G.R. No. 115381 December 23, 1994
Orbos, issued
KILUSANG MAYO UNO LABOR CENTER, petitioner,
vs.
HON. JESUS B. GARCIA, JR., the LAND TRANSPORTATION FRANCHISING
AND REGULATORY BOARD, and the PROVINCIAL BUS OPERATORS
ASSOCIATION OF THE PHILIPPINES, respondents.
Potenciano A. Flores for petitioner.
Robert Anthony C. Sison, Cesar B. Brillantes and Jose Z. Galsim for private
respondent.
Jose F. Miravite for movants.
KAPUNAN, J.:
Public utilities are privately owned and operated businesses whose
service are essential to the general public. They are enterprises which
specially cater to the needs of the public and conduce to their comfort
and convenience. As such, public utility services are impressed with
public interest and concern. The same is true with respect to the
business of common carrier which holds such a peculiar relation to the
public interest that there is superinduced upon it the right of public
regulation when private properties are affected with public interest,
hence, they cease to be juris privati only. When, therefore, 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.1
An abdication of the licensing and regulatory government agencies of
their functions as the instant petition seeks to show, is indeed
lamentable. Not only is it an unsound administrative policy but it is
inimical to public trust and public interest as well.
The instant petition for certiorari assails the constitutionality and validity
of certain memoranda, circulars and/or orders of the Department of
Transportation and Communications (DOTC) and the Land
Transportation Franchising and Regulatory Board LTFRB) 2 which, among
others, (a) authorize provincial bus and jeepney operators to increase or
decrease the prescribed transportation fares without application
therefor with the LTFRB and without hearing and approval thereof by
said agency in violation of Sec. 16(c) of Commonwealth Act No. 146, as
amended, otherwise known as the Public Service Act, and in derogation
of LTFRB's duty to fix and determine just and reasonable fares by
delegating that function to bus operators, and (b) establish a
presumption of public need in favor of applicants for certificates of
public convenience (CPC) and place on the oppositor the burden of
proving that there is no need for the proposed service, in patent
violation not only of Sec. 16(c) of CA 146, as amended, but also of Sec.
20(a) of the same Act mandating that fares should be "just and
reasonable." It is, likewise, violative of the Rules of Court which places
upon each party the burden to prove his own affirmative
allegations.3 The offending provisions contained in the questioned
issuances pointed out by petitioner, have resulted in the introduction
into our highways and thoroughfares thousands of old and smoke-
belching buses, many of which are right-hand driven, and have exposed
our consumers to the burden of spiraling costs of public transportation
without hearing and due process.
The following memoranda, circulars and/or orders are sought to be
nullified by the instant petition, viz: (a) DOTC Memorandum Order 90-
395, dated June 26, 1990 relative to the implementation of a fare range
scheme for provincial bus services in the country; (b) DOTC Department
Order No.
92-587, dated March 30, 1992, defining the policy framework on the
regulation of transport services; (c) DOTC Memorandum dated October
8, 1992, laying down rules and procedures to implement Department
Order No. 92-587; (d) LTFRB Memorandum Circular No. 92-009,
providing implementing guidelines on the DOTC Department Order No.
92-587; and (e) LTFRB Order dated March 24, 1994 in Case No. 94-3112.
The relevant antecedents are as follows:
On June 26, 1990; then Secretary of DOTC, Oscar M.
Memorandum Circular No. 90-395 to then LTFRB Chairman,
Remedios A.S. Fernando allowing provincial bus operators to charge
passengers rates within a range of 15% above and 15% below the
LTFRB official rate for a period of one (1) year. The text of the
memorandum order reads in full:
One of the policy reforms and measures that is in line with the
thrusts and the priorities set out in the Medium-Term Philippine
Development Plan (MTPDP) 1987 — 1992) is the liberalization of
regulations in the transport sector. Along this line, the Government
intends to move away gradually from regulatory policies and make
progress towards greater reliance on free market forces.
Based on several surveys and observations, bus companies are
already charging passenger rates above and below the official fare
declared by LTFRB on many provincial routes. It is in this context
that some form of liberalization on public transport fares is to be
tested on a pilot basis.
In view thereof, the LTFRB is hereby directed to immediately
publicize a fare range scheme for all provincial bus routes in country
(except those operating within Metro Manila). Transport Operators
shall be allowed to charge passengers within a range of fifteen
percent (15%) above and fifteen percent (15%) below the LTFRB
official rate for a period of one year.
Guidelines and procedures for the said scheme shall be prepared by
LTFRB in coordination with the DOTC Planning Service.
The implementation of the said fare range scheme shall start on 6
August 1990.
For compliance. (Emphasis ours.)
Finding the implementation of the fare range scheme "not legally
feasible," Remedios A.S. Fernando submitted the following
memorandum to Oscar M. Orbos on July 24, 1990, to wit:
With reference to DOTC Memorandum Order No. 90-395 dated 26
June 1990 which the LTFRB received on 19 July 1990, directing the
Board "to immediately publicize a fare range scheme for all
provincial bus routes in the country (except those operating within
Metro Manila)" that will allow operators "to charge passengers
within a range of fifteen percent (15%) above and fifteen percent
(15%) below the LTFRB official rate for a period of one year" the
undersigned is respectfully adverting the Secretary's attention to the
following for his consideration:
1. Section 16(c) of the Public Service Act prescribes the following for
the fixing and determination of rates — (a) the rates to be approved
should be proposed by public service operators; (b) there should be
a publication and notice to concerned or affected parties in the
territory affected; (c) a public hearing should be held for the fixing of
the rates; hence, implementation of the proposed fare range
scheme on August 6 without complying with the requirements of
the Public Service Act may not be legally feasible.
2. To allow bus operators in the country to charge fares fifteen
(15%) above the present LTFRB fares in the wake of the devastation,
death and suffering caused by the July 16 earthquake will not be
socially warranted and will be politically unsound; most likely public
criticism against the DOTC and the LTFRB will be triggered by the
untimely motu propio implementation of the proposal by the mere
expedient of publicizing the fare range scheme without calling a
public hearing, which scheme many as early as during the
Secretary's predecessor know through newspaper reports and
columnists' comments to be Asian Development Bank and World
Bank inspired.
3. More than inducing a reduction in bus fares by fifteen percent
(15%) the implementation of the proposal will instead trigger an
upward adjustment in bus fares by fifteen percent (15%) at a time
when hundreds of thousands of people in Central and Northern
Luzon, particularly in Central Pangasinan, La Union, Baguio City,
Nueva Ecija, and the Cagayan Valley are suffering from the devastation
and havoc caused by the recent earthquake.
4. In lieu of the said proposal, the DOTC with its agencies involved in
public transportation can consider measures and reforms in the industry
that will be socially uplifting, especially for the people in the areas
devastated by the recent earthquake.
In view of the foregoing considerations, the undersigned respectfully
suggests that the implementation of the proposed fare range scheme
this year be further studied and evaluated.
On December 5, 1990, private respondent Provincial Bus Operators
Association of the Philippines, Inc. (PBOAP) filed an application for fare
rate increase. An across-the-board increase of eight and a half centavos
(P0.085) per kilometer for all types of provincial buses with a minimum-
maximum fare range of fifteen (15%) percent over and below the
proposed basic per kilometer fare rate, with the said minimum-
maximum fare range applying only to ordinary, first class and premium
class buses and a fifty-centavo (P0.50) minimum per kilometer fare for
aircon buses, was sought.
On December 6, 1990, private respondent PBOAP reduced its applied
proposed fare to an across-the-board increase of six and a half (P0.065)
centavos per kilometer for ordinary buses. The decrease was due to the
drop in the expected price of diesel.
The application was opposed by the Philippine Consumers Foundation,
Inc. and Perla C. Bautista alleging that the proposed rates were
exorbitant and unreasonable and that the application contained no
allegation on the rate of return of the proposed increase in rates.
On December 14, 1990, public respondent LTFRB rendered a decision
granting the fare rate increase in accordance with the following schedule
of fares on a straight computation method, viz:
AUTHORIZED FARES
LUZON
MIN. OF 5 KMS. SUCCEEDING KM.
REGULAR P1.50 P0.37
STUDENT P1.15 P0.28
VISAYAS/MINDANAO
REGULAR P1.60 P0.375
STUDENT P1.20 P0.285
FIRST CLASS (PER KM.)
LUZON P0.385
VISAYAS/
MINDANAO P0.395
PREMIERE CLASS (PER KM.)
LUZON P0.395
VISAYAS/
MINDANAO P0.405
AIRCON (PER KM.) P0.415.4
On March 30, 1992, then Secretary of the Department of Transportation
and Communications Pete Nicomedes Prado issued Department Order
No.
92-587 defining the policy framework on the regulation of transport
services. The full text of the said order is reproduced below in view of
the importance of the provisions contained therein:
WHEREAS, Executive Order No. 125 as amended, designates the
Department of Transportation and Communications (DOTC) as the
primary policy, planning, regulating and implementing agency on
transportation;
WHEREAS, to achieve the objective of a viable, efficient, and dependable
transportation system, the transportation regulatory agencies under or
attached to the DOTC have to harmonize their decisions and adopt a
common philosophy and direction;
WHEREAS, the government proposes to build on the successful
liberalization measures pursued over the last five years and bring
the transport sector nearer to a balanced longer term regulatory
framework;
NOW, THEREFORE, pursuant to the powers granted by laws to the
DOTC, the following policies and principles in the economic
regulation of land, air, and water transportation services are hereby
adopted:
1. Entry into and exit out of the industry. Following the
Constitutional dictum against monopoly, no franchise holder shall
be permitted to maintain a monopoly on any route. A minimum of
two franchise holders shall be permitted to operate on any route.
The requirements to grant a certificate to operate, or certificate of
public convenience, shall be: proof of Filipino citizenship, financial
capability, public need, and sufficient insurance cover to protect the
riding public.
In determining public need, the presumption of need for a service
shall be deemed in favor of the applicant. The burden of proving
that there is no need for a proposed service shall be with the
oppositor(s).
In the interest of providing efficient public transport services, the
use of the "prior operator" and the "priority of filing" rules shall be
discontinued. The route measured capacity test or other similar
tests of demand for vehicle/vessel fleet on any route shall be used
only as a guide in weighing the merits of each franchise application
and not as a limit to the services offered.
Where there are limitations in facilities, such as congested road
space in urban areas, or at airports and ports, the use of demand
management measures in conformity with market principles may be
considered.
The right of an operator to leave the industry is recognized as a
business decision, subject only to the filing of appropriate notice
and following a phase-out period, to inform the public and to
minimize disruption of services.
2. Rate and Fare Setting. Freight rates shall be freed gradually from
government controls.  Passenger fares shall also be deregulated,
except for the lowest class of passenger service (normally third class
passenger transport) for which the government will fix indicative or
reference fares. Operators of particular services may fix their own
fares within a range 15% above and below the indicative or
reference rate.
Where there is lack of effective competition for services, or on
specific routes, or for the transport of particular commodities,
maximum mandatory freight rates or passenger fares shall be set
temporarily by the government pending actions to increase the level
of competition.
For unserved or single operator routes, the government shall
contract such services in the most advantageous terms to the public
and the government, following public bids for the services. The
advisability of bidding out the services or using other kinds of
incentives on such routes shall be studied by the government.
3. Special Incentives and Financing for Fleet Acquisition. As a matter
of policy, the government shall not engage in special financing and
incentive programs, including direct subsidies for fleet acquisition
and expansion. Only when the market situation warrants
government intervention shall programs of this type be considered.
Existing programs shall be phased out gradually.
The Land Transportation Franchising and Regulatory Board, the Civil
Aeronautics Board, the Maritime Industry Authority are hereby
directed to submit to the Office of the Secretary, within forty-five
(45) days of this Order, the detailed rules and procedures for the
Implementation of the policies herein set forth. In the formulation of
such rules, the concerned agencies shall be guided by the most recent
studies on the subjects, such as the Provincial Road Passenger Transport
Study, the Civil Aviation Master Plan, the Presidential Task Force on the
Inter-island Shipping Industry, and the Inter-island Liner Shipping Rate
Rationalization Study.
For the compliance of all concerned. (Emphasis ours)
On October 8, 1992, public respondent Secretary of the Department of
Transportation and Communications Jesus B. Garcia, Jr. issued a
memorandum to the Acting Chairman of the LTFRB suggesting swift
action on the adoption of rules and procedures to implement above-
quoted Department Order No. 92-587 that laid down deregulation and
other liberalization policies for the transport sector. Attached to the said
memorandum was a revised draft of the required rules and procedures
covering (i) Entry Into and Exit Out of the Industry and (ii) Rate and Fare
Setting, with comments and suggestions from the World Bank
incorporated therein. Likewise, resplendent from the said memorandum
is the statement of the DOTC Secretary that the adoption of the rules
and procedures is a pre-requisite to the approval of the Economic
Integration Loan from the World Bank.5
On February 17, 1993, the LTFRB issued Memorandum Circular
No. 92-009 promulgating the guidelines for the implementation of DOTC
Department Order No. 92-587. The Circular provides, among others, the
following challenged portions:
xxx xxx xxx
IV. Policy Guidelines on the Issuance of Certificate of Public Convenience.
The issuance of a Certificate of Public Convenience is determined by
public need. The presumption of public need for a service shall be
deemed in favor of the applicant, while burden of proving that there is
no need for the proposed service shall be the oppositor'(s).
xxx xxx xxx
V. Rate and Fare Setting
The control in pricing shall be liberalized to introduce price competition
complementary with the quality of service, subject to prior notice and
public hearing. Fares shall not be provisionally authorized without public
hearing.
A. On the General Structure of Rates
1. The existing authorized fare range system of plus or minus 15 per cent
for provincial buses and jeepneys shall be widened to 20% and -25% limit
in 1994 with the authorized fare to be replaced by an indicative or
reference rate as the basis for the expanded fare range.
2. Fare systems for aircon buses are liberalized to cover first class and
premier services.
xxx xxx xxx
(Emphasis ours).
Sometime in March, 1994, private respondent PBOAP, availing itself of
the deregulation policy of the DOTC allowing provincial bus operators to
collect plus 20% and minus 25% of the prescribed fare without first
having filed a petition for the purpose and without the benefit of a public
hearing, announced a fare increase of twenty (20%) percent of the
existing fares. Said increased fares were to be made effective on March
16, 1994.
On March 16, 1994, petitioner KMU filed a petition before the LTFRB
opposing the upward adjustment of bus fares.
On March 24, 1994, the LTFRB issued one of the assailed orders
dismissing the petition for lack of merit. The dispositive portion
reads:
PREMISES CONSIDERED, this Board after considering the arguments
of the parties, hereby DISMISSES FOR LACK OF MERIT the petition
filed in the above-entitled case. This petition in this case was
resolved with dispatch at the request of petitioner to enable it to
immediately avail of the legal remedies or options it is entitled
under existing laws.
SO ORDERED.6
Hence, the instant petition for certiorari with an urgent prayer for
issuance of a temporary restraining order.
The Court, on June 20, 1994, issued a temporary restraining order
enjoining, prohibiting and preventing respondents from
implementing the bus fare rate increase as well as the questioned
orders and memorandum circulars. This meant that provincial bus
fares were rolled back to the levels duly authorized by the LTFRB
prior to March 16, 1994. A moratorium was likewise enforced on the
issuance of franchises for the operation of buses, jeepneys, and
taxicabs.
Petitioner KMU anchors its claim on two (2) grounds. First, the
authority given by respondent LTFRB to provincial bus operators to
set a fare range of plus or minus fifteen (15%) percent, later
increased to plus twenty (20%) and minus twenty-five (-25%)
percent, over and above the existing authorized fare without having
to file a petition for the purpose, is unconstitutional, invalid and
illegal. Second, the establishment of a presumption of public need in
favor of an applicant for a proposed transport service without
having to prove public necessity, is illegal for being violative of the
Public Service Act and the Rules of Court.
In its Comment, private respondent PBOAP, while not actually
touching upon the issues raised by the petitioner, questions the
wisdom and the manner by which the instant petition was filed. It
asserts that the petitioner has no legal standing to sue or has no real
interest in the case at bench and in obtaining the reliefs prayed for.
In their Comment filed by the Office of the Solicitor General, public
respondents DOTC Secretary Jesus B. Garcia, Jr. and the LTFRB
asseverate that the petitioner does not have the standing to
maintain the instant suit. They further claim that it is within DOTC
and LTFRB's authority to set a fare range scheme and establish a
presumption of public need in applications for certificates of public
convenience.
We find the instant petition impressed with merit.
At the outset, the threshold issue of locus standi must be struck.
Petitioner KMU has the standing to sue.
The requirement of locus standi inheres from the definition of
judicial power. Section 1 of Article VIII of the Constitution provides:
xxx xxx xxx
Judicial power includes the duty of the courts of justice to settle
actual controversies involving rights which are legally demandable
and enforceable, and to determine whether or not there has been a
grave abuse of discretion amounting to lack or excess of jurisdiction
on the part of any branch or instrumentality of the Government.
In Lamb v. Phipps,7 we ruled that judicial power is the power to hear
and decide causes pending between parties who have the right to
sue in the courts of law and equity. Corollary to this provision is the
principle of locus standi of a party litigant. One who is directly
affected by and whose interest is immediate and substantial in the
controversy has the standing to sue. The rule therefore requires that
a party must show a personal stake in the outcome of the case or an
injury to himself that can be redressed by a favorable decision so as
to warrant an invocation of the court's jurisdiction and to justify the
exercise of the court's remedial powers in his behalf. 8
In the case at bench, petitioner, whose members had suffered and
continue to suffer grave and irreparable injury and damage from the
implementation of the questioned memoranda, circulars and/or orders,
has shown that it has a clear legal right that was violated and continues
to be violated with the enforcement of the challenged memoranda,
circulars and/or orders. KMU members, who avail of the use of buses,
trains and jeepneys everyday, are directly affected by the burdensome
cost of arbitrary increase in passenger fares. They are part of the millions
of commuters who comprise the riding public. Certainly, their rights
must be protected, not neglected nor ignored.
Assuming arguendo that petitioner is not possessed of the standing to
sue, this court is ready to brush aside this barren procedural infirmity
and recognize the legal standing of the petitioner in view of the
transcendental importance of the issues raised. And this act of liberality
is not without judicial precedent. As early as the Emergency Powers
Cases, this Court had exercised its discretion and waived the
requirement of proper party. In the recent case of Kilosbayan, Inc., et al.
v. Teofisto Guingona, Jr., et al.,9 we ruled in the same lines and
enumerated some of the cases where the same policy was adopted, viz:
. . . A party's standing before this Court is a procedural technicality which
it may, in the exercise of its discretion, set aside in view of the
importance of the issues raised. In the landmark  Emergency Powers
Cases, [G.R. No. L-2044 (Araneta v. Dinglasan); G.R. No. L-2756 (Araneta
v. Angeles); G.R. No. L-3054 (Rodriguez v. Tesorero de Filipinas); G.R. No.
L-3055 (Guerrero v. Commissioner of Customs); and G.R. No. L-3056
(Barredo v. Commission on Elections), 84 Phil. 368 (1949)], this Court
brushed aside this technicality because "the transcendental importance
to the public of these cases demands that they be settled promptly and
definitely, brushing aside, if we must, technicalities of procedure.
(Avelino vs. Cuenco, G.R. No. L-2621)." Insofar as taxpayers' suits are
concerned, this Court had declared that it "is not devoid of discretion as
to whether or not it should be entertained," (Tan v. Macapagal, 43 SCRA
677, 680 [1972]) or that it "enjoys an open discretion to entertain the
same or not." [Sanidad v. COMELEC, 73 SCRA 333 (1976)].
xxx xxx xxx
In line with the liberal policy of this Court on  locus standi, ordinary
taxpayers, members of Congress, and even association of planters, and
non-profit civic organizations were allowed to initiate and prosecute
actions before this court to question the constitutionality or validity of
laws, acts, decisions, rulings, or orders of various government agencies
or instrumentalities. Among such cases were those assailing the
constitutionality of (a) R.A. No. 3836 insofar as it allows retirement
gratuity and commutation of vacation and sick leave to Senators and
Representatives and to elective officials of both Houses of Congress
(Philippine Constitution Association, Inc. v. Gimenez, 15 SCRA 479
[1965]); (b) Executive Order No. 284, issued by President Corazon C.
Aquino on 25 July 1987, which allowed members of the cabinet, their
undersecretaries, and assistant secretaries to hold other government
offices or positions (Civil Liberties Union v. Executive Secretary, 194 SCRA
317 [1991]); (c) the automatic appropriation for debt service in the
General Appropriations Act (Guingona v. Carague, 196 SCRA 221 [1991];
(d) R.A. No. 7056 on the holding of desynchronized elections (Osmeña v.
Commission on Elections, 199 SCRA 750 [1991]); (e) P.D. No. 1869 (the
charter of the Philippine Amusement and Gaming Corporation) on the
ground that it is contrary to morals, public policy, and order (Basco v.
Philippine Amusement and Gaming Corp., 197 SCRA 52 [1991]); and (f)
R.A. No. 6975, establishing the Philippine National Police. (Carpio v.
Executive Secretary, 206 SCRA 290 [1992]).
Other cases where we have followed a liberal policy regarding  locus
standi include those attacking the validity or legality of (a) an order
allowing the importation of rice in the light of the prohibition imposed
by R.A. No. 3452 (Iloilo Palay and Corn Planters Association, Inc. v.
Feliciano, 13 SCRA 377 [1965]; (b) P.D. Nos. 991 and 1033 insofar as they
proposed amendments to the Constitution and P.D. No. 1031 insofar as
it directed the COMELEC to supervise, control, hold, and conduct the
referendum-plebiscite on 16 October 1976 (Sanidad v. Commission on
Elections, supra); (c) the bidding for the sale of the 3,179 square meters
of land at Roppongi, Minato-ku, Tokyo, Japan (Laurel v. Garcia, 187 SCRA
797 [1990]); (d) the approval without hearing by the Board of
Investments of the amended application of the Bataan
Petrochemical Corporation to transfer the site of its plant from
Bataan to Batangas and the validity of such transfer and the shift of
feedstock from naphtha only to naphtha and/or liquefied petroleum
gas (Garcia v. Board of Investments, 177 SCRA 374 [1989]; Garcia v.
Board of Investments, 191 SCRA 288 [1990]); (e) the decisions,
orders, rulings, and resolutions of the Executive Secretary, Secretary
of Finance, Commissioner of Internal Revenue, Commissioner of
Customs, and the Fiscal Incentives Review Board exempting the
National Power Corporation from indirect tax and duties (Maceda v.
Macaraig, 197 SCRA 771 [1991]); (f) the orders of the Energy
Regulatory Board of 5 and 6 December 1990 on the ground that the
hearings conducted on the second provisional increase in oil prices
did not allow the petitioner substantial cross-examination; (Maceda
v. Energy Regulatory Board, 199 SCRA 454 [1991]); (g) Executive
Order No. 478 which levied a special duty of P0.95 per liter of
imported oil products (Garcia v. Executive Secretary, 211 SCRA 219
[1992]); (h) resolutions of the Commission on Elections concerning
the apportionment, by district, of the number of elective members
of Sanggunians (De Guia vs. Commission on Elections, 208 SCRA 420
[1992]); and (i) memorandum orders issued by a Mayor affecting the
Chief of Police of Pasay City (Pasay Law and Conscience Union, Inc.
v. Cuneta, 101 SCRA 662 [1980]).
In the 1975 case of Aquino v. Commission on Elections (62 SCRA 275
[1975]), this Court, despite its unequivocal ruling that the
petitioners therein had no personality to file the petition, resolved
nevertheless to pass upon the issues raised because of the far-
reaching implications of the petition. We did no less in De Guia v.
COMELEC (Supra) where, although we declared that De Guia "does
not appear to have  locus standi, a standing in law, a personal or
substantial interest," we brushed aside the procedural infirmity
"considering the importance of the issue involved, concerning as it
does the political exercise of qualified voters affected by the
apportionment, and petitioner alleging abuse of discretion and
violation of the Constitution by respondent."
Now on the merits of the case.
On the fare range scheme.
Section 16(c) of the Public Service Act, as amended, reads:
Sec. 16. Proceedings of the Commission, upon notice and hearing. —
The Commission shall have power, upon proper notice and
hearing in accordance with the rules and provisions of this Act,
subject to the limitations and exceptions mentioned and saving
provisions to the contrary:
xxx xxx xxx
(c) To fix and determine individual or joint rates, tolls, charges,
classifications, or schedules thereof, as well as commutation,
mileage kilometrage, and other special rates which shall be
imposed, observed, and followed thereafter by any public
service: Provided, That the Commission may, in its discretion,
approve rates proposed by public services provisionally and without
necessity of any hearing; but it shall call a hearing thereon within
thirty days thereafter, upon publication and notice to the concerns
operating in the territory affected:  Provided, further, That in case
the public service equipment of an operator is used principally or
secondarily for the promotion of a private business, the net profits
of said private business shall be considered in relation with the
public service of such operator for the purpose of fixing the rates.
(Emphasis ours).
xxx xxx xxx
Under the foregoing provision, the Legislature delegated to the
defunct Public Service Commission the power of fixing the rates of
public services. Respondent LTFRB, the existing regulatory body
today, is likewise vested with the same under Executive Order No.
202 dated June 19, 1987. Section 5(c) of the said executive order
authorizes LTFRB "to determine, prescribe, approve and periodically
review and adjust, reasonable fares, rates and other related
charges, relative to the operation of public land transportation services
provided by motorized vehicles."
Such delegation of legislative power to an administrative agency is
permitted in order to adapt to the increasing complexity of modern life.
As subjects for governmental regulation multiply, so does the difficulty of
administering the laws. Hence, specialization even in legislation has
become necessary. Given the task of determining sensitive and delicate
matters as
route-fixing and rate-making for the transport sector, the responsible
regulatory body is entrusted with the power of subordinate legislation.
With this authority, an administrative body and in this case, the LTFRB,
may implement broad policies laid down in a statute by "filling in" the
details which the Legislature may neither have time or competence to
provide. However, nowhere under the aforesaid provisions of law are
the regulatory bodies, the PSC and LTFRB alike, authorized to delegate
that power to a common carrier, a transport operator, or other public
service.
In the case at bench, the authority given by the LTFRB to the provincial
bus operators to set a fare range over and above the authorized existing
fare, is illegal and invalid as it is tantamount to an undue delegation of
legislative authority.  Potestas delegata non delegari potest. What has
been delegated cannot be delegated. This doctrine is based on the
ethical principle that such a delegated power constitutes not only a right
but a duty to be performed by the delegate through the instrumentality
of his own judgment and not through the intervening mind of
another.10 A further delegation of such power would indeed constitute a
negation of the duty in violation of the trust reposed in the delegate
mandated to discharge it directly. 11 The policy of allowing the provincial
bus operators to change and increase their fares at will would result not
only to a chaotic situation but to an anarchic state of affairs. This would
leave the riding public at the mercy of transport operators who may
increase fares every hour, every day, every month or every year,
whenever it pleases them or whenever they deem it "necessary" to do
so. In  Panay Autobus Co. v. Philippine Railway Co.,12 where respondent
Philippine Railway Co. was granted by the Public Service Commission the
authority to change its freight rates at will, this Court categorically
declared that:
In our opinion, the Public Service Commission was not authorized by law
to delegate to the Philippine Railway Co. the power of altering its freight
rates whenever it should find it necessary to do so in order to meet the
competition of road trucks and autobuses, or to change its freight rates
at will, or to regard its present rates as maximum rates, and to fix lower
rates whenever in the opinion of the Philippine Railway Co. it would be to
its advantage to do so.
The mere recital of the language of the application of the Philippine
Railway Co. is enough to show that it is untenable. The Legislature has
delegated to the Public Service Commission the power of fixing the rates
of public services, but it has not authorized the Public Service
Commission to delegate that power to a common carrier or other public
service. The rates of public services like the Philippine Railway Co. have
been approved or fixed by the Public Service Commission, and any
change in such rates must be authorized or approved by the Public
Service Commission after they have been shown to be just and
reasonable. The public service may, of course, propose new rates, as the
Philippine Railway Co. did in case No. 31827, but it cannot lawfully make
said new rates effective without the approval of the Public Service
Commission, and the Public Service Commission itself cannot authorize a
public service to enforce new rates without the prior approval of said
rates by the commission. The commission must approve new rates when
they are submitted to it, if the evidence shows them to be just and
reasonable, otherwise it must disapprove them. Clearly, the commission
cannot determine in advance whether or not the new rates of the
Philippine Railway Co. will be just and reasonable, because it does not
know what those rates will be.
In the present case the Philippine Railway Co. in effect asked for
permission to change its freight rates at will. It may change them every
day or every hour, whenever it deems it necessary to do so in order to
meet competition or whenever in its opinion it would be to its
advantage. Such a procedure would create a most unsatisfactory state of
affairs and largely defeat the purposes of the public service
law.13 (Emphasis ours).
One veritable consequence of the deregulation of transport fares is
a compounded fare. If transport operators will be authorized to
impose and collect an additional amount equivalent to 20% over
and above the authorized fare over a period of time, this will unduly
prejudice a commuter who will be made to pay a fare that has been
computed in a manner similar to those of compounded bank
interest rates.
Picture this situation. On December 14, 1990, the LTFRB authorized
provincial bus operators to collect a thirty-seven (P0.37) centavo per
kilometer fare for ordinary buses. At the same time, they were
allowed to impose and collect a fare range of plus or minus 15%
over the authorized rate. Thus P0.37 centavo per kilometer
authorized fare plus P0.05 centavos (which is 15% of P0.37
centavos) is equivalent to P0.42 centavos, the allowed rate in 1990.
Supposing the LTFRB grants another five (P0.05) centavo increase
per kilometer in 1994, then, the base or reference for computation
would have to be P0.47 centavos (which is P0.42 + P0.05 centavos).
If bus operators will exercise their authority to impose an additional
20% over and above the authorized fare, then the fare to be
collected shall amount to P0.56 (that is, P0.47 authorized LTFRB rate
plus 20% of P0.47 which is P0.29). In effect, commuters will be
continuously subjected, not only to a double fare adjustment but to
a compounding fare as well. On their part, transport operators shall
enjoy a bigger chunk of the pie. Aside from fare increase applied for,
they can still collect an additional amount by virtue of the
authorized fare range. Mathematically, the situation translates into
the following:
Year** LTFRB authorized Fare Range Fare to be
rate*** collected per
kilometer
1990 P0.37 15% (P0.05) P0.42
1994 P0.42 + 0.05 = 0.47 20% (P0.09) P0.56
1998 P0.56 + 0.05 = 0.61 20% (P0.12) P0.73
2002 P0.73 + 0.05 = 0.78 20% (P0.16) P0.94
Moreover, rate making or rate fixing is not an easy task. It is a
delicate and sensitive government function that requires dexterity
of judgment and sound discretion with the settled goal of arriving at
a just and reasonable rate acceptable to both the public utility and
the public. Several factors, in fact, have to be taken into
consideration before a balance could be achieved. A rate should not
be confiscatory as would place an operator in a situation where he
will continue to operate at a loss. Hence, the rate should enable
public utilities to generate revenues sufficient to cover operational
costs and provide reasonable return on the investments. On the
other hand, a rate which is too high becomes discriminatory. It is
contrary to public interest. A rate, therefore, must be reasonable
and fair and must be affordable to the end user who will utilize the
services.
Given the complexity of the nature of the function of rate-fixing and
its far-reaching effects on millions of commuters, government must
not relinquish this important function in favor of those who would
benefit and profit from the industry. Neither should the requisite
notice and hearing be done away with. The people, represented by
reputable oppositors, deserve to be given full opportunity to be
heard in their opposition to any fare increase.
The present administrative procedure, 14 to our mind, already
mirrors an orderly and satisfactory arrangement for all parties
involved. To do away with such a procedure and allow just one
party, an interested party at that, to determine what the rate should
be, will undermine the right of the other parties to due process. The
purpose of a hearing is precisely to determine what a just and
reasonable rate is.15 Discarding such procedural and constitutional
right is certainly inimical to our fundamental law and to public
interest.
On the presumption of public need.
A certificate of public convenience (CPC) is an authorization granted
by the LTFRB for the operation of land transportation services for
public use as required by law. Pursuant to Section 16(a) of the Public
Service Act, as amended, the following requirements must be met
before a CPC may be granted, to wit: (i) the applicant must be a citizen of
the Philippines, or a corporation or co-partnership, association or joint-
stock company constituted and organized under the laws of the
Philippines, at least 60 per centum of its stock or paid-up capital must
belong entirely to citizens of the Philippines; (ii) the applicant must be
financially capable of undertaking the proposed service and meeting the
responsibilities incident to its operation; and (iii) the applicant must
prove that the operation of the public service proposed and the
authorization to do business will promote the public interest in a proper
and suitable manner. It is understood that there must be proper notice
and hearing before the PSC can exercise its power to issue a CPC.
While adopting in toto the foregoing requisites for the issuance of a CPC,
LTFRB Memorandum Circular No. 92-009, Part IV, provides for yet
incongruous and contradictory policy guideline on the issuance of a CPC.
The guidelines states:
The issuance of a Certificate of Public Convenience is determined by
public need. The presumption of public need for a service shall be
deemed in favor of the applicant, while the burden of proving that there
is no need for the proposed service shall be the oppositor's. (Emphasis
ours).
The above-quoted provision is entirely incompatible and inconsistent
with Section 16(c)(iii) of the Public Service Act which requires that before
a CPC will be issued, the applicant must prove by proper notice and
hearing that the operation of the public service proposed will promote
public interest in a proper and suitable manner. On the contrary, the
policy guideline states that the presumption of public need for a public
service shall be deemed in favor of the applicant. In case of conflict
between a statute and an administrative order, the former must prevail.
By its terms, public convenience or necessity generally means something
fitting or suited to the public need. 16 As one of the basic requirements for
the grant of a CPC, public convenience and necessity exists when the
proposed facility or service meets a reasonable want of the public and
supply a need which the existing facilities do not adequately supply. The
existence or
non-existence of public convenience and necessity is therefore a
question of fact that must be established by evidence, real and/or
testimonial; empirical data; statistics and such other means necessary, in
a public hearing conducted for that purpose. The object and purpose of
such procedure, among other things, is to look out for, and protect, the
interests of both the public and the existing transport operators.
While we recognize the authority of the DOTC and the LTFRB to
issue administrative orders to regulate the transport sector, we find
that they committed grave abuse of discretion in issuing DOTC
Department Order
No. 92-587 defining the policy framework on the regulation of
transport services and LTFRB Memorandum Circular No. 92-009
promulgating the implementing guidelines on DOTC Department
Order No. 92-587, the said administrative issuances being
amendatory and violative of the Public Service Act and the Rules of
Court. Consequently, we rule that the twenty (20%)  per centum fare
increase imposed by respondent PBOAP on March 16, 1994 without
the benefit of a petition and a public hearing is null and void and of
no force and effect. No grave abuse of discretion however was
committed in the issuance of DOTC Memorandum Order No. 90-395
and DOTC Memorandum dated October 8, 1992, the same being
merely internal communications between administrative officers.
WHEREFORE, in view of the foregoing, the instant petition is hereby
GRANTED and the challenged administrative issuances and orders,
namely: DOTC Department Order No. 92-587, LTFRB Memorandum
Circular
No. 92-009, and the order dated March 24, 1994 issued by
respondent LTFRB are hereby DECLARED contrary to law and invalid
insofar as they affect provisions therein (a) delegating to provincial
bus and jeepney operators the authority to increase or decrease the
duly prescribed transportation fares; and (b) creating a presumption
of public need for a service in favor of the applicant for a certificate
of public convenience and placing the burden of proving that there
is no need for the proposed service to the oppositor.
The Temporary Restraining Order issued on June 20, 1994 is hereby
MADE PERMANENT insofar as it enjoined the bus fare rate increase
granted under the provisions of the aforementioned administrative
circulars, memoranda and/or orders declared invalid.
No pronouncement as to costs.
SO ORDERED.

Verily, the power of a regulatory body to issue a CPC is founded on the

condition that after full-dress hearing and investigation, it shall find, as a
fact, that the proposed operation is for the convenience of the
public.17 Basic convenience is the primary consideration for which a CPC
is issued, and that fact alone must be consistently borne in mind. Also,
existing operators in subject routes must be given an opportunity to
offer proof and oppose the application. Therefore, an applicant must, at
all times, be required to prove his capacity and capability to furnish the
service which he has undertaken to
render. 18 And all this will be possible only if a public hearing were
conducted for that purpose.

Otherwise stated, the establishment of public need in favor of an

applicant reverses well-settled and institutionalized judicial, quasi-
judicial and administrative procedures. It allows the party who initiates
the proceedings to prove, by mere application, his affirmative
allegations. Moreover, the offending provisions of the LTFRB
memorandum circular in question would in effect amend the Rules of
Court by adding another disputable presumption in the enumeration of
37 presumptions under Rule 131, Section 5 of the Rules of Court. Such
usurpation of this Court's authority cannot be countenanced as only this
Court is mandated by law to promulgate rules concerning pleading,
practice and procedure. 19

Deregulation, while it may be ideal in certain situations, may not be ideal

at all in our country given the present circumstances. Advocacy of
liberalized franchising and regulatory process is tantamount to an
abdication by the government of its inherent right to exercise police
power, that is, the right of government to regulate public utilities for
protection of the public and the utilities themselves.

G.R. No. L-22545      November 28, 1969
BALDOMERO S. LUQUE AND OTHER PASSENGERS FROM THE PROVINCE
OF CAVITE AND BATANGAS; AND PUBLIC SERVICE OPERATORS
FILOMENA ABALOS, AND OTHERS, petitioners,
vs.
HON. ANTONIO J. VILLEGAS, MAYOR OF MANILA; MUNICIPAL BOARD
OF MANILA; MANILA POLICE DEPARTMENT; HON. ENRIQUE MEDINA,
PSC COMMISSIONER; PUBLIC SERVICE COMMISSION; SAULOG TRANSIT,
INC.; AND BATANGAS TRANSPORTATION CO., INC., respondents.
Samuel Bautista, Arturo J. Clemente, Emigdio Arcilla, Delfin Villanueva
and Baldomero S. Luque for petitioners.
Generoso O. Almario and Paulino S. Gueco for respondents Enrique
Medina and The Public Service Commission.
Graciano C. Regala and Associates for respondents Saulog Transit, Inc.
and Batangas Transportation Co., Inc.
Gregorio A. Ejercito and Felix C. Chavez for respondents Antonio J.
Villegas, et al.
SANCHEZ, J.:
Challenged as unconstitutional, illegal and unjust in these original
proceedings for certiorari and mandamus are two substantially identical
bus ban measures: (1) Ordinance No. 4986 of the City of Manila
approved on July 13, 1964, entitled "An Ordinance Rerouting Traffic on
Roads and Streets in the City of Manila, and for Other Purposes," and (2)
Administrative Order No. 1, series of 1964, dated February 7, 1964, and
Administrative Order No. 3, series of 1964, dated April 21, 1964, both
issued by Commissioner Enrique Medina (hereinafter referred to as the
Commissioner) of the Public Service Commission.
Original petitioners are passengers from the provinces of Cavite and
Batangas who ride on buses plying along the routes between the said
provinces and Manila. Other petitioners are public service operators
operating PUB and PUJ public service vehicles from the provinces with
terminals in Manila, while the rest are those allegedly operating PUB,
PUJ or AC motor vehicles operating within Manila and suburbs.
Ordinance 4986, amongst others, provides that:
RULE II. ENTRY POINTS AND ROUTES OF PROVINCIAL PASSENGER BUSES
AND JEEPNEYS
1. Provincial passenger buses and jeepneys (PUB and PUJ) shall be
allowed to enter Manila, but only through the following entry points and
routes, from 6:30 A.M. to 8:30 P.M. every day except Sundays and
holidays:
xxx      xxx      xxx
(m) Those coming from the south through F. B. Harrison shall proceed to
Mabini; turn right to Harrison Boulevard; turn right to Taft Avenue and
proceed towards Pasay City;
(n) Those coming from the south through Taft Avenue shall turn left at
Vito Cruz; turn right to Dakota; turn right to Harrison Boulevard; turn
right to Taft Avenue; thence proceed towards Pasay City;
Loading and unloading shall be allowed only at Harrison Boulevard,
between A. Mabini and Taft Avenue;
xxx      xxx      xxx
RULE III. FLEXIBLE SHUTTLE BUS SERVICE
1. In order that provincial commuters shall not be unduly
inconvenienced as a result of the implementation of these essential
traffic control regulations, operators of provincial passenger buses
shall be allowed to provide buses to shuttle their passengers from
their respective entry control points, under the following conditions:
(a) Each provincial bus company or firm shall be allowed such
number of shuttle buses proportionate to the number of units
authorized it, the ratio to be determined by the Chief, Traffic Control
Bureau, based on his observations as to the actual needs of
commuters and traffic volume; in no case shall the allocation be
more than one shuttle bus for every 10 authorized units, or fraction
thereof.
(b) No shuttle bus shall enter Manila unless the same shall have
been provided with identification stickers as required under Rule IV
hereof, which shall be furnished and allocated by the Chief, Traffic
Control Bureau to each provincial bus company or firm.
(c) All such shuttle buses are not permitted to load or unload or to
pick and/or drop passengers along the way but must do so only in
the following places:
xxx      xxx      xxx
(3) South
(a) Harrison Boulevard, between Dakota and Taft Avenue.
Administrative Order No. 1, series of 1964, issued by the
Commissioner, in part, provides:
2. All public utilities including jeepneys heretofore authorized to
operate from the City of Manila to any point in Luzon, beyond the
perimeter of Greater Manila, shall carry the words "For Provincial
Operation" in bold and clear types on both sides or on one side and
at the back of the vehicle and must not be less than 12 inches in
dimension. All such vehicles marked "For Provincial Operation" are
authorized to operate outside the perimeter of Greater Manila in
accordance with their respective certificates of public convenience,
and are not authorized to enter or to operate beyond the boundary
line fixed in our order of March 12, 1963 and July 22, 1963, with the
exception of those vehicles authorized to carry their provincial
passengers thru the boundary line up to their Manila terminal which
shall be identified by a sticker signed and furnished by the PSC and
by the Mayors of the affected Cities and municipalities, and which
shall be carried on a prominent place of the vehicle about the upper
middle part of the windshield.
xxx      xxx      xxx
All such public utility vehicles authorized by this Order to enter the
City of Manila and to carry their passengers thru the boundary line,
are not permitted to load or unload or to pick and/or drop
passengers along the way, but must do so only in the following
places:
xxx      xxx      xxx
c. Vehicles coming from the SOUTH may load or unload at the San
Andres-Taft Rotonda; at Plaza Lawton or at the Corner of Harrison
and Mabini Streets near the Manila Zoo.
On April 21, 1964, the Commissioner issued Administrative Order
No. 3 which resolved motions for reconsideration (of the first
administrative order — Administrative Order No. 1, series of 1964)
filed by several affected operators. This order (No. 3), amongst
others, states that only 10% of the provincial buses and jeepneys
shall be allowed to enter Manila; however, provincial buses and
jeepneys "operating within a radius of 50 kms. from Manila City Hall
and whose business is more on the Manila end than on the
provincial end are given fifteen per cent to prevent a dislocation of
their business; provided that operators having less than five units
are not permitted to cross the boundary and shall operate
exclusively on the provincial end." This order also allocated the
number of units each provincial bus operator is allowed to operate
within the City of Manila.
1. On the main, nothing new there is in the present petition. For, the
validity of Ordinance 4986 and the Commissioner's Administrative Order
No. 1, series of 1964, here challenged, has separately passed judicial
tests in two cases brought before this Court.
In Lagman vs. City of Manila (June 30, 1966), 17 SCRA 579, petitioner
Lagman was an operator of PU auto trucks with fixed routes and regular
terminals for the transportation of passengers and freight on the Bocaue
(Bulacan) — Parañaque (Rizal) line via Rizal Avenue, Plaza Goiti, Sta. Cruz
Bridge, Plaza Lawton, P. Burgos, Taft Avenue, and Taft Avenue Extension,
Manila. He sought to prohibit the City of Manila, its officers and agents,
from enforcing Ordinance 4986. His ground was that said ordinance was
unconstitutional, illegal, ultra vires and null and void. He alleged,
amongst others, that (1) "the power conferred upon respondent City of
Manila, under said Section 18 (hh) of Republic Act No. 409, as amended,
does not include the right to enact an ordinance such as the one in
question, which has the effect of amending or modifying a certificate of
public convenience granted by the Public Service Commission, because
any amendment or modification of said certificate is solely vested by law
in the latter governmental agency, and only after notice and hearing
(Sec. 16 [m], Public Service Act); but since this procedure was not
adopted or followed by respondents in enacting the disputed ordinance,
the same is likewise illegal and null and void"; (2) "the enforcement of
said ordinance is arbitrary, oppressive and unreasonable because the
city streets from which he had been prevented to operate his buses are
the cream of his business"; and (3) "even assuming that Ordinance No.
4986 is valid, it is only the Public Service Commission which can require
compliance with its provisions (Sec. 17[j], Public Service Act), but since
its implementation is without the sanction or approval of the
Commission, its enforcement is also unauthorized and illegal." This
Court, in a decision impressive because of its unanimity, upheld the
ordinance. Speaking through Mr. Justice J.B.L. Reyes, we ruled:
First, as correctly maintained by respondents, Republic Act No. 409, as
amended, otherwise known as the Revised Charter of the City of Manila,
is a special law and of later enactment than Commonwealth Act No. 548
and the Public Service Law (Commonwealth Act No. 146, as amended),
so that even if conflict exists between the provisions of the former act
and the latter acts, Republic Act No. 409 should prevail over both
Commonwealth Acts Nos. 548 and 146. In Cassion vs. Banco Nacional
Filipino, 89 Phil. 560, 561, this Court said:
". . . for with or without an express enactment it is a familiar rule of
statutory construction that to the extent of any necessary repugnancy
between a general and a special law or provision, the latter will control
the former without regard to the respective dates of passage."
It is to be noted that Commonwealth Act No. 548 does not confer
an exclusive power or authority upon the Director of Public Works,
subject to the approval of the Secretary of Public Works and
Communications, to promulgate rules and regulations relating to the use
of and traffic on national roads or streets. This being the case, section 18
(hh) of the Manila Charter is deemed enacted as an exception to the
provisions of Commonwealth Act No. 548.
xxx      xxx      xxx
Second, the same situation holds true with respect to the provision of
the Public Service Act. Although the Public Service Commission is
empowered, under its Section 16(m), to amend, modify or revoke
certificates of public convenience after notice and hearing, yet there is
no provision, specific or otherwise, which can be found in this statute
(Commonwealth Act No. 146) vesting power in the Public Service
Commission to superintend, regulate, or control the streets of
respondent City or suspend its power to license or prohibit the
occupancy thereof. On the other hand, this right or authority, as
hereinabove concluded is conferred upon respondent City of Manila. The
power vested in the Public Service Commission under Section 16(m) is,
therefore, subordinate to the authority granted to respondent City,
under said section 18 (hh). . . .
xxx      xxx      xxx
That the powers conferred by law upon the Public Service
Commission were not designed to deny or supersede the regulatory
power of local governments over motor traffic, in the streets subject
to their control is made evident by section 17 (j) of the Public
Service Act (Commonwealth Act No. 146) that provides as follows:
"SEC. 17. Proceedings of Commission without previous hearing. —
The Commission shall have power, without previous hearing, subject
to established limitations and exceptions, and saving provisions to
the contrary:
xxx      xxx      xxx.
(j) To require any public service to comply with the laws of the
Philippines, and with any provincial resolution or municipal
ordinance relating thereto, and to conform to the duties imposed
upon it thereby, or by the provisions of its own charter, whether
obtained under any general or special law of the Philippines."
(Emphasis supplied)
The petitioner's contention that, under this section, the respective
ordinances of the City can only be enforced by the Commission
alone is obviously unsound. Subsection (j) refers not only to
ordinances but also to "the laws of the Philippines," and it is plainly
absurd to assume that even laws relating to public services are to
remain a dead letter without the  placet of the Commission; and the
section makes no distinction whatever between enforcement of
laws and that of municipal ordinances.
The very fact, furthermore, that the Commission is empowered, but
not required, to demand compliance with apposite laws and
ordinances proves that the Commission's powers are merely
supplementary to those of state organs, such as the police, upon
which the enforcement of laws primarily rests.
Third, the implementation of the ordinance in question cannot be
validly assailed as arbitrary, oppressive and unreasonable. Aside
from the fact that there is no evidence to substantiate this charge it
is not disputed that petitioner has not been totally banned or
prohibited from operating all his buses, he having been allowed to
operate two (2) "shuttle" buses within the city limits. 1
The second case for certiorari and prohibition, filed by same
petitioner in the first case just mentioned, is entitled "Lagman vs.
Medina" (December 24, 1968), 26 SCRA 442. Put at issue there is the
validity of the Commissioner's Administrative Order No. 1, series of
1964, also disputed herein. It was there alleged, inter alia, that "the
provisions of the bus ban had not been incorporated into his
certificate of public convenience"; "to be applicable to a grantee of
such certificate subsequently to the issuance of the order
establishing the ban, there should be a decision, not merely by the
Commissioner, but, also, by the PSC, rendered after due notice and
hearing, based upon material changes in the facts and
circumstances under which the certificate had been granted"; and
"the ban is unfair, unreasonable and oppressive." We dismissed this
petition and upheld the validity of the questioned order of the
Commissioner. On the aforequoted issues, Chief Justice Roberto
Concepcion, speaking for an equally unanimous Court, said —
Petitioner's claim is devoid of merit, inasmuch as:
1. The terms and conditions of the bus ban established by the
Commissioner are substantially identical to those contained in
Ordinance No. 4986 of the City of Manila 'rerouting traffic on roads
and streets' therein, approved on July 30, 1964. In G.R. No. L-23305,
entitled "Lagman vs. City of Manila, petitioner herein assailed the
validity of said ordinance," upon the ground, among others, that it
tended to amend or modify certificates of public conveniences
issued by the PSC; that the power therein exercised by the City of
Manila belongs to the PSC; and that the ordinance is arbitrary,
oppressive and unreasonable. In a decision promulgated on June 30,
1966, this Court rejected this pretense and dismissed Lagman's
petition in said case.
2. Petitioner's certificate of public convenience, like all other similar
certificates, was issued subject to the condition that operators shall
observe and comply [with] . . . all the rules and regulations of the
Commission relative to PUB service," and the contested orders — issued
pursuant to Sections 13 (a), 16 (g) and 17 (a) of Commonwealth Act 146,
as amended — partake of the nature of such rules and regulations.
xxx      xxx      xxx
4. The purpose of the ban — to minimize the "traffic problem in the City
of Manila" and the "traffic congestion, delays and even accidents"
resulting from the free entry into the streets of said City and the
operation "around said streets, loading and unloading or picking up
passengers and cargoes" of PU buses in great "number and size" — and
the letter and spirit of the contested orders are inconsistent with the
exclusion of Lagman or of those granted certificates of public
convenience subsequently to the issuance of said orders from the
operation thereof.
xxx      xxx      xxx
9. The theory to the effect that, to be valid, the aforementioned orders
must be issued by the PSC, not merely by its Commissioner, and only
after due notice and hearing, is predicated upon the premise that the
bus ban operates as an amendment of petitioner's certificate of public
convenience, which is false, and was not sustained by this Court in its
decision in G.R. No. L-23305, which is binding upon Lagman, he being the
petitioner in said case.2
The issues raised by Lagman in the two cases just mentioned were
likewise relied upon by the petitioners in the case now before us. But for
the fact that the present petitioners raised other issues, we could have
perhaps written  finis to the present case. The obvious reason is that we
find no cause or reason why we should break away from our ruling in
said cases. Petitioners herein, however, draw our attention to points
which are not specifically ruled upon in the Lagman cases heretofore
mentioned.
2. Petitioners' other gripe against Ordinance 4986 is that it destroys
vested rights of petitioning public services to operate inside Manila and
to proceed to their respective terminals located in the City. They would
want likewise to nullify said ordinance upon the averment that it impairs
the vested rights of petitioning bus passengers to be transported directly
to downtown Manila.
It has been said that a vested right is one which is "fixed, unalterable, or
irrevocable."3 Another definition would give vested right the connotation
that it is "absolute, complete, and unconditional, to the exercise of
which no obstacle exists . . . ."4 Petitioners' citation from 16 C.J.S., pp.
642-643,5 correctly expresses the view that when the "right to
enjoyment, present or prospective, has become the property of some
particular person or persons as a present interest," that right is a vested
right. Along the same lines is our jurisprudential concept. Thus,
in Benguet Consolidated Mining Co. vs. Pineda,6 we put forth the thought
that a vested right is "some right or interest in the property which has
become fixed and established, and is no longer open to doubt or
controversy"; it is an "immediate fixed right of present and future
enjoyment"; it is to be contra-distinguished from a right that is
"expectant or contingent." The Benguet case also quoted from 16 C.J.S.,
Sec. 215, pp. 642-643, as follows: "Rights are vested when the right to
enjoyment, present or prospective, has become the property of some
particular person or persons as a present interest. The right must be
absolute, complete, and unconditional, independent of a contingency,
and a mere expectancy of future benefit, or a contingent interest in
property founded on anticipated continuance of existing laws, does not
constitute a vested right. So, inchoate rights which have not been acted
on are not vested."7
Of course, whether a right is vested or not, much depends upon the
environmental facts.8
Contending that they possess valid and subsisting certificates of public
convenience, the petitioning public services aver that they acquired a
vested right to operate their public utility vehicles to and from Manila as
appearing in their said respective certificates of public convenience.
Petitioner's argument pales on the face of the fact that the very
nature of a certificate of public convenience is at cross purposes
with the concept of vested rights. To this day, the accepted view, at
least insofar as the State is concerned, is that "a certificate of public
convenience constitutes neither a franchise nor a contract, confers
no property right, and is a mere license or privilege." 9 The holder of
such certificate does not acquire a property right in the route
covered thereby. Nor does it confer upon the holder any proprietary
right or interest of franchise in the public highways. 10 Revocation of
this certificate deprives him of no vested right. 11 Little reflection is
necessary to show that the certificate of public convenience is
granted with so many strings attached. New and additional burdens,
alteration of the certificate, and even revocation or annulment
thereof is reserved to the State.
We need but add that the Public Service Commission, a government
agency vested by law with "jurisdiction, supervision, and control
over all public services and their franchises, equipment, and other
properties"12 is empowered, upon proper notice and hearing,
amongst others: (1) "[t]o amend, modify or revoke at any time a
certificate issued under the provisions of this Act [Commonwealth
Act 146, as amended], whenever the facts and circumstances on the
strength of which said certificate was issued have been
misrepresented or materially changed"; 13 and (2) "[t]o suspend or
revoke any certificate issued under the provisions of this Act
whenever the holder thereof has violated or wilfully and
contumaciously refused to comply with any order, rule or regulation
of the Commission or any provision of this Act: Provided, That the
Commission, for good cause, may prior to the hearing suspend for a
period not to exceed thirty days any certificate or the exercise of
any right or authority issued or granted under this Act by order of
the Commission, whenever such step shall in the judgment of the
Commission be necessary to avoid serious and irreparable damage
or inconvenience to the public or to private
interests."14 Jurisprudence echoes the rule that the Commission is
authorized to make reasonable rules and regulations for the
operation of public services and to enforce them. 15 In reality, all
certificates of public convenience issued are subject to the condition
that all public services "shall observe and comply [with] ... all the
rules and regulations of the Commission relative to" the service. 16 To
further emphasize the control imposed on public services, before
any public service can "adopt, maintain, or apply practices or
measures, rules, or regulations to which the public shall be subject
in its relation with the public service," the Commission's approval
must first be had.17
And more. Public services must also reckon with provincial
resolutions and municipal ordinances relating to the operation of
public utilities within the province or municipality concerned. The
Commission can require compliance with these provincial
resolutions or municipal ordinances. 18
Illustrative of the lack of "absolute, complete, and unconditional"
right on the part of public services to operate because of the
delimitations and restrictions which circumscribe the privilege
afforded a certificate of public convenience is the following from the
early (March 31, 1915) decision of this Court in Fisher vs. Yangco
Steamship Company, 31 Phil. 1, 18-19:
Common carriers exercise a sort of public office, and have duties to
perform in which the public is interested. Their business is,
therefore, affected with a public interest, and is subject of public
regulation. (New Jersey Steam Nav. Co. vs. Merchants Banks, 6 How.
344, 382; Munn vs. Illinois, 94 U.S. 113, 130.) Indeed, this right of
regulation is so far beyond question that it is well settled that the
power of the state to exercise legislative control over railroad
companies and other carriers 'in all respects necessary to protect
the public against danger, injustice and oppression' may be
exercised through boards of commissioners. (New York, etc. R. Co.
vs. Bristol, 151 U.S. 556, 571; Connecticut, etc. R. Co. vs. Woodruff,
153 U.S. 689.).
xxx      xxx      xxx
. . . . The right to enter the public employment as a common carrier
and to offer one's services to the public for hire does not carry with
it the right to conduct that business as one pleases, without regard to
the interests of the public and free from such reasonable and just
regulations as may be prescribed for the protection of the public from
the reckless or careless indifference of the carrier as to the public
welfare and for the prevention of unjust and unreasonable
discrimination of any kind whatsoever in the performance of the carrier's
duties as a servant of the public.
Business of certain kinds, including the business of a common carrier,
holds such a peculiar relation to the public interest that there is
superinduced upon it the right of public regulation. (Budd vs. New York,
143 U.S. 517, 533.) When private property is "affected with a public
interest it ceases to be juris privati only." Property becomes clothed with
a public interest when used in a manner to make it of public
consequence and affect the community at large. "When, therefore, 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 be
controlled by the public for the common good, to the extent of the
interest he has thus created. He may withdraw his grant by discontinuing
the use, but so long as he maintains the use he must submit to control."
(Munn vs. Illinois, 94 U.S. 113; Georgia R. & Bkg. Co. vs. Smith, 128 U.S.
174; Budd vs. New York, 143 U.S. 517; Louisville, etc. Ry. Co. vs.
Kentucky, 161 U.S. 677, 695.).
The foregoing, without more, rejects the vested rights theory espoused
by petitioning bus operators.
Very little need be added to show that neither do bus passengers have a
vested right to be transported directly into the City of Manila. It would
suffice if a statement be here made that the alleged right of bus
passengers, to a great extent, is dependent upon the manner public
services are allowed to operate within a given area. Because, regulations
imposed upon public services directly affect the bus passengers. It is
quite obvious that if buses were allowed to load or unload solely at
specific or designated places, a passenger cannot legally demand or
insist that the operator load or unload him at a place other than those
specified or designated.
It is no argument to support the vested rights theory that petitioning
passengers have enjoyed the privilege of having been continuously
transported even before the outbreak of the war directly without
transfer from the provinces to places inside Manila up to the respective
bus terminals in said City. Times have changed. Vehicles have increased
in number. Traffic congestion has moved from bad to worse, from
tolerable to critical. The number of people who use the thoroughfares
has multiplied.
the streets of said City and the operation 'around said streets,
loading and unloading or picking up passengers and cargoes' of PU
buses in great 'number and size.'"26
Police power in both was properly exercised.
4. We find no difficulty in saying that, contrary to the assertion
made by petitioners, Ordinance 4986 is not a class legislation.
It is true that inter-urban buses are allowed to enter the City of
Manila, while provincial buses are not given the same privilege,
although they are allowed shuttle service into the City of Manila.
There is no point, however, in placing provincial buses on the same
level as the inter-urban buses plying to and from Manila and its
suburban towns and cities (Makati, Pasay, Mandaluyong, Caloocan,
San Juan, Quezon City and Navotas). Inter-urban buses are used for
transporting passengers only. Provincial buses are used for
passengers and freight. Provincial buses, because of the freight or
baggage which the passengers usually bring along with them, take
longer time to load or unload than inter-urban buses. Provincial
buses generally travel along national highways and provincial roads,
cover long distances, have fixed trip schedules. Provincial buses are
greater in size and weight than inter-urban buses. The routes of
inter-urban buses are short, covering contiguous municipalities and
cities only. Inter-urban buses mainly use city and municipal streets.
These distinctions generally hold true between provincial passenger
jeepneys and inter-urban passenger jeepneys.
No unjustified discrimination there is under the law.
The obvious inequality in treatment is but the result flowing from
the classification made by the ordinance and does not trench upon
the equal protection clause.27 The least that can be said is that
persons engaged in the same business "are subjected to different
restrictions or are held entitled to different privileges under the
same conditions."28
Neither is there merit to the charge that private vehicles are being
unjustifiably favored over public vehicles. Private vehicles are not
geared for profit, usually have but one destination. Public vehicles
are operated primarily for profit and for this reason are continually
operated to make the most of time. Public and private vehicles
belong to different classes. Differences in class beget differences in
privileges. And petitioners have no cause to complain.

3. It is because of all of these that it has become necessary for the police
power of the State to step in, not for the benefit of the few, but for the
benefit of the many. Reasonable restrictions have to be provided for the
use of the thoroughfares. 19 The operation of public services may be
subjected to restraints and burdens, in order to secure the general
comfort.20 No franchise or right can be availed of to defeat the proper
exercise of police power 21 — the authority "to enact rules and
regulations for the promotion of the general welfare." 22 So it is, that by
the exercise of the police power, which is a continuing one, a business
lawful today may in the future, because of the changed situation, the
growth of population or other causes, become a menace to the public
health and welfare, and be required to yield to the public good." 23 Public
welfare, we have said, lies at the bottom of any regulatory measure
designed "to relieve congestion of traffic, which is, to say the least, a
menace to public safety."24 As a corollary, measures calculated to
promote the safety and convenience of the people using the
thoroughfares by the regulation of vehicular traffic, present a proper
subject for the exercise of police power. 25
The principles just enunciated have long been recognized. In Ichong
vs. Hernandez,29 our ruling is that the equal protection of the law
clause "does not demand absolute equality amongst residents; it
merely requires that all persons shall be treated alike, under like
circumstances and conditions both as to privileges conferred and
liabilities enforced"; and, that the equal protection clause "is not
infringed by legislation which applies only to those persons falling
within a specified class, if it applies alike to all persons within such
class, and reasonable grounds exist for making a distinction
between those who fall within such class and those who do not." 30
FOR THE REASONS GIVEN, the petition herein is denied.
Costs against petitioners. So ordered.

Both Ordinance 4986 and the Commissioner's administrative orders fit

into the concept of promotion of the general welfare. Expressive of the
purpose of Ordinance 4986 is Section 1 thereof, thus — "As a positive
measure to relieve the critical traffic congestion in the City of Manila,
which has grown to alarming and emergency proportions, and in the
best interest of public welfare and convenience, the following traffic
rules and regulations are hereby promulgated." Along the same lines,
the bus ban instituted by the Commissioner has for its object "to
minimize the 'traffic problem in the City of Manila' and the 'traffic
congestion, delays and even accidents' resulting from the free entry into

G.R. No. L-8095             March 31, 1915
F.C. FISHER, plaintiff,
vs.
YANGCO STEAMSHIP COMPANY, J.S. STANLEY, as Acting Collector of
Customs of the Philippine Islands, IGNACIO VILLAMOR, as Attorney-
General of the Philippine Islands, and W.H. BISHOP, as prosecuting
attorney of the city of Manila, respondents.
Haussermann, Cohn and Fisher for plaintiff.
Office of the Solicitor-General Harvey for respondents.
CARSON, J.:
The real question involved in these proceedings is whether the refusal of
the owners and officers of a steam vessel, duly licensed to engage in the
coastwise trade of the Philippine Islands and engaged in that trade as a
common carrier, to accept for carriage "dynamite, powder or other
explosives" from any and all shippers who may offer such explosives for
carriage can be held to be a lawful act without regard to any question as
to the conditions under which such explosives are offered to carriage, or
as to the suitableness of the vessel for the transportation of such
explosives, or as to the possibility that the refusal to accept such articles
of commerce in a particular case may have the effect of subjecting any
person or locality or the traffic in such explosives to an undue,
unreasonable or unnecessary prejudice or discrimination.
Summarized briefly, the complaint alleges that plaintiff is a stockholder
in the Yangco Steamship Company, the owner of a large number of
steam vessels, duly licensed to engage in the coastwise trade of the
Philippine Islands; that on or about June 10, 1912, the directors of the
company adopted a resolution which was thereafter ratified and
affirmed by the shareholders of the company, "expressly declaring and
providing that the classes of merchandise to be carried by the company
in its business as a common carrier do not include dynamite, powder or
other explosives, and expressly prohibiting the officers, agents and
servants of the company from offering to carry, accepting for carriage
said dynamite, powder or other explosives;" that thereafter the
respondent Acting Collector of Customs demanded and required of the
company the acceptance and carriage of such explosives; that he has
refused and suspended the issuance of the necessary clearance
documents of the vessels of the company unless and until the company
consents to accept such explosives for carriage; that plaintiff is advised
and believes that should the company decline to accept such explosives
for carriage, the respondent Attorney-General of the Philippine Islands
and the respondent prosecuting attorney of the city of Manila intend to
institute proceedings under the penal provisions of sections 4, 5, and 6
of Act No. 98 of the Philippine Commission against the company, its
managers, agents and servants, to enforce the requirements of the
Acting Collector of Customs as to the acceptance of such explosives for
carriage; that notwithstanding the demands of the plaintiff stockholder,
the manager, agents and servants of the company decline and refuse to
cease the carriage of such explosives, on the ground that by reason of
the severity of the penalties with which they are threatened upon failure
to carry such explosives, they cannot subject themselves to "the ruinous
consequences which would inevitably result" from failure on their part
to obey the demands and requirements of the Acting Collector of
Customs as to the acceptance for carriage of explosives; that plaintiff
believes that the Acting Collector of Customs erroneously construes the
provisions of Act No. 98 in holding that they require the company to
accept such explosives for carriage notwithstanding the above
mentioned resolution of the directors and stockholders of the company,
and that if the Act does in fact require the company to carry such
explosives it is to that extent unconstitutional and void; that
notwithstanding this belief of complainant as to the true meaning of the
Act, the questions involved cannot be raised by the refusal of the
company or its agents to comply with the demands of the Acting
Collector of Customs, without the risk of irreparable loss and
damage resulting from his refusal to facilitate the documentation of
the company's vessels, and without assuming the company to test
the questions involved by refusing to accept such explosives for
carriage.
The prayer of the complaint is as follows:
Wherefore your petitioner prays to this honorable court as follows:
First. That to the due hearing of the above entitled action be issued
a writ of prohibition perpetually restraining the respondent Yangco
Steamship Company, its appraisers, agents, servants or other
representatives from accepting to carry and from carrying, in
steamers of said company dynamite, powder or other explosive
substance, in accordance with the resolution of the board of
directors and of the shareholders of said company.
Second. That a writ of prohibition be issued perpetually enjoining
the respondent J.S. Stanley as Acting Collector of Customs of the
Philippine Islands, his successors, deputies, servants or other
representatives, from obligating the said Yangco Steamship
Company, by any means whatever, to carry dynamite, powder or
other explosive substance.
Third. That a writ of prohibition be issued perpetually enjoining the
respondent Ignacio Villamor as Attorney-General of the Philippine
Islands, and W.H. Bishop as prosecuting attorney of the city of
Manila, their deputies representatives or employees, from accusing
the said Yangco Steamship Company, its officers, agents or servants,
of the violation of Act No. 98 by reason of the failure or omission of
the said company to accept for carriage out to carry dynamite
powder or other explosive.
Fourth. That the petitioner be granted such other remedy as may be
meet and proper.
To this complaint the respondents demurred, and we are of opinion
that the demurrer must be sustained, on the ground that the
complaint does not set forth facts sufficient to constitute a cause of
action.
It will readily be seen that plaintiff seeks in these proceedings to
enjoin the steamship company from accepting for carriage on any of
its vessels, dynamite, powder or other explosives, under any
conditions whatsoever; to prohibit the Collector of Customs and the
prosecuting officers of the government from all attempts to compel
the company to accept such explosives for carriage on any of its
vessels under any conditions whatsoever; and to prohibit these
officials from any attempt to invoke the penal provisions of Act No.
98, in any case of a refusal by the company or its officers so to do;
and this without regard to the conditions as to safety and so forth
under which such explosives are offered for carriage, and without
regard also to any question as to the suitableness for the
transportation of such explosives of the particular vessel upon
which the shipper offers them for carriage; and further without
regard to any question as to whether such conduct on the part of
the steamship company and its officers involves in any instance an
undue, unnecessary or unreasonable discrimination to the prejudice
of any person, locality or particular kind of traffic.
There are no allegations in the complaint that for some special and
sufficient reasons all or indeed any of the company's vessels are
unsuitable for the business of transporting explosives; or that
shippers have declined or will in future decline to comply with such
reasonable regulations and to take such reasonable precautions as
may be necessary and proper to secure the safety of the vessels of
the company in transporting such explosives. Indeed the contention
of petitioner is that a common carrier in the Philippine Islands may
decline to accept for carriage any shipment of merchandise of a
class which it expressly or impliedly declines to accept from all
shippers alike, because as he contends "the duty of a common
carrier to carry for all who offer arises from the public profession he
has made, and limited by it."
In support of this contention counsel cites for a number of English and
American authorities, discussing and applying the doctrine of the
common law with reference to common carriers. But it is unnecessary
now to decide whether, in the absence of statute, the principles on
which the American and English cases were decided would be applicable
in this jurisdiction. The duties and liabilities of common carriers in this
jurisdiction are defined and fully set forth in Act No. 98 of the Philippine
Commission, and until and unless that statute be declared invalid or
unconstitutional, we are bound by its provisions.
Sections 2, 3 and 4 of the Act are as follows:
SEC. 2. It shall be unlawful for any common carrier engaged in the
transportation of passengers or property as above set forth to make or
give any unnecessary or unreasonable preference or advantage to any
particular person, company, firm, corporation or locality, or any
particular kind of traffic in any respect whatsoever, or to subject any
particular person, company, firm, corporation or locality, or any
particular kind of traffic, to undue or unreasonable prejudice or
discrimination whatsoever, and such unjust preference or discrimination
is also hereby prohibited and declared to be unlawful.
SEC. 3. No common carrier engaged in the carriage of passengers or
property as aforesaid shall, under any pretense whatsoever, fail or
refuse to receive for carriage, and as promptly as it is able to do so
without discrimination, to carry any person or property offering for
carriage, and in the order in which such persons or property are offered
for carriage, nor shall any such common carrier enter into any
arrangement, contract or agreement with any other person or
corporation whereby the latter is given an exclusive or preferential or
monopolize the carriage any class or kind of property to the exclusion or
partial exclusion of any other person or persons, and the entering into
any such arrangement, contract or agreement, under any form or
pretense whatsoever, is hereby prohibited and declared to be unlawful.
SEC. 4. Any willful violation of the provisions of this Act by any common
carrier engaged in the transportation of passengers or property as
hereinbefore set forth is hereby declared to be punishable by a fine not
exceeding five thousand dollars money of the United States, or by
imprisonment not exceeding two years, or both, within the discretion of
the court.
The validity of this Act has been questioned on various grounds, and it is
vigorously contended that in so far as it imposes any obligation on a
common carrier to accept for carriage merchandise of a class which he
makes no public profession to carry, or which he has expressly or
impliedly announced his intention to decline to accept for carriage from
all shippers alike, it is ultra vires, unconstitutional and void.
We may dismiss without extended discussion any argument or
contention as to the invalidity of the statute based on alleged absurdities
inherent in its provisions or on alleged unreasonable or impossible
requirements which may be read into it by a strained construction of its
terms.
We agree with counsel for petitioner that the provision of the Act which
prescribes that, "No common carrier ... shall, under any pretense
whatsoever, fail or refuse to receive for carriage ... to carry any person or
property offering for carriage," is not to be construed in its literal sense
and without regard to the context, so as to impose an imperative duty
on all common carriers to accept for carriage, and to carry all and any
kind of freight which may be offered for carriage without regard to the
facilities which they may have at their disposal. The legislator could not
have intended and did not intend to prescribe that a common carrier
running passenger automobiles for hire must transport coal in his
machines; nor that the owner of a tank steamer, expressly constructed
in small watertight compartments for the carriage of crude oil must
accept common carrier must accept and carry contraband articles, such
as opium, morphine, cocaine, or the like, the mere possession of which is
declared to be a criminal offense; nor that common carriers must accept
eggs offered for transportation in paper parcels or any merchandise
whatever do defectively packed as to entail upon the company
unreasonable and unnecessary care or risks.
Read in connection with its context this, as well as all the other
mandatory and prohibitory provisions of the statute, was clearly
intended merely to forbid failures or refusals to receive persons or
property for carriage involving any "unnecessary or unreasonable
preference or advantage to any particular person, company, firm,
corporation, or locality, or any particular kind of traffic in any
respect whatsoever," or which would "subject any particular person,
company, firm, corporation or locality, or any particular kind of
traffic to any undue or unreasonable prejudice or discrimination
whatsoever."
The question, then, of construing and applying the statute, in cases
of alleged violations of its provisions, always involves a
consideration as to whether the acts complained of had the effect of
making or giving an "unreasonable or unnecessary preference or
advantage" to any person, locality or particular kind of traffic, or of
subjecting any person, locality, or particular kind of traffic to any
undue or unreasonable prejudice or discrimination. It is very clear
therefore that the language of the statute itself refutes any
contention as to its invalidity based on the alleged
unreasonableness of its mandatory or prohibitory provisions.
So also we may dismiss without much discussion the contentions as
to the invalidity of the statute, which are based on the alleged
excessive severity of the penalties prescribed for violation of its
provisions. Upon general principles it is peculiarly and exclusively
within the province of the legislator to prescribe the pains and
penalties which may be imposed upon persons convicted of
violations of the laws in force within his territorial jurisdiction. With
the exercise of his discretion in this regard where it is alleged that
excessive fines or cruel and unusual punishments have been
prescribed, and even in such cases the courts will not presume to
interfere in the absence of the clearest and most convincing
argument and proof in support of such contentions.
(Weems vs. United States, 217 U.S., 349; U.S. vs. Pico, 18 Phil. Rep.,
386.) We need hardly add that there is no ground upon which to
rest a contention that the penalties prescribed in the statute under
consideration are either excessive or cruel and unusual, in the sense
in which these terms are used in the organic legislation in force in
the Philippine Islands.
But it is contended that on account of the penalties prescribed the
statute should be held invalid upon the principles announced in Ex
parte Young (209 U.S., 123, 147, 148); Cotting vs. Goddard (183 U.S.,
79, 102); Mercantile Trust Co. vs. Texas Co. (51 Fed., 529); Louisville
Ry. vs.  McCord (103 Fed., 216); Cons. Gas Co. vs. Mayer (416 Fed.,
150). We are satisfied however that the reasoning of those cases is
not applicable to the statute under consideration. The principles
announced in those decisions are fairly indicated in the following
citations found in petitioner's brief:
But when the legislature, in an effort to prevent any inquiry of the
validity of a particular statute, so burdens any challenge thereof in
the courts that the party affected is necessarily constrained to
submit rather than take the chances of the penalties imposed, then
it becomes a serious question whether the party is not deprived of
the equal protection of the laws. (Cotting vs. Goddard, 183 U. S., 79,
102.)
It may therefore be said that when the penalties for disobedience
are by fines so enormous and imprisonment so severe as to
intimidate the company and its officers from resorting to the courts
to test the validity of the legislation, the result is the same as if the
law in terms prohibited the company from seeking judicial
construction of laws which deeply affect its rights.
It is urged that there is no principle upon which to base the claim
that a person is entitled to disobey a statute at least once, for the
purpose of testing its validity, without subjecting himself to the
penalties for disobedience provided by the statute in case it is valid.
This is not an accurate statement of the case. Ordinarily a law
creating offenses in the nature of misdemeanors or felonies relates
to a subject over which the jurisdiction of the legislature is complete
in any event. In the case, however, of the establishment of certain
rates without any hearing, the validity of such rates necessarily
depends upon whether they are high enough to permit at least
some return upon the investment (how much it is not now
necessary to state), and an inquiry as to that fact is a proper subject
of judicial investigation. If it turns out that the rates are too low for that
purpose, then they are illegal. Now, to impose upon a party interested
the burden of obtaining a judicial decision of such a question (no prior
hearing having been given) only upon the condition that, if unsuccessful,
he must suffer imprisonment and pay fines, as provided in these acts, is,
in effect, to close up all approaches to the courts, and thus prevent any
hearing upon the question whether the rates as provided by the acts are
not too low, and therefore invalid. The distinction is obvious between a
case where the validity of the act depends upon the existence of a fact
which can be determined only after investigation of a very complicated
and technical character, and the ordinary case of a statute upon a
subject requiring no such investigation, and over which the jurisdiction
of the legislature is complete in any event.
We hold, therefore, that the provisions of the acts relating to the
enforcement of the rates, either for freight or passengers, by imposing
such enormous fines and possible imprisonment as a result of an
unsuccessful effort to test the validity of the laws themselves, are
unconstitutional on their face, without regard to the question of the
insufficiency of those rates. (Ex parte Young, 209 U.S., 123 147, 148.)
An examination of the general provisions of our statute, of the
circumstances under which it was enacted, the mischief which it sought
to remedy and of the nature of the penalties prescribed for violations of
its terms convinces us that, unlike the statutes under consideration in
the above cited cases, its enactment involved no attempt to prevent
common carriers "from resorting to the courts to test the validity of the
legislation;" no "effort to prevent any inquiry" as to its validity. It
imposes no arbitrary obligation upon the company to do or to refrain
from doing anything. It makes no attempt to compel such carriers to do
business at a fixed or arbitrarily designated rate, at the risk of separate
criminal prosecutions for every demand of a higher or a different rate. Its
penalties can be imposed only upon proof of "unreasonable,"
"unnecessary" and "unjust" discriminations, and range from a maximum
which is certainly not excessive for willful, deliberate and contumacious
violations of its provisions by a great and powerful corporation, to a
minimum which may be a merely nominal fine. With so wide a range of
discretion for a contention on the part of any common carrier that it or
its officers are "intimidated from resorting to the courts to test the
validity" of the provisions of the statute prohibiting such "unreasonable,"
"unnecessary" and "unjust" discriminations, or to test in any particular
case whether a given course of conduct does in fact involve such
discrimination. We will presume, for the purpose of declaring the statute
invalid, that there is so real a danger that the Courts of First Instance and
this court on appeal will abuse the discretion thus conferred upon us, as
to intimidate any common carrier, acting in good faith, from resorting to
the courts to test the validity of the statute. Legislative enactments,
penalizing unreasonable discriminations, unreasonable restraints of
trade, and unreasonable conduct in various forms of human activity are
so familiar and have been so frequently sustained in the courts, as to
render extended discussion unnecessary to refute any contention as to
the invalidity of the statute under consideration, merely it imposes upon
the carrier the obligation of adopting one of various courses of conduct
open to it, at the risk of incurring a prescribed penalty in the event that
the course of conduct actually adopted by it should be held to have
involved an unreasonable, unnecessary or unjust discrimination.
Applying the test announced in Ex parte Young, supra, it will be seen that
the validity of the Act does not depend upon "the existence of a fact
which can be determined only after investigation of a very complicated
and technical character," and that "the jurisdiction of the legislature"
over the subject with which the statute deals "is complete in any event."
There can be no real question as to the plenary power of the legislature
to prohibit and to penalize the making of undue, unreasonable and
unjust discriminations by common carriers to the prejudice of any
person, locality or particular kind of traffic. (See Munn vs. Illinois, 94 U.S.,
113, and other cases hereinafter cited in support of this proposition.)
Counsel for petitioner contends also that the statute, if construed so as
to deny the right of the steamship company to elect at will whether or
not it will engage in a particular business, such as that of carrying
explosives, is unconstitutional "because it is a confiscation of property, a
taking of the carrier's property without due process of law," and because
it deprives him of his liberty by compelling him to engage in business
against his will. The argument continues as follows:
To require of a carrier, as a condition to his continuing in said business,
that he must carry anything and every thing is to render useless the
facilities he may have for the carriage of certain lines of freight. It
would be almost as complete a confiscation of such facilities as if
the same were destroyed. Their value as a means of livelihood
would be utterly taken away. The law is a prohibition to him to
continue in business; the alternative is to get out or to go into some
other business — the same alternative as was offered in the case of
the Chicago & N.W. Ry. vs. Dey (35 Fed. Rep., 866, 880), and which
was there commented on as follows:
"Whatever of force there may be in such arguments, as applied to
mere personal property capable of removal and use elsewhere, or in
other business, it is wholly without force as against railroad
corporations, so large a proportion of whose investment is in the
soil and fixtures appertaining thereto, which cannot be removed.
For a government, whether that government be a single sovereign
or one of the majority, to say to an individual who has invested his
means in so laudable an enterprise as the construction of a railroad,
one which tends so much to the wealth and prosperity of the
community, that, if he finds that the rates imposed will cause him to
do business at a loss, he may quit business, and abandon that road,
is the very irony of despotism. Apples of Sodom were fruit of joy in
comparison. Reading, as I do, in the preamble of the Federal
Constitution, that it was ordained to "establish justice," I can never
believe that it is within the property of an individual invested in and
used for a purpose in which even the Argus eyes of the police power
can see nothing injurious to public morals, public health, or the
general welfare. I read also in the first section of the bill of rights of
this state that "all men are by nature free and equal, and have
certain inalienable rights, among which are those of enjoying and
defending life and liberty, acquiring, possessing, and protecting
property, and pursuing and obtaining safety and happiness;" and I
know that, while that remains as the supreme law of the state, no
legislature can directly or indirectly lay its withering or destroying
hand on a single dollar invested in the legitimate business of
transportation." (Chicago & N.W. Ry. vs. Dey, 35 Fed. Rep., 866,
880.)
It is manifest, however, that this contention is directed against a
construction of the statute, which, as we have said, is not warranted
by its terms. As we have already indicated, the statute does not
"require of a carrier, as a condition to his continuing in said
business, that he must carry anything and everything," and thereby
"render useless the facilities he may have for the carriage of certain
lines of freight." It merely forbids failures or refusals to receive
persons or property for carriage which have the effect of giving an
"unreasonable or unnecessary preference or advantage" to any
person, locality or particular kind of traffic, or of subjecting any
person, locality or particular kind of traffic to any undue or
unreasonable prejudice or discrimination.
Counsel expressly admits that the statute, "as a prohibition against
discrimination is a fair, reasonable and valid exercise of
government," and that "it is necessary and proper that such
discrimination be prohibited and prevented," but he contends that
"on the other hand there is no reasonable warrant nor valid excuse
for depriving a person of his liberty by requiring him to engage in
business against his will. If he has a rolling boat, unsuitable and
unprofitable for passenger trade, he may devote it to lumber
carrying. To prohibit him from using it unless it is fitted out with
doctors and stewards and staterooms to carry passengers would be
an invalid confiscation of this property. A carrier may limit his
business to the branches thereof that suit his convenience. If his
wagon be old, or the route dangerous, he may avoid liability for loss
of passengers' lives and limbs by carrying freight only. If his vehicles
require expensive pneumatic tires, unsuitable for freight
transportation, ha may nevertheless carry passengers. The only
limitation upon his action that it is competent for the governing
authority to impose is to require him to treat all alike. His limitations
must apply to all, and they must be established limitations. He
cannot refuse to carry a case of red  jusi on the ground that he has
carried for others only  jusi that he was green, or blue, or black. But
he can refuse to carry red jusi, if he has publicly professed such a
limitation upon his business and held himself out as unwilling to
carry the same for anyone."
To this it is sufficient answer to say that there is nothing in the
statute which would deprive any person of his liberty "by requiring
him to engage in business against his will." The prohibitions of the
statute against undue, unnecessary or unreasonable regulations which
the legislator has seen fit to prescribe for the conduct of the business in
which the carrier is engaged of his own free will and accord. In so far as
the self-imposed limitations by the carrier upon the business conducted
by him, in the various examples given by counsel, do not involve an
unreasonable or unnecessary discrimination the statute would not
control his action in any wise whatever. It operates only in cases
involving such unreasonable or unnecessary preferences or
discriminations. Thus in the hypothetical case suggested by the
petitioner, a carrier engaged in the carriage of green, blue or black jusi,
and duly equipped therefor would manifestly be guilty of "giving an
unnecessary and unreasonable preference to a particular kind of traffic"
and of subjecting to "an undue and reasonable prejudice a particular
kind of traffic," should he decline to carry red jusi, to the prejudice of a
particular shipper or of those engaged in the manufacture of that kind
of  jusi, basing his refusal on the ground of "mere whim or caprice" or of
mere personal convenience. So a public carrier of passengers would not
be permitted under this statute to absolve himself from liability for a
refusal to carry a Chinaman, a Spaniard, an American, a Filipino, or
a  mestizo by proof that from "mere whim or caprice or personal
scruple," or to suit his own convenience, or in the hope of increasing his
business and thus making larger profits, he had publicly announced his
intention not to carry one or other of these classes of passengers.
The nature of the business of a common carrier as a public employment
is such that it is clearly within the power of the state to impose such just
and reasonable regulations thereon in the interest of the public as the
legislator may deem proper. Of course such regulations must not have
the effect of depriving an owner of his property without due process of
law, nor of confiscating or appropriating private property without just
compensation, nor of limiting or prescribing irrevocably vested rights or
privileges lawfully acquired under a charter or franchise. But aside from
such constitutional limitations, the determination of the nature and
extent of the regulations which should be prescribed rests in the hands
of the legislator.
Common carriers exercise a sort of public office, and have duties to
perform in which the public is interested. Their business is, therefore,
affected with a public interest, and is subject of public regulation. (New
Jersey Steam Nav. Co. vs. Merchants Bank, 6 How., 344, 382;
Munn vs. Illinois, 94 U.S., 113, 130.) Indeed, this right of regulation is so
far beyond question that it is well settled that the power of the state to
exercise legislative control over railroad companies and other carriers "in
all respects necessary to protect the public against danger, injustice and
oppression" may be exercised through boards of commissioners. (New
York etc. R. Co. vs. Bristol, 151 U.S., 556, 571; Connecticut etc. R.
Co. vs. Woodruff, 153 U.S., 689.)
Regulations limiting of passengers the number of passengers that may
be carried in a particular vehicle or steam vessel, or forbidding the
loading of a vessel beyond a certain point, or prescribing the number and
qualifications of the personnel in the employ of a common carrier, or
forbidding unjust discrimination as to rates, all tend to limit and restrict
his liberty and to control to some degree the free exercise of his
discretion in the conduct of his business. But since the Granger cases
were decided by the Supreme Court of the United States no one
questions the power of the legislator to prescribe such reasonable
regulations upon property clothed with a public interest as he may deem
expedient or necessary to protect the public against danger, injustice or
oppression. (Munn vs. Illinois, 94 U.S., 113, 130; Chicago etc. R.
Co. vs. Cutts, 94 U.S., 155; Budd vs. New York, 143 U.S., 517;
Cotting vs. Goddard, 183 U.S., 79.) The right to enter the public
employment as a common carrier and to offer one's services to the
public for hire does not carry with it the right to conduct that business as
one pleases, without regard to the interest of the public and free from
such reasonable and just regulations as may be prescribed for the
protection of the public from the reckless or careless indifference of the
carrier as to the public welfare and for the prevention of unjust and
unreasonable discrimination of any kind whatsoever in the performance
of the carrier's duties as a servant of the public.
Business of certain kinds, including the business of a common carrier,
holds such a peculiar relation to the public interest that there is
superinduced upon it the right of public regulation. (Budd vs. New York,
143 U.S., 517, 533.) When private property is "affected with a public
interest it ceases to be juris privati only." Property becomes clothed with
a public interest when used in a manner to make it of public
consequence and affect the community at large. "When, therefore,
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 be controlled by the public for the common
good, to the extent of the interest he has thus created. He may
withdraw his grant by discontinuing the use, but so long as he
maintains the use he must submit to control." (Munn vs. Illinois, 94
U.S., 113; Georgia R. & Bkg. Co. vs. Smith, 128 U.S., 174;
Budd vs. New York, 143 U.S., 517; Louisville etc. Ry. Co. vs. Kentucky,
161 U.S., 677, 695.)
Of course this power to regulate is not a power to destroy, and
limitation is not the equivalent of confiscation. Under pretense of
regulating fares and freight the state can not require a railroad
corporation to carry persons or property without reward. Nor can it
do that which in law amounts to a taking of private property for
public use without just compensation, or without due process of
law. (Chicago etc. R. Co. vs. Minnesota, 134 U.S., 418; Minneapolis
Eastern R. Co. vs. Minnesota, 134 U.S., 467.) But the judiciary ought
not to interfere with regulations established and palpably
unreasonable as to make their enforcement equivalent to the taking
of property for public use without such compensation as under all
the circumstances is just both to the owner and to the public, that
is, judicial interference should never occur unless the case presents,
clearly and beyond all doubt, such a flagrant attack upon the rights
of property under the guise of regulations as to compel the court to
say that the regulation in question will have the effect to deny just
compensation for private property taken for the public use. (Chicago
etc. R. Co. vs. Wellman, 143 U.S., 339; Smyth vs. Ames, 169 U.S.,
466, 524; Henderson Bridge Co. vs. Henderson City, 173 U.S., 592,
614.)
Under the common law of England it was early recognized that
common carriers owe to the public the duty of carrying indifferently
for all who may employ them, and in the order in which application
is made, and without discrimination as to terms. True, they were
allowed to restrict their business so as to exclude particular classes
of goods, but as to the kinds of property which the carrier was in the
habit of carrying in the prosecution of his business he was bound to
serve all customers alike (State vs. Cincinnati etc. R. Co., 47 Ohio St.,
130, 134, 138; Louisville etc. Ry. Co. vs. Quezon City Coal Co., 13 Ky.
L. Rep., 832); and it is to be observed in passing that these common
law rules are themselves regulations controlling, limiting and
prescribing the conditions under which common carriers were
permitted to conduct their business. (Munn vs. Illinois, 94 U. S., 113,
133.)
It was found, in the course of time, that the correction of abuses
which had grown up with the enormously increasing business of
common carriers necessitated the adoption of statutory regulations
controlling the business of common carriers, and imposing severe
and drastic penalties for violations of their terms. In England, the
Railway Clauses Consolidation Act was enacted in 1845, the Railway
and Canal Traffic Act in 1854, and since the passage of those Acts
much additional legislation has been adopted tending to limit and
control the conduct of their business by common carriers. In the
United States, the business of common carriers has been subjected
to a great variety of statutory regulations. Among others Congress
enacted "The Interstate Commerce Act" (1887) and its
amendments, and the Elkins Act as amended (1906); and most if not
all of the States of the Union have adopted similar legislation
regulating the business of common carriers within their respective
jurisdictions. Unending litigation has arisen under these statutes and
their amendments, but nowhere has the right of the state to
prescribe just and reasonable regulations controlling and limiting
the conduct of the business of common carriers in the public
interest and for the general welfare been successfully challenged,
though of course there has been wide divergence of opinion as to
the reasonableness, the validity and legality of many of the
regulations actually adopted.
The power of the Philippine legislator to prohibit and to penalize all
and any unnecessary or unreasonable discriminations by common
carriers may be maintained upon the same reasoning which justified
the enactment by the Parliament of England and the Congress of the
United States of the above mentioned statutes prohibiting and
penalizing the granting of certain preferences and discriminations in
those countries. As we have said before, we find nothing confiscatory or
unreasonable in the conditions imposed in the Philippine statute upon
the business of common carriers. Correctly construed they do not force
him to engage in any business his will or to make use of his facilities in a
manner or for a purpose for which they are not reasonably adapted. It is
only when he offers his facilities as a common carrier to the public for
hire, that the statute steps in and prescribes that he must treat all alike,
that he may not pick and choose which customer he will serve, and,
specifically, that he shall not make any undue or unreasonable
preferences or discriminations whatsoever to the prejudice not only of
any person or locality but also of any particular kind of traffic.
The legislator having enacted a regulation prohibiting common carriers
from giving unnecessary or unreasonable preferences or advantages to
any particular kind of traffic or subjecting any particular kind of traffic to
any undue or unreasonable prejudice or discrimination whatsoever, it is
clear that whatever may have been the rule at the common law,
common carriers in this jurisdiction cannot lawfully decline to accept a
particular class of goods for carriage, to the prejudice of the traffic in
those goods, unless it appears that for some sufficient reason the
discrimination against the traffic in such goods is reasonable and
necessary. Mere whim or prejudice will not suffice. The grounds for the
discrimination must be substantial ones, such as will justify the courts in
holding the discrimination to have been reasonable and necessary under
all circumstances of the case.
The prayer of the petition in the case at bar cannot be granted unless we
hold that the refusal of the defendant steamship company to accept for
carriage on any of its vessels "dynamite, gunpowder or other explosives"
would in no instance involve a violation of the provisions of this statute.
There can be little doubt, however, that cases may and will arise wherein
the refusal of a vessel "engaged in the coastwise trade of the Philippine
Islands as a common carrier" to accept such explosives for carriage
would subject some person, company, firm or corporation, or locality, or
particular kind of traffic to a certain prejudice or discrimination. Indeed it
cannot be doubted that the refusal of a "steamship company, the owner
of a large number of vessels" engaged in that trade to receive for
carriage any such explosives on any of its vessels would subject the
traffic in such explosives to a manifest prejudice and discrimination. The
only question to be determined therefore is whether such prejudice or
discrimination might in any case prove to be undue, unnecessary or
unreasonable.
This of course is, in each case, a question of fact, and we are of the
opinion that the facts alleged in the complaint are not sufficient to
sustain a finding in favor of the contentions of the petitioner. It is not
alleged in the complaint that "dynamite, gunpowder and other
explosives" can in no event be transported with reasonable safety on
board steam vessels engaged in the business of common carriers. It is
not alleged that all, or indeed any of the defendant steamship company's
vessels are unsuited for the carriage of such explosives. It is not alleged
that the nature of the business in which the steamship company is
engaged is such as to preclude a finding that a refusal to accept such
explosives on any of its vessels would subject the traffic in such
explosives to an undue and unreasonable prejudice and discrimination.
Plaintiff's contention in this regard is as follows:
In the present case, the respondent company has expressly and publicly
renounced the carriage of explosives, and expressly excluded the same
terms from the business it conducts. This in itself were sufficient, even
though such exclusion of explosives were based on no other ground than
the mere whim, caprice or personal scruple of the carrier. It is
unnecessary, however, to indulge in academic discussion of a moot
question, for the decision not a carry explosives rests on substantial
grounds which are self-evident.
We think however that the answer to the question whether such a
refusal to carry explosives involves an unnecessary or unreasonable
preference or advantage to any person, locality or particular kind of
traffic or subjects any person, locality or particular to traffic to an undue
or unreasonable prejudice and discrimination is by no means "self-
evident," and that it is a question of fact to be determined by the
particular circumstances of each case.
The words "dynamite, powder or other explosives" are broad
enough to include matches, and other articles of like nature, and
may fairly be held to include also kerosene oil, gasoline and similar
products of a highly inflammable and explosive character. Many of
these articles of merchandise are in the nature of necessities in any
country open to modern progress and advancement. We are not
fully advised as to the methods of transportation by which they are
made commercially available throughout the world, but certain it is
that dynamite, gunpowder, matches, kerosene oil and gasoline are
transported on many vessels sailing the high seas. Indeed it is a
matter of common knowledge that common carriers throughout the
world transport enormous quantities of these explosives, on both
land and sea, and there can be little doubt that a general refusal of
the common carriers in any country to accept such explosives for
carriage would involve many persons, firms and enterprises in utter
ruin, and would disastrously affect the interests of the public and
the general welfare of the community.
It would be going to far to say that a refusal by a steam vessel
engaged in the business of transporting general merchandise as a
common carrier to accept for carriage a shipment of matches, solely
on the ground of the dangers incident to the explosive quality of this
class of merchandise, would not subject the traffic in matches to an
unnecessary, undue or unreasonable prejudice and discrimination
without proof that for some special reason the particular vessel is
not fitted to carry articles of that nature. There may be and
doubtless are some vessels engaged in business as common carriers
of merchandise, which for lack of suitable deck space or storage
rooms might be justified in declining to carry kerosene oil, gasoline,
and similar products, even when offered for carriage securely
packed in cases; and few vessels are equipped to transport those
products in bulk. But in any case of a refusal to carry such products
which would subject any person, locality or the traffic in such
products would be necessary to hear evidence before making an
affirmative finding that such prejudice or discrimination was or was
not unnecessary, undue or unreasonable. The making of such a
finding would involve a consideration of the suitability of the vessel
for the transportation of such products ; the reasonable possibility
of danger or disaster resulting from their transportation in the form
and under the conditions in which they are offered for carriage; the
general nature of the business done by the carrier and, in a word, all
the attendant circumstances which might affect the question of the
reasonable necessity for the refusal by the carrier to undertake the
transportation of this class of merchandise.
But it is contended that whatever the rule may be as to other
explosives, the exceptional power and violence of dynamite and
gunpowder in explosion will always furnish the owner of a vessel
with a reasonable excuse for his failure or refusal to accept them for
carriage or to carry them on board his boat. We think however that
even as to dynamite and gunpowder we would not be justified in
making such a holding unaided by evidence sustaining the
proposition that these articles can never be carried with reasonable
safety on any vessel engaged in the business of a common carrier. It
is said that dynamite is so erratic an uncontrollable in its action that
it is impossible to assert that it can be handled with safety in any
given case. On the other hand it is contended that while this may be
true of some kinds of dynamite, it is a fact that dynamite can be and
is manufactured so as to eliminate any real danger from explosion
during transportation. These are of course questions of fact upon
which we are not qualified to pass judgment without the assistance
of expert witnesses who have made special studies as to the
chemical composition and reactions of the different kinds of
dynamite, or attained a thorough knowledge of its properties as a
result of wide experience in its manufacture and transportation.
As we construe the Philippine statute, the mere fact that violent and
destructive explosions can be obtained by the use of dynamite
under certain conditions would not be sufficient in itself to justify
the refusal of a vessel, duly licensed as a common carrier of
merchandise, to accept it for carriage, if it can be proven that in the
condition in which it is offered for carriage there is no real danger to
the carrier, nor reasonable ground to fear that his vessel or those on
board his vessel will be exposed to unnecessary and unreasonable
risk in transporting it, having in mind the nature of his business as a
common carrier engaged in the coastwise trade in the Philippine
Islands, and his duty as a servant of the public engaged in a public
employment. So also, if by the exercise of due diligence and the taking of
unreasonable precautions the danger of explosions can be practically
eliminated, the carrier would not be justified in subjecting the traffic in
this commodity to prejudice or discrimination by proof that there would
be a possibility of danger from explosion when no such precautions are
taken.

The traffic in dynamite, gunpowder and other explosives is vitally

essential to the material and general welfare of the people of these
Islands. If dynamite, gunpowder and other explosives are to continue in
general use throughout the Philippines, they must be transported by
water from port to port in the various islands which make up the
Archipelago. We are satisfied therefore that the refusal by a particular
vessel, engaged as a common carrier of merchandise in the coastwise
trade of the Philippine Islands, to accept any or all of these explosives for
carriage would constitute a violation of the prohibitions against
discriminations penalized under the statute, unless it can be shown by
affirmative evidence that there is so real and substantial a danger of
disaster necessarily involved in the carriage of any or all of these articles
of merchandise as to render such refusal a due or a necessary or a
reasonable exercise of prudence and discretion on the part of the
shipowner.

The complaint in the case at bar lacking the necessary allegations under
this ruling, the demurrer must be sustained on the ground that the facts
alleged do not constitute a cause of action.

A number of interesting questions of procedure are raised and discussed

in the briefs of counsel. As to all of these questions we expressly reserve
our opinion, believing as we do that in sustaining the demurrer on the
grounds indicated in this opinion we are able to dispose of the real issue
involved in the proceedings without entering upon the discussion of the
nice questions which it might have been necessary to pass upon had it
appeared that the facts alleged in the complaint constitute a cause of
action.

We think, however, that we should not finally dispose of the case

without indicating that since the institution of these proceedings the
enactment of Acts No. 2307 and No. 2362 (creating a Board of Public
Utility Commissioners and for other purposes) may have materially
modified the right to institute and maintain such proceedings in this
jurisdiction. But the demurrer having been formallly submitted for
judgment before the enactment of these statutes, counsel have not
been heard in this connection. We therefore refrain from any comment
upon any questions which might be raised as to whether or not there
may be another adequate and appropriate remedy for the alleged wrong
set forth in the complaint. Our disposition of the question raised by the
demurrer renders that unnecessary at this time, though it may not be
improper to observe that a careful examination of those acts confirms us
in the holding upon which we base our ruling on this demurrer, that is to
say "That whatever may have been the rule at the common law,
common carriers in this jurisdiction cannot lawfully decline to accept a
particular class of goods for carriage, to the prejudice of the traffic in
those goods, unless it appears that for some sufficient reason the
discrimination against the traffic in such goods is reasonable and
necessary. Mere prejudice or whim will not suffice. The grounds of the
discrimination must be substantial ones, such as will justify the courts in
holding the discrimination to have been reasonable and necessary under
all the circumstances of the case."

Unless an amended complaint be filed in the meantime, let judgment be

entered ten days hereafter sustaining the demurrer and dismissing the
complaint with costs against the complainant, and twenty days
thereafter let the record be filed in the archives of original actions in this
court. So ordered.

Arellano, C.J., and Trent, J., concur.

Torres and Johnson, JJ., concur in the result.

G.R. No. L-47822 December 22, 1988
PEDRO DE GUZMAN, petitioner,
vs.
COURT OF APPEALS and ERNESTO CENDANA, respondents.
Vicente D. Millora for petitioner.
Jacinto Callanta for private respondent.
FELICIANO, J.:
Respondent Ernesto Cendana, a junk dealer, was engaged in buying up
used bottles and scrap metal in Pangasinan. Upon gathering sufficient
quantities of such scrap material, respondent would bring such material
to Manila for resale. He utilized two (2) six-wheeler trucks which he
owned for hauling the material to Manila. On the return trip to
Pangasinan, respondent would load his vehicles with cargo which various
merchants wanted delivered to differing establishments in Pangasinan.
For that service, respondent charged freight rates which were commonly
lower than regular commercial rates.
Sometime in November 1970, petitioner Pedro de Guzman a merchant
and authorized dealer of General Milk Company (Philippines), Inc. in
Urdaneta, Pangasinan, contracted with respondent for the hauling of
750 cartons of Liberty filled milk from a warehouse of General Milk in
Makati, Rizal, to petitioner's establishment in Urdaneta on or before 4
December 1970. Accordingly, on 1 December 1970, respondent loaded
in Makati the merchandise on to his trucks: 150 cartons were loaded on
a truck driven by respondent himself, while 600 cartons were placed on
board the other truck which was driven by Manuel Estrada, respondent's
driver and employee.
Only 150 boxes of Liberty filled milk were delivered to petitioner. The
other 600 boxes never reached petitioner, since the truck which carried
these boxes was hijacked somewhere along the MacArthur Highway in
Paniqui, Tarlac, by armed men who took with them the truck, its driver,
his helper and the cargo.
On 6 January 1971, petitioner commenced action against private
respondent in the Court of First Instance of Pangasinan, demanding
payment of P 22,150.00, the claimed value of the lost merchandise, plus
damages and attorney's fees. Petitioner argued that private respondent,
being a common carrier, and having failed to exercise the extraordinary
diligence required of him by the law, should be held liable for the value
of the undelivered goods.
In his Answer, private respondent denied that he was a common carrier
and argued that he could not be held responsible for the value of the lost
goods, such loss having been due to force majeure.
1
On 10 December 1975, the trial court rendered a Decision   finding
private respondent to be a common carrier and holding him liable for
the value of the undelivered goods (P 22,150.00) as well as for P
4,000.00 as damages and P 2,000.00 as attorney's fees.
On appeal before the Court of Appeals, respondent urged that the trial
court had erred in considering him a common carrier; in finding that he
had habitually offered trucking services to the public; in not
exempting him from liability on the ground of force majeure; and in
ordering him to pay damages and attorney's fees.
The Court of Appeals reversed the judgment of the trial court and
held that respondent had been engaged in transporting return loads
of freight "as a casual
occupation — a sideline to his scrap iron business" and not as a
common carrier. Petitioner came to this Court by way of a Petition
for Review assigning as errors the following conclusions of the Court
of Appeals:
1. that private respondent was not a common carrier;
2. that the hijacking of respondent's truck was force majeure; and
3. that respondent was not liable for the value of the undelivered
cargo. (Rollo, p. 111)
We consider first the issue of whether or not private respondent
Ernesto Cendana may, under the facts earlier set forth, be properly
characterized 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 deliberaom 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
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
supplied)
It appears to the Court that private respondent is properly
characterized as a common carrier even though he merely "back-
hauled" goods for other merchants from Manila to Pangasinan,
although such back-hauling was done on a periodic or occasional
rather than regular or scheduled manner, and even though private
respondent's principal  occupation was not the carriage of goods for
others. There is no dispute that private respondent charged his
customers a fee for hauling their goods; that fee frequently fell below
commercial freight rates is not relevant here.
The Court of Appeals referred to the fact that private respondent held
no certificate of public convenience, and concluded he was not a
common carrier. This is palpable error. A certificate of public
convenience is not a requisite for the incurring of liability under the Civil
Code provisions governing common carriers. That liability arises the
moment a person or firm acts as a common carrier, without regard to
whether or not such carrier has also complied with the requirements of
the applicable regulatory statute and implementing regulations and has
been granted a certificate of public convenience or other franchise. To
exempt private respondent from the liabilities of a common carrier
because he has not secured the necessary certificate of public
convenience, would be offensive to sound public policy; that would be to
reward private respondent precisely for failing to comply with applicable
statutory requirements. The business of a common carrier impinges
directly and intimately upon the safety and well being and property of
those members of the general community who happen to deal with such
carrier. The law imposes duties and liabilities upon common carriers for
the safety and protection of those who utilize their services and the law
cannot allow a common carrier to render such duties and liabilities
merely facultative by simply failing to obtain the necessary permits and
authorizations.
We turn then to the liability of private respondent as a common carrier.
Common carriers, "by the nature of their business and for reasons of
public policy" 2 are held to a very high degree of care and diligence
("extraordinary diligence") in the carriage of goods as well as of
passengers. The specific import of extraordinary diligence in the care of
goods transported by a common carrier is, according to Article 1733,
"further expressed in Articles 1734,1735 and 1745, numbers 5, 6 and 7"
of the Civil Code.
Article 1734 establishes the general rule that common carriers are
responsible for the loss, destruction or deterioration of the goods which
they carry, "unless the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning or other natural disaster or
calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character-of the goods or defects in the packing or-in the
containers; and
(5) Order or act of competent public authority.
It is important to point out that the above list of causes of loss,
destruction or deterioration which exempt the common carrier for
responsibility therefor, is a closed list. Causes falling outside the
foregoing list, even if they appear to constitute a species of force
majeure fall within the scope of Article 1735, which provides as follows:
In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of the
preceding article, if the goods are lost, destroyed or deteriorated,
common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence as required in Article 1733. (Emphasis supplied)
Applying the above-quoted Articles 1734 and 1735, we note firstly that
the specific cause alleged in the instant case — the hijacking of the
carrier's truck — does not fall within any of the five (5) categories of
exempting causes listed in Article 1734. It would follow, therefore, that
the hijacking of the carrier's vehicle must be dealt with under the
provisions of Article 1735, in other words, that the private respondent as
common carrier is presumed to have been at fault or to have acted
negligently. This presumption, however, may be overthrown by proof of
extraordinary diligence on the part of private respondent.
Petitioner insists that private respondent had not observed
extraordinary diligence in the care of petitioner's goods. Petitioner
argues that in the circumstances of this case, private respondent should
have hired a security guard presumably to ride with the truck carrying
the 600 cartons of Liberty filled milk. We do not believe, however, that in
the instant case, the standard of extraordinary diligence required private
respondent to retain a security guard to ride with the truck and to
engage brigands in a firelight at the risk of his own life and the lives
of the driver and his helper.
The precise issue that we address here relates to the specific
requirements of the duty of extraordinary diligence in the vigilance
over the goods carried in the specific context of hijacking or armed
robbery.
As noted earlier, the duty of extraordinary diligence in the vigilance
over goods is, under Article 1733, given additional specification not
only by Articles 1734 and 1735 but also by Article 1745, numbers 4,
5 and 6, Article 1745 provides in relevant part:
Any of the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy:
xxx xxx xxx
(5) that the common carrier shall not be responsible for the acts or
omissions of his or its employees;
(6) that the common carrier's liability for acts committed by thieves,
or of robbers who do  not act with grave or irresistible threat,
violence or force, is dispensed with or diminished; and
(7) that the common carrier shall not responsible for the loss,
destruction or deterioration of goods on account of the defective
condition of the car vehicle, ship, airplane or other equipment used
in the contract of carriage. (Emphasis supplied)
Under Article 1745 (6) above, a common carrier is held responsible
— and will not be allowed to divest or to diminish such
responsibility — even for acts of strangers like thieves or
robbers, except where such thieves or robbers in fact acted "with
grave or irresistible threat, violence or force." We believe and so
hold that the limits of the duty of extraordinary diligence in the
vigilance over the goods carried are reached where the goods are
lost as a result of a robbery which is attended by "grave or
irresistible threat, violence or force."
In the instant case, armed men held up the second truck owned by
private respondent which carried petitioner's cargo. The record
shows that an information for robbery in band was filed in the Court
of First Instance of Tarlac, Branch 2, in Criminal Case No. 198
entitled "People of the Philippines v. Felipe Boncorno, Napoleon
Presno, Armando Mesina, Oscar Oria and one John Doe." There, the
accused were charged with willfully and unlawfully taking and
carrying away with them the second truck, driven by Manuel
Estrada and loaded with the 600 cartons of Liberty filled milk
destined for delivery at petitioner's store in Urdaneta, Pangasinan.
The decision of the trial court shows that the accused acted with
grave, if not irresistible, threat, violence or force. 3 Three (3) of the
five (5) hold-uppers were armed with firearms. The robbers not only
took away the truck and its cargo but also kidnapped the driver and
his helper, detaining them for several days and later releasing them
in another province (in Zambales). The hijacked truck was
subsequently found by the police in Quezon City. The Court of First
Instance convicted all the accused of robbery, though not of robbery
in band.  4
In these circumstances, we hold that the occurrence of the loss
must reasonably be regarded as quite beyond the control of the
common carrier and properly regarded as a fortuitous event. It is
necessary to recall that even common carriers are not made
absolute insurers against all risks of travel and of transport of goods,
and are not held liable for acts or events which cannot be foreseen
or are inevitable, provided that they shall have complied with the
rigorous standard of extraordinary diligence.
We, therefore, agree with the result reached by the Court of
Appeals that private respondent Cendana is not liable for the value
of the undelivered merchandise which was lost because of an event
entirely beyond private respondent's control.
ACCORDINGLY, the Petition for Review on certiorari is hereby DENIED
and the Decision of the Court of Appeals dated 3 August 1977 is
AFFIRMED. No pronouncement as to costs.
SO ORDERED.
G.R. No. L-46179 January 31, 1978
CANDIDA VIRATA, TOMAS VIRATA, MANOLITO VIRATA, EDERLINDA
VIRATA, NAPOLEON VIRATA, ARACELY VIRATA, ZENAIDA VIRATA,
LUZMINDA VIRATA, PACITA VIRATA, and EVANGELINA
VIRATA, petitioners,
vs.
VICTORIO OCHOA, MAXIMO BORILLA and THE COURT OF FIRST
INSTANCE OF CAVITE, 7th JUDICIAL DISTRICT, BRANCH V, stationed at
BACOOR, CAVITE, respondents.
Remulla, Estrella & Associates for petitioners
Exequil C. Masangkay for respondents.
FERNANDEZ, J.:
This is an appeal by certiorari, from the order of the Court of First
Instance of Cavite, Branch V, in Civil Case No. B-134 granting the motion
of the defendants to dismiss the complaint on the ground that there is
another action pending between the same parties for the same cause. 1
The record shows that on September 24, 1975 one Arsenio Virata died as
a result of having been bumped while walking along Taft Avenue, Pasay
City by a passenger jeepney driven by Maximo Borilla and registered in
the name Of Victoria Ochoa; that Borilla is the employer of Ochoa; that
for the death of Arsenio Virata, a action for homicide through reckless
imprudence was instituted on September 25, 1975 against Maximo
Borilla in the Court of First Instance of Rizal at Pasay City, docketed as C
Case No. 3162-P of said court; that at the hearing of the said criminal
case on December 12, 1975, Atty. Julio Francisco, the private prosecutor,
made a reservation to file a separate civil action for damages against the
driver on his criminal liability; that on February 19, 1976 Atty. Julio
Francisco filed a motion in said c case to withdraw the reservation to file
a separate civil action; that thereafter, the private prosecutor actively
participated in the trial and presented evidence on the damages; that on
June 29, 1976 the heirs of Arsenio Virata again reserved their right to
institute a separate civil action; that on July 19, 1977 the heirs of Arsenio
Virata, petitioners herein, commenced Civil No. B-134 in the Court of
First Instance of Cavite at Bacoor, Branch V, for damages based on quasi-
delict against the driver Maximo Borilla and the registered owner of the
jeepney, Victorio Ochoa; that on August 13, 1976 the defendants, private
respondents filed a motion to dismiss on the ground that there is
another action, Criminal Case No. 3162-P, pending between the same
parties for the same cause; that on September 8, 1976 the Court of First
Instance of Rizal at Pasay City a decision in Criminal Case No. 3612-P
acquitting the accused Maximo Borilla on the ground that he caused an
injury by name accident; and that on January 31, 1977, the Court of First
Instance of Cavite at Bacoor granted the motion to Civil Case No. B-134
for damages. 2
The principal issue is weather or not the of the Arsenio Virata, can
prosecute an action for the damages based on quasi-delict against
Maximo Borilla and Victoria Ochoa, driver and owner, respectively on
the passenger jeepney that bumped Arsenio Virata.
It is settled that in negligence cases the aggrieved parties may
choose between an action under the Revised Penal Code or of
quasi-delict under Article 2176 of the Civil Code of the Philippines.
What is prohibited by Article 2177 of the Civil Code of the
Philippines is to recover twice for the same negligent act.
The Supreme Court has held that:
According to the Code Commission: 'The foregoing provision (Article
2177) though at first sight startling, is not so novel or extraordinary
when we consider the exact nature of criminal and civil negligence.
The former is a violation of the criminal law, while the latter is a
'culpa aquiliana' or quasi-delict, of ancient origin, having always had
its own foundation and individuality, separate from criminal
negligence. Such distinction between criminal negligence and 'culpa
extra-contractual' or quasi-delito has been sustained by decision of
the Supreme Court of Spain and maintained as clear, sound and
perfectly tenable by Maura, an outstanding Spanish jurist.
Therefore, under the proposed Article 2177, acquittal from an
accusation of criminal negligence, whether on reasonable doubt or
not, shall not be a bar to a subsequent civil action, not for civil
liability arising from criminal negligence, but for damages due to a
quasi-delict or 'culpa aquiliana'. But said article forestalls a double
recovery. (Report of the Code Commission, p. 162.)
Although, again, this Article 2177 does seem to literally refer to only
acts of negligence, the same argument of Justice Bocobo about
construction that upholds 'the spirit that given life' rather than that
which is literal that killeth the intent of the lawmaker should be
observed in applying the same. And considering that the preliminary
chapter on human relations of the new Civil Code definitely
establishes the separability and independence of liability in a civil
action for acts criminal in character (under Articles 29 to 32) from
the civil responsibility arising from crime fixed by Article 100 of the
Penal Code, and, in a sense, the Rules of Court, under Sections 2 and
3(c), Rule 111, contemplate also the same separability, it is 'more
congruent' with the spirit of law, equity and justice, and more in
harmony with modern progress', to borrow the felicitous language
in Rakes vs. Atlantic Gulf and Pacific Co., 7 Phil. to 359, to hod as We
do hold, that Article 2176, where it refers to 'fault covers not only
acts 'not punishable by law' but also criminal in character, whether
intentional and voluntary or consequently, a separate civil action
lies against the in a criminal act, whether or not he is criminally
prosecuted and found guilty and acquitted, provided that the
offended party is not allowed, if he is actually charged also
criminally, to recover damages on both scores, and would be
entitled in such eventuality only to the bigger award of the, two
assuming the awards made in the two cases vary. In other words the
extinction of civil liability refereed to in Par. (c) of Section 13, Rule
111, refers exclusively to civil liability founded on Article 100 of the
Revised Penal Code, whereas the civil liability for the same act
considered as a quasi-delict only and not as a crime is not
extinguished even by a declaration in the criminal case that the
criminal act charged has not happened or has not been committed
by the accused. Brief stated, We hold, in reitration of Garcia, that
culpa aquilina includes voluntary and negligent acts which may be
punishable by law. 3
The petitioners are not seeking to recover twice for the same
negligent act. Before Criminal Case No. 3162-P was decided, they
manifested in said criminal case that they were filing a separate civil
action for damages against the owner and driver of the passenger
jeepney based on quasi-delict. The acquittal of the driver, Maximo
Borilla, of the crime charged in Criminal Case No. 3162-P is not a bar
to the prosecution of Civil Case No. B-134 for damages based on
quasi-delict The source of the obligation sought to be enforced in
Civil Case No. B-134 is quasi-delict, not an act or omission
punishable by law. Under Article 1157 of the Civil Code of the
Philippines, quasi-delict and an act or omission punishable by law
are two different sources of obligation.
Moreover, for the petitioners to prevail in the action for damages,
Civil Case No. B-134, they have only to establish their cause of action
by preponderance of the evidence.
WHEREFORE, the order of dismissal appealed from is hereby set aside
and Civil Case No. B-134 is reinstated and remanded to the lower court
for further proceedings, with costs against the private respondents.
SO ORDERED.
G.R. No. 138060             September 1, 2004
WILLIAM TIU, doing business under the name and style of "D’ Rough
Riders," and VIRGILIO TE LAS PIÑAS petitioners,
vs.
PEDRO A. ARRIESGADO, BENJAMIN CONDOR, SERGIO PEDRANO and
PHILIPPINE PHOENIX SURETY AND INSURANCE, INC., respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review on certiorari under Rule 45 of the Rules of
Court from the Decision1 of the Court of Appeals in CA-G.R. CV No. 54354
affirming with modification the Decision2 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 attorney’s 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.3 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 away4 behind the stalled truck to serve as a warning for
oncoming vehicles. The truck’s 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 Laspiñas 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, Laspiñas saw the stalled truck,
which was then about 25 meters away. 5 He applied the breaks and tried
to swerve to the left to avoid hitting the truck. But it was too late; the
bus rammed into the truck’s 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. 6 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. 7
Respondent Pedro A. Arriesgado then filed a complaint for breach of
contract of carriage, damages and attorney’s 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 Laspiñas
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 Laspiñas did not take precautionary
measures to avoid the accident.8 Thus:
6. That the accident resulted to the death of the plaintiff’s 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.
7. That due to the reckless and imprudent driving by defendant
Virgilio Te Laspiñas 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-driver’s 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 Laspiñas.9
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
₱30,000.00 for the death and untimely demise of plaintiff’s wife,
Felisa Pepito Arriesgado;
2). To pay to plaintiff, jointly and severally, the amount of
₱38,441.50, representing actual expenses incurred by the plaintiff in
connection with the death/burial of plaintiff’s wife;
3). To pay to plaintiff, jointly and severally, the amount of ₱1,113.80,
representing medical/hospitalization expenses incurred by plaintiff
for the injuries sustained by him;
4). To pay to plaintiff, jointly and severally, the amount of
₱50,000.00 for moral damages;
5). To pay to plaintiff, jointly and severally, the amount of
₱50,000.00 by way of exemplary damages;
6). To pay to plaintiff, jointly and severally, the amount of
₱20,000.00 for attorney’s fees;
7). To pay to plaintiff, jointly and severally, the amount of ₱5,000.00
for litigation expenses.
PLAINTIFF FURTHER PRAYS FOR SUCH OTHER RELIEFS AND
REMEDIES IN LAW AND EQUITY.10
The petitioners, for their part, filed a Third-Party Complaint 11 on
August 21, 1987 against the following: respondent Philippine
Phoenix Surety and Insurance, Inc. (PPSII), petitioner Tiu’s insurer;
respondent Benjamin Condor, the registered owner of the cargo
truck; and respondent Sergio Pedrano, the driver of the truck. They
alleged that petitioner Laspiñas 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 Laspiñas 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 truck’s 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 against said third-party plaintiffs or are
directly liable of (sic) the alleged death of plaintiff’s 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.;…12
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. 13 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.14
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:
1 - The sum of FIFTY THOUSAND PESOS (₱50,000.00) as moral damages;
2 - The sum of FIFTY THOUSAND PESOS (₱50,000.00) as exemplary
damages;
3 - The sum of THIRTY-EIGHT THOUSAND FOUR HUNDRED FORTY-ONE
PESOS (₱38,441.00) as actual damages;
4 - The sum of TWENTY THOUSAND PESOS (₱20,000.00) as attorney’s
fees;
5 - The sum of FIVE THOUSAND PESOS (₱5,000.00) as costs of suit;
SO ORDERED.15
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
Laspiñas 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 Laspiñas 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 Laspiñas on efficiency and
in-service 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 petitioner’s 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 LASPIÑAS 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,
ATTORNEY’S 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.17
The appellate court rendered judgment affirming the trial court’s
decision with the modification that the awards for moral and
exemplary damages were reduced to ₱25,000. 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 ₱25,000.00 or a total of ₱50,000.00
for both. The judgment is AFFIRMED in all other respects.
SO ORDERED.18
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 Arriesgado’s
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
Arriesgado’s 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, ATTORNEY’S FEES AND
LITIGATION EXPENSES.
IV. THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING
RESPONDENT PHILIPPINE PHOENIX SURETY AND INSURANCE, INC. LIABLE
TO RESPONDENT PEDRO A. ARRIESGADO OR TO PETITIONER WILLIAM
TIU.19
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 Pedrano’s
negligence, as provided under Article 2185 of the New Civil Code. They
also question the appellate court’s 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 latter’s claim.
The petitioners, likewise, aver that expert evidence should have been
presented to prove that petitioner Laspiñas 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 Laspiñas.
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 Arriesgado’s 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, attorney’s 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
₱50,000 each, or a total of ₱100,000 which was reduced by the Court of
Appeals to ₱25,000 each, or a total of only ₱50,000.
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 Laspiñas 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 respondent Arriesgado’s 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
insurer’s liability is determined by the insured’s compliance with the
terms thereof.
The Court’s Ruling
At the outset, it must be stressed that this Court is not a trier of
facts.20 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. 21 The petitioners in
this case assail the finding of both the trial and the appellate courts
that petitioner Laspiñas was driving at a very fast speed before the
bus owned by petitioner Tiu collided with respondent Condor’s
stalled truck. This is clearly one of fact, not reviewable by the Court
in a petition for review under Rule 45.22
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 Laspiñas
Was negligent in driving
The Ill-fated bus
In his testimony before the trial court, petitioner Laspiñas 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.23 He also admitted that he saw the truck which
was parked in an "oblique position" at about 25 meters before
impact,24 and tried to avoid hitting it by swerving to the left.
However, even in the absence of expert evidence, the damage
sustained by the truck25 itself supports the finding of both the trial
court and the appellate court, that the D’ Rough Rider bus driven by
petitioner Laspiñas was traveling at a fast pace. Since he saw the
stalled truck at a distance of 25 meters, petitioner Laspiñas 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 Laspiñas 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 Laspiñas could have
swerved to the left lane with proper clearance, and, thus, could
have avoided the truck.26 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. 27
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 Laspiñas 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 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.28
Indeed, petitioner Laspiñas’ 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. 29 And, as
correctly pointed out by the trial court, petitioner Laspiñas also violated
Section 35 of the Land Transportation and Traffic Code, Republic Act No.
4136, as amended:1avvphil.net
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.30
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.31
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
1756.34 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 ₱18.00.35 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. 36 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.37 Any injury suffered by the passengers in the course
thereof is immediately attributable to the negligence of the
carrier.38 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. 39 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. 40
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.41 As correctly found by the trial court, petitioner Tiu failed to
conclusively rebut such presumption. The negligence of petitioner
Laspiñas as driver of the passenger bus is, thus, binding against
petitioner Tiu, as the owner of the passenger bus engaged as a
common carrier.42
The Doctrine of
Last Clear Chance
Is Inapplicable in the
Case at Bar
Contrary to the petitioner’s 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. 43 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. 44
Thus, petitioner Tiu cannot escape liability for the death of
respondent Arriesgado’s wife due to the negligence of petitioner
Laspiñas, his employee, on this score.
Respondents Pedrano and
Condor were likewise
Negligent
In Phoenix Construction, Inc. v. Intermediate Appellate
Court,45 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, Dionisio’s negligence, although later in point of time
than the truck driver’s 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.
Dionisio’s 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 Dionisio’s negligence was "only
contributory," that the "immediate and proximate cause" of the injury
remained the truck driver’s "lack of due care."…46
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: 47
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. …48
The petitioners were correct in invoking respondent Pedrano’s failure to
observe Article IV, Section 34(g) of the Rep. Act No. 4136, which
provides:1avvphil.net
(g) Lights when parked or disabled. – Appropriate parking lights or flares
visible one hundred meters away shall be displayed at a 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.
The manner in which the truck was parked clearly endangered oncoming
traffic on both sides, considering that the tire blowout which stalled the
truck in the first place occurred in the wee hours of the morning. The
Court can only now surmise that the unfortunate incident could have
been averted had respondent Condor, the owner of the truck, equipped
the said vehicle with lights, flares, or, at the very least, an early warning
device.49 Hence, we cannot subscribe to respondents Condor and
Pedrano’s claim that they should be absolved from liability because, as
found by the trial and appellate courts, the proximate cause of the
collision was the fast speed at which petitioner Laspiñas drove the bus.
To accept this proposition would be to come too close to wiping out the
fundamental principle of law that a man must respond for the
foreseeable consequences of his own negligent 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 members. To accept this
proposition would be to weaken the very bonds of society. 50
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:
SCHEDULED VEHICLE
TYPE OF
MAKE COLOR BLT FILE
MODEL BODY
Isuzu Forward blue mixed NO.
Bus
PLATE SERIAL/CHASSIS AUTHORIZED UNLADEN
MOTOR NO.
NO. NO. CAPACITY WEIGHT
677836
PBP-724 SER450-1584124 50 6 Cyls. Kgs.
SECTION 1/11 *LIMITS OF LIABILITY
PREMIUMS
₱50,000.00
A. THIRD PARTY LIABILITY
PAID
Per Person Per Accident ₱540.0052
B. PASSENGER LIABILITY
₱12,000.00 ₱50,000
In its Answer53 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, 54 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.
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;55…
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
Memorandum56 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.57
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 insurer’s liability for each person was ₱12,000, while the limit
per accident was pegged at ₱50,000. 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. 58 The respondent PPSII could not then just deny
petitioner Tiu’s claim; it should have paid ₱12,000 for the death of Felisa
Arriesgado,59 and respondent Arriesgado’s hospitalization expenses of
₱1,113.80, 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,60 would not exceed the ₱50,000 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. 61 As the
Court, speaking through Associate Justice Leonardo A. Quisumbing,
explained in Government Service Insurance System v. Court of Appeals: 62
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 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 (₱12,000.00) pesos per victim. The schedules
for medical expenses were also provided by said IMC, specifically in
paragraphs (C) to (G).63
negligence of a third party who was the driver of another vehicle,
thus causing an accident. In Anuran v. Buño, 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
latter’s 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."69
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 ₱13,113.80;
(2) The petitioners and the respondents Benjamin Condor and
Sergio Pedrano are ORDERED to pay, jointly and severally,
respondent Pedro A. Arriesgado ₱50,000.00 as indemnity;
₱26,441.50 as actual damages; ₱50,000.00 as moral damages;
₱50,000.00 as exemplary damages; and ₱20,000.00 as attorney’s
fees.
SO ORDERED.

Damages to be
Awarded

The trial court correctly awarded moral damages in the amount of

₱50,000 in favor of respondent Arriesgado. The award of exemplary
damages by way of example or correction of the public good, 64 is likewise
in order. As the Court ratiocinated in Kapalaran Bus Line v. Coronado: 65

…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."…66

The respondent Pedro A. Arriesgado, as the surviving spouse and heir of

Felisa Arriesgado, is entitled to indemnity in the amount of ₱50,000.00. 67

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:68

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

G.R. No. 173870               April 25, 2012
OSCAR DEL CARMEN, JR., Petitioner,
vs.
GERONIMO BACOY, Guardian and representing the children, namely:
MARY MARJORIE B. MONSALUD, ERIC B. MONSALUD, METZIE ANN B.
MONSALUD, KAREEN B. MONSALUD, LEONARDO B. MONSALUD, JR.,
and CRISTINA B. MONSALUD, Respondents.
DECISION
DEL CASTILLO, J.:
1  trip, the jeep would be parked beside Rodrigo’s rented house 19 for
In this Petition for Review on Certiorari, the registered owner of a
motor vehicle challenges the Decision 2 dated July 11, 2006 of the Court
of Appeals (CA) in CA-G.R. CV No. 67764 which held him liable for
damages to the heirs of the victims who were run over by the said
vehicle.
Factual Antecedents
At dawn on New Year’s Day of 1993, Emilia Bacoy Monsalud (Emilia),
along with her spouse Leonardo Monsalud, Sr. and their daughter
Glenda Monsalud, were on their way home from a Christmas party they
attended in Poblacion, Sominot, Zamboanga Del Sur. Upon reaching
Purok Paglaom in Sominot, they were run over by a Fuso passenger jeep
bearing plate number UV-PEK-600 that was being driven by Allan
Maglasang (Allan). The jeep was registered in the name of petitioner
Oscar del Carmen, Jr. (Oscar Jr.) and used as a public utility vehicle plying
the Molave, Zamboanga del Sur to Sominot, Zamboanga del Sur and vice
versa route.
Because of the unfortunate incident, Criminal Case No. 93-10347 3 for
Reckless Imprudence Resulting in Multiple Homicide was filed against
Allan before the Regional Trial Court of Molave, Zamboanga del Sur,
Branch 23. In a Decision dated March 13, 1997, said court declared Allan
guilty beyond reasonable doubt of the crime charged. 4
During the pendency of said criminal case, Emilia’s father, Geronimo
Bacoy (Geronimo), in behalf of the six minor children 5 of the Monsaluds,
filed Civil Case No. 96-20219, 6 an independent civil action for damages
based on culpa aquiliana. Aside from Allan, also impleaded therein were
his alleged employers, namely, the spouses Oscar del Carmen, Sr. (Oscar
Sr.) and Norma del Carmen (Spouses del Carmen) and the registered
owner of the jeep, their son Oscar Jr. Geronimo prayed for the
reimbursement of funeral and burial expenses, as well as the award of
attorney’s fees, moral and exemplary damages resulting from the death
of the three victims, and loss of net income earnings of Emilia who was
employed as a public school teacher at the time of her death. 7
Defendants refused to assume civil liability for the victims’ deaths. Oscar
Sr. averred that the Monsaluds have no cause of action against them
because he and his wife do not own the jeep and that they were never
the employers of Allan.8 For his part, Oscar Jr. claimed to be a victim
himself. He alleged that Allan and his friends 9 stole his jeep while it was
parked beside his driver’s rented house to take it for a joyride. Both he
and a vehicle mechanic testified that the subject jeep can easily be
started by mere pushing sans the ignition key. The vehicle’s engine shall
then run but without any headlights on. 10 And implying that this was the
manner by which the vehicle was illegally taken, Oscar Jr. submitted as
part of his documentary evidence the statements 11 of Jemar Alarcon
(Jemar) and Benjamin Andujar (Benjamin). The two, who were with
Allan in the jeep at the time of the accident, declared before the
investigating officer that during said time, the vehicle’s headlights
were off. Because of this allegation, Oscar Jr. even filed before the
same trial court a carnapping case against Allan and his companions
docketed as Criminal Case No. 93-10380. 12 The case was, however,
dismissed for insufficiency of evidence.13
Oscar Jr. clarified that Allan was his jeep conductor and that it was
the latter’s brother, Rodrigo Maglasang (Rodrigo), who was
employed as the driver.14 In any event, Allan’s employment as
conductor was already severed before the mishap occurred on
January 1, 1993 since he served as such conductor only from the
first week of December until December 14, 1992. 15 In support of
this, Oscar Jr. presented as witnesses Faustino Sismundo (Faustino)
and Cresencio "Junior" Baobao (Cresencio). Faustino, a resident of
Molave, testified that when he boarded the jeep heading to
Sominot on December 31, 1992, it was Cresencio who was the
conductor. He also believed that Crecencio started to work as such
at around December 15 or 16, 1992. 16 Cresencio, for his part,
testified that he worked as Oscar Jr.’s conductor from December 15,
1992 to January 1, 1993 and that Rodrigo was his driver. 17 He stated
that upon learning that the jeep figured in an accident, he never
bothered to verify the news. Instead, he went to Midsalip to work
there as a conductor for his brother’s vehicle, thereby terminating
his employment with Oscar Jr.18
Oscar Jr. likewise testified that it was routinary that after a day’s
the next early-morning operation.
Geronimo, on the other hand, averred that Allan was still Oscar Jr.’s
employee subsequent to December 14, 1992. To prove this, he
presented as witnesses Saturnino Jumawan (Saturnino) and Jose
Navarro (Jose). Saturnino testified that he would pay his fare to
Allan every time he would board the jeep in going to Molave and
that the last time he rode the subject vehicle was on December 23,
1992. He also claimed that immediately before January 1, 1993,
Rodrigo and Allan used to park the jeep at the yard of his house. 20 
Jose likewise attested that Allan was still the jeep conductor during
the said period as he had ridden the jeep many times in mid-
December of 1992.21
Ruling of the Regional Trial Court
In its Decision22 dated April 17, 2000, the RTC exculpated the
spouses del Carmen from civil liability for insufficiency of evidence.
However, their son Oscar Jr. was held civilly liable in a subsidiary
capacity. The RTC anchored its ruling primarily on the principle of
res ipsa loquitur, i.e., that a presumption of negligence on the part
of a defendant may be inferred if the thing that caused an injury is
shown to be under his management and that in the ordinary course
of things, the accident would not have happened had there been an
exercise of care. Said court ratiocinated that Oscar Jr., as the
registered owner of the jeep, managed and controlled the same
through his driver Rodrigo, in whose house the jeep was usually
parked. Since both Oscar Jr. and Rodrigo were well aware that the
jeep could easily be started by a mere push even without the
ignition key, they should have taken the necessary precaution to
prevent the vehicle from being used by unauthorized persons like
Allan. The RTC thus concluded that such lack of proper precaution,
due care and foresight constitute negligence making the registered
owner of the vehicle civilly liable for the damage caused by the
same.
The RTC disposed of the case as follows:
Wherefore, judgment is hereby entered in favor of the plaintiffs and
against the defendants Allan Maglasang and Oscar del Carmen, Jr.
ordering –
1. Defendant ALLAN MAGLASANG to pay the plaintiffs, and in case
of insolvency, for defendant OSCAR DEL CARMEN, JR., to pay the
plaintiffs, the following sums:
a. ₱73,112.00 for their funeral and burial expenses;
b. ₱1,000,000.00 moral damages for the death of the late Emilia
Monsalud;
c. ₱250,000.00 moral damages for the death of the late Leonardo
Monsalud, Sr.;
d. ₱250,000.00 moral damages for the death of the late Glenda
Monsalud;
e. ₱40, 000.00, for exemplary damages;
f. ₱20,000.00 attorney’s fees; and
g. The cost of this proceedings.
2. The dismissal of the complaint as against the spouses OSCAR DEL
CARMEN SR. and NORMA DEL CARMEN.
SO ORDERED.23
Oscar Jr. moved for reconsideration 24 contending that the provision on
vicarious liability of the employer under Article 2180 of the Civil Code 25  Allan also lived; the jeep could easily be started even without the
requires the existence of employer-employee relationship and that the
employee was acting within the scope of his employment when the tort
occurred. He stressed that even assuming that Allan was his employee,
he was hired not as a driver but as a conductor. Hence, Allan acted
beyond the scope of his employment when he drove the jeep.
Oscar Jr. also stressed that the fact that the jeep was running without its
headlights on at the time of the accident indubitably shows that the
same was stolen. He further alleged that the jeep could not have been
taken by only one person. As Rodrigo declared in Criminal Case No. 93-
10380 (carnapping case), based on his experience, the jeep cannot be
pushed by only one person but by at least five people in order for it to
start. This was due to the vehicle’s mass and the deep canal which
separates the parking area from the curved road that was obstructed by
a house.26
Setting aside its earlier decision, the lower court in its Order 27 dated June
21, 2000 granted the Motion for Reconsideration and absolved Oscar Jr.
from civil liability. It cited Article 103 of the Revised Penal Code which
provides that for an employer to be subsidiarily liable for the criminal
acts of his employee, the latter should have committed the same in the
discharge of his duties. The court agreed with Oscar Jr. that this
condition is wanting in Allan’s case as he was not acting in the discharge
of his duties as a conductor when he drove the jeep.
The court also declared the doctrine of res ipsa loquitur inapplicable
since the property owner cannot be made responsible for the damages
caused by his property by reason of the criminal acts of another. It then
adjudged that only Allan should bear the consequences of his criminal
acts. Thus:
WHEREFORE, premises considered, the MOTION FOR
RECONSIDERATION is granted, and defendant OSCAR DEL CARMEN JR. is
hereby absolved from all civil liability arising from the felonious acts of
convicted accused ALLAN MAGLASANG.
IT IS SO ORDERED.28
Geronimo appealed.
Ruling of the Court of Appeals
In its July 11, 2006 Decision,29 the CA granted the appeal.
In resolving the case, the CA first determined the preliminary issue of
whether there was an employer-employee relationship between Oscar
Jr. and Allan at the time of the accident. It ruled in the affirmative and
gave more credence to the testimonies of Geronimo’s witnesses than to
those of Oscar Jr.’s witnesses, Faustino and Cresencio. The CA
ratiocinated that unlike the witness presented by Geronimo,
Faustino never resided in Poblacion and thus has limited knowledge
of the place. His testimony was also unreliable considering that he
only rode the subject jeep twice 30 during the last two weeks of
December 1992. As regards Cresencio’s testimony, the appellate
court found it puzzling why he appeared to have acted uninterested
upon learning that the jeep was the subject of an accident when it
was his bread and butter. Said court likewise considered
questionable Oscar Jr.’s asseveration that Cresencio replaced Allan
as conductor when Cresencio testified that he replaced a certain
Sumagang Jr.31
With regard to the main issue, the CA adjudged Oscar Jr. liable to
the heirs of the victims based on the principle that the registered
owner of a vehicle is directly and primarily responsible for the
injuries or death of third parties caused by the operation of such
vehicle. It disbelieved Oscar Jr.’s defense that the jeep was stolen
not only because the carnapping case filed against Allan and his
companions was dismissed but also because, given the
circumstances, Oscar Jr. is deemed to have given Allan the implied
permission to use the subject vehicle. To support its conclusion, the
CA cited the following circumstances: siblings Rodrigo and Allan
were both employees assigned to the said jeep; after a day’s work,
said vehicle would be parked just beside Rodrigo’s house where
use of an ignition key; the said parking area was not fenced or
secured to prevent the unauthorized use of the vehicle which can be
started even without the ignition key.
The dispositive portion of the CA Decision reads:
WHEREFORE, premises considered, the instant appeal is GRANTED.
The assailed Order dated 21 June 2000 of the Regional Trial Court
(Branch 23), Molave, Zamboanga del Sur, in Civil Case No. 96-20,219
is SET ASIDE and a new one is hereby entered. OSCAR DEL CARMEN,
Jr. and ALLAN MAGLASANG are held primarily liable, jointly and
severally, to pay plaintiffs-appellants:
1. Civil indemnity for the death of Emilia Bacoy Monsalud, Leonardo
Monsalud Sr., and Glenda Monsalud in the amount of Fifty thousand
pesos (₱50,000.00) each or for the total amount of One hundred
fifty thousand pesos (₱150,000.00);
2. Temperate damages in the amount of Twenty-five Thousand
Pesos (₱25,000.00) each for the death of Emilia Monsalud, Leonardo
Monsalud Sr., and Glenda Monsalud (collectively the Monsaluds) or
for the total amount of Seventy-five thousand pesos (₱75,000.00);
3. Moral damages in the amount of Fifty Thousand Pesos
(₱50,000.00) each for the death of the Monsaluds or for a total
amount of One Hundred Fifty Thousand Pesos (₱150,000.00);
4. Exemplary damages of Forty Thousand Pesos (₱40,000.00).
No pronouncement as to costs.
SO ORDERED. 32
Issues
As a result of the adverse judgment, Oscar Jr. filed this Petition for
Review on Certiorari alleging that the CA erred in:
1. x x x basing its conclusions and findings on speculations, surmises
and conjectures; misapprehension of facts which are in conflict with
the findings of the trial court;
2. x x x declaring a question of substance not in accord with law and
with the applicable decisions of the Supreme Court;
3. x x x departing from the regular course of the judicial proceedings
in the disposition of the appeal and [in going] beyond the issues of
the case.33
Oscar Jr. points out that the CA failed to consider the RTC’s ruling in its
June 21, 2000 Order which was in accord with Article 2180 of the Civil
Code, i.e., that the tort committed by an employee should have been
done ‘within the scope of his assigned tasks’ for an employer to be held
liable under culpa aquiliana. However, the CA never touched upon this
matter even if it was glaring that Allan’s driving the subject vehicle was
not within the scope of his previous employment as conductor.
Moreover, Oscar Jr. insists that his jeep was stolen and stresses that the
liability of a registered owner of a vehicle as to third persons, as well as
the doctrine of res ipsa loquitur, should not apply to him. He asserts that
although Allan and his companions were not found to have committed
the crime of carnapping beyond reasonable doubt, it was nevertheless
established that the jeep was illicitly taken by them from a well secured
area. This is considering that the vehicle was running without its
headlights on at the time of the accident, a proof that it was started
without the ignition key.
Our Ruling
Petitioner’s own evidence casts doubt on his claim that his jeep was
stolen by Allan and his alleged cohorts. Negligence is presumed under
the doctrine of res ipsa loquitur.
Oscar Jr.’s core defense to release him from responsibility for the death
of the Monsaluds is that his jeep was stolen. He highlights that the
unauthorized taking of the jeep from the parking area was indeed
carried out by the clandestine and concerted efforts of Allan and his five
companions, notwithstanding the obstacles surrounding the parking
area and the weight of the jeep.
Notably, the carnapping case filed against Allan and his group was
already dismissed by the RTC for insufficiency of evidence. But even in
this civil case and as correctly concluded by the CA, the evidentiary
standard of preponderance of evidence required was likewise not met to
support Oscar Jr.’s claim that his jeep was unlawfully taken.
Two of Allan’s co-accused in the carnapping case, Jemar and Benjamin,
declared before the police that when Allan invited them to ride with him,
he was already driving the jeep:
04. Q- On that night, on or about 11:30 o’clock on December 31, 1992,
where were you?
A- I went to the disco near [the] Public Market[,] Sominot, Zamboanga
del Sur.
05. Q- While you were in disco place, do you know if there was an
incident [that] happened?
A- No sir but when I was in the disco place, at about 3:30 at dawn more
or less[,] January 1, 1993, Allan Maglasang arrived driving the jeep and
he invited me to ride together with Benjamin Andujar, Dioscoro Sol,
Arniel Rezada and Joven Orot.34
xxxx
04. Q- On that night, on or about 9:00 o’clock in the evening more or less
on December 31, 1992, where were you?
A- I went to the disco at [the] Public Market[,] Sominot, Zamboanga del
Sur.
05. Q- While you were in the disco place, do you know if there was an
incident [that] happened?
A- No, sir, but when I was in the disco place, at about 3:30 at dawn more
or less[,] January 1, 1993, Allan Maglasang arrive[d] driving the jeep and
he invited me to ride together with Jemar Alarcon, Dioscoro Sol, Arniel
Rizada and Joven Orot.35
There were six accused in the carnapping case. If Jemar and Benjamin
were fetched by Allan who was driving the jeep, this would mean that
only three men pushed the jeep contrary to Rodrigo’s testimony in
Criminal Case No. 93-10380 that it has to be pushed by at least five
people so that it could start without the ignition key.
On direct examination,36 Oscar Jr. was asked as to what Rodrigo, his
driver who had informed him about the accident on January 1, 1993
at around 7:00 a.m., turned over to him after the incident, viz:
Q: When Rodrigo Maglasang, your driver informed you about the
accident, what did he carry with him if any and turned over to you?
A: The OR (Official Receipt) and the CR (Certificate of Registration)
Sir.
Q: How about the key of the vehicle?
A: It was not turned over, Sir.37
Assuming arguendo that Allan stole the jeep by having the same
pushed by a group, the ignition key should then be with Rodrigo as
he was entrusted with the jeep’s possession. Thus, at the time
Rodrigo faced his employer hours after the incident, it is reasonable
to expect that the driver should have also returned the key to the
operator together with the Official Receipt and Certificate of
Registration. Notably, Rodrigo did not do so and instead, the key
was allegedly handed over to the police for reasons unexplained and
not available from the records. Interestingly, Oscar Jr. never
presented Rodrigo as his witness. Neither was he able to attest on
cross-examination that Allan really stole the jeep by pushing or that
the key was handed over to him by Rodrigo:
Q: On December 31, 1992, you did not know that it was Rodrigo
Maglasang who gave the key to Allan Maglasang. Is that correct?
A: I was not there. So, I do not know but he had an affidavit to show
that he turned it over to the police.
Q: What I was asking you is that, [o]n the night of December 31,
1992, when it was driven by Allan Maglasang, you did not know that
the key was voluntarily given by Rodrigo Maglasang to Allan
Maglasang?
A: I was not there.
Q: So, you could not testify on that, is that correct?
A: Yes Sir, I was not there.38
Furthermore, Oscar Jr. acknowledged the dismissal of the
carnapping case, thus:
Q: Now, there was a case filed against Allan Maglasang and [his] x x
x co-accused x x x [n]amely: Benjamin Andojar, Dioscoro Sol, Joven
Orot, [Jemar Azarcon] and [Arniel] Rizada, for carnapping. Is that
correct?
A: Yes Sir.
Q: That case was filed by you because you alleged that on December
31, 1992, your jeep was carnapped by Allan Maglasang and his co-
accused, the said mentioned, is that correct?
A: Yes Sir.
Q: You testified on the case in Aurora, is that correct?
A: Yes, Sir.
Q: And you could well remember that this representation is the
counsel of the co-accused of Allan Maglasang, is that correct?
A: Yes Sir.
Q: And that case for carnapping was dismissed, is that correct?
A: Yes Sir.
Q: Even the case of Allan Maglasang, was also dismissed, is that correct
A: Yes Sir.
Q: Because there was no sufficient evidence to establish that the jeep
was carnapped, is that correct?
A: Yes Sir.39
While Oscar Jr. highlights that the headlights were not on to support his
claim that his jeep was stolen, this circumstance by itself will not prove
that it really was stolen. The reason why the headlights were not on at
the time of the accident was not sufficiently established during the trial.
Besides, the fact that the headlights were not on cannot be exclusively
attributed to the lack of ignition key in starting the jeep as there may be
other possibilities such as electrical problems, broken headlights, or that
they were simply turned off.
Hence, sans the testimony of witnesses and other relevant evidence to
support the defense of unauthorized taking, we cannot subscribe to
Oscar Jr.’s claim that his jeep was stolen. The evidence on record brings
forth more questions than clear-cut answers.
Oscar Jr. alleges that the presumption of negligence under the doctrine
of res ipsa loquitur (literally, the thing speaks for itself) should not have
been applied because he was vigilant in securing his vehicle. He claims
that the jeep was parked in a well secured area not remote to the
watchful senses of its driver Rodrigo.
Under the doctrine of res ipsa loquitur, "[w]here the thing that caused
the injury complained of is shown to be under the management of the
defendant or his servants; and the accident, in the ordinary course of
things, would not happen if those who had management or control used
proper care, it affords reasonable evidence – in the absence of a
sufficient, reasonable and logical explanation by defendant – that the
accident arose from or was caused by the defendant’s want of care." 40  Savings Bank,45 the car of therein respondent bank caused the death
Res ipsa loquitur is "merely evidentiary, a mode of proof, or a mere
procedural convenience, since it furnishes a substitute for, and relieves a
plaintiff of, the burden of producing a specific proof of negligence." 41 It
"recognizes that parties may establish prima facie negligence without
direct proof, thus, it allows the principle to substitute for specific proof
of negligence. It permits the plaintiff to present along with proof of the
accident, enough of the attending circumstances to invoke the doctrine,
create an inference or presumption of negligence and thereby place on
the defendant the burden of proving that there was no negligence on his
part."42 The doctrine is based partly on "the theory that the defendant in
charge of the instrumentality which causes the injury either knows the
cause of the accident or has the best opportunity of ascertaining it while
the plaintiff has no such knowledge, and is therefore compelled to allege
negligence in general terms."43
The requisites of the doctrine of res ipsa loquitur as established by
jurisprudence are as follows:
1) the accident is of a kind which does not ordinarily occur unless
someone is negligent;
2) the cause of the injury was under the exclusive control of the person
in charge and
3) the injury suffered must not have been due to any voluntary action or
contribution on the part of the person injured.44
The above requisites are all present in this case. First, no person just
walking along the road would suddenly be sideswiped and run over by
an on-rushing vehicle unless the one in charge of the said vehicle had
been negligent. Second, the jeep which caused the injury was under the
exclusive control of Oscar Jr. as its owner. When Oscar Jr. entrusted the
ignition key to Rodrigo, he had the power to instruct him with regard to
the specific restrictions of the jeep’s use, including who or who may not
drive it. As he is aware that the jeep may run without the ignition
key, he also has the responsibility to park it safely and securely and
to instruct his driver Rodrigo to observe the same precaution. Lastly,
there was no showing that the death of the victims was due to any
voluntary action or contribution on their part.
The aforementioned requisites having been met, there now arises a
presumption of negligence against Oscar Jr. which he could have
overcome by evidence that he exercised due care and diligence in
preventing strangers from using his jeep. Unfortunately, he failed to
do so.
What this Court instead finds worthy of credence is the CA’s
conclusion that Oscar Jr. gave his implied permission for Allan to use
the jeep. This is in view of Oscar Jr.’s failure to provide solid proof
that he ensured that the parking area is well secured and that he
had expressly imposed restrictions as to the use of the jeep when he
entrusted the same to his driver Rodrigo. As fittingly inferred by the
CA, the jeep could have been endorsed to Allan by his brother
Rodrigo since as already mentioned, Oscar Jr. did not give Rodrigo
any specific and strict instructions on matters regarding its use.
Rodrigo therefore is deemed to have been given the absolute
discretion as to the vehicle’s operation, including the discretion to
allow his brother Allan to use it.
The operator on record of a vehicle is primarily responsible to third
persons for the deaths or injuries consequent to its operation,
regardless of whether the employee drove the registered owner’s
vehicle in connection with his employment.
Without disputing the factual finding of the CA that Allan was still
his
employee at the time of the accident, a finding which we see no
reason to disturb, Oscar Jr. contends that Allan drove the jeep in his
private capacity and thus, an employer’s vicarious liability for the
employee’s fault under Article 2180 of the Civil Code cannot apply
to him.
The contention is no longer novel. In Aguilar Sr. v. Commercial
of Conrado Aguilar, Jr. while being driven by its assistant vice
president. Despite Article 2180, we still held the bank liable for
damages for the accident as said provision should defer to the
settled doctrine concerning accidents involving registered motor
vehicles, i.e., that the registered owner of any vehicle, even if not
used for public service, would primarily be responsible to the public
or to third persons for injuries caused the latter while the vehicle
was being driven on the highways or streets. 46 We have already
ratiocinated that:
The main aim of motor vehicle registration is to identify the owner
so that if any accident happens, or that any damage or injury is
caused by the vehicle on the public highways, responsibility therefor
can be fixed on a definite individual, the registered owner. Instances
are numerous where vehicles running on public highways caused
accidents or injuries to pedestrians or other vehicles without
positive identification of the owner or drivers, or with very scant
means of identification. It is to forestall these circumstances, so
inconvenient or prejudicial to the public, that the motor vehicle
registration is primarily ordained, in the interest of the
determination of persons responsible for damages or injuries
caused on public highways.47
Absent the circumstance of unauthorized use 48 or that the subject
vehicle was stolen49 which are valid defenses available to a
registered owner, Oscar Jr. cannot escape liability for quasi-delict
resulting from his jeep’s use.1âwphi1
All told and considering that the amounts of damages awarded are
in accordance with prevailing jurisprudence, the Court concurs with
the findings of the CA and sustains the awards made. In addition,
pursuant to Eastern Shipping Lines, Inc. v. Court of Appeals, 50 an
interest of six percent (6%) per annum on the amounts awarded
shall be imposed, computed from the time the judgment of the RTC
is rendered on April 17, 2000 and twelve percent (12%) per annum on
such amount upon finality of this Decision until the payment thereof.
WHEREFORE, premises considered, the instant petition is DENIED. The
Decision dated July 11, 2006 of the Court of Appeals in CA-G.R. CV No.
67764 is hereby AFFIRMED with further MODIFICATION that an interest
of six percent (6%) per annum on the amounts awarded shall be
imposed, computed from the time the judgment of the Regional Trial
Court, Branch 23, Molave, Zamboanga del Sur is rendered on April 17,
2000 and twelve percent (12%) per annum on such amount upon finality
of this Decision until the payment thereof.
SO ORDERED.
G.R. No. 172200               July 6, 2010
THE HEIRS OF REDENTOR COMPLETO and ELPIDIO ABIAD, Petitioners,
vs.
SGT. AMANDO C. ALBAYDA, JR., Respondent.
DECISION
NACHURA, J.:
Before the Court is a petition for review on certiorari under Rule 45 of
the Rules of Court, assailing the Decision 1 dated January 2, 2006 and the
Resolution2 dated March 30, 2006 of the Court of Appeals (CA) in CA-G.R.
CV No. 68405.
The Facts
The facts of the case are as follows:
Respondent Amando C. Albayda, Jr. (Albayda) is a Master Sergeant of the
Philippine Air Force, 527th Base Security Squadron, 520th Airbase,
Philippine Air Force, located at Villamor Air Base (VAB), Pasay City.
Petitioner Redentor Completo (Completo), now represented by his heirs,
was the taxi driver of a Toyota Corolla, bearing Plate No. PYD-128,
owned and operated by co-petitioner Elpidio Abiad (Abiad). 3 Albayda and
Completo figured in an accident along the intersection of 8th and 11th
Streets, VAB. Albayda filed a complaint for damages before the Regional
Trial Court (RTC) of Pasay City. The case was docketed as Civil Case No.
98-1333.4
The amended complaint alleged that, on August 27, 1997, while Albayda
was on his way to the office to report for duty, riding a bicycle along 11th
Street, the taxi driven by Completo bumped and sideswiped him, causing
serious physical injuries. Albayda was brought to the Philippine Air Force
General Hospital (PAFGH) inside VAB. However, he was immediately
transferred to the Armed Forces of the Philippines Medical Center
(AFPMC) on V. Luna Road, Quezon City, because there was a fracture in
his left knee and there was no orthopedic doctor available at PAFGH.
From August 27, 1997 until February 11, 1998, he was confined therein.
He was again hospitalized at PAFGH from February 23, 1998 until March
22, 1998.5
Conciliation between the parties before the barangay failed. Thus,
Albayda filed a complaint for physical injuries through reckless
imprudence against Completo before the Office of the City Prosecutor of
Pasay City. On the other hand, Completo filed a counter-charge of
damage to property through reckless imprudence against Albayda. On
January 13, 1998, the Office of the City Prosecutor issued a
resolution,6 recommending the filing of an information for reckless
imprudence resulting in physical injuries against Completo. The counter-
charge of damage to property was recommended dismissed. 7
The case was raffled to the Metropolitan Trial Court of Pasay City, Branch
45, where Albayda manifested his reservation to file a separate civil
action for damages against petitioners Completo and Abiad.8
Albayda alleged that the proximate cause of the incident which
necessitated his stay in the hospital for approximately seven (7) months
was the negligence of Completo who, at the time of the accident, was in
the employ of Abiad. The pain he suffered required him to undergo
medical physiotherapy for a number of years to regain normality of
his left knee joint, and he claimed that he incurred actual damages
totaling Two Hundred Seventy-Six Thousand Five Hundred Fifty
Pesos (₱276,550.00), inclusive of his anticipated operations. 9
He further stated that aggravating the physical sufferings, mental
anguish, frights, serious anxiety, besmirched reputation, wounded
feelings, moral shock, and social humiliation resulting from his
injuries, his wife abandoned him in May 1998, and left their children
in his custody. He thus demanded the amount of Six Hundred
Thousand Pesos (₱600,000.00) as moral damages. He likewise asked
for exemplary damages in the amount of Two Hundred Thousand
Pesos (₱200,000.00) and attorney’s fees of Twenty-Five Thousand
Pesos (₱25,000.00), plus One Thousand Pesos (₱1,000.00) per court
appearance.10
In his answer to the amended complaint, Completo alleged that, on
August 27, 1997, he was carefully driving the taxicab along 8th
Street, VAB, when suddenly he heard a strange sound from the rear
right side of the taxicab. When he stopped to investigate, he found
Albayda lying on the road and holding his left leg. He immediately
rendered assistance and brought Albayda to PAFGH for emergency
treatment.11
Completo also asserted that he was an experienced driver who, in
accordance with traffic rules and regulations and common courtesy
to his fellow motorists, had already reduced his speed to twenty
(20) kilometers per hour even before reaching the intersection of
8th and 11th Streets. In contrast, Albayda rode his bicycle at a very
high speed, causing him to suddenly lose control of the bicycle and
hit the rear door on the right side of the taxicab.12
The deep indentation on the rear right door of the taxicab was
caused by the impact of Albayda’s body that hit the taxicab after he
had lost control of the bicycle; while the slight indentation on the
right front door of the taxicab was caused by the impact of the bike
that hit the taxicab after Albayda let go of its handles when he had
lost control of it.13
Completo maintained that Albayda had no cause of action. The
accident and the physical injuries suffered by Albayda were caused
by his own negligence, and his purpose in filing the complaint was to
harass petitioners and unjustly enrich himself at their expense. 14
After submission of the parties’ respective pleadings, a pretrial
conference was held. On December 8, 1998, the RTC issued a
pretrial order. Thereafter, trial on the merits ensued. 15
Albayda presented himself, Michael Navarro (Navarro), Dr. Rito
Barrosa, Jr. (Dr. Barrosa), Dr. Armando Sta. Ana, Jr., Dr. Ranny
Santiago, (Dr. Santiago), and Dr. Manuel Fidel Magtira (Dr. Magtira)
as witnesses in open court.16
On direct examination, Navarro testified that, on August 27, 1997, at
around 1:45 p.m., he saw a taxicab, with Plate No. PYD-128, coming
from 11th Street, running at an unusual speed. The normal speed
should have been twenty-five (25) kilometers per hour. He was at
the corner of 9th and 8th Streets when the taxicab passed by him.
The side of the bicycle was hit by the taxicab at the intersection of
11th and 8th Streets. He saw Albayda fall to the ground, grimacing
in pain. The taxicab at that moment was about ten (10) meters away
from Albayda. On cross-examination, Navarro reiterated that the
taxicab was running quite fast. The bicycle ridden by Albayda
reached the intersection of 8th and 11th Streets before the taxicab
hit it.17
Dr. Santiago, the orthopedic surgeon who treated Albayda when the
latter was admitted at AFPMC, testified that the cause of the injury
was "hard impact," and recommended an operation to alleviate the
suffering. On cross-examination, he said that there was a separation
of the fragments of the proximal leg, the injured extremity, called
levia. They placed the victim on knee traction or calcaneal
traction,18 in order to avoid further swelling. They bore the
calcanean bone with a stainless steel pin so that they could put five
percent (5%) of the body weight of the patient to cool down the leg.
He treated Albayda for three (3) months. He recommended surgery,
but the victim had other medical problems, like an increase in sugar
level, and they were waiting for the availability of the implant. The
implant was supposed to be placed on the lateral aspect of the proximal
leg or the levia, the part with the separation. It was a long implant with
screws.19
Dr. Magtira testified that Albayda was readmitted at AFPMC on January
25, 1999 because of complaints of pain and limitation of motion on the
knee joint. Upon evaluation, the pain was caused by traumatic arthritis
brought about by malunion of the lateral trivial condial. An operation of
the soft tissue release was conducted for him to mobilize his knee joint
and attain proper range of motion. After the operation, Albayda attained
functional range of motion, but because of subsisting pain, they had to
do osteoplasty 20 of the malunion, which was another operation. On
cross-examination, Dr. Magtira testified that he rendered free medical
service at AFPMC.21
Albayda testified that he was thirty-six (36) years old and a soldier of the
Armed Forces of the Philippines. On August 27, 1997, at around 1:40
p.m., he was riding his bike on his way to the office, located on 916
Street, VAB. He had to stop at the corner of 11th and 8th Streets
because an oncoming taxicab was moving fast. However, the taxicab still
bumped the front tire of his bike, hit his left knee and threw him off until
he fell down on the road. The taxicab stopped about ten meters away,
and then moved backwards. Its driver, Completo, just stared at him.
When somebody shouted to bring him to the hospital, two (2) persons,
one of whom was Dr. Barrosa, helped him and carried him into the
taxicab driven by Completo, who brought him to PAFGH. 22
Upon examination, it was found that Albayda suffered fracture in his left
knee and that it required an operation. No orthopedic doctor was
available at PAFGH. Thus, he was transferred that same afternoon to
AFPMC, where he was confined until February 11, 1998.23
At AFPMC, Albayda’s left leg was drilled on and attached to traction.
When his leg was drilled, it was so painful that he had to shout. After his
release from the hospital, he continued to suffer pain in his leg. He
underwent reflexology and therapy which offered temporary relief from
pain. But after some time, he had to undergo therapy and reflexology
again.24
On January 25, 1999, Albayda was readmitted at AFPMC and operated
on. On June 24, 1999, he was operated on again. Wire and screw were
installed so that he could bend his knee. Nonetheless, he continued to
suffer pain. As of the date of his testimony in court, he was scheduled for
another operation in January 2000, when the steel that would be
installed in his leg arrives.25
For his food, Albayda spent Thirty Pesos (₱30.00) each day during his six
(6) months of confinement; for his bed pan, One Thousand Pesos
(₱1,000.00); for his twice weekly reflexology, Three Hundred Pesos
(₱300.00) every session since April 1997; for his caretaker, ₱300.00 per
day for six months. He also asked for ₱600,000.00 in moral damages
because Completo did not lend him a helping hand, and he would be
suffering deformity for the rest of his life. He demanded ₱25,000.00 as
attorney’s fees and ₱1,000.00 for every court appearance of his lawyer. 26
On cross-examination, Albayda testified that, on the date of the incident,
he was the base guard at VAB, and his duty was from 2 p.m. to 8 p.m.
That afternoon, he was not in a hurry to go to his place of work because
it was only about 1:45 p.m., and his place of work was only six (6) meters
away. After the accident, he was brought to PAFGH, and at 3:00 p.m., he
was brought to the AFPMC. When he was discharged from the hospital,
he could no longer walk.27
Dr. Barrosa’s testimony during cross-examination emphasized that he
was with 2 other persons when he carried Albayda into the taxicab
driven by Completo. He was certain that it was not Completo who
carried the victim into the taxicab. It was only a matter of seconds when
he rushed to the scene of the accident. The taxicab backed up fifteen
(15) seconds later. Albayda lay 2 meters away from the corner of 8th and
11th Streets.28
Completo, Abiad, and Benjamin Panican (Panican) testified for the
defense.29
Completo alleged that he had been employed as taxi driver of FOJS
Transport, owned by Abiad, since February 1997. On August 27,
1997, he was driving the taxicab, with Plate No. PYD-128, from
10:00 a.m. At around 1:45 p.m., he was on his way home when a
bicycle bumped his taxicab at the intersection of 8th and 11th
Streets, VAB. The bicycle was travelling from south to north, and he
was going east coming from the west. The bicycle was coming from
11th Street, while he was travelling along 8th Street. 30
On cross-examination, Completo testified that when Albayda hit the
rear right door of the taxicab, the latter fell to the ground. When he
heard a noise, he immediately alighted from the taxicab. He denied
that he stopped about 10 meters away from the place where
Albayda fell. He carried Albayda and drove him to the hospital. 31
Panican testified that he worked as an airconditioner technician in a
shop located on 8th Street corner 11th Street. On the date and time
of the incident, he was working in front of the shop near the
roadside. He saw a bicycle bump the rear right side of the taxicab.
Then, the driver of the taxicab alighted, carried Albayda, and
brought him to the hospital.32
When questioned by the trial court, Panican testified that the
bicycle was running fast and that he saw it bump the taxicab. The
taxicab already passed the intersection of 11th and 8th Streets
when the bicycle arrived.33
Abiad testified that, aside from being a soldier, he was also a
franchise holder of taxicabs and passenger jeepneys. When
Completo applied as a driver of the taxicab, Abiad required the
former to show his bio-data, NBI clearance, and driver’s license.
Completo never figured in a vehicular accident since the time he
was employed in February 1997. Abiad averred that Completo was a
good driver and a good man. Being the operator of taxicab, Abiad
would wake up early and personally check all the taxicabs. 34
On July 31, 2000, the trial court rendered a decision, 35 the
dispositive portion of which reads:
WHEREFORE, judgment is hereby rendered in favor of the plaintiff
[Albayda] and against the defendants [Completo and Abiad].
Accordingly, the defendants [Completo and Abiad] are hereby
ordered to pay the plaintiff [Albayda] the following sum:
1. ₱46,000.00 as actual damages;
2. ₱400,000.00 as moral damages; [and]
3. ₱25,000.00 as attorney’s fees.
Costs against the defendants [Completo and Abiad].
SO ORDERED.36
Completo and Abiad filed an appeal. The CA affirmed the trial court
with modification in a Decision37 dated January 2, 2006, viz.:
WHEREFORE, premises considered, the appeal is DENIED for lack of
merit. The assailed Decision dated 31 July 2000 rendered by the
Regional Trial Court of Pasay City, Branch 117, in Civil Case No. 98-
1333 is hereby AFFIRMED with the following MODIFICATIONS:
1. the award of Php 46,000.00 as actual damages is DELETED;
2. temperate damages in the amount of Php 40,000.00 is awarded
in favor of appellee;
3. moral damages in favor of appellee is REDUCED to Php
200,000.00;
4. appellants Redentor Completo and Elpidio Abiad are solidarily
liable to pay appellee Amando C. Albayda, Jr. said temperate and
moral damages, as well as the attorney’s fees in the amount of Php
25,000.00 awarded by the trial court;
5. the temperate and moral damages shall earn legal interest at 6% per
annum computed from the date of promulgation of Our Decision;
6. upon finality of Our Decision, said moral and temperate damages shall
earn legal interest at the rate of 12% per annum, in lieu of 6% per
annum, until full payment. Costs against appellants.
SO ORDERED.38
Hence, this petition.
The Issues
Petitioners presented the following issues for resolution: (1) whether the
CA erred in finding that Completo was the one who caused the collision;
(2) whether Abiad failed to prove that he observed the diligence of a
good father of the family; and (3) whether the award of moral and
temperate damages and attorney’s fees to Albayda had no basis. 39
The Ruling of the Court
The petition is bereft of merit.
I. On Negligence
The issues raised by petitioners essentially delve into factual matters
which were already passed upon by the RTC and the CA. Conclusions and
findings of fact of the trial court are entitled to great weight on appeal
and should not be disturbed unless for strong and cogent reasons,
because the trial court is in a better position to examine real evidence, as
well as to observe the demeanor of the witnesses while testifying in the
case. The fact that the CA adopted the findings of fact of the trial court
makes the same binding upon this Court. Well-settled is the rule that the
Supreme Court is not a trier of facts. 40 To be sure, findings of fact of
lower courts are deemed conclusive and binding upon the Supreme
Court, save only for clear and exceptional reasons, 41 none of which is
present in the case at bar.
The instant case involved a collision between a taxicab and a bicycle
which resulted in serious physical injuries to the bicycle rider, Albayda. It
is a rule in negligence suits that the plaintiff has the burden of proving by
a preponderance of evidence the motorist’s breach in his duty of care
owed to the plaintiff, that the motorist was negligent in failing to
exercise the diligence required to avoid injury to the plaintiff, and that
such negligence was the proximate cause of the injury suffered. 42
Article 2176 of the Civil Code provides that 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
preexisting contractual relation between the parties, is called a quasi-
delict. In this regard, the question of the motorist's negligence is a
question of fact.
It was proven by a preponderance of evidence that Completo failed to
exercise reasonable diligence in driving the taxicab because he was over-
speeding at the time he hit the bicycle ridden by Albayda. Such
negligence was the sole and proximate cause of the serious physical
injuries sustained by Albayda. Completo did not slow down even when
he approached the intersection of 8th and 11th Streets of VAB. It was
also proven that Albayda had the right of way, considering that he
reached the intersection ahead of Completo.
The bicycle occupies a legal position that is at least equal to that of other
vehicles lawfully on the highway, and it is fortified by the fact that
usually more will be required of a motorist than a bicyclist in discharging
his duty of care to the other because of the physical advantages the
automobile has over the bicycle.43
At the slow speed of ten miles per hour, a bicyclist travels almost
fifteen feet per second, while a car traveling at only twenty-five
miles per hour covers almost thirty-seven feet per second, and split-
second action may be insufficient to avoid an accident. It is obvious
that a motor vehicle poses a greater danger of harm to a bicyclist
than vice versa. Accordingly, while the duty of using reasonable care
falls alike on a motorist and a bicyclist, due to the inherent
differences in the two vehicles, more care is required from the
motorist to fully discharge the duty than from the bicyclist. 44 Simply
stated, the physical advantages that the motor vehicle has over the
bicycle make it more dangerous to the bicyclist than vice versa. 45
Under Article 2180 of the Civil Code, the obligation imposed by
Article 2176 is demandable not only for one’s own acts or omissions,
but also for those persons for whom one is responsible. Employers
shall be liable for the damages caused by their employees, but the
employers’ responsibility shall cease upon proof that they observed
all the diligence of a good father of the family in the selection and
supervision of their employees.
When an injury is caused by the negligence of an employee, a legal
presumption instantly arises that the employer was negligent. This
presumption may be rebutted only by a clear showing on the part of
the employer that he exercised the diligence of a good father of a
family in the selection and supervision of his employee. If the
employer successfully overcomes the legal presumption of
negligence, he is relieved of liability. In other words, the burden of
proof is on the employer.46
The trial court’s finding that Completo failed to exercise reasonable
care to avoid collision with Albayda at the intersection of 11th and
8th Streets of VAB gives rise to liability on the part of Completo, as
driver, and his employer Abiad. The responsibility of two or more
persons who are liable for quasi-delict is solidary. 47 The civil liability
of the employer for the negligent acts of his employee is also
primary and direct, owing to his own negligence in selecting and
supervising his employee.48 The civil liability of the employer
attaches even if the employer is not inside the vehicle at the time of
the collision.49
In the selection of prospective employees, employers are required
to examine them as to their qualifications, experience, and service
records. On the other hand, with respect to the supervision of
employees, employers should formulate standard operating
procedures, monitor their implementation, and impose disciplinary
measures for breaches thereof. To establish these factors in a trial
involving the issue of vicarious liability, employers must submit
concrete proof, including documentary evidence.50
Abiad testified that before he hired Completo, he required the latter
to show his bio-data, NBI clearance, and driver’s license. Abiad
likewise stressed that Completo was never involved in a vehicular
accident prior to the instant case, and that, as operator of the
taxicab, he would wake up early to personally check the condition of
the vehicle before it is used.
The protestation of Abiad to escape liability is short of the diligence
required under the law. Abiad’s evidence consisted entirely of
testimonial evidence, and the unsubstantiated and self-serving
testimony of Abiad was insufficient to overcome the legal
presumption that he was negligent in the selection and supervision
of his driver.
II. On Damages
The CA rightfully deleted the award of actual damages by the RTC
because Albayda failed to present documentary evidence to
establish with certainty the amount that he incurred during his
hospitalization and treatment for the injuries he suffered. In the
absence of stipulation, actual damages are awarded only for such
pecuniary loss suffered that was duly proved.51
While the amount of actual damages was not duly established with
certainty, the Court recognizes the fact that, indeed, Albayda
incurred a considerable amount for the necessary and reasonable
medical expenses, loss of salary and wages, loss of capacity to earn
increased wages, cost of occupational therapy, and harm from
conditions caused by prolonged immobilization. Temperate damages,
more than nominal but less than compensatory damages, may be
recovered when the court finds that some pecuniary loss has been
suffered but its amount cannot, from the nature of the case, be proved
with certainty.52 Temperate damages must be reasonable under the
circumstances.53 Thus, the Court finds the award of One Hundred
Thousand Pesos (₱100,000.00) as temperate damages reasonable under
the circumstances.

Doubtless, Albayda suffered immeasurable pain because of the incident

caused by petitioners’ negligence. The CA explained:

The court vicariously feels the pain the plaintiff [Albayda] suffered a
number of times. After he was bumped by defendants’ cab, he cried in
pain. When the doctors bore holes into his left knee, he cried in pain.
When he was tractioned, when he was subjected to an operation after
operation he suffered pain. When he took the witness stand to testify,
he walked with crutches, his left knee in bandage, stiff and unfuctional.
Pain was written [on] his face. He does deserve moral damages. 54

Moral damages are awarded in quasi-delicts causing physical injuries.

The permanent deformity and the scar left by the wounds suffered by
Albayba will forever be a reminder of the pain and suffering that he had
endured and continues to endure because of petitioners’ negligence.
Thus, the award of moral damages in the amount of Five Hundred
Thousand Pesos (₱500,000.00) is proper.

Finally, an interest rate of six percent (6%) per annum is due on the
amount of ₱100,000.00, as temperate damages, and ₱500,000.00, as
moral damages, which we have awarded. The 6% per annum interest
rate on the temperate and moral damages shall commence to run from
the date of the promulgation of this Decision. Upon finality of the
Decision, an interest rate of twelve percent (12%) per annum shall be
imposed on the amount of the temperate and moral damages until full
payment thereof.55

The award of attorney’s fees is hereby deleted for failure to prove that
petitioners acted in bad faith in refusing to satisfy respondent’s just and
valid claim.

WHEREFORE, in view of the foregoing, the Decision dated January 2,

2006 and the Resolution dated March 30, 2006 of the Court of Appeals in
CA-G.R. CV No. 68405 are hereby AFFIRMED with MODIFICATION, viz.:

(1) The estate of the late Redentor Completo and Elpidio Abiad are
solidarily liable to pay One Hundred Thousand Pesos (₱100,000.00), as
temperate damages, and Five Hundred Thousand Pesos (₱500,000.00),
as moral damages;

(2) The temperate and moral damages hereby awarded shall earn legal
interest at the rate of six percent (6%) per annum from the date of the
promulgation of this Decision. Upon finality of this Decision, an interest
rate of twelve percent (12%) per annum shall be imposed on the amount
of the temperate and moral damages until full payment thereof.

Costs against petitioners.

SO ORDERED.