General Hospital where she remained in a coma until her death two days
after.9
REGISERED OWNER RULE
FEB LEASING AND FINANCE CORPORATION (now BPI LEASING
CORP), vs
SPS SERGIO P. BAYLON and MARITESS VILLENA-BAYLON, BG
HAULER, INC., and MANUEL Y. ESTILLOSO,
G.R. No. 181398 June 29, 2011
DECISION
The Case
This is a petition for review on certiorari1 of the 9 October 2007
Decision2 and the 18 January 2008 Resolution3 of the Court of Appeals in
CA-G.R. CV No. 81446. The 9 October 2007 Decision affirmed the 30
October 2003 Decision4 of the Regional Trial Court (Branch 35)
of Gapan City in Civil Case No. 2334 ordering petitioner to pay
respondents damages. The 18 January 2008 Resolution denied petitioners
motion for reconsideration.
The Facts
On 2 September 2000, an Isuzu oil tanker running along Del Monte
Avenue in Quezon City and bearing plate number TDY 712 hit Loretta
V. Baylon (Loretta), daughter of respondent spouses Sergio
P. Baylon and Maritess Villena-Baylon (spouses Baylon). At the time of the
accident, the oil tanker was registered5 in the name of petitioner FEB
Leasing and Finance Corporation6 (petitioner). The oil tanker was
leased7 to BG Hauler, Inc. (BG Hauler) and was being driven by the latters
driver, Manuel Y. Estilloso. The oil tanker was insured 8 by FGU Insurance
Corp. (FGU Insurance).
The accident took place at around 2:00 p.m. as the oil tanker was coming
from Balintawak and heading towards Manila. Upon reaching the
intersection of Bonifacio Street and Del Monte Avenue, the oil tanker
turned left. While the driver of the oil tanker was executing a left turn side
by side with another vehicle towards Del Monte Avenue, the oil tanker hit
Loretta who was then crossing Del Monte Avenue coming
from Mayon Street. Due to the strong impact, Loretta was violently thrown
away about three to five meters from the point of impact. She fell to the
ground unconscious. She was brought for treatment to the Chinese
The spouses Baylon filed with the RTC (Branch 35) of Gapan City a
Complaint10 for damages against petitioner, BG Hauler, the driver, and FGU
Insurance. Petitioner filed its answer with compulsory counterclaim while
FGU Insurance filed its answer with counterclaim. On the other hand, BG
Hauler filed its answer with compulsory counterclaim and cross-claim
against FGU Insurance.
Petitioner claimed that the spouses Baylon had no cause of action against
it because under its lease contract with BG Hauler, petitioner was not liable
for any loss, damage, or injury that the leased oil tanker might cause.
Petitioner claimed that no employer-employee relationship existed
between petitioner and the driver.
BG Hauler alleged that neither do the spouses Baylon have a cause of
action against it since the oil tanker was not registered in its name. BG
Hauler contended that the victim was guilty of contributory negligence in
crossing the street. BG Hauler claimed that even if its driver was at fault,
BG Hauler exercised the diligence of a good father of a family in the
selection and supervision of its driver. BG Hauler also contended that FGU
Insurance is obliged to assume all liabilities arising from the use of the
insured oil tanker.
For its part, FGU Insurance averred that the victim was guilty of
contributory negligence. FGU Insurance concluded that the
spouses Baylon could not expect to be paid the full amount of their claims.
FGU Insurance pointed out that the insurance policy covering the oil tanker
limited any claim to a maximum of P400,000.00.
During trial, FGU Insurance moved that (1) it be allowed to deposit in
court the amount of P450,000.00 in the joint names of the
spouses Baylon, petitioner, and BG Hauler and (2) it be released from
further participating in the proceedings. After the RTC granted the motion,
FGU Insurance deposited in the Branch Clerk of Court a check in the
names of the spousesBaylon, petitioner, and BG Hauler. The RTC then
released FGU Insurance from its contractual obligations under the
insurance policy.
The Ruling of the RTC
After weighing the evidence submitted by the parties, the RTC found that
the death of Loretta was due to the negligent act of the driver. The RTC
held that BG Hauler, as the employer, was solidarily liable with the driver.
The RTC further held that petitioner, as the registered owner of the oil
tanker, was also solidarily liable.
The RTC found that since FGU Insurance already paid the amount
of P450,000.00 to the spouses Baylon, BG Hauler, and petitioner, the
insurers obligation has been satisfactorily fulfilled. The RTC thus dismissed
the cross-claim of BG Hauler against FGU Insurance. The decretal part of
the RTCs decision reads:
Wherefore, premises considered, judgment is hereby rendered in favor of
the plaintiffs and against defendants FEB Leasing (now BPI Leasing), BG
Hauler, and Manuel Estilloso, to wit:
1. Ordering the defendants, jointly and severally, to pay plaintiffs the following:
a. the amount of P62,000.00 representing actual expenses incurred by the
plaintiffs;
b. the amount of P50,000.00 as moral damages;
c. the amount of P2,400,000.00 for loss of earning capacity of the deceased victim,
Loretta V. Baylon;
d. the sum of P50,000.00 for death indemnity;
e. the sum of P50,000.00 for and as attorneys fees; and
f. with costs against the defendants.
2. Ordering the dismissal of defendants counter-claim for lack of merit and the
cross claim of defendant BG Hauler against defendant FGU Insurance.
SO ORDERED.11
Petitioner, BG Hauler, and the driver appealed the RTC Decision to the
Court of Appeals. Petitioner claimed that as financial lessor, it is exempt
from liability resulting from any loss, damage, or injury the oil tanker may
cause while being operated by BG Hauler as financial lessee.
On the other hand, BG Hauler and the driver alleged that no sufficient
evidence existed proving the driver to be at fault. They claimed that the
RTC erred in finding BG Hauler negligent despite the fact that it had
exercised the diligence of a good father of a family in the selection and
supervision of its driver and in the maintenance of its vehicles. They
contended that petitioner, as the registered owner of the oil tanker, should
be solely liable for Lorettas death.
The Ruling of the Court of Appeals
The Court of Appeals held that petitioner, BG Hauler, and the driver
are solidarily liable for damages arising from Lorettas death. Petitioners
liability arose from the fact that it was the registered owner of the oil
tanker while BG Haulers liability emanated from a provision in the lease
contract providing that the lessee shall be liable in case of any loss,
damage, or injury the leased oil tanker may cause.
Thus, the Court of Appeals affirmed the RTC Decision but with the
modification that the award of attorneys fees be deleted for being
speculative. The dispositive part of the appellate courts Decision reads:
WHEREFORE, in the light of the foregoing, the instant appeal is DENIED.
Consequently, the assailed Decision of the lower court is AFFIRMED with the
MODIFICATION that the award of attorneys fees is DELETED.
IT IS SO ORDERED.12
Dissatisfied, petitioner and BG Hauler, joined by the driver, filed two
separate motions for reconsideration. In its 18 January 2008 Resolution,
the Court of Appeals denied both motions for lack of merit.
Unconvinced, petitioner alone filed with this Court the present petition for
review on certiorari impleading the spouses Baylon, BG Hauler, and the
driver as respondents.13
The Issue
The sole issue submitted for resolution is whether the registered owner of
a financially leased vehicle remains liable for loss, damage, or injury
caused by the vehicle notwithstanding an exemption provision in the
financial lease contract.
The Courts Ruling
Petitioner contends that the lease contract between BG Hauler and
petitioner specifically provides that BG Hauler shall be liable for any loss,
damage, or injury the leased oil tanker may cause even if petitioner is the
registered owner of the said oil tanker. Petitioner claims that the Court of
Appeals erred in holding petitioner solidarily liable with BG Hauler despite
having found the latter liable under the lease contract.
For their part, the spouses Baylon counter that the lease contract between
petitioner and BG Hauler cannot bind third parties like them. The
spouses Baylon maintain that the existence of the lease contract does not
relieve petitioner of direct responsibility as the registered owner of the oil
tanker that caused the death of their daughter.
On the other hand, BG Hauler and the driver argue that at the time
petitioner and BG Hauler entered into the lease contract, Republic Act No.
598014 was still in effect. They point out that the amendatory law, Republic
Act No. 8556,15 which exempts from liability in case of any loss, damage,
or injury to third persons the registered owners of vehicles financially
leased to another, was not yet enacted at that time.
In point is the 2008 case of PCI Leasing and Finance, Inc. v. UCPB General
Insurance Co., Inc.16 There, we held liable PCI Leasing and Finance, Inc.,
the registered owner of an 18-wheeler Fuso Tanker Truck leased to
Superior Gas & Equitable Co., Inc. (SUGECO) and being driven by the
latters driver, for damages arising from a collision. This despite an express
provision in the lease contract to the effect that the lessee, SUGECO, shall
indemnify and hold the registered owner free from any liabilities,
damages, suits, claims, or judgments arising from SUGECOs use of the
leased motor vehicle.
In the instant case, Section 5.1 of the lease contract between petitioner
and BG Hauler provides:
Sec. 5.1. It is the principle of this Lease that while the title or ownership of
the EQUIPMENT, with all the rights consequent thereof, are retained by the
LESSOR, the risk of loss or damage of the EQUIPMENT from whatever
source arising, as well as any liability resulting from the ownership,
operation and/or possession thereof, over and above those
actually compensated by insurance, are hereby transferred to and
assumed by the LESSEE hereunder which shall continue in full force and
effect.17 (Emphasis supplied)
If it so wishes, petitioner may proceed against BG Hauler to seek
enforcement of the latters contractual obligation under Section 5.1 of the
lease contract. In the present case, petitioner did not file a cross-claim
against BG Hauler. Hence, this Court cannot require BG Hauler to
reimburse petitioner for the latters liability to the spouses Baylon.
However, as the registered owner of the oil tanker, petitioner may not
escape its liability to third persons.
Under Section 5 of Republic Act No. 4136, 18 as amended, all motor vehicles
used or operated on or upon any highway of the Philippines must be
registered with the Bureau of Land Transportation (now Land
Transportation Office) for the current year.19 Furthermore, any
encumbrances of motor vehicles must be recorded with the Land
Transportation Office in order to be valid against third parties. 20
In accordance with the law on compulsory motor vehicle registration, this
Court has consistently ruled that, with respect to the public and third
persons, the registered owner of a motor vehicle is directly and primarily
responsible for the consequences of its operation regardless of who the
actual vehicle owner might be.21 Well-settled is the rule that the registered
owner of the vehicle is liable for quasi-delicts resulting from its use. Thus,
even if the vehicle has already been sold, leased, or transferred to another
person at the time the vehicle figured in an accident, the registered vehicle
owner would still be liable for damages caused by the accident. The sale,
transfer or lease of the vehicle, which is not registered with the Land
Transportation Office, will not bind third persons aggrieved in an accident
involving the vehicle. The compulsory motor vehicle registration
underscores the importance of registering the vehicle in the name of the
actual owner.
The policy behind the rule is to enable the victim to find redress by the
expedient recourse of identifying the registered vehicle owner in the
records of the Land Transportation Office. The registered owner can be
reimbursed by the actual owner, lessee or transferee who is known to him.
Unlike the registered owner, the innocent victim is not privy to the lease,
sale, transfer or encumbrance of the vehicle. Hence, the victim should not
be prejudiced by the failure to register such transaction or encumbrance.
As the Court held in PCI Leasing:
The burden of registration of the lease contract is minuscule compared to
the chaos that may result if registered owners or operators of vehicles are
freed from such responsibility. Petitioner pays the price for its failure to
obey the law on compulsory registration of motor vehicles for registration
is a pre-requisite for any person to even enjoy the privilege of putting a
vehicle on public roads.22
In the landmark case of Erezo v. Jepte,23 the Court succinctly laid down
the public policy behind the rule, thus:
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 thereforcan 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.
xxx
Were a registered owner allowed to evade responsibility by proving who
the supposed transferee or owner is, it would be easy for him, by collusion
with others or, or otherwise, to escape said responsibility and transfer the
same to an indefinite person, or to one who possesses no property with
which to respond financially for the damage or injury done. A victim of
recklessness on the public highways is usually without means to discover
or identify the person actually causing the injury or damage. He has no
means other than by a recourse to the registration in the Motor Vehicles
Office to determine who is the owner. The protection that the law aims to
extend to him would become illusory were the registered owner given the
opportunity to escape liability by disproving his ownership. If the policy of
the law is to be enforced and carried out, the registered owner should not
be allowed to prove the contrary to the prejudice of the person injured,
that is to prove that a third person or another has become the owner, so
that he may be thereby be relieved of the responsibility to the injured
person.24
In this case, petitioner admits that it is the registered owner of the oil
tanker that figured in an accident causing the death of Loretta. As the
registered owner, it cannot escape liability for the loss arising out of
negligence in the operation of the oil tanker. Its liability remains even if at
the time of the accident, the oil tanker was leased to BG Hauler and was
being driven by the latters driver, and despite a provision in the lease
contract exonerating the registered owner from liability.
As a final point, we agree with the Court of Appeals that the award of
attorneys fees by the RTC must be deleted for lack of basis. The RTC failed
to justify the award of P50,000attorneys fees to respondent
spouses Baylon. The award of attorneys fees must have some factual,
legal and equitable bases and cannot be left to speculations and
conjectures.25Consistent with prevailing jurisprudence, 26 attorneys fees as
part of damages are awarded only in the instances enumerated in Article
2208 of the Civil Code.27 Thus, the award of attorneys fees is the exception
rather than the rule. Attorneys fees are not awarded every time a party
prevails in a suit because of the policy that no premium should be placed
on the right to litigate.28
WHEREFORE, we DENY the petition. We AFFIRM the 9 October 2007
Decision and the 18 January 2008 Resolution of the Court of Appeals in
CA-G.R. CV No. 81446 affirming with modification the 30 October 2003
Decision of the Regional Trial Court (Branch 35) of Gapan City in Civil Case
No. 2334 ordering petitioner FEB Leasing and Finance Corporation, BG
Hauler, Inc., and driver Manuel Y. Estilloso to solidarily pay respondent
spouses Sergio P. Baylon and Maritess Villena-Baylon the following
amounts:
a. P62,000.00 representing actual expenses incurred by the plaintiffs;
b. P50,000.00 as moral damages;
c. P2,400,000.00 for loss of earning capacity of the deceased victim,
Loretta V. Baylon; and
d. P50,000.00 for death indemnity.
Costs against petitioner.
SO ORDERED.
PCI LEASING AND FINANCE, INC., vs. UCPB GENERAL INSURANCE
CO., INC., G.R. No. 162267 July 4, 2008
DECISION
Before the Court is a Petition for Review on Certiorari under Rule 45 of the
Rules of Court, seeking a reversal of the Decision 1 of the Court of Appeals
(CA) dated December 12, 2003 affirming with modification the Decision of
the Regional Trial Court (RTC) of Makati City which ordered petitioner and
Renato Gonzaga (Gonzaga) to pay, jointly and severally, respondent the
amount of P244,500.00 plus interest; and the CA Resolution 2 dated
February 18, 2004 denying petitioner's Motion for Reconsideration.
The facts, as found by the CA, are undisputed:
On October 19, 1990 at about 10:30 p.m., a Mitsubishi Lancer car with
Plate Number PHD-206 owned by United Coconut Planters Bank was
traversing the Laurel Highway, Barangay Balintawak, Lipa City. The car
was insured with plantiff-appellee [UCPB General Insurance Inc.], then
driven by Flaviano Isaac with Conrado Geronimo, the Asst. Manager of
said bank, was hit and bumped by an 18-wheeler Fuso Tanker Truck with
Plate No. PJE-737 and Trailer Plate No. NVM-133, owned by defendants-
appellants PCI Leasing & Finance, Inc. allegedly leased to and operated
by defendant-appellant Superior Gas & Equitable Co., Inc. (SUGECO) and
driven by its employee, defendant appellant Renato Gonzaga.
The impact caused heavy damage to the Mitsubishi Lancer car resulting
in an explosion of the rear part of the car. The driver and passenger
suffered physical injuries. However, the driver defendant-appellant
Gonzaga continued on its [sic] way to its [sic] destination and did not
bother to bring his victims to the hospital.
Plaintiff-appellee paid the assured UCPB the amount of P244,500.00
representing the insurance coverage of the damaged car.
As the 18-wheeler truck is registered under the name of PCI Leasing,
repeated demands were made by plaintiff-appellee for the payment of
the aforesaid amounts. However, no payment was made. Thus, plaintiff-
appellee filed the instant case on March 13, 1991. 3
PCI Leasing and Finance, Inc., (petitioner) interposed the defense that it
could not be held liable for the collision, since the driver of the truck,
Gonzaga, was not its employee, but that of its co-defendant Superior Gas
& Equitable Co., Inc. (SUGECO).4 In fact, it was SUGECO, and not
petitioner, that was the actual operator of the truck, pursuant to a Contract
of Lease signed by petitioner and SUGECO.5 Petitioner, however, admitted
that it was the owner of the truck in question. 6
After trial, the RTC rendered its Decision dated April 15, 1999, 7 the
dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in favor of plaintiff
UCPB General Insurance [respondent], ordering the defendants PCI Leasing and
Finance, Inc., [petitioner] and Renato Gonzaga, to pay jointly and severally the
former the following amounts: the principal amount ofP244,500.00 with 12%
interest as of the filing of this complaint until the same is paid; P50,000.00 as
attorney's fees; and P20,000.00 as costs of suit.
SO ORDERED.8
Aggrieved by the decision of the trial court, petitioner appealed to the CA.
In its Decision dated December 12, 2003, the CA affirmed the RTC's
decision, with certain modifications, as follows:
WHEREFORE, the appealed decision dated April 15, 1999 is hereby AFFIRMED with
modification that the award of attorney's fees is hereby deleted and the rate of
interest shall be six percent (6%) per annum computed from the time of the filing of
the complaint in the trial court until the finality of the judgment. If the adjudged
principal and the interest remain unpaid thereafter, the interest rate shall be twelve
percent (12%) per annum computed from the time the judgment becomes final and
executory until it is fully satisfied.
SO ORDERED.9
Petitioner filed a Motion for Reconsideration which the CA denied in its
Resolution dated February 18, 2004.
Hence, herein Petition for Review.
The issues raised by petitioner are purely legal:
Whether petitioner, as registered owner of a motor vehicle that figured in
a quasi-delict may be held liable, jointly and severally, with the driver
thereof, for the damages caused to third parties.
Whether petitioner, as a financing company, is absolved from liability by
the enactment of Republic Act (R.A.) No. 8556, or the Financing Company
Act of 1998.
Anent the first issue, the CA found petitioner liable for the damage caused
by the collision since under the Public Service Act, if the property covered
by a franchise is transferred or leased to another without obtaining the
requisite approval, the transfer is not binding on the Public Service
Commission and, in contemplation of law, the grantee continues to be
responsible under the franchise in relation to the operation of the vehicle,
such as damage or injury to third parties due to collisions. 10
Petitioner claims that the CA's reliance on the Public Service Act is
misplaced, since the said law applies only to cases involving common
carriers, or those which have franchises to operate as public utilities. In
contrast, the case before this Court involves a private commercial vehicle
for business use, which is not offered for service to the general public. 11
Petitioner's contention has partial merit, as indeed, the vehicles involved in
the case at bar are not common carriers, which makes the Public Service
Act inapplicable.
However, the registered owner of the vehicle driven by a negligent driver
may still be held liable under applicable jurisprudence involving laws on
compulsory motor vehicle registration and the liabilities of employers
for quasi-delicts under the Civil Code.
The principle of holding the registered owner of a vehicle liable for quasi-
delicts resulting from its use is well-established in jurisprudence. Erezo v.
Jepte,12 with Justice Labrador as ponente, wisely explained the reason
behind this principle, thus:
Registration is required not to make said registration the operative act by
which ownership in vehicles is transferred, as in land registration cases,
because the administrative proceeding of registration does not bear any
essential relation to the contract of sale between the parties (Chinchilla vs.
Rafael and Verdaguer, 39 Phil. 888), but to permit the use and operation of
the vehicle upon any public highway (section 5 [a], Act No. 3992, as
amended.) 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.
"'One of the principal purposes of motor vehicles legislation is identification
of the vehicle and of the operator, in case of accident; and another is that
the knowledge that means of detection are always available may act as a
deterrent from lax observance of the law and of the rules of conservative
and safe operation. Whatever purpose there may be in these statutes, it is
subordinate at the last to the primary purpose of rendering it certain that
the violator of the law or of the rules of safety shall not escape because of
lack of means to discover him.' The purpose of the statute is thwarted, and
the displayed number becomes a 'snare and delusion,' if courts would
entertain such defenses as that put forward by appellee in this case. No
responsible person or corporation could be held liable for the most
outrageous acts of negligence, if they should be allowed to place a
'middleman' between them and the public, and escape liability by the
manner in which they recompense their servants." (King vs. Brenham
Automobile Co., 145 S.W. 278, 279.)
With the above policy in mind, the question that defendant-appellant poses
is: should not the registered owner be allowed at the trial to prove who the
actual and real owner is, and in accordance with such proof escape or
evade responsibility and lay the same on the person actually owning the
vehicle? We hold with the trial court that the law does not allow him to do
so; the law, with its aim and policy in mind, does not relieve him directly
of the responsibility that the law fixes and places upon him as an incident
or consequence of registration. Were a registered owner allowed to evade
responsibility by proving who the supposed transferee or owner is, it would
be easy for him, by collusion with others or otherwise, to escape said
responsibility and transfer the same to an indefinite person, or to one who
possesses no property with which to respond financially for the damage or
injury done. A victim of recklessness on the public highways is usually
without means to discover or identify the person actually causing the
injury or damage. He has no means other than by a recourse to the
registration in the Motor Vehicles Office to determine who is the owner.
The protection that the law aims to extend to him would become illusory
were the registered owner given the opportunity to escape liability by
disproving his ownership. If the policy of the law is to be enforced and
carried out, the registered owner should not be allowed to prove the
contrary to the prejudice of the person injured, that is, to prove that a
third person or another has become the owner, so that he may thereby be
relieved of the responsibility to the injured person.
The above policy and application of the law may appear quite harsh and
would seem to conflict with truth and justice. We do not think it is so. A
registered owner who has already sold or transferred a vehicle has the
recourse to a third-party complaint, in the same action brought against
him to recover for the damage or injury done, against the vendee or
transferee of the vehicle. The inconvenience of the suit is no justification
for relieving him of liability; said inconvenience is the price he pays for
failure to comply with the registration that the law demands and requires.
In synthesis, we hold that the registered owner, the defendant-appellant
herein, is primarily responsible for the damage caused to the vehicle of the
plaintiff-appellee, but he (defendant-appellant) has a right to be
indemnified by the real or actual owner of the amount that he may be
required to pay as damage for the injury caused to the plaintiff-appellant. 13
The case is still good law and has been consistently cited in subsequent
cases.14 Thus, there is no good reason to depart from its tenets.
For damage or injuries arising out of negligence in the operation of a
motor vehicle, the registered owner may be held civilly liable with the
negligent driver either 1) subsidiarily, if the aggrieved party seeks relief
based on a delictor crime under Articles 100 and 103 of the Revised Penal
Code; or 2) solidarily, if the complainant seeks relief based on a quasi-
delict under Articles 2176 and 2180 of the Civil Code. It is the option of
the plaintiff whether to waive completely the filing of the civil action, or
institute it with the criminal action, or file it separately or independently of
a criminal action;15 his only limitation is that he cannot recover damages
twice for the same act or omission of the defendant. 16
In case a separate civil action is filed, the long-standing principle is that
the registered owner of a motor vehicle is primarily and directly
responsible for the consequences of its operation, including the negligence
of the driver, with respect to the public and all third persons. 17 In
contemplation of law, the registered owner of a motor vehicle is the
employer of its driver, with the actual operator and employer, such as a
lessee, being considered as merely the owner's agent. 18 This being the
case, even if a sale has been executed before a tortious incident, the sale,
if unregistered, has no effect as to the right of the public and third persons
to recover from the registered owner.19The public has the right to
conclusively presume that the registered owner is the real owner, and may
sue accordingly.20
In the case now before the Court, there is not even a sale of the vehicle
involved, but a mere lease, which remained unregistered up to the time of
the occurrence of the quasi-delict that gave rise to the case. Since a lease,
unlike a sale, does not even involve a transfer of title or ownership, but the
mere use or enjoyment of property, there is more reason, therefore, in this
instance to uphold the policy behind the law, which is to protect the
unwitting public and provide it with a definite person to make accountable
for losses or injuries suffered in vehicular accidents. 21 This is and has
always been the rationale behind compulsory motor vehicle registration
under the Land Transportation and Traffic Code and similar laws, which, as
early as Erezo, has been guiding the courts in their disposition of cases
involving motor vehicular incidents. It is also important to emphasize that
such principles apply to all vehicles in general, not just those offered for
public service or utility.22
The Court recognizes that the business of financing companies has a
legitimate and commendable purpose.23 In earlier cases, it considered a
financial lease or financing lease a legal contract, 24 though subject to the
restrictions of the so-called Recto Law or Articles 1484 and 1485 of the
Civil Code.25 In previous cases, the Court adopted the statutory definition
of a financial lease or financing lease, as:
[A] mode of extending credit through a non-cancelable lease contract
under which the lessor purchases or acquires, at the instance of the
lessee, machinery, equipment, motor vehicles, appliances, business and
office machines, and other movable or immovable property in
consideration of the periodic payment by the lessee of a fixed amount of
money sufficient to amortize at least seventy (70%) of the purchase price
or acquisition cost, including any incidental expenses and a margin of
profit over an obligatory period of not less than two (2) years during which
the lessee has the right to hold and use the leased property, x x x but with
no obligation or option on his part to purchase the leased property from
the owner-lessor at the end of the lease contract. 26
Petitioner presented a lengthy discussion of the purported trend in other
jurisdictions, which apparently tends to favor absolving financing
companies from liability for the consequences of quasi-delictual acts or
omissions involving financially leased property.27 The petition adds that
these developments have been legislated in our jurisdiction in Republic Act
(R.A.) No. 8556,28 which provides:
Section 12. Liability of lessors. - Financing companies shall not be liable for
loss, damage or injury caused by a motor vehicle, aircraft, vessel,
equipment, machinery or other property leased to a third person or entity
except when the motor vehicle, aircraft, vessel, equipment or other
property is operated by the financing company, its employees or agents at
the time of the loss, damage or injury.1avvphi1
Petitioner's argument that the enactment of R.A. No. 8556, especially its
addition of the new Sec. 12 to the old law, is deemed to have absolved
petitioner from liability, fails to convince the Court.
These developments, indeed, point to a seeming emancipation of financing
companies from the obligation to compensate claimants for losses suffered
from the operation of vehicles covered by their lease. Such, however, are
not applicable to petitioner and do not exonerate it from liability in the
present case.
The new law, R.A. No. 8556, notwithstanding developments in foreign
jurisdictions, do not supersede or repeal the law on compulsory motor
vehicle registration. No part of the law expressly repeals Section 5(a) and
(e) of R.A. No. 4136, as amended, otherwise known as the Land
Transportation and Traffic Code, to wit:
Sec. 5. Compulsory registration of motor vehicles. - (a) All motor lease contract between petitioner and SUGECO to the effect that the latter
vehicles and trailer of any type used or operated on or upon any highway shall indemnify and hold the former free and harmless from any "liabilities,
of the Philippines must be registered with the Bureau of Land damages, suits, claims or judgments" arising from the latter's use of the
Transportation (now the Land Transportation Office, per Executive Order motor vehicle.32 Whether petitioner would act against SUGECO based on
No. 125, January 30, 1987, and Executive Order No. 125-A, April 13, this provision is its own option.
1987) for the current year in accordance with the provisions of this Act.
xxxx The burden of registration of the lease contract is minuscule compared to
(e) Encumbrances of motor vehicles. - Mortgages, attachments, and other the chaos that may result if registered owners or operators of vehicles are
encumbrances of motor vehicles, in order to be valid against third freed from such responsibility. Petitioner pays the price for its failure to
parties must be recorded in the Bureau (now the Land Transportation obey the law on compulsory registration of motor vehicles for registration
Office). Voluntary transactions or voluntary encumbrances shall likewise be is a pre-requisite for any person to even enjoy the privilege of putting a
properly recorded on the face of all outstanding copies of the certificates of vehicle on public roads.
registration of the vehicle concerned. WHEREFORE, the petition is DENIED. The Decision dated December 12,
2003 and Resolution dated February 18, 2004 of the Court of Appeals
Cancellation or foreclosure of such mortgages, attachments, and other are AFFIRMED.
encumbrances shall likewise be recorded, and in the absence of such Costs against petitioner.
cancellation, no certificate of registration shall be issued without the
corresponding notation of mortgage, attachment and/or other
encumbrances.
xxxx
Neither is there an implied repeal of R.A. No. 4136. As a rule, repeal by
implication is frowned upon, unless there is clear showing that the later KABIT SYSTEM
statute is so irreconcilably inconsistent and repugnant to the existing law
that they cannot be reconciled and made to stand together.29 There is
ABELARDO LIM and ESMADITO GUNNABAN, vs CA and DONATO H.
nothing in R.A. No. 4136 that is inconsistent and incapable of
GONZALES, [G.R. No. 125817. January 16, 2002]
reconciliation.
DECISION
Thus, the rule remains the same: a sale, lease, or financial lease, for that
When a passenger jeepney covered by a certificate of public convenience
matter, that is not registered with the Land Transportation Office, still does
is sold to another who continues to operate it under the same certificate of
not bind third persons who are aggrieved in tortious incidents, for the
public convenience under the so-called kabit system, and in the course
latter need only to rely on the public registration of a motor vehicle as
thereof the vehicle meets an accident through the fault of another vehicle,
conclusive evidence of ownership.30 A lease such as the one involved in the
may the new owner sue for damages against the erring vehicle? Otherwise
instant case is an encumbrance in contemplation of law, which needs to be
stated, does the new owner have any legal personality to bring the action,
registered in order for it to bind third parties. 31 Under this policy, the evil
or is he the real party in interest in the suit, despite the fact that he is not
sought to be avoided is the exacerbation of the suffering of victims of
the registered owner under the certificate of public convenience?
tragic vehicular accidents in not being able to identify a guilty party. A
contrary ruling will not serve the ends of justice. The failure to register a
Sometime in 1982 private respondent Donato Gonzales purchased an
lease, sale, transfer or encumbrance, should not benefit the parties
Isuzu passenger jeepney from Gomercino Vallarta, holder of a certificate of
responsible, to the prejudice of innocent victims.
public convenience for the operation of public utility vehicles plying the
Monumento-Bulacan route. While private respondent Gonzales continued
The non-registration of the lease contract between petitioner and its lessee
offering the jeepney for public transport services he did not have the
precludes the former from enjoying the benefits under Section 12 of R.A.
registration of the vehicle transferred in his name nor did he secure for
No. 8556.
himself a certificate of public convenience for its operation. Thus Vallarta
remained on record as its registered owner and operator.
This ruling may appear too severe and unpalatable to leasing and financing
companies, but the Court believes that petitioner and other companies so
On 22 July 1990, while the jeepney was running northbound along the
situated are not entirely left without recourse. They may resort to third-
North Diversion Road somewhere in Meycauayan, Bulacan, it collided with
party complaints against their lessees or whoever are the actual operators
a ten-wheeler-truck owned by petitioner Abelardo Lim and driven by his
of their vehicles. In the case at bar, there is, in fact, a provision in the
co-petitioner Esmadito Gunnaban. Gunnaban owned responsibility for the
accident, explaining that while he was traveling towards Manila the truck
suddenly lost its brakes. To avoid colliding with another vehicle, he
swerved to the left until he reached the center island. However, as the
center island eventually came to an end, he veered farther to the left until
he smashed into a Ferroza automobile, and later, into private respondent's
passenger jeepney driven by one Virgilio Gonzales. The impact caused
severe damage to both the Ferroza and the passenger jeepney and left
one (1) passenger dead and many others wounded.
Petitioner Lim shouldered the costs for hospitalization of the wounded,
compensated the heirs of the deceased passenger, and had the Ferroza
restored to good condition. He also negotiated with private respondent and
offered to have the passenger jeepney repaired at his shop. Private
respondent however did not accept the offer so Lim offered
him P20,000.00, the assessment of the damage as estimated by his chief
mechanic. Again, petitioner Lim's proposition was rejected; instead,
private respondent demanded a brand-new jeep or the amount
ofP236,000.00. Lim increased his bid to P40,000.00 but private
respondent was unyielding. Under the circumstances, negotiations had to
be abandoned; hence, the filing of the complaint for damages by private
respondent against petitioners.
In his answer Lim denied liability by contending that he exercised due
diligence in the selection and supervision of his employees. He further
asserted that as the jeepney was registered in Vallartas name, it was
Vallarta and not private respondent who was the real party in interest.
[1]
For his part, petitioner Gunnaban averred that the accident was a
fortuitous event which was beyond his control. [2]
Meanwhile, the damaged passenger jeepney was left by the roadside to
corrode and decay. Private respondent explained that although he wanted
to take his jeepney home he had no capability, financial or otherwise, to
tow the damaged vehicle.[3]
The main point of contention between the parties related to the amount of
damages due private respondent. Private respondent Gonzales averred
that per estimate made by an automobile repair shop he would have to
spend P236,000.00 to restore his jeepney to its original condition. [4] On
the other hand, petitioners insisted that they could have the vehicle
repaired for P20,000.00.[5]
On 1 October 1993 the trial court upheld private respondent's claim and
awarded him P236,000.00 with legal interest from 22 July 1990 as
compensatory damages and P30,000.00 as attorney's fees. In support of
its decision, the trial court ratiocinated that as vendee and current owner
of the passenger jeepney private respondent stood for all intents and
purposes as the real party in interest. Even Vallarta himself supported
private respondent's assertion of interest over the jeepney for, when he
was called to testify, he dispossessed himself of any claim or pretension on
the property. Gunnaban was found by the trial court to have caused the
accident since he panicked in the face of an emergency which was rather
palpable from his act of directing his vehicle to a perilous streak down the
fast lane of the superhighway then across the island and ultimately to the
opposite lane where it collided with the jeepney.
On the other hand, petitioner Lim's liability for Gunnaban's negligence was
premised on his want of diligence in supervising his employees. It was
admitted during trial that Gunnaban doubled as mechanic of the ill-fated
truck despite the fact that he was neither tutored nor trained to handle
such task.[6]
Forthwith, petitioners appealed to the Court of Appeals which, on 17 July
1996, affirmed the decision of the trial court. In upholding the decision of
the court a quo the appeals court concluded that while an operator under
the kabit system could not sue without joining the registered owner of the
vehicle as his principal, equity demanded that the present case be made
an exception.[7] Hence this petition.
It is petitioners' contention that the Court of Appeals erred in sustaining
the decision of the trial court despite their opposition to the well-
established doctrine that an operator of a vehicle continues to be its
operator as long as he remains the operator of record. According to
petitioners, to recognize an operator under the kabit system as the real
party in interest and to countenance his claim for damages is utterly
subversive of public policy. Petitioners further contend that inasmuch as
the passenger jeepney was purchased by private respondent for
onlyP30,000.00, an award of P236,000.00 is inconceivably large and would
amount to unjust enrichment. [8]
Petitioners' attempt to illustrate that an affirmance of the appealed
decision could be supportive of the pernicious kabit system does not
persuade. Their labored efforts to demonstrate how the questioned rulings
of the courts a quo are diametrically opposed to the policy of the law
requiring operators of public utility vehicles to secure a certificate of public
convenience for their operation is quite unavailing.
The kabit system is an arrangement whereby a person who has been
granted a certificate of public convenience allows other persons who own
motor vehicles to operate them under his license, sometimes for a fee or
percentage of the earnings. [9] Although the parties to such an agreement
are not outrightly penalized by law, the kabit system is invariably
recognized as being contrary to public policy and therefore void and
inexistent under Art. 1409 of the Civil Code.
In the early case of Dizon v. Octavio[10] the Court explained that one of the
primary factors considered in the granting of a certificate of public
convenience for the business of public transportation is the financial
capacity of the holder of the license, so that liabilities arising from
accidents may be duly compensated. The kabit system renders illusory
such purpose and, worse, may still be availed of by the grantee to escape
civil liability caused by a negligent use of a vehicle owned by another and
operated under his license. If a registered owner is allowed to escape
liability by proving who the supposed owner of the vehicle is, it would be
easy for him to transfer the subject vehicle to another who possesses no
property with which to respond financially for the damage done. Thus, for
the safety of passengers and the public who may have been wronged and
deceived through the baneful kabit system, the registered owner of the
vehicle is not allowed to prove that another person has become the owner
so that he may be thereby relieved of responsibility. Subsequent cases
affirm such basic doctrine.[11]
It would seem then that the thrust of the law in enjoining the kabit system
is not so much as to penalize the parties but to identify the person upon
whom responsibility may be fixed in case of an accident with the end view
of protecting the riding public. The policy therefore loses its force if the
public at large is not deceived, much less involved.
In the present case it is at once apparent that the evil sought to be
prevented in enjoining the kabit system does not exist. First, neither of the
parties to the pernicious kabit system is being held liable for
damages. Second, the case arose from the negligence of another vehicle in
using the public road to whom no representation, or misrepresentation, as
regards the ownership and operation of the passenger jeepney was made
and to whom no such representation, or misrepresentation, was
necessary. Thus it cannot be said that private respondent Gonzales and
the registered owner of the jeepney were in estoppel for leading the public
to believe that the jeepney belonged to the registered owner. Third, the
riding public was not bothered nor inconvenienced at the very least by the
illegal arrangement. On the contrary, it was private respondent himself
who had been wronged and was seeking compensation for the damage
done to him. Certainly, it would be the height of inequity to deny him his
right.
In light of the foregoing, it is evident that private respondent has the right
to proceed against petitioners for the damage caused on his passenger
jeepney as well as on his business.Any effort then to frustrate his claim of
damages by the ingenuity with which petitioners framed the issue should
be discouraged, if not repelled.
In awarding damages for tortuous injury, it becomes the sole design of the
courts to provide for adequate compensation by putting the plaintiff in the
same financial position he was in prior to the tort. It is a fundamental
principle in the law on damages that a defendant cannot be held liable in
damages for more than the actual loss which he has inflicted and that a
plaintiff is entitled to no more than the just and adequate compensation
for the injury suffered. His recovery is, in the absence of circumstances
giving rise to an allowance of punitive damages, limited to a fair
compensation for the harm done. The law will not put him in a position
better than where he should be in had not the wrong happened. [12]
In the present case, petitioners insist that as the passenger jeepney was
purchased in 1982 for only P30,000.00 to award damages considerably
greater than this amount would be improper and unjustified. Petitioners
are at best reminded that indemnification for damages comprehends not
only the value of the loss suffered but also that of the profits which the
obligee failed to obtain. In other words, indemnification for damages is not
limited to damnum emergens or actual loss but extends to lucrum
cessans or the amount of profit lost.[13]
Had private respondent's jeepney not met an accident it could reasonably
be expected that it would have continued earning from the business in
which it was engaged. Private respondent avers that he derives an average
income of P300.00 per day from his passenger jeepney and this earning
was included in the award of damages made by the trial court and upheld
by the appeals court. The award therefore of P236,000.00 as
compensatory damages is not beyond reason nor speculative as it is based
on a reasonable estimate of the total damage suffered by private
respondent, i.e. damage wrought upon his jeepney and the income lost
from his transportation business. Petitioners for their part did not offer any
substantive evidence to refute the estimate made by the courts a quo.
However, we are constrained to depart from the conclusion of the lower
courts that upon the award of compensatory damages legal interest should
be imposed beginning 22 July 1990,i.e. the date of the accident. Upon the
provisions of Art. 2213 of the Civil Code, interest "cannot be recovered
upon unliquidated claims or damages, except when the demand can be
established with reasonable certainty." It is axiomatic that if the suit were
for damages, unliquidated and not known until definitely ascertained,
assessed and determined by the courts after proof, interest at the rate of
six percent (6%) per annum should be from the date the judgment of the
court is made (at which time the quantification of damages may be
deemed to be reasonably ascertained).[14]
In this case, the matter was not a liquidated obligation as the assessment
of the damage on the vehicle was heavily debated upon by the parties with
private respondent's demand forP236,000.00 being refuted by petitioners
who argue that they could have the vehicle repaired easily
for P20,000.00. In fine, the amount due private respondent was not a
liquidated account that was already demandable and payable.
One last word. We have observed that private respondent left his
passenger jeepney by the roadside at the mercy of the elements. Article
2203 of the Civil Code exhorts parties suffering from loss or injury to
exercise the diligence of a good father of a family to minimize the
damages resulting from the act or omission in question. One who is
injured then by the wrongful or negligent act of another should exercise
reasonable care and diligence to minimize the resulting damage. Anyway,
he can recover from the wrongdoer money lost in reasonable efforts to
preserve the property injured and for injuries incurred in attempting to
prevent damage to it.[15]
However we sadly note that in the present case petitioners failed to offer
in evidence the estimated amount of the damage caused by private
respondent's unconcern towards the damaged vehicle. It is the burden of
petitioners to show satisfactorily not only that the injured party could have
mitigated his damages but also the amount thereof; failing in this regard,
the amount of damages awarded cannot be proportionately reduced.
WHEREFORE, the questioned Decision awarding private respondent
Donato Gonzales P236,000.00 with legal interest from 22 July 1990 as
compensatory damages and P30,000.00 as attorney's fees is
MODIFIED. Interest at the rate of six percent (6%) per annum shall be
computed from the time the judgment of the lower court is made until the
finality of this Decision.If the adjudged principal and interest remain
unpaid thereafter, the interest shall be twelve percent (12%) per annum
computed from the time judgment becomes final and executory until it is
fully satisfied.
Costs against petitioners.
G.R. No. 160110 June 18, 2014
MARIANO C. MENDOZA and ELVIRA LIM, vs.
SPOUSES LEONORA J. GOMEZ and GABRIEL V. GOMEZ,
DECISION
Assailed in the present appeal by certiorari is the Decision 1 dated 29
September 2003 of the Special Fourth Division of the Court of Appeals
(CA) in CA-G.R. CV No. 71877, which affirmed with modification the
Decision2dated 31 January 2001 of the Regional Trial Court (RTC), Branch
172, Valenzuela City in Civil Case No. 5352-V-97, and which effectively
allowed the award of actual, moral, and exemplary damages, as well as
attorney's fees and costs of the suit in favor of respondent Spouses
Leonora and Gabriel Gomez (respondents).
Antecedent Facts
On 7 March 1997, an Isuzu Elf truck (Isuzu truck) with plate number UAW
582,3 owned by respondent Leonora J. Gomez (Leonora) 4 and driven by
Antenojenes Perez (Perez),5 was hit by a Mayamy Transportation bus
(Mayamy bus) with temporary plate number 1376-1280, 6 registered under
the name of petitioner Elvira Lim (Lim)7 and driven by petitioner Mariano
C. Mendoza (Mendoza).8
Owing to the incident, an Information for reckless imprudence resulting in
damage to property and multiple physical injuries was filed against
Mendoza.9 Mendoza, however, eluded arrest, thus, respondents filed a
separate complaint for damages against Mendoza and Lim, seeking actual
damages, compensation for lost income, moral damages, exemplary
damages, attorneys fees and costs of the suit. 10 This was docketed as Civil
Case No. 5352-V-97.
According to PO1 Melchor F. Rosales (PO1 Rosales), investigating officer of
the case, at around 5:30 a.m., the Isuzu truck, coming from Katipunan
Road and heading towards E. Rodriguez, Sr. Avenue, was travelling along
the downward portion of Boni Serrano Avenue when, upon reaching the
corner of Riviera Street, fronting St. Ignatius Village, its left front portion
was hit by the Mayamy bus.11 According to PO1 Rosales, the Mayamy bus,
while traversing the opposite lane, intruded on the lane occupied by the
Isuzu truck.12
PO1 Rosales also reported that Mendoza tried to escape by speeding away,
but he was apprehended in Katipunan Road corner C. P. Garcia Avenue by
one Traffic Enforcer Galante and a security guard of St. Ignatius Village. 13
As a result of the incident, Perez,as well as the helpers on board the Isuzu
truck, namely Melchor V. Anla (Anla), Romeo J. Banca (Banca), and Jimmy
Repisada (Repisada), sustained injuries necessitating medical treatment
amounting to P11,267.35,which amount was shouldered by respondents.
Moreover, the Isuzu truck sustained extensive damages on its cowl,
chassis, lights and steering wheel, amounting to P142,757.40.14
Additionally, respondents averred that the mishap deprived them of a daily
income of P1,000.00. Engaged in the business of buying plastic scraps and
delivering them to recycling plants, respondents claimed that the Isuzu
truck was vital in the furtherance of their business.
For their part, petitioners capitalized on the issue of ownership of the bus
in question. Respondents argued that although the registered owner was
Lim, the actual owner of the bus was SPO1 Cirilo Enriquez (Enriquez), who
had the bus attached with Mayamy Transportation Company (Mayamy
Transport) under the so-called "kabit system." Respondents then
impleaded both Lim and Enriquez.
Petitioners, on the other hand, presented Teresita Gutierrez (Gutierrez),
whose testimony was offered to prove that Mayamy Bus or Mayamy
Transport is a business name registered under her name, and that such
business is a sole proprietorship. Such was presented by petitioners to
rebut the allegation of respondents that Mayamy Transport is a
corporation;15 and to show, moreover, that although Gutierrez is the sole
proprietor of Mayamy Transport, she was not impleaded by respondents in
the case at bar.16
After weighing the evidence, the RTC found Mendoza liable for direct
personal negligence under Article 2176 of the Civil Code, and it also found
Lim vicariously liable under Article 2180 of the same Code.
As regards Lim, the RTC relied on the Certificate of Registration issued by
the Land Transportation Office on 9 December 1996 17 in concluding that
she is the registered owner of the bus in question. Although actually
owned by Enriquez, following the established principle in transportation
law, Lim, as the registered owner, is the one who can be held liable.
Thus, the RTC disposed of the case as follows:
WHEREFORE, judgment is hereby rendered in favor of the [respondents]
and against the [petitioners]:
1. Ordering the [petitioners] except Enriquez to pay [respondents], jointly
and severally, the costs of repair of the damaged vehicle in the amount
of P142,757.40;
2. Ordering the defendants except Enriquez to pay [respondents], jointly
and severally, the amount ofP1,000.00 per day from March 7, 1997 up to
November 1997 representing the unrealized income of the [respondents]
when the incident transpired up to the time the damaged Isuzu truck was
repaired;
3. Ordering the [petitioners] except Enriquez to pay [respondents], jointly
and severally, the amount ofP100,000.00 as moral damages, plus a separate
amount of P50,000.00 as exemplary damages;
4. Ordering the [petitioners] except Enriquez to pay [respondents], jointly
and severally, the amount ofP50,000.00 as attorneys fees; 5. Ordering the
[petitioners] except Enriquez to pay [respondents] the costs of suit. 18
Displeased, petitioners appealed to the CA, which appeal was docketed as
CA-G.R. CV No. 71877. After evaluating the damages awarded by the RTC,
such were affirmed by the CA with the exception of the award of
unrealized income which the CA ordered deleted, viz:
WHEREFORE, premises considered, the appeal is PARTLY GRANTED. The
judgment of the Regional Trial Court of Valenzuela City, Branch 172 dated
January 31, 2001, is MODIFIED, in that the award of P1,000.00 per day
from March 1997 up to November 1997 representing unrealized income is
DELETED. The award of P142,757.40 for the cost of repair of the damaged
vehicle, the award of P100,000.00 as moral damages, the award
ofP50,000.00 as exemplary damages, the award of P50,000.00 as
attorneys fees and the costs of the suit are hereby MAINTAINED.19
The Present Petition
Unsatisfied with the CA ruling, petitioners filed an appeal by certiorari
before the Court, raising the following issues:20
1. The court a quo has decided questions of substance in a way not in
accord with law or with the applicable decisions of the Supreme Court
when it awarded:
a. Moral damages in spite of the fact that the [respondents] cause of action is
clearly based on quasi-delict and [respondents] did not sustain physical injuries
to be entitled thereto pursuant to Article 2219 (2) of the New Civil Code and
pertinent decisions of the Supreme Court to that effect. The court a quo
erroneously concluded that the driver acted in bad faith and erroneously
applied the provision of Article 21 of the same code to justify the award for bad
faith is not consistent with quasi-delict which is founded on fault or negligence.
b. Exemplary damages in spite of the fact that there is no finding that the
vehicular accident was due to petitioner-drivers gross negligence to be entitled
thereto pursuant to Article 2231 of the New Civil Code and pertinent decisions
of the Supreme Court to that effect. The factual basis of the court a quo that
"the act of the driver of the bus in attempting to escape after causing the
accident in wanton disregard of the consequences of his negligent act is such
gross negligence that justifies an award of exemplary damages" is an act after
the fact which is not within the contemplation of Article 2231 of the New Civil
Code.
c. Attorneys fees in spite of the fact that the assailed decisions of the trial
court and the court a quo are bereft with jurisdictions for the award of
attorneys fees pursuant to the pertinent decisions of the Supreme Court on
the matter and provision Article 2208 of the New Civil Code. The court a quo
erroneously applied the decision of the Supreme Court in Baas, Jr. vs. Court
of Appeals, 325 SCRA 259.
The Courts Ruling
The petition is partially meritorious.
Respondents anchor their claim for damages on Mendozas negligence,
banking on Article 2176 of the Civil Code, to wit:
Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or
negligence, if there is no pre-existing contractual relation between the
parties, is called a quasi-delict and is governed by the provisions of this
Chapter.
In impleading Lim, on the other hand, respondents invoke the latters
vicarious liability as espoused in Article 2180 of the same Code:
The obligation imposed by Article 2176 is demandable not only for ones
own acts or omissions, but also for those of persons for whom one is
responsible.
xxxx
Employers shall be liable for the damages caused by their employees and
household helpers acting within the scope of their assigned tasks, even
though the former are not engaged in any business of industry.
The first question to address, then, is whether or not Mendozas negligence
was duly proven. Negligence is defined as the failure to observe for the
protection of the interests of another person, that degree of care,
precaution and vigilance which the circumstances justly demand, whereby
such other person suffers injury.21
As found by the RTC, and affirmed by the CA, Mendoza was negligent in
driving the subject Mayamy bus, as demonstrated by the fact that, at the
time of the collision, the bus intruded on the lane intended for the Isuzu
truck. Having encroached on the opposite lane, Mendoza was clearly in
violation of traffic laws. Article2185 of the Civil Code provides that unless
there is proof to the contrary, it is presumed that a person driving a motor
vehicle has been negligent if at the time of the mishap, he was violating
any traffic regulation. In the case at bar, Mendozas violation of traffic laws
was the proximate cause of the harm.

Proximate cause is defined as that cause, which, in natural and continuous
sequence, unbroken by any efficient intervening cause, produces the
injury, and without which the result would not have occurred. And more
comprehensively, the proximate legal cause is that acting first and
producing the injury, either immediately or by setting other events in
motion, all constituting a natural and continuous chain of events, each
having a close causal connection with its immediate predecessor, the final
event in the chain immediately effecting the injury as a natural and
probable result of the cause which first acted, under such circumstances
that the person responsible for the first event should, as an ordinary
prudent and intelligent person, have reasonable ground to expect at the
moment of his act or default that an injury to some person might probably
result therefrom.22
The evidence on record shows that before the collision, the Isuzu truck
was in its rightful lane, and was even at a stop, having been flagged down
by a security guard of St. Ignatius Village. 23 The mishap occurred when the
Mayamy bus, travelling at a fast speed as shown by the impact of the
collision, and going in the opposite direction as that of the Isuzu truck,
encroached on the lane rightfully occupied by said Isuzu truck, and caused
the latter to spin, injuring Perez, Anla, Banca, and Repisada, and
considerably damaging the Isuzu truck.
Having settled the fact of Mendozas negligence, then, the next question
that confronts us is who may beheld liable. According to Manresa, liability
for personal acts and omissions is founded on that indisputable principle of
justice recognized by all legislations that when a person by his act or
omission causes damage or prejudice to another, a juridical relation is
created by virtue of which the injured person acquires a right to be
indemnified and the person causing the damage is charged with the
corresponding duty of repairing the damage. The reason for this is found in
the obvious truth that man should subordinate his acts to the precepts of
prudence and if he fails to observe them and causes damage to another,
he must repair the damage.24 His negligence having caused the damage,
Mendoza is certainly liable to repair said damage.
Additionally, Mendozas employer may also be held liable under the
doctrine of vicarious liability or imputed negligence. Under such doctrine, a
person who has not committed the act or omission which caused damage
or injury to another may nevertheless be held civilly liable to the latter
either directly or subsidiarily under certain circumstances. 25 In our
jurisdiction, vicarious liability or imputed negligence is embodied in Article
2180 of the Civil Code and the basis for damages in the action under said
article is the direct and primary negligence of the employer in the selection
or supervision, or both, of his employee.26
In the case at bar, who is deemed as Mendozas employer? Is it Enriquez,
the actual owner of the bus or Lim, the registered owner of the bus?
In Filcar Transport Services v. Espinas, 27 we held that the registered owner
is deemed the employer of the negligent driver, and is thus vicariously
liable under Article 2176, in relation to Article 2180, of the Civil Code.
Citing Equitable Leasing Corporation v. Suyom, 28 the Court ruled that in so
far as third persons are concerned, the registered owner of the motor
vehicle is the employer of the negligent driver, and the actual employer is
considered merely as an agent of such owner. Thus, whether there is an
employer-employee relationship between the registered owner and the
driver is irrelevant in determining the liability of the registered owner who
the law holds primarily and directly responsible for any accident, injury or
death caused by the operation of the vehicle in the streets and highways. 29
As early as Erezo v. Jepte, 30 the Court, speaking through Justice Alejo
Labrador summarized the justification for holding the registered owner
directly liable, to wit:
x x x 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 vehicles on the public highways, responsibility therefore can be fixed
on a definite individual, the registered owner. Instances are numerous
where vehicle 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.
"One of the principal purposes of motor vehicles legislation is identification
of the vehicle and of the operator, in case of accident; and another is that
the knowledge that means of detection are always available may act as a
deterrent from lax observance of the law and of the rules of conservative
and safe operation. Whatever purpose there may be in these statutes, it is
subordinate at the last to the primary purpose of rendering it certain that
the violator of the law or of the rules of safety shall not escape because of
lack of means to discover him." The purpose of the statute is thwarted,
and the displayed number becomes a "snare and delusion," if courts will
entertain such defenses as that put forward by appellee in this case. No
responsible person or corporation could be held liable for the most
outrageous acts of negligence, if they should be allowed to place a
"middleman" between them and the public, and escape liability by the
manner in which they recompense their servants. 31
Generally, when an injury is caused by the negligence of a servant or
employee, there instantly arises a presumption of law that there was
negligence on the part of the master or employer either in the selection of
the servant or employee (culpa in eligiendo) or in the supervision over him
after the selection (culpa vigilando), or both. The presumption is juris
tantum and not juris et de jure; consequently, it may be rebutted.
Accordingly, the general rule is that if the employer shows to the
satisfaction of the court that in the selection and supervision of his
employee he has exercised the care and diligence of a good father of a
family, the presumption is overcome and he is relieved of
liability.32 However, with the enactment of the motor vehicle registration
law, the defenses available under Article 2180 of the Civil Code - that the
employee acts beyond the scope of his assigned task or that it exercised
the due diligence of a good father of a family to prevent damage are no
longer available to the registered owner of the motor vehicle, because the
motor vehicle registration law, to a certain extent, modified Article 2180. 33
As such, there can be no other conclusion but to hold Lim vicariously liable
with Mendoza.
This does not mean, however, that Lim is left without any recourse against
Enriquez and Mendoza. Under the civil law principle of unjust enrichment,
the registered owner of the motor vehicle has a right to be indemnified by
the actual employer of the driver; and under Article 2181 of the Civil Code,
whoever pays for the damage caused by his dependents or employees may
recover from the latter what he has paid or delivered in satisfaction of the
claim.
Having identified the persons liable, our next question is what may be
awarded.
Actual or compensatory damages are those awarded in satisfaction of,
or in recompense for, loss or injury sustained. They simply make good or
replace the loss caused by the wrong.34
Article 2202 of the Civil Code provides that in crimes and quasi delicts,
the defendant shall be liable for all damages which are the natural and
probable consequences of the act or omission complained of. It is not
necessary that such damages have been foreseen or could have
reasonably been foreseen by the defendant. Article 2199 of the same
Code, however, sets the limitation that, except as provided by law or by
stipulation, one is entitled to an adequate compensation only for such
pecuniary loss suffered by him as he has duly proved. As such, to warrant
an award of actual or compensatory damages, the claimant must prove
that the damage sustained is the natural and probable consequences of
the negligent act and, moreover, the claimant must adequately prove the
amount of such damage.
In the case at bar, the RTC, basing on the receipts submitted by
respondents and which receipts petitioners had the opportunity to
examine, found that the total repairs on the Isuzu truck amounted
to P142,757.40, and that the full hospitalization and medical expenses of
Perez, Anla, Banca, and Repisada amounted to P11,267.35. As such, these
are the amounts that respondents are entitled to as actual and
compensatory damages.
Although respondents alleged in their complaint that the damage to their
Isuzu truck caused them the loss of a daily income of P1,000.00, such
claim was not duly substantiated by any evidence on record, and thus
cannot be awarded in their favor.
Moral Damages. Moral damages are awarded to enable the injured party to
obtain means, diversions or amusements that will serve to alleviate the
moral suffering he has undergone, by reason of the defendant's culpable
action.35
In prayers for moral damages, however, recovery is more an exception
rather than the rule. Moral damages are not meant to be punitive but are
designed to compensate and alleviate the physical suffering, mental
anguish, fright, serious anxiety, besmirched reputation, wounded feelings,
moral shock, social humiliation, and similar harm unjustly caused to a
person. To be entitled to such an award, the claimant must satisfactorily
prove that he has suffered damages and that the injury causing it has
sprung from any of the cases listed in Articles 2219 and 2220 of the Civil
Code. Moreover, the damages must be shown to be the proximate result of
a wrongful act or omission. The claimant must thus establish the factual
basis of the damages and its causal tie with the acts of the defendant. 36
In fine, an award of moral damages calls for the presentation of 1)
evidence of besmirched reputation or physical, mental or psychological
suffering sustained by the claimant; 2)a culpable act or omission factually
established; 3) proof that the wrongful act or omission of the defendant is
the proximate cause of the damages sustained by the claimant; and 4) the
proof that the act is predicated on any of the instances expressed or
envisioned by Article 2219 and Article 2220 of the Civil Code. 37
A review of the complaint and the transcript of stenographic notes yields
the pronouncement that respondents neither alleged nor offered any
evidence of besmirched reputation or physical, mental or psychological
suffering incurred by them. All that Leonora and her counsel had to say on
the matter of damages other than actual or compensatory damages is
this:38
Q: Did you ever spend covering attorneys fees?
A: Yes, sir. P50,000.00.
Q: Aside from the actual damage that you have mentioned x x x, how much more
would you like this Court to award you by way of moral damages?
A: P100,000.00, sir.
Q: How about exemplary damages?
A: P50,000.00, sir.
Q: What happened to you, what did you feel when the defendants failed to
immediately repair your vehicle that was damaged Madam Witness?
A: I have incurred expenses and I was forced to apply for a loan, sir.
In Kierulf v. CA,39 we observed that this Court cannot remind the bench
and the bar often enough that in order that moral damages may be
awarded, there must be pleading and proof of moral suffering, mental
anguish, fright and the like. Citing Francisco v. GSIS, 40 the Court held that
there must be clear testimony on the anguish and other forms of mental
suffering. Thus, if the plaintiff fails to take the witness stand and testify as
to his social humiliation, wounded feelings and anxiety, moral damages
cannot be awarded.
Moreover, respondents were not able to show that their claim properly falls
under Articles 2219 and 2220 of the Civil Code. Respondents cannot rely
on Article 2219 (2) of the Civil Code which allows moral damages in quasi-
delicts causing physical injuries because in physical injuries, moral
damages are recoverable only by the injured party,41 and in the case at
bar, herein respondents were not the ones who were actually injured.
In B.F. Metal (Corp.) v. Sps. Lomotan, et al.,42 the Court, in a claim for
damages based on quasi-delict causing physical injuries, similarly
disallowed an award of moral damages to the owners of the damaged
vehicle, when neither of them figured in the accident and sustained
injuries.
Neither can respondents rely on Article 21 of the Civil Code as the RTC
erroneously did. Article 21 deals with acts contra bonus mores, and has
the following elements: (1) There is an act which is legal; (2) but which is
contrary to morals, good custom, public order, or public policy; (3) and it
is done with intent to injure. 43 In the present case, it can hardly be said
that Mendozas negligent driving and violation of traffic laws are legal acts.
Moreover, it was not proven that Mendoza intended to injure Perez, et al.
Thus, Article 21 finds no application to the case at bar. All in all, we find
that the RTC and the CA erred in granting moral damages to respondents.
Exemplary Damages. Article 2229 of the Civil Code provides that
exemplary or corrective damages are imposed, by way of example or
correction for the public good, in addition to moral, temperate, liquidated
or compensatory damages. Article 2231 of the same Code further states
that in quasi-delicts, exemplary damages may be granted if the defendant
acted with gross negligence.
Our jurisprudence sets certain conditions when exemplary damages may
be awarded: First, they may be imposed by way of example or correction
only in addition, among others, to compensatory damages, and cannot be
recovered as a matter of right, their determination depending upon the
amount of compensatory damages that may be awarded to the claimant.
Second, the claimant must first establish his right to moral, temperate,
liquidated or compensatory damages. Third, the wrongful act must be
accompanied by bad faith, and the award would be allowed only if the
guilty party acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner.44
In motor vehicle accident cases, exemplary damages may be awarded
where the defendants misconduct is so flagrant as to transcend simple
negligence and be tantamount to positive or affirmative misconduct rather
than passive or negative misconduct. In characterizing the requisite
positive misconduct which will support a claim for punitive damages, the
courts have used such descriptive terms as willful, wanton, grossly
negligent, reckless, or malicious, either alone or in combination. 45
Gross negligence is the absence of care or diligence as to amount to a
reckless disregard of the safety of persons or property. It evinces a
thoughtless disregard of consequences without exerting any effort to avoid
them.46
In the case at bar, having established respondents right to compensatory
damages, exemplary damages are also in order, given the fact that
Mendoza was grossly negligent in driving the Mayamy bus. His act of
intruding or encroaching on the lane rightfully occupied by the Isuzu truck
shows his reckless disregard for safety.
In Bao v. Bachelor Express, Inc., et al., 47 where an erring bus, in the
process of overtaking a jeepney, also encroached on the opposite lane, and
consequently collided with a dump truck, the Court held the driver of the
bus grossly negligent and affirmed the award of exemplary damages.
Attorneys Fees. Article 2208 of the Civil Code enumerates the instances
when attorneys fees may be recovered:
Art. 2208. In the absence of stipulation, attorneys fees and expenses of
litigation, other than judicial costs, cannot be recovered, except:
(1) When exemplary damages are awarded;
(2) When the defendants act or omission has compelled the plaintiff to
litigate with third persons or to incur expenses to protect his interest;
(3) In criminal cases of malicious prosecution against the plaintiff;
(4) In case of a clearly unfounded civil action or proceeding against the
plaintiff;
(5) Where the defendant acted in gross and evident bad faith in refusing to
satisfy the plaintiffs valid and demandable claim;
(6) In actions for legal support;
(7) In actions for the recovery of wages of household helpers, laborers and
skilled workers;
(8) In actions for indemnity under workmens compensation and
employers liability laws;
(9) In a separate civil action to recover civil liability arising from a crime;
(10) When at least double judicial costs are awarded;
(11) In any other case where the court deems it just and equitable that
attorneys fees and expenses of litigation should be recovered;
In all cases, the attorneys fees and expenses of litigation must be
reasonable.
From the very opening sentence of Article 2208 of the Civil Code, it is
clearly intended to retain the award of attorneys fees as the exception in
our law, as the general rule remains that attorneys fees are not
recoverable in the absence of a stipulation thereto, the reason being that it
is not sound policy to set a premium on the right to litigate. 48
As such, in Spouses Agustin v. CA,49 we held that, the award of attorneys
fees being an exception rather than the general rule, it is necessary for the
court to make findings of facts and law that would bring the case within
the exception and justify the grant of such award. Thus, the reason for the
award of attorneys fees must be stated in the text of the courts decision;
otherwise, if it is stated only in the dispositive portion of the decision, the
same must be disallowed on appeal.
In the case at bar, the RTC Decision had nil discussion on the propriety of
attorneys fees, and it merely awarded such in the dispositive. The CA
Decision, on the other hand, merely stated that the award of attorneys
fees is merited as such is allowed when exemplary damages are
awarded.50 Following established jurisprudence,51however, the CA should
have disallowed on appeal said award of attorneys fees as the RTC failed
to substantiate said award. Costs of suit. The Rules of Court provide that,
generally, costs shall be allowed to the prevailing party as a matter of
course, thus:52
Section 1. Costs ordinarily follow results of suit.- Unless otherwise
provided in these rules, costs shall be allowed to the prevailing party as a
matter of course, but the court shall have power, for special reasons, to
adjudge that either party shall pay the costs of an action, or that the same
be divided, as may be equitable. No costs shall be allowed against the
Republic of the Philippines, unless otherwise provided by law.
In the present case, the award of costs of suit to respondents, as the
prevailing party, is in order. Interests.1wphi1Interest by way of damages
has been defined as interest allowed in actions for breach of contractor tort
for the unlawful detention of money already due. This type of interest is
frequently called "moratory interest." Interest as a part of damage, is
allowed, not by application of arbitrary rules, but as a result of the justice
of the individual case and as compensation to the injured party.53
The legal provision on interests in quasi-delicts is Article 2211 of the Civil
Code which provides that in crimes and quasi-delicts, interest as part of
the damage, may, in a proper case, be adjudicated in the discretion of the
court.
Generally, interest is allowed as a matter of right for failure to pay
liquidated claims when due. 54 For unliquidated claims, however, Article
2213 of the Civil Code provides that interest cannot be recovered upon
unliquidated claims or damages, except when the demand can be
established with reasonable certainty.
In the case at bar, although the award of exemplary damages is
unliquidated in the sense that petitioners cannot know for sure, before
judgment, the exact amount that they are required to pay to respondents,
the award of actual or compensatory damages, however, such as the truck
repairs and medical expenses, is arguably liquidated in that they can be
measured against a reasonably certain standard. 55 Moreover, justice would
seem to require that the delay in paying for past losses which can be made
reasonably certain should be compensated through an award of interest. 56
WHEREFORE, premises considered, the Court Resolves to PARTIALLY
GRANT the appeal by certiorari, as follows:
1) DECLARE Mariano Mendoza and Elvira Lim solidarily liable to respondent
Spouses Leonora and Gabriel Gomez;
2) MAINTAIN the award of actual or compensatory damages in the amount
of P142,757.40 for the repair of the Isuzu Elf truck, with legal interest
beginning 31 January 2001 until fully paid;
3) GRANT additional actual or compensatory damages in the amount
of P11,267.35 for the medical expenses shouldered by respondent Spouses
Leonora and Gabriel Gomez, with legal interest beginning 31 January 2001
until fully paid;
4) DELETE the award of moral damages;
5) MAINTAIN the award of exemplary damages at P50,000.00;
6) DELETE the award of attorney's fees; and
7) MAINTAIN the award of costs of suit.
COMMON CARRIER LIABILITIES
In carriage of passengers: presumption of fault & negligence
HEIRS OF JOSE MARCIAL K. OCHOA namely: RUBY B. OCHOA,
MICAELA B. OCHOA and JOMAR B. OCHOA, vs.
G & S TRANSPORT CORPORATION, G.R. No. 170071 March 9, 2011
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 170125
G & S TRANSPORT CORPORATION, vs.
HEIRS OF JOSE MARCIAL K. OCHOA namely: RUBY B. OCHOA,
MICAELA B. OCHOA and JOMAR B. OCHOA,
DECISION
An accident which claimed the life of a passenger is the root of these two
petitions - one brought before us by the common carrier and the other by
the heirs of the deceased.
These consolidated Petitions for Review on Certiorari assail the Court of
Appeals (CA) Decision1 dated June 29, 2005 in CA-G.R. CV No. 75602
which affirmed with modification the December 21, 2001 Decision and
March 5, 2002 Order of the trial court. Likewise assailed is the
Resolution2 dated October 12, 2005 denying the parties respective
Motions for Reconsideration thereto.
Factual Antecedents
Jose Marcial K. Ochoa (Jose Marcial) died on the night of March 10, 1995
while on board an Avis taxicab owned and operated by G & S Transport
Corporation (G & S), a common carrier. As narrated by the trial court, the
circumstances attending Jose Marcials death are as follows:
It appears that sometime in the evening of March 10, 1995, at the Manila
Domestic Airport, the late Jose Marcial K. Ochoa boarded and rode a
taxicab with Plate No. PKR-534, a passenger vehicle for hire owned and
operated by defendant corporation under the business name "Avis Coupon
Taxi" (Avis) and driven by its employee and authorized driver Bibiano
Padilla, Jr. on his way home to Teachers Village, Diliman, Quezon City.
At about 11:00 p.m., the taxicab was cruising along Epifanio delos Santos
Avenue [EDSA], in front of Camp Aguinaldo in Quezon City at high speed.
While going up the Boni Serrano (Santolan) fly-over, it overtook another
cab driven by Pablo Clave and tried to pass another vehicle, a ten-wheeler
cargo truck. Because of the narrow space between the left side railing of
the fly-over and the ten-wheeler truck, the Avis cab was unable to pass
and because of its speed, its driver (Padilla) was unable to control it. To
avoid colliding with the truck, Padilla turned the wheel to the left causing
his taxicab to ram the railing throwing itself off the fly-over and fell on the
middle surface of EDSA below. The forceful drop of the vehicle on the floor
of the road broke and split it into two parts. Both driver Padilla and
passenger Jose Marcial K. Ochoa were injured and rushed to the hospital.
At the East Avenue Medical Center, Ochoa was not as lucky as Padilla who
was alive. He was declared dead on arrival from the accident. The death
certificate issued by the Office of the Civil Registrar of Quezon City cited
the cause of his death as vehicular accident.3
On May 13, 1999, Jose Marcials wife, Ruby Bueno Ochoa, and his two
minor children, Micaela B. Ochoa and Jomar B. Ochoa (the heirs), through
counsel, sent G & S a letter4 demanding that the latter indemnify them for
Jose Marcials death, his loss of earning capacity, and funeral expenses in
the total amount of P15,000,000.00. As G & S failed to heed the same, the
heirs filed a Complaint5 for Damages before the Regional Trial Court (RTC)
of Pasig City which was raffled to Branch 164 of said court.
The heirs alleged that G & S, as a common carrier, is under legal obligation
to observe and exercise extraordinary diligence in transporting its
passengers to their destination safely and securely. However, G & S failed
to observe and exercise this extraordinary diligence because its employee
failed to transport Jose Marcial to his destination safely. They averred that
G & S is liable to them for having breached the contract of common
carriage. As an alternative cause of action, they asserted that G & S is
likewise liable for damages based on quasi-delict pursuant to Article
21806 in relation to Article 21767 of the Civil Code. The heirs thus prayed
for G & S to pay them actual damages, moral damages, exemplary
damages, and attorneys fees and expenses of litigation.
In its Answer With Compulsory Counterclaims, 8 G & S claimed that Jose
Marcial boarded an Avis taxicab driven by its employee, Bibiano Padilla
(Padilla), at the Domestic Airport to bring him to Teachers Village in
Quezon City. While passing the Santolan fly-over, however, the Avis taxicab
was bumped by an on-rushing delivery van at the right portion causing the
taxicab to veer to the left, ram through the left side of the railings of the
fly-over and fall to the center of the island below. The taxicab was split
into two and Jose Marcial was thrown 10 meters away. G & S posited that
the proximate cause of Jose Marcials death is a
fortuitous event and/or the fault or negligence of the driver of the delivery
van that hit the taxicab. It likewise claimed that it exercised the diligence
required of a good father of a family in the selection and supervision of its
employees including Padilla. By way of compulsory counterclaim, G & S
sought to recover from the heirs the amount of P300,000.00 as attorneys
fees and costs of suit.
Ruling of the Regional Trial Court
On December 27, 2001, the trial court rendered a Decision 9 finding the
vehicular mishap not caused by a fortuitous event but by the negligence of
Padilla. It likewise found the evidence adduced by G & S to show that it
exercised the diligence of a good father of a family in the selection and
supervision of its employees as insufficient. Hence, the trial court declared
G & S civilly liable to the heirs. However, for lack of receipts or any proof of
funeral expenses and other actual damages, the trial court denied the
heirs claim for actual damages. It also denied them moral and exemplary
damages for lack of legal basis. The dispositive portion of said Decision
reads:
WHEREFORE, defendant is hereby adjudged guilty of breach of contract of carriage
and is ordered to pay plaintiffs the following amounts:
1. P50,000.00 as civil indemnity for the death of deceased Jose Marcial K. Ochoa;
2. P6,537,244.96 for the loss of earning capacity of the deceased;
3. P100,00.00 for attorneys fees;
4. And the cost of litigation.
SO ORDERED.10
G & S filed a Notice of Appeal 11 while the heirs filed a Motion for Partial
Reconsideration.12 The heirs averred that they are entitled to moral
damages pursuant to Article 176413 in relation to Article 2206(3)14 of the
Civil Code. They also cited applicable jurisprudence providing that moral
damages are recoverable in a damage suit predicated upon a breach of
contract of carriage where the mishap results in the death of the
passenger. With respect to their claim for exemplary damages, the heirs
relied upon Article 2232 of the Civil Code which provides that in contracts
and quasi-contracts, the court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner. And, since Padilla was declared by the trial court to
have been grossly negligent in driving the taxicab, the heirs claimed that
they are likewise entitled to exemplary damages.
After G & S filed its Opposition (To Plaintiffs Motion for Partial
Reconsideration),15 the trial court issued an Order 16 on March 5, 2002. It
found merit in the heirs Motion for Partial Reconsideration and thus
declared them entitled to moral and exemplary damages, viz:
WHEREFORE, the decision dated December 27, 2001 is hereby modified so
as to order defendant Corporation to pay plaintiffs the amount of
P300,000.00 as moral damages and P50,000.00 as exemplary damages.
The dispositive portion of said decision is hereby amended to read as
follows:
WHEREFORE, defendant is hereby adjudged guilty of breach of contract of carriage
and is ordered to pay plaintiffs the following amounts:
1. P50,000.00 as civil indemnity for the death of the deceased Jose Marcial K.
Ochoa;
2. P6,537,244.96 for the loss of earning capacity of the deceased.
3. P300,000.00 as moral damages;
4. P50,000.00 as exemplary damages;
5. P100,000.00 for attorneys fees;
6. And the costs of litigation.
SO ORDERED.17
Because of this, G & S filed another Notice of Appeal 18 and same was given
due course by the trial court in an Order 19 dated April 23, 2002.
Ruling of the Court of Appeals
Before the CA, G & S continued to insist that it exercised the diligence of a
good father of the family in the selection and supervision of its employees.
It averred that it has been carrying out not only seminars for its drivers
even before they were made to work, but also periodic evaluations for
their performance. Aside from these, it has also been conducting monthly
check-up of its automobiles and has regularly issued rules regarding the
conduct of its drivers. G & S claimed that it was able to establish a good
name in the industry and maintain a clientele.
In an effort to build up Padillas character as an experienced and careful
driver, G & S averred that: (1) before G & S employed Padilla, he was a
delivery truck driver of Inter Island Gas Service for 11 years; (2) Padilla
has been an employee of G & S from 1989 to 1996 and during said period,
there was no recorded incident of his being a negligent driver; (3) despite
his qualifications, G & S still required Padilla to submit an NBI clearance,
drivers license and police clearance; (4) Padillas being a good driver-
employee was manifest in his years of service with G & S, as in fact, he
has received congratulatory messages from the latter as shown by the
inter-office memos dated August 23, 1990 and February 1, 1993; and that
(5) Padilla attended a seminar at the Pope Pius Center sometime in
December 1999 as part of the NAIA Taxi Operation Program.
G & S also argued that the proximate cause of Jose Marcials death is a
fortuitous event and/or the fault or negligence of another and not of its
employee. According to G & S, the collision was totally unforeseen since
Padilla had every right to expect that the delivery van would just overtake
him and not hit the right side of the taxicab. Therefore, what transpired
was beyond Padillas control. There was no negligence on his part but on
the part of the driver of the delivery van. For this reason, G & S opined
that it was not liable to the heirs.
On the other hand, the heirs maintained that Padilla was grossly negligent
in driving the Avis taxicab on the night of March 10, 1995. They claimed
that Padilla, while running at a very high speed, acted negligently when he
tried to overtake a ten-wheeler truck at the foot of the fly-over. This forced
him to swerve to the left and as a consequence, the Avis taxicab hit the
center of the railing and was split into two upon hitting the ground. The
manner by which Padilla drove the taxicab clearly showed that he acted
without regard to the safety of his passenger.
The heirs also averred that in order for a fortuitous event to exempt one
from liability, it is necessary that he has committed no negligence or
conduct that may have occasioned the loss. Thus, to be exempt from
liability for the death of Jose Marcial on this ground, G & S must clearly
show that the proximate cause of the casualty was entirely independent of
human will and that it was impossible to avoid. And since in the case at
bar it was Padillas inexcusable poor judgment, utter lack of foresight and
extreme negligence which were the immediate and proximate causes of
the accident, same cannot be considered to be due to a fortuitous event.
This is bolstered by the fact that the court trying the case for criminal
negligence arising from the same incident convicted Padilla for said
charge.20
At any rate, the heirs contended that regardless of whether G & S
observed due diligence in the selection of its employees, it should
nonetheless be held liable for the death of Jose Marcial pursuant to Article
1759 of the Civil Code which provides:
ART. 1759 Common carriers are liable for the death of or injuries to
passengers through the negligence or willful acts of the formers
employees, although such employees may have acted beyond the scope of
their authority or in violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they
exercised all the diligence of a good father of a family in the selection and
supervision of their employees.
In sum, the heirs prayed that the appeal be dismissed for lack of merit and
the assailed Decision and Order of the trial court be affirmed in toto.
In a Decision21 dated June 29, 2005, the CA ruled in favor of the heirs. The
appellate court gave weight to their argument that in order for a fortuitous
event to exempt one from liability, it is necessary that he committed no
negligence or misconduct that may have occasioned the loss. In this case,
the CA noted that Padilla failed to employ reasonable foresight, diligence
and care needed to exempt G & S from liability for Jose Marcials death.
Said court also quoted pertinent portions of the MTC decision convicting
Padilla of reckless imprudence resulting in homicide to negate G & S claim
that the proximate cause of the accident was the fault of the driver of the
delivery van who allegedly hit the right side of the taxicab. And just like
the trial court, the CA found insufficient the evidence adduced by G & S to
support its claim that it exercised due diligence in the selection and
supervision of its employees.
With respect to the award of P6,537,244.96 for Jose Marcials loss of
earning capacity, the CA declared the same unwarranted. It found the
Certification22 issued by Jose Marcials employer, the United States Agency
for International Development (USAID) through its Chief of Human
Resources Division Jonas Cruz (Cruz), as self-serving, unreliable, and
biased. While said certification states that Jose Marcial was earning an
annual salary ofP450,844.49 at the time of his untimely demise, the CA
noted that same is unsupported by competent evidence such as income
tax returns or receipts. This is in view of the ruling in People v.
Ereo23 where it was held that "there must be unbiased proof of the
deceaseds average income." Anent moral damages, the CA found the
award of P300,000.00 excessive and thus reduced the same
to P200,000.00 as to make it proportionate to the award of exemplary
damages which is P50,000.00. The dispositive portion of said Decision
reads:
WHEREFORE, the assailed Decision dated December 27, 2001 and Order dated
March 5, 2002 are AFFIRMED with the following MODIFICATION: appellant is
ordered to pay appellees the sum of P50,000.00 as civil indemnity for the death of
the deceased Jose Marcial K. Ochoa, P200,000.00 as moral damages, P50,000.00 as
exemplary damages, P100,000.00 for attorneys fees and the costs of litigation. The
trial courts award of P6,537,244.96 for the loss of earning capacity of the deceased
is DELETED for lack of basis.
SO ORDERED.
Both parties moved for reconsideration 24 but the CA denied their respective
motions for reconsideration in a Resolution25 dated October 12, 2005.
Hence, G & S and the heirs filed their respective Petitions for Review
on Certiorari before this Court. The heirs petition was docketed as G.R.
No. 170071 and that of G & S as G.R. No. 170125. These petitions were
later consolidated pursuant to this Courts Resolution of November 21,
2005.26
G.R. No. 170125
G & S anchors its petition on the following grounds:
I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT RULING
THAT THE PROXIMATE CAUSE OF DEATH OF MR. JOSE MARCIAL K. OCHOA
WAS A FORTUITOUS EVENT AND/OR WAS DUE TO THE FAULT OR
NEGLIGENCE OF ANOTHER AND SHOULD THUS EXEMPT THE PETITIONER
FROM LIABILITY.
II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT TAKING
NOTE OF THE FACT THAT THE PETITIONERS EMPLOYEE HAD BEEN
ACQUITTED OF THE CRIME OF RECKLESS IMPRUDENCE RESULTING (IN)
HOMICIDE.
III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN UPHOLDING
THE TESTIMONY OF A WITNESS WHO SURFACED MONTHS AFTER THE
INCIDENT WHILE DISREGARDING THAT OF AN EYEWITNESS WHO WAS
PRESENT AT THE TIME AND PLACE OF THE ACCIDENT.
IV. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT RULING
THAT THE PETITIONER EXERCISED THE DILIGENCE OF A GOOD FATHER
OF A FAMILY IN THE SELECTION AND SUPERVISION OF ITS EMPLOYEES
PARTICULARLY MR. BIBIANO PADILLA.27
G & S reiterates its arguments that the proximate cause of the accident is
a fortuitous event and/or the negligence of the driver of the delivery van
which bumped the right portion of its taxicab and, that it exercised the
diligence of a good father of a family in the selection and supervision of its
employees. It faults the CA when it overlooked the fact that the MTC
Decision convicting Padilla of reckless imprudence has already been
reversed on appeal by the RTC with Padilla having been accordingly
acquitted of the crime charged. Moreover, it claims that the appellate court
erred in according respect to the testimony of the lone prosecution
witness, Pablo Clave (Clave), when it concluded that Padilla was driving
negligently at the time of the accident. It asserts that Clave is not a
credible witness and so is his testimony. Thus, G & S prays that the
assailed CA Decision and Resolution be reversed and set aside.
On the other hand, the heirs posit that the determination of the issues
raised by G & S necessarily entails a re-examination of the factual findings
which this Court cannot do in this petition for review on certiorari. At any
rate, they maintain that the trial court itself is convinced of Claves
credibility. They stress the settled rule that the evaluation of the credibility
of witnesses is a matter that particularly falls within the authority of the
trial court because it had the opportunity to observe the demeanor of the
witnesses on the stand.
The heirs assert that fortuitous event was not the proximate cause of the
mishap. They point out that as correctly found by the trial court, Padilla
was running at an extremely high speed. This was why the impact was so
strong when the taxicab rammed the fly-over railings and was split into
two when it hit the ground. Also, while it is true that the MTC Decision in
the criminal case for reckless imprudence has been reversed by the RTC,
this does not excuse G & S from its liability to the heirs because its liability
arises from its breach of contract of carriage and from its negligence in the
selection and supervision of its employees. Also, since the acquittal of
Padilla is based on reasonable doubt, same does not in any way rule out
his negligence as this may merely mean that the prosecution failed to
meet the requisite quantum of evidence to sustain his conviction.
Therefore, G & S cannot bank on said acquittal to disprove its liability.
G.R. No. 170071
The heirs, on the other hand, advance the following grounds in support of
their petition:
THE COURT OF APPEALS MANIFESTLY AND GRAVELY ERRED IN
COMPLETELY DELETING THE TRIAL COURTS AWARD FOR THE LOSS OF
EARNING CAPACITY OF THE DECEASED.
THE COURT OF APPEALS MANIFESTLY AND GRAVELY ERRED IN REDUCING
THE TRIAL COURTS AWARD FOR MORAL DAMAGES.28
The focal point of the heirs petition is the CAs deletion of the award
of P6,537,244.96 for Jose Marcials loss of earning capacity as well as the
reduction of the award of moral damages from P300,000.00
to P200,000.00.
The heirs aver that the appellate court gravely erred in relying
upon Ereo as said case is not on all fours with the present case. They
contend that in Ereo, this Court disallowed the award for loss of income
because the only proof presented was a handwritten statement of the
victims spouse stating the daily income of the deceased as a self-
employed fish vendor. The heirs argue that the reason why this Court
declared said handwritten statement as self-serving is because the one
who prepared it, the deceaseds wife, was also the one who would directly
and personally benefit from such an award. 29 This cannot be said in the
case at bar since the same bias and personal interest cannot be attributed
to Jose Marcials employer, the USAID. Unlike in Ereo, USAID here does
not stand to be benefited by an award for Jose Marcials loss of earning
capacity. Clearly, the Certification issued by it is far from being self-
serving. At any rate, the heirs contend that Ereo has already been
superseded by Pleyto v. Lomboy30 where this Court held that in awarding
damages for loss of earning capacity, "mere testimonial evidence suffices
to establish a basis for which the court can make a fair and reasonable
estimate of the loss of earning capacity". In addition, the heirs point out
that the authenticity and accuracy of said Certification was neither
questioned by G & S nor discredited by any controverting evidence. In
fact, its admission by the trial court was not even assigned by G & S as an
error in their appeal before the CA.
As to the reduction of moral damages, the heirs claim that since the CA
agreed with the factual circumstances of the case as found by the trial
court, there is therefore no reason for it to alter the award of damages
arising from such factual circumstances. They aver that the CA may only
modify the damages awarded by the trial court when it is excessive and
scandalous as held in Meneses v. Court of Appeals.31 Here, they claim that
the award of moral damages in the amount of P300,000.00 cannot be
considered as excessive and unreasonable but only commensurate to the
sufferings caused by the incident to a wife who became a young widow at
the age of 33 and to two minor children who lost a father. Moreover, the
heirs aver that the CA should not have reduced the award of moral
damages just to make said amount proportionate to the exemplary
damages awarded. This is because there is no such rule which dictates
that the amount of moral damages should be proportionate to that of the
exemplary damages. The heirs pray that the assailed CA Decision and
Resolution be reversed and set aside insofar as they deleted the award for
loss of earning capacity and reduced the award for moral damages.
For its part, G & S avers that the Certification issued by USAID is self-
serving because the USAID officer who issued it has not been put on the
witness stand to validate the contents thereof. Moreover, said Certification
was not supported by competent evidence such as income tax returns and
receipts. G & S likewise finds the reduction of the award of moral damages
appropriate in view of the settled rule that moral damages are not meant
to enrich the complainant at the expense of the defendant. Hence, it prays
that the petition be dismissed for lack of merit.
Our Ruling
We shall first tackle the issues raised by G & S in its petition.
The first, third and fourth issues raised by G & S involve questions of fact
We have reviewed said issues and we find that the determination of the
first, third and fourth issues raised entails re-examination of the evidence
presented because they all involve questions of fact. In Microsoft
Corporation v. Maxicorp, Inc.,32 we held that:
Once it is clear that the issue invites a review of the evidence presented,
the question posed is one of fact. If the query requires a re-evaluation of
the credibility of witnesses, or the existence or relevance of surrounding
circumstances and their relation to each other, the issue in that query is
factual. Our ruling in Paterno v. Paterno is illustrative on this point:
Such questions as whether certain items of evidence should be accorded
probative value or weight, or rejected as feeble or spurious, or whether or
not the proof on one side or the other are clear and convincing and
adequate to establish a proposition in issue, are without doubt questions of
fact. Whether or not the body of proofs presented by a party, weighed and
analyzed in relation to contrary evidence submitted by adverse party, may
be said to be strong, clear and convincing; whether or not certain
documents presented by one side should be accorded full faith and credit
in the face of protests as to their spurious character by the other side;
whether or not inconsistencies in the body of proofs of a party are of such
a gravity as to justify refusing to give said proofs weight all these are
issues of fact. (Citations omitted)
In this case, the said three issues boil down to the determination of the
following questions: What is the proximate cause of the death of Jose
Marcial? Is the testimony of prosecution witness Clave credible? Did G & S
exercise the diligence of a good father of a family in the selection and
supervision of its employees? Suffice it to say that these are all questions
of fact which require this Court to inquire into the probative value of the
evidence presented before the trial court. As we have consistently held,
"[t]his Court is not a trier of facts. It is not a function of this court to
analyze or weigh evidence. When we give due course to such situations, it
is solely by way of exception. Such exceptions apply only in the presence
of extremely meritorious circumstances."33 Here, we note that although G
& S enumerated in its Consolidated Memorandum 34 the exceptions35 to the
rule that a petition for review on certiorari should only raise questions of
law, it nevertheless did not point out under what exception its case falls.
And, upon review of the records of the case, we are convinced that it does
not fall under any. Hence, we cannot proceed to resolve said issues and
disturb the findings and conclusions of the CA with respect thereto. As we
declared in Diokno v. Cacdac:36
It is aphoristic that a re-examination of factual findings cannot be done
through a petition for review on certiorariunder Rule 45 of the Rules of
Court because as earlier stated, this Court is not a trier of facts; it reviews
only questions of law. The Supreme Court is not duty-bound to analyze
and weigh again the evidence considered in the proceedings below. This is
already outside the province of the instant Petition for Certiorari. [Citations
omitted.]
There is a contract of carriage between G & S and Jose Marcial
What is clear from the records is that there existed a contract of carriage
between G & S, as the owner and operator of the Avis taxicab, and Jose
Marcial, as the passenger of said vehicle. As a common carrier, G & S "is
bound to carry [Jose Marcial] safely as far as human care and foresight
can provide, using the utmost diligence of very cautious persons, with due
regard for all the circumstances." 37 However, Jose Marcial was not able to
reach his destination safely as he died during the course of the travel. "In
a contract of carriage, it is presumed that the common carrier is at fault or
is negligent when a passenger dies or is injured. In fact, there is even no
need for the court to make an express finding of fault or negligence on the
part of the common carrier. This statutory presumption may only be
overcome by evidence that the carrier exercised extraordinary
diligence."38Unfortunately, G & S miserably failed to overcome this
presumption. Both the trial court and the CA found that the accident which
led to Jose Marcials death was due to the reckless driving and gross
negligence of G & S driver, Padilla, thereby holding G & S liable to the
heirs of Jose Marcial for breach of contract of carriage.
The acquittal of Padilla in the criminal case is immaterial to the instant
case for breach of contract
This thus now leaves us with the remaining issue raised by G & S, that
is, whether the CA gravely erred in not taking note of the fact that Padilla
has already been acquitted of the crime of reckless imprudence resulting
in homicide, a charge which arose from the same incident subject of this
case.
Article 31 of the Civil Code provides, viz:
When the civil action is based on an obligation not arising from the act or
omission complained of as a felony, such civil action may proceed
independently of the criminal proceedings and regardless of the result of
the latter.
Thus, in Cancio, Jr. v. Isip,39 we declared:
In the instant case, it must be stressed that the action filed by petitioner is
an independent civil action, which remains separate and distinct from any
criminal prosecution based on the same act. Not being deemed instituted
in the criminal action based on culpa criminal, a ruling on the culpability
of the offender will have no bearing on said independent civil
action based on an entirely different cause of action, i.e., culpa
contractual." (Emphasis supplied; Citations omitted.)
In this case, the action filed by the heirs is primarily for the recovery of
damages arising from breach of contract of carriage allegedly committed
by G & S. Clearly, it is an independent civil action arising from contract
which is separate and distinct from the criminal action for reckless
imprudence resulting in homicide filed by the heirs against Padilla by
reason of the same incident. Hence, regardless of Padillas acquittal or
conviction in said criminal case, same has no bearing in the resolution of
the present case. There was therefore no error on the part of the CA when
it resolved this case without regard to the fact that Padilla has already
been acquitted by the RTC in the criminal case. Moreover, while the CA
quoted some portions of the MTC Decision in said criminal case, we
however find that those quoted portions were only meant to belie G & S
claim that the proximate cause of the accident was the negligence of the
driver of the delivery van which allegedly hit the Avis taxicab. Even without
those quoted portions, the appellate courts ultimate finding that it was
Padillas negligence which was the proximate cause of the mishap would
still be the same. This is because the CA has, in fact, already made this
declaration in the earlier part of its assailed Decision. The fact that the
MTC Decision from which the subject quoted portions were lifted has
already been reversed by the RTC is therefore immaterial.
In view of the foregoing, we deny G & S petition for lack of merit.
The denial by the CA of the heirs claim for lost earnings is unwarranted
Going now to the petition filed by the heirs, we note at the outset that the
issues of whether the CA erred in deleting the award for loss of earning
capacity and in reducing the award for moral damages made by the trial
court likewise raise questions of fact as they "involve an examination of
the probative value of the evidence presented by the parties". 40 However,
we find that the heirs case falls under one of the exceptions because the
findings of the CA conflict with the findings of the RTC. 41 Since the heirs
properly raised the conflicting findings of the lower courts, it is proper for
this Court to resolve such contradiction.42
In Ereo, we denied the claim for loss of income because the handwritten
estimate of the deceaseds daily income as a self-employed vendor was not
supported by competent evidence like income tax returns or receipts. This
was in view of the rule that compensation for lost income is in the nature
of damages and as such requires due proof of damages suffered. We
reiterated this rule in People v. Yrat43 where we likewise denied the same
claim because the only evidence presented to show that the deceased was
earning P50,000.00 a month was the testimony of the wife. There we
stated that for lost income due to death, there must be unbiased proof of
the deceaseds average income. Self-serving, hence, unreliable statement
is not enough. In People v. Caraig,44 we declared that "documentary
evidence should be presented to substantiate the claim for damages for
loss of earning capacity. By way of exception, damages therefor may be
awarded despite the absence of documentary evidence, provided that
there is testimony that the victim was either (1) self-employed earning
less than the minimum wage under current labor laws, and judicial notice
may be taken of the fact that in the victims line of work no documentary
evidence is available; or (2) employed as a daily-wage worker earning less
than the minimum wage under current labor laws". However, we
subsequently ruled in Pleyto v. Lomboy45 that "failure to present
documentary evidence to support a claim for loss of earning capacity of
the deceased need not be fatal to its cause. Testimonial evidence suffices
to establish a basis for which the court can make a fair and reasonable
estimate of the loss of earning capacity". Hence, we held as sufficient to
establish a basis for an estimate of damages for loss of earning capacity
the testimony of the victims widow that her husband was earning a
monthly income of P8,000.00. Later, in Victory Liner, Inc. v.
Gammad,46 after finding that the deceaseds earnings does not fall within
the exceptions laid down in Caraig, we deleted the award for
compensatory damages for loss of earning capacity as same was awarded
by the lower courts only on the basis of the husbands testimony that the
deceased was 39 years of age and a Section Chief of the Bureau of
Internal Revenue with a salary of P83,088.00 per annum at the time of her
death. This same rule was also applied in the 2008 case of Licyayo v.
People.47
In all of the cases mentioned except for Ereo, the sole basis for the claim
for loss of earning capacity were the testimonies of the claimants. This is
not the case here. Just like in Ereo where the testimony of the mother of
the deceased was accompanied by a handwritten estimate of her
daughters alleged income as a fish vendor, the testimony of Jose Marcials
wife that he was earning around P450,000.00 a year was corroborated by
a Certification issued by the USAID. However in Ereo, we declared as self-
serving the handwritten estimate submitted by the mother hence we
denied the claim for such award. Based on said ruling, the CA in this case
deleted the award for lost income after it found the USAID Certification to
be self-serving and unreliable.
We disagree. The CA sweepingly concluded that the USAID Certification is
self-serving and unreliable without elaborating on how it was able to arrive
at such a conclusion. A research on USAID reveals that it is the "principal
[United States] agency to extend assistance to countries recovering from
disaster, trying to escape poverty, and engaging in democratic
reforms."48 It is an "independent federal government agency that receives
over-all foreign policy guidance from the Secretary of the State [of the
United States]."49 Given this background, it is highly improbable that such
an agency will issue a certification containing unreliable information
regarding an employees income. Besides, there exists a presumption that
official duty has been regularly performed. 50 Absent any showing to the
contrary, it is presumed that Cruz, as Chief of Human Resources Division
of USAID, has regularly performed his duty relative to the issuance of said
certification and therefore, the correctness of its contents can be relied
upon. This presumption remains especially so where the authenticity, due
execution and correctness of said certification have not been put in issue
either before the trial court or the CA. As to its being self-serving, our
discussion on "self-serving evidence" in Heirs of Pedro Clemea y Zurbano
v. Heirs of Irene B. Bien51 is enlightening, viz:
Self-serving evidence, perhaps owing to its descriptive formulation, is a
concept much misunderstood. Not infrequently, the term is employed as a
weapon to devalue and discredit a party's testimony favorable to his
cause. That, it seems, is the sense in which petitioners are using it now.
This is a grave error. "Self-serving evidence" is not to be taken literally to
mean any evidence that serves its proponent's interest. The term, if used
with any legal sense, refers only to acts or declarations made by a
party in his own interest at some place and time out of court x x x.
(Citations omitted; emphasis supplied.)
Verily, the USAID certification cannot be said to be self-serving because it
does not refer to an act or declaration made out of court by the heirs
themselves as parties to this case.1awphi1
Clearly, the CA erred in deleting the award for lost income on the ground
that the USAID Certification supporting such claim is self-serving and
unreliable. On the contrary, we find said certification sufficient basis for the
court to make a fair and reasonable estimate of Jose Marcials loss of
earning capacity just like in Tamayo v. Seora52where we based the
victims gross annual income on his pay slip from the Philippine National
Police. Hence, we uphold the trial courts award for Jose Marcials loss of
earning capacity.
While the trial court applied the formula generally used by the courts to
determine net earning capacity which is, to wit:
Net Earning Capacity = life expectancy * x (gross annual income -
reasonable living expenses),53
*
Life expectancy = 2/3 (80 age of the deceased)
we, however, find incorrect the amount of P6,537, 244.96 arrived at. The
award should be P6,611,634.59 as borne out by the following
computation:
2 (80-3654)
Net earning capacity = x 450,844.4955-50%56
3
88
= x 225,422.25
3
= 29.33 x 225,422.25
= P6, 611,634.59
The award of moral damages should be modified
While we deemed it proper to modify the amount of moral damages
awarded by the trial court as discussed below, we nevertheless agree with
the heirs that the CA should not have pegged said award in proportion to
the award of exemplary damages. Moral and exemplary damages are
based on different jural foundations.57 They are different in nature and
require separate determination. 58 The amount of one cannot be made to
depend on the other.
In Victory Liner Inc. v. Gammad 59 we awarded P100,000.00 by way of
moral damages to the husband and three children of the deceased, a 39-
year old Section Chief of the Bureau of Internal Revenue, to compensate
said heirs for the grief caused by her death. This is pursuant to the
provisions of Articles 1764 and 2206(3) which provide:
Art. 1764. Damages in cases comprised in this Section shall be awarded in
accordance with Title XVIII of this Book, concerning Damages. Articles
2206 shall also apply to the death of a passenger caused by the breach of
contract by a common carrier.
Art. 2206. x x x
(3) The spouse, legitimate and illegitimate descendants and the
ascendants of the deceased may demand moral damages for mental
anguish by reason of the death of the deceased.
Here, there is no question that the heirs are likewise entitled to moral
damages pursuant to the above provisions, considering the mental anguish
suffered by them by reason of Jose Marcials untimely death, as can be
deduced from the following testimony of his wife Ruby:
Atty. Suarez:
Q: How would you describe Jose Marcial Ochoa?
(Ruby) A: My husband was a very loving husband, faithful husband, a very
[good] provider[.] I depended on him so much financially [and] emotionally[.]
He was practically my life then.
Q: How is he as a father?
A: A very good father, he is very committed to Micaela[. H]e has always time
for her[. H]e is a family man, so its really a great [loss] to me and to Micaela.
Q: What was your reaction upon learning of your husbands death?
A: Immediately after I learned of his death, I tried very hard to keep a clear
mind for my little girl, she was 3 and she could not grasp what death is, so I
found [it] so hard to explain to her [at] that time what happened [e]specially
[because] she just talked to her father from the airport telling her that he is
coming home, tapos hindi na pala.
Q: How did it affect you?
A: It was a painful struggle everyday just to get up and move on when
someone who [you] really really love and [who] is important to you it is very
hard to move on and [it is even] harder to move on [when] I found out that I
was pregnant with my second child, parang tinabunan ka [ng] lahat eh[. I]ts
[too] hard to find happiness, youre pregnant, when you know wala naman
talagang father yung bata later on x x x
xxxx
Q: How did this affect your family?
A: Yung effect kay Micaela, she [used] to be a gregarious child, yung happy
ganyan, but nung wala na yong father niya that time, [during] graduation ng
nursery that time naging very very [quiet] siya, so a lot of emotional support
from my own family was given to her at the time para makacope-up siya sa
loss kasi she is very close to the father.
Q: Financially, how did it affect you?
A: I had to make do of what was left by my husband, I couldnt also work so
much at the time because I was.and hirap eh, I cannot find enthusiasm in
what I do, tapos pregnant pa ako, and hirap talaga.
Q: How else did it affect you?
A: We had to move houses like we used to live in Quezon City at (the) time of
his death, tapos kinuha kami ni Gorjie my brother-in-law sa compound nila
para hindi [to] support us emotionally (at that time) kasi nga I was pregnant
and then I also decided to move (to make it easy for me) to adjust yung
lifestyle ng mga bata, because I cannot cope [here] financially on my own[.
N]ahihirapan na ako dito because the living expenses here are quite high
compared sa probinsiya so I decided to move.
Q: If you would assign that pain and suffering that you suffered as a result of
the death of your husband, what will be the monetary consideration?
A: I struggled with that kasi.I can honestly say no amount of money can ever
repay the [loss] that my children suffered, future nila yan eh, and my son was
not given a chance to get to know his father, so I cannot imagine kung ano
yung sinasabi nyong amount that will compensate the suffering that I have to
go through and my children will go through, yon and mahirap bayaran. 60
Under this circumstance, we thus find as sufficient and "somehow
proportional to and in approximation of the suffering inflicted" 61 an award
of moral damages in an amount similar to that awarded in Victory which Is
P100,000.00.
From the above discussion, we, thus, partly grant the heirs petition.
WHEREFORE, the petition for review on certiorari in G.R. No. 170071 is
PARTLY GRANTED while the petition in G.R. No. 170125 is DENIED. The
assailed Decision and Resolution dated June 29, 2005 and October 12,
2005 of the Court of Appeals in CA-G.R. CV No. 75602 are AFFIRMED with
the MODIFICATIONS that G & S is ordered to pay the heirs of Jose Marcial
K. Ochoa the sum of P6,611,634.59 for loss of earning capacity of the
deceased andP100,000.00 as moral damages.
G.R. No. 157917 August 29, 2012
SPOUSES TEODORO1 and NANETTE PERENA, vs.
SPOUSES TERESITA PHILIPPINE NICOLAS and L. ZARATE,
NATIONAL RAILWAYS, and the COURT OF APPEALS
DECISION
The operator of a school bus service is a common carrier in the eyes of the
law. He is bound to observe extraordinary diligence in the conduct of his
business. He is presumed to be negligent when death occurs to a
passenger. His liability may include indemnity for loss of earning capacity
even if the deceased passenger may only be an unemployed high school
student at the time of the accident.
The Case
By petition for review on certiorari, Spouses Teodoro and Nanette Perefia
(Perefias) appeal the adverse decision promulgated on November 13,
2002, by which the Court of Appeals (CA) affirmed with modification the
decision rendered on December 3, 1999 by the Regional Trial Court (RTC),
Branch 260, in Paraaque City that had decreed them jointly and severally
liable with Philippine National Railways (PNR), their co-defendant, to
Spouses Nicolas and Teresita Zarate (Zarates) for the death of their 15-
year old son, Aaron John L. Zarate (Aaron), then a high school student of
Don Bosco Technical Institute (Don Bosco).
Antecedents
The Pereas were engaged in the business of transporting students from
their respective residences in Paraaque City to Don Bosco in Pasong
Tamo, Makati City, and back. In their business, the Pereas used a KIA
Ceres Van (van) with Plate No. PYA 896, which had the capacity to
transport 14 students at a time, two of whom would be seated in the front
beside the driver, and the others in the rear, with six students on either
side. They employed Clemente Alfaro (Alfaro) as driver of the van.
In June 1996, the Zarates contracted the Pereas to transport Aaron to
and from Don Bosco. On August 22, 1996, as on previous school days, the
van picked Aaron up around 6:00 a.m. from the Zarates residence. Aaron
took his place on the left side of the van near the rear door. The van, with
its air-conditioning unit turned on and the stereo playing loudly, ultimately
carried all the 14 student riders on their way to Don Bosco. Considering
that the students were due at Don Bosco by 7:15 a.m., and that they were
already running late because of the heavy vehicular traffic on the South
Superhighway, Alfaro took the van to an alternate route at about 6:45
a.m. by traversing the narrow path underneath the Magallanes
Interchange that was then commonly used by Makati-bound vehicles as a
short cut into Makati. At the time, the narrow path was marked by piles of
construction materials and parked passenger jeepneys, and the railroad
crossing in the narrow path had no railroad warning signs, or watchmen,
or other responsible persons manning the crossing. In fact, the bamboo
barandilla was up, leaving the railroad crossing open to traversing
motorists.
At about the time the van was to traverse the railroad crossing, PNR
Commuter No. 302 (train), operated by Jhonny Alano (Alano), was in the
vicinity of the Magallanes Interchange travelling northbound. As the train
neared the railroad crossing, Alfaro drove the van eastward across the
railroad tracks, closely tailing a large passenger bus. His view of the
oncoming train was blocked because he overtook the passenger bus on its
left side. The train blew its horn to warn motorists of its approach. When
the train was about 50 meters away from the passenger bus and the van,
Alano applied the ordinary brakes of the train. He applied the emergency
brakes only when he saw that a collision was imminent. The passenger bus
successfully crossed the railroad tracks, but the van driven by Alfaro did
not. The train hit the rear end of the van, and the impact threw nine of the
12 students in the rear, including Aaron, out of the van. Aaron landed in
the path of the train, which dragged his body and severed his head,
instantaneously killing him. Alano fled the scene on board the train, and
did not wait for the police investigator to arrive.
Devastated by the early and unexpected death of Aaron, the Zarates
commenced this action for damages against Alfaro, the Pereas, PNR and
Alano. The Pereas and PNR filed their respective answers, with cross-
claims against each other, but Alfaro could not be served with summons.
At the pre-trial, the parties stipulated on the facts and issues, viz:
A. FACTS:
(1) That spouses Zarate were the legitimate parents of Aaron John L.
Zarate;
(2) Spouses Zarate engaged the services of spouses Perea for the
adequate and safe transportation carriage of the former spouses' son from
their residence in Paraaque to his school at the Don Bosco Technical
Institute in Makati City;
(3) During the effectivity of the contract of carriage and in the
implementation thereof, Aaron, the minor son of spouses Zarate died in
connection with a vehicular/train collision which occurred while Aaron was
riding the contracted carrier Kia Ceres van of spouses Perea, then driven
and operated by the latter's employee/authorized driver Clemente Alfaro,
which van collided with the train of PNR, at around 6:45 A.M. of August
22, 1996, within the vicinity of the Magallanes Interchange in Makati City,
Metro Manila, Philippines;
(4) At the time of the vehicular/train collision, the subject site of the
vehicular/train collision was a railroad crossing used by motorists for
crossing the railroad tracks;
(5) During the said time of the vehicular/train collision, there were no
appropriate and safety warning signs and railings at the site commonly
used for railroad crossing;
(6) At the material time, countless number of Makati bound public utility
and private vehicles used on a daily basis the site of the collision as an
alternative route and short-cut to Makati;
(7) The train driver or operator left the scene of the incident on board the
commuter train involved without waiting for the police investigator;
(8) The site commonly used for railroad crossing by motorists was not in
fact intended by the railroad operator for railroad crossing at the time of
the vehicular collision;
(9) PNR received the demand letter of the spouses Zarate;
(10) PNR refused to acknowledge any liability for the vehicular/train
collision;
(11) The eventual closure of the railroad crossing alleged by PNR was an
internal arrangement between the former and its project contractor; and
(12) The site of the vehicular/train collision was within the vicinity or less
than 100 meters from the Magallanes station of PNR.
B. ISSUES
(1) Whether or not defendant-driver of the van is, in the performance of
his functions, liable for negligence constituting the proximate cause of the
vehicular collision, which resulted in the death of plaintiff spouses' son;
(2) Whether or not the defendant spouses Perea being the employer of
defendant Alfaro are liable for any negligence which may be attributed to
defendant Alfaro;
(3) Whether or not defendant Philippine National Railways being the
operator of the railroad system is liable for negligence in failing to provide
adequate safety warning signs and railings in the area commonly used by
motorists for railroad crossings, constituting the proximate cause of the
vehicular collision which resulted in the death of the plaintiff spouses' son;
(4) Whether or not defendant spouses Perea are liable for breach of the
contract of carriage with plaintiff-spouses in failing to provide adequate
and safe transportation for the latter's son;
(5) Whether or not defendants spouses are liable for actual, moral
damages, exemplary damages, and attorney's fees;
(6) Whether or not defendants spouses Teodorico and Nanette Perea
observed the diligence of employers and school bus operators;
(7) Whether or not defendant-spouses are civilly liable for the accidental
death of Aaron John Zarate;
(8) Whether or not defendant PNR was grossly negligent in operating the
commuter train involved in the accident, in allowing or tolerating the
motoring public to cross, and its failure to install safety devices or
equipment at the site of the accident for the protection of the public;
(9) Whether or not defendant PNR should be made to reimburse defendant
spouses for any and whatever amount the latter may be held answerable
or which they may be ordered to pay in favor of plaintiffs by reason of the
action;
(10) Whether or not defendant PNR should pay plaintiffs directly and fully
on the amounts claimed by the latter in their Complaint by reason of its
gross negligence;
(11) Whether or not defendant PNR is liable to defendants spouses for
actual, moral and exemplary damages and attorney's fees.2
The Zarates claim against the Pereas was upon breach of the contract of
carriage for the safe transport of Aaron; but that against PNR was based
on quasi-delict under Article 2176, Civil Code.
In their defense, the Pereas adduced evidence to show that they had
exercised the diligence of a good father of the family in the selection and
supervision of Alfaro, by making sure that Alfaro had been issued a drivers
license and had not been involved in any vehicular accident prior to the
collision; that their own son had taken the van daily; and that Teodoro
Perea had sometimes accompanied Alfaro in the vans trips transporting
the students to school.
For its part, PNR tended to show that the proximate cause of the collision
had been the reckless crossing of the van whose driver had not first
stopped, looked and listened; and that the narrow path traversed by the
van had not been intended to be a railroad crossing for motorists.
Ruling of the RTC
On December 3, 1999, the RTC rendered its decision, 3 disposing:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the
plaintiff and against the defendants ordering them to jointly and severally pay the
plaintiffs as follows:
(1) (for) the death of Aaron- Php50,000.00;
(2) Actual damages in the amount of Php100,000.00;
(3) For the loss of earning capacity- Php2,109,071.00;
(4) Moral damages in the amount of Php4,000,000.00;
(5) Exemplary damages in the amount of Php1,000,000.00;
(6) Attorneys fees in the amount of Php200,000.00; and
(7) Cost of suit.
SO ORDERED.
On June 29, 2000, the RTC denied the Pereas motion for
reconsideration,4 reiterating that the cooperative gross negligence of the
Pereas and PNR had caused the collision that led to the death of Aaron;
and that the damages awarded to the Zarates were not excessive, but
based on the established circumstances.
The CAs Ruling
Both the Pereas and PNR appealed (C.A.-G.R. CV No. 68916).
PNR assigned the following errors, to wit: 5
The Court a quo erred in:
1. In finding the defendant-appellant Philippine National Railways jointly
and severally liable together with defendant-appellants spouses Teodorico
and Nanette Perea and defendant-appellant Clemente Alfaro to pay
plaintiffs-appellees for the death of Aaron Zarate and damages.
2. In giving full faith and merit to the oral testimonies of plaintiffs-
appellees witnesses despite overwhelming documentary evidence on
record, supporting the case of defendants-appellants Philippine National
Railways.
The Pereas ascribed the following errors to the RTC, namely:
The trial court erred in finding defendants-appellants jointly and severally
liable for actual, moral and exemplary damages and attorneys fees with
the other defendants.
The trial court erred in dismissing the cross-claim of the appellants
Pereas against the Philippine National Railways and in not holding the
latter and its train driver primarily responsible for the incident.
The trial court erred in awarding excessive damages and attorneys fees.
The trial court erred in awarding damages in the form of deceaseds loss of
earning capacity in the absence of sufficient basis for such an award.
On November 13, 2002, the CA promulgated its decision, affirming the
findings of the RTC, but limited the moral damages to P 2,500,000.00; and
deleted the attorneys fees because the RTC did not state the factual and
legal bases, to wit:6
WHEREFORE, premises considered, the assailed Decision of the Regional Trial Court,
Branch 260 of Paraaque City is AFFIRMED with the modification that the award of
Actual Damages is reduced to P59,502.76; Moral Damages is reduced
to P 2,500,000.00; and the award for Attorneys Fees is Deleted.
SO ORDERED.
The CA upheld the award for the loss of Aarons earning capacity, taking
cognizance of the ruling in Cariaga v. Laguna Tayabas Bus Company and
Manila Railroad Company,7 wherein the Court gave the heirs of Cariaga a
sum representing the loss of the deceaseds earning capacity despite
Cariaga being only a medical student at the time of the fatal incident.
Applying the formula adopted in the American Expectancy Table of
Mortality:
2/3 x (80 - age at the time of death) = life expectancy
the CA determined the life expectancy of Aaron to be 39.3 years upon
reckoning his life expectancy from age of 21 (the age when he would have
graduated from college and started working for his own livelihood) instead
of 15 years (his age when he died). Considering that the nature of his
work and his salary at the time of Aarons death were unknown, it used
the prevailing minimum wage of P 280.00/day to compute Aarons gross
annual salary to be P 110,716.65, inclusive of the thirteenth month pay.
Multiplying this annual salary by Aarons life expectancy of 39.3 years, his
gross income would aggregate to P 4,351,164.30, from which his
estimated expenses in the sum of P 2,189,664.30 was deducted to finally
arrive at P 2,161,500.00 as net income. Due to Aarons computed net
income turning out to be higher than the amount claimed by the Zarates,
only P 2,109,071.00, the amount expressly prayed for by them, was
granted.
On April 4, 2003, the CA denied the Pereas motion for reconsideration. 8
Issues
In this appeal, the Pereas list the following as the errors committed by
the CA, to wit:
I. The lower court erred when it upheld the trial courts decision holding
the petitioners jointly and severally liable to pay damages with Philippine
National Railways and dismissing their cross-claim against the latter.
II. The lower court erred in affirming the trial courts decision awarding
damages for loss of earning capacity of a minor who was only a high
school student at the time of his death in the absence of sufficient basis
for such an award.
III. The lower court erred in not reducing further the amount of damages
awarded, assuming petitioners are liable at all.
Ruling
The petition has no merit.
1.Were the Pereas and PNR jointly and severally liable for
damages?
The Zarates brought this action for recovery of damages against both the
Pereas and the PNR, basing their claim against the Pereas on breach of
contract of carriage and against the PNR on quasi-delict.
The RTC found the Pereas and the PNR negligent. The CA affirmed the
findings.
We concur with the CA.
To start with, the Pereas defense was that they exercised the diligence of
a good father of the family in the selection and supervision of Alfaro, the
van driver, by seeing to it that Alfaro had a drivers license and that he had
not been involved in any vehicular accident prior to the fatal collision with
the train; that they even had their own son travel to and from school on a
daily basis; and that Teodoro Perea himself sometimes accompanied
Alfaro in transporting the passengers to and from school. The RTC gave
scant consideration to such defense by regarding such defense as
inappropriate in an action for breach of contract of carriage.
We find no adequate cause to differ from the conclusions of the lower
courts that the Pereas operated as a common carrier; and that their
standard of care was extraordinary diligence, not the ordinary diligence of
a good father of a family.
Although in this jurisdiction the operator of a school bus service has been
usually regarded as a private carrier,9primarily because he only caters to
some specific or privileged individuals, and his operation is neither open to
the indefinite public nor for public use, the exact nature of the operation of
a school bus service has not been finally settled. This is the occasion to lay
the matter to rest.
A carrier is a person or corporation who undertakes to transport or convey
goods or persons from one place to another, gratuitously or for hire. The
carrier is classified either as a private/special carrier or as a
common/public carrier.10 A private carrier is one who, without making the
activity a vocation, or without holding himself or itself out to the public as
ready to act for all who may desire his or its services, undertakes, by
special agreement in a particular instance only, to transport goods or
persons from one place to another either gratuitously or for hire. 11The
provisions on ordinary contracts of the Civil Code govern the contract of
private carriage.The diligence required of a private carrier is only ordinary,
that is, the diligence of a good father of the family. In contrast, a common
carrier is a person, corporation, firm or association engaged in the
business of carrying or transporting passengers or goods or both, by land,
water, or air, for compensation, offering such services to the
public.12Contracts of common carriage are governed by the provisions on
common carriers of the Civil Code, the Public Service Act, 13 and other
special laws relating to transportation. A common carrier is required to
observe extraordinary diligence, and is presumed to be at fault or to have
acted negligently in case of the loss of the effects of passengers, or the
death or injuries to passengers.14
In relation to common carriers, the Court defined public use in the
following terms in United States v. Tan Piaco,15viz:
"Public use" is the same as "use by the public". The essential feature of the
public use is not confined to privileged individuals, but is open to the
indefinite public. It is this indefinite or unrestricted quality that gives it its
public character. In determining whether a use is public, we must look not
only to the character of the business to be done, but also to the proposed
mode of doing it. If the use is merely optional with the owners, or the
public benefit is merely incidental, it is not a public use, authorizing the
exercise of the jurisdiction of the public utility commission. There must be,
in general, a right which the law compels the owner to give to the general
public. It is not enough that the general prosperity of the public is
promoted. Public use is not synonymous with public interest. The true
criterion by which to judge the character of the use is whether the public
may enjoy it by right or only by permission.
In De Guzman v. Court of Appeals, 16 the Court noted that Article 1732 of
the Civil Code avoided any distinction between a person or an enterprise
offering transportation on a regular or an isolated basis; and has not
distinguished a carrier offering his services to the general public, that is,
the general community or population, from one offering his services only
to a narrow segment of the general population.
Nonetheless, the concept of a common carrier embodied in Article 1732 of
the Civil Code coincides neatly with the notion of public service under the
Public Service Act, which supplements the law on common carriers found
in the Civil Code. Public service, according to Section 13, paragraph (b) of
the Public Service Act, includes:
x x x every person that now or hereafter may own, operate, manage, or
control in the Philippines, for hire or compensation, with general or limited
clientle, whether permanent or occasional, and done for the 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, 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. x x x.17
Given the breadth of the aforequoted characterization of a common carrier,
the Court has considered as common carriers pipeline operators, 18 custom
brokers and warehousemen,19 and barge operators20 even if they had
limited clientle.
As all the foregoing indicate, the true test for a common carrier is not the
quantity or extent of the business actually transacted, or the number and
character of the conveyances used in the activity, but whether the
undertaking is a part of the activity engaged in by the carrier that he has
held out to the general public as his business or occupation. If the
undertaking is a single transaction, not a part of the general business or
occupation engaged in, as advertised and held out to the general public,
the individual or the entity rendering such service is a private, not a
common, carrier. The question must be determined by the character of the
business actually carried on by the carrier, not by any secret intention or
mental reservation it may entertain or assert when charged with the duties
and obligations that the law imposes.21
Applying these considerations to the case before us, there is no question
that the Pereas as the operators of a school bus service were: (a)
engaged in transporting passengers generally as a business, not just as a
casual occupation; (b) undertaking to carry passengers over established
roads by the method by which the business was conducted; and (c)
transporting students for a fee. Despite catering to a limited clientle, the
Pereas operated as a common carrier because they held themselves out
as a ready transportation indiscriminately to the students of a particular
school living within or near where they operated the service and for a fee.
The common carriers standard of care and vigilance as to the safety of the
passengers is defined by law. Given the nature of the business and for
reasons of public policy, the common carrier is bound "to observe
extraordinary diligence in the vigilance over the goods and for the safety of
the passengers transported by them, according to all the circumstances of
each case."22 Article 1755 of the Civil Code specifies that the common
carrier should "carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons,
with a due regard for all the circumstances." To successfully fend off
liability in an action upon the death or injury to a passenger, the common
carrier must prove his or its observance of that extraordinary diligence;
otherwise, the legal presumption that he or it was at fault or acted
negligently would stand.23 No device, whether by stipulation, posting of
notices, statements on tickets, or otherwise, may dispense with or lessen
the responsibility of the common carrier as defined under Article 1755 of
the Civil Code. 24
And, secondly, the Pereas have not presented any compelling defense or
reason by which the Court might now reverse the CAs findings on their
liability. On the contrary, an examination of the records shows that the
evidence fully supported the findings of the CA.
As earlier stated, the Pereas, acting as a common carrier, were already
presumed to be negligent at the time of the accident because death had
occurred to their passenger.25 The presumption of negligence, being a
presumption of law, laid the burden of evidence on their shoulders to
establish that they had not been negligent. 26 It was the law no less that
required them to prove their observance of extraordinary diligence in
seeing to the safe and secure carriage of the passengers to their
destination. Until they did so in a credible manner, they stood to be held
legally responsible for the death of Aaron and thus to be held liable for all
the natural consequences of such death.
There is no question that the Pereas did not overturn the presumption of
their negligence by credible evidence. Their defense of having observed
the diligence of a good father of a family in the selection and supervision
of their driver was not legally sufficient. According to Article 1759 of the
Civil Code, their liability as a common carrier did not cease upon proof that
they exercised all the diligence of a good father of a family in the selection
and supervision of their employee. This was the reason why the RTC
treated this defense of the Pereas as inappropriate in this action for
breach of contract of carriage.
The Pereas were liable for the death of Aaron despite the fact that their
driver might have acted beyond the scope of his authority or even in
violation of the orders of the common carrier.27 In this connection, the
records showed their drivers actual negligence. There was a showing, to
begin with, that their driver traversed the railroad tracks at a point at
which the PNR did not permit motorists going into the Makati area to cross
the railroad tracks. Although that point had been used by motorists as a
shortcut into the Makati area, that fact alone did not excuse their driver
into taking that route. On the other hand, with his familiarity with that
shortcut, their driver was fully aware of the risks to his passengers but he
still disregarded the risks. Compounding his lack of care was that loud
music was playing inside the air-conditioned van at the time of the
accident. The loudness most probably reduced his ability to hear the
warning horns of the oncoming train to allow him to correctly appreciate
the lurking dangers on the railroad tracks. Also, he sought to overtake a
passenger bus on the left side as both vehicles traversed the railroad
tracks. In so doing, he lost his view of the train that was then coming from
the opposite side of the passenger bus, leading him to miscalculate his
chances of beating the bus in their race, and of getting clear of the train.
As a result, the bus avoided a collision with the train but the van got
slammed at its rear, causing the fatality. Lastly, he did not slow down or go
to a full stop before traversing the railroad tracks despite knowing that his
slackening of speed and going to a full stop were in observance of the right
of way at railroad tracks as defined by the traffic laws and
regulations.28 He thereby violated a specific traffic regulation on right of
way, by virtue of which he was immediately presumed to be negligent. 29
The omissions of care on the part of the van driver constituted
negligence,30 which, according to Layugan v. Intermediate Appellate
Court,31 is "the omission to do something which a reasonable man, guided
by those considerations which ordinarily regulate the conduct of human
affairs, would do, or the doing of something which a prudent and
reasonable man would not do, 32 or as Judge Cooley defines it, (t)he failure
to observe for the protection of the interests of another person, that
degree of care, precaution, and vigilance which the circumstances justly
demand, whereby such other person suffers injury."33
The test by which to determine the existence of negligence in a particular
case has been aptly stated in the leading case of Picart v.
Smith,34 thuswise:
The test by which to determine the existence of negligence in a particular
case may be stated as follows: Did the defendant in doing the alleged
negligent act use that reasonable care and caution which an ordinarily
prudent person would have used in the same situation? If not, then he is
guilty of negligence. The law here in effect adopts the standard supposed
to be supplied by the imaginary conduct of the discreet paterfamilias of the
Roman law. The existence of negligence in a given case is not determined
by reference to the personal judgment of the actor in the situation before
him. The law considers what would be reckless, blameworthy, or negligent
in the man of ordinary intelligence and prudence and determines liability
by that.
The question as to what would constitute the conduct of a prudent man in
a given situation must of course be always determined in the light of
human experience and in view of the facts involved in the particular case.
Abstract speculation cannot here be of much value but this much can be
profitably said: Reasonable men govern their conduct by the
circumstances which are before them or known to them. They are not, and
are not supposed to be, omniscient of the future. Hence they can be
expected to take care only when there is something before them to
suggest or warn of danger. Could a prudent man, in the case under
consideration, foresee harm as a result of the course actually pursued? If
so, it was the duty of the actor to take precautions to guard against that
harm. Reasonable foresight of harm, followed by the ignoring of the
suggestion born of this prevision, is always necessary before negligence
can be held to exist. Stated in these terms, the proper criterion for
determining the existence of negligence in a given case is this: Conduct is
said to be negligent when a prudent man in the position of the tortfeasor
would have foreseen that an effect harmful to another was sufficiently
probable to warrant his foregoing the conduct or guarding against its
consequences. (Emphasis supplied)
Pursuant to the Picart v. Smith test of negligence, the Pereas driver was
entirely negligent when he traversed the railroad tracks at a point not
allowed for a motorists crossing despite being fully aware of the grave
harm to be thereby caused to his passengers; and when he disregarded
the foresight of harm to his passengers by overtaking the bus on the left
side as to leave himself blind to the approach of the oncoming train that
he knew was on the opposite side of the bus.
Unrelenting, the Pereas cite Phil. National Railways v. Intermediate
Appellate Court,35 where the Court held the PNR solely liable for the
damages caused to a passenger bus and its passengers when its train hit
the rear end of the bus that was then traversing the railroad crossing. But
the circumstances of that case and this one share no similarities. In
Philippine National Railways v. Intermediate Appellate Court, no evidence
of contributory negligence was adduced against the owner of the bus.
Instead, it was the owner of the bus who proved the exercise of
extraordinary diligence by preponderant evidence. Also, the records are
replete with the showing of negligence on the part of both the Pereas and
the PNR. Another distinction is that the passenger bus in Philippine
National Railways v. Intermediate Appellate Court was traversing the
dedicated railroad crossing when it was hit by the train, but the Pereas
school van traversed the railroad tracks at a point not intended for that
purpose.
At any rate, the lower courts correctly held both the Pereas and the PNR
"jointly and severally" liable for damages arising from the death of Aaron.
They had been impleaded in the same complaint as defendants against
whom the Zarates had the right to relief, whether jointly, severally, or in
the alternative, in respect to or arising out of the accident, and questions
of fact and of law were common as to the Zarates. 36 Although the basis of
the right to relief of the Zarates (i.e., breach of contract of carriage)
against the Pereas was distinct from the basis of the Zarates right to
relief against the PNR (i.e., quasi-delict under Article 2176, Civil Code),
they nonetheless could be held jointly and severally liable by virtue of their
respective negligence combining to cause the death of Aaron. As to the
PNR, the RTC rightly found the PNR also guilty of negligence despite the
school van of the Pereas traversing the railroad tracks at a point not
dedicated by the PNR as a railroad crossing for pedestrians and motorists,
because the PNR did not ensure the safety of others through the placing of
crossbars, signal lights, warning signs, and other permanent safety
barriers to prevent vehicles or pedestrians from crossing there. The RTC
observed that the fact that a crossing guard had been assigned to man
that point from 7 a.m. to 5 p.m. was a good indicium that the PNR was
aware of the risks to others as well as the need to control the vehicular
and other traffic there. Verily, the Pereas and the PNR were joint
tortfeasors.
2.Was the indemnity for loss of Aarons earning capacity proper?
The RTC awarded indemnity for loss of Aarons earning capacity. Although
agreeing with the RTC on the liability, the CA modified the amount. Both
lower courts took into consideration that Aaron, while only a high school
student, had been enrolled in one of the reputable schools in the
Philippines and that he had been a normal and able-bodied child prior to
his death. The basis for the computation of Aarons earning capacity was
not what he would have become or what he would have wanted to be if
not for his untimely death, but the minimum wage in effect at the time of
his death. Moreover, the RTCs computation of Aarons life expectancy rate
was not reckoned from his age of 15 years at the time of his death, but on
21 years, his age when he would have graduated from college.
We find the considerations taken into account by the lower courts to be
reasonable and fully warranted.
Yet, the Pereas submit that the indemnity for loss of earning capacity was
speculative and unfounded.1wphi1 They cited People v. Teehankee,
Jr.,37 where the Court deleted the indemnity for victim Jussi Leinos loss of
earning capacity as a pilot for being speculative due to his having
graduated from high school at the International School in Manila only two
years before the shooting, and was at the time of the shooting only
enrolled in the first semester at the Manila Aero Club to pursue his
ambition to become a professional pilot. That meant, according to the
Court, that he was for all intents and purposes only a high school
graduate.
We reject the Pereas submission.
First of all, a careful perusal of the Teehankee, Jr. case shows that the
situation there of Jussi Leino was not akin to that of Aaron here. The CA
and the RTC were not speculating that Aaron would be some highly-paid
professional, like a pilot (or, for that matter, an engineer, a physician, or a
lawyer). Instead, the computation of Aarons earning capacity was
premised on him being a lowly minimum wage earner despite his being
then enrolled at a prestigious high school like Don Bosco in Makati, a fact
that would have likely ensured his success in his later years in life and at
work.
And, secondly, the fact that Aaron was then without a history of earnings
should not be taken against his parents and in favor of the defendants
whose negligence not only cost Aaron his life and his right to work and
earn money, but also deprived his parents of their right to his presence
and his services as well. Our law itself states that the loss of the earning
capacity of the deceased shall be the liability of the guilty party in favor of
the heirs of the deceased, and shall in every case be assessed and
awarded by the court "unless the deceased on account of permanent
physical disability not caused by the defendant, had no earning capacity at
the time of his death."38Accordingly, we emphatically hold in favor of the
indemnification for Aarons loss of earning capacity despite him having
been unemployed, because compensation of this nature is awarded not for
loss of time or earnings but for loss of the deceaseds power or ability to
earn money.39
This favorable treatment of the Zarates claim is not unprecedented. In
Cariaga v. Laguna Tayabas Bus Company and Manila Railroad
Company,40 fourth-year medical student Edgardo Carriagas earning
capacity, although he survived the accident but his injuries rendered him
permanently incapacitated, was computed to be that of the physician that
he dreamed to become. The Court considered his scholastic record
sufficient to justify the assumption that he could have finished the medical
course and would have passed the medical board examinations in due
time, and that he could have possibly earned a modest income as a
medical practitioner. Also, in People v. Sanchez, 41 the Court opined that
murder and rape victim Eileen Sarmienta and murder victim Allan Gomez
could have easily landed good-paying jobs had they graduated in due
time, and that their jobs would probably pay them high monthly salaries
from P 10,000.00 to P 15,000.00 upon their graduation. Their earning
capacities were computed at rates higher than the minimum wage at the
time of their deaths due to their being already senior agriculture students
of the University of the Philippines in Los Baos, the countrys leading
educational institution in agriculture.
3.Were the amounts of damages excessive?
The Pereas plead for the reduction of the moral and exemplary damages
awarded to the Zarates in the respective amounts of P 2,500,000.00
and P 1,000,000.00 on the ground that such amounts were excessive.
The plea is unwarranted.
The moral damages of P 2,500,000.00 were really just and reasonable
under the established circumstances of this case because they were
intended by the law to assuage the Zarates deep mental anguish over
their sons unexpected and violent death, and their moral shock over the
senseless accident. That amount would not be too much, considering that
it would help the Zarates obtain the means, diversions or amusements
that would alleviate their suffering for the loss of their child. At any rate,
reducing the amount as excessive might prove to be an injustice, given the
passage of a long time from when their mental anguish was inflicted on
them on August 22, 1996.
Anent the P 1,000,000.00 allowed as exemplary damages, we should not
reduce the amount if only to render effective the desired example for the
public good. As a common carrier, the Pereas needed to be vigorously
reminded to observe their duty to exercise extraordinary diligence to
prevent a similarly senseless accident from happening again. Only by an
award of exemplary damages in that amount would suffice to instill in
them and others similarly situated like them the ever-present need for
greater and constant vigilance in the conduct of a business imbued with
public interest.
WHEREFORE, we DENY the petition for review on certiorari; AFFIRM the
decision promulgated on November 13, 2002; and ORDER the petitioners
to pay the costs of suit.
SO ORDERED.
LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, vs
MARJORIE NAVIDAD, Heirs of the Late NICANOR NAVIDAD &
PRUDENT SECURITY AGENCY, G.R. No. 145804 Feb 6, 2003
DECISION
The case before the Court is an appeal from the decision and resolution of
the Court of Appeals, promulgated on 27 April 2000 and 10 October 2000,
respectively, in CA-G.R. CV No. 60720, entitled "Marjorie Navidad and
Heirs of the Late Nicanor Navidad vs. Rodolfo Roman, et. al.," which has
modified the decision of 11 August 1998 of the Regional Trial Court,
Branch 266, Pasig City, exonerating Prudent Security Agency (Prudent)
from liability and finding Light Rail Transit Authority (LRTA) and Rodolfo
Roman liable for damages on account of the death of Nicanor Navidad.
On 14 October 1993, about half an hour past seven oclock in the evening,
Nicanor Navidad, then drunk, entered the EDSA LRT station after
purchasing a "token" (representing payment of the fare). While Navidad
was standing on the platform near the LRT tracks, Junelito Escartin, the
security guard assigned to the area approached Navidad. A
misunderstanding or an altercation between the two apparently ensued
that led to a fist fight. No evidence, however, was adduced to indicate how
the fight started or who, between the two, delivered the first blow or how
Navidad later fell on the LRT tracks. At the exact moment that Navidad
fell, an LRT train, operated by petitioner Rodolfo Roman, was coming in.
Navidad was struck by the moving train, and he was killed instantaneously.
On 08 December 1994, the widow of Nicanor, herein respondent Marjorie
Navidad, along with her children, filed a complaint for damages against
Junelito Escartin, Rodolfo Roman, the LRTA, the Metro Transit
Organization, Inc. (Metro Transit), and Prudent for the death of her
husband. LRTA and Roman filed a counterclaim against Navidad and a
cross-claim against Escartin and Prudent. Prudent, in its answer, denied
liability and averred that it had exercised due diligence in the selection and
supervision of its security guards.
The LRTA and Roman presented their evidence while Prudent and Escartin,
instead of presenting evidence, filed a demurrer contending that Navidad
had failed to prove that Escartin was negligent in his assigned task. On 11
August 1998, the trial court rendered its decision; it adjudged:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the
defendants Prudent Security and Junelito Escartin ordering the latter to pay jointly
and severally the plaintiffs the following:
"a) 1) Actual damages of P44,830.00;
2) Compensatory damages of P443,520.00;
3) Indemnity for the death of Nicanor Navidad in the sum of P50,000.00;
"b) Moral damages of P50,000.00;
"c) Attorneys fees of P20,000;
"d) Costs of suit.
"The complaint against defendants LRTA and Rodolfo Roman are dismissed for lack
of merit.
"The compulsory counterclaim of LRTA and Roman are likewise dismissed." 1
Prudent appealed to the Court of Appeals. On 27 August 2000, the
appellate court promulgated its now assailed decision exonerating Prudent
from any liability for the death of Nicanor Navidad and, instead, holding
the LRTA and Roman jointly and severally liable thusly:
"WHEREFORE, the assailed judgment is hereby MODIFIED, by exonerating the
appellants from any liability for the death of Nicanor Navidad, Jr. Instead, appellees
Rodolfo Roman and the Light Rail Transit Authority (LRTA) are held liable for his
death and are hereby directed to pay jointly and severally to the plaintiffs-appellees,
the following amounts:
a) P44,830.00 as actual damages;
b) P50,000.00 as nominal damages;
c) P50,000.00 as moral damages;
d) P50,000.00 as indemnity for the death of the deceased; and
e) P20,000.00 as and for attorneys fees."2
The appellate court ratiocinated that while the deceased might not have
then as yet boarded the train, a contract of carriage theretofore had
already existed when the victim entered the place where passengers were
supposed to be after paying the fare and getting the corresponding token
therefor. In exempting Prudent from liability, the court stressed that there
was nothing to link the security agency to the death of Navidad. It said
that Navidad failed to show that Escartin inflicted fist blows upon the
victim and the evidence merely established the fact of death of Navidad by
reason of his having been hit by the train owned and managed by the
LRTA and operated at the time by Roman. The appellate court faulted
petitioners for their failure to present expert evidence to establish the fact
that the application of emergency brakes could not have stopped the train.
The appellate court denied petitioners motion for reconsideration in its
resolution of 10 October 2000.
In their present recourse, petitioners recite alleged errors on the part of
the appellate court; viz:
"I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY
DISREGARDING THE FINDINGS OF FACTS BY THE TRIAL COURT
"II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING
THAT PETITIONERS ARE LIABLE FOR THE DEATH OF NICANOR NAVIDAD,
JR.
"III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING
THAT RODOLFO ROMAN IS AN EMPLOYEE OF LRTA."3
Petitioners would contend that the appellate court ignored the evidence
and the factual findings of the trial court by holding them liable on the
basis of a sweeping conclusion that the presumption of negligence on the
part of a common carrier was not overcome. Petitioners would insist that
Escartins assault upon Navidad, which caused the latter to fall on the
tracks, was an act of a stranger that could not have been foreseen or
prevented. The LRTA would add that the appellate courts conclusion on
the existence of an employer-employee relationship between Roman and
LRTA lacked basis because Roman himself had testified being an employee
of Metro Transit and not of the LRTA.
Respondents, supporting the decision of the appellate court, contended
that a contract of carriage was deemed created from the moment Navidad
paid the fare at the LRT station and entered the premises of the latter,
entitling Navidad to all the rights and protection under a contractual
relation, and that the appellate court had correctly held LRTA and Roman
liable for the death of Navidad in failing to exercise extraordinary diligence
imposed upon a common carrier.
Law and jurisprudence dictate that a common carrier, both from the nature
of its business and for reasons of public policy, is burdened with the duty
of exercising utmost diligence in ensuring the safety of passengers. 4 The
Civil Code, governing the liability of a common carrier for death of or
injury to its passengers, provides:
"Article 1755. A common carrier is bound to carry the passengers safely as
far as human care and foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the circumstances.
"Article 1756. In case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to have acted negligently,
unless they prove that they observed extraordinary diligence as prescribed
in articles 1733 and 1755."
"Article 1759. Common carriers are liable for the death of or injuries to
passengers through the negligence or willful acts of the formers
employees, although such employees may have acted beyond the scope of
their authority or in violation of the orders of the common carriers.
"This liability of the common carriers does not cease upon proof that they
exercised all the diligence of a good father of a family in the selection and
supervision of their employees."
"Article 1763. A common carrier is responsible for injuries suffered by a
passenger on account of the willful acts or negligence of other passengers
or of strangers, if the common carriers employees through the exercise of
the diligence of a good father of a family could have prevented or stopped
the act or omission."
The law requires common carriers to carry passengers safely using the
utmost diligence of very cautious persons with due regard for all
circumstances.5 Such duty of a common carrier to provide safety to its
passengers so obligates it not only during the course of the trip but for so
long as the passengers are within its premises and where they ought to be
in pursuance to the contract of carriage. 6 The statutory provisions render a
common carrier liable for death of or injury to passengers (a) through the
negligence or wilful acts of its employees or b) on account of wilful acts or
negligence of other passengers or of strangers if the common carriers
employees through the exercise of due diligence could have prevented or
stopped the act or omission. 7 In case of such death or injury, a carrier is
presumed to have been at fault or been negligent, and 8 by simple proof of
injury, the passenger is relieved of the duty to still establish the fault or
negligence of the carrier or of its employees and the burden shifts upon
the carrier to prove that the injury is due to an unforeseen event or to
force majeure.9 In the absence of satisfactory explanation by the carrier on
how the accident occurred, which petitioners, according to the appellate
court, have failed to show, the presumption would be that it has been at
fault,10 an exception from the general rule that negligence must be
proved.11
The foundation of LRTAs liability is the contract of carriage and its
obligation to indemnify the victim arises from the breach of that contract
by reason of its failure to exercise the high diligence required of the
common carrier. In the discharge of its commitment to ensure the safety
of passengers, a carrier may choose to hire its own employees or avail
itself of the services of an outsider or an independent firm to undertake
the task. In either case, the common carrier is not relieved of its
responsibilities under the contract of carriage.
Should Prudent be made likewise liable? If at all, that liability could only be
for tort under the provisions of Article 2176 12 and related provisions, in
conjunction with Article 2180, 13 of the Civil Code. The premise, however,
for the employers liability is negligence or fault on the part of the
employee. Once such fault is established, the employer can then be made
liable on the basis of the presumption juris tantum that the employer failed
to exercise diligentissimi patris families in the selection and supervision of
its employees. The liability is primary and can only be negated by showing
due diligence in the selection and supervision of the employee, a factual
matter that has not been shown. Absent such a showing, one might ask
further, how then must the liability of the common carrier, on the one
hand, and an independent contractor, on the other hand, be described? It
would be solidary. A contractual obligation can be breached by tort and
when the same act or omission causes the injury, one resulting in culpa
contractual and the other in culpa aquiliana, Article 2194 14 of the Civil
Code can well apply.15 In fine, a liability for tort may arise even under a
contract, where tort is that which breaches the contract. 16 Stated
differently, when an act which constitutes a breach of contract would have
itself constituted the source of a quasi-delictual liability had no contract
existed between the parties, the contract can be said to have been
breached by tort, thereby allowing the rules on tort to apply.17
Regrettably for LRT, as well as perhaps the surviving spouse and heirs of
the late Nicanor Navidad, this Court is concluded by the factual finding of
the Court of Appeals that "there is nothing to link (Prudent) to the death of
Nicanor (Navidad), for the reason that the negligence of its employee,
Escartin, has not been duly proven x x x." This finding of the appellate
court is not without substantial justification in our own review of the
records of the case.
There being, similarly, no showing that petitioner Rodolfo Roman himself is
guilty of any culpable act or omission, he must also be absolved from
liability. Needless to say, the contractual tie between the LRT and Navidad
is not itself a juridical relation between the latter and Roman; thus, Roman
can be made liable only for his own fault or negligence.
The award of nominal damages in addition to actual damages is untenable.
Nominal damages are adjudicated in order that a right of the plaintiff,
which has been violated or invaded by the defendant, may be vindicated or
recognized, and not for the purpose of indemnifying the plaintiff for any
loss suffered by him.18 It is an established rule that nominal damages
cannot co-exist with compensatory damages.19
WHEREFORE, the assailed decision of the appellate court is AFFIRMED
with MODIFICATION but only in that (a) the award of nominal damages is
DELETED and (b) petitioner Rodolfo Roman is absolved from liability. No
costs.
SO ORDERED.

G.R. No. 149749 July 25, 2006
AGAPITA DIAZ, vs. CA, et al.,
RESOLUTION
In this petition for certiorari under Rule 65 of the Rules of Court, petitioner
imputes grave abuse of discretion to the Court of Appeals vis-a-vis its May
30, 2001 decision2 in CA-G.R. CV No. 67017, the dispositive portion of
which read:
WHEREFORE, premises considered, the present appeal is hereby DISMISSED for
lack of merit. The Decision (Judgment) dated October 29, 1999 of the Regional Trial
Court of Malaybalay City, Bukidnon, Branch 10 in Civil Case No. 2586-95 is
hereby AFFIRMED and REITERATED.3
The facts follow.
Petitioner Agapita Diaz operated a common carrier, a Tamaraw FX taxi
plying the route of Cagayan de Oro City to any point in Region 10. On July
20, 1996, petitioners taxi, driven by one Arman Retes, was moving at an
excessive speed when it rammed into the rear portion of a Hino cargo
truck owned by private respondent Teodoro Lantoria and driven by private
respondent Rogelio Francisco. As a result, nine passengers of the taxi died
including Sherly Moneo.
On August 13, 1996, the heirs of Sherly Moneo 4 filed with the Regional
Trial Court of Malaybalay City, Branch 10, 5 an action for breach of contract
of carriage and damages6 against petitioner and her driver, Arman Retes.
On motion,7 petitioner filed a third-party complaint against private
respondents Teodorio Lantoria and Rogelio Francisco.8
The pre-trial conference was initially set on July 11, 1998 but was reset to
July 30, 1998 for petitioner and her counsels failure to appear 9 despite
due notice. Registry receipt number 04364 10 showed that notice had been
sent to petitioners counsel, Atty. Cipriano Lupeba. 11 On scheduled date,
petitioner and her counsel again failed to appear, prompting the court to
allow private respondents to present evidence ex parte.
More than seven months after the conclusion 12 of private respondents ex
parte presentation of evidence, petitioner filed a motion for leave to
present evidence on her defense and third-party complaint. 13 The trial
court denied this.14
On October 29, 1999, the trial court rendered a decision holding petitioner
and Arman Retes jointly and severally liable to pay private respondent
heirs of Sherly Moneo P50,000 for her death, P50,000 as moral
damages,P20,000 as exemplary damages and P20,000 as attorneys
fees.15
On appeal, the trial courts decision was affirmed by the Court of Appeals
in the assailed May 30, 2001 decision. 16 The motion for reconsideration
was denied.17 Hence, this recourse.
The issues raised by petitioner are:
1) whether or not the Court of Appeals committed grave abuse of
discretion in affirming the trial courts decision denying petitioners motion
for leave to present evidence on her defense and third-party complaint,
and
2) whether or not the Court of Appeals committed grave abuse of
discretion in affirming the trial courts decision holding petitioner liable for
reach of contract.
The petition lacks merit.
First, Section 3, Rule 18 of the Rules of Court states that:
The notice of pre-trial shall be served on counsel, or on the party who has
no counsel. The counsel served with such notice is charged with the duty
of notifying the party represented by him.
Petitioner was represented by Atty. Cipriano Lupeba to whom the notice
was sent.18 It was incumbent on the latter to advise petitioner accordingly.
His failure to do so constituted negligence which bound petitioner.
Further, Sections 4 and 5 of Rule 18 read:
Sec. 4. Appearance of Parties. It shall be the duty of the parties and
their counsel to appear at the pre-trial. The non-appearance of the party
may be excused only if a valid cause is shown therefore or if a
representative shall appear in his behalf fully authorized in writing to enter
into an amicable settlement, to submit to alternative modes of dispute
resolution, and to enter into stipulations or admissions of facts and of
documents.
Sec. 5. Effect of failure to appear. The failure of the plaintiff to
appear when so required pursuant to the next preceding section shall be
cause for the dismissal of the action. The dismissal shall be with prejudice,
unless otherwise ordered by the court. A similar failure on the defendant
shall be cause to allow the plaintiff to present his evidence ex parte and
the court to render judgment on the basis thereof.
Consequently, it was no error for the trial court to allow private
respondents to present their evidence ex partewhen petitioner and her
counsel failed to appear for the scheduled pre-trial conference.
Second, "a common carrier is bound to carry the passengers safely as far
as human care and foresight can provide, using the utmost diligence of
very cautious persons, with a due regard for all the circumstances." 19
In a contract of carriage, it is presumed that the common carrier is at fault
or is negligent when a passenger dies or is injured. In fact, there is even
no need for the court to make an express finding of fault or negligence on
the part of the common carrier. This statutory presumption may only be
overcome by evidence that the carrier exercised extraordinary diligence. 20
In the case at bar, petitioner, as common carrier, failed to establish
sufficient evidence to rebut the presumption of negligence. The findings of
the trial court, as affirmed by the Court of Appeals, showed that the
accident which led to the death of Sherly Moneo was caused by the WHEREFORE, this petition is hereby DISMISSED.
reckless speed and gross negligence of petitioners driver who Costs against petitioner.
demonstrated no regard for the safety of his passengers. 21 It was thus
correct to hold petitioner guilty of breach of the contract of carriage.