Transpo Batch 2 Full Cases

Transpo Batch 2 Cases
Atty. Opulencia
THIRD DIVISION
SPOUSES DANTE CRUZ and

LEONORA CRUZ,
Petitioners,
G.R. No. 186312

Present:
CARPIO MORALES, J.,
Chairperson,
BRION,
BERSAMIN,
ABAD,* and
VILLARAMA, JR., JJ.
- versus SUN HOLIDAYS, INC.,

Respondent.
Matute stayed at the Resort from September 8 to 11, 2000. He was originally
scheduled to leave the Resort in the afternoon of September 10, 2000, but
was advised to stay for another night because of strong winds and heavy
rains.
Promulgated:
June 29, 2010
x-------------------------------------------------x
DECISION
On September 11, 2000, as it was still windy, Matute and 25 other Resort
guests including petitioners son and his wife trekked to the other side of
the Coco Beach mountain that was sheltered from the wind where they
boarded M/B Coco Beach III, which was to ferry them to Batangas.
Shortly after the boat sailed, it started to rain. As it moved farther away from
Puerto Galera and into the open seas, the rain and wind got stronger,
causing the boat to tilt from side to side and the captain to step forward to
the front, leaving the wheel to one of the crew members.
The waves got more unwieldy. After getting hit by two big waves
which came one after the other, M/B Coco Beach III capsized putting all
passengers underwater.
The passengers, who had put on their life jackets, struggled to get out of the
boat. Upon seeing the captain, Matute and the other passengers who
reached the surface asked him what they could do to save the people who
were still trapped under the boat. The captain replied Iligtas niyo na lang ang
sarili niyo (Just save yourselves).
CARPIO MORALES, J.:
Miguel C. Matute (Matute),[2] a scuba diving instructor and one of the

survivors, gave his account of the incident that led to the filing of the
complaint as follows:
At the time of Ruelitos death, he was 28 years old and employed as a

contractual worker for Mitsui Engineering & Shipbuilding Arabia, Ltd.
in Saudi Arabia, with a basic monthly salary of $900.[3]
Petitioners, by letter of October 26, 2000,[4] demanded indemnification from
respondent for the death of their son in the amount of at least P4,000,000.
Replying, respondent, by letter dated November 7, 2000,[5] denied any
responsibility for the incident which it considered to be a fortuitous event. It
nevertheless offered, as an act of commiseration, the amount of P10,000 to
petitioners upon their signing of a waiver.
The stay of the newly wed Ruelito and his wife at the Resort from September
9 to 11, 2000 was by virtue of a tour package-contract with respondent that
included transportation to and from the Resort and the point of departure in
Batangas.
Help came after about 45 minutes when two boats owned by Asia Divers in
Sabang, Puerto Galera passed by the capsized M/B Coco Beach
III. Boarded on those two boats were 22 persons, consisting of 18
passengers and four crew members, who were brought to Pisa Island. Eight
passengers, including petitioners son and his wife, died during the incident.
Page
Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on

January 25, 2001[1] against Sun Holidays, Inc. (respondent) with the
Regional Trial Court (RTC) of Pasig City for damages arising from the death
of their son Ruelito C. Cruz (Ruelito) who perished with his wife on
September 11, 2000 on board the boat M/B Coco Beach III that capsized en
route to Batangas from Puerto Galera, Oriental Mindoro where the couple
had stayed at Coco Beach Island Resort (Resort) owned and operated by
respondent.

Atty. Opulencia
Carlos Bonquin, captain of M/B Coco Beach III, averred that the Resort
customarily requires four conditions to be met before a boat is allowed to
sail, to wit: (1) the sea is calm, (2) there is clearance from the Coast Guard,
(3) there is clearance from the captain and (4) there is clearance from the
Resorts assistant manager.[8] He added that M/B Coco Beach III met all four
conditions on September 11, 2000,[9] but a subasco or squall, characterized
by strong winds and big waves, suddenly occurred, causing the boat to
capsize.[10]
By Decision of February 16, 2005,[11] Branch 267 of the Pasig RTC
dismissed petitioners Complaint and respondents Counterclaim.
Petitioners Motion for Reconsideration having been denied by Order
dated September 2, 2005,[12] they appealed to the Court of Appeals.
By Decision of August 19, 2008,[13] the appellate court denied
petitioners appeal, holding, among other things, that the trial court correctly
ruled that respondent is a private carrier which is only required to observe
ordinary diligence; that respondent in fact observed extraordinary diligence
in transporting its guests on board M/B Coco Beach III; and that the
proximate cause of the incident was a squall, a fortuitous event.
Petitioners Motion for Reconsideration having been denied by Resolution
dated January 16, 2009,[14] they filed the present Petition for Review.[15]
Petitioners maintain the position they took before the trial court,
adding that respondent is a common carrier since by its tour package, the
Upon the other hand, respondent contends that petitioners failed to present
evidence to prove that it is a common carrier; that the Resorts ferry services
for guests cannot be considered as ancillary to its business as no income is
derived therefrom; that it exercised extraordinary diligence as shown by the
conditions it had imposed before allowing M/B Coco Beach III to sail; that the
incident was caused by a fortuitous event without any contributory
negligence on its part; and that the other case wherein the appellate court
held it liable for damages involved different plaintiffs, issues and evidence. [16]
The petition is impressed with merit.
Petitioners correctly rely on De Guzman v. Court of Appeals[17] in
characterizing respondent as a common carrier.
The Civil Code defines common carriers in the following
terms:
Article 1732. Common carriers are
persons,
corporations,
firms
or
associations engaged in the business of
carrying or transporting passengers or
goods or both, by land, water, or air for
compensation, offering their services to
the public.
The above article makes no distinction between one
whose principal business activity is the carrying of
persons or goods or both, and one who does such
carrying only as an ancillary activity (in local idiom, as
a sideline). Article 1732 also carefully avoids making
any distinction between a person or enterprise offering
transportation service on a regular or scheduled
basis and one offering such service on an occasional,
episodic or unscheduled basis. Neither does Article
1732 distinguish between a carrier offering its services
to the general public, i.e., the general community or
population, and one who offers services or solicits
business only from a narrow segment of the general
population. We think that Article 1733 deliberately
refrained from making such distinctions.
In its Answer,[7] respondent denied being a common carrier, alleging that its
boats are not available to the general public as they only ferry Resort guests
and crew members.Nonetheless, it claimed that it exercised the utmost
diligence in ensuring the safety of its passengers; contrary to petitioners
allegation, there was no storm on September 11, 2000as the Coast Guard in
fact cleared the voyage; and M/B Coco Beach III was not filled to capacity
and had sufficient life jackets for its passengers. By way of Counterclaim,
respondent alleged that it is entitled to an award for attorneys fees and
litigation expenses amounting to not less than P300,000.
transporting of its guests is an integral part of its resort business. They

inform that another division of the appellate court in fact held respondent
liable for damages to the other survivors of the incident.
Page
As petitioners declined respondents offer, they filed the Complaint, as earlier

reflected, alleging that respondent, as a common carrier, was guilty of
negligence in allowing M/B Coco Beach III to sail notwithstanding storm
warning bulletins issued by the Philippine Atmospheric, Geophysical and
Astronomical Services Administration (PAGASA) as early as 5:00 a.m. of
September 11, 2000.[6]

Atty. Opulencia
Indeed, respondent is a common carrier. Its ferry services are so

intertwined with its main business as to be properly considered ancillary
thereto. The constancy of respondents ferry services in its resort operations
is underscored by its having its own Coco Beach boats. And the tour
packages it offers, which include the ferry services, may be availed of by
That respondent does not charge a separate fee or fare for its ferry
services is of no moment. It would be imprudent to suppose that it provides
said services at a loss. The Court is aware of the practice of beach resort
operators offering tour packages to factor the transportation fee in arriving at
the tour package price. That guests who opt not to avail of respondents ferry
services pay the same amount is likewise inconsequential. These guests
may only be deemed to have overpaid.
As De Guzman instructs, Article 1732 of the Civil Code defining common
carriers has deliberately refrained from making distinctions on whether the
carrying of persons or goods is the carriers principal business, whether it is
offered on a regular basis, or whether it is offered to the general public. The
intent of the law is thus to not consider such distinctions. Otherwise, there is
no telling how many other distinctions may be concocted by unscrupulous
businessmen engaged in the carrying of persons or goods in order to avoid
the legal obligations and liabilities of common carriers.
Under the Civil Code, common carriers, from the nature of their business
and for reasons of public policy, are bound to observe extraordinary
diligence for the safety of the passengers transported by them, according to
all the circumstances of each case.[19] They are bound to carry the
passengers safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with due regard for all the
circumstances.[20]
When a passenger dies or is injured in the discharge of a contract

of carriage, it is presumed that the common carrier is at fault or negligent. In
fact, there is even no need for the court to make an express finding of fault
or negligence on the part of the common carrier. This statutory presumption
may only be overcome by evidence that the carrier exercised extraordinary
diligence.[21]
Respondent nevertheless harps on its strict compliance with the earlier
mentioned conditions of voyage before it allowed M/B Coco Beach III to sail
on September 11, 2000.Respondents position does not impress.
The evidence shows that PAGASA issued 24-hour public weather forecasts
and tropical cyclone warnings for shipping on September 10 and 11, 2000
advising of tropical depressions in Northern Luzon which would also affect
. . . every person that now or hereafter

may own, operate, manage, or control in
the
Philippines,
for
hire
or
compensation, with general or limited
clientele,
whether
permanent,
occasional or accidental, and done for
general
business
purposes,
any
common carrier, railroad, street railway,
traction railway, subway motor vehicle,
either for freight or passenger, or both,
with or without fixed route and whatever
may be its classification, freight or
carrier service of any class, express
service, steamboat, or steamship line,
pontines, ferries and water craft,
engaged in the transportation of
passengers or freight or both, shipyard,
marine repair shop, wharf or dock, ice
plant, ice-refrigeration plant, canal,
irrigation system, gas, electric light, heat
and power, water supply and power
petroleum, sewerage system, wire or
wireless communications systems, wire
or wireless broadcasting stations and
other similar public services . .
.[18] (emphasis
and
underscoring
supplied.)
anyone who can afford to pay the same. These services are thus available
to the public.
Page
So understood, the concept of common carrier under

Article 1732 may be seen to coincide neatly with the
notion of public service, under the Public Service Act
(Commonwealth Act No. 1416, as amended) which at
least partially supplements the law on common carriers set
forth in the Civil Code. Under Section 13, paragraph (b) of
the Public Service Act, public service includes:

Atty. Opulencia
Respondents insistence that the incident was caused by a

fortuitous event does not impress either.
The elements of a "fortuitous event" are: (a) the cause of the unforeseen and
unexpected occurrence, or the failure of the debtors to comply with their
obligations, must have been independent of human will; (b) the event that
constituted the caso fortuito must have been impossible to foresee or, if
foreseeable, impossible to avoid; (c) the occurrence must have been such
as to render it impossible for the debtors to fulfill their obligation in a normal
manner; and (d) the obligor must have been free from any participation in
the aggravation of the resulting injury to the creditor. [24]
To fully free a common carrier from any liability, the fortuitous event must
have been the proximate and only cause of the loss. And it should have
exercised due diligence to prevent or minimize the loss before, during and
after the occurrence of the fortuitous event.[25]
Respondent cites the squall that occurred during the voyage as the
fortuitous event that overturned M/B Coco Beach III. As reflected above,
however, the occurrence of squalls was expected under the weather
condition of September 11, 2000. Moreover, evidence shows that M/B Coco
Beach III suffered engine trouble before it capsized and sank. [26]The incident
was, therefore, not completely free from human intervention.
The Court need not belabor how respondents evidence likewise fails to
demonstrate that it exercised due diligence to prevent or minimize the loss
before, during and after the occurrence of the squall.
Article 1764[27] vis--vis Article 2206[28] of the Civil Code holds the common
carrier in breach of its contract of carriage that results in the death of a
passenger liable to pay the following: (1) indemnity for death, (2) indemnity
for loss of earning capacity and (3) moral damages.
As for damages representing unearned income, the formula for its

computation is:
Net Earning Capacity = life expectancy x (gross annual
income - reasonable
and necessary living
expenses).
Life expectancy is determined in accordance with the
formula:
2 / 3 x [80 age of deceased at the time of death][30]
The first factor, i.e., life expectancy, is computed by applying the

formula (2/3 x [80 age at death]) adopted in the American Expectancy Table
of Mortality or the Actuarial of Combined Experience Table of Mortality. [31]
The second factor is computed by multiplying the life expectancy by
the net earnings of the deceased, i.e., the total earnings less expenses
necessary in the creation of such earnings or income and less living and
other incidental expenses.[32] The loss is not equivalent to the entire earnings
of the deceased, but only such portion as he would have used to support his
dependents or heirs. Hence, to be deducted from his gross earnings are the
necessary expenses supposed to be used by the deceased for his own
needs.[33]
In computing the third factor necessary living expense, Smith Bell
Dodwell Shipping Agency Corp. v. Borja[34] teaches that when, as in this
case, there is no showing that the living expenses constituted the smaller
percentage of the gross income, the living expenses are fixed at half of the
gross income.
Applying the above guidelines, the Court determines Ruelito's life
expectancy as follows:
Life expectancy = 2/3 x [80 - age of deceased at the time of death]
2/3 x [80 - 28]
2/3 x [52]
Life expectancy = 35
A very cautious person exercising the utmost diligence would thus not brave
such stormy weather and put other peoples lives at risk. The extraordinary
diligence required of common carriers demands that they take care of the
goods or lives entrusted to their hands as if they were their own. This
respondent failed to do.
Petitioners are entitled to indemnity for the death of Ruelito which is

fixed at P50,000.[29]
Page
the province of Mindoro.[22] By the testimony of Dr. Frisco Nilo, supervising

weather specialist of PAGASA, squalls are to be expected under such
weather condition.[23]

Atty. Opulencia
= 35 x (P475,200 - P237,600)
= 35 x (P237,600)
Net Earning Capacity = P8,316,000
Respecting the award of moral damages, since respondent

common carriers breach of contract of carriage resulted in the death of
petitioners son, following Article 1764vis--vis Article 2206 of the Civil
Code, petitioners are entitled to moral damages.
Since respondent failed to prove that it exercised the extraordinary
diligence required of common carriers, it is presumed to have acted
recklessly, thus warranting the award too of exemplary damages, which are
granted in contractual obligations if the defendant acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner. [37]
Under the circumstances, it is reasonable to award petitioners the
amount of P100,000 as moral damages and P100,000 as exemplary
damages.[38]
Pursuant to Article 2208[39] of the Civil Code, attorney's fees may
also be awarded where exemplary damages are awarded. The Court finds
that 10% of the total amount adjudged against respondent is reasonable for
the purpose.
Finally, Eastern Shipping Lines, Inc. v. Court of Appeals[40] teaches
that when an obligation, regardless of its source, i.e., law, contracts, quasicontracts, delicts or quasi-delicts is breached, the contravenor can be held
liable for payment of interest in the concept of actual and compensatory
damages, subject to the following rules, to wit
1. When the obligation is breached, and it
consists in the payment of a sum of money, i.e., a loan or
2. When an obligation, not constituting a loan or

forbearance of money, is breached, an interest on the
amount of damages awarded may be imposed at the
discretion of the court at the rate of 6% per annum. No
interest, however, shall be adjudged on unliquidated
claims or damages except when or until the demand can
be established with reasonable certainty. Accordingly,
where the demand is established with reasonable
certainty, the interest shall begin to run from the time the
claim is made judicially or extrajudicially (Art. 1169, Civil
Code) but when such certainty cannot be so reasonably
established at the time the demand is made, the interest
shall begin to run only from the date the judgment of the
court is made (at which time the quantification of damages
may be deemed to have been reasonably ascertained).
The actual base for the computation of legal interest shall,
in any case, be on the amount finally adjudged.
3. When the judgment of the court awarding a
sum of money becomes final and executory, the rate of
legal interest, whether the case falls under paragraph 1 or
paragraph 2, above, shall be 12% per annum from such
finality until its satisfaction, this interim period being
deemed to be by then an equivalent to a forbearance of
credit. (emphasis supplied).
Since the amounts payable by respondent have been determined with

certainty only in the present petition, the interest due shall be computed
upon the finality of this decision at the rate of 12% per annum until
satisfaction, in accordance with paragraph number 3 of the immediately cited
guideline in Easter Shipping Lines, Inc.
Net Earning Capacity = life expectancy x (gross annual income reasonable and necessary living expenses).
forbearance of money, the interest due should be that

which may have been stipulated in writing. Furthermore,
the interest due shall itself earn legal interest from the time
it is judicially demanded. In the absence of stipulation, the
rate of interest shall be 12% per annum to be computed
from default, i.e., from judicial or extrajudicial demand
under and subject to the provisions of Article 1169 of the
Civil Code.
Page
Documentary evidence shows that Ruelito was earning a basic

monthly salary of $900[35] which, when converted to Philippine peso applying
the annual average exchange rate of $1 = P44 in 2000,[36] amounts
to P39,600. Ruelitos net earning capacity is thus computed as follows:

Atty. Opulencia
WHEREFORE, the
Court
of
Appeals
Decision
of August
19,
2008 is REVERSED and SET ASIDE. Judgment is rendered in favor of
petitioners ordering respondent to pay petitioners the following: (1) P50,000
as indemnity for the death of Ruelito Cruz; (2) P8,316,000 as indemnity for
Ruelitos
loss
of
earning
capacity;
(3) P100,000
as
moral
damages; (4) P100,000 as exemplary damages; (5) 10% of the total amount
adjudged against respondent as attorneys fees; and (6) the costs of suit.
The total amount adjudged against respondent shall earn interest at the rate
of 12% per annum computed from the finality of this decision until full
payment.
Page
SO ORDERED.

Atty. Opulencia
[G.R. No. 147079. December 21, 2004]
A.F. SANCHEZ BROKERAGE INC., petitioners, vs. THE HON. COURT

OF
APPEALS
and
FGU
INSURANCE
CORPORATION, respondents.
DECISION
On July 29, 1992, Mitzi Morales and Ernesto Mendoza, representatives

of Sanchez Brokerage, paid PSI storage fee amounting to P8,572.35 a
receipt for which, Official Receipt No. 016992,[10] was issued. On the receipt,
another representative of Sanchez Brokerage, M. Sison, [11] acknowledged
that he received the cargoes consisting of three pieces in good
condition.[12]
Wyeth-Suaco being a regular importer, the customs examiner did not
inspect the cargoes[13] which were thereupon stripped from the aluminum
containers[14] and loaded inside two transport vehicles hired by Sanchez
Brokerage.[15]
CARPIO MORALES, J.:
Wyeth-Suaco insured the shipment against all risks with FGU

Insurance which issued Marine Risk Note No. 4995 pursuant to Marine
Open Policy No. 138.[4]
Upon arrival of the shipment on July 11, 1992 at the Ninoy Aquino
International Airport (NAIA),[5] it was discharged without exception[6] and
delivered to the warehouse of the Philippine Skylanders, Inc. (PSI) located
also at the NAIA for safekeeping.[7]
In order to secure the release of the cargoes from the PSI and the
Bureau of Customs, Wyeth-Suaco engaged the services of Sanchez
Brokerage which had been its licensed broker since 1984.[8] As its customs
broker, Sanchez Brokerage calculates and pays the customs duties, taxes
and storage fees for the cargo and thereafter delivers it to Wyeth-Suaco.[9]
On July 31, 1992, Ronnie Likas, a representative of Wyeth-Suaco,

acknowledged the delivery of the cargoes by affixing his signature on the
delivery receipt.[19] Upon inspection, however, he, together with Ruben
Alonzo of Elite Surveyors, discovered that 44 cartons containing Femenal
and Nordiol tablets were in bad order.[20] He thus placed a note above his
signature on the delivery receipt stating that 44 cartons of oral
contraceptives were in bad order. The remaining 160 cartons of oral
contraceptives were accepted as complete and in good order.
Ruben Alonzo thus prepared and signed, along with Ronnie Likas, a
survey report[21] dated July 31, 1992 stating that 41 cartons of Femenal
tablets and 3 cartons of Nordiol tablets were wetted (sic).[22]
The Elite Surveyors later issued Certificate No. CS-07311538/92[23] attached to which was an Annexed Schedule whereon it was
indicated that prior to the loading of the cargoes to the brokers trucks at the
NAIA, they were inspected and found to be in apparent good
condition.[24] Also noted was that at the time of delivery to the warehouse of
Hizon Laboratories Inc., slight to heavy rains fell, which could account for the
wetting of the 44 cartons of Femenal and Nordiol tablets. [25]
On July 8, 1992, Wyeth-Pharma GMBH shipped on board an aircraft of

KLM Royal Dutch Airlines at Dusseldorf, Germany oral contraceptives
consisting of 86,800 Blisters Femenal tablets, 14,000 Blisters Nordiol tablets
and 42,000 Blisters Trinordiol tablets for delivery to Manila in favor of the
consignee, Wyeth-Suaco Laboratories, Inc.[2] The Femenal tablets were
placed in 124 cartons and the Nordiol tablets were placed in 20 cartons
which were packed together in one (1) LD3 aluminum container, while the
Trinordial tablets were packed in two pallets, each of which contained 30
cartons.[3]
Upon instructions of Wyeth-Suaco, the cargoes were delivered to

Hizon Laboratories Inc. in Antipolo City for quality control check.[17] The
delivery receipt, bearing No. 07037 dated July 29, 1992, indicated that the
delivery consisted of one container with 144 cartons of Femenal and Nordiol
and 1 pallet containing Trinordiol.[18]
Page
Before this Court on a petition for Certiorari is the appellate courts

Decision[1] of August 10, 2000 reversing and setting aside the judgment of
Branch 133, Regional Trial Court of Makati City, in Civil Case No. 93-76B
which dismissed the complaint of respondent FGU Insurance Corporation
(FGU Insurance) against petitioner A.F. Sanchez Brokerage, Inc. (Sanchez
Brokerage).
Among those who witnessed the release of the cargoes from the PSI
warehouse were Ruben Alonso and Tony Akas, [16] employees of Elite
Adjusters and Surveyors Inc. (Elite Surveyors), a marine and cargo surveyor
and insurance claim adjusters firm engaged by Wyeth-Suaco on behalf of
FGU Insurance.

Atty. Opulencia
Wyeth-Suaco later demanded, by letter[29] of August 25, 1992, from

Sanchez Brokerage the payment of P191,384.25 representing the value of
its loss arising from the damaged tablets.
As the Sanchez Brokerage refused to heed the demand, Wyeth-Suaco
filed an insurance claim against FGU Insurance which paid Wyeth-Suaco the
amount of P181,431.49 in settlement of its claim under Marine Risk Note
Number 4995.
Wyeth-Suaco thus issued Subrogation Receipt[30] in favor of FGU
Insurance.
On demand by FGU Insurance for payment of the amount
of P181,431.49 it paid Wyeth-Suaco, Sanchez Brokerage, by letter[31] of
January 7, 1993, disclaimed liability for the damaged goods, positing that the
damage was due to improper and insufficient export packaging; that when
the sealed containers were opened outside the PSI warehouse, it was
discovered that some of the loose cartons were wet, [32] prompting its
(Sanchez Brokerages) representative Morales to inform the Import-Export
Assistant of Wyeth-Suaco, Ramir Calicdan, about the condition of the
cargoes but that the latter advised to still deliver them to Hizon Laboratories
where an adjuster would assess the damage.[33]
Hence, the filing by FGU Insurance of a complaint for damages before
the Regional Trial Court of Makati City against the Sanchez Brokerage.
The trial court, by Decision[34] of July 29, 1996, dismissed the
complaint, holding that the Survey Report prepared by the Elite Surveyors is
bereft of any evidentiary support and a mere product of pure guesswork. [35]
On appeal, the appellate court reversed the decision of the trial court, it
holding that the Sanchez Brokerage engaged not only in the business of
customs brokerage but also in the transportation and delivery of the cargo of
its clients, hence, a common carrier within the context of Article 1732 of the
New Civil Code.[36]
The appellate court thus disposed:

IN THE LIGHT OF ALL THE FOREGOING, the appeal of the Appellant is
GRANTED. The Decision of the Court a quo is REVERSED. Another
Decision is hereby rendered in favor of the Appellant and against the
Appellee as follows:
1. The Appellee is hereby ordered to pay the Appellant the
principal amount of P181, 431.49, with interest
thereupon at the rate of 6% per annum, from the date
of the Decision of the Court, until the said amount is
paid in full;
2. The Appellee is hereby ordered to pay to the Appellant
the amount of P20,000.00 as and by way of attorneys
fees; and
3. The counterclaims of the Appellee are DISMISSED.[38]
Sanchez Brokerages Motion for Reconsideration having been denied
by the appellate courts Resolution of December 8, 2000 which was received
by petitioner on January 5, 2001, it comes to this Court on petition for
certiorari filed on March 6, 2001.
In the main, petitioner asserts that the appellate court committed grave
and reversible error tantamount to abuse of discretion when it found
petitioner a common carrier within the context of Article 1732 of the New
Civil Code.
Respondent FGU Insurance avers in its Comment that the proper
course of action which petitioner should have taken was to file a petition for
review on certiorari since the sole office of a writ of certiorari is the correction
of errors of jurisdiction including the commission of grave abuse of discretion
On August 5, 1992, Wyeth-Suaco issued a Notice of Materials

Rejection[27] of 38 cartons of Femenal and 3 cartons of Nordiol on the ground
that they were delivered to Hizon Laboratories with heavy water damaged
(sic) causing the cartons to sagged (sic) emitting a foul order and easily
attracted flies.[28]
Noting that Wyeth-Suaco adduced evidence that the cargoes were

delivered to petitioner in good order and condition but were in a damaged
state when delivered to Wyeth-Suaco, the appellate court held that Sanchez
Brokerage is presumed negligent and upon it rested the burden of proving
that it exercised extraordinary negligence not only in instances when
negligence is directly proven but also in those cases when the cause of the
damage is not known or unknown.[37]
Page
On August 4, 1992, the Hizon Laboratories Inc. issued a Destruction

Report[26] confirming that 38 x 700 blister packs of Femenal tablets, 3 x 700
blister packs of Femenal tablets and 3 x 700 blister packs of Nordiol tablets
were heavily damaged with water and emitted foul smell.

Atty. Opulencia
The petition fails.
Anacleto F. Sanchez, Jr., the Manager and Principal Broker of

Sanchez Brokerage, himself testified that the services the firm offers include
the delivery of goods to the warehouse of the consignee or importer.
Rule 45 is clear that decisions, final orders or resolutions of the Court

of Appeals in any case, i.e., regardless of the nature of the action or
proceedings involved, may be appealed to this Court by filing a petition for
review, which would be but a continuation of the appellate process over the
original case.[40]
ATTY. FLORES:
The Resolution of the Court of Appeals dated December 8, 2000

denying the motion for reconsideration of its Decision of August 10, 2000
was received by petitioner on January 5, 2001. Since petitioner failed to
appeal within 15 days or on or before January 20, 2001, the appellate courts
decision had become final and executory. The filing by petitioner of a petition
for certiorari on March 6, 2001 cannot serve as a substitute for the lost
remedy of appeal.
As customs broker, we calculate the taxes that has to be paid in

cargos, and those upon approval of the importer, we
prepare the entry together for processing and claims from
customs and finallydeliver the goods to the warehouse of
the importer.[43]
In another vein, the rule is well settled that in a petition for certiorari,
the petitioner must prove not merely reversible error but also grave abuse of
discretion amounting to lack or excess of jurisdiction.
Petitioner alleges that the appellate court erred in reversing and setting
aside the decision of the trial court based on its finding that petitioner is
liable for the damage to the cargo as a common carrier. What petitioner is
ascribing is an error of judgment, not of jurisdiction, which is properly the
subject of an ordinary appeal.
Where the issue or question involves or affects the wisdom or legal
soundness of the decision not the jurisdiction of the court to render said
decision the same is beyond the province of a petition for certiorari.[41] The
supervisory jurisdiction of this Court to issue a cert writ cannot be exercised
in order to review the judgment of lower courts as to its intrinsic correctness,
either upon the law or the facts of the case.[42]
Procedural technicalities aside, the petition still fails.
The appellate court did not err in finding petitioner, a customs broker,
to be also a common carrier, as defined under Article 1732 of the Civil Code,
to wit:
Q: What are the functions of these license brokers, license

customs broker?
WITNESS:
Article 1732 does not distinguish between one whose principal

business activity is the carrying of goods and one who does such carrying
only as an ancillary activity.[44] The contention, therefore, of petitioner that it
is not a common carrier but a customs broker whose principal function is to
prepare the correct customs declaration and proper shipping documents as
required by law is bereft of merit. It suffices that petitioner undertakes to
deliver the goods for pecuniary consideration.
In this light, petitioner as a common carrier is mandated to observe,
under Article 1733[45] of the Civil Code, extraordinary diligence in the
vigilance over the goods it transports according to all the circumstances of
each case. In the event that the goods are lost, destroyed or deteriorated, it
is presumed to have been at fault or to have acted negligently, unless it
proves that it observed extraordinary diligence.[46]
The concept of extra-ordinary diligence was explained in Compania
Maritima v. Court of Appeals:[47]
The extraordinary diligence in the vigilance over the goods tendered for
shipment requires the common carrier to know and to follow the required
precaution for avoiding damage to, or destruction of the goods entrusted to it
for sale, carriage and delivery. It requires common carriers to render service
with the greatest skill and foresight and to use all reasonable means to
On the merits, respondent FGU Insurance contends that petitioner, as

a common carrier, failed to overcome the presumption of negligence, it being
documented that petitioner withdrew from the warehouse of PSI the subject
shipment entirely in good order and condition.[39]
Art. 1732. Common carriers are persons, corporations, firms or associations

engaged in the business of carrying or transporting passengers or goods or
both, by land, water, or air, for compensation, offering their services to the
public.
Page
amounting to lack or excess of jurisdiction and does not include correction of

the appellate courts evaluation of the evidence and factual findings thereon.

Atty. Opulencia
ascertain the nature and characteristics of goods tendered for shipment, and
to exercise due care in the handling and stowage, including such methods
as their nature requires.[48]
already wet on delivery by PSI outside the PSI warehouse but such
notwithstanding Calicdan directed Morales to proceed with the delivery to
Hizon Laboratories, Inc.
In the case at bar, it was established that petitioner received the

cargoes from the PSI warehouse in NAIA in good order and condition;[49] and
that upon delivery by petitioner to Hizon Laboratories Inc., some of the
cargoes were found to be in bad order, as noted in the Delivery
Receipt[50] issued by petitioner, and as indicated in the Survey Report of Elite
Surveyors[51]and the Destruction Report of Hizon Laboratories, Inc. [52]
While Calicdan testified that he received the purported telephone call of

Morales on July 29, 1992, he failed to specifically declare what time he
received the call. As to whether the call was made at the PSI warehouse
when the shipment was stripped from the airport containers, or when the
cargoes were already in transit to Antipolo, it is not determinable. Aside from
that phone call, petitioner admitted that it had no documentary evidence to
prove that at the time it received the cargoes, a part of it was wet, damaged
or in bad condition.[60]
If the claim of petitioner that some of the cartons were already

damaged upon delivery to it were true, then it should naturally have received
the cargo under protest or with reservations duly noted on the receipt issued
by PSI. But it made no such protest or reservation.[57]
Moreover, as observed by the appellate court, if indeed petitioners
employees only examined the cargoes outside the PSI warehouse and
found some to be wet, they would certainly have gone back to PSI, showed
to the warehouseman the damage, and demanded then and there for Bad
Order documents or a certification confirming the damage.[58] Or, petitioner
would have presented, as witness, the employees of the PSI from whom
Morales and Domingo took delivery of the cargo to prove that, indeed, part
of the cargoes was already damaged when the container was allegedly
opened outside the warehouse.[59]
Petitioner goes on to posit that contrary to the report of Elite Surveyors,
no rain fell that day. Instead, it asserts that some of the cargoes were
The possibility on the other hand that, as found by Hizon Laboratories,

Inc., the oral contraceptives were damaged by rainwater while in transit to
Antipolo City is more likely then. Sanchez himself testified that in the past,
there was a similar instance when the shipment of Wyeth-Suaco was also
found to be wet by rain.
ATTY. FLORES:
Q: Was there any instance that a shipment of this nature, oral
contraceptives, that arrived at the NAIA were damaged and
claimed by the Wyeth-Suaco without any question?
WITNESS:
A: Yes sir, there was an instance that one cartoon (sic) were
wetted (sic) but Wyeth-Suaco did not claim anything against
us.
ATTY. FLORES:
Q: HOW IS IT?
WITNESS:
A: We experienced, there was a time that we experienced that
there was a cartoon (sic) wetted (sic) up to the bottom are
wet specially during rainy season.[62]
Since petitioner received all the cargoes in good order and condition at
the time they were turned over by the PSI warehouseman, and upon their
10
While paragraph No. 4 of Article 1734[55] of the Civil Code exempts a

common carrier from liability if the loss or damage is due to the character of
the goods or defects in the packing or in the containers, the rule is that if the
improper packing is known to the carrier or his employees or is apparent
upon ordinary observation, but he nevertheless accepts the same without
protest or exception notwithstanding such condition, he is not relieved of
liability for the resulting damage.[56]
The 4-page weather data furnished by PAGASA[61] on request of

Sanchez Brokerage hardly impresses, no witness having identified it and
interpreted the technical terms thereof.
Page
In an attempt to free itself from responsibility for the damage to the

goods, petitioner posits that they were damaged due to the fault or
negligence of the shipper for failing to properly pack them and to the
inherent characteristics of the goods[53]; and that it should not be faulted for
following the instructions of Calicdan of Wyeth-Suaco to proceed with the
delivery despite information conveyed to the latter that some of the cartons,
on examination outside the PSI warehouse, were found to be wet. [54]

Atty. Opulencia
delivery to Hizon Laboratories, Inc. a portion thereof was found to be in bad

order, it was incumbent on petitioner to prove that it exercised extraordinary
diligence in the carriage of the goods. It did not, however. Hence, its
presumed negligence under Article 1735 of the Civil Code remains
unrebutted.
WHEREFORE, the August 10, 2000 Decision of the Court of Appeals
is hereby AFFIRMED.
Costs against petitioner.
SO ORDERED.
Page
11
Panganiban, (Chairman), Sandoval-Gutierrez, and Garcia, JJ., concur.

Corona, J., on leave.

Atty. Opulencia
L.
CRISOSTOMO, petitioner, vs. THE
COURT
OF
APPEALS and CARAVAN TRAVEL & TOURS INTERNATIONAL,
INC., respondents.
DECISION
YNARES-SANTIAGO, J.:
In May 1991, petitioner Estela L. Crisostomo contracted the services of
respondent Caravan Travel and Tours International, Inc. to arrange and
facilitate her booking, ticketing and accommodation in a tour dubbed Jewels
of Europe. The package tour included the countries of England, Holland,
Germany, Austria, Liechstenstein, Switzerland and France at a total cost of
P74,322.70. Petitioner was given a 5% discount on the amount, which
included airfare, and the booking fee was also waived because petitioners
niece, Meriam Menor, was respondent companys ticketing manager.
Pursuant to said contract, Menor went to her aunts residence on June
12, 1991 a Wednesday to deliver petitioners travel documents and plane
tickets. Petitioner, in turn, gave Menor the full payment for the package
tour. Menor then told her to be at the Ninoy Aquino International Airport
(NAIA) on Saturday, two hours before her flight on board British Airways.
Without checking her travel documents, petitioner went to NAIA on
Saturday, June 15, 1991, to take the flight for the first leg of her journey from
Manila to Hongkong. To petitioners dismay, she discovered that the flight
she was supposed to take had already departed the previous day. She
learned that her plane ticket was for the flight scheduled on June 14, 1991.
She thus called up Menor to complain.
In her complaint,[2] petitioner alleged that her failure to join Jewels of

Europe was due to respondents fault since it did not clearly indicate the
departure date on the plane ticket.Respondent was also negligent in
informing her of the wrong flight schedule through its employee Menor. She
insisted that the British Pageant was merely a substitute for the Jewels of
Europe tour, such that the cost of the former should be properly set-off
against the sum paid for the latter.
For its part, respondent company, through its Operations Manager,
Concepcion Chipeco, denied responsibility for petitioners failure to join the
first tour. Chipeco insisted that petitioner was informed of the correct
departure date, which was clearly and legibly printed on the plane ticket. The
travel documents were given to petitioner two days ahead of the scheduled
trip.Petitioner had only herself to blame for missing the flight, as she did not
bother to read or confirm her flight schedule as printed on the ticket.
Respondent explained that it can no longer reimburse the amount paid
for Jewels of Europe, considering that the same had already been remitted
to its principal in Singapore, Lotus Travel Ltd., which had already billed the
same even if petitioner did not join the tour. Lotus European tour organizer,
Insight International Tours Ltd., determines the cost of a package tour based
on a minimum number of projected participants. For this reason, it is
accepted industry practice to disallow refund for individuals who failed to
take a booked tour.[3]
Subsequently, Menor prevailed upon petitioner to take another tour the

British Pageant which included England, Scotland and Wales in its itinerary.
For this tour package, petitioner was asked anew to pay US$785.00 or
P20,881.00 (at the then prevailing exchange rate of P26.60). She gave
respondent US$300 or P7,980.00 as partial payment and commenced the
trip in July 1991.
Lastly, respondent maintained that the British Pageant was not a

substitute for the package tour that petitioner missed. This tour was
independently procured by petitioner after realizing that she made a mistake
in missing her flight for Jewels of Europe. Petitioner was allowed to make a
partial payment of only US$300.00 for the second tour because her niece
was then an employee of the travel agency. Consequently, respondent
prayed that petitioner be ordered to pay the balance of P12,901.00 for the
British Pageant package tour.
Upon petitioners return from Europe, she demanded from respondent

the reimbursement of P61,421.70, representing the difference between the
After due proceedings, the trial court rendered a decision,[4] the

dispositive part of which reads:
12
ESTELA
sum she paid for Jewels of Europe and the amount she owed respondent for
the British Pageant tour. Despite several demands, respondent company
refused to reimburse the amount, contending that the same was nonrefundable.[1] Petitioner was thus constrained to file a complaint against
respondent for breach of contract of carriage and damages, which was
docketed as Civil Case No. 92-133 and raffled to Branch 59 of the Regional
Trial Court of Makati City.
Page
[G.R. No. 138334. August 25, 2003]

Atty. Opulencia
WHEREFORE, premises considered, judgment is hereby rendered as

follows:
1. Ordering the defendant to return and/or refund to the plaintiff
the amount of Fifty Three Thousand Nine Hundred Eighty
Nine Pesos and Forty Three Centavos (P53,989.43) with
legal interest thereon at the rate of twelve percent (12%)
per annum starting January 16, 1992, the date when the
complaint was filed;
the defendant-appellant the amount of P12,901.00, representing the balance

of the price of the British Pageant Package Tour, the same to earn legal
interest at the rate of SIX PERCENT (6%) per annum, to be computed from
the time the counterclaim was filed until the finality of this decision. After this
decision becomes final and executory, the rate of TWELVE PERCENT
(12%) interest per annum shall be additionally imposed on the total
obligation until payment thereof is satisfied. The award of attorneys fees is
DELETED. Costs against the plaintiff-appellee.
SO ORDERED.[6]
4. With costs against the defendant.

SO ORDERED.[5]
The trial court held that respondent was negligent in erroneously
advising petitioner of her departure date through its employee, Menor, who
was not presented as witness to rebut petitioners testimony. However,
petitioner should have verified the exact date and time of departure by
looking at her ticket and should have simply not relied on Menors verbal
representation. The trial court thus declared that petitioner was guilty of
contributory negligence and accordingly, deducted 10% from the amount
being claimed as refund.
Respondent appealed to the Court of Appeals, which likewise found
both parties to be at fault. However, the appellate court held that petitioner is
more negligent than respondent because as a lawyer and well-traveled
person, she should have known better than to simply rely on what was told
to her. This being so, she is not entitled to any form of damages. Petitioner
also forfeited her right to the Jewels of Europe tour and must therefore pay
respondent the balance of the price for the British Pageant tour. The
dispositive portion of the judgment appealed from reads as follows:
WHEREFORE, premises considered, the decision of the Regional Trial
Court dated October 26, 1995 is hereby REVERSED and SET ASIDE. A
new judgment is hereby ENTERED requiring the plaintiff-appellee to pay to
I
It is respectfully submitted that the Honorable Court of Appeals committed a
reversible error in reversing and setting aside the decision of the trial court
by ruling that the petitioner is not entitled to a refund of the cost of unavailed
Jewels of Europe tour she being equally, if not more, negligent than the
private respondent, for in the contract of carriage the common carrier is
obliged to observe utmost care and extra-ordinary diligence which is higher
in degree than the ordinary diligence required of the passenger. Thus, even
if the petitioner and private respondent were both negligent, the petitioner
cannot be considered to be equally, or worse, more guilty than the private
respondent. At best, petitioners negligence is only contributory while the
private respondent [is guilty] of gross negligence making the principle of pari
delicto inapplicable in the case;
II
The Honorable Court of Appeals also erred in not ruling that the Jewels of
Europe tour was not indivisible and the amount paid therefor refundable;
III
The Honorable Court erred in not granting to the petitioner the consequential
damages due her as a result of breach of contract of carriage. [8]
Petitioner contends that respondent did not observe the standard of
care required of a common carrier when it informed her wrongly of the flight
13
3. Dismissing the defendants counterclaim, for lack of merit; and
Upon denial of her motion for reconsideration,[7] petitioner filed the

instant petition under Rule 45 on the following grounds:
Page
2. Ordering the defendant to pay the plaintiff the amount of Five

Thousand (P5,000.00) Pesos as and for reasonable
attorneys fees;

Atty. Opulencia
By definition, a contract of carriage or transportation is one whereby a

certain person or association of persons obligate themselves to transport
persons, things, or news from one place to another for a fixed price. [9] Such
person or association of persons are regarded as carriers and are classified
as private or special carriers and common or public carriers. [10] A common
carrier is defined under Article 1732 of the Civil Code as persons,
corporations, firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water or air, for
compensation, offering their services to the public.
It is obvious from the above definition that respondent is not an entity
engaged in the business of transporting either passengers or goods and is
therefore, neither a private nor a common carrier. Respondent did not
undertake to transport petitioner from one place to another since its
covenant with its customers is simply to make travel arrangements in their
behalf. Respondents services as a travel agency include procuring tickets
and facilitating travel permits or visas as well as booking customers for tours.
While petitioner concededly bought her plane ticket through the efforts
of respondent company, this does not mean that the latter ipso facto is a
common carrier. At most, respondent acted merely as an agent of the airline,
with whom petitioner ultimately contracted for her carriage to Europe.
Respondents obligation to petitioner in this regard was simply to see to it
that petitioner was properly booked with the airline for the appointed date
and time. Her transport to the place of destination, meanwhile, pertained
directly to the airline.
The object of petitioners contractual relation with respondent is the
latters service of arranging and facilitating petitioners booking, ticketing
and accommodation in the package tour. In contrast, the object of a contract
of carriage is the transportation of passengers or goods. It is in this sense
that the contract between the parties in this case was an ordinary one for
services and not one of carriage. Petitioners submission is premised on a
wrong assumption.
Since the contract between the parties is an ordinary one for services,
the standard of care required of respondent is that of a good father of a
family under Article 1173 of the Civil Code.[12] This connotes reasonable care
consistent with that which an ordinarily prudent person would have observed
when confronted with a similar situation. The test to determine whether
negligence attended the performance of an obligation is: 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.[13]
In the case at bar, the lower court found Menor negligent when she
allegedly informed petitioner of the wrong day of departure. Petitioners
testimony was accepted as indubitable evidence of Menors alleged negligent
act since respondent did not call Menor to the witness stand to refute the
allegation. The lower court applied the presumption under Rule 131, Section
3 (e)[14] of the Rules of Court that evidence willfully suppressed would be
adverse if produced and thus considered petitioners uncontradicted
testimony to be sufficient proof of her claim.
On the other hand, respondent has consistently denied that Menor was
negligent and maintains that petitioners assertion is belied by the evidence
on record. The date and time of departure was legibly written on the plane
ticket and the travel papers were delivered two days in advance precisely so
that petitioner could prepare for the trip. It performed all its obligations to
enable petitioner to join the tour and exercised due diligence in its dealings
with the latter.
We agree with respondent.
Respondents failure to present Menor as witness to rebut petitioners
testimony could not give rise to an inference unfavorable to the former.
Menor was already working in France at the time of the filing of the
complaint,[15] thereby making it physically impossible for respondent to
present her as a witness. Then too, even if it were possible for respondent to
14
Petitioners contention has no merit.
The nature of the contractual relation between petitioner and

respondent is determinative of the degree of care required in the
performance of the latters obligation under the contract. For reasons of
public policy, a common carrier in a contract of carriage is bound by law to
carry passengers as far as human care and foresight can provide using the
utmost diligence of very cautious persons and with due regard for all the
circumstances.[11] As earlier stated, however, respondent is not a common
carrier but a travel agency. It is thus not bound under the law to observe
extraordinary diligence in the performance of its obligation, as petitioner
claims.
Page
schedule. She could not be deemed more negligent than respondent since
the latter is required by law to exercise extraordinary diligence in the
fulfillment of its obligation. If she were negligent at all, the same is merely
contributory and not the proximate cause of the damage she suffered. Her
loss could only be attributed to respondent as it was the direct consequence
of its employees gross negligence.

Atty. Opulencia
Contrary to petitioners claim, the evidence on record shows that

respondent exercised due diligence in performing its obligations under the
contract and followed standard procedure in rendering its services to
petitioner. As correctly observed by the lower court, the plane
ticket[19] issued to petitioner clearly reflected the departure date and time,
contrary to petitioners contention. The travel documents, consisting of the
tour itinerary, vouchers and instructions, were likewise delivered to petitioner
two days prior to the trip. Respondent also properly booked petitioner for the
tour, prepared the necessary documents and procured the plane tickets. It
arranged petitioners hotel accommodation as well as food, land transfers
and sightseeing excursions, in accordance with its avowed undertaking.
Therefore, it is clear that respondent performed its prestation under the
contract as well as everything else that was essential to book petitioner for
the tour. Had petitioner exercised due diligence in the conduct of her affairs,
there would have been no reason for her to miss the flight. Needless to say,
after the travel papers were delivered to petitioner, it became incumbent
upon her to take ordinary care of her concerns. This undoubtedly would
require that she at least read the documents in order to assure herself of the
important details regarding the trip.
The negligence of the obligor in the performance of the obligation
renders him liable for damages for the resulting loss suffered by the obligee.
Fault or negligence of the obligor consists in his failure to exercise due care
The lower court declared that respondents employee was

negligent. This factual finding, however, is not supported by the evidence on
record. While factual findings below are generally conclusive upon this court,
the rule is subject to certain exceptions, as when the trial court overlooked,
misunderstood, or misapplied some facts or circumstances of weight and
substance which will affect the result of the case.[22]
In the case at bar, the evidence on record shows that respondent
company performed its duty diligently and did not commit any contractual
breach. Hence, petitioner cannot recover and must bear her own damage.
WHEREFORE, the instant petition is DENIED for lack of merit. The
decision of the Court of Appeals in CA-G.R. CV No. 51932 is
AFFIRMED. Accordingly, petitioner is ordered to pay respondent the amount
of P12,901.00 representing the balance of the price of the British Pageant
Package Tour, with legal interest thereon at the rate of 6% per annum, to be
computed from the time the counterclaim was filed until the finality of this
Decision. After this Decision becomes final and executory, the rate of 12%
per annum shall be imposed until the obligation is fully settled, this interim
period being deemed to be by then an equivalent to a forbearance of
credit.[23]
SO ORDERED.
Davide, Jr., C.J., (Chairman), Vitug, Carpio, and Azcuna, JJ., concur.
15
In sum, we do not agree with the finding of the lower court that Menors
negligence concurred with the negligence of petitioner and resultantly
caused damage to the latter. Menors negligence was not sufficiently proved,
considering that the only evidence presented on this score was petitioners
uncorroborated narration of the events. It is well-settled that the party
alleging a fact has the burden of proving it and a mere allegation cannot take
the place of evidence.[17] If the plaintiff, upon whom rests the burden of
proving his cause of action, fails to show in a satisfactory manner facts upon
which he bases his claim, the defendant is under no obligation to prove his
exception or defense.[18]
and prudence in the performance of the obligation as the nature of the

obligation so demands.[20] There is no fixed standard of diligence applicable
to each and every contractual obligation and each case must be determined
upon its particular facts. The degree of diligence required depends on the
circumstances of the specific obligation and whether one has been negligent
is a question of fact that is to be determined after taking into account the
particulars of each case.[21]
Page
secure Menors testimony, the presumption under Rule 131, Section 3(e)
would still not apply. The opportunity and possibility for obtaining Menors
testimony belonged to both parties, considering that Menor was not just
respondents employee, but also petitioners niece. It was thus error for the
lower court to invoke the presumption that respondent willfully suppressed
evidence under Rule 131, Section 3(e). Said presumption would logically be
inoperative if the evidence is not intentionally omitted but is simply
unavailable, or when the same could have been obtained by both parties.[16]

Atty. Opulencia
Vicente D. Millora for petitioner.

Jacinto Callanta for private respondent.
FELICIANO, J.:
Respondent Ernesto Cendana, a junk dealer, was engaged in buying up
used bottles and scrap metal in Pangasinan. Upon gathering sufficient
quantities of such scrap material, respondent would bring such material to
Manila for resale. He utilized two (2) six-wheeler trucks which he owned for
hauling the material to Manila. On the return trip to Pangasinan, respondent
would load his vehicles with cargo which various merchants wanted
delivered to differing establishments in Pangasinan. For that service,
respondent charged freight rates which were commonly lower than regular
commercial rates.
Sometime in November 1970, petitioner Pedro de Guzman a merchant and
authorized dealer of General Milk Company (Philippines), Inc. in Urdaneta,
Pangasinan, contracted with respondent for the hauling of 750 cartons of
Liberty filled milk from a warehouse of General Milk in Makati, Rizal, to
petitioner's establishment in Urdaneta on or before 4 December 1970.
Accordingly, on 1 December 1970, respondent loaded in Makati the
merchandise on to his trucks: 150 cartons were loaded on a truck driven by
respondent himself, while 600 cartons were placed on board the other truck
which was driven by Manuel Estrada, respondent's driver and employee.
Only 150 boxes of Liberty filled milk were delivered to petitioner. The other
600 boxes never reached petitioner, since the truck which carried these
boxes was hijacked somewhere along the MacArthur Highway in Paniqui,
Tarlac, by armed men who took with them the truck, its driver, his helper and
the cargo.
In his Answer, private respondent denied that he was a common carrier and
argued that he could not be held responsible for the value of the lost goods,
such loss having been due to force majeure.
On 10 December 1975, the trial court rendered a Decision 1 finding private
respondent to be a common carrier and holding him liable for the value of
the undelivered goods (P 22,150.00) as well as for P 4,000.00 as damages
and P 2,000.00 as attorney's fees.
On appeal before the Court of Appeals, respondent urged that the trial court
had erred in considering him a common carrier; in finding that he had
habitually offered trucking services to the public; in not exempting him from
liability on the ground of force majeure; and in ordering him to pay damages
and attorney's fees.
The Court of Appeals reversed the judgment of the trial court and held that
respondent had been engaged in transporting return loads of freight "as a
casual
occupation a sideline to his scrap iron business" and not as a common
carrier. Petitioner came to this Court by way of a Petition for Review
assigning as errors the following conclusions of the Court of Appeals:
1. that private respondent was not a common carrier;
2. that the hijacking of respondent's truck was force
majeure; and
3. that respondent was not liable for the value of the
undelivered cargo. (Rollo, p. 111)
We consider first the issue of whether or not private respondent Ernesto
Cendana may, under the facts earlier set forth, be properly characterized as
a common carrier.
16
PEDRO DE GUZMAN, petitioner,

vs.
COURT OF APPEALS and ERNESTO CENDANA, respondents.
On 6 January 1971, petitioner commenced action against private respondent

in the Court of First Instance of Pangasinan, demanding payment of P
22,150.00, the claimed value of the lost merchandise, plus damages and
attorney's fees. Petitioner argued that private respondent, being a common
carrier, and having failed to exercise the extraordinary diligence required of
him by the law, should be held liable for the value of the undelivered goods.
Page
G.R. No. L-47822 December 22, 1988

Atty. Opulencia
The above article makes no distinction between one

whose principal business activity is the carrying of persons or goods or both,
and one who does such carrying only as an ancillary activity (in local Idiom
as "a sideline"). Article 1732 also carefully avoids making any distinction
between a person or enterprise offering transportation service on a regular
or scheduled basis and one offering such service on an occasional, episodic
or unscheduled basis. Neither does Article 1732 distinguish between a
carrier offering its services to the "general public," i.e., the general
community or population, and one who offers services or solicits business
only from a narrow segment of the general population. We think that Article
1733 deliberaom making such distinctions.
So understood, the concept of "common carrier" under Article 1732 may be
seen to coincide neatly with the notion of "public service," under the Public
Service Act (Commonwealth Act No. 1416, as amended) which at least
partially supplements the law on common carriers set forth in the Civil Code.
Under Section 13, paragraph (b) of the Public Service Act, "public service"
includes:
... every person that now or hereafter may own, operate,
manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general
business purposes, any common carrier, railroad, street
railway, traction railway, subway motor vehicle, either for
freight or passenger, or both, with or without fixed route
and whatever may be its classification, freight or carrier
service of any class, express service, steamboat, or
steamship line, pontines, ferries and water craft, engaged
in the transportation of passengers or freight or both,
shipyard, marine repair shop, wharf or dock, ice plant,
ice-refrigeration plant, canal, irrigation system, gas,
electric light, heat and power, water supply and power
petroleum, sewerage system, wire or wireless
It appears to the Court that private respondent is properly characterized as a

common carrier even though he merely "back-hauled" goods for other
merchants from Manila to Pangasinan, although such back-hauling was
done on a periodic or occasional rather than regular or scheduled manner,
and even though private respondent'sprincipal occupation was not the
carriage of goods for others. There is no dispute that private respondent
charged his customers a fee for hauling their goods; that fee frequently fell
below commercial freight rates is not relevant here.
The Court of Appeals referred to the fact that private respondent held no
certificate of public convenience, and concluded he was not a common
carrier. This is palpable error. A certificate of public convenience is not a
requisite for the incurring of liability under the Civil Code provisions
governing common carriers. That liability arises the moment a person or firm
acts as a common carrier, without regard to whether or not such carrier has
also complied with the requirements of the applicable regulatory statute and
implementing regulations and has been granted a certificate of public
convenience or other franchise. To exempt private respondent from the
liabilities of a common carrier because he has not secured the necessary
certificate of public convenience, would be offensive to sound public policy;
that would be to reward private respondent precisely for failing to comply
with applicable statutory requirements. The business of a common carrier
impinges directly and intimately upon the safety and well being and property
of those members of the general community who happen to deal with such
carrier. The law imposes duties and liabilities upon common carriers for the
safety and protection of those who utilize their services and the law cannot
allow a common carrier to render such duties and liabilities merely
facultative by simply failing to obtain the necessary permits and
authorizations.
We turn then to the liability of private respondent as a common carrier.
Common carriers, "by the nature of their business and for reasons of public
policy" 2 are held to a very high degree of care and diligence ("extraordinary
diligence") in the carriage of goods as well as of passengers. The specific
import of extraordinary diligence in the care of goods transported by a
common carrier is, according to Article 1733, "further expressed in Articles
1734,1735 and 1745, numbers 5, 6 and 7" of the Civil Code.
17
Article 1732. Common carriers are persons, corporations,

firms or associations engaged in the business of carrying
or transporting passengers or goods or both, by land,
water, or air for compensation, offering their services to
the public.
communications systems, wire or wireless broadcasting

stations and other similar public services. ... (Emphasis
supplied)
Page
The Civil Code defines "common carriers" in the following terms:

Atty. Opulencia
Article 1734 establishes the general rule that common carriers are
responsible for the loss, destruction or deterioration of the goods which they
carry, "unless the same is due to any of the following causes only:
The precise issue that we address here relates to the specific requirements
of the duty of extraordinary diligence in the vigilance over the goods carried
in the specific context of hijacking or armed robbery.
(1) Flood, storm, earthquake, lightning or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character-of the goods or defects in the packing or-in the containers;
and
(5) Order or act of competent public authority.
As noted earlier, the duty of extraordinary diligence in the vigilance over

goods is, under Article 1733, given additional specification not only by
Articles 1734 and 1735 but also by Article 1745, numbers 4, 5 and 6, Article
1745 provides in relevant part:
Applying the above-quoted Articles 1734 and 1735, we note firstly that the
specific cause alleged in the instant case the hijacking of the carrier's
truck does not fall within any of the five (5) categories of exempting
causes listed in Article 1734. It would follow, therefore, that the hijacking of
the carrier's vehicle must be dealt with under the provisions of Article 1735,
in other words, that the private respondent as common carrier is presumed
to have been at fault or to have acted negligently. This presumption,
however, may be overthrown by proof of extraordinary diligence on the part
of private respondent.
Petitioner insists that private respondent had not observed extraordinary
diligence in the care of petitioner's goods. Petitioner argues that in the
circumstances of this case, private respondent should have hired a security
guard presumably to ride with the truck carrying the 600 cartons of Liberty
filled milk. We do not believe, however, that in the instant case, the standard
of extraordinary diligence required private respondent to retain a security
guard to ride with the truck and to engage brigands in a firelight at the risk of
his own life and the lives of the driver and his helper.
(5) that the common carrier shall not be responsible for the
acts or omissions of his or its employees;
(6) that the common carrier's liability for acts committed by
thieves, or of robbers who donot act with grave or
irresistible threat, violence or force, is dispensed with or
diminished; and
(7) that the common carrier shall not responsible for the
loss, destruction or deterioration of goods on account of
the defective condition of the car vehicle, ship, airplane or
other equipment used in the contract of carriage.
(Emphasis supplied)
Under Article 1745 (6) above, a common carrier is held responsible and
will not be allowed to divest or to diminish such responsibility even for
acts of strangers like thieves or robbers, except where such thieves or
robbers in fact acted "with grave or irresistible threat, violence or force." We
believe and so hold that the limits of the duty of extraordinary diligence in the
vigilance over the goods carried are reached where the goods are lost as a
result of a robbery which is attended by "grave or irresistible threat, violence
or force."
In the instant case, armed men held up the second truck owned by private
respondent which carried petitioner's cargo. The record shows that an
18
In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of the

preceding article, if the goods are lost, destroyed or deteriorated, common
carriers are presumed to have been at fault or to have acted negligently,
unless they prove that they observed extraordinary diligence as required in
Article 1733. (Emphasis supplied)
xxx xxx xxx
Page
It is important to point out that the above list of causes of loss, destruction or
deterioration which exempt the common carrier for responsibility therefor, is
a closed list. Causes falling outside the foregoing list, even if they appear to
constitute a species of force majeure fall within the scope of Article 1735,
which provides as follows:
Any of the following or similar stipulations shall be

considered unreasonable, unjust and contrary to public
policy:

Atty. Opulencia
information for robbery in band was filed in the Court of First Instance of
Tarlac, Branch 2, in Criminal Case No. 198 entitled "People of the
Philippines v. Felipe Boncorno, Napoleon Presno, Armando Mesina, Oscar
Oria and one John Doe." There, the accused were charged with willfully and
unlawfully taking and carrying away with them the second truck, driven by
Manuel Estrada and loaded with the 600 cartons of Liberty filled milk
destined for delivery at petitioner's store in Urdaneta, Pangasinan. The
decision of the trial court shows that the accused acted with grave, if not
irresistible, threat, violence or force. 3 Three (3) of the five (5) hold-uppers
were armed with firearms. The robbers not only took away the truck and its
cargo but also kidnapped the driver and his helper, detaining them for
several days and later releasing them in another province (in Zambales).
The hijacked truck was subsequently found by the police in Quezon City.
The Court of First Instance convicted all the accused of robbery, though not
of robbery in band. 4
In these circumstances, we hold that the occurrence of the loss must
reasonably be regarded as quite beyond the control of the common carrier
and properly regarded as a fortuitous event. It is necessary to recall that
even common carriers are not made absolute insurers against all risks of
travel and of transport of goods, and are not held liable for acts or events
which cannot be foreseen or are inevitable, provided that they shall have
complied with the rigorous standard of extraordinary diligence.
We, therefore, agree with the result reached by the Court of Appeals that
private respondent Cendana is not liable for the value of the undelivered
merchandise which was lost because of an event entirely beyond private
respondent's control.
ACCORDINGLY, the Petition for Review on certiorari is hereby DENIED and
the Decision of the Court of Appeals dated 3 August 1977 is AFFIRMED. No
pronouncement as to costs.
SO ORDERED.
Page
19
Fernan, C.J., Gutierrez, Jr., Bidin and Cortes, JJ., concur.

Atty. Opulencia
Julian C. Gonzales, Jr. for plaintiff-appellant.

Gerardo E. Angeles for defendant-third-party plaintiff-appellee.
Apostadera, Palabrica and Muyco for third-party defendant-appellee.
CASTRO, J.:
This appeal from the decision dated June 9, 1967 of the Court of First
Instance of Davao in its civil case 3163 poses objections to the manner the
trial court adjudicated the claim for damages filed by the plaintiff-appellant
Fe Perez against the defendant-third-party plaintiff-appellee Josefina
Gutierrez.
The complaint (later amended) filed on October 29, 1959 by Fe Perez with
the Court of First Instance of Davao against Josefina Gutierrez, for breach of
contract of carriage, alleges that on September 6, 1959 while she, together
with nine co-teachers, was a passenger of an AC jeepney registered under
the name of the defendant Gutierrez, the said vehicle, due to the reckless
negligence of its driver Leopoldo Cordero, met with an accident, resulting in
injuries to herself which required her hospitalization. In her answer, Josefina
Gutierrez averred that if the claim of Fe Perez is at all justified, responsibility
therefor should devolve on one Panfilo Alajar, the actual owner, by
purchase, of the said passenger jeepney when the accident occurred and
against whom she has filed a third-party complaint.
The deed of sale attached to the third-party complaint recites, inter alia,
That it is mutually agreed by the herein vendor and
vendee that the TITLE to the aforementioned vehicle shall
remain with the VENDOR, pending approval of the herein
That the vendee herein, by these presents, do [sic] hereby

binds himself and do [sic] hereby assume, [sic]
responsibility for all actions, claims, demands, and rights
of action, and whatever kind and nature, that may
hereafter develop as a consequence of or in the course of
operation of the aforementioned vehicle; ...
In his answer to the third-party complaint, Panfilo Alajar disclaimed
responsibility for the accident, alleging that (a) the mentioned deed of sale is
null and void because it has not been registered with the Public Service
Commission despite repeated demands on the 3rd-party complainant to do
so; (b) the said passenger jeepney remained in the control of the 3rd-party
complainant who, together with her lawyer-husband, had been collecting
rentals from him for the use of the said vehicle; and (c) by express
agreement, title to the said vehicle remained with the 3rd-party complainant
pending approval of the sale by the Public Service Commission.
The defendant Leopoldo Cordero was declared in default and did not
appeal.
On June 9, 1967, after trial on the merits, the court a quo rendered its
decision, in the main finding Leopoldo Cordero guilty of reckless
imprudence, and finding that Panfilo Alajar owned and operated the auto
calesa in question and, in fact, after the accident, even assumed
responsibility for the payment of the hospital bills due to the Brokenshire
Memorial Hospital for treatment of the injuries suffered by Fe Perez. Based
on these findings as well as the proof of the damages suffered by Fe Perez,
the court adjudged as follows:
WHEREFORE, premises considered, judgment is hereby
rendered ordering third-party defendant Panfilo Alajar to
pay plaintiff the amount of P1,552.20 hospital expenses;
P2,000.00, actual damages; P5,000.00 moral damages;
P500.00 incidental expenses; and P2,000.00 attorney's
fees.
20
FE PEREZ, plaintiff-appellant,
vs.
JOSEFINA GUTIERREZ, defendant third-party plaintiff-appellee, PANFILO
ALAJAR, third-party defendant-appellee.
SALE by the Public Service Commission, said motor

vehicle being registered as a public utility auto-calesa
under "AC" denomination; ...
Page
G.R. No. L-30115 September 28, 1973

Atty. Opulencia
We find the appeal meritorious and in accord with settled law on the matter.
In Peralta vs. Mangusang 1 this Court, in approbation of a similar argument,
said:
The law (Sec. 20 [g], Public Service Act) really requires
the approval of the Public Service Commission in order
that a franchise, or any privileges pertaining thereto, may
be sold or leased without infringing the certificate issued to
the grantee. The reason is obvious. Since a franchise is
personal in nature any transfer or lease thereof should be
submitted for approval of the Public Service Commission,
so that the latter may take proper safeguards to protect
the interest of the public. It follows that if the property
covered by the 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
Commission and to the public for the consequences
incident to the operation of the vehicle, one of them being
the collision under consideration. (Montoya v. Ignacio, 50
O.G. No. 1. 108; Vda. de Medina, et al. v. Cresencia, et
al., 52 O.G. No. 10, 4604; Erezo v. Jepte, et al., G.R. No.
L-9605, Sept. 30, 1957; Tamayo v. Aquino, 56 O.G. No.
36,5617).
In the earlier case of Erezo vs. Jepte, 2 which is cited in the foregoing
opinion, this Court held that the doctrine making the registered owner of a
... that in dealing with vehicles registered under the Public

Service Law, the public has the right to assume or
presume that the registered owner is the actual owner
thereof, for it would be difficult for the public to enforce the
actions that they may have for injuries caused to them by
the vehicles being negligently operated if the public should
be required to prove who the actual owner is. How would
the public or third persons know against whom to enforce
their rights in case of subsequent transfers of the
vehicles? We do not imply by this doctrine, however, that
the registered owner may not recover whatever amount he
had paid by virtue of his liability to third persons from the
person to whom he had actually sold, assigned or
conveyed the vehicle.
In Tamayo vs. Aquino, 3 also cited in Mangusang, supra, this Court,
reiterating what was stated en passant in Jepte,supra, described the nature
of the liability of the actual transferee of a vehicle the negligent operation of
which gives rise to injuries to its passengers:
The question that is posed, therefore, is how should the
holder of the certificate of public convenience Tamayo
participate with his transferee operator Rayos, in the
damages recoverable by the heirs of the deceased
passenger, if their liability is not that of joint tortfeasors in
accordance with Article 2194 of the Civil Code. The
following considerations must be borne in mind in
determining this question. As Tamayo is the registered
owner of the truck, his responsibility to the public or to any
passenger riding in the vehicle or truck must be direct, for
the reasons given in our decision in the case of Erezo vs.
Jepte, supra, as quoted above. But as the transferee, who
operated the vehicle when the passenger died, is the one
directly responsible for the accident and death, he should
in turn be made responsible to the registered owner for
what the latter may have been adjudged to pay. In
operating the truck without transfer thereof having been
approved by the Public Service Commission, the
21
The present appeal questions the correctness of the dispositive portion of

the decision a quo which adjudged Panfilo Alajar, instead of Josefina
Gutierrez, as the party liable to her for the payment of the damages
adjudicated in her favor. Specifically, Fe Perez argues that the registered
owner of a motor vehicle should be the one held liable for damages resulting
from breach of contract of carriage by a common carrier.
common carrier answerable to the public for negligence injuries to its

passengers or third persons, even though the vehicle had already been
transferred to another, is based upon the principle
Page
Ordering likewise Panfilo Alajar to pay defendant thirdparty plaintiff Josefina Gutierrez P500.00 moral damages;
and P1,000.00 attorney's fees, and to pay the costs of the
proceedings on both cases.

Atty. Opulencia
transferee acted merely as agent of the registered owner

and should be responsible to him (the registered owner),
for any damages that he may cause the latter by his
negligence."
Upon the foregoing, it is quite clear that the court below erred in holding
Panfilo Alajar, rather than Josefina Gutierrez, as the one directly liable to Fe
Perez for the latter's injuries and the corresponding damages incurred. This
Court notes moreover, that the court below inexplicably failed to hold the
driver (Leopoldo Cordero), whom it found guilty of reckless imprudence,
jointly and solidarily liable with Josefina Gutierrez to Fe Perez in accordance
with the provisions of article 2184 in relation to article 2180 of the new Civil
Code. 4
ACCORDINGLY, the judgment below is hereby modified in the sense that
Josefina Gutierrez and Leopoldo Cordero are hereby adjudged directly and
jointly and solidarily liable to Fe Perez for the sums adjudicated in the
judgment below in her (Fe Perez') favor, while Panfilo Alajar is, in turn,
hereby held answerable to Josefina Gutierrez for such amount as the latter
may pay to Fe Perez in satisfaction of the judgment appealed from. Costs
against both the defendant-third party plaintiff-appellee Josefina Gutierrez
and the third party defendant-appellee Panfilo Alajar.
Page
22
Makalintal, Actg.. C.J., Zaldivar, Fernando, Teehankee, Barredo, Makasiar,

Antonio and Esguerra, JJ., concur.

Atty. Opulencia
ABELARDO LIM and ESMADITO GUNNABAN, petitioners,

vs.
COURT OF APPEALS and DONATO H. GONZALES, respondents.
BELLOSILLO, J.:
When a passenger jeepney covered by a certificate of public convenience is
sold to another who continues to operate it under the same certificate of
public convenience under the so-called kabit system, and in the course
thereof the vehicle meets an accident through the fault of another vehicle,
may the new owner sue for damages against the erring vehicle? Otherwise
stated, does the new owner have any legal personality to bring the action, or
is he the real party in interest in the suit, despite the fact that he is not the
registered owner under the certificate of public convenience?
Sometime in 1982 private respondent Donato Gonzales purchased an Isuzu
passenger jeepney from Gomercino Vallarta, holder of a certificate of public
convenience for the operation of public utility vehicles plying the
Monumento-Bulacan route. While private respondent Gonzales continued
offering the jeepney for public transport services he did not have the
registration of the vehicle transferred in his name nor did he secure for
himself a certificate of public convenience for its operation. Thus Vallarta
remained on record as its registered owner and operator.1wphi1.nt
On 22 July 1990, while the jeepney was running northbound along the North
Diversion Road somewhere in Meycauayan, Bulacan, it collided with a tenwheeler-truck owned by petitioner Abelardo Lim and driven by his copetitioner 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 of P236,000.00. 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.
23
January 16, 2002
Page
G.R. No. 125817

Atty. Opulencia
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 perniciouskabit 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, thekabit 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. Octavio10 the Court explained that one of the
primary factors considered in the granting of a certificate of public
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.
24
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
thekabit 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.
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
banefulkabit 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
Page
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

Atty. Opulencia
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
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 for P236,000.00 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.1wphi1.nt
Costs against petitioners.
SO ORDERED.
Mendoza, Quisumbing, Buena, and De Leon, Jr., JJ., concur.
25
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
todamnum emergens or actual loss but extends to lucrum cessans or the
amount of profit lost.13
(at which time the quantification of damages may be deemed to be

reasonably ascertained).14
Page
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

Atty. Opulencia
Manuel A. Concordia for petitioner.

Nicasio Ocampo for himself and on behalf of his correspondents.
ESCOLIN, J.:+.wph!1
"Ex pacto illicito non oritur actio" [No action arises out of an illicit bargain] is
the tune-honored maxim that must be applied to the parties in the case at
bar. Having entered into an illegal contract, neither can seek relief from the
courts, and each must bear the consequences of his acts.
The factual background of this case is undisputed.
Sometime in 1966, the spouses Nicasio M. Ocampo and Francisca Garcia,
herein private respondents, purchased in installment from the Delta Motor
Sales Corporation five (5) Toyota Corona Standard cars to be used as
taxicabs. Since they had no franchise to operate taxicabs, they contracted
with petitioner Lita Enterprises, Inc., through its representative, Manuel
Concordia, for the use of the latter's certificate of public convenience in
consideration of an initial payment of P1,000.00 and a monthly rental of
P200.00 per taxicab unit. To effectuate Id agreement, the aforesaid cars
were registered in the name of petitioner Lita Enterprises, Inc, Possession,
however, remained with tile spouses Ocampo who operated and maintained
the same under the name Acme Taxi, petitioner's trade name.
About a year later, on March 18, 1967, one of said taxicabs driven by their
employee, Emeterio Martin, collided with a motorcycle whose driver, one
Florante Galvez, died from the head injuries sustained therefrom. A criminal
case was eventually filed against the driver Emeterio Martin, while a civil
case for damages was instituted by Rosita Sebastian Vda. de Galvez, heir of
the victim, against Lita Enterprises, Inc., as registered owner of the taxicab
This decision having become final, a writ of execution was issued. One of
the vehicles of respondent spouses with Engine No. 2R-914472 was levied
upon and sold at public auction for 12,150.00 to one Sonnie Cortez, the
highest bidder. Another car with Engine No. 2R-915036 was likewise levied
upon and sold at public auction for P8,000.00 to a certain Mr. Lopez.
Thereafter, in March 1973, respondent Nicasio Ocampo decided to register
his taxicabs in his name. He requested the manager of petitioner Lita
Enterprises, Inc. to turn over the registration papers to him, but the latter
allegedly refused. Hence, he and his wife filed a complaint against Lita
Enterprises, Inc., Rosita Sebastian Vda. de Galvez, Visayan Surety &
Insurance Co. and the Sheriff of Manila for reconveyance of motor vehicles
with damages, docketed as Civil Case No. 90988 of the Court of First
Instance of Manila. Trial on the merits ensued and on July 22, 1975, the said
court rendered a decision, the dispositive portion of which
reads: t.hqw
WHEREFORE, the complaint is hereby dismissed as far
as defendants Rosita Sebastian Vda. de Galvez, Visayan
Surety & Insurance Company and the Sheriff of Manila are
concerned.
Defendant Lita Enterprises, Inc., is ordered to transfer the
registration certificate of the three Toyota cars not levied
upon with Engine Nos. 2R-230026, 2R-688740 and 2R585884 [Exhs. A, B, C and D] by executing a deed of
conveyance in favor of the plaintiff.
Plaintiff is, however, ordered to pay Lita Enterprises, Inc.,
the rentals in arrears for the certificate of convenience
from March 1973 up to May 1973 at the rate of P200 a
month per unit for the three cars. (Annex A, Record on
Appeal, p. 102-103, Rollo)
Petitioner Lita Enterprises, Inc. moved for reconsideration of the decision,
but the same was denied by the court a quo on October 27, 1975. (p.
121, Ibid.)
26
LITA ENTERPRISES, INC., petitioner,

vs.
SECOND CIVIL CASES DIVISION, INTERMEDIATE APPELLATE COURT,
NICASIO M. OCAMPO and FRANCISCA P. GARCIA, respondents.
in the latter case, Civil Case No. 72067 of the Court of First Instance of
Manila, petitioner Lita Enterprises, Inc. was adjudged liable for damages in
the amount of P25,000.00 and P7,000.00 for attorney's fees.
Page
G.R. No. L-64693 April 27, 1984

Atty. Opulencia
Its first and second motions for reconsideration having been denied,
petitioner came to Us, praying that: t.hqw
1. ...
2. ... after legal proceedings, decision be rendered or
resolution be issued, reversing, annulling or amending the
decision of public respondent so that:
(a) the additional paragraph added by the public
respondent to the DECISION of the lower court (CFI) be
deleted;
(b) that private respondents be declared liable to petitioner
for whatever amount the latter has paid or was declared
liable (in Civil Case No. 72067) of the Court of First
Instance of Manila to Rosita Sebastian Vda. de Galvez, as
heir of the victim Florante Galvez, who died as a result ot
the gross negligence of private respondents' driver while
driving one private respondents' taxicabs. (p. 39, Rollo.)
Unquestionably, the parties herein operated under an arrangement, comonly
known as the "kabit system", whereby a person who has been granted a
certificate of convenience allows another person who owns motors vehicles
to operate under such franchise for a fee. A certificate of public convenience
is a special privilege conferred by the government . Abuse of this privilege by
the grantees thereof cannot be countenanced. The "kabit system" has been
Identified as one of the root causes of the prevalence of graft and corruption
in the government transportation offices. In the words of Chief Justice
Although not outrightly penalized as a criminal offense, the "kabit system" is

invariably recognized as being contrary to public policy and, therefore, void
and inexistent under Article 1409 of the Civil Code, It is a fundamental
principle that the court will not aid either party to enforce an illegal contract,
but will leave them both where it finds them. Upon this premise, it was
flagrant error on the part of both the trial and appellate courts to have
accorded the parties relief from their predicament. Article 1412 of the Civil
Code denies them such aid. It provides:t.hqw
ART. 1412. if the act in which the unlawful or forbidden
cause consists does not constitute a criminal offense, the
following rules shall be observed;
(1) when the fault, is on the part of both contracting
parties, neither may recover what he has given by virtue of
the contract, or demand the performance of the other's
undertaking.
The defect of inexistence of a contract is permanent and incurable, and
cannot be cured by ratification or by prescription. As this Court said
in Eugenio v. Perdido, 2 "the mere lapse of time cannot give efficacy to
contracts that are null void."
The principle of in pari delicto is well known not only in this jurisdiction but
also in the United States where common law prevails. Under American
jurisdiction, the doctrine is stated thus: "The proposition is universal that no
action arises, in equity or at law, from an illegal contract; no suit can be
maintained for its specific performance, or to recover the property agreed to
be sold or delivered, or damages for its property agreed to be sold or
delivered, or damages for its violation. The rule has sometimes been laid
down as though it was equally universal, that where the parties are in pari
delicto, no affirmative relief of any kind will be given to one against the
other." 3 Although certain exceptions to the rule are provided by law, We see
no cogent reason why the full force of the rule should not be applied in the
instant case.
27
In the event the condition of the three Toyota rears will no

longer serve the purpose of the deed of conveyance
because of their deterioration, or because they are no
longer serviceable, or because they are no longer
available, then Lita Enterprises, Inc. is ordered to pay the
plaintiffs their fair market value as of July 22, 1975. (Annex
"D", p. 167, Rollo.)
Makalintal, 1 "this is a pernicious system that cannot be too severely

condemned. It constitutes an imposition upon the goo faith of the
government.
Page
On appeal by petitioner, docketed as CA-G.R. No. 59157-R, the

Intermediate Appellate Court modified the decision by including as part of its
dispositive portion another paragraph, to wit: t.hqw

Atty. Opulencia
WHEREFORE, all proceedings had in Civil Case No. 90988 entitled "Nicasio
Ocampo and Francisca P. Garcia, Plaintiffs, versus Lita Enterprises, Inc., et
al., Defendants" of the Court of First Instance of Manila and CA-G.R. No.
59157-R entitled "Nicasio Ocampo and Francisca P. Garica, PlaintiffsAppellees, versus Lita Enterprises, Inc., Defendant-Appellant," of the
Intermediate Appellate Court, as well as the decisions rendered therein are
hereby annuleled and set aside. No costs.
SO ORDERED.1wph1.t
Feranando, C.J., Teehankee, Makasiar, Concepcion, Jr., Guerrero, Abad
Santos, De Castro, Melencio-Herrera, Plana, Relova, Gutierrez, Jr. and De
la Fuente, JJ., concur.
Page
28
Aquino, J., took no part.

Atty. Opulencia
Cirilo A. Diaz, Jr. for petitioner.

Henry V. Briguera for private respondent.
PARAS, J.:
"'Ex pacto illicito' non oritur actio" (No action arises out of illicit bargain) is the
time-honored maxim that must be applied to the parties in the case at bar.
Having entered into an illegal contract, neither can seek relief from the
courts, and each must bear the consequences of his acts." (Lita Enterprises
vs. IAC, 129 SCRA 81.)
The factual background of this case is undisputed. The same is narrated by
the respondent court in its now assailed decision, as follows:
On May 9, 1975, the defendant bought from the plaintiff a
motorcycle with complete accessories and a sidecar in the
total consideration of P8,000.00 as shown by Invoice No.
144 (Exh. "A"). Out of the total purchase price the
defendant gave a downpayment of P1,700.00 with a
promise that he would pay plaintiff the balance within sixty
days. The defendant, however, failed to comply with his
promise and so upon his own request, the period of paying
the balance was extended to one year in monthly
installments until January 1976 when he stopped paying
anymore. The plaintiff made demands but just the same
the defendant failed to comply with the same thus forcing
the plaintiff to consult a lawyer and file this action for his
damage in the amount of P546.21 for attorney's fees and
P100.00 for expenses of litigation. The plaintiff also claims
that as of February 20, 1978, the total account of the
In this particular transaction a chattel mortgage (Exhibit 1)

was constituted as a security for the payment of the
balance of the purchase price. It has been the practice of
financing firms that whenever there is a balance of the
purchase price the registration papers of the motor vehicle
subject of the sale are not given to the buyer. The records
of the LTC show that the motorcycle sold to the defendant
was first mortgaged to the Teja Marketing by Angel
Jaucian though the Teja Marketing and Angel Jaucian are
one and the same, because it was made to appear that
way only as the defendant had no franchise of his own
and he attached the unit to the plaintiff's MCH Line. The
agreement also of the parties here was for the plaintiff to
undertake the yearly registration of the motorcycle with the
Land Transportation Commission. Pursuant to this
agreement the defendant on February 22, 1976 gave the
plaintiff P90.00, the P8.00 would be for the mortgage fee
and the P82.00 for the registration fee of the motorcycle.
The plaintiff, however failed to register the motorcycle on
that year on the ground that the defendant failed to comply
with some requirements such as the payment of the
insurance premiums and the bringing of the motorcycle to
the LTC for stenciling, the plaintiff saying that the
defendant was hiding the motorcycle from him. Lastly, the
plaintiff explained also that though the ownership of the
motorcycle was already transferred to the defendant the
vehicle was still mortgaged with the consent of the
defendant to the Rural Bank of Camaligan for the reason
that all motorcycle purchased from the plaintiff on credit
was rediscounted with the bank.
On his part the defendant did not dispute the sale and the
outstanding balance of P1,700. 00 still payable to the
plaintiff. The defendant was persuaded to buy from the
plaintiff the motorcycle with the side car because of the
29
TEJA MARKETING AND/OR ANGEL JAUCIAN, petitioner,

vs.
HONORABLE INTERMEDIATE APPELLATE COURT * AND PEDRO N.
NALE, respondents.
defendant was already P2,731.06 as shown in a statement

of account (Exhibit. "B"). This amount includes not only the
balance of P1,700.00 but an additional 12% interest per
annum on the said balance from January 26, 1976 to
February 27, 1978; a 2% service charge; and P 546.21
representing attorney's fees.
Page
G.R. No. L-65510 March 9, 1987

Atty. Opulencia
xxx xxx xxx

... it also appears and the Court so finds that defendant
purchased the motorcycle in question, particularly for the
purpose of engaging and using the same in the
Eventually, petitioner Teja Marketing and/or Angel Jaucian filed an action for
"Sum of Money with Damages" against private respondent Pedro N. Nale in
the City Court of Naga City. The City Court rendered judgment in favor of
petitioner, the dispositive portion of which reads:
WHEREFORE, decision is hereby rendered dismissing the
counterclaim and ordering the defendant to pay plaintiff
the sum of P1,700.00 representing the unpaid balance of
the purchase price with legal rate of interest from the date
of the filing of the complaint until the same is fully paid; to
pay plaintiff the sum of P546.21 as attorney's fees; to pay
plaintiff the sum of P200.00 as expenses of litigation; and
to pay the costs.
SO ORDERED.
On appeal to the Court of First Instance of Camarines Sur, the decision was
affirmed in toto. Private respondent filed a petition for review with the
Intermediate Appellate Court and on July 18, 1983 the said Court
promulgated its decision, the pertinent portion of which reads
However, as the purchase of the motorcycle for operation
as a trimobile under the franchise of the private
respondent Jaucian, pursuant to what is commonly known
as the "kabit system", without the prior approval of the
Board of Transportation (formerly the Public Service
Commission) was an illegal transaction involving the
fictitious registration of the motor vehicle in the name of
the private respondent so that he may traffic with the
30
The defendant disputed the claim of the plaintiff that he

was hiding from the plaintiff the motorcycle resulting in its
not being registered. The truth being that the motorcycle
was being used for transporting passengers and it kept on
travelling from one place to another. The motor vehicle
sold to him was mortgaged by the plaintiff with the Rural
Bank of Camaligan without his consent and knowledge
and the defendant was not even given a copy of the
mortgage deed. The defendant claims that it is not true
that the motorcycle was mortgaged because of rediscounting for rediscounting is only true with Rural Banks
and the Central Bank. The defendant puts the blame on
the plaintiff for not registering the motorcycle with the LTC
and for not giving him the registration papers inspite of
demands made. Finally, the evidence of the defendant
shows that because of the filing of this case he was forced
to retain the services of a lawyer for a fee on not less than
P1,000.00.
transportation business and for this purpose said trimobile

unit was attached to the plaintiffs transportation line who
had the franchise, so much so that in the registration
certificate, the plaintiff appears to be the owner of the
unit. Furthermore, it appears to have been agreed, further
between the plaintiff and the defendant, that plaintiff would
undertake the yearly registration of the unit in question
with the LTC. Thus, for the registration of the unit for the
year 1976, per agreement, the defendant gave to the
plaintiff the amount of P82.00 for its registration, as well as
the insurance coverage of the unit.
Page
condition that the plaintiff would be the one to register

every year the motorcycle with the Land Transportation
Commission. In 1976, however, the plaintfff failed to
register both the chattel mortgage and the motorcycle with
the LTC notwithstanding the fact that the defendant gave
him P90.00 for mortgage fee and registration fee and had
the motorcycle insured with La Perla Compana de
Seguros (Exhibit "6") as shown also by the Certificate of
cover (Exhibit "3"). Because of this failure of the plaintiff to
comply with his obligation to register the motorcycle the
defendant suffered damages when he failed to claim any
insurance indemnity which would amount to no less than
P15,000.00 for the more than two times that the
motorcycle figured in accidents aside from the loss of the
daily income of P15.00 as boundary fee beginning
October 1976 when the motorcycle was impounded by the
LTC for not being registered.

Atty. Opulencia
privileges of his franchise, or certificate of public

convenience, to operate a tricycle service, the parties
being in pari delicto, neither of them may bring an action
against the other to enforce their illegal contract [Art. 1412
(a), Civil Code].
Art. 1412. If the act in which the unlawful or forbidden

cause consists does not constitute a criminal offense, the
following rules shall be observed:
1. When the fault is on the part of both contracting parties,
neither may recover that he has given by virtue of the
contract, or demand, the performance of the other's
undertaking.
xxx xxx xxx

WHEREFORE, the decision under review is hereby set
aside. The complaint of respondent Teja Marketing and/or
Angel Jaucian, as well as the counterclaim of petitioner
Pedro Nale in Civil Case No. 1153 of the Court of First
Instance of Camarines Sur (formerly Civil Case No. 5856
of the City Court of Naga City) are dismissed. No
pronouncement as to costs.
The defect of in existence of a contract is permanent and cannot be cured by

ratification or by prescription. The mere lapse of time cannot give efficacy to
contracts that are null and void.
WHEREFORE, the petition is hereby dismissed for lack of merit. The
assailed decision of the Intermediate Appellate Court (now the Court of
Appeals) is AFFIRMED. No costs.
SO ORDERED.
SO ORDERED.
The decision is now before Us on a petition for review, petitioner Teja
Marketing and/or Angel Jaucian presenting a lone assignment of error
whether or not respondent court erred in applying the doctrine of "pari
delicto."
Fernan (Chairman), Gutierrez, Jr., Padilla, Bidin and Cortez, JJ., concur.
Alampay, J., took no part.
We find the petition devoid of merit.
Page
Although not outrightly penalized as a criminal offense, the kabit system is

invariably recognized as being contrary to public policy and, therefore, void
and in existent under Article 1409 of the Civil Code. It is a fundamental
principle that the court will not aid either party to enforce an illegal contract,
but will leave both where it finds then. Upon this premise it would be error to
accord the parties relief from their predicament. Article 1412 of the Civil
Code denies them such aid. It provides:
31
Unquestionably, the parties herein operated under an arrangement,

commonly known as the "kabit system" whereby a person who has been
granted a certificate of public convenience allows another person who owns
motor vehicles to operate under such franchise for a fee. A certificate of
public convenience is a special privilege conferred by the government.
Abuse of this privilege by the grantees thereof cannot be countenanced. The
"kabit system" has been Identified as one of the root causes of the
prevalence of graft and corruption in the government transportation offices.

Atty. Opulencia
DECISION
CORONA, J.:
This is a petition to review the decision[1] of the Court of Appeals in CAG.R. CV No. 52203 affirming in turn the decision of the trial court finding
petitioner liable to respondent for damages. The dispositive portion read:
WHEREFORE, the appealed decision is hereby AFFIRMED except the
award of attorneys fees including appearance fees which is DELETED.
SO ORDERED.[2]
The facts of the case, as summarized by the Court of Appeals, are as
follows:
[Respondent] Priscilla R. Domingo is the registered owner of a silver
Mitsubishi Lancer Car model 1980 bearing plate No. NDW 781 91 with [corespondent] Leandro Luis R. Domingo as authorized driver. [Petitioner]
Nostradamus Villanueva was then the registered owner of a green
Mitsubishi Lancer bearing Plate No. PHK 201 91.
On 22 October 1991 at about 9:45 in the evening, following a green traffic
light, [respondent] Priscilla Domingos silver Lancer car with Plate No. NDW
781 91 then driven by [co-respondent] Leandro Luis R. Domingo was
cruising along the middle lane of South Superhighway at moderate speed
from north to south. Suddenly, a green Mitsubishi Lancer with plate No. PHK
201 91 driven by Renato Dela Cruz Ocfemia darted from Vito Cruz Street
towards the South Superhighway directly into the path of NDW 781 91
thereby hitting and bumping its left front portion. As a result of the impact,
NDW 781 91 hit two (2) parked vehicles at the roadside, the second hitting
another parked car in front of it.
The original complaint was amended twice: first, impleading Auto Palace Car
Exchange as commercial agent and/or buyer-seller and second, impleading
Albert Jaucian as principal defendant doing business under the name and
style of Auto Palace Car Exchange.
Except for Ocfemia, all the defendants filed separate answers to the
complaint. [Petitioner] Nostradamus Villanueva claimed that he was no
longer the owner of the car at the time of the mishap because it was
swapped with a Pajero owned by Albert Jaucian/Auto Palace Car Exchange.
For her part, Linda Gonzales declared that her presence at the scene of the
accident was upon the request of the actual owner of the Mitsubishi Lancer
(PHK 201 91) [Albert Jaucian] for whom she had been working as
agent/seller. On the other hand, Auto Palace Car Exchange represented by
Albert Jaucian claimed that he was not the registered owner of the car.
Moreover, it could not be held subsidiary liable as employer of Ocfemia
because the latter was off-duty as utility employee at the time of the incident.
Neither was Ocfemia performing a duty related to his employment.[3]
After trial, the trial court found petitioner liable and ordered him to pay
respondent actual, moral and exemplary damages plus appearance and
attorneys fees:
WHEREFORE, judgment is hereby rendered for the plaintiffs, ordering
Nostradamus Villanueva to pay the amount of P99,580 as actual
damages, P25,000.00 as moral damages, P25,000.00 as exemplary
damages and attorneys fees in the amount of P10,000.00 plus appearance
fees of P500.00 per hearing with legal interest counted from the date of
judgment. In conformity with the law on equity and in accordance with the
ruling in First Malayan Lending and Finance Corporation vs. Court of
Appeals (supra), Albert Jaucian is hereby ordered to indemnify Nostradamus
Villanueva for whatever amount the latter is hereby ordered to pay under the
judgment.
SO ORDERED.[4]
32
NOSTRADAMUS VILLANUEVA petitioner, vs. PRISCILLA R. DOMINGO

and LEANDRO LUIS R. DOMINGO, respondents.
Per Traffic Accident Report prepared by Traffic Investigator Pfc. Patrocinio

N. Acido, Renato dela Cruz Ocfemia was driving with expired license and
positive for alcoholic breath. Hence, Manila Assistant City Prosecutor Oscar
A. Pascua recommended the filing of information for reckless imprudence
resulting to (sic) damage to property and physical injuries.
Page
[G.R. No. 144274. September 20, 2004]

Atty. Opulencia
Yes.
We have consistently ruled that the registered owner of any vehicle is
directly and primarily responsible to the public and third persons while it is
being operated.[6] The rationale behind such doctrine was explained way
back in 1957 in Erezo vs. Jepte[7]:
The principle upon which this doctrine is based is that in dealing with
vehicles registered under the Public Service Law, the public has the right to
assume or presume that the registered owner is the actual owner thereof, for
it would be difficult for the public to enforce the actions that they may have
for injuries caused to them by the vehicles being negligently operated if the
public should be required to prove who the actual owner is. How would the
public or third persons know against whom to enforce their rights in case of
subsequent transfers of the vehicles? We do not imply by his doctrine,
however, that the registered owner may not recover whatever amount he
had paid by virtue of his liability to third persons from the person to whom he
had actually sold, assigned or conveyed the vehicle.
Under the same principle the registered owner of any vehicle, even if not
used for a public service, should primarily be responsible to the public or to
third persons for injuries caused the latter while the vehicle is being driven
on the highways or streets. The members of the Court are in agreement that
the defendant-appellant should be held liable to plaintiff-appellee for the
injuries occasioned to the latter because of the negligence of the driver,
even if the defendant-appellant was no longer the owner of the vehicle at the
time of the damage because he had previously sold it to another. What is the
legal basis for his (defendant-appellants) liability?
The Revised Motor Vehicle Law (Act No. 3992, as amended) provides that
no vehicle may be used or operated upon any public highway unless the
same is property registered. It has been stated that the system of licensing
and the requirement that each machine must carry a registration number,
conspicuously displayed, is one of the precautions taken to reduce the
danger of injury to pedestrians and other travelers from the careless
management of automobiles. And to furnish a means of ascertaining the
identity of persons violating the laws and ordinances, regulating the speed
and operation of machines upon the highways (2 R.C.L. 1176). Not only are
vehicles to be registered and that no motor vehicles are to be used or
operated without being properly registered for the current year, but that
dealers in motor vehicles shall furnish thee Motor Vehicles Office a report
showing the name and address of each purchaser of motor vehicle during
the previous month and the manufacturers serial number and motor number.
(Section 5(c), Act No. 3992, as amended.)
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 therefore 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
33
MAY THE REGISTERED OWNER OF A MOTOR VEHICLE BE HELD

LIABLE FOR DAMAGES ARISING FROM A VEHICULAR ACCIDENT
INVOLVING HIS MOTOR VEHICLE WHILE BEING OPERATED BY THE
EMPLOYEE OF ITS BUYER WITHOUT THE LATTERS CONSENT AND
KNOWLEDGE?[5]
There is a presumption that the owner of the guilty vehicle is the defendantappellant as he is the registered owner in the Motor Vehicles Office. Should
he not be allowed to prove the truth, that he had sold it to another and thus
shift the responsibility for the injury to the real and actual owner? The
defendant holds the affirmative of this proposition; the trial court held the
negative.
Page
The CA upheld the trial courts decision but deleted the award for
appearance and attorneys fees because the justification for the grant was
not stated in the body of the decision. Thus, this petition for review which
raises a singular issue:

Atty. Opulencia
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
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.[8]
Petitioner insists that he is not liable for damages since the driver of the
vehicle at the time of the accident was not an authorized driver of the new
(actual) owner of the vehicle. He claims that the ruling in First Malayan
Leasing and Finance Corporation vs. CA[9] implies that to hold the registered
owner liable for damages, the driver of the vehicle must have been
authorized, allowed and permitted by its actual owner to operate and drive it.
Thus, if the vehicle is driven without the knowledge and consent of the actual
owner, then the registered owner cannot be held liable for damages.
He further argues that this was the underlying theory behind Duavit vs.
CA[10] wherein the court absolved the registered owner from liability after
finding that the vehicle was virtually stolen from the owners garage by a
person who was neither authorized nor employed by the owner. Petitioner
concludes that the ruling in Duavit and not the one in First Malayan should
be applicable to him.
Petitioners argument lacks merit. Whether the driver is authorized or
not by the actual owner is irrelevant to 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. To require the driver of the vehicle to be authorized by
theactual owner before the registered owner can be held accountable is to
defeat the very purpose why motor vehicle legislations are enacted in the
first place.
Furthermore, there is nothing in First Malayan which even remotely
suggests that the driver must be authorized before the registered owner can
be held accountable. In First Malayan, the registered owner, First Malayan
Corporation, was held liable for damages arising from the accident even if
the vehicle involved was already owned by another party:
This Court has consistently ruled that regardless of who the actual owner is
of a motor vehicle might be, the registered owner is the operator of the same
34
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 by 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 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.
Page
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 share 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 pace a middleman between them
and the public, and escape liability by the manner in which they recompense
servants. (King vs. Brenham Automobile Co., Inc. 145 S.W. 278, 279.)

Atty. Opulencia
Contrary to petitioners position, the First Malayan ruling is applicable to

him since the case involves the same set of facts the registered owner
had previously sold the vehicle to someone else and was being driven by an
employee of the new (actual) owner. Duavit is inapplicable since the vehicle
there was not transferred to another; the registered and the actual owner
was one and the same person. Besides, in Duavit, the defense of the
registered owner, Gilberto Duavit, was that the vehicle was practically stolen
from his garage by Oscar Sabiano, as affirmed by the latter:
Defendant Sabiano, in his testimony, categorically admitted that he took the
jeep from the garage of defendant Duavit without the consent and authority
of the latter. He testified further that Duavit even filed charges against him
for the theft of the jeep but which Duavit did not push through as his
(Sabianos) parents apologized to Duavit on his behalf. [12]
As correctly pointed out by the CA, the Duavit ruling is not applicable to
petitioners case since the circumstance of unauthorized use was not
present. He in fact voluntarily delivered his car to Albert Jaucian as part of
the downpayment for a vehicle he purchased from Jaucian. Thus, he could
not claim that the vehicle was stolen from him since he voluntarily ceded
possession thereof to Jaucian. It was the latter, as the new (actual) owner,
who could have raised the defense of theft to prove that he was not liable for
The ruling in First Malayan has been reiterated in BA Finance

Corporation vs. CA[13] and more recently in Aguilar, Sr. vs. Commercial
Savings Bank.[14] In BA Finance, we held the registered owner liable even if,
at the time of the accident, the vehicle was leased by another party and was
driven by the lessees employee. In Aguilar, the registered owner-bank
answered for damages for the accident even if the vehicle was being driven
by the Vice-President of the Bank in his private capacity and not as an
officer of the Bank, as claimed by the Bank. We find no reason to deviate
from these decisions.
The main purpose of vehicle registration is the easy identification of the
owner who can be held responsible for any accident, damage or injury
caused by the vehicle. Easy identification prevents inconvenience and
prejudice to a third party injured by one who is unknown or unidentified. To
allow a registered owner to escape liability by claiming that the driver was
not authorized by the new (actual) owner results in the public detriment the
law seeks to avoid.
Finally, the issue of whether or not the driver of the vehicle during the
accident was authorized is not at all relevant to determining the liability of the
registered owner. This must be so if we are to comply with the rationale and
principle behind the registration requirement under the motor vehicle law.
WHEREFORE, the petition is hereby DENIED. The January 26, 2000
decision of the Court of Appeals is AFFIRMED.
SO ORDERED.
Panganiban (Chairman) and Sandoval-Gutierrez, JJ., concur.
Carpio-Morales, J., on leave.
35
We believe that it is immaterial whether or not the driver was actually

employed by the operator of record. It is even not necessary to prove who
the actual owner of the vehicle and the employer of the driver is. Granting
that, in this case, the father of the driver is the actual owner and that he is
the actual employer, following the well-settled principle that the operator of
record continues to be the operator of the vehicle in contemplation of law, as
regards the public and third person, and as such is responsible for the
consequences incident to its operation, we must hold and consider such
owner-operator of record as the employer, in contemplation of law, of the
driver. And, to give effect to this policy of law as enunciated in the above
cited decisions of this Court, we must now extend the same and consider the
actual operator and employer as the agent of the operator of record. [11]
the acts of his employee Ocfemia. Thus, there is no reason to apply

the Duavit ruling to this case.
Page
with respect to the public and third persons, and as such, directly and
primarily responsible for the consequences of its operation. In contemplation
of law, the owner/operator of record is the employer of the driver, the actual
operator and employer being considered merely as his agent (MYC-AgroIndustrial Corporation vs. Vda. de Caldo, 132 SCRA 10, citing Vargas vs.
Langcay, 6 SCRA 174; Tamayo vs. Aquino, 105 Phil. 949).

Atty. Opulencia
DECISION
YNARES-SANTIAGO, J.:
This is a petition for review under Rule 45 of the Rules of Court seeking
the reversal of the decision[1] of the Court of Appeals, dated April 29, 2003,
in CA-G.R. CV No. 60357, which affirmed with modification the amount of
damages awarded in the November 24, 1997 decision [2] of the Regional Trial
Court of Batangas City, Branch IV.
The undisputed facts are as follows:
At about 3:00 p.m. of December 19, 1986, Lorenzo Menard Boyet
Dolor, Jr. was driving an owner-type jeepney with plate no. DEB 804 owned
by her mother, Margarita, towards Anilao, Batangas. As he was traversing
the road at Barangay Anilao East, Mabini, Batangas, his vehicle collided with
a passenger jeepney bearing plate no. DEG 648, driven by petitioner Juan
Gonzales and owned by his co-petitioner Francisco Hernandez, which was
travelling towards Batangas City.
Boyet Dolor and his passenger, Oscar Valmocina, died as a result of
the collision. Fred Panopio, Rene Castillo and Joseph Sandoval, who were
also on board the owner-type jeep, which was totally wrecked, suffered
physical injuries. The collision also damaged the passenger jeepney of
Francisco Hernandez and caused physical injuries to its passengers,
namely, Virgie Cadavida, Fiscal Artemio Reyes and Francisca Corona. [3]
Consequently, respondents commenced an action[4] for damages
against petitioners before the Regional Trial Court of Batangas City, alleging
that driver Juan Gonzales was guilty of negligence and lack of care and that
Petitioners countered that the proximate cause of the death and

injuries sustained by the passengers of both vehicles was the recklessness
of Boyet Dolor, the driver of the owner-type jeepney, who was driving in a
zigzagging manner under the influence of alcohol. Petitioners also alleged
that Gonzales was not the driver-employee of the Hernandez spouses as the
former only leased the passenger jeepney on a daily basis. The Hernandez
spouses further claimed that even if an employer-employee relationship is
found to exist between them, they cannot be held liable because as
employers they exercised due care in the selection and supervision of their
employee.
During the trial of the case, it was established that the drivers of the
two vehicles were duly licensed to drive and that the road where the collision
occurred was asphalted and in fairly good condition. [6] The owner-type jeep
was travelling uphill while the passenger jeepney was going downhill. It was
further established that the owner-type jeep was moderately moving and had
just passed a road bend when its passengers, private respondents Joseph
Sandoval and Rene Castillo, saw the passenger jeepney at a distance of
three meters away. The passenger jeepney was traveling fast when it
bumped the owner type jeep.[7] Moreover, the evidence presented by
respondents before the trial court showed that petitioner Juan Gonzales
obtained his professional drivers license only on September 24, 1986, or
three months before the accident. Prior to this, he was holder of a student
drivers permit issued on April 10, 1986.[8]
On November 24, 1997, the trial court rendered a decision in favor of
respondents, the dispositive portion of which states:
Premises duly considered and the plaintiffs having satisfactorily convincingly
and credibly presented evidence clearly satisfying the requirements of
preponderance of evidence to sustain the complaint, this Court hereby
declares judgment in favor of the plaintiffs and against the defendants.
Defendants-spouses Francisco Hernandez and Aniceta Abel Hernandez and
Juan Gonzales are therefore directed to pay jointly and severally, the
following:
1) To spouses Lorenzo Dolor and Margarita Dolor:
a) P50,000.00 for the death of their son, Lorenzo Menard Boyet Dolor, Jr.;
36
SPOUSES FRANCISCO M. HERNANDEZ and ANICETA ABELHERNANDEZ and JUAN GONZALES, petitioners, vs. SPOUSES
LORENZO DOLOR and MARGARITA DOLOR, FRED PANOPIO,
JOSEPH
SANDOVAL,
RENE
CASTILLO,
SPOUSES
FRANCISCO VALMOCINA and VIRGINIA VALMOCINA,
SPOUSES VICTOR PANOPIO and MARTINA PANOPIO, and
HON. COURT OF APPEALS, respondents.
the Hernandez spouses were guilty of negligence in the selection and

supervision of their employees.[5]
Page
[G.R. No. 160286. July 30, 2004]

Atty. Opulencia
b) P142,000.00 as actual and necessary funeral

expenses;
c) P50,000.00 reasonable value of the totally wrecked
owner-type jeep with plate no. DEB 804 Phil 85;
d) P20,000.00 as moral damages;
e) P20,000.00 as reasonable litigation expenses and attorneys fees.
expenses and attorneys fees awarded to the private respondents. The

decretal portion of the decision of the Court of Appeals reads:
2) To spouses Francisco Valmocina and Virginia Valmocina:
1) To spouses Lorenzo Dolor and Margarita Dolor:
a) P10,450.00 for the cost of the artificial leg and crutches being used by
their son Fred Panopio;
b) P25,000.00 for hospitalization and medical expenses they incurred for the
treatment of their son, Fred Panopio.
4) To Fred Panopio:
a) P25,000.00 for the loss of his right leg;
b) P10,000.00 as moral damages.
2) To Spouses Francisco Valmocina and Virginia Valmocina:

a) P50,000.00 civil indemnity for the death of their
son, Oscar Valmocina;
b) P100,000.00 as moral damages;
c) P10,000.00 as temperate damages;
d) P10,000.00 as reasonable litigation expenses and
attorneys fees.
3) To Spouses Victor Panopio and Martina Panopio:
5) To Joseph Sandoval:
a) P10,352.59 as actual hospitalization and medical expenses;

b) P5,000.00 as temperate damages.
a) P4,000.00 for medical treatment.
4) To Fred Panopio:
The defendants are further directed to pay the costs of this proceedings.
a) P50,000.00 as moral damages.
SO ORDERED.[9]
5) To Joseph Sandoval:
Petitioners appealed[10] the decision to the Court of Appeals, which

affirmed the same with modifications as to the amount of damages, actual
a) P3,000.00 as temperate damages.

SO ORDERED.[11]
37
3) To spouses Victor Panopio and Martina Panopio:
a) P50,000.00 civil indemnity for their son Lorenzo Menard Dolor, Jr.;
b) P58,703.00 as actual and necessary funeral
expenses;
c) P25,000,00 as temperate damages;
d) P100,000.00 as moral damages;
e) P20,000.00 as reasonable litigation expenses and attorneys fees.
Page
a) P50,000.00 for the death of their son, Oscar

Balmocina (sic);
b) P20,000.00 as moral damages;
c) P18,400.00 for funeral expenses;
d) P10,000.00 for litigation expenses and attorneys
fees.
WHEREFORE, the foregoing premises considered, the appealed decision

is AFFIRMED. However, the award for damages, actual expenses and
attorneys fees shall be MODIFIED as follows:

Atty. Opulencia
2. Whether the Court of Appeals was correct in awarding temperate

damages to private respondents namely the Spouses Dolor, Spouses
Valmocina and Spouses Panopio and to Joseph Sandoval, although the
grant of temperate damages is not provided for in decision of the court a
quo;
3. Whether the Court of Appeals was correct in increasing the award of
moral damages to respondents, Spouses Dolor, Spouses Valmocina and
Fred Panopio;
4. Whether the Court of Appeals was correct in affirming the grant of
attorneys fees to Spouses Dolor and to Spouses Valmocina although the
lower court did not specify the fact and the law on which it is based.
Petitioners contend that the absence of the Hernandez spouses inside
the passenger jeepney at the time of the collision militates against holding
them solidarily liable with their co-petitioner, Juan Gonzales, invoking Article
2184 of the Civil Code, which provides:
ARTICLE 2184. In motor vehicle mishaps, the owner is solidarily liable with
his driver, if the former, who was in the vehicle, could have, by the use of the
due diligence, prevented the misfortune. It is disputably presumed that a
driver was negligent, if he had been found guilty of reckless driving or
violating traffic regulations at least twice within the next preceding two
months.
If the owner was not in the motor vehicle, the provisions of article 2180 are
applicable.
The Hernandez spouses argues that since they were not inside the
jeepney at the time of the collision, the provisions of Article 2180 of the Civil
Code, which does not provide for solidary liability between employers and
employees, should be applied.
Article 2180 provides:

ARTICLE 2180. The obligation imposed by article 2176 is demandable not
only for one's own acts or omissions, but also for those of persons for whom
one is responsible.
The father and, in case of his death or incapacity, the mother, are
responsible for the damages caused by the minor children who live in their
company.
Guardians are liable for damages caused by the minors or incapacitated
persons who are under their authority and live in their company.
The owners and managers of an establishment or enterprise are likewise
responsible for damages caused by their employees in the service of the
branches in which the latter are employed or on the occasion of their
functions.
Employers shall be liable for the damages caused by their employees
and household helpers acting within the scope of their assigned tasks,
even though the former are not engaged in any business or industry.
The State is responsible in like manner when it acts through a special agent;
but not when the damage has been caused by the official to whom the task
done properly pertains, in which case what is provided in article 2176 shall
be applicable.
Lastly, teachers or heads of establishments of arts and trades shall be liable
for damages caused by their pupils and students or apprentices, so long as
they remain in their custody.
The responsibility treated of in this article shall cease when the persons
herein mentioned prove that they observed all the diligence of a good father
of a family to prevent damage. (Underscoring supplied)
On the other hand, Article 2176 provides
38
1. Whether the Court of Appeals was correct when it pronounced the

Hernandez spouses as solidarily liable with Juan Gonzales, although it is of
record that they were not in the passenger jeepney driven by latter when the
accident occurred;
We are not persuaded.
Page
Hence the present petition raising the following issues:

Atty. Opulencia
Moreover, Article 2180 should be read with Article 2194 of the same
Code, which categorically states that the responsibility of two or more
persons who are liable for quasi-delict is solidary. In other words, the liability
of joint tortfeasors is solidary.[12] Verily, under Article 2180 of the Civil Code,
an employer may be held solidarily liable for the negligent act of his
employee.[13]
The solidary liability of employers with their employees for quasi-delicts
having been established, the next question is whether Julian Gonzales is an
employee of the Hernandez spouses. An affirmative answer will put to rest
any issue on the solidary liability of the Hernandez spouses for the acts of
Julian Gonzales. The Hernandez spouses maintained that Julian Gonzales
is not their employee since their relationship relative to the use of the
jeepney is that of a lessor and a lessee. They argue that Julian Gonzales
pays them a daily rental of P150.00 for the use of the jeepney.[14] In
essence, petitioners are practicing the boundary system of jeepney
operation albeit disguised as a lease agreement between them for the use of
the jeepney.
We hold that an employer-employee relationship exists between the
Hernandez spouses and Julian Gonzales.
Indeed to exempt from liability the owner of a public vehicle who
operates it under the boundary system on the ground that he is a mere
lessor would be not only to abet flagrant violations of the Public Service Law,
but also to place the riding public at the mercy of reckless and irresponsible
drivers reckless because the measure of their earnings depends largely
upon the number of trips they make and, hence, the speed at which they
drive; and irresponsible because most if not all of them are in no position to
pay the damages they might cause.[15]
Temperate or moderate damages are damages which are more than

nominal but less than compensatory which may be recovered when the court
finds that some pecuniary loss has been suffered but its amount cannot,
from the nature of the case, be proved with certainty.[16] Temperate damages
are awarded for those cases where, from the nature of the case, definite
proof of pecuniary loss cannot be offered, although the court is convinced
that there has been such loss. A judge should be empowered to calculate
moderate damages in such cases, rather than the plaintiff should suffer,
without redress, from the defendants wrongful act. [17] The assessment of
temperate damages is left to the sound discretion of the court provided that
such an award is reasonable under the circumstances. [18]
We have gone through the records of this case and we find that,
indeed, respondents suffered losses which cannot be quantified in monetary
terms. These losses came in the form of the damage sustained by the owner
type jeep of the Dolor spouses; the internment and burial of Oscar
Valmocina; the hospitalization of Joseph Sandoval on account of the injuries
he sustained from the collision and the artificial leg and crutches that
respondent Fred Panopio had to use because of the amputation of his right
leg. Further, we find that the amount of temperate damages awarded to the
respondents were reasonable under the circumstances.
As to the amount of moral damages which was awarded to
respondents, a review of the records of this case shows that there exists no
cogent reason to overturn the action of the appellate court on this aspect.
Under Article 2206, the spouse, legitimate and illegitimate descendants
and ascendants of the deceased may demand moral damages for mental
anguish for the death of the deceased. The reason for the grant of moral
damages has been explained, thus:
. . . the award of moral damages is aimed at a restoration, within the limits
possible, of the spiritual status quo ante; and therefore, it must be
proportionate to the suffering inflicted. The intensity of the pain experienced
by the relatives of the victim is proportionate to the intensity of affection for
him and bears no relation whatsoever with the wealth or means of the
offender.[19]
Moral damages are emphatically not intended to enrich a plaintiff at the
expense of the defendant. They are awarded to allow the former to obtain
39
While the above provisions of law do not expressly provide for solidary
liability, the same can be inferred from the wordings of the first paragraph of
Article 2180 which states that the obligation imposed by article 2176 is
demandable not only for one's own acts or omissions, but also for those of
persons for whom one is responsible.
Anent the award of temperate damages to the private respondents, we

hold that the appellate court committed no reversible error in awarding the
same to the respondents.
Page
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.

Atty. Opulencia
means, diversion or amusements that will serve to alleviate the moral

suffering he has undergone due to the defendants culpable action and must,
perforce, be proportional to the suffering inflicted. [20]
Truly, the pain of the sudden loss of ones offspring, especially of a son
who was in the prime of his youth, and who holds so much promise waiting
to be fulfilled is indeed a wellspring of intense pain which no parent should
be made to suffer. While it is true that there can be no exact or uniform rule
for measuring the value of a human life and the measure of damages cannot
be arrived at by a precise mathematical calculation, [21] we hold that the Court
of Appeals award of moral damages of P100,000.00 each to the Spouses
Dolor and Spouses Valmocina for the death of their respective sons, Boyet
Dolor and Oscar Valmocina, is in full accord with prevailing jurisprudence. [22]
WHEREFORE, the petition is DENIED. The assailed decision of the

Court of Appeals is AFFIRMED with the MODIFICATION that the grant of
attorneys fees is DELETED for lack of basis.
Costs against petitioners.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Quisumbing, Carpio, and Azcuna,
JJ., concur.
With respect to the award of attorneys fees to respondents, no

sufficient basis was established for the grant thereof.
It is well settled that attorneys fees should not be awarded in the
absence of stipulation except under the instances enumerated in Article
2208 of the Civil Code. As we have held inRizal Surety and Insurance
Company v. Court of Appeals:[23]
Article 2208 of the Civil Code allows attorneys fees to be awarded by a court
when its claimant is compelled to litigate with third persons or to incur
expenses to protect his interest by reason of an unjustified act or omission of
the party from whom it is sought. While judicial discretion is here extant, an
award thereof demands, nevertheless, a factual, legal or equitable
justification. The matter cannot and should not be left to speculation and
conjecture (Mirasol vs. De la Cruz, 84 SCRA 337; Stronghold Insurance
Company, Inc. vs. Court of Appeals, 173 SCRA 619).
In the case at bench, the records do not show enough basis for sustaining
the award for attorneys fees and to adjudge its payment by petitioner. x x x.
Page
In Abrogar v. Intermediate Appellate Court [G.R. No. 67970, January 15,

1988, 157 SCRA 57], the Court had occasion to state that [t]he 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. x x x.[24]
40
Likewise, this Court held in Stronghold Insurance Company, Inc. vs. Court of
Appeals that:

Atty. Opulencia
FEB LEASING AND FINANCE G.R. No. 181398
The Case
CORPORATION (now BPI

LEASING CORPORATION) , Present:
Petitioner,
CARPIO, J., Chairperson,LEONARDO-DE CASTRO,*BRION,
- versus - PEREZ, and SERENO, JJ.
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.
SPOUSES SERGIO P. BAYLON

and MARITESS VILLENA-BAYLON,
The Facts
BG HAULER, INC., and Promulgated:

MANUEL Y. ESTILLOSO,
Respondents. June 29, 2011
x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x
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 insured8 by FGU Insurance Corp.
(FGU Insurance).
Page
CARPIO, J.:
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
41
DECISION

Atty. Opulencia
was brought for treatment to the Chinese General Hospital where she
remained in a coma until her death two days after.9
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.
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
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.
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.
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.
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:
1. Ordering the defendants, jointly and severally, to pay plaintiffs

the following:
Page
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.
42
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:

Atty. Opulencia
a. the amount of P62,000.00 representing actual expenses incurred

by the plaintiffs;
The Ruling of the Court of Appeals
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
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.
f. with costs against the defendants.
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.
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.
43
SO ORDERED.11
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.
Page
2. Ordering the dismissal of defendants counter-claim for lack of

merit and the cross claim of defendant BG Hauler against
defendant FGU Insurance.
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:

Atty. Opulencia
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.
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:
The Courts Ruling
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.
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.
44
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.
Page
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.
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)

Atty. Opulencia
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
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 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
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
45
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 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.
Page
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.

Atty. Opulencia
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
WHEREFORE, we DENY the petition. We AFFIRM the 9 October 2007

Decision and the 18 January 2008 Resolution of the Court of Appeals in CAG.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;
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.
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.
Page
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
46
SO ORDERED.

Atty. Opulencia
SPOUSES TEODORO1 and NANETTE PERENA, Petitioners,

vs.
SPOUSES TERESITA PHILIPPINE NICOLAS and L. ZARATE, NATIONAL
RAILWAYS, and the COURT OF APPEALS Respondents.
DECISION
BERSAMIN, J.:
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 airconditioning 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 crossclaims 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:
47
August 29, 2012
Page
G.R. No. 157917

Atty. Opulencia
(1) That spouses Zarate were the legitimate parents of Aaron John
L. Zarate;
(10) PNR refused to acknowledge any liability for the

vehicular/train collision;
(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;
(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;
(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;
(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;
(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;
(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;
(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;
(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;
48
(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;
Page
(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;

Atty. Opulencia
(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;
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;
(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;
(5) Exemplary damages in the amount of Php1,000,000.00;

(6) Attorneys fees in the amount of Php200,000.00; and
(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.
(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).
The Court a quo erred in:

1. In finding the defendant-appellant Philippine National Railways
jointly and severally liable together with defendant-appellants
49
Ruling of the RTC
PNR assigned the following errors, to wit:5
Page
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.

Atty. Opulencia
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 plaintiffsappellees 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.
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.
The trial court erred in awarding excessive damages and attorneys fees.
On April 4, 2003, the CA denied the Pereas motion for reconsideration. 8
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
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.
50
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
Issues
Page
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.

Atty. Opulencia
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.
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
51
The petition has no merit.
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
Page
Ruling

Atty. Opulencia
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
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.
52
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:
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.
Page
general community or population, from one offering his services only to a

narrow segment of the general population.

Atty. Opulencia
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
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
53
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
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
Page
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.

Atty. Opulencia
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.
2.
Was the indemnity for loss of
Aarons earning capacity proper?
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.
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.
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.
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 find the considerations taken into account by the lower courts to be

reasonable and fully warranted.
Page
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.
54
We reject the Pereas submission.

Atty. Opulencia
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 goodpaying 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.
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.
The plea is unwarranted.
Page
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.
55
3.
Were the amounts of damages excessive?

Transpo Batch 2 Full Cases

Загружено:

Сведения о документе

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Transpo Batch 2 Full Cases

Загружено:

Авторское право:

Доступные форматы

Transpo Batch 2 Cases

SPOUSES DANTE CRUZ and

G.R. No. 186312

- versus SUN HOLIDAYS, INC.,

CARPIO MORALES, J.:

Miguel C. Matute (Matute),[2] a scuba diving instructor and one of the

At the time of Ruelitos death, he was 28 years old and employed as a

Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on

Transpo Batch 2 Cases

transporting of its guests is an integral part of its resort business. They

As petitioners declined respondents offer, they filed the Complaint, as earlier

Transpo Batch 2 Cases

Indeed, respondent is a common carrier. Its ferry services are so

When a passenger dies or is injured in the discharge of a contract

. . . every person that now or hereafter

So understood, the concept of common carrier under

Transpo Batch 2 Cases

Respondents insistence that the incident was caused by a

As for damages representing unearned income, the formula for its

The first factor, i.e., life expectancy, is computed by applying the

Petitioners are entitled to indemnity for the death of Ruelito which is

the province of Mindoro.[22] By the testimony of Dr. Frisco Nilo, supervising

Transpo Batch 2 Cases

Respecting the award of moral damages, since respondent

2. When an obligation, not constituting a loan or

Since the amounts payable by respondent have been determined with

forbearance of money, the interest due should be that

Documentary evidence shows that Ruelito was earning a basic

Transpo Batch 2 Cases

Transpo Batch 2 Cases

A.F. SANCHEZ BROKERAGE INC., petitioners, vs. THE HON. COURT

On July 29, 1992, Mitzi Morales and Ernesto Mendoza, representatives

CARPIO MORALES, J.:

Wyeth-Suaco insured the shipment against all risks with FGU

On July 31, 1992, Ronnie Likas, a representative of Wyeth-Suaco,

On July 8, 1992, Wyeth-Pharma GMBH shipped on board an aircraft of

Upon instructions of Wyeth-Suaco, the cargoes were delivered to

Before this Court on a petition for Certiorari is the appellate courts

Transpo Batch 2 Cases

Wyeth-Suaco later demanded, by letter[29] of August 25, 1992, from

The appellate court thus disposed:

On August 5, 1992, Wyeth-Suaco issued a Notice of Materials

Noting that Wyeth-Suaco adduced evidence that the cargoes were

On August 4, 1992, the Hizon Laboratories Inc. issued a Destruction

Transpo Batch 2 Cases

The petition fails.

Anacleto F. Sanchez, Jr., the Manager and Principal Broker of

Rule 45 is clear that decisions, final orders or resolutions of the Court

The Resolution of the Court of Appeals dated December 8, 2000

As customs broker, we calculate the taxes that has to be paid in

Q: What are the functions of these license brokers, license

Article 1732 does not distinguish between one whose principal

On the merits, respondent FGU Insurance contends that petitioner, as

Art. 1732. Common carriers are persons, corporations, firms or associations

amounting to lack or excess of jurisdiction and does not include correction of

Transpo Batch 2 Cases

In the case at bar, it was established that petitioner received the

While Calicdan testified that he received the purported telephone call of

If the claim of petitioner that some of the cartons were already

The possibility on the other hand that, as found by Hizon Laboratories,

While paragraph No. 4 of Article 1734[55] of the Civil Code exempts a

The 4-page weather data furnished by PAGASA[61] on request of

In an attempt to free itself from responsibility for the damage to the

Transpo Batch 2 Cases