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No. L-68729/ MAR 4 1959/ REYES, JBL, J/ TRANSPO Common Carriers: Nature and
Basis of Liability (NCC 1733) /RLAurellano


Petition to review NTC order

Paz Fores
Irineo Miranda

SUMMARY. Respondent Miranda was a passenger in a jeep operated by

Petitioner Fores. The jeep got involved in an accident, and Miranda was
injured. The CFi awarded moral damages, which Fores contested in the SC.
SC held that moral damages cannot be awarded, because there was no
showing of fraud or bad faith.
DOCTRINE. The liability of common carriers is contractual; therefore,
there is a presumption of liability on the part of the carrier, upon mere
proof of injury to the passenger. They also cannot escape liability by
proving that they exercised due diligence in the selection and supervision
of their employees. In addition, moral damages cannot be awarded in the
absence of fraud or bad faith on the part of the common carrier, unless a
passenger dies (NCC 1763)
Respondent Miranda was one of passengers on a jeepney driven by
Eugenio Luga, owned by petitioner Fores. While the vehicle was
descending the Sta. Mesa bridge at an excessive rate of speed, the driver
lost control, causing it to swerve and to hit the bridge wall.
o Five of the passengers were injured, including the respondent who
suffered a fracture of the upper right humerus.
The driver was charged with serious physical injuries through reckless
imprudence, and upon interposing a plea of guilty was sentenced
Miranda was awarded Php 5k actual damages and attorneys fees, and Php
10k moral damages.
Fores assails the award for damages
o She further contends that she sold the jeep to
1. MAIN ISSUE: WON the award of moral damages is correct NO,
because moral damages are not recoverable in actions
predicated on the breach of contract of carriage, in the absence
of fraud or bad faith on the part of the common carrier
By contrasting the provisions of NCC 2219 1 and 222o2 it immediately
becomes apparent that:

1 NCC 2219. Moral damages may be recovered in the following and analogous
cases:(1) A criminal offense resulting in physical injuries;
(2) Quasi-delicts causing physical injuries; xx

2 NCC 2220. Willful injury to property may be a legal ground for awarding moral
damages if the court should find that, under the circumstances, such damages are
justly due. The same rule applies to breaches of contract where the
defendant acted fraudulently or in bad faith."

In case of breach of contract (including one of transportation) proof of

bad faith or fraud (dolus), i.e., wanton or deliberately injurious
conduct, is essential to justify an award of moral damages; and
That a breach of contract cannot be considered included in the
descriptive term analogous cases used in NCC 2219; not only
because NCC 2220 specifically provides for the damages that are
caused by contractual breach, but because the definition of quasidelict in NCC 21763 of the Code expressly excludes the cases where
there is a preexisting contractual relation between the parties.
The exception to the basic rule of damages now under consideration
is a mishap resulting in the death of a passenger, in which case NCC
17644 makes the common carrier expressly subject to the rule of NCC
22065, that entitles the spouse, descendants and ascendants of the
deceased passenger to demand moral damages for mental anguish by
reason of the death of the deceased. But the exceptional rule of NCC
1764 makes it all the more evident that where the injured passenger
does not die, moral damages are not recoverable unless it is proved that
the carrier was guilty of malice or bad faith.

The mere carelessness of the driver does not per se constitute or

justify an inference of malice or bad faith on the part of the carrier

No other evidence of malice on part of common carrier

The action for breach of contract imposes on the defendant
carrier a presumption of liability upon mere proof of injury to the
passenger that latter is relieved from the duty to establish the fault of
the carrier, or of his employees, and the burden is placed on the carrier
to prove that it was due to an unforeseen event or to force majeure.
Moreover, the carrier, unlike in suits for quasi-delict, may not escape
liability by proving that it has exercised due diligence in the
selection and supervision of its employees
SUB-ISSUE: WON carriers violation of its engagement to safely
transport passengers involves a reach of the passengers
confidence, and therefore should be regarded as breach in bad
faith NO. The theory is untenable because under it, the carrier
is always deemed in bad faith, and it would never be
accountable for simple negligence

3 NCC 2176. Whoever by act or omission causes damage to another, there being
fault or negligence, is obliged to pay for the damage done. Such fault or negligence,
if there is no preexisting contractual relation between the parties, is called a quasidelict and is governed by the provisions of this Chapter."

4 NCC 1764. Damages in cases comprised in this Section shall be awarded in

accordance with Title XVIII of this Book, concerning Damages. Article 2206 shall also
apply to the death of a passenger caused by the breach of contract by a common
5 NCC 2206. The amount of damages for death caused by a crime or quasi-delict
shall be at least three thousand pesos, even though there may have been mitigating
circumstances. xxx

The distinction between fraud, bad faith or malice in the sense of

deliberate or wanton wrong doing and negligence (as mere carelessness)
is too fundamental in our law to be ignored. It is true that negligence
may be occasionally so gross as to amount to malice, but that fact must
be shown in evidence, and a carrier's bad faith is not to be lightly
inferred from a mere finding that the contract was breached through
negligence of the carrier's employees.
2. OTHER ISSUE: WON approval of the Public Service Commission is
necessary for the sale of a public service vehicle even without

conveying the authority to operate the same YES, because of

PSL, Sec. 20. If the transfer is not registered, it is not effective and
binding in so far as the responsibility of the grantee to the public is
CA decision modified. Moral damages deleted. But affirmed in all other