions or issues raised and argued in appellants brief. Plaintiff did
not appeal from that portion of the judgment of the trial court
awarding them only P3,000.00 damages for the death of their
daughter.
PETITION for review by certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
G.E. Yabut, R. Monterey and M.C. Lagman for petitioner.
Ahmed Garcia for respondents.
BARRERA, J.:
La Mallorca seeks the review of the decision of the Court of Appeals
in CA-G.R. No. 23267-R, holding it liable for quasi-delict and ordering
it to pay to respondents Mariano Beltran, et al., P6,000.00 for the
death of his minor daughter Raquel Beltran, plus P400.00 as actual
damages.
The facts of the case, as found by the Court of Appeals, briefly are:
248

On December 20, 1953, at about noontime, plaintiffs, husband and
wife, together with their minor daughters, namely, Milagros, 13 years
old, Raquel, about 4 years old, and Fe, over 2 years old, boarded
the Pambusco Bus No. 352, bearing plate TPU No. 757 (1953
Pampanga), owned and operated by the defendant, at San Fernando,
Pampanga, bound for Anao, Mexico, Pampanga. At the time, they
were carrying with them four pieces of baggages containing their
personal belonging. The conductor of the bus, who happened to be a
half-brother of plaintiff Mariano Beltran, issued three tickets (Exhs. A,
B, & C) covering the full fares of the plaintiff and their eldest child,
Milagros. No fare was charged on Raquel and Fe, since both were
below the height at which fare is charged in accordance with the
appellants rules and regulations.
After about an hours trip, the bus reached Anao, where at it stopped
to allow the passengers bound therefor, among whom were the
plaintiffs and their children to get off. With respect to the group of the
plaintiffs, Mariano Beltran, then carrying some of their baggages, was
the first to get down the bus, followed by his wife and his children.
Mariano led his companions to a shaded spot on the.left pedestrians
side of the road about four or five meters away from the vehicle.
Afterwards, he returned to the bus in controversy to get his other
bayong, which he had left behind, but in so doing, his daughter Raquel
followed him, unnoticed by her father. While said Mariano Beltran was
on the running board of the bus waiting for the conductor to hand him
his bayong which he left under one of its seats near the door, the bus,
whose motor was not shut off while unloading, suddenly started
moving forward, evidently to resume its trip, notwithstanding the fact
that the conductor has not given the driver the customary signal to
start, since said conductor was still attending to the baggage left
behind by Mariano Beltran. Incidentally, when the bus was again
placed into a complete stop, it had travelled about ten meters from
the point where the plaintiffs had gotten off.
Sensing that the bus was again in motion, Mariano Beltran
immediately jumped from the running board without getting his
bayong from the conductor. He landed on the side of the road almost
in front of the shaded place where he left his wife and children. At
that precise time, he saw people beginning to gather around the body
of a child lying prostrate on the ground, her skull crushed, and without
life. The child was none other than his daughter Raquel, who was run
over by the bus in which she rode earlier together with her parents.
For the death of their said child, the plaintiffs commenced the present
suit against the defendant seeking to recover from the latter an
aggregate amount of ?16,000 to cover moral damages and actual
damages sustained as a result thereof and attorneys f ees. Af ter trial
on the merits, the court below rendered the judgment in question.
On the basis of these facts, the trial court found defendant liable for
breach of contract of carriage and sentenced it to pay P3,000.00 for
the death of the child and P400.00 as compensatory damages
representing burial expenses and costs.
On appeal to the Court of Appeals, La Mallorca claimed that there
could not be a breach of contract in the case, for the reason that when
the child met her death, she was no longer a passenger of the bus
involved in the incident and, therefore, the contract of carriage had
already terminated. Although the Court of Appeals sustained this
theory, it nevertheless found the defendant-appellant guilty of quasi-
delict and held the latter liable for damages, for the negligence of its
driver, in accordance with Article 2180 of the Civil Code. And, the Court
of Appeals did not only find the petitioner liable, but increased the
damages awarded the plaintiffs-appellees to P6,000.00, instead of
P3,000.00 granted by the trial court.
In its brief before us, La Mallorca contends that the Court of Appeals
erred (1) in holding it liable for quasidelict, considering that
respondents complaint was one for breach of contract, and (2) in
raising the award of damages from P3,000.00 to P6,000.00 although
respondents did not appeal from the decision of the lower court.
Under the facts as found by the Court of Appeals, we have to sustain
the judgment holding petitioner liable for damages for the death of
the child, Raquel Beltran. It may be pointed out that although it is true
249
that respondent Mariano Beltran, his wife, and their children (including
the deceased child) had alighted from the bus at a place designated
for disembarking or unloading of passengers, it was also established
that the father had to return to the vehicle (which was still at a stop)
to get one of his bags or bayong that was left under one of the seats
of the bus. There can be no controversy that as far as the father is
concerned, when he returned to the bus for his bayong which was not
unloaded, the relation of passenger and carrier between him and the
petitioner remained subsisting. For, the relation of carrier and
passenger does not necessarily cease where the latter, after alighting
from the car, aids the carriers servant or employee in removing his
baggage from the car. The issue to be determined here is whether as
to the child, who was already led by the father to a place about 5
meters away from the bus, the liability of the carrier for her safety
under the contract of carriage also persisted.
It has been recognized as a rule that the relation of carrier and
passenger does not cease at the moment the passenger alights from
the carriers vehicle at a place selected by the carrier at the point of
destination, but continues until the passenger has had a reasonable
time or a reasonable opportunity to leave the carriers premises. And,
what is a reasonable time or a reasonable delay within this rule is to
be determined from all the circumstances, Thus, a person who, after
alighting from a train, walks along the station platform is considered
still a passenger. So also, where a passenger has alighted at his
destination and is proceeding by the usual way to leave the companys
premises, but before actually doing so is halted by the report that his
brother, a fellow passenger, has been shot, and he in good faith and
without intent of engaging in the difficulty, returns to relieve his
brother, he is deemed reasonably and necessarily delayed and thus
continues to be a passenger entitled as such to the protection of the
railroad and company and its agents.
In the present case, the father returned to the bus to get one of his
baggages which was not unloaded when they alighted from the bus.
Raquel, the child that she was, must have followed the father.
However, although the father was still on the running board of the bus
awaiting for the conductor to hand him the bag or bayong, the bus
started to run, so that even he (the father) had to jump down from
the moving vehicle. It was at this instance that the child, who must be
near the bus, was run over and killed. In the circumstances, it cannot
be claimed that the carriers agent had exercised the utmost
diligence of a very cautions person required by Article 1755 of the
Civil Code to be observed by a common carrier in the discharge of its
obligation to transport saf ely its passengers. In the first place, the
driver, although stopping the bus, nevertheless did not put off the
engine. Secondly, he started to run the bus even before the bus
conductor gave him the signal to go and while the latter was still
unloading part of the baggages of the passengers Mariano Beltran and
family. The presence of said passengers near the bus was not
unreasonable and they are, therefore, to be considered still as
passengers of the carrier, entitled to the protection under their
contract of carriage.
But even assuming arguendo that the contract of carriage has already
terminated, herein petitioner can be held liable for the negligence of
its driver, as ruled by the Court of Appeals, pursuant to Article 2180
of the Civil Code. Paragraph 7 of the complaint, which reads
That aside from the aforesaid breach of contract, the death of Raquel
Beltran, plaintiffs daughter, was caused by the negligence and want
of exercise of the utmost diligence of a very cautious person on the
part of the defendants and their agent, necessary to transport
plaintiffs and their daughter safely as far as human care and foresight
can provide in the operation of their vehicle. is clearly an allegation
for quasi-delict. The inclusion of this averment for quasi-delict, while
incompatible with the other claim under the contract of carriage, is
permissible under Section 2 of Rule 8 of the New Rules of Court, which
allows a plaintiff to allege causes of action in the alternative, be they
compatible with each other or not, to the end that the real matter in
controversy may be resolved and determined.
The plaintiffs sufficiently pleaded the culpa or negligence upon which
the claim was predicated when it was alleged in the complaint that
the death of Raquel Beltran, plaintiffs daughter, was caused by the
negligence and want of exercise of the utmost diligence of a very
250
cautious person on the part of the defendants and their agent. This
allegation was also proved when it was established during the trial
that the driver, even before receiving the proper signal from the
conductor, and while there were still persons on the running board of
the bus and near it, started to run off the vehicle. The presentation of
proof of the negligence of its employee gave rise to the presumption
that the defendant employer did not exercise the diligence of a good
father of the family in the selection and supervision 01 its employees.
And this presumption, as the Court of Appeals found, petitioner had
failed to overcome. Consequently, petitioner must be adjudged
pecuniarily liable for the death of the child Raquel Beltran.

The increase of the award of damages from P3,000.00 to P6,000.00

by the Court of Appeals, however, cannot be sustained. Generally, the
appellate court can only pass upon and consider questions or issues
raised and argued in appellants brief. Plaintiffs did not appeal from
that portion of the judgment of the trial court awarding them on
P3,000.00 damages for the death of their daughter. Neither does it
appear that, as appellees in the Court of Appeals, plaintiffs have
pointed out in their brief the inadequacy of the award, or that the
inclusion of the figure P3,000.00 was merely a clerical error, in order
that the matter may be treated as an exception to the general rule.
Herein petitioners contention, therefore, that the Court of Appeals
committed error in raising the amount of the award for damages is,
evidently, meritorious.

Wherefore, the decision of the Court of Appeals is hereby modified by

sentencing, the petitioner to pay to the respondents Mariano Beltran,
et al., the sum of P3,000.00 for the death of the child, Raquel Beltran,
and the amount of P400.00 as actual damages. No costs in this
instance. So ordered.

Chief Justice Concepcion and Justices J.B.L. Reyes, Dizon, Regala,

J.P. Bengzon, Zaldivar, Sanchez and Castro, concur. Mr. Justice
Makalintal concurs in the result.

Decision modified.

251
JOSE BARITUA and JB LINE, petitioners, vs. NIMFA DIVINA
MERCADER in her capacity and as guardian of DARWIN,
GIOVANNI, RODEL and DENNIS, all surnamed MERCADER;
LEONIDA Vda. de MERCADER on her behalf and on behalf of
her minor child MARY JOY MERCADER; SHIRLEY MERCADER
DELA CRUZ; MARIA THERESA MERCADER-GARCIA; DANILO
MERCADER; JOSE DANTE MERCADER; and JOSEFINA
MERCADER, respondents
G.R. No. 136048. January 23, 2001
Actions; Courts; Jurisdiction; Generally, the jurisdiction of a court is
determined by the statute in force at the commencement of the
action, unless such statute provides for its retroactive application.
Generally, the jurisdiction of a court is determined by the statute in
force at the commencement of the action, unless such statute provides
for its retroactive application. Once the jurisdiction of a court attaches,
it continues until the case is finally terminated. The trial court cannot
be ousted therefrom by subsequent happenings or events, although
of a character that would have prevented jurisdiction from attaching
in the first instance.
Same; Docket Fees; The Manchester ruling, which became final in
1987, has no retroactive application and cannot be invoked in the
subject Complaint filed in 1984.The Manchester ruling, which
became final in 1987, has no retroactive application and cannot be
invoked in the subject Complaint filed in 1984. The Court explicitly
declared: To put a stop to this irregularity, henceforth all complaints,
petitions, answers and other similar pleadings should specify the
amount of damages being prayed for not only in the body of the
pleading but also in the prayer, and said damages shall be considered
in the assessment of the filing fees in any case. Any pleading that fails
to comply with this requirement shall not be accepted nor admitted,
or shall otherwise be expunged from the record. (emphasis supplied)
Same; Pleadings and Practice; Motions for Bill of Particulars; A motion
for bill of particulars becomes moot and academic where, prior to its
filing, the defendant has already filed his answer and several other
pleadings.We are not impressed. It must be noted that petitioners
counsel manifested in open court his desire to file a motion for a bill
of particulars. The RTC gave him ten days from March 12, 1985 within
which to do so. He, however, filed the aforesaid motion only on April
2, 1985 or eleven days past the deadline set by the trial court.
Moreover, such motion was already moot and academic because, prior
to its filing, petitioners had already filed their answer and several other
pleadings to the amended Complaint. Section 1, Rule 12 of the Rules
of Court, provides: Section 1. When applied for; purpose.Before
responding to a pleading, a party may move for a more definite
statement or for a bill of particulars of any matter which is not averred
with sufficient definiteness or particularity to enable him properly to
prepare his responsive pleading. If the pleading is a reply, the motion
must be filed within ten (10) days from service thereof. Such motion
shall point out the defects complained of, the paragraphs wherein they
are contained, and the details desired. (emphasis supplied)
Witnesses; Judges cannot be expected to rely on the testimonies of
every witnessin ascertaining the facts, they determine who are
credible and who are not.First, judges cannot be expected to rely
on the testimonies of every witness. In ascertaining the facts, they
determine who are credible and who are not. In doing so, they
consider all the evidence before them. In other words, the mere fact
that Judge Noynay based his decision on the testimonies of
respondents witnesses does not necessarily mean that he did not
consider those of petitioners. Second, we find no sufficient showing
that Judge Operario was overzealous in questioning the witnesses. His
questions merely sought to clarify their testimonies. In all, we reject
petitioners contention that their right to adduce evidence was
violated.
Common Carriers; By the nature of its business and for reasons of
public policy, a common carrier is bound to carry passengers safely as
far as human care and foresight can provide.We agree with the
findings of both courts that petitioners failed to observe extraordinary
diligence that fateful morning. It must be noted that a common carrier,
by the nature of its business and for reasons of public policy, is bound
to carry passengers safely as far as human care and foresight can
252
provide. It is supposed to do so by using the utmost diligence of very
cautious persons, with due regard for all the circumstances. In case
of death or injuries to passengers, it is presumed to have been at fault
or to have acted negligently, unless it proves that it observed
extraordinary diligence as prescribed in Articles 1733 and 1755 of the
Civil Code.
Evidence; It is a well-settled rule that the trial courts factual findings,
when affirmed by the appellate court, are conclusive and binding, if
they are not tainted with arbitrariness or oversight of some fact or
circumstance of significance and influence.We therefore believe that
there is no reason to overturn the assailed CA Decision, which affirmed
that of the RTC. It is a well-settled rule that the trial courts factual
findings, when affirmed by the appellate court, are conclusive and
binding, if they are not tainted with arbitrariness or oversight of some
fact or circumstance of significance and influence. As clearly discussed
above, petitioners have not presented sufficient ground to warrant a
deviation from this rule.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Domingo Lucenario for petitioners.
Mercader & Associates Law Offices for private respondents.
PANGANIBAN, J.:
The Manchester ruling requiring the payment of docket and other fees
as a condition for the acquisition of jurisdiction has no retroactive
effect and applies only to cases filed after its finality.
The Case
Before us is a Petition for Review under Rule 45 of the Rules of Court,
assailing the April 17, 1998 Decision and the October 28, 1998
Resolution of the Court of Appeals (CA) in CA-GR CV No. 40772. The
decretal portion of said Decision reads as follows:
WHEREFORE, upon all the foregoing premises considered, the
DECISION appealed from is AFFIRMED with the MODIFICATION that
the loss of earnings of the late Dominador Mercader is reduced to
P798,000.00.
The assailed Resolution denied petitioners Motion for
Reconsideration.
The Court of Appeals sustained the Decision of the Regional Trial Court
(RTC) of Laoang, Northern Samar (Branch 21). Except for the
modification of the loss of earnings, it affirmed all the monetary
damages granted by the trial court to respondents. The decretal
portion of the assailed RTC Decision reads as follows:
WHEREFORE, on preponderance of evidence, judgment is for [herein
respondents] and against [herein petitioners], ordering the latter to
pay the former:
(a) As compensatory damages for the death of Dominador Mercader
P50,000.00;
(b) For the loss of earnings of the late Dominador Mercader
P1,660,000.00, more or less, based on the average life span of 75
years from the time of his death who earned a net income of
P5,000.00 monthly out of his business;
(c) Actual damages of P30,000.00 receipted purchases of goods in
Manila; P5,750.00 for the first class coffin and a 15-day wake services
evidenced by a receipt marked Exh. D; [P]850.00 for the 50 x 60
headstone, receipt marked Exh. E and P1,590.00Deed of Absolute
Sale of a burial lot, marked Exh. F;
(d) 25% of whatever amount is collected by [respondents] from
[petitioners] but no less than P50,000.00 plus P1,000.00 per hearing
by way of attorneys fees;
(e) As moral damagesP50,000.00;
253
(f) As exemplary damagesP30,000.00; and
(g) To pay the costs.
The Facts
The antecedents of the case are succinctly summarized by the Court
of Appeals in this wise:
The original complaint was filed against JB Lines, Inc. [Petitioner JB
Lines, Inc.] filed a motion to dismiss complaint, to strike out false-
impertinent matters therefrom, and/or for bill of particulars on the
primary grounds that [respondents] failed to implead Jose Baritua as
an indispensable party and that the cause of action is a suit against a
wrong and non-existent party. [Respondents] filed and opposition to
the said motion and an amended complaint.
In an Order dated December 11, 1984 the trial court denied the
aforesaid motion and admitted the amended complaint of
[respondents] impleading Jose Baritua and alleged the following:
(10) The late Dominador Mercader is a [b]usinessman mainly
engaged in the buy and sell of dry goods in Laoang, N. Samar. He
buys his goods from Manila and bringt[s] them to Laoang, Northern
Samar for sale at his store located in the said locality;
(11) Sometime on March 16, 1983, the late Dominador Mercader
boarded [petitioners] bus No. 142 with Plate No. 484 EU at
[petitioners] Manila Station/terminal, bound for Brgy. Rawis, Laoang
Northern Samar as a paying passenger;
(12) At that time, Dominador Mercader had with him as his baggage,
assorted goods (i.e. long pants, short pants, dusters, etc.) which he
likewise loaded in [petitioners] bus;
(13) The late Dominador Mercader was not able to reach his
destination considering that on March 17, 1983 at Bailey (Bugco)
Bridge, Barangay Roxas, Mondragon, Northern Samar, while he was
on board [petitioners] bus no. 142 with Plate No. 484 EU, the said bus
fell into the river as a result of which the late Dominador Mercader
died. x x x.
(14) The accident happened because [petitioners] driver negligently
and recklessly operated the bus at a fast speed in wanton disregard
of traffic rules and regulations and the prevailing conditions then
existing that caused [the] bus to fall into the river.
[Respondents] then filed a motion to declare [petitioners] in default
which motion was opposed by [petitioners]. [Respondents] withdrew
the said motion prompting the trial court to cancel the scheduled
hearing of the said motion to declare [petitioners] in default in an
Order dated January 23, 1985.
In its answer, [petitioners] denied specifically all the material
allegations in the complaint and alleged the following:
2. The alleged person of Dominador Mercader did not board bus 142
at [petitioners] Manila station/terminal x x x as a (supposed paying
passenger). There is even no statement in the complaint that
Dominador Mercader (if it were true that he was a passenger of bus
142 at the [petitioners] Manila station/terminal) was issued any
passenger-freight ticket conformably with law and practice. It is a fact
of public knowledge that, in compliance with existing rules and laws,
[Petitioner] Baritua, as a public utility operator, issues, thru his
conductors, in appropriate situations, to a true passenger, the familiar
and known passenger and freight ticket which reads in part:
NOTICE
Baggage carried at owners risk x x x liability on prepaid freight
otherwise declared.
xxx xxx xxx
Whole Fare Paid P_________________
Declared value_______________x x x.
254
Description of Freight _________________
Signature of Owner.
3. It is also a fact of public knowledge that [Petitioner] Baritua does
not have any Manila station/terminal, because what he has is a Pasay
city station.
4. [Petitioner] Baritua had no prior knowledge that, on of about March
17, 1983, and/or previous thereto, the Bugko Bailey Bridge (across
Catarman-Laoang road) in Barangay Roxas, Mondragon, Northern
Samar, was in virtual dilapidated] and dangerous condition, in a state
of decay and disrepair, thus calling for the concerned government and
public officials performance of their coordinative and joint duties and
responsibilities, to repair, improve and maintain that bridge, in good
and reasonably safe condition, but, far from performing or complying
with said subject duties and responsibilities, the adverted officials
concerned, without just cause, not only failed and neglected to cause
such needed repair, improvement and maintenance of the Bugko
Bailey Bridge, on or prior to March 17, 1983, but also failed, and
neglected to either close the Bugko Bridge to public use and travel,
and/or to put appropriate warning and cautionary signs, for repair,
improvement, maintenance, and safety purposes. So that, as a
proximate and direct consequence of the aggregate officials
nonfeasance, bad faith, negligence, serious inefficiency, and callous
indifference to public safety, that Bugko Bridge collapsed inward and
caved in ruin, on that March 17, 1983, while Barituas bus 142 was
cautiously and prudently passing and travelling across the said bridge,
as a result of which the bus fell into the river and sea waters, despite
the exercise and compliance by Baritua and his driver of their duties
in the matter of their requisite degree of diligence, caution and
prudence, Baritua also exercised and complied with the requisite duty
of diligence, care, and prudence in the selection and supervision over
his driver, contrary to the baseless imputation in paragraphs 14 and
20 of the original and amended complaints. Moreover, Baritua and his
driver did not violate any traffic rule and regulation, contrary to
plaintiffs insinuation.
5. Furthermore, [Petitioner] Baritua and his driver have no causative
connection with the alleged death of Dominador Mercader who,
according to a reliable source, was already seriously suffering from a
lingering illness even prior to his alleged demise. Baritua also learned
lately, and so it is herein alleged that Dominador Mercader contributed
considerably, to, and/or provided the proximate and direct cause of
his own death, hence, he himself is to be blamed for whatever may
have happened to him or for whatever may have been sustained by
his supposed heirs, vis--vis the suit against the wrong party.
6. Baritua and his driver, as earlier stated, did not commit any
actionable breach of contract with the alleged Dominador Mercader or
the latters supposed heirs.
7. There is no factual nor any legal basis for plaintiffs proffered claims
for damages.
II. AFFIRMATIVE DEFENSES
8. Based on the preceding averments, plaintiffs have neither a cause
nor a right of action against [Petitioner] Baritua and his driver.
8.1. The allegation that supposedly the x x x [plaintiffs are the
compulsory heirs of the late DOMINADOR MERCADER x x x (par. 8,
complaint) is too vague and too broad, as the subject allegation is a
bare and pure conclusionary averment unaccompanied by the
requisite statement of ultimate facts constitutive of a cause or right of
action.
8.2. Even assuming arguendo, without however conceding, plaintiffs
statement of a cause of action, the complaint is nonetheless replete
with false and impertinent matters which fit the rule on striking out
pleadings or parts thereof. To mention only a glaring few:
8.2.a. The allegation on exemplary damages x x x is impertinent and
immaterial in the complaint against a supposed employer. For, even
theoretically assuming, without however admitting a negligent act-
omission on the part of a driver, nevertheless, in such a hypothetical
situation, the causative negligence, if any there was, is personal to the
255
wrongdoer, i.e., the employee-driver, to the exclusion of the
employer.
8.2.b. The allegation on supposed minimum life of 75 years and on
Tie expects to earn no less than P1,680,000.00 x x x is false, a pure
hyperbole, and bereft of factual and legal basis. Besides, what
jurisprudential rule refers to is only net earning. The law abhors a
claim, akin to plaintiffs allegation, which is manifestly speculative, as
it may not exist at all. Furthermore, the questioned allegation in the
plaintiffs original and amended complaints is not preceded by the
requisite statement of definitive facts, nor of any specific fact, which
could possibly afford a rational basis for a reasonable expectation of
supposed earning that could be lost, or impaired.
8.2.c. Likewise, the allegations that allegedly x x x the late Dominador
Mercader boarded x x x Bus No. 142 x x x and that supposedly the
latter had a baggage x x x containing drygoods x x x in which case
[petitioners have] to pay the value thereof in such amount as may be
proven by [respondents] in court during the trial x x x, apart from
being false, are offensive to the rule on concise statement of ultimate
facts. The assailed allegations also contravene Interim Rule 11, (i)f
any demand is for damages in a civil action the amount thereof must
be specifically alleged In consequence of this averment,
[respondents] have not yet paid the correct docket fee, for which
reason, [respondents] case may be dismissed on that ground alone.
8.3 In violation also of the same Interim Rule 11, regarding the
requisite definitive amount of claim, the allegation on the supposed
funeral expense x x x does not also indicate any specific amount. So
with the averment on supposed moral damage which may not be
warranted because of absence of allegation of fraud or bad faith, if
any, there was, apart from want of causative connection with the
defendant.
8.4 The allegation in paragraph 15 of the original and amended
complaint is also a pure conclusionary averment, without a factual
premise.
9. [Petitioner] JB LINE, impleaded in the amended complaint, is merely
a business name and sole proprietorship of defendant Baritua. As
such, JB Line is not a juridical person, nor an entity authorized by law
to sue and be sued, hence, it cannot legally be a party to any action.
With this averment, correlated with that in paragraphs 4-5 hereof,
[respondents] amended complaint is essentially a suit against a wrong
party.
The RTC, after due trial, rendered the aforesaid assailed Decision.
Ruling of the Court of Appeals
As earlier stated, the Court of Appeals affirmed the trial courts award
of monetary damages in favor of respondents, except the amount of
Dominador Mercaders lost earnings, which it reduced to P798,000. It
held that petitioners failed to rebut the presumption that in the event
a passenger died or was injured, the carrier had acted negligently.
Petitioners, it added, presented no sufficient proof that they had
exercised extraordinary diligence.
Hence, this Petition.
The Issues
In their Memorandum, petitioners submit the following issues for our
consideration:
I
Did the honorable Court of Appeals (CA) gravely abuse its discretion
when it allowed to pass sub silencio the trial courts failure to rule
frontally on petitioners plea for a bill of particulars, and ignored the
nature of respondents prayer in the complaint pleading for an award
of
a) P12,000.00representing the death compensation;
b) An amount to be proven in court, representing actual damages;
256

c)P1,660,000.00 or more as may be proven during the trial, by way of
loss of earnings;
d) An amount to be proven in court as and by way of funeral expenses;
e) An amount to be proven during the trial, representing moral
damages;
f) An amount to be determined by this Honorable Court, representing
exemplary damages;
g) An amount equivalent to 25% of whatever amount the plaintiffs
would be able to collect from the defendant but in no case less than
P50,000.00 plus an additional amount of P1,000.00 per hearing as and
by way of Attorneys fees;
II
Did the CA also ignore the fact that the trial court was not paid the
correct amount of the docket and other lawful fees; hence, without
jurisdiction over the original and amended complaints or over the
subject matter of the case;
III
Did the CA likewise arbitrarily disregard petitioners constitutional right
to procedural due process and fairness when it ignored and thrust
aside their right to present evidence and to expect that their evidence
will be duly considered and appreciated; and
IV
In awarding excessive and extravagant damages, did the CA and the
trial court adhere to the rule that their assailed decision must state
clearly and distinctly the facts and the laws on which they are based?
Distilling the alleged errors cited above, petitioners raise two main
issues for our consideration: (1) whether the CA erred in holding that
the RTC had jurisdiction over the subject matter of the case, and (2)
whether the CA disregarded petitioners procedural rights.
The Courts Ruling
The Petition is devoid of merit.
First Issue: Jurisdiction
Petitioners contend that since the correct amounts of docket and other
lawful fees were not paid by respondents, then the trial court did not
acquire jurisdiction over the subject matter of the case.
The Court, in Manchester Development Corporation v. CA, held that
[t]he court acquires jurisdiction over any case only upon the payment
of the prescribed docket fee. An amendment of the complaint or
similar pleading will not thereby vest jurisdiction in the court, much
less the payment of the docket fee based on the amounts sought in
the amended pleading, x x x.
Generally, the jurisdiction of a court is determined by the statute in
force at the commencement of the action, unless such statute provides
for its retroactive application. Once the jurisdiction of a court attaches,
it continues until the case is finally terminated. The trial court cannot
be ousted therefrom by subsequent happenings or events, although
of a character that would have prevented jurisdiction from attaching
in the first instance.
The Manchester ruling, which became final in 1987, has no retroactive
application and cannot be invoked in the subject Complaint filed in
1984. The Court explicitly declared:
To put a stop to this irregularity, henceforth all complaints, petitions,
answers and other similar pleadings should specify the amount of
damages being prayed for not only in the body of the pleading but
also in the prayer, and said damages shall be considered in the
257
assessment of the filing fees in any case. Any pleading that fails to
comply with this requirement shall not he accepted nor admitted, or
shall otherwise he expunged from the record. (emphasis supplied)
Second Issue: Petitioners Procedural Rights Motion for a Bill of
Particulars
Petitioners argue that the Court of Appeals erred when it passed sub
silencio on the trial Courts failure to rule frontally on their plea for a
bill of particulars.
We are not impressed. It must be noted that petitioners counsel
manifested in open court his desire to file a motion for a bill of
particulars. The RTC gave him ten days from March 12, 1985 within
which to do so. He, however, filed the aforesaid motion only on April
2, 1985 or eleven days past the deadline set by the trial court.
Moreover, such motion was already moot and academic because, prior
to its filing, petitioners had already filed their answer and several other
pleadings to the amended Complaint. Section 1, Rule 12 of the Rules
of Court, provides:
Section 1. When applied for; purpose.Before responding to a
pleading, a party may move for a more definite statement or for a bill
of particulars of any matter which is not averred with sufficient
definiteness or particularity to enable him properly to prepare his
responsive pleading. If the pleading is a reply, the motion must be
filed within ten (10) days from service thereof. Such motion shall point
out the defects complained of, the paragraphs wherein they are
contained, and the details desired. (emphasis supplied)
Petitioners Right to Adduce Evidence
Petitioners also argue that their right to present evidence was violated
by the CA, because it did not consider their contention that the trial
judges who heard the case were biasfed and impartial. Petitioners
contend, as they did before the CA, that Judge Tomas B. Noynay
based his Decision on certain chosen partial testimonies of
[respondents] witnesses x x x. They further maintain that Judge
Fortunato Operario, who initially handled the case, questioned some
witnesses in an overzealous manner and assum[ed] the dual role of
magistrate and advocate.
These arguments are not meritorious. First, judges cannot be
expected to rely on the testimonies of every witness. In ascertaining
the facts, they determine who are credible and who are not. In doing
so, they consider all the evidence before them. In other words, the
mere fact that Judge Noynay based his decision on the testimonies of
respondents witnesses does not necessarily mean that he did not
consider those of petitioners. Second, we find no sufficient showing
that Judge Operario was overzealous in questioning the witnesses. His
questions merely sought to clarify their testimonies. In all, we reject
petitioners contention that their right to adduce evidence was
violated.
Alleged Failure to State Clearly the Facts and the Law
We are not convinced by petitioners contention, either, that both the
trial and the appellate courts failed to state clearly and distinctly the
facts and the law involved in the case. As can be gleaned from their
Decisions, both courts clearly laid down their bases for awarding
monetary damages to respondents.
Both the RTC and the CA found that a contract of carriage existed
between petitioners and Dominador Mercader when he boarded Bus
No. 142 in Pasay City on March 16, 1983. Petitioners failed to transport
him to his destination, because the bus fell into a river while traversing
the Bugko Bailey Bridge. Although he survived the fall, he later died
of asphyxia secondary to drowning.
We agree with the findings of both courts that petitioners failed to
observe extraordinary diligence18 that fateful morning. It must be
noted that a common carrier, by the nature of its business and for
reasons of public policy, is bound to carry passengers safely as far as
human care and foresight can provide. It is supposed to do so by using
the utmost diligence of very cautious persons, with due regard for all
the circumstances. In case of death or injuries to passengers, it is
258
presumed to have been at fault or to have acted negligently, unless it
proves that it observed extraordinary diligence as prescribed in Articles
1733 and 1755 of the Civil Code.
We sustain the ruling of the CA that petitioners failed to prove that
they had observed extraordinary diligence.
Petition denied, judgment affirmed.
Notes.While common carriers are required to observe extraordinary
diligence and are presumed at fault, no such presumption applies to
private carriers. (Planters Products, Inc. vs. Court of Appeals, 226
SCRA 476 [1993])

First, petitioners did not present evidence on the skill or expertise of
the driver of Bus No. 142 or the condition of that vehicle at the time
of the incident.
Second, the bus was overloaded at the time. In fact, several
individuals were standing when the incident occurred.
Third, the bus was overspeeding. Its conductor testified that it had
overtaken several buses before it reached the Bugko Bailey Bridge.
Moreover, prior to crossing the bridge, it had accelerated and
maintained its speed towards the bridge.
The contract of air carnage generates a relation attended with a public
duty and any discourteous conduct on the part of the carriers
employees toward a passenger gives the latter an action for damages
against the carrier. (Korean Airlines Co., Ltd. vs. Court of Appeals, 234
SCRA 717 [1994])
In breach of contract of carriage, moral damages may be recovered
when it results in the death of a passenger. (Sulpicio Lines, Inc. vs.
Court of Appeals, 246 SCRA 376 [1995])
o0o

We therefore believe that there is no reason to overturn the assailed

CA Decision, which affirmed that of the RTC. It is a well-settled rule
that the trial courts factual findings, when affirmed by the appellate
court, are conclusive and binding, if they are not tainted with
arbitrariness or oversight of some fact or circumstance of significance
and influence. As clearly discussed above, petitioners have not
presented sufficient ground to warrant a deviation from this rule.

Finally, we cannot fault the appellate court in its computation of the

damages and lost earnings, since it effectively computed only net
earnings in accordance with existing jurisprudence.

WHEREFORE, the Petition is hereby DENIED, and the assailed Decision

AFFIRMED. Costs against petitioners.

SO ORDERED.

Melo (Chairman), Vitug, Gonzaga-Reyes and Sandoval-Gutierrez,

JJ., concur.

259
ALBERTA YOBIDO and CRESENCIO YOBIDO, petitioners, vs.
COURT OF APPEALS, LENY TUMBOY, ARDEE TUMBOY AND
JASMIN TUMBOY, respondents
G.R. No. 113003. October 17, 1997
Appeals; Evidence; Factual findings of the Court of Appeals are final
and may not be reviewed on appeal by the Supreme Court except
when the lower court and the Court of Appeals arrived at diverse
factual findings.The Court did re-examine the facts and evidence in
this case because of the inapplicability of the established principle that
the factual findings of the Court of Appeals are final and may not be
reviewed on appeal by this Court. This general principle is subject to
exceptions such as the one present in this case, namely, that the lower
court and the Court of Appeals arrived at diverse factual findings.
However, upon such re-examination, we found no reason to overturn
the findings and conclusions of the Court of Appeals.
Common Carriers; When a passenger boards a common carrier, he
takes the risks incidental to the mode of travel he has takenafter all,
a carrier is not an insurer of the safety of its passengers and is not
bound absolutely and at all events to carry them safely and without
injury.As a rule, when a passenger boards a common carrier, he
takes the risks incidental to the mode of travel he has taken. After all,
a carrier is not an insurer of the safety of its passengers and is not
bound absolutely and at all events to carry them safely and without
injury. However, when a passengers is injured or dies while travelling,
the law presumes that the common carrier is negligent. Thus, the Civil
Code provides: Art. 1756. In case of death or injuries to passengers,
common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence as prescribed in Articles 1733 and 1755.
Same; Fortuitous Events; Words and Phrases; Characteristics of a
Fortuitous Event.In view of the foregoing, petitioners contention
that they should be exempt from liability because the tire blowout was
no more than a fortuitous event that could not have been foreseen,
must fail. A fortuitous event is possessed of the following
characteristics: (a) the cause of the unforeseen and unexpected
occurrence, or the failure of the debtor to comply with his obligations,
must be independent of human will; (b) it must be impossible to
foresee the event which constitutes the caso fortuito, or if it can be
foreseen, it must be impossible to avoid; (c) the occurrence must be
such as to render it impossible for the debtor to fulfill his obligation in
a normal manner; and (d) the obligor must be free from any
participation in the aggravation of the injury resulting to the creditor.
As Article 1174 provides, no person shall be responsible for a
fortuitous event which could not be foreseen, or which, though
foreseen, was inevitable. In other words, there must be an entire
exclusion of human agency from the cause of injury or loss.
Same; Same; Under the circumstances of the present case, the
explosion of the new tire may not be considered a fortuitous event.
Under the circumstances of this case, the explosion of the new tire
may not be considered a fortuitous event. There are human factors
involved in the situation. The fact that the tire was new did not imply
that it was entirely free from manufacturing defects or that it was
properly mounted on the vehicle. Neither may the fact that the tire
bought and used in the vehicle is of a brand name noted for quality,
resulting in the conclusion that it could not explode within five days
use. Be that as it may, it is settled that an accident caused either by
defects in the automobile or through the negligence of its driver is not
a caso fortuito that would exempt the carrier from liability for
damages.
Same; Same; A common carrier may not be absolved from liability in
case of force majeure or fortuitous event alonethe common carrier
must still prove that it was not negligent in causing the death or injury
resulting from an accident.Moreover, a common carrier may not be
absolved from liability in case of force majeure or fortuitous event
alone. The common carrier must still prove that it was not negligent
in causing the death or injury resulting from an accident. This Court
has had occasion to state: While it may be true that the tire that
blew-up was still good because the grooves of the tire were still visible,
this fact alone does not make the explosion of the tire a fortuitous
event. No evidence was presented to show that the accident was due
260
to adverse road conditions or that precautions were taken by the
jeepney driver to compensate for any conditions liable to cause
accidents. The sudden blowing-up, therefore, could have been caused
by too much air pressure injected into the tire coupled by the fact that
the jeepney was overloaded and speeding at the time of the accident.
Same; Same; Damages; Where a common carrier failed to exercise
the extraordinary diligence required of it, which resulted in the death
of a passenger, it is deemed to have acted recklessly, and the heirs of
the passenger shall be entitled to exemplary damages.Moral
damages are generally not recoverable in culpa contractual except
when bad faith had been proven. However, the same damages may
be recovered when breach of contract of carriage results in the death
of a passenger, as in this case. Exemplary damages, awarded by way
of example or correction for the public good when moral damages are
awarded, may likewise be recovered in contractual obligations if the
defendant acted in wanton, fraudulent, reckless, oppressive, or
malevolent manner. Because petitioners failed to exercise the
extraordinary diligence required of a common carrier, which resulted
in the death of Tito Tumboy, it is deemed to have acted recklessly. As
such, private respondents shall be entitled to exemplary damages.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion on the Court.
Silvanio T. Liza for petitioners.
Gershon A. Patalinghug, Jr. for private respondents.
ROMERO, J.:
In this petition for review on certiorari of the decision of the Court of
Appeals, the issue is whether or not the explosion of a newly installed
tire of a passenger vehicle is a fortuitous event that exempts the
carrier from liability for the death of a passenger.
On April 26, 1988, spouses Tito and Leny Tumboy and their minor
children named Ardee and Jasmin, boarded at Mangagoy, Surigao del
Sur, a Yobido Liner bus bound for Davao City. Along Picop Road in
Km. 17, Sta. Maria, Agusan del Sur, the left front tire of the bus
exploded. The bus fell into a ravine around three (3) feet from the
road and struck a tree. The incident resulted in the death of 28-year-
old Tito Tumboy and physical injuries to other passengers.
On November 21, 1988, a complaint for breach of contract of carriage,
damages and attorneys fees was filed by Leny and her children
against Alberta Yobido, the owner of the bus, and Cresencio Yobido,
its driver, before the Regional Trial Court of Davao City. When the
defendants therein filed their answer to the complaint, they raised the
affirmative defense of caso fortuito. They also filed a third-party
complaint against Philippine Phoenix Surety and Insurance, Inc. This
third-party defendant filed an answer with compulsory counterclaim.
At the pre-trial conference, the parties agreed to a stipulation of facts.
Upon a finding that the third party defendant was not liable under the
insurance contract, the lower court dismissed the third party
complaint. No amicable settlement having been arrived at by the
parties, trial on the merits ensued.
The plaintiffs asserted that violation of the contract of carriage
between them and the defendants was brought about by the drivers
failure to exercise the diligence required of the carrier in transporting
passengers safely to their place of destination. According to Leny
Tumboy, the bus left Mangagoy at 3:00 oclock in the afternoon. The
winding road it traversed was not cemented and was wet due to the
rain; it was rough with crushed rocks. The bus which was full of
passengers had cargoes on top. Since it was running fast, she
cautioned the driver to slow down but he merely stared at her through
the mirror. At around 3:30 p.m., in Trento, she heard something
explode and immediately, the bus fell into a ravine.
For their part, the defendants tried to establish that the accident was
due to a fortuitous event. Abundio Salce, who was the bus conductor
when the incident happened, testified that the 42-seater bus was not
261
full as there were only 32 passengers, such that he himself managed
to get a seat. He added that the bus was running at a speed of 60 to
50 and that it was going slow because of the zigzag road. He affirmed
that the left front tire that exploded was a brand new tire that he
mounted on the bus on April 21, 1988 or only five (5) days before the
incident. The Yobido Liner secretary, Minerva Fernando, bought the
new Goodyear tire from Davao Toyo Parts on April 20, 1988 and she
was present when it was mounted on the bus by Salce. She stated
that all driver applicants in Yobido Liner underwent actual driving tests
before they were employed. Defendant Cresencio Yobido underwent
such test and submitted his professional drivers license and
clearances from the barangay, the fiscal and the police.
On August 29, 1991, the lower court rendered a decision dismissing
the action for lack of merit. On the issue of whether or not the tire
blowout was a caso fortuito, it found that the falling of the bus to the
cliff was a result of no other outside factor than the tire blow-out. It
held that the ruling in the La Mallorca and Pampanga Bus Co. v. De
Jesus that a tire blowout is a mechanical defect of the conveyance or
a fault in its equipment which was easily discoverable if the bus had
been subjected to a more thorough or rigid check-up before it took to
the road that morning is inapplicable to this case. It reasoned out
that in said case, it was found that the blowout was caused by the
established fact that the inner tube of the left front tire was pressed
between the inner circle of the left wheel and the rim which had
slipped out of the wheel. In this case, however, the cause of the
explosion remains a mystery until at present. As such, the court
added, the tire blowout was a caso fortuito which is completely an
extraordinary circumstance independent of the will of the defendants
who should be relieved of whatever liability the plaintiffs may have
suffered by reason of the explosion pursuant to Article 1174, of the
Civil Code.
Dissatisfied, the plaintiffs appealed to the Court of Appeals. They
ascribed to the lower court the following errors: (a) finding that the
tire blowout was a caso fortuito; (b) failing to hold that the defendants
did not exercise utmost and/or extraordinary diligence required of
carriers under Article 1755 of the Civil Code, and (c) deciding the case
contrary to the ruling in Juntilla v. Fontanar, and Necesito v. Paras.
On August 23, 1993, the Court of Appeals rendered the Decision
reversing that of the lower court. It held that:
To Our mind, the explosion of the tire is not in itself a fortuitous
event. The cause of the blow-out, if due to a factory defect, improper
mounting, excessive tire pressure, is not an unavoidable event. On the
other hand, there may have been adverse conditions on the road that
were unforeseeable and/or inevitable, which could make the blow-out
a caso fortuito. The fact that the cause of the blow-out was not known
does not relieve the carrier of liability. Owing to the statutory
presumption of negligence against the carrier and its obligation to
exercise the utmost diligence of very cautious persons to carry the
passenger safely as far as human care and foresight can provide, it is
the burden of the defendants to prove that the cause of the blow-out
was a fortuitous event. It is not incumbent upon the plaintiff to prove
that the cause of the blow-out is not casofortuito.
Proving that the tire that exploded is a new Goodyear tire is not
sufficient to discharge defendants burden. As enunciated in Necesito
vs. Paras, the passenger has neither choice nor control over the carrier
in the selection and use of its equipment, and the good repute of the
manufacturer will not necessarily relieve the carrier from liability.
Moreover, there is evidence that the bus was moving fast, and the
road was wet and rough. The driver could have explained that the
blow-out that precipitated the accident that caused the death of Toto
Tumboy could not have been prevented even if he had exercised due
care to avoid the same, but he was not presented as witness.
The Court of Appeals thus disposed of the appeal as follows:
WHEREFORE, the judgment of the court a quo is set aside and
another one entered ordering defendants to pay plaintiffs the sum of
P50,000.00 for the death of Tito Tumboy, P30,000.00 in moral
damages, and P7,000.00 for funeral and burial expenses.
262
SO ORDERED.
The defendants filed a motion for reconsideration of said decision
which was denied on November 4, 1993 by the Court of Appeals.
Hence, the instant petition asserting the position that the tire blowout
that caused the death of Tito Tumboy was a caso fortuito. Petitioners
claim further that the Court of Appeals, in ruling contrary to that of
the lower court, misapprehended facts and, therefore, its findings of
fact cannot be considered final which shall bind this Court. Hence, they
pray that this Court review the facts of the case.
The Court did re-examine the facts and evidence in this case because
of the inapplicability of the established principle that the factual
findings of the Court of Appeals are final and may not be reviewed on
appeal by this Court. This general principle is subject to exceptions
such as the one present in this case, namely, that the lower court and
the Court of Appeals arrived at diverse factual findings. However, upon
such re-examination, we found no reason to overturn the findings and
conclusions of the Court of Appeals.
As a rule, when a passenger boards a common carrier, he takes the
risks incidental to the mode of travel he has taken. After all, a carrier
is not an insurer of the safety of its passengers and is not bound
absolutely and at all events to carry them safely and without injury.
However, when a passenger is injured or dies while travelling, the law
presumes that the common carrier is negligent. Thus, the Civil Code
provides:
Art. 1756. In case of death or injuries to passengers, common carriers
are presumed to have been at fault or to have acted negligently,
unless they prove that they observed extraordinary diligence as
prescribed in Articles 1733 and 1755.
Article 1755 provides that (a) common carrier is bound to carry the
passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with a due regard
for all the circumstances. Accordingly, in culpa contractual, once a
passenger dies or is injured, the carrier is presumed to have been at
fault or to have acted negligently. This disputable presumption may
only be overcome by evidence that the carrier had observed
extraordinary diligence as prescribed by Articles 1733, 1755 and 1756
of the Civil Code or that the death or injury of the passenger was due
to a fortuitous event.11 Consequently, the court need not make an
express finding of fault or negligence on the part of the carrier to hold
it responsible for damages sought by the passenger.
In view of the foregoing, petitioners contention that they should be
exempt from liability because the tire blowout was no more than a
fortuitous event that could not have been foreseen, must fail. A
fortuitous event is possessed of the following characteristics: (a) the
cause of the unforeseen and unexpected occurrence, or the failure of
the debtor to comply with his obligations, must be independent of
human will; (b) it must be impossible to foresee the event which
constitutes the caso fortuito, or if it can be foreseen, it must be
impossible to avoid; (c) the occurrence must be such as to render it
impossible for the debtor to fulfill his obligation in a normal manner;
and (d) the obligor must be free from any participation in the
aggravation of the injury resulting to the creditor. As Article 1174
provides, no person shall be responsible for a fortuitous event which
could not be foreseen, or which, though foreseen, was inevitable. In
other words, there must be an entire exclusion of human agency from
the cause of injury or loss.
Under the circumstances of this case, the explosion of the new tire
may not be considered a fortuitous event. There are human factors
involved in the situation. The fact that the tire was new did not imply
that it was entirely free from manufacturing defects or that it was
properly mounted on the vehicle. Neither may the fact that the tire
bought and used in the vehicle is of a brand name noted for quality,
resulting in the conclusion that it could not explode within five days
use. Be that as it may, it is settled that an accident caused either by
defects in the automobile or through the negligence of its driver is not
a caso fortuito that would exempt the carrier from liability for
damages.
263
Moreover, a common carrier may not be absolved from liability in case
of force majeure or fortuitous event alone. The common carrier must
still prove that it was not negligent in causing the death or injury
resulting from an accident. This Court has had occasion to state:
While it may be true that the tire that blew-up was still good because
the grooves of the tire were still visible, this fact alone does not make
the explosion of the tire a fortuitous event. No evidence was presented
to show that the accident was due to adverse road conditions or that
precautions were taken by the jeepney driver to compensate for any
conditions liable to cause accidents. The sudden blowing-up,
therefore, could have been caused by too much air pressure injected
into the tire coupled by the fact that the jeepney was overloaded and
speeding at the time of the accident.
It is interesting to note that petitioners proved through the bus
conductor, Salce, that the bus was running at 60-50 kilometers per
hour only or within the prescribed lawful speed limit. However, they
failed to rebut the testimony of Leny Tumboy that the bus was running
so fast that she cautioned the driver to slow down. These
contradictory facts must, therefore, be resolved in favor of liability in
view of the presumption of negligence of the carrier in the law.
Coupled with this is the established condition of the road-rough,
winding and wet due to the rain. It was incumbent upon the defense
to establish that it took precautionary measures considering partially
dangerous condition of the road. As stated above, proof that the tire
was new and of good quality is not sufficient proof that it was not
negligent. Petitioners should have shown that it undertook
extraordinary diligence in the care of its carrier, such as conducting
daily routinary checkups of the vehicles parts. As the late Justice J.B.L.
Reyes said:
It may be impracticable, as appellee argues, to require of carriers to
test the strength of each and every part of its vehicles before each
trip; but we are of the opinion that a due regard for the carriers
obligations toward the traveling public demands adequate periodical
tests to determine the condition and strength of those vehicle portions
the failure of which may endanger the safety of the passen-gers.
Having failed to discharge its duty to overthrow the presumption of
negligence with clear and convincing evidence, petitioners are hereby
held liable for damages. Article 1764 in relation to Article 2206 of the
Civil Code prescribes the amount of at least three thousand pesos as
damages for the death of a passenger. Under prevailing jurisprudence,
the award of damages under Article 2206 has been increased to fifty
thousand pesos (P50,000.00).
Moral damages are generally not recoverable in culpa contractual
except when bad faith had been proven. However, the same damages
may be recovered when breach of contract of carriage results in the
death of a passenger,22 as in this case. Exemplary damages, awarded
by way of example or correction for the public good when moral
damages are awarded, may likewise be recovered in contractual
obligations if the defendant acted in wanton, fraudulent, reckless,
oppressive, or malevolent manner.24 Because petitioners failed to
exercise the extraordinary diligence required of a common carrier,
which resulted in the death of Tito Tumboy, it is deemed to have acted
recklessly.25 As such, private respondents shall be entitled to
exemplary damages.
WHEREFORE, the Decision of the Court of Appeals is hereby
AFFIRMED subject to the modification that petitioners shall, in addition
to the monetary awards therein, be liable for the award of exemplary
damages in the amount of P20,000.00. Costs against petitioners.
SO ORDERED.
Narvasa (C.J., Chairman), Melo, Francisco and Panganiban, JJ.,
concur.
Judgment affirmed with modification.
Notes.In a contract of affreightment a common carrier is not
converted into a private carrier but remains as a common carrier and
still liable as such. (Coastwise Lighterage Corporation vs. Court of
Appeals, 245 SCRA 796 [1995])
264
On no other employer is a greater duty imposed of minimizing
absences among crew members than on common carriers. (Michael,
Inc. vs. National Labor Relations Commission, 256 SCRA 461 [1996])

In a contract of carriage, it is presumed that the common carrier was

at fault or was negligent when a passenger dies or is injured. (Baliwag
Transit, Inc. vs. Court of Appeals, 256 SCRA 746 [1996])

o0o

265
 BALIWAG TRANSIT, INC., petitioner, vs. COURT OF
APPEALS, SPOUSES ANTONIO GARCIA & LETICIA GARCIA, A
& J TRADING AND JULIO RECONTIQUE, respondents
G.R. No. 116110. May 15, 1996
Common Carriers; Presumptions; In a contract of carriage, it is
presumed that the common carrier was at fault or was negligent when
a passenger dies or is injured.As a common carrier, Baliwag
breached its contract of carriage when it failed to deliver its
passengers, Leticia and Allan Garcia to their destination safe and
sound. A common carrier is bound to carry its passengers safely as far
as human care and foresight can provide, using the utmost diligence
of a very cautious person, with due regard for all the circumstances.
In a contract of carriage, it is presumed that the common carrier was
at fault or was negligent when a passenger dies or is injured. Unless
the presumption is rebutted, the court need not even make an express
finding of fault or negligence on the part of the common carrier. This
statutory presumption may only be overcome by evidence that the
carrier exercised extraordinary diligence as prescribed in Articles 1733
and 1755 of the Civil Code.
Same; Early Warning Devices (EWD); A kerosene lamp or torch at the
edge of the road, near the rear portion of the truck to serve as an
early warning device substantially complies with Section 34(g) of the
Land Transportation and Traffic Code.Col. dela Cruz and Romano
testified that they did not see any early warning device at the scene
of the accident. They were referring to the triangular reflectorized
plates in red and yellow issued by the Land Transportation Office.
However, the evidence shows that Recontique and Ecala placed a
kerosene lamp or torch at the edge of the road, near the rear portion
of the truck to serve as an early warning device. This substantially
complies with Section 34 (g) of the Land Transportation and Traffic
Code.
Same; Damages; Evidence; To prove actual damages, the best
evidence available to the injured party must be presentedthe court
cannot rely on uncorroborated testimony whose truth is suspect but
must depend upon competent proof that damages have been actually
suffered.The propriety of the amount awarded as hospitalization and
medical fees. The award of P25,000.00 is not supported by the
evidence on record. The Garcias presented receipts marked as Exhibits
B-1 to B-42 but their total amounted only to P5,017.74. To be sure,
Leticia testified as to the extra amount spent for her medical needs
but without more reliable evidence, her lone testimony cannot justify
the award of P25,000.00. To prove actual damages, the best evidence
available to the injured party must be presented. The court cannot
rely on uncorroborated testimony whose truth is suspect, but must
depend upon competent proof that damages have been actually
suffered. Thus, we reduce the actual damages for medical and
hospitalization expenses to P5,017.74.
Same; Same; In a breach of contract of carriage, moral damages are
recoverable if the carrier, through its agent, acted fraudulently or in
bad faith.The award of moral damages is in accord with law. In a
breach of contract of carriage, moral damages are recoverable if the
carrier, through its agent, acted fraudulently or in bad faith. The
evidence shows the gross negligence of the driver of Baliwag bus
which amounted to bad faith.
PETITION for certiorari to review a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Leopoldo C. Sta. Maria for Baliwag Transit, Inc.
Arturo D. Vallar for Sps. Antonio and Leticia Garcia.
Alan A. Leynes for A & J Trading and Julio Recontique.
PUNO, J.:
This is a petition for certiorari to review the Decision of the Court of
Appeals in CA-G.R. CV-31246 awarding damages in favor of the
spouses Antonio and Leticia Garcia for breach of contract of carriage.
266
The records show that on July 31, 1980, Leticia Garcia, and her five-
year old son, Allan Garcia, boarded Baliwag Transit Bus No. 2036
bound for Cabanatuan City driven by Jaime Santiago. They took the
seat behind the driver.
At about 7:30 in the evening, in Malimba, Gapan, Nueva Ecija, the bus
passengers saw a cargo truck parked at the shoulder of the national
highway. Its left rear portion jutted to the outer lane, as the shoulder
of the road was too narrow to accommodate the whole truck. A
kerosene lamp appeared at the edge of the road obviously to serve as
a warning device. The truck driver, Julio Recontique, and his helper,
Arturo Escala, were then replacing a flat tire. The truck is owned by
respondent A & J Trading.
Bus driver Santiago was driving at an inordinately fast speed and failed
to notice the truck and the kerosene lamp at the edge of the road.
Santiagos passengers urged him to slow down but he paid them no
heed. Santiago even carried animated conversations with his co-
employees while driving. When the danger of collision became
imminent, the bus passengers shouted Babangga tayo!. Santiago
stepped on the brake, but it was too late. His bus rammed into the
stalled cargo truck. It caused the instant death of Santiago and Escala,
and injury to several others. Leticia and Allan Garcia were among the
injured passengers.
Leticia suffered a fracture in her pelvis and right leg. They rushed her
to the provincial hospital in Cabanatuan City where she was given
emergency treatment. After three days, she was transferred to the
National Orthopedic Hospital where she was confined for more than a
month.3 She underwent an operation for partial hip prosthesis.
Allan, on the other hand, broke a leg. He was also given emergency
treatment at the provincial hospital.
Spouses Antonio and Leticia Garcia sued Baliwag Transit, Inc., A & J
Trading and Julio Recontique for damages in the Regional Trial Court
of Bulacan. Leticia sued as an injured passenger of Baliwag and as
mother of Allan. At the time of the complaint, Allan was a minor,
hence, the suit initiated by his parents in his favor.
Baliwag, A & J Trading and Recontique disclaimed responsibility for
the mishap. Baliwag alleged that the accident was caused solely by
the fault and negligence of A & J Trading and its driver, Recontique.
Baliwag charged that Recontique failed to place an early warning
device at the corner of the disabled cargo truck to warn oncoming
vehicles. On the other hand, A & J Trading and Recontique alleged
that the accident was the result of the negligence and reckless driving
of Santiago, bus driver of Baliwag.
After hearing, the trial court found all the defendants liable, thus:
xxx
In view thereof, the Court holds that both defendants should be held
liable; the defendant Baliwag Transit, Inc. for having failed to deliver
the plaintiff and her son to their point of destination safely in violation
of plaintiffs and defendant Baliwag Transits contractual relation.
The defendant A & J and Julio Recontique for failure to provide its
cargo truck with an early warning device in violation of the Motor
Vehicle Law.
The trial court ordered Baliwag, A & J Trading and Recontique to pay
jointly and severally the Garcia spouses the following: (1) P25,000.00
hospitalization and medication fee, (2) P450,000.00 loss of earnings
in eight (8) years, (3) P2,000.00 for the hospitalization of their son
Allan Garcia, (4) P50,000.00 moral damages, and (5) P30,000.00
attorneys fee.
On appeal, the Court of Appeals modified the trial courts Decision by
absolving A & J Trading from liability and by reducing the award of
attorneys fees to P10,000.00 and loss of earnings to P300,000.00,
respectively.
Baliwag filed the present petition for review raising the following
issues:
267
1. Did the Court of Appeals err in absolving A & J Trading from liability
and holding Baliwag solely liable for the injuries suffered by Leticia
and Allan Garcia in the accident?
2. Is the amount of damages awarded by the Court of Appeals to the
Garcia spouses correct?
We affirm the factual findings of the Court of Appeals.
I Baliwag cannot evade its liability by insisting that the accident was
As a common carrier, Baliwag breached its contract of carriage when
it failed to deliver its passengers, Leticia and Allan Garcia to their
destination safe and sound. A common carrier is bound to carry its
passengers safely as far as human care and foresight can provide,
using the utmost diligence of a very cautious person, with due regard
for all the circumstances. In a contract of carriage, it is presumed that
the common carrier was at fault or was negligent when a passenger
dies or is injured. Unless the presumption is rebutted, the court need
not even make an express finding of fault or negligence on the part of
the common carrier. This statutory presumption may only be
overcome by evidence that the carrier exercised extraordinary
diligence as prescribed in Articles 1733 and 1755 of the Civil Code.
The records are bereft of any proof to show that Baliwag exercised
extraordinary diligence. On the contrary, the evidence demonstrates
its drivers recklessness. Leticia Garcia testified that the bus was
running at a very high speed despite the drizzle and the darkness of
the highway. The passengers pleaded for its driver to slow down, but
their plea was ignored. Leticia also revealed that the driver was
smelling of liquor. She could smell him as she was seated right behind
the driver. Another passenger, Felix Cruz testified that immediately
before the collision, the bus driver was conversing with a co-employee.
All these prove the bus drivers wanton disregard for the physical
safety of his passengers, which makes Baliwag as a common carrier
liable for damages under Article 1759 of the Civil Code:
Art. 1759. Common carriers are liable for the death of or injuries to
passengers through the negligence or willful acts of the formers
employees, although such employees may have acted beyond the
scope of their authority or in violation of the orders of the common
carriers.
This liability of the common carriers does not cease upon proof that
they exercised all the diligence of a good father of a family in the
selection or supervision of their employees.
caused solely by the negligence of A & J Trading and Julio Recontique.
It harps on their alleged non-use of an early warning device as testified
to by Col. Demetrio dela Cruz, the station commander of Gapan,
Nueva Ecija who investigated the incident, and Francisco Romano, the
bus conductor.
The records do not bear out Baliwags contention. Col. dela Cruz and
Romano testified that they did not see any early warning device at the
scene of the accident. They were referring to the triangular
reflectorized plates in red and yellow issued by the Land
Transportation Office. However, the evidence shows that Recontique
and Ecala placed a kerosene lamp or torch at the edge of the road,
near the rear portion of the truck to serve as an early warning device.
This substantially complies with Section 34 (g) of the Land
Transportation and Traffic Code, to wit:
(g) Lights and reflector when parked or disabled.Appropriate
parking lights or flares visible one hundred meters away shall be
displayed at the corner of the vehicle whenever such vehicle is parked
on highways or in places that are not well-lighted or, is placed in such
manner as to endanger passing traffic. Furthermore, every motor
vehicle shall be provided at all times with built-in reflectors or other
similar warning devices either pasted, painted or attached at its front
and back which shall likewise be visible at night at least one hundred
meters away. No vehicle not provided with any of the requirements
mentioned in this subsection shall be registered. (emphasis supplied)
Baliwags argument that the kerosene lamp or torch does not
substantially comply with the law is untenable. The aforequoted law
clearly allows the use not only of an early warning device of the
268
triangular reflectorized plates variety but also parking lights or flares
visible one hundred meters away. Indeed, Col. dela Cruz himself
admitted that a kerosene lamp is an acceptable substitute for the
reflectorized plates. No negligence, therefore, may be imputed to A &
J Trading and its driver, Recontique.
Anent this factual issue, the analysis of evidence made by the Court
of Appeals deserves our concurrence, viz:
xxx
In the case at bar, both the injured passengers of the Baliwag
involved in the accident testified that they saw some sort of kerosene
or a torch on the rear portion of the truck before the accident. Baliwag
Transits conductor attempted to defeat such testimony by declaring
that he noticed no early warning device in front of the truck.
Among the testimonies offered by the witnesses who were present at
the scene of the accident, we rule to uphold the affirmative
testimonies given by the two injured passengers and give less
credence to the testimony of the bus conductor who solely testified
that no such early warning device exists.
The testimonies of injured passengers who may well be considered as
disinterested witness appear to be natural and more probable than
the testimony given by Francisco Romano who is undoubtedly
interested in the outcome of the case, being the conductor of the
defendant-appellant Baliwag Transit, Inc.
It must be borne in mind that the situation then prevailing at the time
of the accident was admittedly drizzly and all dark. This being so, it
would be improbable and perhaps impossible on the part of the truck
helper without the torch nor the kerosene to remove the flat tires of
the truck. Moreover, witness including the bus conductor himself
admitted that the passengers shouted, that they are going to bump
before the collision which consequently caused the bus driver to apply
the brake 3 to 4 meters away from the truck. Again, without the
kerosene nor the torch in front of the truck, it would be improbable
for the driver, more so the passengers to notice the truck to be
bumped by the bus considering the darkness of the place at the time
of the accident.
xxx
While it is true that the investigating officer testified that he found no
early warning device at the time of his investigation, We rule to give
less credence to such testimony insofar as he himself admitted on
cross examination that he did not notice the presence of any kerosene
lamp at the back of the truck because when he arrived at the scene
of the accident, there were already many people surrounding the place
(TSN, Aug. 22, 1989, p. 13). He further admitted that there exists a
probability that the lights of the truck may have been smashed by the
bus at the time of the accident considering the location of the truck
where its rear portion was connected with the front portion of the bus
(TSN, March 29, 1985, pp. 11-13). Investigators testimony therefore
did not confirm nor deny the existence of such warning device, making
his testimony of little probative value.
II
We now review the amount of damages awarded to the Garcia
spouses.
First, the propriety of the amount awarded as hospitalization and
medical fees. The award of P25,000.00 is not supported by the
evidence on record. The Garcias presented receipts marked as Exhibits
B-1 to B-42 but their total amounted only to P5,017.74. To be sure,
Leticia testified as to the extra amount spent for her medical needs
but without more reliable evidence, her lone testimony cannot justify
the award of P25,000.00. To prove actual damages, the best evidence
available to the injured party must be presented. The court cannot
rely on uncorroborated testimony whose truth is suspect, but must
depend upon competent proof that damages have been actually
suffered. Thus, we reduce the actual damages for medical and
hospitalization expenses to P5,017.74.
269
Second, we find as reasonable the award of P300,000.00 representing SO ORDERED.
Leticias lost earnings. Before the accident, Leticia was engaged in
embroidery, earning P5,000.00 per month. Her injuries forced her to Regalado (Chairman), Romero, Mendoza and Torres, Jr., JJ.,
stop working. Considering the nature and extent of her injuries and concur.
the length of time it would take her to recover, we find it proper that
Baliwag should compensate her lost income for five (5) years. Judgment affirmed with modification.

Third, the award of moral damages is in accord with law. In a breach
of contract of carriage, moral damages are recoverable if the carrier,
through its agent, acted fraudulently or in bad faith. The evidence
shows the gross negligence of the driver of Baliwag bus which
amounted to bad faith. Without doubt, Leticia and Allan experienced
physical suffering, mental anguish and serious anxiety by reason of
the accident. Leticia underwent an operation to replace her broken hip
bone with a metal plate. She was confined at the National Orthopedic
Hospital for 45 days. The young Allan was also confined in the hospital
for his foot injury. Contrary to the contention of Baliwag, the decision
of the trial court as affirmed by the Court of Appeals awarded moral
damages to Antonio and Leticia Garcia not in their capacity as parents
of Allan. Leticia was given moral damages as an injured party. Allan
was also granted moral damages as an injured party but because of
his minority, the award in his favor has to be given to his father who
represented him in the suit.
Notes.When the goods shipped either are lost or arrive in damaged
condition, a presumption arises against the carrier of its failure to
observe that requisite diligence, and there need not be an express
finding of negligence to hold it liable. (Eastern Shipping Lines, Inc. vs.
Court of Appeals, 234 SCRA 78 [1994])
When one devotes his property to a use in which the public has an
interest, he, in effect, grants to the public an interest in that use, and
must submit to the control by the public for the common good, to the
extent of the interest he has thus created. (Kilusang Mayo Uno Labor
Center vs. Garcia, Jr., 239 SCRA 386 [1994])
o0o

Finally, we find the award of attorneys fees justified. The complaint

for damages was instituted by the Garcia spouses on December 15,
1982, following the unjustified refusal of Baliwag to settle their claim.
The Decision was promulgated by the trial court only on January 29,
1991 or about nine years later. Numerous pleadings were filed before
the trial court, the appellate court and to this Court. Given the
complexity of the case and the amount of damages involved, the
award of attorneys fee for P10,000.00 is just and reasonable.

IN VIEW WHEREOF, the Decision of the respondent Court of Appeals

in CA-G.R. CV-31246 is AFFIRMED with the MODIFICATION reducing
the actual damages for hospitalization and medical fees to P5,017.74.
No costs.

270
 WILLIAM TIU, doing business under the name and style of
D Rough Riders, and VIRGILIO TE LASPIAS, petitioners,
vs. PEDRO A. ARRIESGADO, BENJAMIN CONDOR, SERGIO
PEDRANO and PHILIPPINE PHOENIX SURETY AND
INSURANCE, INC., respondents
G.R. No. 138060. September 1, 2004
Civil Law; Contracts; Contracts of Carriage; Common Carriers;
Extraordinary Diligence; A man must use common sense, and exercise
due reflection in all his actsit is his duty to be cautious, careful and
prudent, if not from instinct, then through fear of recurring
punishment.A man must use common sense, and exercise due
reflection in all his acts; it is his duty to be cautious, careful and
prudent, if not from instinct, then through fear of recurring
punishment. He is responsible for such results as anyone might
foresee and for acts which no one would have performed except
through culpable abandon. Otherwise, his own person, rights and
property, and those of his fellow beings, would ever be exposed to all
manner of danger and injury.
Same; Same; Same; Same; Same; Negligence; Upon the happening
of the accident, the presumption of negligence at once arises, and it
becomes the duty of a common carrier to prove that he observed
extraordinary diligence in the care of his pasengers.Under the said
contract of carriage, the petitioners assumed the express obligation to
transport the respondent and his wife to their destination safely and
to observe extraordinary diligence with due regard for all
circumstances. Any injury suffered by the passengers in the course
thereof is immediately attributable to the negligence of the carrier.
Upon the happening of the accident, the presumption of negligence
at once arises, and it becomes the duty of a common carrier to prove
that he observed extraordinary diligence in the care of his passengers.
It must be stressed that in requiring the highest possible degree of
diligence from common carriers and in creating a presumption of
negligence against them, the law compels them to curb the
recklessness of their drivers.
Same; Same; Same; Same; Same; Same; The carrier must show the
utmost diligence of very cautious persons as far as human care and
foresight can provide, or that the accident was caused by fortuitous
event. While evidence may be submitted to overcome such
presumption of negligence, it must be shown that the carrier observed
the required extraordinary diligence, which means that the carrier
must show the utmost diligence of very cautious persons as far as
human care and foresight can provide, or that the accident was caused
by fortuitous event.
Same; Same; Same; Same; Same; Same; Principle of Last Clear
Chance; Contrary to the petitioners contention, the principle of last
clear chance is inapplicable in the instant case, as it only applies in a
suit between the owners and drivers of colliding vehicles.Contrary
to the petitioners contention, the principle of last clear chance is
inapplicable in the instant case, as it only applies in a suit between the
owners and drivers of two colliding vehicles. It does not arise where a
passenger demands responsibility from the carrier to enforce its
contractual obligations, for it would be inequitable to exempt the
negligent driver and its owner on the ground that the other driver was
likewise guilty of negligence. The common law notion of last clear
chance permitted courts to grant recovery to a plaintiff who has also
been negligent provided that the defendant had the last clear chance
to avoid the casualty and failed to do so. Accordingly, it is difficult to
see what role, if any, the common law of last clear chance doctrine
has to play in a jurisdiction where the common law concept of
contributory negligence as an absolute bar to recovery by the plaintiff,
has itself been rejected, as it has been in Article 2179 of the Civil Code.
Same; Same; Same; Same; Same; Same; Presumed Negligence; It is
such a firmly established principle, as to have virtually formed part of
the law itself, that the negligence of the employee gives rise to the
presumption of negligence on the part of the employer.It is such a
firmly established principle, as to have virtually formed part of the law
itself, that the negligence of the employee gives rise to the
presumption of negligence on the part of the employer. This is the
presumed negligence in the selection and supervision of employee.
The theory of presumed negligence, in contrast with the American
271
doctrine of respondeat superior, where the negligence of the
employee is conclusively presumed to be the negligence of the
employer, is clearly deducible from the last paragraph of Article 2180
of the Civil Code which provides that the responsibility therein
mentioned shall cease if the employers prove that they observed all
the diligence of a good father of a family to prevent damages. . . .
Same; Same; Same; Same; Same; Same; Indemnity; Compulsory
Vehicle Liability Insurance; The nature of Compulsory Motor Vehicle
Liability Insurance is such that it is primarily intended to provide
compensation for the death or bodily injuries suffered by innocent
third parties or pasengers as a result of the negligent operation and
use of motor vehicles.The nature of Compulsory Motor Vehicle
Liability Insurance is such that it is primarily intended to provide
compensation for the death or bodily injuries suffered by innocent
third parties or passengers as a result of the negligent operation and
use of motor vehicles. The victims and/or their dependents are
assured of immediate financial assistance, regardless of the financial
capacity of motor vehicle owners.
Same; Same; Same; Same; Same; Same; Same; Same; Extent;
Although the victim may proceed directly against the insurer for
indemnity, the third party liability is only up to the extent of the
insurance policy and those required by law.Although the victim may
proceed directly against the insurer for indemnity, the third party
liability is only up to the extent of the insurance policy and those
required by law. While it is true that where the insurance contract
provides for indemnity against liability to third persons, and such
persons can directly sue the insurer, the direct liability of the insurer
under indemnity contracts against third party liability does not mean
that the insurer can be held liable in solidum with the insured and/or
the other parties found at fault. For the liability of the insurer is based
on contract; that of the insured carrier or vehicle owner is based on
tort. . . .
Same; Same; Same; Same; Same; Same; Exemplary Damages; Article
2231 of the Civil Code explicitly authorizes the imposition of exemplary
damages in quasi-delicts if the defendant acted with gross
negligence. While the immediate beneficiaries of the standard of
extraordinary diligence are, of course, the passengers and owners of
cargo carried by a common carrier, they are not the only persons that
the law seeks to benefit. For if common carriers carefully observed the
statutory standard of extraordinary diligence in respect of their own
passengers, they cannot help but simultaneously benefit pedestrians
and the passengers of other vehicles who are equally entitled to the
safe and convenient use of our roads and highways. The law seeks to
stop and prevent the slaughter and maiming of people (whether
passengers or not) on our highways and buses, the very size and
power of which seem to inflame the minds of their drivers. Article 2231
of the Civil Code explicitly authorizes the imposition of exemplary
damages in cases of quasi-delicts if the defendant acted with gross
negligence. . . .
Same; Same; Same; Same; Same; Same; Solidary Liability; In case of
injury to a passenger due to the negligence of the driver of the bus
on which he was riding and of the driver of another vehicle, the drivers
as well as the owners of the two vehicles are jointly and severally liable
for damages. The same rule of liability was applied in situations
where the negligence of the driver of the bus on which plaintiff was
riding concurred with the negligence of a third party who was the
driver of another vehicle, thus causing an accident. In Anuran v. Buo,
Batangas Laguna Tayabas Bus Co. v. Intermediate Appellate Court,
and Metro Manila Transit Corporation v. Court of Appeals, the bus
company, its driver, the operator of the other vehicle and the driver
of the vehicle were jointly and severally held liable to the injured
passenger or the latters heirs. The basis of this allocation of liability
was explained in Viluan v. Court of Appeals, thus: Nor should it make
difference that the liability of petitioner [bus owner] springs from
contract while that of respondents [owner and driver of other vehicle]
arises from quasi-delict. As early as 1913, we already ruled in Gutierrez
vs. Gutierrez, 56 Phil. 177, that in case of injury to a passenger due
to the negligence of the driver of the bus on which he was riding and
of the driver of another vehicle, the drivers as well as the owners of
the two vehicles are jointly and severally liable for damages. Some
members of the Court, though, are of the view that under the
circumstances they are liable on quasi-delict.
272
PETITION for review on certiorari of the decision and resolution of the
Court of Appeals.
The facts are stated in the opinion of the Court.
Rufino L. Remoreras, Jr. and Sixto Rey M. Orig for petitioners.
Rogelio R. Corro for private respondent Pedro A. Arriesgado.
Glenn N. Jumao-as for respondent B. Condor.
Ma. Cristina G. Laderas for respondent PPSII.
CALLEJO, SR., J.:
This is a petition for review on certiorari under Rule 45 of the Rules of
Court from the Decision of the Court of Appeals in CA-G.R. CV No.
54354 affirming with modification the Decision of the Regional Trial
Court, 7th Judicial Region, Cebu City, Branch 20, in Civil Case No. CEB-
5963 for breach of contract of carriage, damages and attorneys fees,
and the Resolution dated February 26, 1999 denying the motion for
reconsideration thereof.
The following facts are undisputed:
At about 10:00 p.m. of March 15, 1987, the cargo truck marked
Condor Hollow Blocks and General Merchandise bearing plate
number GBP-675 was loaded with firewood in Bogo, Cebu and left for
Cebu City. Upon reaching Sitio Aggies, Poblacion, Compostela, Cebu,
just as the truck passed over a bridge, one of its rear tires exploded.
The driver, Sergio Pedrano, then parked along the right side of the
national highway and removed the damaged tire to have it vulcanized
at a nearby shop, about 700 meters away. Pedrano left his helper,
Jose Mitante, Jr. to keep watch over the stalled vehicle, and instructed
the latter to place a spare tire six fathoms away behind the stalled
truck to serve as a warning for oncoming vehicles. The trucks tail
lights were also left on. It was about 12:00 a.m., March 16, 1987.
At about 4:45 a.m., D Rough Riders passenger bus with plate number
PBP-724 driven by Virgilio Te Laspias was cruising along the national
highway of Sitio Aggies, Poblacion, Compostela, Cebu. The passenger
bus was also bound for Cebu City, and had come from Maya,
Daanbantayan, Cebu. Among its passengers were the Spouses Pedro
A. Arriesgado and Felisa Pepito Arriesgado, who were seated at the
right side of the bus, about three (3) or four (4) places from the front
seat.
As the bus was approaching the bridge, Laspias saw the stalled truck,
which was then about 25 meters away. He applied the brakes and
tried to swerve to the left to avoid hitting the truck. But it was too
late; the bus rammed into the trucks left rear. The impact damaged
the right side of the bus and left several passengers injured. Pedro
Arriesgado lost consciousness and suffered a fracture in his right
colles. His wife, Felisa, was brought to the Danao City Hospital. She
was later transferred to the Southern Island Medical Center where she
died shortly thereafter.
Respondent Pedro A. Arriesgado then filed a complaint for breach of
contract of carriage, damages and attorneys fees before the Regional
Trial Court of Cebu City, Branch 20, against the petitioners, D Rough
Riders bus operator William Tiu and his driver, Virgilio Te Laspias on
May 27, 1987. The respondent alleged that the passenger bus in
question was cruising at a fast and high speed along the national road,
and that petitioner Laspias did not take precautionary measures to
avoid the accident. Thus:
6. That the accident resulted to the death of the plaintiffs wife, Felisa
Pepito Arriesgado, as evidenced by a Certificate of Death, a xerox copy
of which is hereto attached as integral part hereof and marked as
ANNEX A, and physical injuries to several of its passengers,
including plaintiff himself who suffered a COLLES FRACTURE RIGHT,
per Medical Certificate, a xerox copy of which is hereto attached as
integral part hereof and marked as ANNEX B hereof.
273
7. That due to the reckless and imprudent driving by defendant Virgilio
Te Laspias of the said Rough Riders passenger bus, plaintiff and his
wife, Felisa Pepito Arriesgado, failed to safely reach their destination
which was Cebu City, the proximate cause of which was defendant-
drivers failure to observe utmost diligence required of a very cautious
person under all circumstances.
8. That defendant William Tiu, being the owner and operator of the
said Rough Riders passenger bus which figured in the said accident,
wherein plaintiff and his wife were riding at the time of the accident,
is therefore directly liable for the breach of contract of carriage for his
failure to transport plaintiff and his wife safely to their place of
destination which was Cebu City, and which failure in his obligation to
transport safely his passengers was due to and in consequence of his
failure to exercise the diligence of a good father of the family in the
selection and supervision of his employees, particularly defendant-
driver Virgilio Te Laspias.
The respondent prayed that judgment be rendered in his favor and
that the petitioners be condemned to pay the following damages:
1). To pay to plaintiff, jointly and severally, the amount of P30,000.00
for the death and untimely demise of plaintiffs wife, Felisa Pepito
Arriesgado;
2). To pay to plaintiff, jointly and severally, the amount of P38,441.50,
representing actual expenses incurred by the plaintiff in connection
with the death/burial of plaintiffs wife;
3). To pay to plaintiff, jointly and severally, the amount of P1,113.80,
representing medical/hospitalization expenses incurred by plaintiff for
the injuries sustained by him;
4). To pay to plaintiff, jointly and severally, the amount of P50,000.00
for moral damages;
5). To pay to plaintiff, jointly and severally, the amount of P50,000.00
by way of exemplary damages;
6). To pay to plaintiff, jointly and severally, the amount of P20,000.00
for attorneys fees;
7). To pay to plaintiff, jointly and severally, the amount of P5,000.00
for litigation expenses.
PLAINTIFF FURTHER PRAYS FOR SUCH OTHER RELIEFS AND
REMEDIES IN LAW AND EQUITY.
The petitioners, for their part, filed a Third-Party Complaint on August
21, 1987 against the following: respondent Philippine Phoenix Surety
and Insurance, Inc. (PPSII), petitioner Tius insurer; respondent
Benjamin Condor, the registered owner of the cargo truck; and
respondent Sergio Pedrano, the driver of the truck. They alleged that
petitioner Laspias was negotiating the uphill climb along the national
highway of Sitio Aggies, Poblacion, Compostela, in a moderate and
normal speed. It was further alleged that the truck was parked in a
slanted manner, its rear portion almost in the middle of the highway,
and that no early warning device was displayed. Petitioner Laspias
promptly applied the brakes and swerved to the left to avoid hitting
the truck head-on, but despite his efforts to avoid damage to property
and physical injuries on the passengers, the right side portion of the
bus hit the cargo trucks left rear. The petitioners further alleged, thus:
5. That the cargo truck mentioned in the aforequoted paragraph is
owned and registered in the name of the third-party defendant
Benjamin Condor and was left unattended by its driver Sergio
Pedrano, one of the third-party defendants, at the time of the incident;
6. That third-party defendant Sergio Pedrano, as driver of the cargo
truck with marked (sic) Condor Hollow Blocks & General
Merchandise, with Plate No. GBP-675 which was recklessly and
imprudently parked along the national highway of Compostela, Cebu
during the vehicular accident in question, and third-party defendant
Benjamin Condor, as the registered owner of the cargo truck who
failed to exercise due diligence in the selection and supervision of
third-party defendant Sergio Pedrano, are jointly and severally liable
to the third-party plaintiffs for whatever liability that may be adjudged
274
against said third-party plaintiffs or are directly liable of (sic) the
alleged death of plaintiffs wife;
7. That in addition to all that are stated above and in the answer which
are intended to show reckless imprudence on the part of the third-
party defendants, the third-party plaintiffs hereby declare that during
the vehicular accident in question, third-party defendant was clearly
violating Section 34, par. (g) of the Land Transportation and Traffic
Code . . .
...
10. That the aforesaid passenger bus, owned and operated by third-
party plaintiff William Tiu, is covered by a common carrier liability
insurance with Certificate of Cover No. 054940 issued by Philippine
Phoenix Surety and Insurance, Inc., Cebu City Branch, in favor of
third-party plaintiff William Tiu which covers the period from July 22,
1986 to July 22, 1987 and that the said insurance coverage was valid,
binding and subsisting during the time of the aforementioned incident
(Annex A as part hereof);
11. That after the aforesaid alleged incident, third-party plaintiff
notified third-party defendant Philippine Phoenix Surety and
Insurance, Inc., of the alleged incident hereto mentioned, but to no
avail;
12. That granting, et arguendo et arguendi, if herein third-party
plaintiffs will be adversely adjudged, they stand to pay damages
sought by the plaintiff and therefore could also look up to the
Philippine Phoenix Surety and Insurance, Inc., for contribution,
indemnification and/or reimbursement of any liability or obligation that
they might [be] adjudged per insurance coverage duly entered into by
and between third-party plaintiff William Tiu and third-party defendant
Philippine Phoenix Surety and Insurance, Inc.; . . .
The respondent PPSII, for its part, admitted that it had an existing
contract with petitioner Tiu, but averred that it had already attended
to and settled the claims of those who were injured during the
incident. It could not accede to the claim of respondent Arriesgado,
as such claim was way beyond the scheduled indemnity as contained
in the contract of insurance.
After the parties presented their respective evidence, the trial court
ruled in favor of respondent Arriesgado. The dispositive portion of the
decision reads:
WHEREFORE, in view of the foregoing, judgment is hereby rendered
in favor of plaintiff as against defendant William Tiu ordering the latter
to pay the plaintiff the following amounts:
1The sum of FIFTY THOUSAND PESOS (P50,000.00) as moral
damages;
2The sum of FIFTY THOUSAND PESOS (P50,000.00) as exemplary
damages;
3The sum of THIRTY-EIGHT THOUSAND FOUR HUNDRED FORTY-
ONE PESOS (P38,441.00) as actual damages;
4The sum of TWENTY THOUSAND PESOS (P20,000.00) as
attorneys fees;
5The sum of FIVE THOUSAND PESOS (P5,000.00) as costs of suit;
SO ORDERED.
According to the trial court, there was no dispute that petitioner
William Tiu was engaged in business as a common carrier, in view of
his admission that D Rough Rider passenger bus which figured in the
accident was owned by him; that he had been engaged in the
transportation business for 25 years with a sole proprietorship; and
that he owned 34 buses. The trial court ruled that if petitioner Laspias
had not been driving at a fast pace, he could have easily swerved to
the left to avoid hitting the truck, thus, averting the unfortunate
incident. It then concluded that petitioner Laspias was negligent.
The trial court also ruled that the absence of an early warning device
near the place where the truck was parked was not sufficient to impute
negligence on the part of respondent Pedrano, since the tail lights of
the truck were fully on, and the vicinity was well lighted by street
lamps.16 It also found that the testimony of petitioner Tiu, that he
based the selection of his driver Laspias on efficiency and in-service
275
training, and that the latter had been so far an efficient and good
driver for the past six years of his employment, was insufficient to
prove that he observed the diligence of a good father of a family in
the selection and supervision of his employees.
After the petitioners motion for reconsideration of the said decision
was denied, the petitioners elevated the case to the Court of Appeals
on the following issues:
I WHETHER THIRD PARTY DEFENDANT SERGIO PEDRANO WAS
RECKLESS AND IMPRUDENT WHEN HE PARKED THE CARGO TRUCK
IN AN OBLIQUE MANNER;
II WHETHER THE THIRD PARTY DEFENDANTS ARE JOINTLY AND
SEVERALLY LIABLE DIRECTLY TO PLAINTIFF-APPELLEE OR TO
DEFENDANTS-APPELLANTS FOR WHATEVER LIABILITY THAT MAY BE
ADJUDGED TO THE SAID DEFENDANTS-APPELLANTS;
III WHETHER DEFENDANT-APPELLANT VIRGILIO TE LASPIAS WAS
GUILTY OF GROSS NEGLIGENCE;
IV WHETHER DEFENDANT-APPELLANT WILLIAM TIU HAD EXERCISED
THE DUE DILIGENCE OF A GOOD FATHER OF A FAMILY IN THE
SELECTION AND SUPERVISION OF HIS DRIVERS;
V GRANTING FOR THE SAKE OF ARGUMENT THAT DEFENDANT-
APPELLANT WILLIAM TIU IS LIABLE TO PLAINTIFF-APPELLEE,
WHETHER THERE IS LEGAL AND FACTUAL BASIS IN AWARDING
EXCESSIVE MORAL DAMAGES, EX[E]MPLARY DAMAGES, ATTORNEYS
FEES AND LITIGATION EXPENSES TO PLAINTIFF-APPELLEE;
VI WHETHER THIRD PARTY DEFENDANT PHILIPPINE PHOENIX
SURETY AND INSURANCE, INC. IS LIABLE TO DEFENDANT-
APPELLANT WILLIAM TIU.
The appellate court rendered judgment affirming the trial courts
decision with the modification that the awards for moral and
exemplary damages were reduced to P25,000. The dispositive portion
reads:
WHEREFORE, the appealed Decision dated November 6, 1995 is
hereby MODIFIED such that the awards for moral and exemplary
damages are each reduced to P25,000.00 or a total of P50,000.00 for
both. The judgment is AFFIRMED in all other respects.
SO ORDERED.
According to the appellate court, the action of respondent Arriesgado
was based not on quasi-delict but on breach of contract of carriage.
As a common carrier, it was incumbent upon petitioner Tiu to prove
that extraordinary diligence was observed in ensuring the safety of
passengers during transportation. Since the latter failed to do so, he
should be held liable for respondent Arriesgados claim. The CA also
ruled that no evidence was presented against the respondent PPSII,
and as such, it could not be held liable for respondent Arriesgados
claim, nor for contribution, indemnification and/or reimbursement in
case the petitioners were adjudged liable.
The petitioners now come to this Court and ascribe the following
errors committed by the appellate court:
I. THE HONORABLE COURT OF APPEALS ERRED IN NOT DECLARING
RESPONDENTS BENJAMIN CONDOR AND SERGIO PEDRANO GUILTY
OF NEGLIGENCE AND HENCE, LIABLE TO RESPONDENT PEDRO A.
ARRIESGADO OR TO PETITIONERS FOR WHATEVER LIABILITY THAT
MAY BE ADJUDGED AGAINST THEM.
II. THE HONORABLE COURT OF APPEALS ERRED IN FINDING
PETITIONERS GUILTY OF NEGLIGENCE AND HENCE, LIABLE TO
RESPONDENT PEDRO A. ARRIESGADO.
III. THE HONORABLE COURT OF APPEALS ERRED IN FINDING
PETITIONER WILLIAM TIU LIABLE FOR EXEMPLARY DAMAGES,
ATTORNEYS FEES AND LITIGATION EXPENSES.
IV. THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING
RESPONDENT PHILIPPINE PHOENIX SURETY AND INSURANCE, INC.
276
LIABLE TO RESPONDENT PEDRO A. ARRIESGADO OR TO
PETITIONER WILLIAM TIU.
According to the petitioners, the appellate court erred in failing to
appreciate the absence of an early warning device and/or built-in
reflectors at the front and back of the cargo truck, in clear violation of
Section 34, par. (g) of the Land Transportation and Traffic Code. They
aver that such violation is only a proof of respondent Pedranos
negligence, as provided under Article 2185 of the New Civil Code. They
also question the appellate courts failure to take into account that the
truck was parked in an oblique manner, its rear portion almost at the
center of the road. As such, the proximate cause of the incident was
the gross recklessness and imprudence of respondent Pedrano,
creating the presumption of negligence on the part of respondent
Condor in supervising his employees, which presumption was not
rebutted. The petitioners then contend that respondents Condor and
Pedrano should be held jointly and severally liable to respondent
Arriesgado for the payment of the latters claim.
The petitioners, likewise, aver that expert evidence should have been
presented to prove that petitioner Laspias was driving at a very fast
speed, and that the CA could not reach such conclusion by merely
considering the damages on the cargo truck. It was also pointed out
that petitioner Tiu presented evidence that he had exercised the
diligence of a good father of a family in the selection and supervision
of his drivers.
The petitioners further allege that there is no legal and factual basis
to require petitioner Tiu to pay exemplary damages as no evidence
was presented to show that the latter acted in a fraudulent, reckless
and oppressive manner, or that he had an active participation in the
negligent act of petitioner Laspias.
Finally, the petitioners contend that respondent PPSII admitted in its
answer that while it had attended to and settled the claims of the
other injured passengers, respondent Arriesgados claim remained
unsettled as it was beyond the scheduled indemnity under the
insurance contract. The petitioners argue that said respondent PPSII
should have settled the said claim in accordance with the scheduled
indemnity instead of just denying the same.
On the other hand, respondent Arriesgado argues that two of the
issues raised by the petitioners involved questions of fact, not
reviewable by the Supreme Court: the finding of negligence on the
part of the petitioners and their liability to him; and the award of
exemplary damages, attorneys fees and litigation expenses in his
favor. Invoking the principle of equity and justice, respondent
Arriesgado pointed out that if there was an error to be reviewed in the
CA decision, it should be geared towards the restoration of the moral
and exemplary damages to P50,000 each, or a total of P100,000 which
was reduced by the Court of Appeals to P25,000 each, or a total of
only P50,000.
Respondent Arriesgado also alleged that respondents Condor and
Pedrano, and respondent Phoenix Surety, are parties with whom he
had no contract of carriage, and had no cause of action against. It
was pointed out that only the petitioners needed to be sued, as driver
and operator of the ill-fated bus, on account of their failure to bring
the Arriesgado Spouses to their place of destination as agreed upon
in the contract of carriage, using the utmost diligence of very cautious
persons with due regard for all circumstances.
Respondents Condor and Pedrano point out that, as correctly ruled by
the Court of Appeals, the proximate cause of the unfortunate incident
was the fast speed at which petitioner Laspias was driving the bus
owned by petitioner Tiu. According to the respondents, the allegation
that the truck was not equipped with an early warning device could
not in any way have prevented the incident from happening. It was
also pointed out that respondent Condor had always exercised the due
diligence required in the selection and supervision of his employees,
and that he was not a party to the contract of carriage between the
petitioners and respondent Arriesgado.
Respondent PPSII, for its part, alleges that contrary to the allegation
of petitioner Tiu, it settled all the claims of those injured in accordance
with the insurance contract. It further avers that it did not deny
277
respondent Arriesgados claim, and emphasizes that its liability should
be within the scheduled limits of indemnity under the said contract.
The respondent concludes that while it is true that insurance contracts
are contracts of indemnity, the measure of the insurers liability is
determined by the insureds compliance with the terms thereof.
The Courts Ruling
At the outset, it must be stressed that this Court is not a trier of facts.
Factual findings of the Court of Appeals are final and may not be
reviewed on appeal by this Court, except when the lower court and
the CA arrived at diverse factual findings. The petitioners in this case
assail the finding of both the trial and the appellate courts that
petitioner Laspias was driving at a very fast speed before the bus
owned by petitioner Tiu collided with respondent Condors stalled
truck. This is clearly one of fact, not reviewable by the Court in a
petition for review under Rule 45.
On this ground alone, the petition is destined to fail.
However, considering that novel questions of law are likewise
involved, the Court resolves to examine and rule on the merits of the
case.
Petitioner Laspias Was negligent in driving The Ill-fated bus
In his testimony before the trial court, petitioner Laspias claimed that
he was traversing the two-lane road at Compostela, Cebu at a speed
of only forty (40) to fifty (50) kilometers per hour before the incident
occurred. He also admitted that he saw the truck which was parked in
an oblique position at about 25 meters before impact, and tried to
avoid hitting it by swerving to the left. However, even in the absence
of expert evidence, the damage sustained by the truck itself supports
the finding of both the trial court and the appellate court, that the D
Rough Rider bus driven by petitioner Laspias was traveling at a fast
pace. Since he saw the stalled truck at a distance of 25 meters,
petitioner Laspias had more than enough time to swerve to his left
to avoid hitting it; that is, if the speed of the bus was only 40 to 50
kilometers per hour as he claimed. As found by the Court of Appeals,
it is easier to believe that petitioner Laspias was driving at a very fast
speed, since at 4:45 a.m., the hour of the accident, there were no
oncoming vehicles at the opposite direction. Petitioner Laspias could
have swerved to the left lane with proper clearance, and, thus, could
have avoided the truck. Instinct, at the very least, would have
prompted him to apply the breaks to avert the impending disaster
which he must have foreseen when he caught sight of the stalled
truck. As we had occasion to reiterate:
A man must use common sense, and exercise due reflection in all his
acts; it is his duty to be cautious, careful and prudent, if not from
instinct, then through fear of recurring punishment. He is responsible
for such results as anyone might foresee and for acts which no one
would have performed except through culpable abandon. Otherwise,
his own person, rights and property, and those of his fellow beings,
would ever be exposed to all manner of danger and injury.
We agree with the following findings of the trial court, which were
affirmed by the CA on appeal:
A close study and evaluation of the testimonies and the documentary
proofs submitted by the parties which have direct bearing on the issue
of negligence, this Court as shown by preponderance of evidence that
defendant Virgilio Te Laspias failed to observe extraordinary diligence
as a driver of the common carrier in this case. It is quite hard to accept
his version of the incident that he did not see at a reasonable distance
ahead the cargo truck that was parked when the Rough Rider [Bus]
just came out of the bridge which is on an (sic) [more] elevated
position than the place where the cargo truck was parked. With its
headlights fully on, defendant driver of the Rough Rider was in a
vantage position to see the cargo truck ahead which was parked and
he could just easily have avoided hitting and bumping the same by
maneuvering to the left without hitting the said cargo truck. Besides,
it is (sic) shown that there was still much room or space for the Rough
Rider to pass at the left lane of the said national highway even if the
cargo truck had occupied the entire right lane thereof. It is not true
that if the Rough Rider would proceed to pass through the left lane it
278
would fall into a canal considering that there was much space for it to
pass without hitting and bumping the cargo truck at the left lane of
said national highway. The records, further, showed that there was no
incoming vehicle at the opposite lane of the national highway which
would have prevented the Rough Rider from not swerving to its left in
order to avoid hitting and bumping the parked cargo truck. But the
evidence showed that the Rough Rider instead of swerving to the still
spacious left lane of the national highway plowed directly into the
parked cargo truck hitting the latter at its rear portion; and thus, the
(sic) causing damages not only to herein plaintiff but to the cargo
truck as well.
Indeed, petitioner Laspias negligence in driving the bus is apparent
in the records. By his own admission, he had just passed a bridge and
was traversing the highway of Compostela, Cebu at a speed of 40 to
50 kilometers per hour before the collision occurred. The maximum
speed allowed by law on a bridge is only 30 kilometers per hour. And,
as correctly pointed out by the trial court, petitioner Laspias also
violated Section 35 of the Land Transportation and Traffic Code,
Republic Act No. 4136, as amended:
Sec. 35. Restriction as to speed.(a) Any person driving a motor
vehicle on a highway shall drive the same at a careful and prudent
speed, not greater nor less than is reasonable and proper, having due
regard for the traffic, the width of the highway, and or any other
condition then and there existing; and no person shall drive any motor
vehicle upon a highway at such speed as to endanger the life, limb
and property of any person, nor at a speed greater than will permit
him to bring the vehicle to a stop within the assured clear distance
ahead.
Under Article 2185 of the Civil Code, a person driving a vehicle is
presumed negligent if at the time of the mishap, he was violating any
traffic regulation.
Petitioner Tiu failed to Overcome the presumption Of negligence
against him as One engaged in the business Of common carriage
The rules which common carriers should observe as to the safety of
their passengers are set forth in the Civil Code, Articles 1733,32
175533 and 1756. In this case, respondent Arriesgado and his
deceased wife contracted with petitioner Tiu, as owner and operator
of D Rough Riders bus service, for transportation from Maya,
Daanbantayan, Cebu, to Cebu City for the price of P18.00. It is
undisputed that the respondent and his wife were not safely
transported to the destination agreed upon. In actions for breach of
contract, only the existence of such contract, and the fact that the
obligor, in this case the common carrier, failed to transport his
passenger safely to his destination are the matters that need to be
proved. This is because under the said contract of carriage, the
petitioners assumed the express obligation to transport the
respondent and his wife to their destination safely and to observe
extraordinary diligence with due regard for all circumstances. Any
injury suffered by the passengers in the course thereof is immediately
attributable to the negligence of the carrier. Upon the happening of
the accident, the presumption of negligence at once arises, and it
becomes the duty of a common carrier to prove that he observed
extraordinary diligence in the care of his passengers It must be
stressed that in requiring the highest possible degree of diligence from
common carriers and in creating a presumption of negligence against
them, the law compels them to curb the recklessness of their drivers.
While evidence may be submitted to overcome such presumption of
negligence, it must be shown that the carrier observed the required
extraordinary diligence, which means that the carrier must show the
utmost diligence of very cautious persons as far as human care and
foresight can provide, or that the accident was caused by fortuitous
event. As correctly found by the trial court, petitioner Tiu failed to
conclusively rebut such presumption. The negligence of petitioner
Laspias as driver of the passenger bus is, thus, binding against
petitioner Tiu, as the owner of the passenger bus engaged as a
common carrier.
The Doctrine of Last Clear Chance Is Inapplicable in the Case at Bar
279
Contrary to the petitioners contention, the principle of last clear
chance is inapplicable in the instant case, as it only applies in a suit
between the owners and drivers of two colliding vehicles. It does not
arise where a passenger demands responsibility from the carrier to
enforce its contractual obligations, for it would be inequitable to
exempt the negligent driver and its owner on the ground that the other
driver was likewise guilty of negligence. The common law notion of
last clear chance permitted courts to grant recovery to a plaintiff who
has also been negligent provided that the defendant had the last clear
chance to avoid the casualty and failed to do so. Accordingly, it is
difficult to see what role, if any, the common law of last clear chance
doctrine has to play in a jurisdiction where the common law concept
of contributory negligence as an absolute bar to recovery by the
plaintiff, has itself been rejected, as it has been in Article 2179 of the
Civil Code.
Thus, petitioner Tiu cannot escape liability for the death of respondent
Arriesgados wife due to the negligence of petitioner Laspias, his
employee, on this score.
Respondents Pedrano and Condor were likewise Negligent
In Phoenix Construction, Inc. v. Intermediate Appellate Court, where
therein respondent Dionisio sustained injuries when his vehicle
rammed against a dump truck parked askew, the Court ruled that the
improper parking of a dump truck without any warning lights or
reflector devices created an unreasonable risk for anyone driving
within the vicinity, and for having created such risk, the truck driver
must be held responsible. In ruling against the petitioner therein, the
Court elucidated, thus:
. . . In our view, Dionisios negligence, although later in point of time
than the truck drivers negligence, and therefore closer to the
accident, was not an efficient intervening or independent cause. What
the petitioners describe as an intervening cause was no more than
a foreseeable consequence of the risk created by the negligent
manner in which the truck driver had parked the dump truck. In other
words, the petitioner truck driver owed a duty to private respondent
Dionisio and others similarly situated not to impose upon them the
very risk the truck driver had created. Dionisios negligence was not
that of an independent and overpowering nature as to cut, as it were,
the chain of causation in fact between the improper parking of the
dump truck and the accident, nor to sever the juris vinculum of
liability. . . .
...
We hold that private respondent Dionisios negligence was only
contributory, that the immediate and proximate cause of the injury
remained the truck drivers lack of due care. . . .
In this case, both the trial and the appellate courts failed to consider
that respondent Pedrano was also negligent in leaving the truck
parked askew without any warning lights or reflector devices to alert
oncoming vehicles, and that such failure created the presumption of
negligence on the part of his employer, respondent Condor, in
supervising his employees properly and adequately. As we ruled in
Poblete v. Fabros:
It is such a firmly established principle, as to have virtually formed
part of the law itself, that the negligence of the employee gives rise
to the presumption of negligence on the part of the employer. This is
the presumed negligence in the selection and supervision of
employee. The theory of presumed negligence, in contrast with the
American doctrine of respondeat superior, where the negligence of
the employee is conclusively presumed to be the negligence of the
employer, is clearly deducible from the last paragraph of Article 2180
of the Civil Code which provides that the responsibility therein
mentioned shall cease if the employers prove that they observed all
the diligence of a good father of a family to prevent damages. . . .
The petitioners were correct in invoking respondent Pedranos failure
to observe Article IV, Section 34(g) of the Rep. Act No. 4136, which
provides:
280
(g) Lights when parked or disabled.Appropriate parking lights or SCHEDULED VEHICLE MODEL - Isuzu Forward
flares visible one hundred meters away shall be displayed at a corner MAKE TYPE OF BODY - Bus
of the vehicle whenever such vehicle is parked on highways or in COLOR - blue mixed
places that are not well-lighted or is placed in such manner as to BLT FILE NO.
endanger passing traffic. PLATE NO. PBP-724
SERIAL/CHASSIS NO. SER450-1584124
The manner in which the truck was parked clearly endangered MOTOR NO. 677836
oncoming traffic on both sides, considering that the tire blowout which AUTHORIZED CAPACITY 50
stalled the truck in the first place occurred in the wee hours of the UNLADEN WEIGHT - 6 Cyls. Kgs.
morning. The Court can only now surmise that the unfortunate
incident could have been averted had respondent Condor, the owner SECTION 1/11
of the truck, equipped the said vehicle with lights, flares, or, at the
very least, an early warning device. Hence, we cannot subscribe to *LIMITS OF LIABILITY
respondents Condor and Pedranos claim that they should be absolved
from liability because, as found by the trial and appellate courts, the PREMIUMS PAID - P540.00
proximate cause of the collision was the fast speed at which petitioner
Laspias drove the bus. To accept this proposition would be to come A. THIRD PARTY LIABILITY - P50,000.00
too close to wiping out the fundamental principle of law that a man
must respond for the foreseeable consequences of his own negligent B. PASSENGER LIABILITY
act or omission. Indeed, our law on quasi-delicts seeks to reduce the
risks and burdens of living in society and to allocate them among its Per Person - P12,000.00
members. To accept this proposition would be to weaken the very
bonds of society. Per Accident P50,000

The Liability of Respondent PPSII as Insurer
The trial court in this case did not rule on the liability of respondent
PPSII, while the appellate court ruled that, as no evidence was
presented against it, the insurance company is not liable.
A perusal of the records will show that when the petitioners filed the
Third-Party Complaint against respondent PPSII, they failed to attach
a copy of the terms of the insurance contract itself. Only Certificate of
Cover No. 05494051 issued in favor of Mr. William Tiu, Lahug, Cebu
City signed by Cosme H. Boniel was appended to the third-party
complaint. The date of issuance, July 22, 1986, the period of
insurance, from July 22, 1986 to July 22, 1987, as well as the following
items, were also indicated therein:
In its Answer to the Third-Party Complaint, the respondent PPSII
admitted the existence of the contract of insurance, in view of its
failure to specifically deny the same as required under then Section
8(a), Rule 8 of the Rules of Court, which reads:
Sec. 8. How to contest genuineness of such documents.When an
action or defense is founded upon a written instrument copied in or
attached to the corresponding pleading as provided in the preceding
section, the genuineness and due execution of the instrument shall be
deemed admitted unless the adverse party, under oath, specifically
denies them, and sets forth what he claims to be the facts; but the
requirement of an oath does not apply when the adverse party does
not appear to be a party to the instrument or when compliance with
an order for inspection of the original instrument is refused.

281
In fact, respondent PPSII did not dispute the existence of such
contract, and admitted that it was liable thereon. It claimed, however,
that it had attended to and settled the claims of those injured during
the incident, and set up the following as special affirmative defenses:
Third party defendant Philippine Phoenix Surety and Insurance, Inc.
hereby reiterates and incorporates by way of reference the preceding
paragraphs and further states THAT:
8. It has attended to the claims of Vincent Canales, Asuncion Batiancila
and Neptali Palces who sustained injuries during the incident in
question. In fact, it settled financially their claims per vouchers duly
signed by them and they duly executed Affidavit[s] of Desistance to
that effect, xerox copies of which are hereto attached as Annexes 1,
2, 3, 4, 5, and 6 respectively;
9. With respect to the claim of plaintiff, herein answering third party
defendant through its authorized insurance adjuster attended to said
claim. In fact, there were negotiations to that effect. Only that it
cannot accede to the demand of said claimant considering that the
claim was way beyond the scheduled indemnity as per contract
entered into with third party plaintiff William Tiu and third-party
defendant (Philippine Phoenix Surety and Insurance, Inc.). Third party
Plaintiff William Tiu knew all along the limitation as earlier stated, he
being an old hand in the transportation business; . . .
Considering the admissions made by respondent PPSII, the existence
of the insurance contract and the salient terms thereof cannot be
dispatched. It must be noted that after filing its answer, respondent
PPSII no longer objected to the presentation of evidence by
respondent Arriesgado and the insured petitioner Tiu.
Even in its Memorandum before the Court, respondent PPSII admitted
the existence of the contract, but averred as follows:
Petitioner Tiu is insisting that PPSII is liable to him for contribution,
indemnification and/or reimbursement. This has no basis under the
contract. Under the contract, PPSII will pay all sums necessary to
discharge liability of the insured subject to the limits of liability but not
to exceed the limits of liability as so stated in the contract. Also, it is
stated in the contract that in the event of accident involving indemnity
to more than one person, the limits of liability shall not exceed the
aggregate amount so specified by law to all persons to be indemnified.
As can be gleaned from the Certificate of Cover, such insurance
contract was issued pursuant to the Compulsory Motor Vehicle Liability
Insurance Law. It was expressly provided therein that the limit of the
insurers liability for each person was P12,000, while the limit per
accident was pegged at P50,000. An insurer in an indemnity contract
for third party liability is directly liable to the injured party up to the
extent specified in the agreement but it cannot be held solidarily liable
beyond that amount. The respondent PPSII could not then just deny
petitioner Tius claim; it should have paid P12,000 for the death of
Felisa Arriesgado, and respondent Arriesgados hospitalization
expenses of P1,113.80, which the trial court found to have been duly
supported by receipts. The total amount of the claims, even when
added to that of the other injured passengers which the respondent
PPSII claimed to have settled, would not exceed the P50,000 limit
under the insurance agreement.
Indeed, the nature of Compulsory Motor Vehicle Liability Insurance is
such that it is primarily intended to provide compensation for the
death or bodily injuries suffered by innocent third parties or
passengers as a result of the negligent operation and use of motor
vehicles. The victims and/or their dependents are assured of
immediate financial assistance, regardless of the financial capacity of
motor vehicle owners. As the Court, speaking through Associate
Justice Leonardo A. Quisumbing, explained in Government Service
Insurance System v. Court of Appeals:
However, although the victim may proceed directly against the insurer
for indemnity, the third-party liability is only up to the extent of the
insurance policy and those required by law. While it is true that where
the insurance contract provides for indemnity against liability to third
persons, and such persons can directly sue the insurer, the direct
liability of the insurer under indemnity contracts against third party
liability does not mean that the insurer can be held liable in solidum
282
with the insured and/or the other parties found at fault. For the liability
of the insurer is based on contract; that of the insured carrier or
vehicle owner is based on tort. . . .
Obviously, the insurer could be held liable only up to the extent of
what was provided for by the contract of insurance, in accordance with
the CMVLI law. At the time of the incident, the schedule of indemnities
for death and bodily injuries, professional fees and other charges
payable under a CMVLI coverage was provided for under the
Insurance Memorandum Circular (IMC) No. 5-78 which was approved
on November 10, 1978. As therein provided, the maximum indemnity
for death was twelve thousand (P12,000.00) pesos per victim. The
schedules for medical expenses were also provided by said IMC,
specifically in paragraphs (C) to (G).
Damages to be Awarded
The trial court correctly awarded moral damages in the amount of
P50,000 in favor of respondent Arriesgado. The award of exemplary
damages by way of example or correction of the public good, is
likewise in order. As the Court ratiocinated in Kapalaran Bus Line v.
Coronado:
. . . While the immediate beneficiaries of the standard of extraordinary
diligence are, of course, the passengers and owners of cargo carried
by a common carrier, they are not the only persons that the law seeks
to benefit. For if common carriers carefully observed the statutory
standard of extraordinary diligence in respect of their own passengers,
they cannot help but simultaneously benefit pedestrians and the
passengers of other vehicles who are equally entitled to the safe and
convenient use of our roads and highways. The law seeks to stop and
prevent the slaughter and maiming of people (whether passengers or
not) on our highways and buses, the very size and power of which
seem to inflame the minds of their drivers. Article 2231 of the Civil
Code explicitly authorizes the imposition of exemplary damages in
cases of quasi-delicts if the defendant acted with gross negligence.
...
The respondent Pedro A. Arriesgado, as the surviving spouse and heir
of Felisa Arriesgado, is entitled to indemnity in the amount of
P50,000.00.
The petitioners, as well as the respondents Benjamin Condor and
Sergio Pedrano are jointly and severally liable for said amount,
conformably with the following pronouncement of the Court in Fabre,
Jr. vs. Court of Appeals:
The same rule of liability was applied in situations where the
negligence of the driver of the bus on which plaintiff was riding
concurred with the negligence of a third party who was the driver of
another vehicle, thus causing an accident. In Anuran v. Buo,
Batangas Laguna Tayabas Bus Co. v. Intermediate Appellate Court,
and Metro Manila Transit Corporation v. Court of Appeals, the bus
company, its driver, the operator of the other vehicle and the driver
of the vehicle were jointly and severally held liable to the injured
passenger or the latters heirs. The basis of this allocation of liability
was explained in Viluan v. Court of Appeals, thus:
Nor should it make difference that the liability of petitioner [bus
owner] springs from contract while that of respondents [owner and
driver of other vehicle] arises from quasi-delict. As early as 1913, we
already ruled in Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of
injury to a passenger due to the negligence of the driver of the bus
on which he was riding and of the driver of another vehicle, the drivers
as well as the owners of the two vehicles are jointly and severally liable
for damages. Some members of the Court, though, are of the view
that under the circumstances they are liable on quasi-delict.
IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY
GRANTED. The Decision of the Court of Appeals is AFFIRMED with
MODIFICATIONS:
(1) Respondent Philippine Phoenix Surety and Insurance, Inc. and
petitioner William Tiu are ORDERED to pay, jointly and severally,
respondent Pedro A. Arriesgado the total amount of P13,113.80;
283
(2) The petitioners and the respondents Benjamin Condor and Sergio
Pedrano are ORDERED to pay, jointly and severally, respondent Pedro
A. Arriesgado P50,000.00 as indemnity; P26,441.50 as actual
damages; P50,000.00 as moral damages; P50,000.00 as exemplary
damages; and P20,000.00 as attorneys fees.

SO ORDERED.

Austria-Martinez (Actg. Chairman), Tinga and Chico-Nazario, JJ.,

concur.

Puno (Chairman), J., On Official Leave.

Petition partially granted, judgment affirmed with modifica tions.

Note.Neglect or malfeasance of the carriers employees naturally

could give ground for an action for damages. (Morris vs. Court of
Appeals, 352 SCRA 428 [2001])

o0o

284
 GREGORIO PESTAO and METRO CEBU AUTOBUS
CORPORATION, petitioners, vs. Spouses TEOTIMO
SUMAYANG and PAZ C. SUMAYANG, respondents
G.R. No. 139875. December 4, 2000
Quasi-Delicts; Common Carriers; A professional driver operating a
public transport bus should anticipate that overtaking at a junction is
a perilous maneuver and should thus exercise extreme caution.
Petitioners are raising a question of fact based on Pestaos testimony
contradicting that of Eyewitness Ignacio Neis and on the location of
the dents on the bumper and the grill. Neis testified that as the two
vehicles approached the junction, the victim raised his left arm to
signal that he was turning left to Tabagon, but that the latter and his
companion were thrown off the motorcycle after it was bumped by
the over-speeding bus. These contentions have already been passed
upon by the trial and the appellate courts. We find no cogent reason
to reverse or modify their factual findings. The CA agreed with the trial
court that the vehicular collision was caused by Pestaos negligence
when he attempted to overtake the motorcycle. As a professional
driver operating a public transport bus, he should have anticipated
that overtaking at a junction was a perilous maneuver and should thus
have exercised extreme caution.
Evidence; Appeals; Factual findings of the Court of Appeals affirming
those of the trial court are conclusive and binding on the Supreme
Court.Factual findings of the CA affirming those of the trial court are
conclusive and binding on this Court. Petitioners failed to demonstrate
that this case falls under any of the recognized exceptions to this rule.
Indeed, the issue of negligence is basically factual and, in quasi-
delicts, crucial in the award of damages.
Quasi-Delicts; Employer-Employee Relationship; Under Articles 2180
and 2176 of the Civil Code, owners and managers are responsible for
damages caused by their employees.Under Articles 2180 and 2176
of the Civil Code, owners and managers are responsible for damages
caused by their employees. When an injury is caused by the
negligence of a servant or an employee, the master or employer is
presumed to be negligent either in the selection or in the supervision
of that employee. This presumption may be overcome only by
satisfactorily showing that the employer exercised the care and the
diligence of a good father of a family in the selection and the
supervision of its employee.
Same; Same; Common Carriers; The fact that the driver was able to
use a bus with a faulty speedometer shows that the employer was
remiss in the supervision of its employees and in the proper care of
its vehicles.The CA said that allowing Pestao to ply his route with
a defective speedometer showed laxity on the part of Metro Cebu in
the operation of its business and in the supervision of its employees.
The negligence alluded to here is in its supervision over its driver, not
in that which directly caused the accident. The fact that Pestao was
able to use a bus with a faulty speedometer shows that Metro Cebu
was remiss in the supervision of its employees and in the proper care
of its vehicles. It had thus failed to conduct its business with the
diligence required by law.
Same; Same; Damages; The indemnity for death caused by a quasi-
delict used to be pegged at P3,000.00, based on Article 2206 of the
Civil Code, but the amount has been gradually increased through the
years because of the declining value of our currency, and at present,
the prevailing jurisprudence fixes the amount at P50,000.00.
Petitioners aver that the CA erred in increasing the award for life
indemnity from P30,000 to P50,000, without specifying any
aggravating circumstance to justify the increment as provided in the
Civil Code. This contention is untenable. The indemnity for death
caused by a quasi-delict used to be pegged at P3,000, based on Article
2206 of the Civil Code. However, the amount has been gradually
increased through the years because of the declining value of our
currency. At present, prevailing jurisprudence fixes the amount at
P50,000.
Same; Same; Same; The Supreme Court has consistently computed
the loss of earning capacity based on the life expectancy of the
deceased, and not on that of the heir.Petitioners cite Villa Rey
Transit, Inc. v. Court of Appeals, which held: The determination of the
285
indemnity to be awarded to the heirs of a deceased person has
therefore no fixed basis, x x x The life expectancy of the deceased or
of the beneficiary, whichever is shorter, is an important factor, x x x.
They contend that the CA used the wrong basis for its computation of
earning capacity. We disagree. The Court has consistently computed
the loss of earning capacity based on the life expectancy of the
deceased, and not on that of the heir. Even Villa Rey Transit did
likewise.
Same; Same; Same; The award for loss of earning capacity is based
on two factors(1) the number of years on which the computation of
dam
ages is based and (2) the rate at which the loss sustained by the heirs
is fixed.The award for loss of earning capacity is based on two
factors: (1) the number of years on which the computation of
damages is based and (2) the rate at which the loss sustained by the
heirs is fixed. The first factor refers to the life expectancy, which takes
into consideration the nature of the victims work, lifestyle, age and
state of health prior to the accident. The second refers to the victims
earning capacity minus the necessary living expenses. Stated
otherwise, the amount recoverable is that portion of the earnings of
the deceased which the beneficiary would have receivedthe net
earnings of the deceased.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Bugarin & Bugarin Law Office for petitioners.
Paterno S. Compra for private respondents.
PANGANIBAN, J.:
Factual findings of the Court of Appeals, affirming those of the trial
judge, are binding on this Court. In quasi-delicts, such findings are
crucial because negligence is largely a matter of evidence. In
computing an award for lost earning capacity, the life expectancy of
the deceased, not that of the heir, is used as basis.
The Case
Before us is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court, assailing the April 21, 1999 Decision and the August 6,
1999 Resolution of the Court of Appeals (CA) in CA-GR CV No. 30289.
The questioned Decision disposed as follows:
WHEREFORE, premises considered, the instant appeal is hereby
DENIED. The assailed Decision of the lower court is hereby AFFIRMED
with the aforesaid modification regarding the award of death penalty.
The Resolution of August 6, 1999 denied reconsideration.
The Facts
The events leading to this Petition were summarized by the Court of
Appeals as follows:
It appears from the records that at around 2:00 oclock [o]n the
afternoon of August 9, 1986, Ananias Sumayang was riding a
motorcycle along the national highway in Ilihan, Tabagon, Cebu.
Riding with him was his friend Manuel Romagos. As they came upon
a junction where the highway connected with the road leading to
Tabagon, they were hit by a passenger bus driven by [Petitioner]
Gregorio Pestao and owned by [Petitioner] Metro Cebu Autobus
Corporation (Metro Cebu, for brevity), which had tried to overtake
them, sending the motorcycle and its passengers hurtling upon the
pavement. Both Ananias Sumayang and Manuel Romagos were
rushed to the hospital in Sogod, where Sumayang was pronounced
dead on arrival. Romagos was transferred to the Cebu Doctors
Hospital, but he succumbed to his injuries the day after.
Apart from the institution of criminal charges against Gregorio
Pestao, [Respondents] Teotimo and Paz Sumayang, as heirs of
Ananias Sumayang, filed this civil action for damages against Gregorio
286
Pestao, as driver of the passenger bus that rammed the deceaseds
motorcycle, Metro Cebu, as owner and operator of the said bus, and
Perla Compania de Seguros, as insurer of Metro Cebu. The case was
docketed as Civil Case No. CEB-6108.
On November 9, 1987, upon motion of [Petitioner] Pestao, Judge
Pedro C. Son ordered the consolidation of the said case with Criminal
Case No. 10624, pending in Branch 16 of the same Court, involving
the criminal prosecution of Gregorio Pestao for [d]ouble [h]omicide
thru [r]eckless [i]mprudence. Joint trial of the two cases thereafter
ensued, where the following assertions were made:
[Respondents] rely mainly on the testimonies of Ignacio Neis, Pat.
Aquilino Dinoy and Teotimo Sumayang, father of the deceased. Neis
declared that he saw the incident while he was sitting on a bench
beside the highway; that both vehicles c[a]me from the North; that as
the motorcycle approached the junction to Tab[a]gon, the driver
Ananias Sumayang signalled with his left arm to indicate that he was
taking the Tab[a]gon Road; that the motorcycle did turn left but as it
did so, it was bumped by an overspeeding bus; that the force of the
impact threw Ananias Sumayang and his companion Manuel Romagos
about 14 meters away. The motorcycle, Neis continued, was badly
damaged as it was dragged by the bus.
On the other hand, Pat. Dinoy testified that he was in the nearby
house of Ruben Tiu [when] he heard the sound or noise caused by
the collision; that he immediately went to the scene where he found
Ananias Sumayang and Manuel Romagos lying on the road bleeding
and badly injured; that he requested the driver of a PU vehicle to take
them to a hospital; that he took note of the various distances which
he included in his sketch (Exh. J) that the probable point of impact
was at the left lane of the highway and right at the junction to
Tab[a]gon (Exh. J-11); that he based his conclusion on the scratches
caused by the motorcycles footrest on the asphalt pavement; that he
described the damage caused to the motorcycle in his sketch (Exh. J);
that on the part of the bus, the right end of its front bumper was bent
and the right portion of the radiator grill was dented. Pat. Dinoy
acknowledged that he met at the scene Ignacio Neis who informed
him that he saw the incident.
On the contrary, Pestao blamed Sumayang for the accident. He
testified that when he first blew the horn the motorcycle which was
about 15 or 20 meters ahead went to the right side of the highway
that he again blew the horn and accelerated in order to overtake the
motorcycle; that when he was just one meter behind, the motorcycle
suddenly turned left towards the Tab[a]gon [R]oad and was bumped
by his bus; that he was able to apply his break only after the impact.
Pestaos testimony was corroborated by Ireneo Casilia who declared
that he was one of the passengers of the bus; that the motorcycle
suddenly turned left towards Tab[a]gon [R]oad without giving any
signal to indicate its maneuver; that the bus was going at 40 kph when
the accident occurred.
To substantiate its defense of bonos pater familias [petitioner]
[c]orporation recalled to the witness box Gregorio Pestao who
explained how his driving experience and ability were tested by the
company before he was hired. He further declared that the
management gave regular lectures to drivers and conductors touching
on various topics like speeding, parking, loading and treatment of
passengers, and that before he took to the road at 2:30 AM of that
day he checked together with the mechanic the tires, brake, signal
lights as well as the tools to be brought along. He did the same thing
before commencing his return trip from Hagnaya, San Remegio later
in the day.
The corporation also presented its maintenance supervisor, Agustin
Pugeda, Jr., and its manager, Alfonso Corominas, Jr. who
corroborated Pestaos testimony that his driving ability was
thoroughly tested, and that all drivers underwent periodic lecture on
various aspects of safety driving including pertinent traffic regulations.
They also confirmed the thorough checkup of every vehicle before it
would depart and that the performance of the drivers was being
monitored by several inspectors posted at random places along the
route.
287
In judgment, the lower court found [petitioners] liable to the
[respondents], in the amounts of P30,000.00 for death indemnity,
P829,079 for loss of earning capacity of the deceased Ananias
Sumayang, and P36,000.00 for necessary interment expenses. The
liability of defendant Perla Compania de Seguros, Inc., however, was
limited only to the amount stipulated in the insurance policy, which
[was] P12,000 for death indemnity and P4,500.00 for burial expenses.
In so ruling, the lower court found [Petitioner] Pestao to have been
negligent in driving the passenger bus that hit the deceased. It was
shown that Pestao negligently attempted to overtake the motorcycle
at a dangerous speed as they were coming upon a junction in the
road, and as the motorcycle was about to turn left towards Tabagon.
The court likewise found Metro Cebu directly and primarily liable,
along with Pestao, the latters employer under Article 2180 of the
Civil Code, as [Petitioner] Metro Cebu failed to present evidence to
prove that it had observed x x x [the] diligence of a good father of a
family to prevent damage. Nor has Metro Cebu proven that it had
exercised due diligence in the supervision of its employees and in the
maintenance of vehicles.
Ruling of the Court of Appeals
The CA affirmed respondents liability for the accident and for
Sumayangs death. Pestao was negligent when he tried to overtake
the victims motorcycle at the Tabagon junction. As a professional
driver operating a public transport vehicle, he should have taken extra
precaution to avoid accidents, knowing that it was perilous to overtake
at a junction, where adjoining roads had Drought about merging and
diverging traffic.
The appellate court opined that Metro Cebu had shown laxity in the
conduct of its operations and in the supervision of its employees. By
allowing the bus to ply its route despite the defective speedometer,
said petitioner showed its indifference towards the proper
maintenance of its vehicles. Having failed to observe the extraordinary
diligence required of public transportation companies, it was held
vicariously liable to the victims of the vehicular accident.
In accordance with prevailing jurisprudence, the CA raised to P50,000
the granted indemnity for the death of the victim. It also affirmed the
award of loss of earning capacity based on his life expectancy. Such
liability was assessed, not as a pension for the claiming heirs, but as
a penalty and an indemnity for the drivers negligent act.
Hence, this Petition.
Issues
Petitioners submit the following issues for our consideration:
1. The Court of Appeals misapplied facts of weight and substance
affecting the result of the case.
2. The Court of Appeals misapplied R.A. 4136 as regards the behavior
of the deceased at the time of the accident.
3. The Court of Appeals erred in ruling that the award of damages
representing income that deceased could have earned be considered
a penalty.
4. The Court of Appeals, contrary to Article 2204, Civil Code, raised
the award of P30,000.00 damages representing indemnity for death
to P50,000.00.
5. The Court of Appeals used as basis for the loss of earning capacity,
the life expectancy of the [d]eceased instead of that of the
respondents which was shorter.
In short, they raise these questions: whether the CA erred (1) in
applying Section 45 of RA 4136 when it ruled that negligence in driving
was the proximate cause of the accident; (2) in increasing the civil
indemnity from P30,000 to P50,000; and (3) in using the life
expectancy of the deceased instead of the life expectancies of
respondents.
The Courts Ruling
288
The Petition has no merit.
First Issue: Negligence
Petitioners contend that Pestao was not under any obligation to slow
down when he overtook the motorcycle, because the deceased had
given way to him upon hearing the bus horn. Seeing that the left side
of the road was clearly visible and free of oncoming traffic, Pestao
accelerated his speed to pass the motorcycle. Having given way to the
bus, the motorcycle driver should have slowed down until he had been
overtaken.
They further contend that the motorcycle was not in the middle of the
road nearest to the junction as found by the trial and the appellate
courts, but was on the inner lane. This explains why the damage on
the bus were all on the right sidethe right end of the bumper and
the right portion of the radiator grill were bent and dented. Hence,
they insist that it was the victim who was negligent.
We disagree. Petitioners are raising a question of fact based on
Pestaos testimony contradicting that of Eyewitness Ignacio Neis and
on the location of the dents on the bumper and the grill. Neis testified
that as the two vehicles approached the junction, the victim raised his
left arm to signal that he was turning left to Tabagon, but that the
latter and his companion were thrown off the motorcycle after it was
bumped by the overspeeding bus.
These contentions have already been passed upon by the trial and the
appellate courts. We find no cogent reason to reverse or modify their
factual findings. The CA agreed with the trial court that the vehicular
collision was caused by Pestaos negligence when he attempted to
overtake the motorcycle. As a professional driver operating a public
transport bus, he should have anticipated that overtaking at a junction
was a perilous maneuver and should thus have exercised extreme
caution.
Factual findings of the CA affirming those of the trial court are
conclusive and binding on this Court. Petitioners failed to demonstrate
that this case falls under any of the recognized exceptions to this rule.
Indeed, the issue of negligence is basically factual and, in quasi-
delicts, crucial in the award of damages.
Petitioners aver that the CA was wrong in attributing the accident to
a faulty speedometer and in implying that the accident could have
been avoided had this instrument been properly functioning.
This contention has no factual basis. Under Articles 2180 and 2176 of
the Civil Code, owners and managers are responsible for damages
caused by their employees. When an injury is caused by the
negligence of a servant or an employee, the master or employer is
presumed to be negligent either in the selection or in the supervision
of that employee. This presumption may be overcome only by
satisfactorily showing that the employer exercised the care and the
diligence of a good father of a family in the selection and the
supervision of its employee.
The CA said that allowing Pestao to ply his route with a defective
speedometer showed laxity on the part of Metro Cebu in the operation
of its business and in the supervision of its employees. Hie negligence
alluded to here is in its supervision over its driver, not in that which
directly caused the accident. The fact that Pestao was able to use a
bus with a faulty speedometer shows that Metro Cebu was remiss in
the supervision of its employees and in the proper care of its vehicles.
It had thus failed to conduct its business with the diligence required
by law.
Second Issue: Life Indemnity
Petitioners aver that the CA erred in increasing the award for life
indemnity from P30,000 to P50,000, without specifying any
aggravating circumstance to justify the increment as provided in the
Civil Code.
This contention is untenable. The indemnity for death caused by a
quasi-delict used to be pegged at P3,000, based on Article 2206 of the
Civil Code. However, the amount has been gradually increased
289
through the years because of the declining value of our currency. At Notes.-While common carriers are required to observe extraordinary
present, prevailing jurisprudence fixes the amount at P50,000. diligence and are presumed at fault, no such presumption applies to
private carriers. (Planters Products, Inc. vs. Court of Appeals, 226
Third Issue: Loss of Earning Capacity SCRA 476 [19931)

Petitioners cite Villa Rey Transit, Inc. v. Court of Appeals, which held:
The determination of the indemnity to be awarded to the heirs of a
deceased person has therefore no fixed basis, x x x The life expectancy
of the deceased or of the beneficiary, whichever is shorter, is an
important factor, x x x.
In a contract of carriage, it is presumed that the common carrier was
at fault or was negligent when a passenger dies or is injured. (Baliwag
Transit, Inc. vs. Court of Appeals, 256 SCRA 746 [1996])
The standard of extraordinary diligence is peculiar to common carriers.
(Reyes vs. Sisters of Mercy Hospital, 340 SCRA 760 [2000])

They contend that the CA used the wrong basis for its computation of o0o
earning capacity.

We disagree. The Court has consistently computed the loss of earning

capacity based on the life expectancy of the deceased, and not on that
of the heir. Even Villa Rey Transit did likewise.

The award for loss of earning capacity is based on two factors: (1) the
number of years on which the computation of damages is based and
(2) the rate at which the loss sustained by the heirs is fixed. The first
factor refers to the life expectancy, which takes into consideration the
nature of the victims work, lifestyle, age and state of health prior to
the accident. The second refers to the victims earning capacity minus
the necessary living expenses. Stated otherwise, the amount
recoverable is that portion of the earnings of the deceased which the
beneficiary would have receivedthe net earnings of the deceased.

WHEREFORE, the Petition is DENIED and the assailed Decision and

Resolution AFFIRMED. Cost against petitioners.

SO ORDERED.

Melo (Chairman), Vitug and Gonzaga-Reyes, JJ., concur.

Petition denied, judgment and resolution affirmed.

290
ALBERTA YOBIDO and CRESENCIO YOBIDO, petitioners, vs.
COURT OF APPEALS, LENY TUMBOY, ARDEE TUMBOY AND
JASMIN TUMBOY, respondents
G.R. No. 113003. October 17, 1997
Appeals; Evidence; Factual findings of the Court of Appeals are final
and may not be reviewed on appeal by the Supreme Court except
when the lower court and the Court of Appeals arrived at diverse
factual findings.The Court did re-examine the facts and evidence in
this case because of the inapplicability of the established principle that
the factual findings of the Court of Appeals are final and may not be
reviewed on appeal by this Court. This general principle is subject to
exceptions such as the one present in this case, namely, that the lower
court and the Court of Appeals arrived at diverse factual findings.
However, upon such re-examination, we found no reason to overturn
the findings and conclusions of the Court of Appeals.
Common Carriers; When a passenger boards a common carrier, he
takes the risks incidental to the mode of travel he has takenafter all,
a carrier is not an insurer of the safety of its passengers and is not
bound absolutely and at all events to carry them safely and without
injury.As a rule, when a passenger boards a common carrier, he
takes the risks incidental to the mode of travel he has taken. After all,
a carrier is not an insurer of the safety of its passengers and is not
bound absolutely and at all events to carry them safely and without
injury. However, when a passenger is injured or dies while travelling,
the law presumes that the common carrier is negligent. Thus, the Civil
Code provides: Art. 1756. In case of death or injuries to passengers,
common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence as prescribed in Articles 1733 and 1755.
Same; Fortuitous Events; Words and Phrases; Characteristics of a
Fortuitous Event.In view of the foregoing, petitioners contention
that they should be exempt from liability because the tire blowout was
no more than a fortuitous event that could not have been foreseen,
must fail. A fortuitous event is possessed of the following
characteristics: (a) the cause of the unforeseen and unexpected
occurrence, or the failure of the debtor to comply with his obligations,
must be independent of human will; (b) it must be impossible to
foresee the event which constitutes the caso fortuito, or if it can be
foreseen, it must be impossible to avoid; (c) the occurrence must be
such as to render it impossible for the debtor to fulfill his obligation in
a normal manner; and (d) the obligor must be free from any
participation in the aggravation of the injury resulting to the creditor.
As Article 1174 provides, no person shall be responsible for a
fortuitous event which could not be foreseen, or which, though
foreseen, was inevitable. In other words, there must be an entire
exclusion of human agency from the cause of injury or loss.
Same; Same; Under the circumstances of the present case, the
explosion of the new tire may not be considered a fortuitous event.
Under the circumstances of this case, the explosion of the new tire
may not be considered a fortuitous event. There are human factors
involved in the situation. The fact that the tire was new did not imply
that it was entirely free from manufacturing defects or that it was
properly mounted on the vehicle. Neither may the fact that the tire
bought and used in the vehicle is of a brand name noted for quality,
resulting in the conclusion that it could not explode within five days
use. Be that as it may, it is settled that an accident caused either by
defects in the automobile or through the negligence of its driver is not
a caso fortuito that would exempt the carrier from liability for
damages.
Same; Same; A common carrier may not be absolved from liability in
case of force majeure or fortuitous event alonethe common carrier
must still prove that it was not negligent in causing the death or injury
resulting from an accident.Moreover, a common carrier may not be
absolved from liability in case of force majeure or fortuitous event
alone. The common carrier must still prove that it was not negligent
in causing the death or injury resulting from an accident. This Court
has had occasion to state: While it may be true that the tire that
blew-up was still good because the grooves of the tire were still visible,
this fact alone does not make the explosion of the tire a fortuitous
event. No evidence was presented to show that the accident was due
291
to adverse road conditions or that precautions were taken by the
jeepney driver to compensate for any conditions liable to cause
accidents. The sudden blowing-up, therefore, could have been caused
by too much air pressure injected into the tire coupled by the fact that
the jeepney was overloaded and speeding at the time of the accident.
Same; Same; Damages; Where a common carrier failed to exercise
the extraordinary diligence required of it, which resulted in the death
of a passenger, it is deemed to have acted recklessly, and the heirs of
the passenger shall be entitled to exemplary damages.Moral
damages are generally not recoverable in culpa contractual except
when bad faith had been proven. However, the same damages may
be recovered when breach of contract of carriage results in the death
of a passenger, as in this case. Exemplary damages, awarded by way
of example or correction for the public good when moral damages are
awarded, may likewise be recovered in contractual obligations if the
defendant acted in wanton, fraudulent, reckless, oppressive, or
malevolent manner. Because petitioners failed to exercise the
extraordinary diligence required of a common carrier, which resulted
in the death of Tito Tumboy, it is deemed to have acted recklessly. As
such, private respondents shall be entitled to exemplary damages.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion on the Court.
Silvanio T. Liza for petitioners.
Gershon A. Patalinghug, Jr. for private respondents.
ROMERO, J.:
In this petition for review on certiorari of the decision of the Court of
Appeals, the issue is whether or not the explosion of a newly installed
tire of a passenger vehicle is a fortuitous event that exempts the
carrier from liability for the death of a passenger.
On April 26, 1988, spouses Tito and Leny Tumboy and their minor
children named Ardee and Jasmin, boarded at Mangagoy, Surigao del
Sur, a Yobido Liner bus bound for Davao City. Along Picop Road in
Km. 17, Sta. Maria, Agusan del Sur, the left front tire of the bus
exploded. The bus fell into a ravine around three (3) feet from the
road and struck a tree. The incident resulted in the death of 28-year-
old Tito Tumboy and physical injuries to other passengers.
On November 21, 1988, a complaint for breach of contract of carriage,
damages and attorneys fees was filed by Leny and her children
against Alberta Yobido, the owner of the bus, and Cresencio Yobido,
its driver, before the Regional Trial Court of Davao City. When the
defendants therein filed their answer to the complaint, they raised the
affirmative defense of caso fortuito. They also filed a third-party
complaint against Philippine Phoenix Surety and Insurance, Inc. This
third-party defendant filed an answer with compulsory counterclaim.
At the pre-trial conference, the parties agreed to a stipulation of facts.
Upon a finding that the third party defendant was not liable under the
insurance contract, the lower court dismissed the third party
complaint. No amicable settlement having been arrived at by the
parties, trial on the merits ensued.
The plaintiffs asserted that violation of the contract of carriage
between them and the defendants was brought about by the drivers
failure to exercise the diligence required of the carrier in transporting
passengers safely to their place of destination. According to Leny
Tumboy, the bus left Mangagoy at 3:00 oclock in the afternoon. The
winding road it traversed was not cemented and was wet due to the
rain; it was rough with crushed rocks. The bus which was full of
passengers had cargoes on top. Since it was running fast, she
cautioned the driver to slow down but he merely stared at her through
the mirror. At around 3:30 p.m., in Trento, she heard something
explode and immediately, the bus fell into a ravine.
For their part, the defendants tried to establish that the accident was
due to a fortuitous event. Abundio Salce, who was the bus conductor
when the incident happened, testified that the 42-seater bus was not
292
full as there were only 32 passengers, such that he himself managed
to get a seat. He added that the bus was running at a speed of 60 to
50 and that it was going slow because of the zigzag road. He affirmed
that the left front tire that exploded was a brand new tire that he
mounted on the bus on April 21, 1988 or only five (5) days before the
incident. The Yobido Liner secretary, Minerva Fernando, bought the
new Goodyear tire from Davao Toyo Parts on April 20, 1988 and she
was present when it was mounted on the bus by Salce. She stated
that all driver applicants in Yobido Liner underwent actual driving tests
before they were employed. Defendant Cresencio Yobido underwent
such test and submitted his professional drivers license and
clearances from the barangay, the fiscal and the police.
On August 29, 1991, the lower court rendered a decision dismissing
the action for lack of merit. On the issue of whether or not the tire
blowout was a caso fortuito, it found that the falling of the bus to the
cliff was a result of no other outside factor than the tire blow-out. It
held that the ruling in the La Mallorca and Pampanga Bus Co. v. De
Jesus that a tire blowout is a mechanical defect of the conveyance or
a fault in its equipment which was easily discoverable if the bus had
been subjected to a more thorough or rigid check-up before it took to
the road that morning is inapplicable to this case. It reasoned out
that in said case, it was found that the blowout was caused by the
established fact that the inner tube of the left front tire was pressed
between the inner circle of the left wheel and the rim which had
slipped out of the wheel. In this case, however, the cause of the
explosion remains a mystery until at present. As such, the court
added, the tire blowout was a caso fortuito which is completely an
extraordinary circumstance independent of the will of the defendants
who should be relieved of whatever liability the plaintiffs may have
suffered by reason of the explosion pursuant to Article 1174, of the
Civil Code.
Dissatisfied, the plaintiffs appealed to the Court of Appeals. They
ascribed to the lower court the following errors: (a) finding that the
tire blowout was a caso fortuito; (b) failing to hold that the defendants
did not exercise utmost and/or extraordinary diligence required of
carriers under Article 1755 of the Civil Code, and (c) deciding the case
contrary to the ruling in Juntilla v. Fontanar, and Necesito v. Paras.
On August 23, 1993, the Court of Appeals rendered the Decision
reversing that of the lower court. It held that:
To Our mind, the explosion of the tire is not in itself a fortuitous
event. The cause of the blow-out, if due to a factory defect, improper
mounting, excessive tire pressure, is not an unavoidable event. On the
other hand, there may have been adverse conditions on the road that
were unforeseeable and/or inevitable, which could make the blow-out
a caso fortuito. The fact that the cause of the blow-out was not known
does not relieve the carrier of liability. Owing to the statutory
presumption of negligence against the carrier and its obligation to
exercise the utmost diligence of very cautious persons to carry the
passenger safely as far as human care and foresight can provide, it is
the burden of the defendants to prove that the cause of the blow-out
was a fortuitous event. It is not incumbent upon the plaintiff to prove
that the cause of the blow-out is not caso fortuito.
Proving that the tire that exploded is a new Goodyear tire is not
sufficient to discharge defendants burden. As enunciated in Necesito
vs. Paras, the passenger has neither choice nor control over the carrier
in the selection and use of its equipment, and the good repute of the
manufacturer will not necessarily relieve the carrier from liability.
Moreover, there is evidence that the bus was moving fast, and the
road was wet and rough. The driver could have explained that the
blow-out that precipitated the accident that caused the death of Toto
Tumboy could not have been prevented even if he had exercised due
care to avoid the same, but he was not presented as witness.
The Court of Appeals thus disposed of the appeal as follows:
WHEREFORE, the judgment of the court a quo is set aside and
another one entered ordering defendants to pay plaintiffs the sum of
P50,000.00 for the death of Tito Tumboy, P30,000.00 in moral
damages, and P7,000.00 for funeral and burial expenses.
293
SO ORDERED.
The defendants filed a motion for reconsideration of said decision
which was denied on November 4, 1993 by the Court of Appeals.
Hence, the instant petition asserting the position that the tire blowout
that caused the death of Tito Tumboy was a caso fortuito. Petitioners
claim further that the Court of Appeals, in ruling contrary to that of
the lower court, misapprehended facts and, therefore, its findings of
fact cannot be considered final which shall bind this Court. Hence, they
pray that this Court review the facts of the case.
The Court did re-examine the facts and evidence in this case because
of the inapplicability of the established principle that the factual
findings of the Court of Appeals are final and may not be reviewed on
appeal by this Court. This general principle is subject to exceptions
such as the one present in this case, namely, that the lower court and
the Court of Appeals arrived at diverse factual findings. However, upon
such re-examination, we found no reason to overturn the findings and
conclusions of the Court of Appeals.
As a rule, when a passenger boards a common carrier, he takes the
risks incidental to the mode of travel he has taken. After all, a carrier
is not an insurer of the safety of its passengers and is not bound
absolutely and at all events to carry them safely and without injury.
However, when a passenger is injured or dies while travelling, the law
presumes that the common carrier is negligent. Thus, the Civil Code
provides:
Art. 1756. In case of death or injuries to passengers, common carriers
are presumed to have been at fault or to have acted negligently,
unless they prove that they observed extraordinary diligence as
prescribed in Articles 1733 and 1755.
Article 1755 provides that (a) common carrier is bound to carry the
passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with a due regard
for all the circumstances. Accordingly, in culpa contractual, once a
passenger dies or is injured, the carrier is presumed to have been at
fault or to have acted negligently. This disputable presumption may
only be overcome by evidence that the carrier had observed
extraordinary diligence as prescribed by Articles 1733, 1755 and 1756
of the Civil Code or that the death or injury of the passenger was due
to a fortuitous event.11 Consequently, the court need not make an
express finding of fault or negligence on the part of the carrier to hold
it responsible for damages sought by the passenger.
In view of the foregoing, petitioners contention that they should be
exempt from liability because the tire blowout was no more than a
fortuitous event that could not have been foreseen, must fail. A
fortuitous event is possessed of the following characteristics: (a) the
cause of the unforeseen and unexpected occurrence, or the failure of
the debtor to comply with his obligations, must be independent of
human will; (b) it must be impossible to foresee the event which
constitutes the caso fortuito, or if it can be foreseen, it must be
impossible to avoid; (c) the occurrence must be such as to render it
impossible for the debtor to fulfill his obligation in a normal manner;
and (d) the obligor must be free from any participation in the
aggravation of the injury resulting to the creditor. As Article 1174
provides, no person shall be responsible for a fortuitous event which
could not be foreseen, or which, though foreseen, was inevitable. In
other words, there must be an entire exclusion of human agency from
the cause of injury or loss.
Under the circumstances of this case, the explosion of the new tire
may not be considered a fortuitous event. There are human factors
involved in the situation. The fact that the tire was new did not imply
that it was entirely free from manufacturing defects or that it was
properly mounted on the vehicle. Neither may the fact that the tire
bought and used in the vehicle is of a brand name noted for quality,
resulting in the conclusion that it could not explode within five days
use. Be that as it may, it is settled that an accident caused either by
defects in the automobile or through the negligence of its driver is not
a caso fortuito that would exempt the carrier from liability for
damages.
294
Moreover, a common carrier may not be absolved from liability in case
of force majeure or fortuitous event alone. The common carrier must
still prove that it was not negligent in causing the death or injury
resulting from an accident. This Court has had occasion to state:
While it may be true that the tire that blew-up was still good because
the grooves of the tire were still visible, this fact alone does not make
the explosion of the tire a fortuitous event. No evidence was presented
to show that the accident was due to adverse road conditions or that
precautions were taken by the jeepney driver to compensate for any
conditions liable to cause accidents. The sudden blowing-up,
therefore, could have been caused by too much air pressure injected
into the tire coupled by the fact that the jeepney was overloaded and
speeding at the time of the accident.
It is interesting to note that petitioners proved through the bus
conductor, Salce, that the bus was running at 60-50 kilometers per
hour only or within the prescribed lawful speed limit. However, they
failed to rebut the testimony of Leny Tumboy that the bus was running
so fast that she cautioned the driver to slow down. These
contradictory facts must, therefore, be resolved in favor of liability in
view of the presumption of negligence of the carrier in the law.
Coupled with this is the established condition of the road-rough,
winding and wet due to the rain. It was incumbent upon the defense
to establish that it took precautionary measures considering partially
dangerous condition of the road. As stated above, proof that the tire
was new and of good quality is not sufficient proof that it was not
negligent. Petitioners should have shown that it undertook
extraordinary diligence in the care of its carrier, such as conducting
daily routinary checkups of the vehicles parts. As the late Justice J.B.L.
Reyes said:
It may be impracticable, as appellee argues, to require of carriers to
test the strength of each and every part of its vehicles before each
trip; but we are of the opinion that a due regard for the carriers
obligations toward the traveling public demands adequate periodical
tests to determine the condition and strength of those vehicle portions
the failure of which may endanger the safety of the passen-gers.
Having failed to discharge its duty to overthrow the presumption of
negligence with clear and convincing evidence, petitioners are hereby
held liable for damages. Article 1764 in relation to Article 2206 of the
Civil Code prescribes the amount of at least three thousand pesos as
damages for the death of a passenger. Under prevailing jurisprudence,
the award of damages under Article 2206 has been increased to fifty
thousand pesos (P50,000.00).
Moral damages are generally not recoverable in culpa contractual
except when bad faith had been proven. However, the same damages
may be recovered when breach of contract of carriage results in the
death of a passenger,22 as in this case. Exemplary damages, awarded
by way of example or correction for the public good when moral
damages are awarded, may likewise be recovered in contractual
obligations if the defendant acted in wanton, fraudulent, reckless,
oppressive, or malevolent manner.24 Because petitioners failed to
exercise the extraordinary diligence required of a common carrier,
which resulted in the death of Tito Tumboy, it is deemed to have acted
recklessly.25 As such, private respondents shall be entitled to
exemplary damages.
WHEREFORE, the Decision of the Court of Appeals is hereby
AFFIRMED subject to the modification that petitioners shall, in addition
to the monetary awards therein, be liable for the award of exemplary
damages in the amount of P20,000.00. Costs against petitioners.
SO ORDERED.
Narvasa (C.J., Chairman), Melo, Francisco and Panganiban, JJ.,
concur.
Judgment affirmed with modification.
Notes.In a contract of affreightment a common carrier is not
converted into a private carrier but remains as a common carrier and
still liable as such. (Coastwise Lighterage Corporation vs. Court of
Appeals, 245 SCRA 796 [1995])
295
On no other employer is a greater duty imposed of minimizing
absences among crew members than on common carriers. (Michael,
Inc. vs. National Labor Relations Commission, 256 SCRA 461 [1996])

In a contract of carriage, it is presumed that the common carrier was

at fault or was negligent when a passenger dies or is injured. (Baliwag
Transit, Inc. vs. Court of Appeals, 256 SCRA 746 [1996])

o0o

296
 SPOUSES MARCELO LANDINGIN and RACQUEL BOCASAS,
plaintiffs-appellees, vs. PANGASINAN TRANSPORTATION Co.
and MARCELO OLIGAN, defendants-appellants
SPOUSES PEDRO GARCIA and EUFRACIA LANDINGIN,
plaintiffs-appellees, vs. PANGASINAN TRANSPORTATION Co.
and MARCELO OLIGAN, defendants-appellants
Nos. L-28014-15. May 29, 1970
Transportation; Common carrier; Duty of common carriers.A
common carrier is duty bound to carry its passengers "safely as far as
human care and foresight can provide, using the utmost diligence of
very cautious .persons, with a due regard for all the circumstances/'
(Article 1755, Civil Code.)
Same; Same; Same; Accident caused by defects of motor vehicle.ln
Lasam vs. Smith, 45 Phil. 660, this Supreme Court held that an
accident caused by defects in the automobile is not a caso fortuito.
The rationale of the carrier's liability is the fact that "the passenger
has neither the choice nor control over the carrier in the selection and
use of the equipment and appliances in use by the carrier.
Same; Same; Presumption of negligence of common carrier; How
rebutted.When a passenger dies or is injured, the presumption is
that the common carrier is at fault or that it acted negligently, This
presumption is only rebutted by proof on the carrier's part that it
observed the "extraordinary diligence" required in Article 1733 and the
"utmost diligence of very cautious persons" required in Article 1755,
DIRECT APPEAL from a judgment of the Court of First Instance of
Pangasinan. Domingo, J.
The facts are stated in the opinion of the Court.
Gabriel A. Zabala for plaintiffs-appellees.
Vicente M. Erfe Law Office for defendants-appellants.
VlLLAMOR, J.:
Direct appeal on a question of law from the portion of the judgment
of the Court of First Instance of Manila ordering the defendants
Pangasinan Transportation Co. (PANTRANCO) and Marcelo Oligan to
pay the plaintiffs in Civil Case No. D-1468 (L-28014) the sum of
P6,500.00, and the plaintiffs in Civil Case No. 1470 (L-28015) the sum
of P3,500.00.
The complaints in said Civil Cases Nos, D-1468 and D1470 were filed
by the spouses Marcelo Landingin and and Racquel Bocasas, and the
spouses Pedro Garcia and Eufracia Landingin, respectively, for
damages allegedly suffered by them in connection with the death of
their respective daughter, Leonila Landingin and Estrella Garcia, due
to the alleged negligence of the defendants and/ or breach of contract
of carriage. In their complaints, plaintiffs averred, among others, that
in the morning of April 20, 1963, their above-mentioned daughters
were among the passengers in the bus driven by defendant Marcelo
Oligan and owned and operated by defendant PANTRANCO on an
excursion trip from Dagupan City to Baguio City and back, that the
bus was open on one side and enclosed on the other, in gross violation
of the rules of the Public Service Commission: that defendant
PANTRANCO acted with negligence, fraud and bad faith in pretending
to have previously secured a special permit for the trip when in truth
it had not done so; that upon reaching an uphill point at Camp 8,
Kennon Road, Baguio City, on the onward trip, defendant driver,
through utter lack of foresight, experience and driving knowledge,
caused the bus to stall and stop for a few moments; that through the
said defendant's fault and mishandling, the motor ceased to function,
causing the bus to slide back unchecked; that when the said defendant
suddenly swerved and steered the bus toward the mountainside,
Leonila and Estrella, together with several other passengers, were
thrown out of the bus through its open side unto the road, suffering
serious injuries as a result of which Leonila and Estrella died at the
hospital on the same day; and that in connection with the incident,
defendant driver had been charged with and convicted of multiple
homicide and multiple slight physical injuries on account of the 'death
of Leonila and Estrella and of the injuries suffered by four others,
297
although it may be said, by way of parenthesis, that this case is now
pending appeal in a higher court The plaintiffs prayed for awards of
moral, actual and exemplary damages in the total sum of P40,000.00
in Civil Case No. D-1468, and in the total sum of P25,000.00 in Civil
Case No. D-1470 as well as attorney's fees in the amounts of
P5,000.00 and P4,000.00, respectively.
Defendants filed a joint answer to each of the two complaints alleging,
among others, that at the time of the accident, defendant driver was
driving the bus at the slow speed of about 10 kilometers per hour;
that while the said defendant was steering his bus toward the
mountainside after hearing a sound coming from under the rear end
of the bus, Leonila and Estrella recklessly, and in disobedience to his
shouted warnings and advice, jumped out of the bus causing their
heads to hit the road or pavement; that the bus was then being driven
with extraordinary care, prudence. and diligence; that defendant
PANTRANCO observed the care and diligence of a good father of a
family to prevent the accident as well as in the selection and
supervision of its employees, particularly of defendant driver; and that
the decision convicting the said defendant was not yet final, the same
having been appealed to the Court of Appeals where it was still
pending.
By agreement of the parties, the two cases were tried jointly. On
October 17, 1966, the court a quo rendered its decision therein in
which it made the following findings; that upon reaching the fatal spot
at Camp 8, a sudden snapping or breaking of metal below the floor of
the bus was heard, and the bus abruptly stopped, rolling back a few
moments later; that as a result, some of the passengers jumped out
of the bus, while others stepped down; that defendant driver
maneuvered the bus safely to and against the side of the mountain
where its rear end was made to rest, ensuring the safety of the many
passengers still inside the bus; that while defendant driver was
steering the bus towards the mountainside, he advised the passengers
not to jump, but to remain seated; that Leonila and Estrella were not
thrown out of the bus, but that they panicked and jumped out; that
the malfunctioning of the motor resulted from the breakage of the
crossjoint; that there was no negligence on the part of either of the
defendants; that only the day before, the said crossjoint was duly
inspected and found to be in order; and that defendant PANTRANCO
had exercised the requisite care in the selection and supervision of its
employees, including the defendant driver. The court concluded that
"the accident was caused by a fortuitous. event or an act of God
'brought about by some extra-ordinary circumstances independent of
the will of the Pantranco or its employees."
One would wonder why in the face of such factual findings and
conclusion of the trial court, the defendants, instead of the plaintiffs,
should come to this Court on appeal. The answer lies in the dispositive
portion of the decision, to wit;
"IN VIEW OF THE FOREGOING CONSIDERATIONS. the Court hereby
renders judgment: (a) Absolving the defendants from any liability on
account of negligence on their part and therefore . dismissing the
complaints in these two cases: (b) However, as stated above, the
Court hereby orders the defendant Pantranco to pay to the plaintiffs
spouses Marcelo Landingin and Racquel Bocasas in Civil Case No. D-
1468 the amount of P6,500.00; and the amount of P3,500.00 to the
spouses Pedro Garcia and Eufracia Landingin in Civil Case No. D-1470.
not in payment of liability because of any negligence on the part of
the defendants but as an expression of sympathy and goodwill" (Italics
supplied.)
As to what impelled the court below to include item (b) in the
dispositive portion of its decision, can be gathered from the
penultimate paragraph of the decision, which reads:
"However, there is evidence to the effect that an offer of P8,500.00 in
the instant cases without any admission of fault or negligence had
been made by the defendant Pantranco and that actually in Civil Case
No. D-1469 for the death of Pacita Descalso, the other deceased
passenger of the bus in question, the heirs of the deceased received
P3,000.00 in addition to hospital and medical bills and the coffin of the
deceased for the dismissal of the said case without Pantranco
accepting liability. There was as a matter of fact during the pre-trial
of these two cases a continuing offer of settlement on the part of the
298
defendant Pantranco without accepting any liability for such damages,
-and the Court understood that the Pantranco would be willing still to
pay said amounts even if these cases were to be tried on the merits.
It is well-known that the defendant Pantranco is zealous in the
preservation of its public relations. In the spirit therefore of the offer
of the defendant Pantranco aforesaid, to assuage the feelings of the
herein plaintiffs an award of P6,500.00 for the spouses Marcelo
Landingin and Racquel Bocasas in Civil Case No. D-1468 whose
daughter Leonila was, when she died, a third-year Commerce student
at the Far Eastern University, and P3,500.00 for the spouses Pedro
Garcia and Eufracia Landingin in Civil Case No. D-1470 whose
daughter Estrella was in the fourth year High at the Dagupan Colleges
when she died, is hereby made in their favor. This award is in addition
to what Pantranco might have spent to help the parents of both
deceased after the accident"
Defendants-appellants complain that having found them to be
absolutely free from fault or negligence, and having in fact dismissed
the complaints against them. the court should not have ordered them
to assume any pecuniary liability. There would be merit in his
argument but for the fact that defendant-appellant PANTRANCO was
guilty of breach of contract of carriage, It will be noted that in each of
the two complaints it is averred that two buses, including the one in
which the two deceased girls were riding, were hired to transport the
excursionist passengers from Dagupan City to Baguio City, and return,
and that the said two passengers did not reach destination safely.
As a common carrier, defendant-appellant PANTRANCO was duty
bound to carry its passengers "safely as far as human care and
foresight can provide, using the utmost diligence of very cautious
persons, with a due regard for all the circumstances." (Article 1755,
Civil Code.) Did defendant-appellant PANTRANCO measure up to the
degree of care and foresight required it under the circumstances? We
think not. The court below found that the cross-joint of the bus in
which the deceased were riding broke, which caused the
malfunctioning of the motor, which in turn resulted in panic among
some of the passengers. This is a finding of fact which this Court may
not disturb. We are of the opinion, however, that the lower court's
conclusion drawn from that fact, i.e., that "the accident was caused
by a fortuitous event or an act of God brought about by some
extraordinary circumstances independent of the will of the Pantranco
or its employees," is in large measure conjectural and speculative, and
was arrived at without due regard to all the circumstances, as required
by Article 1755. In Lasam vs, Smith (45 Phil. 660), this Court held that
an accident caused by defects in the automobile is not a caso fortuito.
The rationale of the carrier's liability is the fact that "the passenger
has neither the choice nor control over the carrier in the selection and
use of the equipment and appliances in use by the carrier." (Necesito,
et al. vs. Paras, at al., 104 Phil. 75.)
When a passenger dies or is injured, the presumption is that the
common carrier is at fault or that it acted negligently (Article 1756).
This presumption is only rebutted by proof on the carrier's part that it
observed the "extraordinary diligence" required in Article 1733 and the
"utmost diligence of very cautious persons" required in Article 1755
(Article 1756). In the instant case it appears that the court below
considered the presumption rebutted on the strength of defendants-
appellants' evidence that only the day before the incident, the cross-
joint in question was duly inspected and found to be in order. It does
not appear, however, that the carrier gave due regard for all the
circumstances in connection with the said inspection. The bus in which
the deceased were riding was heavily laden with passengers, and it
would be traversing mountainous,. circuitous and ascending roads.
Thus the entire bus, including its mechanical parts, would naturally be
taxed more heavily than it would be under ordinary circumstances.
The mere fact that the bus was inspected only recently and found to
be in order would not exempt the carrier from liability unless it is
shown that the particular circumstances under which the bus would
travel were also considered.
In the premises, it was error for the trial court to dismiss the
complaints. The awards made by the court should be considered in
the concept of damages for breach of contracts of carriage.
IN VIEW OF THE FOREGOING CONSIDERATIONS, the judgment
appealed from is modified as indicated above, and defendant-
299
appellant PANTRANCO is ordered to pay to plaintiffs-appellees the
amounts stated in the judgment appealed from, as damages for
breach of contracts, with interest thereon at the legal rate from the
date of the filing of the complaints. Costs against against defendant-
appellant PANTRANCO.

Concepcion, CJ., Reyes, J.B.L., Dizon, Makalintal, Zaldivar,

Fernando, Teehankee and Barredo, JJ., concur.

Castro, J., is on official leave.

Notes.(a) Basis of carrier's liability for injury or death.Under the

new Civil Code, the liability of a carrier with respect to passengers
transported is contractual and arises upon breach of its obligation to
carry them "safely as far as human care and foresight can provide."
There is breach of this obligation if it fails to exert extraordinary
diligence according to all the circumstances of the case in exercise of
the utmost diligence of a very cautious person (Isaac vs. Ammen
Transportation Co., L-9671, Aug. 23, 1957), The liability arising from
such breach is not dependent upon establishing negligence or "culpa
aquiliana", in the ordinary sense, against the carrier, nor is it in any
way tied to conviction of the carrier or one of Its employees of a
criminal offense in connection with the occurrence. It is an entirely
distinct type or theory of liability, enforcement of which may proceed
regardless of pending criminal prosecutions (Parker vs. Panlilio, L-
4961, March 5, 1952; San Pedro Bus Line vs. Navarro, L-6291; Son
vs. Cebu Autobus Co., L-6155, April 30, 1954; Medina vs. Crescencia,
L-8194, July 11, 1956; Dionisio vs. Alvendia, L-10567, Nov. 26, 1957).

(b) Fortuitous event.For examples of caso fortuito, see Rakes vs.

Atlantic, Gulf & Pacific Co., 7 Phil. 359; Crame Sy Panco vs. Gonzaga,
10 Phil. 646; Roman Catholic Bishop of Jaro vs. De La Pea, 26 Phil.
144; Novo & Co. vs. Ainsworth, 26 Phil. 433; University of Santo
Tomas vs. Descals, 38 Phil. 267; Lizares vs. Hernaez, 40 Phil. 981.

300
 Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. No. L-10605 June 30, 1958
PRECILLANO NECESITO, ETC., plaintiff-appellant,
vs.
NATIVIDAD PARAS, ET AL., defendants-appellees.
x---------------------------------------------------------x
G.R. No. L-10606 June 30, 1958
GERMAN NECESITO, ET AL., plaintiffs-appellants,
vs.
NATIVIDAD PARAS, ET AL., defendants-appellees.
Tomas Besa and Federico Agrava for appellants.
Jose W. Diokno for appellees.
REYES, J. B. L., J.:
These cases involve ex contractu against the owners and operators of
the common carrier known as Philippine Rabbit Bus Lines, filed by one
passenger, and the heirs of another, who injured as a result of the fall
into a river of the vehicle in which they were riding.
In the morning of January 28, 1964, Severina Garces and her one-
year old son, Precillano Necesito, carrying vegetables, boarded
passenger auto truck or bus No. 199 of the Philippine Rabbit Bus Lines
at Agno, Pangasinan. The passenger truck, driven by Francisco
Bandonell, then proceeded on its regular run from Agno to Manila.
After passing Mangatarem, Pangasinan truck No. 199 entered a
wooden bridge, but the front wheels swerved to the right; the driver
lost control, and after wrecking the bridge's wooden rails, the truck
fell on its right side into a creek where water was breast deep. The
mother, Severina Garces, was drowned; the son, Precillano Necesito,
was injured, suffering abrasions and fracture of the left femur. He was
brought to the Provincial Hospital at Dagupan, where the fracture was
set but with fragments one centimeter out of line. The money, wrist
watch and cargo of vegetables were lost.
Two actions for damages and attorney's fees totalling over P85,000
having been filed in the Court of First Instance of Tarlac (Cases Nos.
908 and 909) against the carrier, the latter pleaded that the accident
was due to "engine or mechanical trouble" independent or beyond the
control of the defendants or of the driver Bandonell.
After joint trial, the Court of First Instance found that the bus was
proceeding slowly due to the bad condition of the road; that the
accident was caused by the fracture of the right steering knuckle,
which was defective in that its center or core was not compact but
"bubbled and cellulous", a condition that could not be known or
ascertained by the carrier despite the fact that regular thirty-day
inspections were made of the steering knuckle, since the steel exterior
was smooth and shiny to the depth of 3/16 of an inch all around; that
the knuckles are designed and manufactured for heavy duty and may
last up to ten years; that the knuckle of bus No. 199 that broke on
January 28, 1954, was last inspected on January 5, 1954, and was
due to be inspected again on February 5th. Hence, the trial court,
holding that the accident was exclusively due to fortuitous event,
dismissed both actions. Plaintiffs appealed directly to this Court in view
of the amount in controversy.
We are inclined to agree with the trial court that it is not likely that
bus No. 199 of the Philippine Rabbit Lines was driven over the deeply
rutted road leading to the bridge at a speed of 50 miles per hour, as
testified for the plaintiffs. Such conduct on the part of the driver would
have provoked instant and vehement protest on the part of the
passengers because of the attendant discomfort, and there is no trace
of any such complaint in the records. We are thus forced to assume
that the proximate cause of the accident was the reduced strength of
the steering knuckle of the vehicle caused by defects in casting it.
While appellants hint that the broken knuckle exhibited in court was
301
not the real fitting attached to the truck at the time of the accident,
the records they registered no objection on that ground at the trial
below. The issue is thus reduced to the question whether or not the
carrier is liable for the manufacturing defect of the steering knuckle,
and whether the evidence discloses that in regard thereto the carrier
exercised the diligence required by law (Art. 1755, new Civil Code).
ART. 1755. A common carrier is bound to carry the passengers safely
as far as human care and foresight can provide, using the utmost
diligence of very cautious persons, with a due regard for the all the
circumstances.
It is clear that the carrier is not an insurer of the passengers' safety.
His liability rests upon negligence, his failure to exercise the "utmost"
degree of diligence that the law requires, and by Art. 1756, in case of
a passenger's death or injury the carrier bears the burden of satisfying
the court that he has duly discharged the duty of prudence required.
In the American law, where the carrier is held to the same degree of
diligence as under the new Civil Code, the rule on the liability of
carriers for defects of equipment is thus expressed: "The
preponderance of authority is in favor of the doctrine that a passenger
is entitled to recover damages from a carrier for an injury resulting
from a defect in an appliance purchased from a manufacturer,
whenever it appears that the defect would have been discovered by
the carrier if it had exercised the degree of care which under the
circumstances was incumbent upon it, with regard to inspection and
application of the necessary tests. For the purposes of this doctrine,
the manufacturer is considered as being in law the agent or servant
of the carrier, as far as regards the work of constructing the appliance.
According to this theory, the good repute of the manufacturer will not
relieve the carrier from liability" (10 Am. Jur. 205, s, 1324; see also
Pennsylvania R. Co. vs. Roy, 102 U. S. 451; 20 L. Ed. 141; Southern
R. Co. vs. Hussey, 74 ALR 1172; 42 Fed. 2d 70; and Ed Note, 29 ALR
788; Ann. Cas. 1916E 929).
The rationale of the carrier's liability is the fact that the passenger has
neither choice nor control over the carrier in the selection and use of
the equipment and appliances in use by the carrier. Having no privity
whatever with the manufacturer or vendor of the defective equipment,
the passenger has no remedy against him, while the carrier usually
has. It is but logical, therefore, that the carrier, while not in insurer of
the safety of his passengers, should nevertheless be held to answer
for the flaws of his equipment if such flaws were at all discoverable.
Thus Hannen, J., in Francis vs. Cockrell, LR 5 Q. B. 184, said:
In the ordinary course of things, the passenger does not know
whether the carrier has himself manufactured the means of carriage,
or contracted with someone else for its manufacture. If the carrier has
contracted with someone else the passenger does not usually know
who that person is, and in no case has he any share in the selection.
The liability of the manufacturer must depend on the terms of the
contract between him and the carrier, of which the passenger has no
knowledge, and over which he can have no control, while the carrier
can introduce what stipulations and take what securities he may think
proper. For injury resulting to the carrier himself by the manufacturer's
want of care, the carrier has a remedy against the manufacturer; but
the passenger has no remedy against the manufacturer for damage
arising from a mere breach of contract with the carrier . . . . Unless,
therefore, the presumed intention of the parties be that the passenger
should, in the event of his being injured by the breach of the
manufacturer's contract, of which he has no knowledge, be without
remedy, the only way in which effect can be given to a different
intention is by supposing that the carrier is to be responsible to the
passenger, and to look for his indemnity to the person whom he
selected and whose breach of contract has caused the mischief. (29
ALR 789)
And in the leading case of Morgan vs. Chesapeake & O. R. Co. 15 LRA
(NS) 790, 16 Ann. Cas. 608, the Court, in holding the carrier
responsible for damages caused by the fracture of a car axle, due to
a "sand hole" in the course of moulding the axle, made the following
observations.
The carrier, in consideration of certain well-known and highly valuable
rights granted to it by the public, undertakes certain duties toward the
public, among them being to provide itself with suitable and safe cars
302
and vehicles in which carry the traveling public. There is no such duty
on the manufacturer of the cars. There is no reciprocal legal relation
between him and the public in this respect. When the carrier elects to
have another build its cars, it ought not to be absolved by that facts
from its duty to the public to furnish safe cars. The carrier cannot
lessen its responsibility by shifting its undertaking to another's
shoulders. Its duty to furnish safe cars is side by side with its duty to
furnish safe track, and to operate them in a safe manner. None of its
duties in these respects can be sublet so as to relieve it from the full
measure primarily exacted of it by law. The carrier selects the
manufacturer of its cars, if it does not itself construct them, precisely
as it does those who grade its road, and lay its tracks, and operate its
trains. That it does not exercise control over the former is because it
elects to place that matter in the hands of the manufacturer, instead
of retaining the supervising control itself. The manufacturer should be
deemed the agent of the carrier as respects its duty to select the
material out of which its cars and locomotive are built, as well as in
inspecting each step of their construction. If there be tests known to
the crafts of car builders, or iron moulders, by which such defects
might be discovered before the part was incorporated into the car,
then the failure of the manufacturer to make the test will be deemed
a failure by the carrier to make it. This is not a vicarious responsibility.
It extends, as the necessity of this business demands, the rule of
respondeat superior to a situation which falls clearly within its scope
and spirit. Where an injury is inflicted upon a passenger by the
breaking or wrecking of a part of the train on which he is riding, it is
presumably the result of negligence at some point by the carrier. As
stated by Judge Story, in Story on Bailments, sec. 601a: "When the
injury or damage happens to the passenger by the breaking down or
overturning of the coach, or by any other accident occurring on the
ground, the presumption prima facie is that it occurred by the
negligence of the coachmen, and onus probandi is on the proprietors
of the coach to establish that there has been no negligence whatever,
and that the damage or injury has been occasioned by inevitable
casualty, or by some cause which human care and foresight could not
prevent; for the law will, in tenderness to human life and limb, hold
the proprietors liable for the slightest negligence, and will compel
them to repel by satisfactory proofs every imputation thereof." When
the passenger has proved his injury as the result of a breakage in the
car or the wrecking of the train on which he was being carried,
whether the defect was in the particular car in which he was riding or
not, the burden is then cast upon the carrier to show that it was due
to a cause or causes which the exercise of the utmost human skill and
foresight could not prevent. And the carrier in this connection must
show, if the accident was due to a latent defect in the material or
construction of the car, that not only could it not have discovered the
defect by the exercise of such care, but that the builders could not by
the exercise of the same care have discovered the defect or foreseen
the result. This rule applies the same whether the defective car
belonged to the carrier or not.
In the case now before us, the record is to the effect that the only test
applied to the steering knuckle in question was a purely visual
inspection every thirty days, to see if any cracks developed. It
nowhere appears that either the manufacturer or the carrier at any
time tested the steering knuckle to ascertain whether its strength was
up to standard, or that it had no hidden flaws would impair that
strength. And yet the carrier must have been aware of the critical
importance of the knuckle's resistance; that its failure or breakage
would result in loss of balance and steering control of the bus, with
disastrous effects upon the passengers. No argument is required to
establish that a visual inspection could not directly determine whether
the resistance of this critically important part was not impaired. Nor
has it been shown that the weakening of the knuckle was impossible
to detect by any known test; on the contrary, there is testimony that
it could be detected. We are satisfied that the periodical visual
inspection of the steering knuckle as practiced by the carrier's agents
did not measure up to the required legal standard of "utmost diligence
of very cautious persons" "as far as human care and foresight can
provide", and therefore that the knuckle's failure can not be
considered a fortuitous event that exempts the carrier from
responsibility (Lasam vs. Smith, 45 Phil. 657; Son vs. Cebu Autobus
Co., 94 Phil., 892.)
It may be impracticable, as appellee argues, to require of carriers to
test the strength of each and every part of its vehicles before each
303
trip; but we are of the opinion that a due regard for the carrier's
obligations toward the traveling public demands adequate periodical
tests to determine the condition and strength of those vehicle portions
the failure of which may endanger the safe of the passengers.
As to the damages suffered by the plaintiffs, we agree with appellee
that no allowance may be made for moral damages, since under
Article 2220 of the new Civil Code, in case of suits for breach of
contract, moral damages are recoverable only where the defendant
acted fraudulently or in bad faith, and there is none in the case before
us. As to exemplary damages, the carrier has not acted in a "wanton,
fraudulent, reckless, oppressive or malevolent manner" to warrant
their award. Hence, we believe that for the minor Precillano Necesito
(G. R. No. L-10605), an indemnity of P5,000 would be adequate for
the abrasions and fracture of the femur, including medical and
hospitalization expenses, there being no evidence that there would be
any permanent impairment of his faculties or bodily functions, beyond
the lack of anatomical symmetry. As for the death of Severina Garces
(G. R. No. L-10606) who was 33 years old, with seven minor children
when she died, her heirs are obviously entitled to indemnity not only
for the incidental loses of property (cash, wrist watch and
merchandise) worth P394 that she carried at the time of the accident
and for the burial expenses of P490, but also for the loss of her
earnings (shown to average P120 a month) and for the deprivation of
her protection, guidance and company. In our judgment, an award of
P15,000 would be adequate (cf Alcantara vs. Surro, 49 Off. Gaz. 2769;
93 Phil., 472).
The low income of the plaintiffs-appellants makes an award for
attorney's fees just and equitable (Civil Code, Art. 2208, par. 11).
Considering that he two cases filed were tried jointly, a fee of P3,500
would be reasonable.
In view of the foregoing, the decision appealed from is reversed, and
the defendants-appellees are sentenced to indemnify the plaintiffs-
appellants in the following amounts: P5,000 to Precillano Necesito,
and P15,000 to the heirs of the deceased Severina Garces, plus P3,500
by way of attorney's fees and litigation expenses. Costs against
defendants-appellees. So ordered.
Paras, C. J., Bengzon, Reyes, A., Bautista Angelo, Concepcion, and
Endencia, JJ., concur.
Felix, J., concurs in the result.
RESOLUTION
September 11, 1958
REYES, J. B. L., J.:
Defendants-appellees have Submitted a motion asking this Court to
reconsider its decision of June 30, 1958, and that the same be
modified with respect to (1) its holding the carrier liable for the
breakage of the steering knuckle that caused the autobus No. 199 to
overturn, whereby the passengers riding in it were injured; (2) the
damages awarded, that appellees argue to be excessive; and (3) the
award of attorneys' fees.
(1) The rule prevailing in this jurisdiction as established in previous
decisions of this Court, cited in our main opinion, is that a carrier is
liable to its passengers for damages caused by mechanical defects of
the conveyance. As early as 1924, in Lasam vs. Smith, 45 Phil. 659
this Court ruled:
As far as the record shows, the accident was caused either by defects
in the automobile or else through the negligence of its driver. That is
not caso fortuito.
And in Son vs. Cebu Autobus Company, 94 Phil., 892, this Court held
a common carrier liable in damages to passenger for injuries cause by
an accident due to the breakage of a faulty drag-link spring.
It can be seen that while the courts of the United States are at
variance on the question of a carrier's liability for latent mechanical
defects, the rule in this jurisdiction has been consistent in holding the
carrier responsible. This Court has quoted from American and English
decisions, not because it felt bound to follow the same, but merely in
approval of the rationale of the rule as expressed therein, since the
304
previous Philippine cases did not enlarge on the ideas underlying the
doctrine established thereby.
The new evidence sought to be introduced do not warrant the grant
of a new trial, since the proposed proof available when the original
trial was held. Said evidence is not newly discovered.
(2) With regard to the indemnity awarded to the child Precilliano
Necesito, the injuries suffered by him are incapable of accurate
pecuniary estimation, particularly because the full effect of the injury
is not ascertainable immediately. This uncertainty, however, does not
preclude the right to an indemnity, since the injury is patent and not
denied (Civil Code, Art. 2224). The reasons behind this award are
expounded by the Code Commission in its report:
There are cases where from the nature of the case, definite proof of
pecuniary loss cannot be offered, although the court is convinced that
there has been such loss. For instance, injury to one's commercial
credit or to the goodwill of a business firm is often hard to show with
certainty in terms of money. Should damages be denied for that
reason? The judge should be empowered to calculate moderate
damages in such cases, rather than that the plaintiff should suffer,
without redress, from the defendant's wrongful act." (Report of the
Code Commission, p. 75)
In awarding to the heirs of the deceased Severina Garces an indemnity
for the loss of her "guidance, protection and company," although it is
but moral damage, the Court took into account that the case of a
passenger who dies in the course of an accident, due to the carrier's
negligence constitutes an exception to the general rule. While, as
pointed out in the main decision, under Article 2220 of the new Civil
Code there can be no recovery of moral damages for a breach of
contract in the absence of fraud malice or bad faith, the case of a
violation of the contract of carriage leading to a passenger's death
escapes this general rule, in view of Article 1764 in connection with
Article 2206, No. 3 of the new Civil Code.
ART. 1764. Damages in cases comprised in this Section shall be
awarded in accordance with Title XVIII of this Book, concerning
Damages. Article 2206 shall also apply to the death of a passenger
caused by the breach of contract by a comman carrier. ART. 2206. . .
.
(3) The spouse, legitimate and eligimate descendants and ascendants
of the deceased may demand moral damages for mental anguish by
reason of the death of the deceased.
Being a special rule limited to cases of fatal injuries, these articles
prevail over the general rule of Art. 2220. Special provisions control
general ones (Lichauco & Co. vs. Apostol, 44 Phil. 138; Sancio vs.
Lizarraga, 55 Phil. 601).
It thus appears that under the new Civil Code, in case of accident due
to a carrier's negligence, the heirs of a deceased passenger may
recover moral damages, even though a passenger who is injured, but
manages to survive, is not entitled to them. There is, therefore, no
conflict between our main decision in the instant case and that
of Cachero vs. Manila Yellow Taxi Cab Co., 101 Phil., 523, where the
passenger suffered injuries, but did not lose his life.
(3) In the Cachero case this Court disallowed attorneys' fees to the
injured plaintiff because the litigation arose out of his exaggerated and
unreasonable deeds for an indemnity that was out of proportion with
the compensatory damages to which he was solely entitled. But in the
present case, plaintiffs' original claims can not be deemed a
priori wholly unreasonable, since they had a right to indemnity for
moral damages besides compensatory ones, and moral damages are
not determined by set and invariable bounds.
Neither does the fact that the contract between the passengers and
their counsel was on a contingent basis affect the former's right to
counsel fees. As pointed out for appellants, the Court's award is an
party and not to counsel. A litigant who improvidently stipulate higher
counsel fees than those to which he is lawfully entitled, does not for
that reason earn the right to a larger indemnity; but, by parity of
reasoning, he should not be deprived of counsel fees if by law he is
entitled to recover them.
305
We find no reason to alter the main decision heretofore rendered.
Ultimately, the position taken by this Court is that a common carrier's
contract is not to be regarded as a game of chance wherein the
passenger stakes his limb and life against the carrier's property and
profits.

Wherefore, the motion for reconsideration is hereby denied.

So ordered.

o0o

306
 ALFREDO MALLARI, SR. and ALFREDO MALLARI, JR.,
petitioners, vs. COURT OF APPEALS and BULLETIN
PUBLISHING CORPORATION, respondents
G.R. No. 128607. January 31, 2000
Civil Law; Negligence; Common Carriers; Rule is settled that a driver
abandoning his proper lane for the purpose of overtaking another
vehicle in an ordinary situation has the duty to see to it that the road
is clear and not to proceed if he cannot do so in safety.The rule is
settled that a driver abandoning his proper lane for the purpose of
overtaking another vehicle in an ordinary situation has the duty to see
to it that the road is clear and not to proceed if he cannot do so in
safety. When a motor vehicle is approaching or rounding a curve,
there is special necessity for keeping to the right side of the road and
the driver does not have the right to drive on the left hand side relying
upon having time to turn to the right if a car approaching from the
opposite direction comes into view.
Same; Same; Same; Under Article 2185 of the Civil Code, unless there
is proof to the contrary, it is presumed that a person driving a motor
vehicle has been negligent if at the time of the mishap he was violating
a traffic regulation.In the instant case, by his own admission,
petitioner Mallari, Jr. already saw that the BULLETIN delivery van was
coming from the opposite direction and failing to consider the speed
thereof since it was still dark at 5:00 oclock in the morning mindlessly
occupied the left lane and overtook two (2) vehicles in front of it at a
curve in the highway. Clearly, the proximate cause of the collision
resulting in the death of Israel Reyes, a passenger of the jeepney, was
the sole negligence of the driver of the passenger jeepney, petitioner
Alfredo Mallari, Jr., who recklessly operated and drove his jeepney in
a lane where overtaking was not allowed by traffic rules. Under Art.
2185 of the Civil Code, unless there is proof to the contrary, it is
presumed that a person driving a motor vehicle has been negligent if
at the time of the mishap he was violating a traffic regulation. As found
by the appellate court, petitioners failed to present satisfactory
evidence to overcome this legal presumption.
Same; Same; Same; Liability of the common carrier does not cease
upon proof that it exercised all the diligence of a good father of a
family in the selection of its employees.The negligence and
recklessness of the driver of the passenger jeepney is binding against
petitioner Mallari, Sr., who admittedly was the owner of the passenger
jeepney engaged as a common carrier, considering the fact that in an
action based on contract of carriage, the court need not make an
express finding of fault or negligence on the part of the carrier in order
to hold it responsible for the payment of damages sought by the
passenger. Under Art. 1755 of the Civil Code, a common carrier is
bound to carry the passengers safely as far as human care and
foresight can provide using the utmost diligence of very cautious
persons with due regard for all the circumstances. Moreover, under
Art. 1756 of the Civil Code, in case of death or injuries to passengers,
a common carrier is presumed to have been at fault or to have acted
negligently, unless it proves that it observed extraordinary diligence.
Further, pursuant to Art. 1759 of the same Code, it is liable for the
death of or injuries to passengers through the negligence or willful
acts of the formers employees. This liability of the common carrier
does not cease upon proof that it exercised all the diligence of a good
father of a family in the selection of its employees. Clearly, by the
contract of carriage, the carrier jeepney owned by Mallari, Sr. assumed
the express obligation to transport the passengers to their destination
safely and to observe extraordinary diligence with due regard for all
the circumstances, and any injury or death that might be suffered by
its passengers is right away attributable to the fault or negligence of
the carrier.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Public Attorneys Office for petitioners.
Siguion Reyna, Montecillo & Ongsiako, Estanislao L. Cesa, Jr. and
Tanjuatco, Sta. Maria, Tanjuatco for private respondent.
BELLOSILLO, J.:
307

ALFREDO MALLARI, SR. and ALFREDO MALLARI, JR. in this petition
for review on certiorari seek to set aside the Decision of the Court of
Appeals which reversed the court a quo and adjudged petitioners to
be liable for damages due to negligence as a common carrier resulting
in the death of a passenger.
On 14 October 1987, at about 5:00 oclock in the morning, the
passenger jeepney driven by petitioner Alfredo Mallari, Jr. and owned
by his co-petitioner Alfredo Mallari, Sr. collided with the delivery van
of respondent Bulletin Publishing Corp. (BULLETIN, for brevity) along
the National Highway in Barangay San Pablo, Dinalupihan, Bataan.
Petitioner Mallari, Jr. testified that he went to the left lane of the
highway and overtook a Fiera which had stopped on the right lane.
Before he passed by the Fiera, he saw the van of respondent
BULLETIN coming from the opposite direction. It was driven by one
Felix Angeles. The sketch of the accident showed that the collision
occurred after Mallari, Jr. overtook the Fiera while negotiating a curve
in the highway. The points of collision were the left rear portion of the
passenger jeepney and the left front side of the delivery van of
BULLETIN. The two (2) right wheels of the delivery van were on the
right shoulder of the road and pieces of debris from the accident were
found scattered along the shoulder of the road up to a certain portion
of the lane travelled by the passenger jeepney. The impact caused the
jeepney to turn around and fall on its left side resulting in injuries to
its passengers one of whom was Israel Reyes who eventually died due
to the gravity of his injuries.
On 16 December 1987 Claudia G. Reyes, the widow of Israel M. Reyes,
filed a complaint for damages with the Regional Trial Court of
Olongapo City against Alfredo Mallari, Sr. and Alfredo Mallari, Jr., and
also against BULLETIN, its driver Felix Angeles, and the N.V.
Netherlands Insurance Company. The complaint alleged that the
collision which resulted in the death of Israel Reyes was caused by the
fault and negligence of both drivers of the passenger jeepney and the
Bulletin Isuzu delivery van. The complaint also prayed that the
defendants be ordered jointly and severally to pay plaintiff
P1,006,777.40 in compensatory damages, P40,000.00 for hospital and
medical expenses, P18,270.00 for burial expenses plus such amounts
as may be fixed by the trial court for exemplary damages and
attorneys fees.
The trial court found that the proximate cause of the collision was the
negligence of Felix Angeles, driver of the Bulletin delivery van,
considering the fact that the left front portion of the delivery truck
driven by Felix Angeles hit and bumped the left rear portion of the
passenger jeepney driven by Alfredo Mallari, Jr. Hence, the trial court
ordered BULLETIN and Felix Angeles to pay jointly and severally
Claudia G. Reyes, widow of the deceased victim, the sums of
P42,106.93 for medical expenses; P8,600.00 for funeral and burial
expenses; P1,006,777.40 for loss of earning capacity; P50,000.00 for
moral damages and P10,000.00 for attorneys fees. The trial court also
ordered N.V. Netherlands Insurance Company to indemnify Claudia G.
Reyes P12,000.00 as death indemnity and P2,500.00 for funeral
expenses which when paid should be deducted from the liabilities of
respondent BULLETIN and its driver Felix Angeles to the plaintiff. It
also dismissed the complaint against the other defendants Alfredo
Mallari, Sr. and Alfredo Mallari, Jr.
On appeal the Court of Appeals modified the decision of the trial court
and found no negligence on the part of Angeles and consequently of
his employer, respondent BULLETIN. Instead, the appellate court
ruled that the collision was caused by the sole negligence of petitioner
Alfredo Mallari, Jr. who admitted that immediately before the collision
and after he rounded a curve on the highway, he overtook a Fiera
which had stopped on his lane and that he had seen the van driven
by Angeles before overtaking the Fiera. The Court of Appeals ordered
petitioners Mallari, Jr. and Mallari, Sr. to compensate Claudia G. Reyes
P1,006,777.50 for loss of earning capacity, P50,000.00 as indemnity
for death and P10,000.00 for attorneys fees. It absolved from any
liability respondent BULLETIN, Felix Angeles and N.V. Netherlands
Insurance Company. Hence this petition.
Petitioners contend that there is no evidence to show that petitioner
Mallari, Jr. overtook a vehicle at a curve on the road at the time of the
accident and that the testimony of Angeles on the overtaking made
308
by Mallari, Jr. was not credible and unreliable. Petitioner also submits
that the trial court was in a better position than the Court of Appeals
to assess the evidence and observe the witnesses as well as determine
their credibility; hence, its finding that the proximate cause of the
collision was the negligence of respondent Angeles, driver of the
delivery van owned by respondent BULLETIN, should be given more
weight and consideration.
We cannot sustain petitioners. Contrary to their allegation that there
was no evidence whatsoever that petitioner Mallari, Jr. overtook a
vehicle at a curve on the road at the time of or before the accident,
the same petitioner himself testified that such fact indeed did occur
Q: And what was that accident all about?
A: Well, what happened, sir, is that at about that time 5:00 oclock in
that morning of October 14 while I was negotiating on the highway at
San Pablo, Dinalupihan, Bataan, I was then following a blue Ford
Fierra and my distance behind was about twenty (20) feet and then I
passed that blue Ford Fierra. I overtook and when I was almost on
the right lane of the highway towards Olongapo City there was an
oncoming delivery van of the Bulletin Publishing Corporation which
bumped the left rear portion of the jeepney which I was driving and
as a result of which the jeepney x x x turned around and fell on its left
side and as a result of which some of my passengers including me
were injured, sir x x x x
Q: Before you overtook the Ford Fierra jeepney did you look x x x
whether there was any vehicle coming towards you?
A: Yes, sir.
Q: Did you see the Bulletin van or the Press van coming towards you?
A: Yes, sir.
Q: At the moment the Ford Fierra x x x stop(ped) and in overtaking
the Fierra, did you not have an option to stop and not to overtake the
Ford Fierra?
A: Well, at the time when the Ford Fierra stopped in front of me I
slowed down with the intention of applying the brake, however, when
I saw the oncoming vehicle which is the Press van is very far x x x
which is 100 feet distance, x x x it is sufficient to overtake the Ford
Fierra so I overt(ook) it x x x x
Q: You said that you took into consideration the speed of the
oncoming Press van but you also could not estimate the speed of the
press van because it was dark at that time, which of these statements
are true?
A: What I wanted to say, I took into consideration the speed of the
oncoming vehicle, the Press van, although at the moment I could not
estimate the speed of the oncoming vehicle x x x x
The Court of Appeals correctly found, based on the sketch and spot
report of the police authorities which were not disputed by petitioners,
that the collision occurred immediately after petitioner Mallari, Jr.
overtook a vehicle in front of it while traversing a curve on the
highway. This act of overtaking was in clear violation of Sec. 41, pars,
(a) and (b), of RA 4136 as amended, otherwise known as The Land
Transportation and Traffic Code which provides:
Sec. 41. Restrictions on overtaking and passing.(a) The driver of a
vehicle shall not drive to the left side of the center line of a highway
in overtaking or passing another vehicle proceeding in the same
direction, unless such left side is clearly visible and is free of oncoming
traffic for a sufficient distance ahead to permit such overtaking or
passing to be made in safety.
(b) The driver of a vehicle shall not overtake or pass another vehicle
proceeding in the same direction when approaching the crest of a
grade, nor upon a curve in the highway, where the drivers view along
the highway is obstructed within a distance of five hundred feet ahead
309
except on a highway having two or more lanes for movement of traffic
in one direction where the driver of a vehicle may overtake or pass
another vehicle: Provided That on a highway, within a business or
residential district, having two or more lanes for movement of traffic
in one direction, the driver of a vehicle may overtake or pass another
vehicle on the right.
The rule is settled that a driver abandoning his proper lane for the
purpose of overtaking another vehicle in an ordinary situation has the
duty to see to it that the road is clear and not to proceed if he cannot
do so in safety. When a motor vehicle is approaching or rounding a
curve, there is special necessity for keeping to the right side of the
road and the driver does not have the right to drive on the left hand
side relying upon having time to turn to the right if a car approaching
from the opposite direction comes into view.
In the instant case, by his own admission, petitioner Mallari, Jr. already
saw that the BULLETIN delivery van was coming from the opposite
direction and failing to consider the speed thereof since it was still
dark at 5:00 oclock in the morning mindlessly occupied the left lane
and overtook two (2) vehicles in front of it at a curve in the highway.
Clearly, the proximate cause of the collision resulting in the death of
Israel Reyes, a passenger of the jeepney, was the sole negligence of
the driver of the passenger jeepney, petitioner Alfredo Mallari, Jr., who
recklessly operated and drove his jeepney in a lane where overtaking
was not allowed by traffic rules. Under Art. 2185 of the Civil Code,
unless there is proof to the contrary, it is presumed that a person
driving a motor vehicle has been negligent if at the time of the mishap
he was violating a traffic regulation. As found by the appellate court,
petitioners failed to present satisfactory evidence to overcome this
legal presumption.
The negligence and recklessness of the driver of the passenger
jeepney is binding against petitioner Mallari, Sr., who admittedly was
the owner of the passenger jeepney engaged as a common carrier,
considering the fact that in an action based on contract of carriage,
the court need not make an express finding of fault or negligence on
the part of the carrier in order to hold it responsible for the payment
of damages sought by the passenger. Under Art. 1755 of the Civil
Code, a common carrier is bound to carry the passengers safely as far
as human care and foresight can provide using the utmost diligence
of very cautious persons with due regard for all the circumstances.
Moreover, under Art. 1756 of the Civil Code, in case of death or injuries
to passengers, a common carrier is presumed to have been at fault or
to have acted negligently, unless it proves that it observed
extraordinary diligence. Further, pursuant to Art. 1759 of the same
Code, it is liable for the death of or injuries to passengers through the
negligence or willful acts of the formers employees. This liability of
the common carrier does not cease upon proof that it exercised all the
diligence of a good father of a family in the selection of its employees.
Clearly, by the contract of carriage, the carrier jeepney owned by
Mallari, Sr. assumed the express obligation to transport the
passengers to their destination safely and to observe extraordinary
diligence with due regard for all the circumstances, and any injury or
death that might be suffered by its passengers is right away
attributable to the fault or negligence of the carrier.
The monetary award ordered by the appellate court to be paid by
petitioners to the widow of the deceased passenger Israel M. Reyes
of P1,006,777.50 for loss of earning capacity, P50,000.00 as civil
indemnity for death, and P10,000.00 for attorneys fees, all of which
were not disputed by petitioners, is a factual matter binding and
conclusive upon this Court.
WHEREFORE, the Petition is DENIED and the Decision of the Court of
Appeals dated 20 September 1995 reversing the decision of the trial
court being in accord with law and evidence is AFFIRMED.
Consequently, petitioners are ordered jointly and severally to pay
Claudia G. Reyes P1,006,777.50 for loss of earning capacity,
P50,000.00 as civil indemnity for death, and P10,000.00 for attorneys
fees. Costs against petitioners.
SO ORDERED.
Mendoza, Quisumbing, Buena and De Leon, Jr., JJ., concur.
310
Petition denied, judgment affirmed.

Note.Extraordinary diligence requires common carriers to render

service with the greatest skill and foresight. (Tabacalera Ins. Co. vs.
North Front Shipping Services, Inc., 272 SCRA 527 [1997])

o0o

311
 R TRANSPORT CORPORATION, represented by its
owner/President RIZALINA LAMZON, petitioner, vs.
EDUARDO PANTE, respondent
G.R. No. 162104. September 15, 2009
Civil Law; Common Carriers; Common carriers, like petitioner bus
company, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence for the safety of
the passengers transported by them, according to all the
circumstances of each case.Under the Civil Code, common carriers,
like petitioner bus company, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary diligence
for the safety of the passengers transported by them, according to all
the circumstances of each case. They are bound to carry the
passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with due regard
for all the circumstances.
Same; Same; Common carriers are liable for the death or injury to
passengers through the negligence or willful acts of the formers
employees, although such employees may have acted beyond the
scope of their authority or in violation of the orders of the common
carriers.Article 1756 of the Civil Code states that [i]n case of death
of or injuries to passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they prove that they
observed extraordinary diligence as prescribed by Articles 1733 and
1755. Further, Article 1759 of the Civil Code provides that [c]ommon
carriers are liable for the death or injury to passengers through the
negligence or willful acts of the formers employees, although such
employees may have acted beyond the scope of their authority or in
violation of the orders of the common carriers. This liability of the
common carriers does not cease upon proof that they exercised all the
diligence of a good father of a family in the selection and supervision
of their employees.
Due Process; There is no denial of due process where a party was
given an opportunity to be heard.In Silverio, Sr. v. Court of Appeals
(304 SCRA 541 [1999]), the Court held that petitioner therein was not
denied due process when the records of the case showed that he was
amply given the opportunity to present his evidence, which he,
however, waived. There is no denial of due process where a party was
given an opportunity to be heard.
Damages; As cited by the Court of Appeals in its Decision, Jarco
Marketing Corporation v. Court of Appeals (378 Phil. 991; 321 SCRA
375 [1999]) awarded actual damages for hospitalization expenses that
was evidenced by a statement of account issued by the Makati Medical
Center.As cited by the Court of Appeals in its Decision, Jarco
Marketing Corporation v. Court of Appeals (321 SCRA 375 [1999])
awarded actual damages for hospitalization expenses that was
evidenced by a statement of account issued by the Makati Medical
Center. Hence, the statement of account is admissible evidence of
hospital expenses incurred by respondent. Petitioner also contends
that the award of moral damages is not proper, because it is not
recoverable in actions for damages predicated on breach of the
contract of transportation under Articles 2219 and 2220 of the Civil
Code.
Same; The Court of Appeals correctly sustained the award of moral
damages, citing Spouses Ong v. Court of Appeals (361 Phil. 338; 301
SCRA 387 [1999]), which awarded moral damages to paying
passengers, who suffered physical injuries on board a bus that figured
in an accident.The Court of Appeals correctly sustained the award
of moral damages, citing Spouses Ong v. Court of Appeals (301 SCRA
387 [1999]), which awarded moral damages to paying passengers,
who suffered physical injuries on board a bus that figured in an
accident. Spouses Ong held that a person is entitled to the integrity of
his body and if that integrity is violated, damages are due and
assessable. Thus, the usual practice is to award moral damages for
physical injuries sustained. In Spouses Ong, the Court awarded moral
damages in the amount of P50,000.00 to a passenger who was
deemed to have suffered mental anguish and anxiety because her
right arm could not function in a normal manner. Another passenger,
who suffered injuries on his left chest, right knee, right arm and left
312
eye, was awarded moral damages in the amount of P30,000.00 for
the mental anxiety and anguish he suffered from the accident.
Same; The award of exemplary damages is justified to serve as an
example or as a correction for the public good.Article 2232 of the
Civil Code states that [i]n contracts and quasi-contracts, the court
may award exemplary damages if the defendant acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner. In this case,
respondents testimonial evidence showed that the bus driver, Johnny
Merdiquia, was driving the bus very fast in a reckless, negligent and
imprudent manner; hence, the bus hit a tree and a house along the
highway in Baliuag, Bulacan. The award of exemplary damages is,
therefore, proper. The award of exemplary damages is justified to
serve as an example or as a correction for the public good.
Attorneys Fees; The award of legal fees is commensurate to the effort
of respondents counsel, who attended to the case in the trial court
for seven years, and who finally helped secure redress for the injury
sustained by respondent after 14 years.The Court affirms the award
of attorneys fees to respondents counsel. The Court notes that
respondent filed his Complaint for damages on March 14, 1995 as
pauper-litigant. The award of legal fees by the trial court to
respondents counsel was a contingent fee of 25 percent of the total
amount of damages, which shall constitute a lien on the total amount
awarded. The said award was affirmed by the Court of Appeals.
Twenty-five percent of the total damages is equivalent to P34,778.15.
The award of legal fees is commensurate to the effort of respondents
counsel, who attended to the case in the trial court for seven years,
and who finally helped secure redress for the injury sustained by
respondent after 14 years.
Evidence; The Court of Appeals correctly held that the medical
certificate is admissible since petitioner failed to object to the
presentation of the evidence.The Court of Appeals correctly held
that the medical certificate is admissible since petitioner failed to
object to the presentation of the evidence.
PETITION for review on certiorari of the decision and resolution of the
Court of Appeals.
The facts are stated in the opinion of the Court.
Gaspar V. Tagalo for petitioner.
PERALTA, J.:
This is a petition for review on certiorari of the Decision dated October
7, 2003 of the Court of Appeals in CA-G.R. CV No. 76170, and its
Resolution dated February 5, 2004, denying petitioners motion for
reconsideration. The Court of Appeals affirmed the Decision of the
Regional Trial Court (RTC) of Gapan City, Branch 35, dated January
26, 2002, holding petitioner liable to respondent for damages for
physical injuries sustained by respondent due to a vehicular accident.
The facts are as follows:
Petitioner R Transport Corporation, represented by its owner and
president, Rizalina Lamzon, is a common carrier engaged in operating
a bus line transporting passengers to Gapan, Nueva Ecija from Cubao,
Quezon City and back.
At about 3:00 a.m. of January 27, 1995, respondent Eduardo Pante
rode petitioners R. L. Bus Liner with Plate Number CVW-635 and Body
Number 94810 in Cubao, Quezon City bound for Gapan, Nueva Ecija.
Respondent paid the sum of P48.00 for his fare, and he was issued
bus ticket number 555401.
While traveling along the Doa Remedios Trinidad Highway in Baliuag,
Bulacan, the bus hit a tree and a house due to the fast and reckless
driving of the bus driver, Johnny Merdiquia. Respondent sustained
physical injuries as a result of the vehicular accident. He was brought
by an unidentified employee of petitioner to the Baliuag District
Hospital, where respondent was diagnosed to have sustained a
laceration frontal area, with fracture of the right humerus, or the
bone that extends from the shoulder to the elbow of the right arm.
313
Respondent underwent an operation for the fracture of the right
humerus per Certification dated February 17, 1995 issued by Dr.
Virginia C. Cabling of the Baliuag District Hospital.
The hospitals Statement of Account showed that respondents
operation and confinement cost P22,870.00. Respondent also spent
P8,072.60 for his medication. He was informed that he had to undergo
a second operation after two years of rest. He was unemployed for
almost a year after his first operation because Goldilocks, where he
worked as a production crew, refused to accept him with his disability
as he could not perform his usual job.
By way of initial assistance, petitioner gave respondents wife, Analiza
P. Pante, the sum of P7,000.00, which was spent for the stainless steel
instrument used in his fractured arm.
After the first operation, respondent demanded from petitioner,
through its manager, Michael Cando, the full payment or
reimbursement of his medical and hospitalization expenses, but
petitioner refused payment.
Four years later, respondent underwent a second operation. He spent
P15,170.00 for medical and hospitalization expenses.
On March 14, 1995, respondent filed a Complaint13 for damages
against petitioner with the RTC of Gapan City, Branch 35 (trial court)
for the injuries he sustained as a result of the vehicular accident.
In its Answer, petitioner put up the defense that it had always
exercised the diligence of a good father of a family in the selection
and supervision of its employees, and that the accident was a force
majeure for which it should not be held liable.
At the pre-trial on October 4, 1995, petitioner was declared in default,
which was reconsidered by the trial court on December 12, 1995 upon
finding that petitioner had earlier filed a Motion to Transfer Date of
Hearing. Trial was first set on February 26, 1996, and from then on
trial was postponed several times on motion of petitioner.
Six years later, on October 24, 2001, respondents direct examination
was concluded. His cross-examination was reset to December 5, 2001
due to the absence of petitioner and its counsel. It was again reset to
January 23, 2002 upon petitioners motion. On January 23, 2002,
petitioner, through its new counsel, asked for another postponement
on the ground that he was not ready. Hence, the cross-examination
of respondent was reset to March 13, 2002.
On March 13, 2002, petitioner was declared to have waived its right
to cross-examine respondent due to the absence of petitioner and its
counsel, and respondent was allowed to offer his exhibits within five
days. Petitioners motion for reconsideration dated April 4, 2002 was
denied on May 7, 2002.
In the hearing of June 19, 2002, petitioner was declared to have
waived its right to present evidence on motion of respondents counsel
in view of the unexplained absence of petitioner and its counsel
despite prior notice. The case was declared submitted for decision.
On June 26, 2002, the trial court rendered a Decision, the dispositive
portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered
finding the plaintiffs to be entitled to damages and ordering
defendants to [pay]:
1.) P39,112.60 as actual damages;
2.) P50,000.00 as moral damages;
3.) P50,000.00 as exemplary damages;
4.) Twenty-five percent (25%) of the total of which shall constitute
a lien as contingent fee of plaintiffs counsel.
So ordered.
314
The trial court held that the provisions of the Civil Code on common
carriers govern this case. Article 1756 of the Civil Code states that [i]n
case of death of or injuries to passengers, common carriers are
presumed to have been at fault or to have acted negligently, unless
they prove that they observed extraordinary diligence as prescribed
by Articles 1733 and 1755. The trial court ruled that since petitioner
failed to dispute said presumption despite the many opportunities
given to it, such presumption of negligence stands.
Petitioner appealed the decision of the trial court to the Court of
Appeals.
In its Decision dated October 7, 2003, the Court of Appeals affirmed
the decision of the trial court, the dispositive portion of which reads:
WHEREFORE, for lack of merit, the appeal is DENIED and the
Decision appealed from is AFFIRMED in toto. With double costs against
the appellant.
Petitioners motion for reconsideration was denied for lack of merit in
the Resolution of the Court of Appeals dated February 5, 2004.26
Hence, petitioner filed this petition raising the following issues:
I
THE HONORABLE COURT OF APPEALS, TENTH DIVISION GRAVELY
ERRED IN NOT GIVING DUE COURSE TO THE DEFENDANT-
APPELLANTS MOTION FOR RECONSIDERATION OF THE DECISION
PROMULGATED ON OCTOBER 7, 2003, THEREBY DEPRIVING
PETITIONERS FUNDAMENTAL RIGHT TO DUE PROCESS.
II
THE HONORABLE COURT OF APPEALS, TENTH DIVISION FURTHER
GRAVELY ERRED IN AFFIRMING IN TOTO THE DECISION OF THE
REGIONAL TRIAL COURT OF GAPAN CITY, BRANCH 35,
PARTICULARLY IN AWARDING DAMAGES TO THE RESPONDENT
WITHOUT PRESENTING ANY SUBSTANTIAL EVIDENCE.
III
THE HONORABLE COURT OF APPEALS, TENTH DIVISION, IN
AFFIRMING IN TOTO THE DECISION OF THE REGIONAL TRIAL
COURT OF GAPAN CITY, BRANCH 35, HAS COMMITTED GRAVE AND
REVERSIBLE ERROR IN ITS FINDING OF FACTS AND APPLICATION
OF [THE] LAW.
The main issue is whether or not petitioner is liable to respondent for
damages.
The Court affirms the decision of the Court of Appeals that petitioner
is liable for damages.
Under the Civil Code, common carriers, like petitioner bus company,
from the nature of their business and for reasons of public policy, are
bound to observe extraordinary diligence for the safety of the
passengers transported by them, according to all the circumstances of
each case. They are bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence of
very cautious persons, with due regard for all the circumstances.
Article 1756 of the Civil Code states that [i]n case of death of or
injuries to passengers, common carriers are presumed to have been
at fault or to have acted negligently, unless they prove that they
observed extraordinary diligence as prescribed by Articles 1733 and
1755.
Further, Article 1759 of the Civil Code provides that [c]ommon
carriers are liable for the death or injury to passengers through the
negligence or willful acts of the formers employees, although such
employees may have acted beyond the scope of their authority or in
violation of the orders of the common carriers. This liability of the
common carriers does not cease upon proof that they exercised all the
315
diligence of a good father of a family in the selection and supervision
of their employees.
In this case, the testimonial evidence of respondent showed that
petitioner, through its bus driver, failed to observe extraordinary
diligence, and was, therefore, negligent in transporting the passengers
of the bus safely to Gapan, Nueva Ecija on January 27, 1995, since
the bus bumped a tree and a house, and caused physical injuries to
respondent. Article 1759 of the Civil Code explicitly states that the
common carrier is liable for the death or injury to passengers through
the negligence or willful acts of its employees, and that such liability
does not cease upon proof that the common carrier exercised all the
diligence of a good father of a family in the selection and supervision
of its employees. Hence, even if petitioner was able to prove that it
exercised the diligence of a good father of the family in the selection
and supervision of its bus driver, it is still liable to respondent for the
physical injuries he sustained due to the vehicular accident.
Petitioner cannot complain that it was denied due process when the
trial court waived its right to present evidence, because it only had
itself to blame for its failure to attend the hearing scheduled for
reception of its evidence on June 19, 2002. The trial court stated, thus:
It is noteworthy to state that during the course of the proceeding of
this case, defendant (petitioner) and its counsel hardly appeared in
court and only made innumerable motions to reset the hearings to the
point that this case x x x dragged [on] for seven years from its filing
up to the time that it has been submitted for decision. And for the
unexplained absence of counsel for defendant in the hearing set last
June 19, 2002 despite repeated resetting, upon motion of the counsel
for plaintiff (respondent), Atty. Ireneo Romano, its right to present its
evidence was considered waived.
In Silverio, Sr. v. Court of Appeals, the Court held that petitioner
therein was not denied due process when the records of the case
showed that he was amply given the opportunity to present his
evidence, which he, however, waived. There is no denial of due
process where a party was given an opportunity to be heard.
Next, petitioner contends that the Court of Appeals erred in denying
its motion for reconsideration of the appellate courts Decision dated
October 7, 2003.
The contention is unmeritorious.
The Court of Appeals has the discretion to deny petitioners motion for
reconsideration since it found that there was no cogent reason to
warrant reconsideration of its Decision dated October 7, 2003.
According to the appellate court, it had already considered, if not
squarely ruled upon, the arguments raised in petitioners motion for
reconsideration.77777
Moreover, petitioner contends that the Court of Appeals erred in
affirming the decision of the trial court, which awarded actual
damages in the amount of P22,870.00 based on the statement of
account issued by the Baliuag District Hospital and not based on an
official receipt. Petitioner argues that the statement of account is not
the best evidence.
The contention is without merit.
As cited by the Court of Appeals in its Decision, Jarco Marketing
Corporation v. Court of Appeals36 awarded actual damages for
hospitalization expenses that was evidenced by a statement of
account issued by the Makati Medical Center. Hence, the statement of
account is admissible evidence of hospital expenses incurred by
respondent.
Petitioner also contends that the award of moral damages is not
proper, because it is not recoverable in actions for damages predicated
on breach of the contract of transportation under Articles 2219 and
2220 of the Civil Code.7
The Court is not persuaded.
The Court of Appeals correctly sustained the award of moral damages,
citing Spouses Ong v. Court of Appeals, which awarded moral
316
damages to paying passengers, who suffered physical injuries on
board a bus that figured in an accident. Spouses Ong held that a
person is entitled to the integrity of his body and if that integrity is
violated, damages are due and assessable. Thus, the usual practice is
to award moral damages for physical injuries sustained. In Spouses
Ong, the Court awarded moral damages in the amount of P50,000.00
to a passenger who was deemed to have suffered mental anguish and
anxiety because her right arm could not function in a normal manner.
Another passenger, who suffered injuries on his left chest, right knee,
right arm and left eye, was awarded moral damages in the amount of
P30,000.00 for the mental anxiety and anguish he suffered from the
accident.
In this case, respondent sustained a laceration frontal area, with
fracture of the right humerus due to the vehicular accident. He
underwent an operation for the fracture of the bone extending from
the shoulder to the elbow of his right arm. After a few years of rest,
he had to undergo a second operation. Respondent, therefore,
suffered physical pain, mental anguish and anxiety as a result of the
vehicular accident. Hence, the award of moral damages in the amount
of P50,000.00 is proper.
Petitioner likewise contends that the award of exemplary damages is
improper, because it did not act in a wanton, fraudulent, reckless,
oppressive or malevolent manner.
The contention is without merit.
Article 2232 of the Civil Code states that [i]n contracts and quasi-
contracts, the court may award exemplary damages if the defendant
acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner. In this case, respondents testimonial evidence showed that
the bus driver, Johnny Merdiquia, was driving the bus very fast in a
reckless, negligent and imprudent manner; hence, the bus hit a tree
and a house along the highway in Baliuag, Bulacan. The award of
exemplary damages is, therefore, proper. The award of exemplary
damages is justified to serve as an example or as a correction for the
public good.
Further, the Court affirms the award of attorneys fees to respondents
counsel. The Court notes that respondent filed his Complaint for
damages on March 14, 1995 as pauper-litigant. The award of legal
fees by the trial court to respondents counsel was a contingent fee of
25 percent of the total amount of damages, which shall constitute a
lien on the total amount awarded. The said award was affirmed by the
Court of Appeals. Twenty-five percent of the total damages is
equivalent to P34,778.15. The award of legal fees is commensurate to
the effort of respondents counsel, who attended to the case in the
trial court for seven years, and who finally helped secure redress for
the injury sustained by respondent after 14 years.
Lastly, petitioner contends that the medical certificate presented in
evidence is without probative value since respondent failed to present
as witness Dr. Virginia Cabling to affirm the content of said medical
certificate.
The contention lacks merit. The Court of Appeals correctly held that
the medical certificate is admissible since petitioner failed to object to
the presentation of the evidence.
WHEREFORE, the petition is DENIED. The Decision of the Court of
Appeals in CA-G.R. CV No. 76170, dated October 7, 2003, and its
Resolution dated February 5, 2004, are hereby AFFIRMED. Petitioner
R Transport Corporation is ordered to pay respondent Eduardo Pante
P39,112.60 as actual damages; P50,000.00 as moral damages; and
P50,000.00 as exemplary damages. Twenty-five percent (25%) of the
total amount shall constitute a lien as contingent fee of respondents
counsel.
Costs against petitioner.
317
 ANTONIA MARANAN, plaintiff-appellant, vs. PASCUAL
PEREZ, ET AL., defendants. PASCUAL PEREZ, defendant-
appellant.
No. L-22272. June 276, 1967
Common Carriers; Liability for intentional assaults committed by its
employees on passengers; Difference between old and New Civil Code
provisions.Unlike the old Civil Code, the New Civil Code expressly
makes the common carrier liable for intentional assaults committed by
its employees upon its passengers (Art. 1759). This rule was adopted
from Anglo-American law, where the majority view, as distinguished
from the minority view based on respondeat superior, is that the
carrier is liable as long as the assault occurs within the course of the
performance of the employee's duty. It is no defense for the carrier
that the act was done in excess of authority or in disobedience of the
carrier's orders. The carrier's liability is absolute in the sense that it
practically secures the passengers from assaults committed by its own
employees.
Same; Reasons for carrier's liability for intentional assaults upon
passengers.The special undertaking of the carrier requires that it
furnish its passengers that full measure of protection afforded by the
exercise of the high degree of care prescribed by law, inter alia, from
violence and insults at the hands of strangers and other passengers,
but above all from the acts of the carrier's own servants charged with
the passenger's safety. The performance of that undertaking is
confided by the carrier to its employees. As between the carrier and
the passenger, the former must bear the risk of wrongful acts of the
former's employees against passengers, since the carrier, not the
passengers, has the power to select and remove them,
Same; Carrier is liable to the heir of a passenger killed by its driver.
Where a passenger in a taxicab was killed by the driver, the cab owner
is liable to the heir of the deceased passenger for damages on the
basis of breach of the contract of carriage. The driver is not liable to
the heir because the driver was not a party to the contract of carriage.
His civil liability is covered by the judgment of conviction in the criminal
case. The case is different from Gillaco vs. Manila Railroad Company,
97 Phil, 884,
Same; Damages; Carrier's liability for passenger's death.The
minimum amount of compensatory damages, which a common carrier
should pay for the intentional killing of a passenger committed by its
driver while transporting the passenger, is P6,000. Moral damages
may also be awarded. Interest is due on said damages.
APPEAL from a judgment of the Court of First Instance of Batangas.
Relona, J.
The facts are stated in the opinion of the Court.
Pedro Panganiban for defendant-appellant.
Magno T. Bueser for plaintiff-appellant.
BENGZON, J.P., J.:
Rogelio Corachea, on October 18, 1960, was a passenger in a taxicab
owned and operated by Pascual Perez when he was stabbed and killed
by the driver, Simeon Valenzuela.
Valenzuela was prosecuted for homicide in the Court of First Instance
of Batangas. Found guilty, he was sentenced to suffer imprisonment
and to indemnify the heirs of the deceased in the sum of P6,000.
Appeal f rom said conviction was taken to the Court of Appeals.
On December 6, 1961, while appeal was pending in the Court of
Appeals, Antonia Maranan, Rogelio's mother, filed an action in the
Court of First Instance of Batangas to recover damages from Perez
and Valenzuela for the death of her son. Defendants asserted that the
deceased was killed in self-defense, since he first assaulted the driver
by stabbing him from behind. Defendant Perez further claimed that
the death was a caso fortuito for which the carrier was not liable.
318
The court a quo, after trial, found for the plaintiff and awarded her
P3,000 as damages against defendant Perez. The claim against
defendant Valenzuela was dismissed. From this ruling, both plaintiff
and defendant Perez appealed to this Court, the former asking for
more damages and the latter insisting on non-liability. Subsequently,
the Court of Appeals affirmed the judgment of conviction earlier
mentioned, during the pendency of the herein appeal, and on May 19,
1964, final judgment was entered therein. (Rollo, p. 33).
Defendant-appellant relies solely on the ruling enunciated in Gillaco v.
Manila Railroad Co., 97 Phil. 884, that the carrier is under no absolute
liability for assaults of its employees upon the passengers. The
attendant facts and controlling law of that case and the one at bar are
very different however. In the Gillaco case, the passenger was killed
outside the scope and the course of duty of the guilty employee. As
this Court there found:
"x x x when the crime took place, the guard Devesa had no duties to
discharge in connection with the transportation of the deceased from
Calamba to Manila. The stipulation of facts is clear that when Devesa
shot and killed Gillaco, Devesa was assigned to guard the Manila-San
Fernando (La Union) trains, and he was at Paco Station awaiting
transportation to Tutuban, the starting point of the train that he was
engaged to guard. In fact, his tour of duty was to start at 9:00 a.m.,
two hours after the commission of the crime. Devesa was therefore
under no obligation to safeguard the passengers of the Calamba-
Manila, train, where the deceased was riding; and the killing of Gillaco
was not done in line of duty. The position of Devesa at the time was
that of another would be passenger, a stranger also awaiting
transportation, and not that of an employee assigned to discharge any
of the duties that the Railroad had assumed by its contract with the
deceased. As a result, Devesa's assault can not be deemed in law a
breach of Gillaco's contract of transportation by a servant or employee
of the carrier. x x x" (Italics supplied)
Now here, the killing was perpetrated by the driver of the very cab
transporting the passenger, in whose hands the carrier had entrusted
the duty of executing the contract of carriage. In other words, unlike
the Gillaco case, the killing of the passenger here took place in the
course of duty of the guilty employee and when the employee was
acting within the scope of his duties.
Moreover, the Gillaco case was decided under the provisions of the
Civil Code of 1889 which, unlike the present Civil Code, did not impose
upon common carriers absolute liability for the safety of passengers
against wilful assaults or negligent acts committed by their employees.
The death of the passenger in the Gillaco case was truly a fortuitous
event which exempted the carrier from liability. It is true that Art. 1105
of the old Civil Code on fortuitous events has been substantially
reproduced in Art. 1174 of the Civil Code of the Philippines but both
articles clearly remove from their exempting effect the case where the
law expressly provides for liability in spite of the occurrence of force
majeure. And herein significantly lies the statutory difference between
the old and present Civil Codes, in the backdrop of the factual situation
before Us, which further accounts for a different result in the Gillaco
case. Unlike the old Civil Code, the new Civil Code of the Philippines
expressly makes the common carrier liable for intentional assaults
committed by its employees upon its passengers, by the wording of
Art. 1759 which categorically states that
"Common carriers are liable for the death of or injuries to passengers
through the negligence or willful acts of the former's employees,
although such employees may have acted beyond the scope of their
authority or in violation of the orders of the common carriers."
The Civil Code provisions on the subject of Common Carriers1 are new
and were taken from Anglo-American Law. There, the basis of the
carrier's liability for assaults on passengers committed by its drivers
rests either on (1) the doctrine of respondeat superior or (2) the
principle that it is the carrier's implied duty to transport the passenger
safely.
Under the first, which is the minority view, the carrier is liable only
when the act of the employee is within the scope of his authority and
duty. It is not sufficient that the act be within the course of
employment only.
319
Under the second view, upheld by the majority and also by the later
cases, it is enough that the assault happens within the course of the
employee's duty. It is no defense for the carrier that the act was done
in excess of authority or in disobedience of the carrier's orders. The
carrier's liability here is absolute in the sense that it practically secures
the passengers from assaults committed by its own employees.
As can be gleaned from Art. 1759, the Civil Code of the Philippines
evidently follows the rule based on the second view. At least three
very cogent reasons underlie this rule. As explained in Texas Midland
R.R. v, Monroe, 110 Tex. 97, 216 S.W. 388, 389-390, and Haver v.
Central Railroad Co,, 43 LRA 84, 85: (1) the special undertaking of the
carrier' requires that it furnish its passenger that full measure of
protection afforded by the exercise of the high degree of care
prescribed by the law, inter alia from violence and insults at the hands
of strangers and other passengers, but above all, from the acts of the
carrier's own servants charged with the passenger's safety; (2) said
liability of the carrier for the servant's violation of duty to passengers,
is the result of the former's confiding in the servant's hands the
performance of his contract to safely transport the passenger,
delegating therewith the duty of protecting the passenger with the
utmost care prescribed by law; and (3) as between the carrier and the
passenger, the former must bear the risk of wrongful acts or
negligence of the carrier's employees against passengers, since it, and
not the passengers, has power to select and remove them.
Accordingly, it is the carrier's strict obligation to select its drivers and
similar employees with due regard not only to their technical
competence and physical ability, but also, no less important, to their
total personality, including their patterns of behavior, moral fibers, and
social attitude.
Applying this stringent norm to the facts in this case, therefore, the
lower court rightly. adjudged the defendant carrier liable pursuant to
Art. 1759 of the Civil Code. The dismissal of the claim against the
defendant driver was also correct. Plaintiff's action was predicated on
breach of contract of carriage and the cab driver was not a party
thereto. His civil liability is covered in the criminal case wherein he was
convicted by final judgment.
In connection with the award of damages. the court a quo granted
only P3,000 to plaintiff-appellant. This is the minimum compensatory
damages amount recoverable under Art. 1764 in connection with Art.
2206 of the Civil Code when a breach of contract results in the
passenger's death. As has been the policy followed by this Court, this
minimal award should be increased to P6,000. As to other alleged
actual damages, the lower court's f inding that plaintiff's evidence
thereon was not convincing, should not be disturbed. Still, Arts. 2206
and 1764 award moral damages in addition to compensatory
damages, to the parents of the passenger killed to compensate for the
mental anguish they suffered. A claim therefor, having been properly
made, it becomes the court's duty to award moral damages. Plaintiff
demands P5,000 as moral damages; however, in the circumstances,
We consider P3,000 moral damages, in addition to the P6,000
damages afore-stated, as sufficient. Interest upon such damages are
also due to plaintiff-appellant.
Wherefore, with the modification increasing the award of actual
damages in plaintiff's favor to P6,000, plus P3,000 moral damages,
with legal interest on both from the filing of the complaint on
December 6, 1961 until the whole amount is paid, the judgment
appealed from is affirmed in all other respects. No costs. So ordered.
Concepcion, C.J., Reyes, J.B.L., Dizon, Makalintal, Zaldivar,
Sanchez and Castro, JJ., concur.
Judgment modified.
320
 MANILA RAILROAD COMPANY, petitioner, vs. MACARIA
BALLESTEROS, TLMOTEO CAMAYO, JOSE REYES and JULIAN
MAIMBAN, JR., respondents
No. L-19161. April 29, 1966
Appeals; Courts can not be compelled to approve a frivolous appeal.
Where the appeal is frivolous and interposed only for purpose of delay,
the appellate court may deny a petition for mandamus to compel the
trial court to approve and certify the appeal (De la Cruz vs. Blanco, 73
Phil. 596; Paner vs. Yatco, 87 Phil. 271).
Common carriers; Liability for injuries suffered by passengers on
account of willful acts or negligence of strangers. A common carrier
is liable for injuries suffered by its passengers due to the wilful acts or
negligence of other passengers or of strangers, if the common carriers
employees, through the exercise of the diligence of a good father of a
family, could have prevented or stopped the act or omission (Art.
1763, New Civil Code).
Motor Vehicle Law.A common carrier is liable for damages arising
from the negligence of its driver in allowing another person to drive
his vehicle (Sec. 48[b], Motor Vehicle Law).
Compromise; Effect of negotiations for compromise.Negotiations
between the common carrier and the injured passengers for the
settlement of the latters claims may indicate that the carrier is really
liable for damages, especially considering that its counsel advised that
a reasonable settlement be made.
ORIGINAL ACTION in the Supreme Court. Mandamus.
The facts are stated in the opinion of the Court.
Govt Corp. Counsel S. M. Gopengco & Atty. R. G. Fernando, for
petitioner.
George G. Arbolario, for respondents.
MAKALINTAL, J.:
In civil case No. 45968 of the Court of First Instance of Manila (Macaria
Ballesteros, Timoteo Camayo, Jose Reyes and Julian Maimban, Jr. vs.
Manila Railroad Company) the defendant was adjudged to pay
damages in the following amounts: P2,400 to Macaria Ballesteros;
P4,000 to Timoteo Camayo; P3,000 to Jose Reyes; and P2,000, plus
P1,000 as attorneys fees, to Julian Maimban, Jr.
The defendant appealed from the judgment, but upon motion by the
plaintiffs, the trial court, by order dated October 14, 1961, dismissed
the appeal on the ground that it was manifestly and palpably frivolous
and interposed ostensibly to delay the settlement of the just and
reasonable claims of the herein plaintiffs, which have been pending
since 1958. The defendant moved to reconsider, and upon denial of
its motion instituted in this Court the instant petition for mandamus to
set aside the order of dismissal and to order respondent court to give
due course to the appeal.
In filing the petition directly with this Court, petitioner evidently
intended to raise only questions of law in the appeal contemplated,
since under Rule 41, section 15, when erroneously a motion to
dismiss an appeal is granted or a record on appeal is disallowed by
the trial court, a proper petition for mandamus may be filed in the
appellate court; and under section 17(6) of the Judiciary Act this
Court may review on appeal only questions of law in civil cases decided
by inferior courts unless the value in controversy exceeds P200,000.
The fact that an appeal is frivolous and interposed only for purposes
of delay has been recognized as a valid ground to deny issuance of
the writ of mandamus to compel the trial court to approve and certify
the appeal. In De la Cruz vs. Blanco and Quevedo, 73 Phil. 596, We
held:
And where as in the instant case, the dismissal has been ordered by
the trial court, it would not be disturbed in the Appellate Court if the
latter finds the appeal to have been interposed ostensibly for delay. It
has been held that a frivolous appeal is one presenting no justiciable
321
question or one so readily cognizable as devoid of merit on the face
of the record that there is little, if any, prospect that it can over
succeed. The instant case is one such instance in which the appeal is
evidently without merit, taken manifestly for delay.
And in Paner vs. Yatco, 87 Phil. 271, We denied the writ prayed for
and held that while strictly and legally speaking the petition may be
granted, we may, before acting thereon, inquire into the facts involved
in order to determine whether once the writ is granted and the case
is brought up here on appeal the appellant has any chance, even
possibility, of having the basic decision of the trial court set aside or
modified; for if the appellant has not that prospect or likelihood then
the granting of the writ and the consequent appeal would be futile
and would mean only a waste of time to the parties and to this Court.
The material facts, as found by respondent court in its decision, are
as follows: Private respondents here, plaintiffs below, were
passengers on petitioners bus, the driver of which was Jose Anastacio.
In Bayombong, Nueva Vizcaya, Anastacio stopped the bus and got off
to replace a defective spark plug. While he was thus engaged, one
Dionisio Abello, an auditor assigned to defendant company by the
General Auditing Office, took the wheel and told the driver to sit
somewhere else. With Abello driving, the bus proceeded on its way,
from time to time stopping to pick up passengers. Anastacio tried
twice to take the wheel back but Abello would not relinquish it.
Then, in the language of the trial court, while the bus was negotiating
between Km. posts 328 and 329 (in Isabela) a freight truck x x x driven
by Marcial Nocum x x x bound for Manila, was also negotiating the
same place; when these two vehicles were about to meet at the bend
of the road Marcial Nocum, in trying to evade several holes on the
right lane, where his truck was running, swerved his truck towards the
middle part of the road and in so doing, the left front fender and left
side of the freight truck smashed the left side of the bus resulting in
extensive damages to the body of the bus and injuries to seventeen
of its passengers, x x x including the plaintiffs herein.
In rejecting petitioners contention that the negligence of Marcial
Nocum could not be imputed to it and relieved it from liability, the trial
court found that Dionisio Abello was likewise reckless when he was
driving the bus at the rate of from 40 to 50 kilometers per hour on a
bumpy road at the moment of the collision.
Another defense put up by petitioner is that since Abello was not its
employee it should not be held responsible for his acts. This defense
was correctly overruled by the trial court, considering the provisions
of Article 1763 of the Civil Code and section 48(b) of the Motor Vehicle
Law, which respectively provide as follows:
Art. 1763. A common carrier is responsible for injuries suffered by a
passenger on account of the wilful acts or negligence of other
passengers or of strangers, if the common carriers employees through
the exercise of the diligence of a good father of a family could have
prevented or stopped the act or omission.
Sec. 48(b). No professional chauffeur shall permit any unlicensed
person to drive the motor vehicle under his control, or permit a person,
sitting beside him or in any other part of the car, to interfere with him
in the operation of the motor vehicle, by allowing said person to take
hold of the steering wheel, or in any other manner take part in the
manipulation or control of the car.
It appears further, and so the trial court found, that there were
negotiations between the parties to compromise the case, as a result
of which respondents herein, plaintiffs below, considerably reduced
their claims to the amounts subsequently awarded in the judgment;
that petitioner had in fact settled the claims of the other passengers
who were also injured in the same accident and even the claim for
damages filed in another action by the owner of the freight truck; and
that the Government Corporate Counsel himself, who represents
herein petitioner, rendered two separate opinions (Op. No. 86, May
13, 1960; and Op. No. 99, series of 1961) wherein, after analyzing the
facts and the law applicable, he reached the conclusion that the acts
of the bus personnel, particularly in allowing Mr. Abello to drive
despite two occasions when the bus stopped and the regular driver
322
could have taken over, constitute reckless imprudence and wanton
injurious conduct on the part of the MRR employees. On the basis of
those opinions the Government Corporate Counsel advised petitioner
that the offer of the claimants was reasonable and should be accepted.
His advice, however, was not favorably acted upon, petitioner
obviously preferring to litigate.

The issues proposed to be taken up on appeal, as set forth in the

petition, are whether or not Dionisio Abello acted with reckless
negligence while driving petitioners bus at the time of the accident,
and whether or not petitioner may be held liable on account of such
negligence, considering that he was not its employee. These are no
longer justiciable questions which would justify our issuing the
peremptory writ prayed for. The first is a question of fact on which the
affirmative finding of respondent court is not reviewable by Us; and
the second is one as to which there can be no possible doubt in view
of the provisions of the Civil Code and of the Motor Vehicle Law
hereinbefore cited. There would be no point in giving the appeal due
course.

The writ prayed for is denied, with costs against petitioner.

Chief Justice Bengzon and Justices Bautista Angelo, Concepcion,

J.B.L. Reyes, Barrera, Dizon, Regala, J.P. Bengzon and Sanchez,
concur.

Petition denied.

Notes.As to frivolous appeal, see Ferinion vs. Sta. Romana, L-25521,

Feb. 28, 1966, ante, and notes thereunder. As to liability of common
carrier for willful acts of a stranger, see Gillaco vs. Manila Railroad
Company, 97 Phil. 884.

323
 SARKIES TOURS PHILIPPINES, INC., petitioner, vs.
HONORABLE COURT OF APPEALS (TENTH DIVISION), DR.
ELINO G. FORTADES, MARISOL A. FORTADES and FATIMA
MINERVA A. FORTADES, respondents.
G.R. No. 108897. October 2, 1997
Common Carriers; Damages; Common carriers, from the nature of
their business and for reasons of public policy, are bound to observe
extraordinary diligence in the vigilance over the goods transported by
them, and this liability lasts from the time the goods are
unconditionally placed in the possession of, and received by the carrier
for transportation until the same are delivered, actually or
constructively, by the carrier to the person who has a right to receive
them.Petitioners receipt of Fatimas personal luggage having been
thus established, it must now be determined if, as a common carrier,
it is responsible for their loss. Under the Civil Code, (c)ommon
carriers, from the nature of their business and for reasons of public
policy, are bound to observe extraordinary diligence in the vigilance
over the goods x x x transported by them, and this liability lasts from
the time the goods are unconditionally placed in the possession of,
and received by the carrier for transportation until the same are
delivered, actually or constructively, by the carrier to x x x the person
who has a right to receive them, unless the loss is due to any of the
excepted causes under Article 1734 thereof.
Same; Same; Moral damages and exemplary damages are due where
the negligence and bad faith of a common carrier has been duly
established. Petitioner questions the award of actual damages to
respondents. On this point, we likewise agree with the trial and
appellate courts conclusions. There is no dispute that of the three
pieces of luggage of Fatima, only one was recovered. The other two
contained optometry books, materials, equipment, as well as vital
documents and personal belongings. Respondents had to shuttle
between Bicol and Manila in their efforts to be compensated for the
loss. During the trial, Fatima and Marisol had to travel from the United
States just to be able to testify. Expenses were also incurred in
reconstituting their lost documents. Under these circumstances, the
Court agrees with the Court of Appeals in awarding P30,000.00 for the
lost items and P30,000.00 for the transportation expenses, but
disagrees with the deletion of the award of moral and exemplary
damages which, in view of the foregoing proven facts, with negligence
and bad faith on the fault of petitioner having been duly established,
should be granted to respondents in the amount of P20,000.00 and
P5,000.00, respectively.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Cruz, Durian, Agabin & Alday for petitioner.
Jose B. Ramos for private respondents.
ROMERO, J.:
This petition for review is seeking the reversal of the decision of the
Court of Appeals in CA-G.R. CV No. 18979 promulgated on January
13, 1993, as well as its resolution of February 19, 1993, denying
petitioners motion for reconsideration for being a mere rehash of the
arguments raised in the appellants brief.
The case arose from a damage suit filed by private respondents Elino,
Marisol, and Fatima Minerva, all surnamed Fortades, against petitioner
for breach of contract of carriage allegedly attended by bad faith.
On August 31, 1984, Fatima boarded petitioners De Luxe Bus No. 5
in Manila on her way to Legazpi City. Her brother Raul helped her load
three pieces of luggage containing all of her optometry review books,
materials and equipment, trial lenses, trial contact lenses, passport
and visa, as well as her mother Marisols U.S. immigration (green)
card, among other important documents and personal belongings. Her
belongings were kept in the baggage compartment of the bus, but
during a stopover at Daet, it was discovered that only one bag
remained in the open compartment. The others, including Fatimas
things, were missing and might have dropped along the way. Some of
324
the passengers suggested retracing the route of the bus to try to
recover the lost items, but the driver ignored them and proceeded to
Legazpi City.
Fatima immediately reported the loss to her mother who, in turn, went
to petitioners office in Legazpi City and later at its head office in
Manila. Petitioner, however, merely offered her P1,000.00 for each
piece of luggage lost, which she turned down. After returning to Bicol,
disappointed but not defeated, mother and daughter asked assistance
from the radio stations and even from Philtranco bus drivers who plied
the same route on August 31st. The effort paid off when one of
Fatimas bags was recovered. Marisol further reported the incident to
the National Bureau of Investigations field office in Legazpi City and
to the local police.
On September 20, 1984, respondents, through counsel, formally
demanded satisfaction of their complaint from petitioner. In a letter
dated October 1, 1984, the latter apologized for the delay and said
that (a) team has been sent out to Bicol for the purpose of recovering
or at least getting the full detail of the incident.
After more than nine months of fruitless waiting, respondents decided
to file the case below to recover the value of the remaining lost items,
as well as moral and exemplary damages, attorneys fees and
expenses of litigation. They claimed that the loss was due to
petitioners failure to observe extraordinary diligence in the care of
Fatimas luggage and that petitioner dealt with them in bad faith from
the start. Petitioner, on the other hand, disowned any liability for the
loss on the ground that Fatima allegedly did not declare any excess
baggage upon boarding its bus.
On June 15, 1988, after trial on the merits, the court a quo adjudged
the case in favor of respondents, viz.:
PREMISES CONSIDERED, judgment is hereby rendered in favor of the
plaintiffs (herein respondents) and against the herein defendant
Sarkies Tours Philippines, Inc., ordering the latter to pay to the former
the following sums of money, to wit:
1. The sum of P30,000.00 equivalent to the value of the personal
belongings of plaintiff Fatima Minerva Fortades, etc. less the value of
one luggage recovered;
2. The sum of P90,000.00 for the transportation expenses, as well as
moral damages;
3. The sum of P10,000.00 by way of exemplary damages;
4. The sum of P5,000.00 as attorneys fees; and
5. The sum of P5,000.00 as litigation expenses or a total of One
Hundred Forty Thousand (P140,000.00) Pesos. to be paid by herein
defendant Sarkies Tours Philippines, Inc. to the herein plaintiffs within
30 days from receipt of this Decision.
SO ORDERED.
On appeal, the appellate court affirmed the trial courts judgment, but
deleted the award of moral and exemplary damages. Thus,
WHEREFORE, premises considered, except as above modified, fixing
the award for transportation expenses at P30,000.00 and the deletion
of the award for moral and exemplary damages, the decision appealed
from is AFFIRMED, with costs against defendant-appellant.
SO ORDERED.
Its motion for reconsideration was likewise rejected by the Court of
Appeals, so petitioner elevated its case to this Court for a review.
After a careful scrutiny of the records of this case, we are convinced
that the trial and appellate courts resolved the issues judiciously based
on the evidence at hand.
Petitioner claims that Fatima did not bring any piece of luggage with
her, and even if she did, none was declared at the start of the trip.
325
The documentary and testimonial evidence presented at the trial,
however, established that Fatima indeed boarded petitioners De Luxe
Bus No. 5 in the evening of August 31, 1984, and she brought three
pieces of luggage with her, as testified by her brother Raul, who
helped her pack her things and load them on said bus. One of the
bags was even recovered by a Philtranco bus driver. In its letter dated
October 1, 1984, petitioner tacitly admitted its liability by apologizing
to respondents and assuring them that efforts were being made to
recover the lost items.
The records also reveal that respondents went to great lengths just to
salvage their loss. The incident was reported to the police, the NBI,
and the regional and head offices of petitioner. Marisol even sought
the assistance of Philtranco bus drivers and the radio stations. To
expedite the replacement of her mothers lost U.S. immigration
documents, Fatima also had to execute an affidavit of loss. Clearly,
they would not have gone through all that trouble in pursuit of a
fancied loss.
Fatima was not the only one who lost her luggage. Apparently, other
passengers had suffered a similar fate: Dr. Lita Samarista testified that
petitioner offered her P1,000.00 for her lost baggage and she
accepted it; Carleen Carullo-Magno lost her chemical engineering
review materials, while her brother lost abaca products he was
transporting to Bicol.
Petitioners receipt of Fatimas personal luggage having been thus
established, it must now be determined if, as a common carrier, it is
responsible for their loss. Under the Civil Code, (c)ommon carriers,
from the nature of their business and for reasons of public policy, are
bound to observe extraordinary diligence in the vigilance over the
goods x x x transported by them, and this liability lasts from the time
the goods are unconditionally placed in the possession of, and
received by the carrier for transportation until the same are delivered,
actually or constructively, by the carrier to x x x the person who has
a right to receive them, unless the loss is due to any of the excepted
causes under Article 1734 thereof.
The cause of the loss in the case at bar was petitioners negligence in
not ensuring that the doors of the baggage compartment of its bus
were securely fastened. As a result of this lack of care, almost all of
the luggage was lost, to the prejudice of the paying passengers. As
the Court of Appeals correctly observed:
x x x. Where the common carrier accepted its passengers baggage
for transportation and even had it placed in the vehicle by its own
employee, its failure to collect the freight charge is the common
carriers own lookout. It is responsible for the consequent loss of the
baggage. In the instant case, defendant appellants employee even
helped Fatima Minerva Fortades and her brother load the
luggages/baggages in the bus baggage compartment, without asking
that they be weighed, declared, receipted or paid for (TSN, August 4,
1986, pp. 29, 34, 54, 57, 70; December 23, 1987, p. 35). Neither was
this required of the other passengers (TSN, August 4, 1986, p. 104;
February 5, 1988, p. 13).
Finally, petitioner questions the award of actual damages to
respondents. On this point, we likewise agree with the trial and
appellate courts conclusions. There is no dispute that of the three
pieces of luggage of Fatima, only one was recovered. The other two
contained optometry books, materials, equipment, as well as vital
documents and personal belongings.
Respondents had to shuttle between Bicol and Manila in their efforts
to be compensated for the loss. During the trial, Fatima and Marisol
had to travel from the United States just to be able to testify. Expenses
were also incurred in reconstituting their lost documents. Under these
circumstances, the Court agrees with the Court of Appeals in awarding
P30,000.00 for the lost items and P30,000.00 for the transportation
expenses, but disagrees with the deletion of the award of moral and
exemplary damages which, in view of the foregoing proven facts, with
negligence and bad faith on the fault of petitioner having been duly
established, should be granted to respondents in the amount of
P20,000.00 and P5,000.00, respectively.
326
WHEREFORE, the assailed decision of the Court of Appeals dated
January 13, 1993, and its resolution dated February 19, 1993, are
hereby AFFIRMED with the MODIFICATION that petitioner is ordered
to pay respondents an additional P20,000.00 as moral damages and
P5,000.00 as exemplary damages. Costs against petitioner.

SO ORDERED.

Narvasa (C.J., Chairman), Melo, Francisco and Panganiban, JJ.,

concur.

Judgment affirmed with modification.

Notes.Inattention to and lack of care for the interests of its

passengers who are entitled to its utmost consideration, particularly
as to their convenience, amount to bad faith which entitles the
passenger to an award of moral damages. (Philippine Airlines, Inc. vs.
Court of Appeals, 257 SCRA 33 [1996])

In a contract of carriage, it is presumed that the common carrier was

at fault or was negligent when a passenger dies or is injured. (Baliwag
Transit, Inc. vs. Court of Appeals, 256 SCRA 746 [1996]).

o0o

327
 HEIRS OF JOSE MARCIAL K. OCHOA namely: RUBY B.
OCHOA, MICAELA B. OCHOA and JOMAR B. OCHOA,
petitioners, vs. G & S TRANSPORT CORPORATION,
respondent
G.R. No. 170071. March 9, 2011
G & S TRANSPORT CORPORATION, petitioner, vs. HEIRS OF
JOSE MARCIAL K. OCHOA namely: RUBY B. OCHOA,
MICAELA B. OCHOA and JOMAR B. OCHOA, respondents
G.R. No. 170125. March 9, 2011
Civil Law; Contract of Carriage; Common Carriers; In a contract of
carriage, it is presumed that the common carrier is at fault or is
negligent when a passenger dies or is injured. As a common carrier,
G & S is bound to carry [Jose Marcial] safely as far as human care
and foresight can provide, using the utmost diligence of very cautious
persons, with due regard for all the circumstances. However, Jose
Marcial was not able to reach his destination safely as he died during
the course of the travel. In a contract of carriage, it is presumed that
the common carrier is at fault or is negligent when a passenger dies
or is injured. In fact, there is even no need for the court to make an
express finding of fault or negligence on the part of the common
carrier.
Criminal Law; Reckless Imprudence Resulting in Homicide; The action
filed by the heirs for the recovery of damages arising from breach of
contract of carriage is an independent civil action which is separate
and distinct from the criminal action for reckless imprudence resulting
in homicide filed by the heirs by reason of the same incident.In this
case, the action filed by the heirs is primarily for the recovery of
damages arising from breach of contract of carriage allegedly
committed by G & S. Clearly, it is an independent civil action arising
from contract which is separate and distinct from the criminal action
for reckless imprudence resulting in homicide filed by the heirs against
Padilla by reason of the same incident. Hence, regardless of Padillas
acquittal or conviction in said criminal case, same has no bearing in
the resolution of the present case.
PETITIONS for review on certiorari of the decision and resolution of
the Court of Appeals.
The facts are stated in the opinion of the Court.
Medialdea, Ata, Bello, Guevarra and Suarez for Heirs of Jose Marcial
K. Ochoa.
Gepty & Jose Law Offices for G & S Transport Corp.
DEL CASTILLO, J.:
An accident which claimed the life of a passenger is the root of these
two petitionsone brought before us by the common carrier and the
other by the heirs of the deceased.
These consolidated Petitions for Review on Certiorari assail the Court
of Appeals (CA) Decision dated June 29, 2005 in CA-G.R. CV No.
75602 which affirmed with modification the December 21, 2001
Decision and March 5, 2002 Order of the trial court. Likewise, assailed
is the Resolution dated October 12, 2005 denying the parties
respective Motions for Reconsideration thereto.
Factual Antecedents
Jose Marcial K. Ochoa (Jose Marcial) died on the night of March 10,
1995 while on board an Avis taxicab owned and operated by G & S
Transport Corporation (G & S), a common carrier. As narrated by the
trial court, the circumstances attending Jose Marcials death are as
follows:
It appears that sometime in the evening of March 10, 1995, at the
Manila Domestic Airport, the late Jose Marcial K. Ochoa boarded and
rode a taxicab with Plate No. PKR-534, a passenger vehicle for hire
owned and operated by defendant corporation under the business
name Avis Coupon Taxi (Avis) and driven by its employee and
328
authorized driver Bibiano Padilla, Jr. on his way home to Teachers
Village, Diliman, Quezon City.
At about 11:00 p.m., the taxicab was cruising along Epifanio delos
Santos Avenue [EDSA], in front of Camp Aguinaldo in Quezon City at
high speed. While going up the Boni Serrano (Santolan) fly-over, it
overtook another cab driven by Pablo Clave and tried to pass another
vehicle, a ten-wheeler cargo truck. Because of the narrow space
between the left side railing of the fly-over and the ten-wheeler truck,
the Avis cab was unable to pass and because of its speed, its driver
(Padilla) was unable to control it. To avoid colliding with the truck,
Padilla turned the wheel to the left causing his taxicab to ram the
railing throwing itself off the fly-over and fell on the middle surface of
EDSA below. The forceful drop of the vehicle on the floor of the road
broke and split it into two parts. Both driver Padilla and passenger
Jose Marcial K. Ochoa were injured and rushed to the hospital. At the
East Avenue Medical Center, Ochoa was not as lucky as Padilla who
was alive. He was declared dead on arrival from the accident. The
death certificate issued by the Office of the Civil Registrar of Quezon
City cited the cause of his death as vehicular accident.
On May 13, 1999, Jose Marcials wife, Ruby Bueno Ochoa, and his two
minor children, Micaela B. Ochoa and Jomar B. Ochoa (the heirs),
through counsel, sent G & S a letter demanding that the latter
indemnify them for Jose Marcials death, his loss of earning capacity,
and funeral expenses in the total amount of P15,000,000.00. As G &
S failed to heed the same, the heirs filed a Complaint for Damages
before the
Regional Trial Court (RTC) of Pasig City which was raffled to Branch
164 of said court.
The heirs alleged that G & S, as a common carrier, is under legal
obligation to observe and exercise extraordinary diligence in
transporting its passengers to their destination safely and securely.
However, G & S failed to observe and exercise this extraordinary
diligence because its employee failed to transport Jose Marcial to his
destination safely. They averred that G & S is liable to them for having
breached the contract of common carriage. As an alternative cause of
action, they asserted that G & S is likewise liable for damages based
on quasi-delict pursuant to Article 2180 in relation to Article 2176 of
the Civil Code. The heirs thus prayed for G & S to pay them actual
damages, moral damages, exemplary damages, and attorneys fees
and expenses of litigation.
In its Answer With Compulsory Counterclaims, G & S claimed that Jose
Marcial boarded an Avis taxicab driven by its employee, Bibiano Padilla
(Padilla), at the Domestic Airport to bring him to Teachers Village in
Quezon City. While passing the Santolan fly-over, however, the Avis
taxicab was bumped by an on-rushing delivery van at the right portion
causing the taxicab to veer to the left, ram through the left side of the
railings of the fly-over and fall to the center of the island below. The
taxicab was split into two and Jose Marcial was thrown 10 meters
away. G & S posited that the proximate cause of Jose Marcials death
is a fortuitous event and/or the fault or negligence of the driver of the
delivery van that hit the taxicab. It likewise claimed that it exercised
the diligence required of a good father of a family in the selection and
supervision of its employees including Padilla. By way of compulsory
counterclaim, G & S sought to recover from the heirs the amount of
P300,000.00 as attorneys fees and costs of suit.
Ruling of the Regional Trial Court
On December 27, 2001, the trial court rendered a Decision9 finding
the vehicular mishap not caused by a fortuitous event but by the
negligence of Padilla. It likewise found the evidence adduced by G &
S to show that it exercised the diligence of a good father of a family
in the selection and supervision of its employees as insufficient. Hence,
the trial court declared G & S civilly liable to the heirs. However, for
lack of receipts or any proof of funeral expenses and other actual
damages, the trial court denied the heirs claim for actual damages. It
also denied them moral and exemplary damages for lack of legal basis.
The dispositive portion of said Decision reads:
329
WHEREFORE, defendant is hereby adjudged guilty of breach of
contract of carriage and is ordered to pay plaintiffs the following
amounts:
1. P50,000.00 as civil indemnity for the death of deceased Jose
Marcial K. Ochoa;
2. P6,537,244.96 for the loss of earning capacity of the deceased;
3. P100,00.00 for attorneys fees;
4. And the cost of litigation.
SO ORDERED.
G & S filed a Notice of Appeal while the heirs filed a Motion for Partial
Reconsideration. The heirs averred that they are entitled to moral
damages pursuant to Article 1764 in relation to Article 2206(3) of the
Civil Code. They also cited applicable jurisprudence providing that
moral damages are recoverable in a damage suit predicated upon a
breach of contract of carriage where the mishap results in the death
of the passenger. With respect to their claim for exemplary damages,
the heirs relied upon Article 2232 of the Civil Code which provides that
in contracts and quasi-contracts, the court may award exemplary
damages if the defendant acted in a wanton, fraudulent, reckless,
oppressive or malevolent manner. And, since Padilla was declared by
the trial court to have been grossly negligent in driving the taxicab,
the heirs claimed that they are likewise entitled to exemplary
damages.
After G & S filed its Opposition (To Plaintiffs Motion for Partial
Reconsideration), the trial court issued an Order on March 5, 2002. It
found merit in the heirs Motion for Partial Reconsideration and thus
declared them entitled to moral and exemplary damages, viz.:
WHEREFORE, the decision dated December 27, 2001 is hereby
modified so as to order defendant Corporation to pay plaintiffs the
amount of P300,000.00 as moral damages and P50,000.00 as
exemplary damages. The dispositive portion of said decision is hereby
amended to read as follows:
WHEREFORE, defendant is hereby adjudged guilty of breach of
contract of carriage and is ordered to pay plaintiffs the following
amounts:
1. P50,000.00 as civil indemnity for the death of the deceased Jose
Marcial K. Ochoa;
2. P6,537,244.96 for the loss of earning capacity of the deceased.
3. P300,000.00 as moral damages;
4. P50,000.00 as exemplary damages;
5. P100,000.00 for attorneys fees;
6. And the costs of litigation.
SO ORDERED.
Because of this, G & S filed another Notice of Appeal and same was
given due course by the trial court in an Order dated April 23, 2002.
Ruling of the Court of Appeals
Before the CA, G & S continued to insist that it exercised the diligence
of a good father of the family in the selection and supervision of its
employees. It averred that it has been carrying out not only seminars
for its drivers even before they were made to work, but also periodic
evaluations for their perfor-mance. Aside from these, it has also been
conducting monthly check-up of its automobiles and has regularly
issued rules regarding the conduct of its drivers. G & S claimed that it
was able to establish a good name in the industry and maintain a
clientele.
In an effort to build up Padillas character as an experienced and
careful driver, G & S averred that: (1) before G & S employed Padilla,
he was a delivery truck driver of Inter Island Gas Service for 11 years;
330
(2) Padilla has been an employee of G & S from 1989 to 1996 and
during said period, there was no recorded incident of his being a
negligent driver; (3) despite his qualifications, G & S still required
Padilla to submit an NBI clearance, drivers license and police
clearance; (4) Padillas being a good driver-employee was manifest in
his years of service with G & S, as in fact, he has received
congratulatory messages from the latter as shown by the inter-office
memos dated August 23, 1990 and February 1, 1993; and that (5)
Padilla attended a seminar at the Pope Pius Center sometime in
December 1999 as part of the NAIA Taxi Operation Program.
G & S also argued that the proximate cause of Jose Marcials death is
a fortuitous event and/or the fault or negligence of another and not
of its employee. According to G & S, the collision was totally
unforeseen since Padilla had every right to expect that the delivery
van would just overtake him and not hit the right side of the taxicab.
Therefore, what transpired was beyond Padillas control. There was
no negligence on his part but on the part of the driver of the delivery
van. For this reason, G & S opined that it was not liable to the heirs.
On the other hand, the heirs maintained that Padilla was grossly
negligent in driving the Avis taxicab on the night of March 10, 1995.
They claimed that Padilla, while running at a very high speed, acted
negligently when he tried to overtake a ten-wheeler truck at the foot
of the fly-over. This forced him to swerve to the left and as a
consequence, the Avis taxicab hit the center of the railing and was
split into two upon hitting the ground. The manner by which Padilla
drove the taxicab clearly showed that he acted without regard to the
safety of his passenger.
The heirs also averred that in order for a fortuitous event to exempt
one from liability, it is necessary that he has committed no negligence
or conduct that may have occasioned the loss. Thus, to be exempt
from liability for the death of Jose Marcial on this ground, G & S must
clearly show that the proximate cause of the casualty was entirely
independent of human will and that it was impossible to avoid. And
since in the case at bar it was Padillas inexcusable poor judgment,
utter lack of foresight and extreme negligence which were the
immediate and proximate causes of the accident, same cannot be
considered to be due to a fortuitous event. This is bolstered by the
fact that the court trying the case for criminal negligence arising from
the same incident convicted Padilla for said charge.
At any rate, the heirs contended that regardless of whether G & S
observed due diligence in the selection of its employees, it should
nonetheless be held liable for the death of Jose Marcial pursuant to
Article 1759 of the Civil Code which provides:
ART. 1759Common carriers are liable for the death of or injuries
to passengers through the negligence or willful acts of the formers
employees, although such employees may have acted beyond the
scope of their authority or in violation of the orders of the common
carriers.
This liability of the common carriers does not cease upon proof that
they exercised all the diligence of a good father of a family in the
selection and supervision of their employees.
In sum, the heirs prayed that the appeal be dismissed for lack of merit
and the assailed Decision and Order of the trial court be affirmed in
toto.
In a Decision dated June 29, 2005, the CA ruled in favor of the heirs.
The appellate court gave weight to their argument that in order for a
fortuitous event to exempt one from liability, it is necessary that he
committed no negligence or misconduct that may have occasioned the
loss. In this case, the CA noted that Padilla failed to employ reasonable
foresight, diligence and care needed to exempt G & S from liability for
Jose Marcials death. Said court also quoted pertinent portions of the
MTC decision convicting Padilla of reckless imprudence resulting in
homicide to negate G & S claim that the proximate cause of the
accident was the fault of the driver of the delivery van who allegedly
hit the right side of the taxicab. And just like the trial court, the CA
found insufficient the evidence adduced by G & S to support its claim
331
that it exercised due diligence in the selection and supervision of its
employees.
With respect to the award of P6,537,244.96 for Jose Marcials loss of
earning capacity, the CA declared the same unwarranted. It found the
Certification issued by Jose Marcials employer, the United States
Agency for International Development (USAID) through its Chief of
Human Resources Division Jonas Cruz (Cruz), as self-serving,
unreliable, and biased. While said certification states that Jose Marcial
was earning an annual salary of P450,844.49 at the time of his
untimely demise, the CA noted that same is unsupported by
competent evidence such as income tax returns or receipts. This is in
view of the ruling in People v. Ereo23 where it was held that there
must be unbiased proof of the deceaseds average income. Anent
moral damages, the CA found the award of P300,000.00 excessive
and thus reduced the same to P200,000.00 as to make it proportionate
to the award of exemplary damages which is P50,000.00. The
dispositive portion of said Decision reads:
WHEREFORE, the assailed Decision dated December 27, 2001 and
Order dated March 5, 2002 are AFFIRMED with the following
MODIFICATION: appellant is ordered to pay appellees the sum of
P50,000.00 as civil indemnity for the death of the deceased Jose
Marcial K. Ochoa, P200,000.00 as moral damages, P50,000.00 as
exemplary damages, P100,000.00 for attorneys fees and the costs of
litigation. The trial courts award of P6,537,244.96 for the loss of
earning capacity of the deceased is DELETED for lack of basis.
SO ORDERED.
Both parties moved for reconsideration but the CA denied their
respective motions for reconsideration in a Resolution dated October
12, 2005.
Hence, G & S and the heirs filed their respective Petitions for Review
on Certiorari before this Court. The heirs petition was docketed as
G.R. No. 170071 and that of G & S as G.R. No. 170125. These petitions
were later consolidated pursuant to this Courts Resolution of
November 21, 2005.
G.R. No. 170125
G & S anchors its petition on the following grounds:
I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT
RULING THAT THE PROXIMATE CAUSE OF DEATH OF MR. JOSE
MARCIAL K. OCHOA WAS A FORTUITOUS EVENT AND/OR WAS DUE
TO THE FAULT OR NEGLIGENCE OF ANOTHER AND SHOULD THUS
EXEMPT THE PETITIONER FROM LIABILITY.
II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT
TAKING NOTE OF THE FACT THAT THE PETITIONERS EMPLOYEE
HAD BEEN ACQUITTED OF THE CRIME OF RECKLESS IMPRUDENCE
RESULTING (IN) HOMICIDE.
III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
UPHOLDING THE TESTIMONY OF A WITNESS WHO SURFACED
MONTHS AFTER THE INCIDENT WHILE DISREGARDING THAT OF AN
EYEWITNESS WHO WAS PRESENT AT THE TIME AND PLACE OF THE
ACCIDENT.
IV. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT
RULING THAT THE PETITIONER EXERCISED THE DILIGENCE OF A
GOOD FATHER OF A FAMILY IN THE SELECTION AND SUPERVISION
OF ITS EMPLOYEES PARTICULARLY MR. BIBIANO PADILLA.
G & S reiterates its arguments that the proximate cause of the accident
is a fortuitous event and/or the negligence of the driver of the delivery
van which bumped the right portion of its taxicab and, that it exercised
the diligence of a good father of a family in the selection and
supervision of its employees. It faults the CA when it overlooked the
fact that the MTC Decision convicting Padilla of reckless imprudence
has already been reversed on appeal by the RTC with Padilla having
been accordingly acquitted of the crime charged. Moreover, it claims
that the appellate court erred in according respect to the testimony of
332
the lone prosecution witness, Pablo Clave (Clave), when it concluded
that Padilla was driving negligently at the time of the accident. It
asserts that Clave is not a credible witness and so is his testimony.
Thus, G & S prays that the assailed CA Decision and Resolution be
reversed and set aside.
On the other hand, the heirs posit that the determination of the issues
raised by G & S necessarily entails a re-examination of the factual
findings which this Court cannot do in this petition for review on
certiorari. At any rate, they maintain that the trial court itself is
convinced of Claves credibility. They stress the settled rule that the
evaluation of the credibility of witnesses is a matter that particularly
falls within the authority of the trial court because it had the
opportunity to observe the demeanor of the witnesses on the stand.
The heirs assert that fortuitous event was not the proximate cause of
the mishap. They point out that as correctly found by the trial court,
Padilla was running at an extremely high speed. This was why the
impact was so strong when the taxicab rammed the fly-over railings
and was split into two when it hit the ground. Also, while it is true that
the MTC Decision in the criminal case for reckless imprudence has
been reversed by the RTC, this does not excuse G & S from its liability
to the heirs because its liability arises from its breach of contract of
carriage and from its negligence in the selection and supervision of its
employees. Also, since the acquittal of Padilla is based on reasonable
doubt, same does not in any way rule out his negligence as this may
merely mean that the prosecution failed to meet the requisite
quantum of evidence to sustain his conviction. Therefore, G & S
cannot bank on said acquittal to disprove its liability.
G.R. No. 170071
The heirs, on the other hand, advance the following grounds in
support of their petition:
THE COURT OF APPEALS MANIFESTLY AND GRAVELY ERRED IN
COMPLETELY DELETING THE TRIAL COURTS AWARD FOR THE LOSS
OF EARNING CAPACITY OF THE DECEASED.
THE COURT OF APPEALS MANIFESTLY AND GRAVELY ERRED IN
REDUCING THE TRIAL COURTS AWARD FOR MORAL DAMAGES.
The focal point of the heirs petition is the CAs deletion of the award
of P6,537,244.96 for Jose Marcials loss of earning capacity as well as
the reduction of the award of moral damages from P300,000.00 to
P200,000.00.
The heirs aver that the appellate court gravely erred in relying upon
Ereo as said case is not on all fours with the present case. They
contend that in Ereo, this Court disallowed the award for loss of
income because the only proof presented was a handwritten
statement of the victims spouse stating the daily income of the
deceased as a self-employed fish vendor. The heirs argue that the
reason why this Court declared said handwritten statement as self-
serving is because the one who prepared it, the deceaseds wife, was
also the one who would directly and personally benefit from such an
award. This cannot be said in the case at bar since the same bias and
personal interest cannot be attributed to Jose Marcials employer, the
USAID. Unlike in Ereo, USAID here does not stand to be benefited
by an award for Jose Marcials loss of earning capacity. Clearly, the
Certification issued by it is far from being self-serving. At any rate, the
heirs contend that Ereo has already been superseded by Pleyto v.
Lomboy where this Court held that in awarding damages for loss of
earning capacity, mere testimonial evidence suffices to establish a
basis for which the court can make a fair and reasonable estimate of
the loss of earning capacity. In addition, the heirs point out that the
authenticity and accuracy of said Certification was neither questioned
by G & S nor discredited by any controverting evidence. In fact, its
admission by the trial court was not even assigned by G & S as an
error in their appeal before the CA.
333
As to the reduction of moral damages, the heirs claim that since the
CA agreed with the factual circumstances of the case as found by the
trial court, there is therefore no reason for it to alter the award of
damages arising from such factual circumstances. They aver that the
CA may only modify the damages awarded by the trial court when it
is excessive and scandalous as held in Meneses v. Court of Appeals.
Here, they claim that the award of moral damages in the amount of
P300,000.00 cannot be considered as excessive and unreasonable but
only commensurate to the sufferings caused by the incident to a wife
who became a young widow at the age of 33 and to two minor children
who lost a father. Moreover, the heirs aver that the CA should not
have reduced the award of moral damages just to make said amount
proportionate to the exemplary damages awarded. This is because
there is no such rule which dictates that the amount of moral damages
should be proportionate to that of the exemplary damages. The heirs
pray that the assailed CA Decision and Resolution be reversed and set
aside insofar as they deleted the award for loss of earning capacity
and reduced the award for moral damages.
For its part, G & S avers that the Certification issued by USAID is self-
serving because the USAID officer who issued it has not been put on
the witness stand to validate the contents thereof. Moreover, said
Certification was not supported by competent evidence such as
income tax returns and receipts. G & S likewise finds the reduction of
the award of moral damages appropriate in view of the settled rule
that moral damages are not meant to enrich the complainant at the
expense of the defendant. Hence, it prays that the petition be
dismissed for lack of merit.
Our Ruling
We shall first tackle the issues raised by G & S in its petition.
The first, third and fourth issues raised
by G & S involve questions of fact
We have reviewed said issues and we find that the determination of
the first, third and fourth issues raised entails re-examination of the
evidence presented because they all involve questions of fact. In
Microsoft Corporation v. Maxicorp, Inc., we held that:
Once it is clear that the issue invites a review of the evidence
presented, the question posed is one of fact. If the query requires a
re-evaluation of the credibility of witnesses, or the existence or
relevance of surrounding circumstances and their relation to each
other, the issue in that query is factual. Our ruling in Paterno v.
Paterno is illustrative on this point:
Such questions as whether certain items of evidence should be
accorded probative value or weight, or rejected as feeble or spurious,
or whether or not the proof on one side or the other are clear and
convincing and adequate to establish a proposition in issue, are
without doubt questions of fact. Whether or not the body of proofs
presented by a party, weighed and analyzed in relation to contrary
evidence submitted by adverse party, may be said to be strong, clear
and convincing; whether or not certain documents presented by one
side should be accorded full faith and credit in the face of protests as
to their spurious character by the other side; whether or not
inconsistencies in the body of proofs of a party are of such a gravity
as to justify refusing to give said proofs weightall these are issues
of fact. (Citations omitted)
In this case, the said three issues boil down to the determination of
the following questions: What is the proximate cause of the death of
Jose Marcial? Is the testimony of prosecution witness Clave credible?
Did G & S exercise the diligence of a good father of a family in the
selection and supervision of its employees? Suffice it to say that these
are all questions of fact which require this Court to inquire into the
probative value of the evidence presented before the trial court. As
we have consistently held, [t]his Court is not a trier of facts. It is not
a function of this court to analyze or weigh evidence. When we give
due course to such situations, it is solely by way of exception. Such
exceptions apply only in the presence of extremely meritorious
334
circumstances. Here, we note that although G & S enumerated in its
Consolidated Memorandum the exceptions to the rule that a petition
for review on certiorari should only raise questions of law, it
nevertheless did not point out under what exception its case falls. And,
upon review of the records of the case, we are convinced that it does
not fall under any. Hence, we cannot proceed to resolve said issues
and disturb the findings and conclusions of the CA with respect
thereto. As we declared in Diokno v. Cacdac:
It is aphoristic that a re-examination of factual findings cannot be
done through a petition for review on certiorari under Rule 45 of the
Rules of Court because as earlier stated, this Court is not a trier of
facts; it reviews only questions of law. The Supreme Court is not duty-
bound to analyze and weigh again the evidence considered in the
proceedings below. This is already outside the province of the instant
Petition for Certiorari. [Citations omitted.]
There is a contract of carriage between
G & S and Jose Marcial
What is clear from the records is that there existed a contract of
carriage between G & S, as the owner and operator of the Avis taxicab,
and Jose Marcial, as the passenger of said vehicle. As a common
carrier, G & S is bound to carry [Jose Marcial] safely as far as human
care and foresight can provide, using the utmost diligence of very
cautious persons, with due regard for all the circumstances. However,
Jose Marcial was not able to reach his destination safely as he died
during the course of the travel. In a contract of carriage, it is
presumed that the common carrier is at fault or is negligent when a
passenger dies or is injured. In fact, there is even no need for the
court to make an express finding of fault or negligence on the part of
the common carrier. This statutory presumption may only be
overcome by evidence that the carrier exercised extraordinary
diligence. Unfortunately, G & S miserably failed to overcome this
presumption. Both the trial court and the CA found that the accident
which led to Jose Marcials death was due to the reckless driving and
gross negligence of G & S driver, Padilla, thereby holding G & S liable
to the heirs of Jose Marcial for breach of contract of carriage.
The acquittal of Padilla in the criminal case is immaterial to the instant
case for breach of contract
This thus now leaves us with the remaining issue raised by G & S, that
is, whether the CA gravely erred in not taking note of the fact that
Padilla has already been acquitted of the crime of reckless imprudence
resulting in homicide, a charge which arose from the same incident
subject of this case.
Article 31 of the Civil Code provides, viz.:
When the civil action is based on an obligation not arising from the
act or omission complained of as a felony, such civil action may
proceed independently of the criminal proceedings and regardless of
the result of the latter.
Thus, in Cancio, Jr. v. Isip, we declared:
In the instant case, it must be stressed that the action filed by
petitioner is an independent civil action, which remains separate and
distinct from any criminal prosecution based on the same act. Not
being deemed instituted in the criminal action based on culpa criminal,
a ruling on the culpability of the offender will have no bearing on said
independent civil action based on an entirely different cause of action,
i.e., culpa contractual. (Emphasis supplied; Citations omitted.)
In this case, the action filed by the heirs is primarily for the recovery
of damages arising from breach of contract of carriage allegedly
committed by G & S. Clearly, it is an independent civil action arising
from contract which is separate and distinct from the criminal action
for reckless imprudence resulting in homicide filed by the heirs against
Padilla by reason of the same incident. Hence, regardless of Padillas
acquittal or conviction in said criminal case, same has no bearing in
the resolution of the present case. There was therefore no error on
the part of the CA when it resolved this case without regard to the fact
335
that Padilla has already been acquitted by the RTC in the criminal case.
Moreover, while the CA quoted some portions of the MTC Decision in
said criminal case, we however find that those quoted portions were
only meant to belie G & S claim that the proximate cause of the
accident was the negligence of the driver of the delivery van which
allegedly hit the Avis taxicab. Even without those quoted portions, the
appellate courts ultimate finding that it was Padillas negligence which
was the proximate cause of the mishap would still be the same. This
is because the CA has, in fact, already made this declaration in the
earlier part of its assailed Decision. The fact that the MTC Decision
from which the subject quoted portions were lifted has already been
reversed by the RTC is therefore immaterial.
In view of the foregoing, we deny G & S petition for lack of merit.
The denial by the CA of the heirs claim
for lost earnings is unwarranted
Going now to the petition filed by the heirs, we note at the outset that
the issues of whether the CA erred in deleting the award for loss of
earning capacity and in reducing the award for moral damages made
by the trial court likewise raise questions of fact as they involve an
examination of the probative value of the evidence presented by the
parties. However, we find that the heirs case falls under one of the
exceptions because the findings of the CA conflict with the findings of
the RTC. Since the heirs properly raised the conflicting findings of the
lower courts, it is proper for this Court to resolve such contradiction.
In Ereo, we denied the claim for loss of income because the
handwritten estimate of the deceaseds daily income as a self-
employed vendor was not supported by competent evidence like
income tax returns or receipts. This was in view of the rule that
compensation for lost income is in the nature of damages and as such
requires due proof of damages suffered. We reiterated this rule in
People v. Yrat where we likewise denied the same claim because the
only evidence presented to show that the deceased was earning
P50,000.00 a month was the testimony of the wife. There we stated
that for lost income due to death, there must be unbiased proof of the
deceaseds average income. Self-serving, hence, unreliable statement
is not enough. In People v. Caraig, we declared that documentary
evidence should be presented to substantiate the claim for damages
for loss of earning capacity. By way of exception, damages therefor
may be awarded despite the absence of documentary evidence,
provided that there is testimony that the victim was either (1) self-
employed earning less than the minimum wage under current labor
laws, and judicial notice may be taken of the fact that in the victims
line of work no documentary evidence is available; or (2) employed as
a daily-wage worker earning less than the minimum wage under
current labor laws. However, we subsequently ruled in Pleyto v.
Lomboy that failure to present documentary evidence to support a
claim for loss of earning capacity of the deceased need not be fatal to
its cause. Testimonial evidence suffices to establish a basis for which
the court can make a fair and reasonable estimate of the loss of
earning capacity. Hence, we held as sufficient to establish a basis for
an estimate of damages for loss of earning capacity the testimony of
the victims widow that her husband was earning a monthly income of
P8,000.00. Later, in Victory Liner, Inc. v. Gammad, after finding that
the deceaseds earnings does not fall within the exceptions laid down
in Caraig, we deleted the award for compensatory damages for loss
of earning capacity as same was awarded by the lower courts only on
the basis of the husbands testimony that the deceased was 39 years
of age and a Section Chief of the Bureau of Internal Revenue with a
salary of P83,088.00 per annum at the time of her death. This same
rule was also applied in the 2008 case of Licyayo v. People.
In all of the cases mentioned except for Ereo, the sole basis for the
claim for loss of earning capacity were the testimonies of the
claimants. This is not the case here. Just like in Ereo where the
testimony of the mother of the deceased was accompanied by a
handwritten estimate of her daughters alleged income as a fish
vendor, the testimony of Jose Marcials wife that he was earning
around P450,000.00 a year was corroborated by a Certification issued
336
by the USAID. However in Ereo, we declared as self-serving the
handwritten estimate submitted by the mother hence we denied the
claim for such award. Based on said ruling, the CA in this case deleted
the award for lost income after it found the USAID Certification to be
self-serving and unreliable.
We disagree. The CA sweepingly concluded that the USAID
Certification is self-serving and unreliable without elaborating on how
it was able to arrive at such a conclusion. A research on USAID reveals
that it is the principal [United States] agency to extend assistance to
countries recovering from disaster, trying to escape poverty, and
engaging in democratic reforms. It is an independent federal
government agency that receives over-all foreign policy guidance from
the Secretary of the State [of the United States]. Given this
background, it is highly improbable that such an agency will issue a
certification containing unreliable information regarding an employees
income. Besides, there exists a presumption that official duty has been
regularly performed. Absent any showing to the contrary, it is
presumed that Cruz, as Chief of Human Resources Division of USAID,
has regularly performed his duty relative to the issuance of said
certification and therefore, the correctness of its contents can be relied
upon. This presumption remains especially so where the authenticity,
due execution and correctness of said certification have not been put
in issue either before the trial court or the CA. As to its being self-
serving, our discussion on self-serving evidence in Heirs of Pedro
Clemea y Zurbano v. Heirs of Irene B. Bien is enlightening, viz.:
Self-serving evidence, perhaps owing to its descriptive formulation,
is a concept much misunderstood. Not infrequently, the term is
employed as a weapon to devalue and discredit a partys testimony
favorable to his cause. That, it seems, is the sense in which petitioners
are using it now. This is a grave error. Self-serving evidence is not
to be taken literally to mean any evidence that serves its proponents
interest. The term, if used with any legal sense, refers only to acts or
declarations made by a party in his own interest at some place and
time out of court x x x. (Citations omitted; emphasis supplied.)
Verily, the USAID certification cannot be said to be self-serving
because it does not refer to an act or declaration made out of court
by the heirs themselves as parties to this case.
Clearly, the CA erred in deleting the award for lost income on the
ground that the USAID Certification supporting such claim is self-
serving and unreliable. On the contrary, we find said certification
sufficient basis for the court to make a fair and reasonable estimate
of Jose Marcials loss of earning capacity just like in Tamayo v. Seora
where we based the victims gross annual income on his pay slip from
the Philippine National Police. Hence, we uphold the trial courts award
for Jose Marcials loss of earning capacity.
While the trial court applied the formula generally used by the courts
to determine net earning capacity which is, to wit:
Net Earning Capacity = life expectancy* x (gross annual income -
reasonable living expenses)
*Life expectancy = 2/3 (80 age of the deceased)
we, however, find incorrect the amount of P6,537,244.96 arrived at.
The award should be P6,611,634.59 as borne out by the following
computation:
Net earning capacity = 2 (80-3654) x 450,844.4955-50%
= 88 x 225,422.25
= 29.33 x 225,422.25
= P6, 611,634.59
The award of moral damages should be modified
While we deemed it proper to modify the amount of moral damages
awarded by the trial court as discussed below, we nevertheless agree
with the heirs that the CA should not have pegged said award in
proportion to the award of exemplary damages. Moral and exemplary
damages are based on different jural foundations. They are different
337
in nature and require separate determination. The amount of one
cannot be made to depend on the other.
In Victory Liner Inc. v. Gammad59 we awarded P100,000.00 by way
of moral damages to the husband and three children of the deceased,
a 39-year old Section Chief of the Bureau of Internal Revenue, to
compensate said heirs for the grief caused by her death. This is
pursuant to the provisions of Articles 1764 and 2206(3) which provide:
Art. 1764. Damages in cases comprised in this Section shall be
awarded in accordance with Title XVIII of this Book, concerning
Damages. Articles 2206 shall also apply to the death of a passenger
caused by the breach of contract by a common carrier.
Art. 2206. x x x
(3) The spouse, legitimate and illegitimate descendants and the
ascendants of the deceased may demand moral damages for mental
anguish by reason of the death of the deceased.
Here, there is no question that the heirs are likewise entitled to moral
damages pursuant to the above provisions, considering the mental
anguish suffered by them by reason of Jose Marcials untimely death,
as can be deduced from the following testimony of his wife Ruby:
Atty. Suarez:
Q: How would you describe Jose Marcial Ochoa?
(Ruby)
A: My husband was a very loving husband, faithful husband, a very
[good] provider[.] I depended on him so much financially [and]
emotionally[.] He was practically my life then.
Q: How is he as a father?
A: A very good father, he is very committed to Micaela[. H]e has
always time for her[. H]e is a family man, so its really a great [loss]
to me and to Micaela.
Q: What was your reaction upon learning of your husbands death?
A: Immediately after I learned of his death, I tried very hard to keep
a clear mind for my little girl, she was 3 and she could not grasp
what death is, so I found [it] so hard to explain to her [at] that time
what happened [e]specially [because] she just talked to her father
from the airport telling her that he is coming home, tapos hindi na
pala.
Q: How did it affect you?
A: It was a painful struggle everyday just to get up and move on
when someone who [you] really really love and [who] is important to
you it is very hard to move on and [it is even] harder to move on
[when] I found out that I was pregnant with my second child, parang
tinabunan ka [ng] lahat eh[. I]ts [too] hard to find happiness, youre
pregnant, when you know wala naman talagang father yung bata later
on x x x
xxxx
Q: How did this affect your family?
A: Yung effect kay Micaela, she [used] to be a gregarious child, yung
happy ganyan, but nung wala na yong father niya that time, [during]
graduation ng nursery that time naging very very [quiet] siya, so a lot
of emotional support from my own family was given to her at the time
para makacope-up siya sa loss kasi she is very close to the father.
Q: Financially, how did it affect you?
A: I had to make do of what was left by my husband, I couldnt also
work so much at the time because I was.and hirap eh, I cannot find
enthusiasm in what I do, tapos pregnant pa ako, and hirap talaga.
Q: How else did it affect you?
A: We had to move houses like we used to live in Quezon City at
(the) time of his death, tapos kinuha kami ni Gorjie my brother-in-law
338
sa compound nila para hindi [to] support us emotionally (at that
time) kasi nga I was pregnant and then I also decided to move (to
make it easy for me) to adjust yung lifestyle ng mga bata, because I
cannot cope [here] financially on my own[. N]ahihirapan na ako dito
because the living expenses here are quite high compared sa
probinsiya so I decided to move.
Q: If you would assign that pain and suffering that you suffered as
a result of the death of your husband, what will be the monetary
consideration?
A: I struggled with that kasi.I can honestly say no amount of
money can ever repay the [loss] that my children suffered, future nila
yan eh, and my son was not given a chance to get to know his father,
so I cannot imagine kung ano yung sinasabi nyong amount that will
compensate the suffering that I have to go through and my children
will go through, yon ang mahirap bayaran.
Petition in G.R. No. 170071 partly granted while petition in G.R. No.
170125 denied. Judgment and resolution affirmed with modifications.
Note.Victims of negligence or their heirs have a choice between an
action to enforce the civil liability arising from culpa criminal under
Article 100 of the Revised Penal Code, and an action for quasi-delict
(culpa aquiliana) under Articles 2176 to 2194 of the Civil Code. If, as
here, the action chosen is for quasi-delict, the plaintiff may hold the
employer liable for the negligent act of its employee, subject to the
employers defense of exercise of the diligence of a good father of the
family. On the other hand, if the action chosen is for culpa criminal,
the plaintiff can hold the employer subsidiarily liable only upon proof
of prior conviction of its employee. (L.G. Foods Corporation vs.
Pagapong-Agraviador, 503 SCRA 170 [2006])
o0o

Under this circumstance, we thus find as sufficient and somehow

proportional to and in approximation of the suffering inflicted an
award of moral damages in an amount similar to that awarded in
Victory which is P100,000.00.

From the above discussion, we, thus, partly grant the heirs petition.

WHEREFORE, the petition for review on certiorari in G.R. No. 170071

is PARTLY GRANTED while the petition in G.R. No. 170125 is DENIED.
The assailed Decision and Resolution dated June 29, 2005 and October
12, 2005 of the Court of Appeals in CA-G.R. CV No. 75602 are
AFFIRMED with the MODIFICATIONS that G & S is ordered to pay the
heirs of Jose Marcial K. Ochoa the sum of P6,611,634.59 for loss of
earning capacity of the deceased and P100,000.00 as moral damages.

SO ORDERED.

Corona (C.J., Chairperson), Velasco, Jr., Leonardo-De Castro and

Perez, JJ., concur.

339
SPOUSES DANTE CRUZ and LEONORA CRUZ, petitioners, vs.
SUN HOLIDAYS, INC., respondent
G.R. No. 186312. June 29, 2010
Civil Law; Common Carriers; Definition of Common Carriers. As De
Guzman instructs, Article 1732 of the Civil Code defining common
carriers has deliberately refrained from making distinctions on
whether the carrying of persons or goods is the carriers principal
business, whether it is offered on a regular basis, or whether it is
offered to the general public. The intent of the law is thus to not
consider such distinctions. Otherwise, there is no telling how many
other distinctions may be concocted by unscrupulous businessmen
engaged in the carrying of persons or goods in order to avoid the legal
obligations and liabilities of common carriers.
Same; Same; Degree of Diligence Required; From the nature of their
business and for reasons of public policy, common carriers are bound
to observe extraordinary diligence for the safety of the passengers
transported by them, according to all the circumstances of each
case.Under the Civil Code, common carriers, from the nature of their
business and for reasons of public policy, are bound to observe
extraordinary diligence for the safety of the passengers transported
by them, according to all the circumstances of each case. They are
bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious
persons, with due regard for all the circumstances.
Same; Same; Negligence; Presumption of Negligence; When a
passenger dies or is injured in the discharge of a contract of carriage,
it is presumed that the common carrier is at fault or negligent.When
a passenger dies or is injured in the discharge of a contract of carriage,
it is presumed that the common carrier is at fault or negligent. In fact,
there is even no need for the court to make an express finding of fault
or negligence on the part of the common carrier. This statutory
presumption may only be overcome by evidence that the carrier
exercised extraordinary diligence.
Same; Same; Same; Fortuitous Event; Element of a Fortuitous
Event.The elements of a fortuitous event are: (a) the cause of
the unforeseen and unexpected occurrence, or the failure of the
debtors to comply with their obligations, must have been independent
of human will; (b) the event that constituted the caso fortuito must
have been impossible to foresee or, if foreseeable, impossible to
avoid; (c) the occurrence must have been such as to render it
impossible for the debtors to fulfill their obligation in a normal manner;
and (d) the obligor must have been free from any participation in the
aggravation of the resulting injury to the creditor.
Same; Same; Same; Same; To fully free a common carrier from any
liability, the fortuitous event must have been the proximate and only
cause of the loss.To fully free a common carrier from any liability,
the fortuitous event must have been the proximate and only cause of
the loss. And it should have exercised due diligence to prevent or
minimize the loss before, during and after the occurrence of the
fortuitous event.
Same; Same; Same; Damages; Liability of a common carrier in breach
of its contract of carriage resulting in the death of a passenger.
Article 1764 vis--vis Article 2206 of the Civil Code holds the common
carrier in breach of its contract of carriage that results in the death of
a passenger liable to pay the following: (1) indemnity for death, (2)
indemnity for loss of earning capacity and (3) moral damages
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
Fortun, Narvasa & Salazar for petitioners.
Sycip, Salazar, Hernandez & Gatmaitan for respondent.
CARPIO-MORALES, J.:
Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on
January 25, 200 against Sun Holidays, Inc. (respondent) with the
Regional Trial Court (RTC) of Pasig City for damages arising from the
340
death of their son Ruelito C. Cruz (Ruelito) who perished with his wife
on September 11, 2000 on board the boat M/B Coco Beach III that
capsized en route to Batangas from Puerto Galera, Oriental Mindoro
where the couple had stayed at Coco Beach Island Resort (Resort)
owned and operated by respondent.
The stay of the newly wed Ruelito and his wife at the Resort from
September 9 to 11, 2000 was by virtue of a tour package-contract
with respondent that included transportation to and from the Resort
and the point of departure in Batangas.
Miguel C. Matute (Matute), a scuba diving instructor and one of the
survivors, gave his account of the incident that led to the filing of the
complaint as follows:
Matute stayed at the Resort from September 8 to 11, 2000. He was
originally scheduled to leave the Resort in the afternoon of September
10, 2000, but was advised to stay for another night because of strong
winds and heavy rains.
On September 11, 2000, as it was still windy, Matute and 25 other
Resort guests including petitioners son and his wife trekked to the
other side of the Coco Beach mountain that was sheltered from the
wind where they boarded M/B Coco Beach III, which was to ferry them
to Batangas.
Shortly after the boat sailed, it started to rain. As it moved farther
away from Puerto Galera and into the open seas, the rain and wind
got stronger, causing the boat to tilt from side to side and the captain
to step forward to the front, leaving the wheel to one of the crew
members.
The waves got more unwieldy. After getting hit by two big waves
which came one after the other, M/B Coco Beach III capsized putting
all passengers underwater.
The passengers, who had put on their life jackets, struggled to get out
of the boat. Upon seeing the captain, Matute and the other passengers
who reached the surface asked him what they could do to save the
people who were still trapped under the boat. The captain replied
Iligtas niyo na lang ang sarili niyo (Just save yourselves).
Help came after about 45 minutes when two boats owned by Asia
Divers in Sabang, Puerto Galera passed by the capsized M/B Coco
Beach III. Boarded on those two boats were 22 persons, consisting of
18 passengers and four crew members, who were brought to Pisa
Island. Eight passengers, including petitioners son and his wife, died
during the incident.
At the time of Ruelitos death, he was 28 years old and employed as
a contractual worker for Mitsui Engineering & Shipbuilding Arabia, Ltd.
in Saudi Arabia, with a basic monthly salary of $900.
Petitioners, by letter of October 26, 2000, demanded indemnification
from respondent for the death of their son in the amount of at least
P4,000,000.
Replying, respondent, by letter dated November 7, 2000,denied any
responsibility for the incident which it considered to be a fortuitous
event. It nevertheless offered, as an act of commiseration, the amount
of P10,000 to petitioners upon their signing of a waiver.
As petitioners declined respondents offer, they filed the Complaint, as
earlier reflected, alleging that respondent, as a common carrier, was
guilty of negligence in allowing M/B Coco Beach III to sail
notwithstanding storm warning bulletins issued by the Philippine
Atmospheric, Geophysical and Astronomical Services Administration
(PAGASA) as early as 5:00 a.m. of September 11, 2000.
In its Answer, respondent denied being a common carrier, alleging
that its boats are not available to the general public as they only ferry
Resort guests and crew members. Nonetheless, it claimed that it
exercised the utmost diligence in ensuring the safety of its passengers;
contrary to petitioners allegation, there was no storm on September
11, 2000 as the Coast Guard in fact cleared the voyage; and M/B Coco
Beach III was not filled to capacity and had sufficient life jackets for
341
its passengers. By way of Counterclaim, respondent alleged that it is
entitled to an award for attorneys fees and litigation expenses
amounting to not less than P300,000.
Carlos Bonquin, captain of M/B Coco Beach III, averred that the Resort
customarily requires four conditions to be met before a boat is allowed
to sail, to wit: (1) the sea is calm, (2) there is clearance from the Coast
Guard, (3) there is clearance from the captain and (4) there is
clearance from the Resorts assistant manager. He added that M/B
Coco Beach III met all four conditions on September 11, 2000, but a
subasco or squall, characterized by strong winds and big waves,
suddenly occurred, causing the boat to capsize.
By Decision of February 16, 2005, Branch 267 of the Pasig RTC
dismissed petitioners Complaint and respondents Counterclaim.
Petitioners Motion for Reconsideration having been denied by Order
dated September 2, 2005, they appealed to the Court of Appeals.
By Decision of August 19, 2008, the appellate court denied petitioners
appeal, holding, among other things, that the trial court correctly ruled
that respondent is a private carrier which is only required to observe
ordinary diligence; that respondent in fact observed extraordinary
diligence in transporting its guests on board M/B Coco Beach III; and
that the proximate cause of the incident was a squall, a fortuitous
event.
Petitioners Motion for Reconsideration having been denied by
Resolution dated January 16, 2009, they filed the present Petition for
Review.
Petitioners maintain the position they took before the trial court,
adding that respondent is a common carrier since by its tour package,
the transporting of its guests is an integral part of its resort business.
They inform that another division of the appellate court in fact held
respondent liable for damages to the other survivors of the incident.
Upon the other hand, respondent contends that petitioners failed to
present evidence to prove that it is a common carrier; that the Resorts
ferry services for guests cannot be considered as ancillary to its
business as no income is derived therefrom; that it exercised
extraordinary diligence as shown by the conditions it had imposed
before allowing M/B Coco Beach III to sail; that the incident was
caused by a fortuitous event without any contributory negligence on
its part; and that the other case wherein the appellate court held it
liable for damages involved different plaintiffs, issues and evidence.
The petition is impressed with merit.
Petitioners correctly rely on De Guzman v. Court of Appeals in
characterizing respondent as a common carrier.
The Civil Code defines common carriers in the following terms:
Article 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air for compensation,
offering their services to the public.
The above article makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one
who does such carrying only as an ancillary activity (in local idiom, as
a sideline). Article 1732 also carefully avoids making any distinction
between a person or enterprise offering transportation service on a
regular or scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the general
public, i.e., the general community or population, and one who offers
services or solicits business only from a narrow segment of the general
population. We think that Article 1733 deliberately refrained from
making such distinctions.
So understood, the concept of common carrier under Article 1732
may be seen to coincide neatly with the notion of public service,
under the Public Service Act (Commonwealth Act No. 1416, as
342
amended) which at least partially supplements the law on common
carriers set forth in the Civil Code. Under Section 13, paragraph (b) of
the Public Service Act, public service includes:
. . . every person that now or hereafter may own, operate, manage,
or control in the Philippines, for hire or compensation, with general or
limited clientele, whether permanent, occasional or accidental, and
done for general business purposes, any common carrier, railroad,
street railway, traction railway, subway motor vehicle, either for
freight or passenger, or both, with or without fixed route and whatever
may be its classification, freight or carrier service of any class, express
service, steamboat, or steamship line, pontines, ferries and water
craft, engaged in the transportation of passengers or freight or both,
shipyard, marine repair shop, wharf or dock, ice plant, ice-refrigeration
plant, canal, irrigation system, gas, electric light, heat and power,
water supply and power petroleum, sewerage system, wire or wireless
communications systems, wire or wireless broadcasting stations and
other similar public services . . . (emphasis and underscoring
supplied.)
Indeed, respondent is a common carrier. Its ferry services are so
intertwined with its main business as to be properly considered
ancillary thereto. The constancy of respondents ferry services in its
resort operations is underscored by its having its own Coco Beach
boats. And the tour packages it offers, which include the ferry services,
may be availed of by anyone who can afford to pay the same. These
services are thus available to the public.
That respondent does not charge a separate fee or fare for its ferry
services is of no moment. It would be imprudent to suppose that it
provides said services at a loss. The Court is aware of the practice of
beach resort operators offering tour packages to factor the
transportation fee in arriving at the tour package price. That guests
who opt not to avail of respondents ferry services pay the same
amount is likewise inconsequential. These guests may only be deemed
to have overpaid.
As De Guzman instructs, Article 1732 of the Civil Code defining
common carriers has deliberately refrained from making distinctions
on whether the carrying of persons or goods is the carriers principal
business, whether it is offered on a regular basis, or whether it is
offered to the general public. The intent of the law is thus to not
consider such distinctions. Otherwise, there is no telling how many
other distinctions may be concocted by unscrupulous businessmen
engaged in the carrying of persons or goods in order to avoid the legal
obligations and liabilities of common carriers.
Under the Civil Code, common carriers, from the nature of their
business and for reasons of public policy, are bound to observe
extraordinary diligence for the safety of the passengers transported
by them, according to all the circumstances of each case. They are
bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious
persons, with due regard for all the circumstances.
When a passenger dies or is injured in the discharge of a contract of
carriage, it is presumed that the common carrier is at fault or
negligent. In fact, there is even no need for the court to make an
express finding of fault or negligence on the part of the common
carrier. This statutory presumption may only be overcome by evidence
that the carrier exercised extraordinary diligence.
Respondent nevertheless harps on its strict compliance with the
earlier mentioned conditions of voyage before it allowed M/B Coco
Beach III to sail on September 11, 2000. Respondents position does
not impress.
The evidence shows that PAGASA issued 24-hour public weather
forecasts and tropical cyclone warnings for shipping on September 10
and 11, 2000 advising of tropical depressions in Northern Luzon which
would also affect the province of Mindoro. By the testimony of Dr.
Frisco Nilo, supervising weather specialist of PAGASA, squalls are to
be expected under such weather condition.
343
A very cautious person exercising the utmost diligence would thus not a passenger liable to pay the following: (1) indemnity for death, (2)
brave such stormy weather and put other peoples lives at risk. The indemnity for loss of earning capacity and (3) moral damages.
extraordinary diligence required of common carriers demands that
Petitioners are entitled to indemnity for the death of Ruelito which is
they take care of the goods or lives entrusted to their hands as if they
fixed at P50,000.
were their own. This respondent failed to do.

Respondents insistence that the incident was caused by a fortuitous As for damages representing unearned income, the formula for its
computation is:
event does not impress either.
Net Earning Capacity = life expectancy x (gross annual income -
The elements of a fortuitous event are: (a) the cause of the
reasonable and necessary living expenses).
unforeseen and unexpected occurrence, or the failure of the debtors
to comply with their obligations, must have been independent of Life expectancy is determined in accordance with the formula:
human will; (b) the event that constituted the caso fortuito must have
been impossible to foresee or, if foreseeable, impossible to avoid; (c) 2 / 3 x [80 age of deceased at the time of death]
the occurrence must have been such as to render it impossible for the
The first factor, i.e., life expectancy, is computed by applying the
debtors to fulfill their obligation in a normal manner; and (d) the
formula (2/3 x [80 age at death]) adopted in the American
obligor must have been free from any participation in the aggravation
Expectancy Table of Mortality or the Actuarial of Combined Experience
of the resulting injury to the creditor.
Table of Mortality.
To fully free a common carrier from any liability, the fortuitous event
The second factor is computed by multiplying the life expectancy by
must have been the proximate and only cause of the loss. And it
the net earnings of the deceased, i.e., the total earnings less expenses
should have exercised due diligence to prevent or minimize the loss
necessary in the creation of such earnings or income and less living
before, during and after the occurrence of the fortuitous event.
and other incidental expenses.[32] The loss is not equivalent to the
Respondent cites the squall that occurred during the voyage as the entire earnings of the deceased, but only such portion as he would
fortuitous event that overturned M/B Coco Beach III. As reflected have used to support his dependents or heirs. Hence, to be deducted
above, however, the occurrence of squalls was expected under the from his gross earnings are the necessary expenses supposed to be
weather condition of September 11, 2000. Moreover, evidence shows used by the deceased for his own needs.
that M/B Coco Beach III suffered engine trouble before it capsized and
In computing the third factornecessary living expense, Smith Bell
sank. The incident was, therefore, not completely free from human
Dodwell Shipping Agency Corp. v. Borja teaches that when, as in this
intervention.
case, there is no showing that the living expenses constituted the
The Court need not belabor how respondents evidence likewise fails smaller percentage of the gross income, the living expenses are fixed
to demonstrate that it exercised due diligence to prevent or minimize at half of the gross income.
the loss before, during and after the occurrence of the squall.
Applying the above guidelines, the Court determines Ruelitos life
Article 1764 vis--vis Article 2206 of the Civil Code holds the common expectancy as follows:
carrier in breach of its contract of carriage that results in the death of

344
Life expectancy = 2/3 x [80 - age of deceased at the time of death]
2/3 x [80 - 28]
2/3 x [52]
Life expectancy = 35
Documentary evidence shows that Ruelito was earning a basic
monthly salary of $900 which, when converted to Philippine peso
applying the annual average exchange rate of $1 = P44 in 2000,
amounts to P39,600. Ruelitos net earning capacity is thus computed
as follows:
Net Earning Capacity = life expectancy x (gross annual income -
reasonable and necessary living expenses).
= 35 x (P475,200 - P237,600)
= 35 x (P237,600)
Net Earning Capacity = P8,316,000
Respecting the award of moral damages, since respondent common
carriers breach of contract of carriage resulted in the death of
petitioners son, following Article 1764 vis--vis Article 2206 of the Civil
Code, petitioners are entitled to moral damages.
Since respondent failed to prove that it exercised the extraordinary
diligence required of common carriers, it is presumed to have acted
recklessly, thus warranting the award too of exemplary damages,
which are granted in contractual obligations if the defendant acted in
a wanton, fraudulent, reckless, oppressive or malevolent manner.
Under the circumstances, it is reasonable to award petitioners the
amount of P100,000 as moral damages and P100,000 as exemplary
damages.
Pursuant to Article 2208 of the Civil Code, attorney's fees may also be
awarded where exemplary damages are awarded. The Court finds that
10% of the total amount adjudged against respondent is reasonable
for the purpose.
Finally, Eastern Shipping Lines, Inc. v. Court of Appeals teaches that
when an obligation, regardless of its source, i.e., law, contracts, quasi-
contracts, delicts or quasi-delicts is breached, the contravenor can be
held liable for payment of interest in the concept of actual and
compensatory damages, subject to the following rules, to wit
1. When the obligation is breached, and it consists in the payment
of a sum of money, i.e., a loan or forbearance of money, the interest
due should be that which may have been stipulated in writing.
Furthermore, the interest due shall itself earn legal interest from the
time it is judicially demanded. In the absence of stipulation, the rate
of interest shall be 12% per annum to be computed from default, i.e.,
from judicial or extrajudicial demand under and subject to the
provisions of Article 1169 of the Civil Code.
2. When an obligation, not constituting a loan or forbearance of
money, is breached, an interest on the amount of damages awarded
may be imposed at the discretion of the court at the rate of 6% per
annum. No interest, however, shall be adjudged on unliquidated
claims or damages except when or until the demand can be
established with reasonable certainty. Accordingly, where the demand
is established with reasonable certainty, the interest shall begin to run
from the time the claim is made judicially or extrajudicially (Art. 1169,
Civil Code) but when such certainty cannot be so reasonably
established at the time the demand is made, the interest shall begin
to run only from the date the judgment of the court is made (at which
time the quantification of damages may be deemed to have been
reasonably ascertained). The actual base for the computation of legal
interest shall, in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a sum of money
becomes final and executory, the rate of legal interest, whether the
case falls under paragraph 1 or paragraph 2, above, shall be 12% per
annum from such finality until its satisfaction, this interim period being
345
deemed to be by then an equivalent to a forbearance of credit.
(emphasis supplied).

Since the amounts payable by respondent have been determined with

certainty only in the present petition, the interest due shall be
computed upon the finality of this decision at the rate of 12% per
annum until satisfaction, in accordance with paragraph number 3 of
the immediately cited guideline in Eastern Shipping Lines, Inc.

WHEREFORE, the Court of Appeals Decision of August 19, 2008 is

REVERSED and SET ASIDE. Judgment is rendered in favor of
petitioners ordering respondent to pay petitioners the following: (1)
P50,000 as indemnity for the death of Ruelito Cruz; (2) P8,316,000 as
indemnity for Ruelitos loss of earning capacity; (3) P100,000 as moral
damages; (4) P100,000 as exemplary damages; (5) 10% of the total
amount adjudged against respondent as attorneys fees; and (6) the
costs of suit.

The total amount adjudged against respondent shall earn interest at

the rate of 12% per annum computed from the finality of this decision
until full payment.

SO ORDERED.

Brion, Bersamin, Abad** and Villarama, Jr., JJ., concur.

Judgment reversed and set aside.

Note.A common carrier is bound by law to exercise extraordinary

diligence and utmost care in ensuring for the safety and welfare of its
passengers with due regard for all the circumstances. (Philippine
Airlines, Inc vs. Court of Appeals, 566 SCRA 124 [2008])

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346
 NEW WORLD INTERNATIONAL DEVELOPMENT (PHILS.), the duration of delay at the rate of twice the ceiling prescribed by the
INC., petitioner, vs. NYK-FILJAPAN SHIPPING CORP., LEP Monetary Board.
PROFIT INTERNATIONAL, INC. (ORD), LEP INTERNATIONAL
Same; Section 244 of the Insurance Code also provides for an award
PHILIPPINES, INC., DMT CORP., ADVATECH INDUSTRIES,
of attorneys fees and other expenses incurred by the assured due to
INC., MARINA PORT SERVICES, INC., SERBROS CARRIER
the unreasonable withholding of payment of his claim. The term
CORPORATION, and SEABOARD-EASTERN INSURANCE CO.,
ceiling prescribed by the Monetary Board means the legal rate of
INC., respondents
interest of 12% per annum provided in Central Bank Circular 416,
G.R. No. 171468. August 24, 2011 pursuant to Presidential Decree 116. Section 244 of the Insurance
Code also provides for an award of attorneys fees and other expenses
NEW WORLD INTERNATIONAL DEVELOPMENT (PHILS.),
incurred by the assured due to the unreasonable withholding of
INC., petitioner, vs. SEABOARD-EASTERN INSURANCE CO.,
payment of his claim.
INC., respondent
PETITIONS for review on certiorari of the decision and resolution of
G.R. No. 174241. August 24, 2011
the Court of Appeals.
Civil Law; Common Carriers; That the loss was occasioned by a
The facts are stated in the opinion of the Court.
typhoon, an exempting cause under Article 1734 of the Civil Code,
does not automatically relieve the common carrier of liability. That Quisumbing, Torres for petitioner (in both petitions).
the loss was occasioned by a typhoon, an exempting cause under
Article 1734 of the Civil Code, does not automatically relieve the Valdez, Domondon & Associates for respondent Advatech Industries,
Inc.
common carrier of liability. The latter had the burden of proving that
the typhoon was the proximate and only cause of loss and that it Del Rosario & Del Rosario for respondent NYK-FilJapan Shipping
exercised due diligence to prevent or minimize such loss before, Corp.
during, and after the disastrous typhoon.
Factoran & Associates Law Offices for respondent LEP International
Insurance Law; Under Section 243 of the Insurance Code, the insurer Phils., Inc. [now Geologistics, Inc.].
has 30 days after proof of loss is received and ascertainment of the
loss or damage within which to pay the claim. If such ascertainment Manuel M. Lazaro for respondent Seaboard Eastern Insurance Co.,
is not had within 60 days from receipt of evidence of loss, the insurer Inc.
has 90 days to pay or settle the claim. Under Section 243, the
Hernandez, Velicaria, Vibar & Santiago co-counsel for respondents
insurer has 30 days after proof of loss is received and ascertainment
Seaboard Eastern Insurance Co., Inc.
of the loss or damage within which to pay the claim. If such
ascertainment is not had within 60 days from receipt of evidence of Jinky H. Cruz for Asian Terminals, Inc.
loss, the insurer has 90 days to pay or settle the claim. And, in case
the insurer refuses or fails to pay within the prescribed time, the ABAD, J.:
insured shall be entitled to interest on the proceeds of the policy for

347
These consolidated petitions involve a cargo owners right to recover
damages from the loss of insured goods under the Carriage of Goods
by Sea Act and the Insurance Code.
The Facts and the Case
Petitioner New World International Development (Phils.), Inc. (New
World) bought from DMT Corporation (DMT) through its agent,
Advatech Industries, Inc. (Advatech) three emergency generator sets
worth US$721,500.00.
DMT shipped the generator sets by truck from Wisconsin, United
States, to LEP Profit International, Inc. (LEP Profit) in Chicago, Illinois.
From there, the shipment went by train to Oakland, California, where
it was loaded on S/S California Luna V59, owned and operated by NYK
Fil-Japan Shipping Corporation (NYK) for delivery to petitioner New
World in Manila. NYK issued a bill of lading, declaring that it received
the goods in good condition.
NYK unloaded the shipment in Hong Kong and transshipped it to S/S
ACX Ruby V/72 that it also owned and operated. On its journey to
Manila, however, ACX Ruby encountered typhoon Kadiang whose
captain filed a sea protest on arrival at the Manila South Harbor on
October 5, 1993 respecting the loss and damage that the goods on
board his vessel suffered.
Marina Port Services, Inc. (Marina), the Manila South Harbor arrastre
or cargo-handling operator, received the shipment on October 7,
1993. Upon inspection of the three container vans separately carrying
the generator sets, two vans bore signs of external damage while the
third van appeared unscathed. The shipment remained at Pier 3s
Container Yard under Marinas care pending clearance from the
Bureau of Customs. Eventually, on October 20, 1993 customs
authorities allowed petitioners customs broker, Serbros Carrier
Corporation (Serbros), to withdraw the shipment and deliver the same
to petitioner New Worlds job site in Makati City.
An examination of the three generator sets in the presence of
petitioner New Worlds representatives, Federal Builders (the project
contractor) and surveyors of petitioner New Worlds insurer,
SeaboardEastern Insurance Company (Seaboard), revealed that all
three sets suffered extensive damage and could no longer be repaired.
For these reasons, New World demanded recompense for its loss from
respondents NYK, DMT, Advatech, LEP Profit, LEP International
Philippines, Inc. (LEP), Marina, and Serbros. While LEP and NYK
acknowledged receipt of the demand, both denied liability for the loss.
Since Seaboard covered the goods with a marine insurance policy,
petitioner New World sent it a formal claim dated November 16, 1993.
Replying on February 14, 1994, Seaboard required petitioner New
World to submit to it an itemized list of the damaged units, parts, and
accessories, with corresponding values, for the processing of the
claim. But petitioner New World did not submit what was required of
it, insisting that the insurance policy did not include the submission of
such a list in connection with an insurance claim. Reacting to this,
Seaboard refused to process the claim.
On October 11, 1994 petitioner New World filed an action for specific
performance and damages against all the respondents before the
Regional Trial Court (RTC) of Makati City, Branch 62, in Civil Case 94-
2770.
On August 16, 2001 the RTC rendered a decision absolving the various
respondents from liability with the exception of NYK. The RTC found
that the generator sets were damaged during transit while in the care
of NYKs vessel, ACX Ruby. The latter failed, according to the RTC, to
exercise the degree of diligence required of it in the face of a foretold
raging typhoon in its path.
The RTC ruled, however, that petitioner New World filed its claim
against the vessel owner NYK beyond the one year provided under the
Carriage of Goods by Sea Act (COGSA). New World filed its complaint
on October 11, 1994 when the deadline for filing the action (on or
before October 7, 1994) had already lapsed. The RTC held that the
348
one-year period should be counted from the date the goods were
delivered to the arrastre operator and not from the date they were
delivered to petitioners job site.
As regards petitioner New Worlds claim against Seaboard, its insurer,
the RTC held that the latter cannot be faulted for denying the claim
against it since New World refused to submit the itemized list that
Seaboard needed for assessing the damage to the shipment. Likewise,
the belated filing of the complaint prejudiced Seaboards right to
pursue a claim against NYK in the event of subrogation.
On appeal, the Court of Appeals (CA) rendered judgment on January
31, 2006, affirming the RTCs rulings except with respect to Seaboards
liability. The CA held that petitioner New World can still recoup its loss
from Seaboards marine insurance policy, considering a) that the
submission of the itemized listing is an unreasonable imposition and
b) that the one-year prescriptive period under the COGSA did not
affect New Worlds right under the insurance policy since it was the
Insurance Code that governed the relation between the insurer and
the insured.
Although petitioner New World promptly filed a petition for review of
the CA decision before the Court in G.R. 171468, Seaboard chose to
file a motion for reconsideration of that decision. On August 17, 2006
the CA rendered an amended decision, reversing itself as regards the
claim against Seaboard. The CA held that the submission of the
itemized listing was a reasonable requirement that Seaboard asked of
New World. Further, the CA held that the one-year prescriptive period
for maritime claims applied to Seaboard, as insurer and subrogee of
New Worlds right against the vessel owner. New Worlds failure to
comply promptly with what was required of it prejudiced such right.
Instead of filing a motion for reconsideration, petitioner instituted a
second petition for review before the Court in G.R. 174241, assailing
the CAs amended decision.
The Issues Presented
The issues presented in this case are as follows:
a) In G.R. 171468, whether or not the CA erred in affirming the RTCs
release from liability of respondents DMT, Advatech, LEP, LEP Profit,
Marina, and Serbros who were at one time or another involved in
handling the shipment; and
b) In G.R. 174241, 1) whether or not the CA erred in ruling that
Seaboards request from petitioner New World for an itemized list is a
reasonable imposition and did not violate the insurance contract
between them; and 2) whether or not the CA erred in failing to rule
that the one-year COGSA prescriptive period for marine claims does
not apply to petitioner New Worlds prosecution of its claim against
Seaboard, its insurer.
The Courts Rulings
In G.R. 171468
Petitioner New World asserts that the roles of respondents DMT,
Advatech, LEP, LEP Profit, Marina and Serbros in handling and
transporting its shipment from Wisconsin to Manila collectively
resulted in the damage to the same, rendering such respondents
solidarily liable with NYK, the vessel owner.
But the issue regarding which of the parties to a dispute incurred
negligence is factual and is not a proper subject of a petition for review
on certiorari. And petitioner New World has been unable to make out
an exception to this rule. Consequently, the Court will not disturb the
finding of the RTC, affirmed by the CA, that the generator sets were
totally damaged during the typhoon which beset the vessels voyage
from Hong Kong to Manila and that it was her negligence in continuing
with that journey despite the adverse condition which caused
petitioner New Worlds loss.
That the loss was occasioned by a typhoon, an exempting cause under
Article 1734 of the Civil Code, does not automatically relieve the
common carrier of liability. The latter had the burden of proving that
349
the typhoon was the proximate and only cause of loss and that it
exercised due diligence to prevent or minimize such loss before,
during, and after the disastrous typhoon. As found by the RTC and the
CA, NYK failed to discharge this burden.
In G.R. 174241
One. The Court does not regard as substantial the question of
reasonableness of Seaboards additional requirement of an itemized
listing of the damage that the generator sets suffered. The record
shows that petitioner New World complied with the documentary
requirements evidencing damage to its generator sets.
The marine open policy that Seaboard issued to New World was an
all-risk policy. Such a policy insured against all causes of conceivable
loss or damage except when otherwise excluded or when the loss or
damage was due to fraud or intentional misconduct committed by the
insured. The policy covered all losses during the voyage whether or
not arising from a marine peril.
Here, the policy enumerated certain exceptions like unsuitable
packaging, inherent vice, delay in voyage, or vessels unseaworthiness,
among others. But Seaboard had been unable to show that petitioner
New Worlds loss or damage fell within some or one of the enumerated
exceptions.
What is more, Seaboard had been unable to explain how it could not
verify the damage that New Worlds goods suffered going by the
documents that it already submitted, namely, (1) copy of the
Suppliers Invoice KL2504; (2) copy of the Packing List; (3) copy of
the Bill of Lading 01130E93004458; (4) the Delivery of Waybill
Receipts 1135, 1222, and 1224; (5) original copy of Marine Insurance
Policy MA-HO-000266; (6) copies of Damage Report from Supplier and
Insurance Adjusters; (7) Consumption Report from the Customs
Examiner; and (8) Copies of Received Formal Claim from the
following: a) LEP International Philippines, Inc.; b) Marina Port
Services, Inc.; and c) Serbros Carrier Corporation. Notably, Seaboards
own marine surveyor attended the inspection of the generator sets.
Seaboard cannot pretend that the above documents are inadequate
since they were precisely the documents listed in its insurance policy.
Being a contract of adhesion, an insurance policy is construed strongly
against the insurer who prepared it. The Court cannot read a
requirement in the policy that was not there.
Further, it appears from the exchanges of communications between
Seaboard and Advatech that submission of the requested itemized
listing was incumbent on the latter as the seller DMTs local agent.
Petitioner New World should not be made to suffer for Advatechs
shortcomings.
Two. Regarding prescription of claims, Section 3(6) of the COGSA
provides that the carrier and the ship shall be discharged from all
liability in case of loss or damage unless the suit is brought within one
year after delivery of the goods or the date when the goods should
have been delivered.
But whose fault was it that the suit against NYK, the common carrier,
was not brought to court on time? The last day for filing such a suit
fell on October 7, 1994. The record shows that petitioner New World
filed its formal claim for its loss with Seaboard, its insurer, a remedy
it had the right to take, as early as November 16, 1993 or about 11
months before the suit against NYK would have fallen due.
In the ordinary course, if Seaboard had processed that claim and paid
the same, Seaboard would have been subrogated to petitioner New
Worlds right to recover from NYK. And it could have then filed the suit
as a subrogee. But, as discussed above, Seaboard made an
unreasonable demand on February 14, 1994 for an itemized list of the
damaged units, parts, and accessories, with corresponding values
when it appeared settled that New Worlds loss was total and when
the insurance policy did not require the production of such a list in the
event of a claim.
350
Besides, when petitioner New World declined to comply with the
demand for the list, Seaboard against whom a formal claim was
pending should not have remained obstinate in refusing to process
that claim. It should have examined the same, found it
unsubstantiated by documents if that were the case, and formally
rejected it. That would have at least given petitioner New World a
clear signal that it needed to promptly file its suit directly against NYK
and the others.
Ultimately, the fault for the delayed court suit could be brought to
Seaboards doorstep.
Section 241 of the Insurance Code provides that no insurance
company doing business in the Philippines shall refuse without just
cause to pay or settle claims arising under coverages provided by its
policies. And, under Section 243, the insurer has 30 days after proof
of loss is received and ascertainment of the loss or damage within
which to pay the claim. If such ascertainment is not had within 60
days from receipt of evidence of loss, the insurer has 90 days to pay
or settle the claim. And, in case the insurer refuses or fails to pay
within the prescribed time, the insured shall be entitled to interest on
the proceeds of the policy for the duration of delay at the rate of twice
the ceiling prescribed by the Monetary Board.
Notably, Seaboard already incurred delay when it failed to settle
petitioner New Worlds claim as Section 243 required. Under Section
244, a prima facie evidence of unreasonable delay in payment of the
claim is created by the failure of the insurer to pay the claim within
the time fixed in Section 243.
Consequently, Seaboard should pay interest on the proceeds of the
policy for the duration of the delay until the claim is fully satisfied at
the rate of twice the ceiling prescribed by the Monetary Board. The
term ceiling prescribed by the Monetary Board means the legal rate
of interest of 12% per annum provided in Central Bank Circular 416,
pursuant to Presidential Decree 116.9 Section 244 of the Insurance
Code also provides for an award of attorneys fees and other expenses
incurred by the assured due to the unreasonable withholding of
payment of his claim.
In Prudential Guarantee and Assurance, Inc. v. Trans-Asia Shipping
Lines, Inc.,10 the Court regarded as proper an award of 10% of the
insurance proceeds as attorneys fees. Such amount is fair considering
the length of time that has passed in prosecuting the claim.11
Pursuant to the Courts ruling in Eastern Shipping Lines, Inc. v. Court
of Appeals,12 a 12% interest per annum from the finality of judgment
until full satisfaction of the claim should likewise be imposed, the
interim period equivalent to a forbearance of credit.
Petitioner New World is entitled to the value stated in the policy which
is commensurate to the value of the three emergency generator sets
or US$721,500.00 with double interest plus attorneys fees as
discussed above.
WHEREFORE, the Court DENIES the petition in G.R. 171468 and
AFFIRMS the Court of Appeals decision of January 31, 2006 insofar as
petitioner New World International Development (Phils.), Inc. is not
allowed to recover against respondents DMT Corporation, Advatech
Industries, Inc., LEP International Philippines, Inc., LEP Profit
International, Inc., Marina Port Services, Inc. and Serbros Carrier
Corporation.
With respect to G.R. 174241, the Court GRANTS the petition and
REVERSES and SETS ASIDE the Court of Appeals Amended Decision
of August 17, 2006. The Court DIRECTS Seaboard-Eastern Insurance
Company, Inc. to pay petitioner New World International Development
(Phils.), Inc. US$721,500.00 under Policy MA-HO-000266, with 24%
interest per annum for the duration of delay in accordance with
Sections 243 and 244 of the Insurance Code and attorneys fees
equivalent to 10% of the insurance proceeds. Seaboard shall also pay,
from finality of judgment, a 12% interest per annum on the total
amount due to petitioner until its full satisfaction.
SO ORDERED.
351
Velasco, Jr. (Chairperson), Leonardo-De Castro,** Peralta and
Mendoza, JJ., concur.

Petition in G.R. No. 171468 denied, judgment affirmed; while petition

in G.R. No. 174241 granted, amended decision reversed and set aside.

Note.Common carriers are obliged to observe extraordinary

diligence in the vigilance over the goods transported by them.
Accordingly, they are presumed to have been at fault or to have acted
negligently if the goods are lost, destroyed or deteriorated. (DSR-
Senator Lines vs. Federal Phoenix Assurance Co., Inc., 413 SCRA 14
[2003])

o0o

352
 SINGAPORE AIRLINES LIMITED, petitioner, vs. ANDION
FERNANDEZ, respondent
G.R. No. 142305. December 10, 2003
Common Carriers; Air Transportation; When an airline issues a ticket
to a passenger, confirmed for a particular flight on a certain date, a
contract of carriage arises; In an action for breach of contract of
carriage, the aggrieved party does not have to prove that the common
carrier was at fault or was negligentall that is necessary to prove is
the existence of the contract and the fact of its non-performance by
the carrier.When an airline issues a ticket to a passenger, confirmed
for a particular flight on a certain date, a contract of carriage arises.
The passenger then has every right to expect that he be transported
on that flight and on that date. If he does not, then the carrier opens
itself to a suit for a breach of contract of carriage. The contract of air
carriage is a peculiar one. Imbued with public interest, the law requires
common carriers to carry the passengers safely as far as human care
and foresight can provide, using the utmost diligence of very cautious
persons with due regard for all the circumstances. In an action for
breach of contract of carriage, the aggrieved party does not have to
prove that the common carrier was at fault or was negligent. All that
is necessary to prove is the existence of the contract and the fact of
its non-performance by the carrier.
Same; Same; When a passenger contracts for a specific flight, he has
a purpose in making that choice which must be respected.When a
passenger contracts for a specific flight, he has a purpose in making
that choice which must be respected. This choice, once exercised,
must not be impaired by a breach on the part of the airline without
the latter incurring any liability. For petitioners failure to bring the
respondent to her destination, as scheduled, we find the petitioner
clearly liable for the breach of its contract of carriage with the
respondent.
Same; Same; Bad Faith; Words and Phrases; Bad faith means a breach
of known duty through some motive of interest or ill will; Self-
enrichment or fraternal interest, and not personal ill will, may well
have been the motive, but it is malice nevertheless; Inattentiveness
and rudeness of an airlines personnel to a passengers plight may
amount to bad faith.We are convinced that the petitioner acted in
bad faith. Bad faith means a breach of known duty through some
motive of interest or ill will. Self-enrichment or fraternal interest, and
not personal ill will, may well have been the motive; but it is malice
nevertheless. Bad faith was imputed by the trial court when it found
that the petitioners employees at the Singapore airport did not accord
the respondent the attention and treatment allegedly warranted under
the circumstances. The lady employee at the counter was unkind and
of no help to her. The respondent further alleged that without her
threats of suing the company, she was not allowed to use the
companys phone to make long distance calls to her mother in Manila.
The male employee at the counter where it says: Immediate
Attention to Passengers with Immediate Booking was rude to her
when he curtly retorted that he was busy attending to other
passengers in line. The trial court concluded that this inattentiveness
and rudeness of petitioners personnel to respondents plight was
gross enough amounting to bad faith. This is a finding that is generally
binding upon the Court which we find no reason to disturb.
Same; Same; Where the airlines employees acted in a wanton,
oppressive or malevolent manner, the award of exemplary damages
is warranted.Article 2232 of the Civil Code provides that in a
contractual or quasi-contractual relationship, exemplary damages may
be awarded only if the defendant had acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner. In this case, petitioners
employees acted in a wanton, oppressive or malevolent manner. The
award of exemplary damages is, therefore, warranted in this case.
PETITION for review on certiorari of a decision of the Court of Appeals.
The facts are stated in the opinion of the Court.
353
 Teodoro A. Pastrana for petitioner.
Padlan, Sutton & Associates for respondent.
CALLEJO, SR., J.:
This is a petition for review on certiorari assailing the Decision of the
Court of Appeals which affirmed in toto the decision of the Regional
Trial Court of Pasig City, Branch 164 in Civil Case No. 60985 filed by
the respondent for damages.
The Case for the Respondent
Respondent Andion Fernandez is an acclaimed soprano here in the
Philippines and abroad. At the time of the incident, she was availing
an educational grant from the Federal Republic of Germany, pursuing
a Masters Degree in Music majoring in Voice.
She was invited to sing before the King and Queen of Malaysia on
February 3 and 4, 1991. For this singing engagement, an airline
passage ticket was purchased from petitioner Singapore Airlines which
would transport her to Manila from Frankfurt, Germany on January 28,
1991. From Manila, she would proceed to Malaysia on the next day.4
It was necessary for the respondent to pass by Manila in order to
gather her wardrobe; and to rehearse and coordinate with her pianist
her repertoire for the aforesaid performance.
The petitioner issued the respondent a Singapore Airlines ticket for
Flight No. SQ 27, leaving Frankfurt, Germany on January 27, 1991
bound for Singapore with onward connections from Singapore to
Manila. Flight No. SQ 27 was scheduled to leave Frankfurt at 1:45 in
the afternoon of January 27, 1991, arriving at Singapore at 8:50 in
the morning of January 28, 1991. The connecting flight from
Singapore to Manila, Flight No. SQ 72, was leaving Singapore at 11:00
in the morning of January 28, 1991, arriving in Manila at 2:20 in the
afternoon of the same day.
On January 27, 1991, Flight No. SQ 27 left Frankfurt but arrived in
Singapore two hours late or at about 11:00 in the morning of January
28, 1991. By then, the aircraft bound for Manila had left as scheduled,
leaving the respondent and about 25 other passengers stranded in the
Changi Airport in Singapore.
Upon disembarkation at Singapore, the respondent approached the
transit counter who referred her to the nightstop counter and told the
lady employee thereat that it was important for her to reach Manila
on that day, January 28, 1991. The lady employee told her that there
were no more flights to Manila for that day and that respondent had
no choice but to stay in Singapore. Upon respondents persistence,
she was told that she can actually fly to Hong Kong going to Manila
but since her ticket was non-transferable, she would have to pay for
the ticket. The respondent could not accept the offer because she had
no money to pay for it. Her pleas for the respondent to make
arrangements to transport her to Manila were unheeded.
The respondent then requested the lady employee to use their phone
to make a call to Manila. Over the employees reluctance, the
respondent telephoned her mother to inform the latter that she missed
the connecting flight. The respondent was able to contact a family
friend who picked her up from the airport for her overnight stay in
Singapore.
The next day, after being brought back to the airport, the respondent
proceeded to petitioners counter which says: Immediate Attention
To Passengers with Immediate Booking. There were four or five
passengers in line. The respondent approached petitioners male
employee at the counter to make arrangements for immediate
booking only to be told: Cant you see I am doing something. She
explained her predicament but the male employee uncaringly retorted:
Its your problem, not ours.
The respondent never made it to Manila and was forced to take a
direct flight from Singapore to Malaysia on January 29, 1991, through
the efforts of her mother and travel agency in Manila. Her mother also
had to travel to Malaysia bringing with her respondents wardrobe and
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personal things needed for the performance that caused them to incur
an expense of about P50,000.
As a result of this incident, the respondents performance before the
Royal Family of Malaysia was below par. Because of the rude and
unkind treatment she received from the petitioners personnel in
Singapore, the respondent was engulfed with fear, anxiety,
humiliation and embarrassment causing her to suffer mental fatigue
and skin rashes. She was thereby compelled to seek immediate
medical attention upon her return to Manila for acute urticaria.
On June 15, 1993, the RTC rendered a decision with the following
dispositive portion:
ACCORDINGLY and as prayed for, defendant Singapore Airlines is
ordered to pay herein plaintiff Andion H. Fernandez the sum of:
1. FIFTY THOUSAND (P50,000.00) PESOS as compensatory or actual
damages;
2. TWO HUNDRED and FIFTY THOUSAND (P250,000.00) PESOS as
moral damages considering plaintiffs professional standing in the field
of culture at home and abroad;
3. ONE HUNDRED THOUSAND (P100,000.00) PESOS as exemplary
damages;
4. SEVENTY-FIVE THOUSAND (P75,000.00) PESOS as attorneys fees;
and
5. To pay the costs of suit.
SO ORDERED.
The petitioner appealed the decision to the Court of Appeals.
On June 10, 1998, the CA promulgated the assailed decision finding
no reversible error in the appealed decision of the trial court.
Forthwith, the petitioner filed the instant petition for review, raising
the following errors:
I
THE HONORABLE COURT OF APPEALS ERRED IN AFFIRMING IN
TOTO THE DECISION OF THE TRIAL COURT THAT AWARDED
DAMAGES TO RESPONDENT FOR THE ALLEGED FAILURE OF THE
PETITIONER TO EXERCISE EXTRAORDINARY DILIGENCE.
II
THE HONORABLE COURT OF APPEALS ERRED IN HOLDING THAT THE
PETITIONER ACTED IN BAD FAITH.
III
THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE
PETITIONERS COUNTERCLAIMS.
The petitioner assails the award of damages contending that it
exercised the extraordinary diligence required by law under the given
circumstances. The delay of Flight No. SQ 27 from Frankfurt to
Singapore on January 28, 1991 for more than two hours was due to a
fortuitous event and beyond petitioners control. Inclement weather
prevented the petitioners plane coming from Copenhagen, Denmark
to arrive in Frankfurt on time on January 27, 1991. The plane could
not take off from the airport as the place was shrouded with fog. This
delay caused a snowball effect whereby the other flights were
consequently delayed. The plane carrying the respondent arrived in
Singapore two (2) hours behind schedule. The delay was even
compounded when the plane could not travel the normal route which
was through the Middle East due to the raging Gulf War at that time.
It had to pass through the restricted Russian airspace which was more
congested.
Under these circumstances, petitioner therefore alleged that it cannot
be faulted for the delay in arriving in Singapore on January 28, 1991
and causing the respondent to miss her connecting flight to Manila.
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The petitioner further contends that it could not also be held in bad
faith because its personnel did their best to look after the needs and
interests of the passengers including the respondent.
Because the respondent and the other 25 passengers missed their
connecting flight to Manila, the petitioner automatically booked them
to the flight the next day and gave them free hotel accommodations
for the night. It was respondent who did not take petitioners offer
and opted to stay with a family friend in Singapore.
The petitioner also alleges that the action of the respondent was
baseless and it tarnished its good name and image earned through
the years for which, it was entitled to damages in the amount of
P1,000,000; exemplary damages of P500,000; and attorneys fees also
in the amount of P500,000.
The petition is barren of merit.
When an airline issues a ticket to a passenger, confirmed for a
particular flight on a certain date, a contract of carriage arises. The
passenger then has every right to expect that he be transported on
that flight and on that date. If he does not, then the carrier opens
itself to a suit for a breach of contract of carriage.
The contract of air carriage is a peculiar one. Imbued with public
interest, the law requires common carriers to carry the passengers
safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons with due regard for all the
circumstances. In an action for breach of contract of carriage, the
aggrieved party does not have to prove that the common carrier was
at fault or was negligent. All that is necessary to prove is the existence
of the contract and the fact of its non-performance by the carrier.
In the case at bar, it is undisputed that the respondent carried a
confirmed ticket for the two-legged trip from Frankfurt to Manila: 1)
Frankfurt-Singapore; and 2) Singapore-Manila. In her contract of
carriage with the petitioner, the respondent certainly expected that
she would fly to Manila on Flight No. SQ 72 on January 28, 1991. Since
the petitioner did not transport the respondent as covenanted by it on
said terms, the petitioner clearly breached its contract of carriage with
the respondent. The respondent had every right to sue the petitioner
for this breach. The defense that the delay was due to fortuitous
events and beyond petitioners control is unavailing. In PAL vs. CA we
held that:
. . . . Undisputably, PALs diversion of its flight due to inclement
weather was a fortuitous event. Nonetheless, such occurrence did not
terminate PALs contract with its passengers. Being in the business of
air carriage and the sole one to operate in the country, PAL is deemed
to be equipped to deal with situations as in the case at bar. What we
said in one case once again must be stressed, i.e., the relation of
carrier and passenger continues until the latter has been landed at the
port of destination and has left the carriers premises. Hence, PAL
necessarily would still have to exercise extraordinary diligence in
safeguarding the comfort, convenience and safety of its stranded
passengers until they have reached their final destination . . .
...
. . . If the cause of non-fulfillment of the contract is due to a fortuitous
event, it has to be the sole and only cause (Art. 1755 C.C., Art. 1733
C.C.). Since part of the failure to comply with the obligation of
common carrier to deliver its passengers safely to their destination lay
in the defendants failure to provide comfort and convenience to its
stranded passengers using extraordinary diligence, the cause of non-
fulfillment is not solely and exclusively due to fortuitous event, but due
to something which defendant airline could have prevented,
defendant becomes liable to plaintiff.
Indeed, in the instant case, petitioner was not without recourse to
enable it to fulfill its obligation to transport the respondent safely as
scheduled as far as human care and foresight can provide to her
destination. Tagged as a premiere airline as it claims to be and with
the complexities of air travel, it was certainly well-equipped to be able
to foresee and deal with such situation. The petitioners indifference
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and negligence by its absence and insensitivity was exposed by the
trial court, thus:
(a) Under Section 9.1 of its Traffic Manual (Exhibit (4) . . . flights can
be delayed to await the uplift of connecting cargo and passengers
arriving on a late in-bound flight . . . As adverted to by the trial court,
. . . Flight SQ-27/28 maybe delayed for about half an hour to transfer
plaintiff to her connecting flight. As pointed out above, delay is normal
in commercial air transportation (RTC Decision, p. 22); or
(b) Petitioner airlines could have carried her on one of its flights bound
for Hongkong and arranged for a connecting flight from Hongkong to
Manila all on the same date. But then the airline personnel who
informed her of such possibility told her that she has to pay for that
flight. Regrettably, respondent did not have sufficient funds to pay for
it. (TSN, 30 March 1992, pp.8-9; RTC Decision, pp. 22-23) Knowing
the predicament of the respondent, petitioner did not offer to shoulder
the cost of the ticket for that flight; or
(c) As noted by the trial court from the account of petitioners witness,
Bob Khkimyong, that a passenger such as the plaintiff could have
been accommodated in another international airline such as Lufthansa
to bring the plaintiff to Singapore early enough from Frankfurt
provided that there was prior communication from that station to
enable her to catch the connecting flight to Manila because of the
urgency of her business in Manila . . . (RTC Decision, p. 23)
The petitioners diligence in communicating to its passengers the
consequences of the delay in their flights was wanting. As elucidated
by the trial court:
It maybe that delay in the take off and arrival of commercial aircraft
could not be avoided and may be caused by diverse factors such as
those testified to by defendants pilot. However, knowing fully well
that even before the plaintiff boarded defendants Jumbo aircraft in
Frankfurt bound for Singapore, it has already incurred a delay of two
hours. Nevertheless, defendant did not take the trouble of informing
plaintiff, among its other passengers of such a delay and that in such
a case, the usual practice of defendant airline will be that they have
to stay overnight at their connecting airport; and much less did it
inquire from the plaintiff and the other 25 passengers bound for Manila
whether they are amenable to stay overnight in Singapore and to take
the connecting flight to Manila the next day. Such information should
have been given and inquiries made in Frankfurt because even the
defendant airlines manual provides that in case of urgency to reach
his or her destination on the same date, the head office of defendant
in Singapore must be informed by telephone or telefax so as the latter
may make certain arrangements with other airlines in Frankfurt to
bring such a passenger with urgent business to Singapore in such a
manner that the latter can catch up with her connecting flight such as
S-27/28 without spending the night in Singapore. . .23
The respondent was not remiss in conveying her apprehension about
the delay of the flight when she was still in Frankfurt. Upon the
assurance of petitioners personnel in Frankfurt that she will be
transported to Manila on the same date, she had every right to expect
that obligation fulfilled. She testified, to wit:
Q: Now, since you were late, when the plane that arrived from
Frankfurt was late, did you not make arrangements so that your flight
from Singapore to Manila would be adjusted?
A: I asked the lady at the ticket counter, the one who gave the
boarding pass in Frankfort and I asked her, Since my flight going to
Singapore would be late, what would happen to my Singapore-Manila
flight? and then she said, Dont worry, Singapore Airlines would be
responsible to bring you to Manila on the same date. And then they
have informed the name of the officer, or whatever, that our flight is
going to be late.
When a passenger contracts for a specific flight, he has a purpose in
making that choice which must be respected. This choice, once
exercised, must not be impaired by a breach on the part of the airline
without the latter incurring any liability. For petitioners failure to bring
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the respondent to her destination, as scheduled, we find the petitioner Petition denied, judgment affirmed.
clearly liable for the breach of its contract of carriage with the
Notes.In awarding moral damages for breach of contract of carriage,
respondent.
the breach must be wanton and deliberately injurious or the one
We are convinced that the petitioner acted in bad faith. Bad faith responsible acted fraudulently or with malice or bad faith. (Cervantes
means a breach of known duty through some motive of interest or ill vs. Court of Appeals, 304 SCRA 25 [1999])
will. Self-enrichment or fraternal interest, and not personal ill will, may
Within our jurisdiction, the Warsaw Convention can be applied or
well have been the motive; but it is malice nevertheless.26 Bad faith
ignored, depending on the peculiar facts presented by each case.
was imputed by the trial court when it found that the petitioners
(United Airlines vs. Uy, 318 SCRA 576 [1999])
employees at the Singapore airport did not accord the respondent the
attention and treatment allegedly warranted under the circumstances. o0o
The lady employee at the counter was unkind and of no help to her.
The respondent further alleged that without her threats of suing the
company, she was not allowed to use the companys phone to make
long distance calls to her mother in Manila. The male employee at the
counter where it says: Immediate Attention to Passengers with
Immediate Booking was rude to her when he curtly retorted that he
was busy attending to other passengers in line. The trial court
concluded that this inattentiveness and rudeness of petitioners
personnel to respondents plight was gross enough amounting to bad
faith. This is a finding that is generally binding upon the Court which
we find no reason to disturb.

Article 2232 of the Civil Code provides that in a contractual or quasi-

contractual relationship, exemplary damages may be awarded only if
the defendant had acted in a wanton, fraudulent, reckless, oppressive
or malevolent manner. In this case, petitioners employees acted in a
wanton, oppressive or malevolent manner. The award of exemplary
damages is, therefore, warranted in this case.

WHEREFORE, the Petition is DENIED. The Decision of the Court of

Appeals is AFFIRMED.

SO ORDERED.

Puno (Chairman), Quisumbing, Austria-Martinez and Tinga, JJ.,

concur.

358