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Republic of the Philippines

Supreme Court
Baguio City

FIRST DIVISION

PHILTRANCO SERVICE ENTERPRISES, INC., Petitioner,

G.R. No. 161909

Present:

CORON , C.J. Chairperson, !"ON R#O-#" C S$RO, -versusB"RS %&N, #"! C S$&!!O, and '&!! R % , (R., JJ. FELIX PARAS AND INLAND TRAILWAYS, INC., AND HON. COURT OF APPEALS, Respondents.

Promulgated:

pril )*, )+,)

x-----------------------------------------------------------------------------------------x

DECISION

BERSAMIN, J.:

&n an action for breach of contract of carriage commenced by a passenger against his common carrier, the plaintiff can reco-er damages from a third-party defendant brought into the suit by the common carrier upon a claim based on tort or quasi-delict. $he liability of the third-party defendant is independent from the liability of the common carrier to the passenger.

Philtranco Ser-ice "nterprises, &nc. .Philtranco/ appeals the affirmance 0ith modifications by the Court of ppeals .C / of the decision of the Regional $rial Court .R$C/ a0arding moral, actual and temperate damages, as 0ell as attorney1s fees and costs of suit, to respondent 2eli3 Paras .Paras/, and temperate damages to respondent &nland $rail0ays, &nc. .&nland/, respecti-ely the plaintiff and the defendant4third-party plaintiff in this action for breach of contract of carriage, upon a finding that the negligence of the petitioner and its dri-er had caused the serious physical in5uries Paras sustained and the material damage &nland1s bus suffered in a -ehicular accident.

A !"#"$" !%

$he antecedent facts, as summari6ed by the C , are as follo0s:

Plaintiff-appellant 7respondent8 2eli3 Paras .Paras for bre-ity/, 0ho hails from Cainta, Ri6al is engaged in the buy and sell of fish products. Sometime on +9 2ebruary ,:9;, on his 0ay home to %anila from Bicol Region, he boarded a bus 0ith Body No. ,+, and Plate No. "'" *+9, o0ned and operated by &nland $rail0ays, &nc. .&nland for bre-ity/ and dri-en by its dri-er Cal-in Coner .Coner for bre-ity/. t appro3imately <:*+ o1cloc= in the morning of +: 2ebruary ,:9;, 0hile the said bus 0as tra-elling along %aharli=a >igh0ay, $iaong, ?ue6on, it 0as bumped at the rear by another bus 0ith Plate No. "'B )*:, o0ned and operated by Philtranco Ser-ice "nterprises, &nc. .Philtranco for bre-ity/. s a result of the strong and -iolent impact, the &nland bus 0as pushed for0ard and smashed into a cargo truc= par=ed along the outer right portion of the high0ay and the shoulder thereof. Conse@uently, the said accident bought considerable damage to the -ehicles in-ol-ed and caused physical in5uries to the passengers and cre0 of the t0o buses, including the death of Coner 0ho 0as the dri-er of the &nland Bus at the time of the incident. Paras 0as not spared from the pernicious effects of the accident. fter an emergency treatment at the San Pablo %edical Center, San Pablo City, !aguna, Paras 0as ta=en to the National Orthopedic >ospital. t the latter hospital, he 0as found and diagnosed by #r. ntonio $anchuling, (r. to be affected 0ith the follo0ing in5uries: a/ contusion4hematomaA b/ dislocation of hip upon fracture of the fibula on the right legA c/ fractured small bone on the right legA and d/ close fracture on the tibial plateau of the left leg. ."3h. B C, p. ,*;, record/ On +D %arch ,:9; and ,* pril ,:9;, Paras under0ent t0o .)/ operations affecting the fractured portions of his body. ."3hs. B -)C and B -<C, pp. ,*: and ,E+ respecti-ely, record/ Fnable to obtain sufficient financial assistance from &nland for the costs of his operations, hospitali6ation, doctors1 fees and other miscellaneous e3penses, on <, (uly ,:9:, Paras filed a complaint for damages based on breach of contract of carriage against &nland. &n its ans0er, defendant &nland denied responsibility, by alleging, among others, that its dri-er Coner had obser-ed an utmost and e3traordinary care and diligence to ensure the safety of its passengers. &n support of its disclaimer of responsibility, &nland in-o=ed the Police &n-estigation Report 0hich established the fact that the Philtranco bus dri-er of 7sic8 polinar %iralles 0as the one 0hich -iolently bumped the rear portion of the &nland bus, and therefore, the direct and pro3imate cause of Paras1 in5uries.

On +) %arch ,::+, upon lea-e of court, &nland filed a third-party complaint against Philtranco and polinar %iralles .$hird Party defendants/. &n this third-party complaint, &nland, sought for e3oneration of its liabilities to Paras, asserting that the latter1s cause of action should be directed against Philtranco considering that the accident 0as caused by %iralles1 lac= of care, negligence and rec=less imprudence. .pp. *+ to *E, records/.

fter trial, the R$C .Branch ;,/ in ntipolo, Ri6al rendered its 5udgment on (uly ,9, ,::;,,7,8 viz:

G>"R"2OR", third-party defendant Philtranco and polinar %iralles are hereby ordered to pay plaintiff 5ointly and se-erally, the follo0ing amounts: ,.P*D,+++.++ as actual damagesA ).P*+,+++.++ as moral damagesA

<.P)+,+++.++ as attorney1s fees and costs. SO OR#"R"#.

ll the parties appealed to the C on different grounds.

On his part, Paras ascribed the follo0ing errors to the R$C, to 0it:

,. $>" $R& ! COFR$ "RR"# &N >O!#&NH $> $ ON!I $>&R#P R$I #"2"N# N$- PP"!! N$ P>&!$R NCO &S !& B!" 2OR $>" # % H"S SF22"R"# BI PP"!! N$ P R S.

,7,8

Rollo, pp. EE-;+.

&&. $>" $R& ! COFR$ "RR"# &N NO$ >O!#&NH PP"!! N$ &N! N# $R &!G IS &NC. $O B" (O&N$!I N# S"'"R !!I !& B!" 2OR $>" # % H"S SF22"R"# BI P R S. &&&. $>" $R& ! COFR$ "RR"# &N NO$ G R#&NH FN" RN"# &NCO%" S ##&$&ON ! C$F ! # % H"S SF22"R"# BI PP"!! N$ P R S S >&S P>IS&C ! #&S B&!&$I &S P"R% N"N$ &N N $FR". &'. $>" $R& ! COFR$ "RR"# &N NO$ G R#&NH "J"%P! RI # % H"S &N 2 'OR O2 PP"!! N$ P R S.

On the other hand, &nland assigned the follo0ing errors to the R$C, namely:
$>" $R& ! COFR$ "RR"# G>"N &$ 2 &!"# $O G R# # % H"S FN$O $>" $>&R# P R$I P! &N$&22 NO$G&$>S$ N#&NH C!" R 2&N#&NH $> $: It is clear from the evidence that the plaintiff sustained injuries because of the rec less, ne!li!ence, and lac of precaution of third part" defendant #polinar $iralles, an emplo"ee of %hiltranco.& N#, CO%P!"$"!I #&SR"H R#"# $>" FNCON$RO'"R$"# OR ! N# #OCF%"N$ RI "'&#"NC"S "S$ B!&S>&NH $>" "J$"N$ N# #"HR"" O2 # % H"S SFS$ &N"# BI $>" $>&R# P R$I P! &N$&22.

!astly, Philtranco stated that the R$C erred thus0ise:

& $>" COFR$ ?FO %&S"R B!I "RR"# &N G R#&NH C$F ! # % H"S HR" $"R $> N G> $ G S !!"H"# &N $>" CO%P! &N$ &$S"!2, N# "'"N %FC> %OR" HR" $"R $> N G> $ G"R" PRO'"# #FR&NH $>" $R& !, >"NC", P"RP"$F $&NH FN(FS$ "NR&C>%"N$.

&&

$>" COFR$ ?FO S"R&OFS!I "RR"# &N G R#&NH %OR ! # % H"S $O C FS" O2 C$&ON O2 CF!P -CON$R C$F ! "'"N G&$>OF$ NI "'&#"NC" O2 HROSS B # 2 &$>A >"NC", CON$R RI $O $>" "S$ B!&S>"# #OC$R&N" &N $>" C S"S O2 P>&!. R BB&$ BFS !&N"S 'S. "SHF"RR A SOB"R NO 'S. B"NHF"$ F$O !&N" N# 2!OR"S 'S. %&R N# .

&&& $>" COFR$ ?FO %&S"R B!I "RR"# &N >O!#&NH $> $ %&R !!"S G S $>" ON" $ 2 F!$ %"R"!I ON $>" S$R"NH>$ O2 $>" $"S$&%ONI O2 $>" PO!&C" &N'"S$&H $OR G>&C> &S &N $FRN B S"# ON $>" S$ $"%"N$S O2 !!"H"# G&$N"SS"S G>O G"R" N"'"R PR"S"N$"# ON $>" G&$N"SS S$ N#.

&' $>" COFR$ ?FO CO%%&$$"# HR&"'OFS "RROR &N #&SR"H R#&NH $>" $"S$&%ONI O2 PP"!! N$S1 G&$N"SS"S G>O $"S$&2&"# S $O $>" #"2"NS" O2 "J"RC&S" O2 #F" #&!&H"NC" &N $>" S"!"C$&ON N# SFP"R'&S&ON O2 "%P!OI""S PFRSF N$ $O R$. ),9+, ! S$ P R HR P>, N"G C&'&! CO#".

On September )*, )++), the C promulgated its decision,)7)8 disposing:

G>"R"2OR", in consideration of the foregoing premises, the assailed decision dated ,9 (uly ,:.:/; is perforce affirmed 0ith the follo0ing modifications: ,. $hird party defendants-appellants Philtranco and polinar %iralles are ordered to pay plaintiff-appellant 2eli3 Paras 5ointly and se-erally the follo0ing amounts:

)7)8 C rollo, pp. ,,*-,<)A penned by ssociate (ustice Bien-enido !. Reyes .no0 a %ember of the Court/, 0ith ssociate (ustice >ilarion !. @uino .retired/ and ssociate (ustice %ario !. HuariKa &&& .retired/ concurring.

a/ b/ c/ d/

P,,<:;.:* as actual damagesA P*+,+++.++ as temperate damagesA P*+,+++.++ as moral damagesA and P)+,+++.++ as attorney1s fees and costs of suit.

). On the third party plaintiff-appellant &nland1s claims, the third party defendant-appellants Philtranco and polinar %iralles are hereby ordered to pay the former .&nland/ 5ointly and se-erally the amount of P)*+,+++.++ as and by 0ay of temperate damages. SO OR#"R"#.

$he C

agreed 0ith the R$C1s finding that no trace of negligence at the

time of the accident 0as attributable to &nland1s dri-er, rendering &nland not guilty of breach of contract of carriageA that faulty bra=es had caused Philtranco1s bus to forcefully bump &nland1s bus from behind, ma=ing it hit the rear portion of a par=ed cargo truc=A that the impact had resulted in considerable material damage to the three -ehiclesA and that Paras and others had sustained -arious physical in5uries.

ccordingly, the C : .a/ sustained the a0ard of moral damages of P*+,+++.++ in fa-or of Paras pursuant to rticle )),: of the Civil Code based on quasi-delict committed by Philtranco and its dri-erA . b/ reduced the actual damages to be paid by Philtranco to Paras from P*D,+++.++ to P,,<:;.:* because only the latter amount had been duly supported by receiptsA .c/ granted temperate damages of P*+,+++.++ .in lieu of actual damages in -ie0 of the absence of competent proof of actual damages for his hospitali6ation and therapy/ to be paid by Philtranco to

ParasA and .d/ a0arded temperate damages of P)*+,+++.++ under the same premise to be paid by Philtranco to &nland for the material damage caused to &nland1s bus.

Philtranco mo-ed for reconsideration,<7<8 but the C reconsideration on (anuary ),, )++D.D7D8

denied its motion for

I%%&"%

>ence, this appeal, in 0hich the petitioner submits that the C

committed

gra-e abuse of discretion amounting to lac= of 5urisdiction in a0arding moral damages to Paras despite the fact that the complaint had been anchored on breach of contract of carriageA and that the C committed a re-ersible error in substituting its o0n 5udgment by motu proprio a0arding temperate damages of P)*+,+++.++ to &nland and P*+,+++.++ to Paras despite the clear fact that temperate damages 0ere not raised on appeal by Paras and &nland.

R&'( )

$he appeal lac=s merit.


<7<8 D7D8 C rollo, pp. ,<<-,D<. Id., pp. ,):-,<,.

$he Court does not disturb the unanimous findings by the C in5uries of Paras and the material damage of &nland.

and the R$C

on the negligence of Philtranco and its dri-er being the direct cause of the physical

Nonetheless, 0e feel bound to pass upon the disparate results the C and the R$C reached on the liabilities of Philtranco and its dri-er.

1. P*+*% #* +"#o,"+ -o+*' $*-*)"% ( !.(% %&(! /*%"$ o quasi0$"'(#!

Philtranco contends that Paras could not reco-er moral damages because his suit 0as based on breach of contract of carriage, pursuant to 0hich moral damages could be reco-ered only if he had died, or if the common carrier had been guilty of fraud or bad faith. &t argues that Paras had suffered only physical in5uriesA that he had not adduced e-idence of fraud or bad faith on the part of the common carrierA and that, conse@uently, Paras could not reco-er moral damages directly from it .Philtranco/, considering that it 0as only being subrogated for &nland.

$he Court cannot uphold the petitioner1s contention.

s a general rule, indeed, moral damages are not reco-erable in an action predicated on a breach of contract. $his is because such action is not included in rticle )),: of the Civil Code*7*8 as one of the actions in 0hich moral damages may be reco-ered. By 0ay of e3ception, moral damages are reco-erable in an action predicated on a breach of contract: . a/ 0here the mishap results in the death of a passenger, as pro-ided in
5[5]

rticle ,;ED, E7E8 in relation to

rticle ))+E, .</,;7;8

Article 2219. Moral damages may be recovered in the following and analogous cases: 1! A criminal offense resulting in "hysical in#uries$ 2! %uasi&delicts causing "hysical in#uries$ '! (eduction) abduction) ra"e) or other lascivious acts$ *! Adultery or concubinage$ 5! +llegal or arbitrary detention or arrest$ ,! +llegal search$ -! .ibel) slander or any other form of defamation$ /! Malicious "rosecution$ 9! Acts mentioned in article '09$

10! Acts and actions referred to in articles 21) 2,) 2-) 2/) 29) '0) '2) '*) and '5. 1he "arents of the female seduced) abducted) ra"ed) or abused) referred to in 2o. ' of this article) may also recover moral damages. 1he s"ouse) descendants) ascendants) and brothers and sisters may bring the action mentioned in 2o. 9 of this article) in the order named.

E7E8 rticle ,;ED. #amages in cases comprised in this Section shall be a0arded in accordance 0ith $itle J'&&& of this Boo=, concerning #amages. rticle ))+E shall also apply to the death of a passenger caused by the breach of contract by a common carrier.
-[-]
Article 220,. 1he amount of damages for death caused by a crime or 3uasi&delict shall be at least three thousand "esos) even though there may have been mitigating circumstances. +n addition: 1! 1he defendant shall be liable for the loss of the earning ca"acity of the deceased) and the indemnity shall be "aid to the heirs of the latter$ such indemnity shall in every case be assessed and

of the Civil CodeA and .b/ 0here the common carrier has been guilty of fraud or bad faith,9798 as pro-ided in rticle )))+:7:8 of the Civil Code. lthough this action does not fall under either of the e3ceptions, the a0ard of moral damages to Paras 0as nonetheless proper and -alid. $here is no @uestion that &nland filed its third-party complaint against Philtranco and its dri-er in order to establish in this action that the", instead of Inland, should be directl" liable to %aras for the ph"sical injuries he had sustained because of their ne!li!ence . $o be precise, Philtranco and its dri-er 0ere brought into the action on the theory of liability that the pro3imate cause of the collision bet0een &nland1s bus and Philtranco1s bus had been Bthe negligent, rec=less and imprudent manner defendant polinar %iralles dro-e and operated his dri-en unit, the Philtranco Bus 0ith Plate No. )*:, o0ned and operated by third-party defendant Philtranco Ser-ice "nterprises, &nc.C,+7,+8 $he apparent ob5ecti-e of &nland 0as not to merely subrogate the third-party defendants for itself, as Philtranco appears to suggest, ,,

awarded by the court) unless the deceased on account of "ermanent "hysical disability not caused by the defendant) had no earning ca"acity at the time of his death$ 2! +f the deceased was obliged to give su""ort according to the "rovisions of article 291) the reci"ient who is not an heir called to the decedent4s inheritance by the law of testate or intestate succession) may demand su""ort from the "erson causing the death) for a "eriod not e5ceeding five years) the e5act duration to be fi5ed by the court$ '! 1he s"ouse) legitimate and illegitimate descendants and ascendants of the deceased may demand moral damages for mental anguish by reason of the death of the deceased.

9798
9[9]

Japan #irlines v. 'iman!an, H.R. No. ,;+,D,, pril )), )++9, **) SCR <D,, <E,.

Article 2220. 6illful in#ury to "ro"erty may be a legal ground for awarding moral damages if the court should find that) under the circumstances) such damages are #ustly due. 1he same rule a""lies to breaches of contract where the defendant acted fraudulently or in bad faith.

,+7,+8 ,,7,,8

Rollo, p. *;. Id., p. ,<.

7,,8 but, rather, to obtain a different relief 0hereby the third-party defendants

0ould be held directly, fully and solely liable to Paras and &nland for (hatever dama!es each had suffered from the negligence committed by Philtranco and its dri-er. &n other 0ords, Philtranco and its dri-er 0ere charged here as 5oint tortfeasors 0ho 0ould be 5ointly and se-erally be liable to Paras and &nland.

&mpleading Philtranco and its dri-er through the third-party complaint filed on %arch ), ,::+ 0as correct. $he de-ice of the third-party action, also =no0n as impleader, 0as in accord 0ith Section ,), Rule E of the Revised Rules of Court, the rule then applicable, viz:

Section ,). )hird-part" complaint. L third-party complaint is a claim that a defending party may, 0ith lea-e of court, file against a person not a party to the action, called the third-party defendant, for contribution, indemnity, subrogation or any other relief, in respect of his opponent1s claim.,)7,)8

"3plaining the application of Section ,), Rule E, supra, the Court said in *albastro v. Court of #ppeals,,<7,<8 to 0it:

,)7,)8 $he rule, as re-ised in ,::;, presently pro-ides: Section ,,. )hird, +fourth, etc.,-part" complaint. M third .fourth, etc./-party complaint is a claim that a defending party may, 0ith lea-e of court, file against a person not a party to the action, called the third .fourth, etc./-party defendant, for contribution, indemnity, subrogation or any other relief, in respect of his opponentNs claim. .,)a/ ,<7,<8 No. <<)**, No-ember ):, ,:;), D9 SCR )<, .bold emphasis supplied/

Section ,) of Rule E of the Re-ised Rules of Court authori6es a defendant to bring into a la0suit any person Bnot a party to the action . . . for contribution, indemnity, subrogation or any other relief in respect of his opponentNs claim.C 2rom its e3plicit language it does not compel the defendant to bring the thirdparties into the litigation, rather it simply permits the inclusion of anyone 0ho meets the standard set forth in the rule. $he secondary or deri-ati-e liability of the third-party is central M 0hether the basis is indemnity, subrogation, contribution, e3press or implied 0arranty or some other theory. T." (-1'"*$"+ o2 "3 1*+!("% & $"+ !.(% +&'" (% 1+o1"+ o '4 3." * +().! !o +"'("2 "5(%!% & $"+ !." *11'(#*/'" %&/%!* !(," '*3. T.(% +&'" (% -"+"'4 * 1+o#"$&+*' -"#.* (%-, * $ #* o! /" &!('(6"$ & '"%% !."+" (% %o-" %&/%!* !(," /*%(% & $"+ *11'(#*/'" '*3. A1*+! 2+o- !." +"7&(+"-" ! !.*! !." !.(+$01*+!4 #o-1'*( * ! %.o&'$ *%%"+! * $"+(,*!(," o+ %"#o $*+4 #'*(- 2o+ +"'("2 2+o- !." !.(+$01*+!4 $"2" $* ! !."+" *+" o!."+ '(-(!*!(o % o %*($ 1*+!48% */('(!4 !o (-1'"*$. T." +&'" +"7&(+"% !.*! !." !.(+$01*+!4 $"2" $* ! (% 9 o! * 1*+!4 !o !." *#!(o : 2o+ o!."+3(%" !." 1+o1"+ 1+o#"$&+" 2o+ *%%"+!( ) * #'*(- *)*( %! o " 3.o (% *'+"*$4 * 1*+!4 !o !." %&(! (% /4 -"* % o2 #o& !"+#'*(- o+ #+o%%0#'*(- & $"+ %"#!(o % 6 * $ ; o2 R&'" 6. I *$$(!(o !o !." *2o+"#(!"$ +"7&(+"-" !, !." #'*(- *)*( %! !." !.(+$01*+!4 $"2" $* ! -&%! /" /*%"$ &1o 1'*( !(22<% #'*(*)*( %! !." o+()( *' $"2" $* ! =!.(+$01*+!4 #'*(-* !>. T." #+&#(*' #.*+*#!"+(%!(# o2 * #'*(- & $"+ %"#!(o 1? o2 R&'" 6, (% !.*! !." o+()( *' 9$"2" $* ! (% *!!"-1!( ) !o !+* %2"+ !o !." !.(+$01*+!4 $"2" $* ! !." '(*/('(!4 *%%"+!"$ *)*( %! .(- /4 !." o+()( *' 1'*( !(22.:

ccordingly, the re@uisites for a third-party action are, firstl", that the party to be impleaded must not yet be a party to the actionA secondl", that the claim against the third-party defendant must belong to the original defendantA thirdl", the claim of the original defendant against the third-party defendant must be based upon the plaintiff1s claim against the original defendantA and, fourthl", the defendant is attempting to transfer to the third-party defendant the liability asserted against him by the original plaintiff.,D7,D8

,D7,D8 Id., pp. )<E-)<;.

s the foregoing indicates, the claim that the third-party complaint asserts against the third-party defendant must be predicated on substanti-e la0. >ere, the substanti-e la0 on 0hich the right of &nland to see= such other relief through its third-party complaint rested 0ere 0hich read: rticle ),;E and rticle ),9+ of the Civil Code,

rticle ),;E. Ghoe-er 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-e3isting contractual relation bet0een the parties, is called a @uasi-delict and is go-erned by the pro-isions of this chapter. .,:+)a/ rticle ),9+. $he obligation imposed by article ),;E is demandable not only for one1s o0n acts or omissions, but also for those of persons for 0hom one is responsible. 333 "mployers shall be liable for the damages caused by their employees and household helpers acting 0ithin the scope of their assigned tas=s, e-en though the former are not engaged in any business or industry. 333 $he responsibility treated of in this article shall cease 0hen the persons herein mentioned pro-e that they obser-ed all the diligence of a good father of a family to pre-ent damage. .,:+<a/

Paras1 cause of action against &nland .breach of contract of carriage/ did not need to be the same as the cause of action of &nland against Philtranco and its dri-er .tort or quasi-delict/ in the impleader. &t is settled that a defendant in a contract action may 5oin as third-party defendants those 0ho may be liable to him in tort for the plaintiff1s claim against him, or e-en directly to the plaintiff. ,*7,*8 &ndeed, Prof. Gright, et al., commenting on the pro-ision of the -ederal Rules of

,*7,*8 .iluan v. Court of #ppeals, Nos. !-),D;;-9,, pril ):, ,:EE, ,E SCR 'amala v. Jud!e .ictor, H.R. No. !-*<:E:, 2ebruary ),, ,:9:, ,;+ SCR D*<, DE+.

;D)A

%rocedure of the Fnited States from 0hich Section ,), supra, 0as deri-ed, obser-ed so, to 0it:,E7,E8

$he third-party claim need not be based on the same theory as the main claim. 2or e3ample, there are cases in 0hich the third-party claim is based on an e3press indemnity contract and the original complaint is framed in terms of negligence. Similarly, there need not be any legal relationship bet0een the thirdparty defendant and any of the other parties to the action. &mpleader also is proper e-en though the third party1s liability is contingent, and technically does not come into e3istence until the original defendant1s liability has been established. &n addition, the 0ords Ois or may be liable1 in Rule ,D.a/ ma=e it clear that impleader is proper e-en though the third-party defendant1s liability is not automatically established once the third-party plaintiff1s liability to the original plaintiff has been determined.

Nor 0as it a pre-re@uisite for attachment of the liability to Philtranco and its dri-er that &nland be first declared and found liable to Paras for the breach of its contract of carriage 0ith him.,;7,;8 s the Court has cogently discoursed in 'amala v. Jud!e .ictor:,97,98

ppellants argue that since plaintiffs filed a complaint for damages against the defendants on a breach of contract of carriage, they cannot reco-er from the third-party defendants on a cause of action based on @uasi-delict. $he third party defendants, they allege, are ne-er parties liable 0ith respect to plaintiff s claim although they are 0ith respect to the defendants for indemnification, subrogation, contribution or other reliefs. Conse@uently, they are not directly liable to the ,E7,E8 Gright, %iller P Qane, -ederal %ractice and %rocedure, 'ol. E, R,DDE, ,::+ "dition, pp. <;)-<;<. ,;7,;8 .iluan v. Court of #ppeals, supra, note ,*. ,97,98 'amala v. Jud!e .ictor, supra, note ,*.

plaintiffs. $heir liability commences only 0hen the defendants are ad5udged liable and not 0hen they are absol-ed from liability as in the case at bar. ?uite apparent from these arguments is the misconception entertained by appellants 0ith respect to the nature and office of a third party complaint. Section ,E, Rule E of the Re-ised Rules of Court defines a third party complaint as a Bclaim that a defending party may, 0ith lea-e of court, file against a person not a party to the action, called the third-party defendant, for contribution, indemnification, subrogation, or any other relief, in respect of his opponent1s claim.C &n the case of .iluan vs. Court of #ppeals, et al., ,E SCR ;D) 7,:EE8, this Court had occasion to elucidate on the sub5ects co-ered by this Rule, thus: ... s e3plained in the tlantic Coast !ine R. Co. -s. F.S. 2idelity P Huaranty Co., *) 2. Supp. ,;; .,:D<:/ O2rom the sources of Rule ,D and the decisions herein cited, it is clear that this rule, li=e the admiralty rule, Oco-ers t0o distinct sub5ects, the addition of parties defendant to the main cause of action, and the bringing in of a third party for a defendant1s remedy o-er1. 333 @I2 !." !.(+$ 1*+!4 #o-1'*( ! *''")"% 2*#!% %.o3( ) * !.(+$ 1*+!48% $(+"#! '(*/('(!4 !o 1'*( !(22 o !." #'*(- %"! o&! ( 1'*( !(228% 1"!(!(o , !." !.(+$ 1*+!4 @%.*''8 -*A" .(% $"2" %"% *% 1+o,($"$ ( R&'" 1? * $ .(% #o& !"+#'*(-% *)*( %! 1'*( !(22 *% 1+o,($"$ ( R&'" 1B. I !." #*%" o2 *''")"$ $(+"#! '(*/('(!4, o *-" $-" ! =!o !." #o-1'*( !> (% "#"%%*+4 o+ +"7&(+"$. T." %&/C"#!0-*!!"+ o2 !." #'*(- (% #o !*( "$ ( 1'*( !(22<% #o-1'*( !, !." )+o& $ o2 !.(+$ 1*+!48% '(*/('(!4 o !.*! #'*(- (% *''")"$ ( !.(+$ 1*+!4 #o-1'*( !, * $ !.(+$ 1*+!48% $"2" %" !o %"! &1 ( .(% * %3"+ !o 1'*( !(22<% #o-1'*( !. A! !.*! 1o( ! * $ 3(!.o&! *-" $-" !, !." 1'*( !(22 * $ !.(+$ 1*+!4 *+" *! (%%&" *% !o !."(+ +().!% +"%1"#!( ) !." #'*(-. $he pro-ision in the rule that, O$he third-party defendant may assert any defense 0hich the third-party plaintiff may assert to the plaintiffs claim,1 applies to the other sub5ect, namely, the alleged liability of third party defendant. $he ne3t sentence in the rule, O$he third-party defendant is bound by the ad5udication of the third party plaintiffs liability to the plaintiff, as 0ell as of his o0n to the plaintiff or to the third-party plaintiff applies to both sub5ects. &f third party is brought in as liable only to defendant and 5udgment is rendered ad5udicating plaintiffNs right to reco-er against defendant and defendant1s rights to reco-er against third party, he is bound

by both ad5udications.$hat part of the sentence refers to the second sub5ect. &f third party is brought in as liable to plaintiff, then third party is bound by the ad5udication as bet0een him and plaintiff. $hat refers to the first sub5ect. &f third party is brought in as liable to plaintiff and also o-er to defendant, then third party is bound by both ad5udications. 333 Fnder this Rule, a person not a party to an action may be impleaded by the defendant either .a/ on an allegation of liability to the latterA .b/ on the ground of direct liability to the plaintiff-A or, .c/ both .a/ and .b/. $he situation in .a/ is co-ered by the phrase Bfor contribution, indemnity or subrogationAC 0hile .b/ and .c/ are subsumed under the catch all Bor any other relief, in respect of his opponent1s claim.C T." #*%" *! /*+ (% o " ( 3.(#. !." !.(+$ 1*+!4 $"2" $* !% *+" /+o&).! ( !o !." *#!(o *% $(+"#!'4 '(*/'" !o !." 1'*( !(22% &1o !." *''")*!(o !.*! 9!." 1+(-*+4 * $ (--"$(*!" #*&%" *% %.o3 /4 !." 1o'(#" ( ,"%!()*!(o o2 %*($ ,".(#&'*+ #o''(%(o /"!3"" =%(#> !." */o,"0-" !(o "$ !.+"" ,".(#'"% 3*% !." +"#A'"%% "%% * $ ")'()" #" * $ '*#A o2 (-1+&$" #" =%(#> o2 !." !.(+$01*+!4 $"2" $* ! V(+)('(o =%.o&'$ /" L"o *+$o> E%)&"++* 4 L"$"%-* !." $+(,"+ o2 !." 1*%%" )"+ /&%.: T." "22"#!% *+" !.*! 91'*( !(22 * $ !.(+$ 1*+!4 *+" *! (%%&" *% !o !."(+ +().!% +"%1"#!( ) !." #'*(-: * $ 9!." !.(+$ 1*+!4 (% /o& $ /4 !." *$C&$(#*!(o *% /"!3"" .(- * $ 1'*( !(22.: I! (% o! ( $(%1" %*/'" ( !." 1+"-(%"% !.*! !." $"2" $* ! /" 2(+%! *$C&$)"$ '(*/'" !o 1'*( !(22 /"2o+" !." !.(+$01*+!4 $"2" $* ! -*4 /" ."'$ '(*/'" !o !." 1'*( !(22, *% 1+"#(%"'4, !." !."o+4 o2 $"2" $* ! (% !.*! (! (% !." !.(+$ 1*+!4 $"2" $* !, * $ o! .", 3.o (% directly liable !o 1'*( !(22. T." %(!&*!(o #o !"-1'*!"$ /4 *11"''* !% 3o&'$ 1+o1"+'4 1"+!*( !o %(!&*!(o =*> */o," 3."+"( !." !.(+$ 1*+!4 $"2" $* ! (% /"( ) %&"$ 2o+ #o !+(/&!(o , ( $"- (!4 o+ %&/+o)*!(o , o+ %(-1'4 %!*!"$, 2o+ * $"2" $* !<% 9+"-"$4 o,"+:.,:7,:8

&t is 0orth adding that allo0ing the reco-ery of damages by Paras based on quasi-delict, despite his complaint being upon contractual breach, ser-ed the 5udicial policy of a-oiding multiplicity of suits and circuity of actions by disposing of the entire sub5ect matter in a single litigation.)+7)+8

,:7,:8 )+7)+8

Id., at pp. D*9-DE+ .bold underscoring supplied for emphasis/. Id., at p. DE+.

?. A3*+$ o2 !"-1"+*!" $*-*)"% 3*% ( o+$"+

Philtranco assails the a0ard of temperate damages by the C respecti-e appealsA secondl", the C

considering

that, firstl", Paras and &nland had not raised the matter in the trial court and in their could not substitute the temperate damages granted to Paras if Paras could not properly establish his actual damages despite e-idence of his actual e3penses being easily a-ailable to himA and, thirdl", the C gra-ely abused its discretion in granting motu proprio the temperate damages of P)*+,+++.++ to &nland although &nland had not claimed temperate damages in its pleading or during trial and e-en on appeal.

$he Court cannot side 0ith Philtranco.

ctual damages, to be reco-erable, must not only be capable of proof, but must actually be pro-ed 0ith a reasonable degree of certainty. $he reason is that the court Bcannot simply rely on speculation, con5ecture or guess0or= in determining the fact and amount of damages,C but Bthere must be competent proof of the actual amount of loss, credence can be gi-en only to claims 0hich are duly supported by receipts.C),7),8

),7),8 .iron )ransportation Co., Inc. v. /elos 'antos, H..R. No. ,<9):E, No-ember )), )+++, <D* SCR *+:, *,:.

$he receipts formally submitted and offered by Paras 0ere limited to the costs of medicines purchased on -arious times in the period from 2ebruary ,:9; to (uly ,:9: ."3hibits " to "-<*, inclusi-e/ totaling only P,,<:;.:*.))7))8 $he receipts by no means included hospital and medical e3penses, or the costs of at least t0o surgeries as 0ell as rehabilitati-e therapy. Conse@uently, the C fi3ed actual damages only at that small sum of P,,<:;.:*. On its part, &nland offered no definite proof on the repairs done on its -ehicle, or the e3tent of the material damage e3cept the testimony of its 0itness, "merlinda %ara-illa, to the effect that the bus had been damaged beyond economic repair. )<7)<8 $he C re5ected &nland1s sho0ing of unreali6ed income 0orth P<,:D*,9*9.*+ for <+ months .based on alleged avera!e (ee l" income of P)<:,,D<.+) multiplied by its !uaranteed revenue amounting to **S thereof, then spread o-er a period of <+ months, the e@ui-alent to the remaining D+S of the -ehicle1s un-depreciated or net boo= -alue/, finding such sho0ing arbitrary, uncertain and speculati-e.)D7)D8 the C allo0ed no compensation to &nland for unreali6ed income. s a result,

Nonetheless, the C

0as con-inced that Paras should not suffer from the

lac= of definite proof of his actual e3penses for the surgeries and rehabilitati-e therapyA and that &nland should not be depri-ed of recourse to reco-er its loss of the economic -alue of its damaged -ehicle. s the records indicated, Paras 0as first rushed for emergency treatment to the San Pablo %edical Center in San Pablo City, !aguna, and 0as later brought to the National Orthopedic >ospital in ?ue6on
))7))8 Records, pp. ,;E-,9*.

)<7)<8 Rollo, p. <*. )D7)D8 Id., p. <E.

City 0here he 0as diagnosed to ha-e suffered a dislocated hip, fracture of the fibula on the right leg, fracture of the small bone of the right leg, and closed fracture on the tibial plateau of the left leg. >e under0ent surgeries on %arch D, ,:9; and pril ,*, ,:9; to repair the fractures. )*7)*8 $hus, the C a0arded to him temperate damages of P*+,+++.++ in the absence of definite proof of his actual e3penses to0ards that end. loss, for 0hich the C s to &nland, %ara-illa1s testimony of the bus ha-ing been damaged beyond economic repair sho0ed a definitely substantial pecuniary fi3ed temperate damages of P)*+,+++.++. Ge cannot disturb the C 1s determination, for 0e are in no position today to 5udge its reasonableness on account of the lapse of a long time from 0hen the accident occurred.)E7)E8

&n a0arding temperate damages in lieu of actual damages, the C pecuniary losses. &t 0ould really be a tra-esty of 5ustice 0ere the C

did not

err, because Paras and &nland 0ere definitely sho0n to ha-e sustained substantial no0 to be held bereft of the discretion to calculate moderate or temperate damages, and thereby lea-e Paras and &nland 0ithout redress from the 0rongful act of Philtranco and its dri-er.);7);8 Ge are satisfied that the C e3erted effort and practiced great care to ensure that the causal lin= bet0een the physical in5uries of Paras and the material loss of &nland, on the one hand, and the negligence of Philtranco and its dri-er, on the other hand, e3isted in fact. &t also re5ected arbitrary or speculati-e
)*7)*8 $SN, October ,9, ,::,, pp. ,,-,). )E7)E8 $he Civil Code states: rticle )))*. $emperate damages must be reasonable under the circumstances. );7);8 0overnment 'ervice Insurance '"stem v. 1abun!-/ean!, H.R. No. ,<*EDD, September ,;, )++,, <E* SCR <D,, <*+.

proof of loss. Clearly, the costs of Paras1 surgeries and conse@uential rehabilitation, as 0ell as the fact that repairing &nland1s -ehicle 0ould no longer be economical 5ustly 0arranted the C to calculate temperate damages of P*+,+++.++ and P)*+,+++.++ respecti-ely for Paras and &nland.

$here is no @uestion that rticle )))D of the Civil Code e3pressly authori6es the courts to a0ard temperate damages despite the lac= of certain proof of actual damages, to 0it:

rticle )))D. $emperate or moderate damages, 0hich are more than nominal but less than compensatory damages, may be reco-ered 0hen the court finds that some pecuniary loss has been suffered but its amount cannot, from the nature of the case, be pro-ed 0ith certainty.

$he rationale for

rticle )))D has been stated in %remiere /evelopment *an v.

Court of #ppeals)97)98 in the follo0ing manner:

"-en if not reco-erable as compensatory damages, Panacor may still be a0arded damages in the concept of temperate or moderate damages. Ghen the court finds that some pecuniary loss has been suffered but the amount cannot, from the nature of the case, be pro-ed 0ith certainty, temperate damages may be reco-ered. $emperate damages may be allo0ed in cases 0here from the nature of the case, definite proof of pecuniary loss cannot be adduced, although the court is con-inced that the aggrie-ed party suffered some pecuniary loss. $he Code Commission, in e3plaining the concept of temperate damages under rticle )))D, ma=es the follo0ing comment:

)97)98 H.R. No. ,*:<*), pril ,D, )++D, D); SCR E9E, E::.

&n some States of the merican Fnion, temperate damages are allo0ed. $here are cases 0here from the nature of the case, definite proof of pecuniary loss cannot be offered, although the court is con-inced that there has been such loss. 2or instance, in5ury to one1s commercial credit or to the good0ill of a business firm is often hard to sho0 0ith certainty in terms of money. Should damages be denied for that reasonT $he 5udge should be empo0ered to calculate moderate damages in such cases, rather than that the plaintiff should suffer, 0ithout redress from the defendant1s 0rongful act.

B. P*+*%8 'o%% o2 "*+ ( ) #*1*#(!4 -&%! /" #o-1" %*!"$

&n the body of its decision, the C concluded that considering that Paras had a minimum monthly income of P9,+++.++ as a trader he 0as entitled to reco-er compensation for unearned income during the <-month period of his hospital confinement and the E-month period of his reco-ery and rehabilitationA and aggregated his unearned income for those periods to P;),+++.++.):7):8 Iet, the C omitted the unearned income from the dispositi-e portion.

$he omission should be rectified, for there 0as credible proof of Paras1 loss of income during his disability. ccording to rticle ))+*, .,/, of the Civil Code, damages may be reco-ered for loss or impairment of earning capacity in cases of temporary or permanent personal in5ury. &ndeed, indemnification for damages comprehends not only the loss suffered .actual damages or damnum emer!ens/ but
):7):8 Rollo, pp. <D-<*.

also the claimant1s lost profits .compensatory damages or lucrum cessans/.<+7<+8 "-en so, the formula that has gained acceptance o-er time has limited reco-ery to net earnin! capacit"A hence, the entire amount of P;),+++.++ is not allo0able. $he premise is ob-iously that net earning capacity is the person1s capacity to ac@uire money, less the necessary e3pense for his o0n li-ing. <,7<,8 $o simplify the determination, therefore, the net earning capacity of Paras during the :-month period of his confinement, surgeries and conse@uential therapy is pegged at only half of his unearned monthly gross income of P9,+++.++ as a trader, or a total of P<E,+++.++ for the :-month period, the other half being treated as the necessary e3pense for his o0n li-ing in that period.

&t is rele-ant to clarify that a0arding the temperate damages .for the substantial pecuniary losses corresponding to Paras1s surgeries and rehabilitation and for the irreparability of &nland1s damaged bus/ and the actual damages to compensate lost earnings and costs of medicines gi-e rise to no incompatibility. $hese damages co-er distinct pecuniary losses suffered by Paras and &nland,<)7<)8 and do not infringe the statutory prohibition against reco-ering damages t0ice for the same act or omission.<<7<<8
<+7<+8 )itan-I eda Construction and /evelopment Corporation v. %rimeto(n %ropert" 0roup, Inc., H.R. No. ,*9;E9, 2ebruary ,), )++9, *DD SCR DEE, D:,. <,7<,8 .illa Re" )ransit, Inc. v. Court of #ppeals, <, SCR *,,, *,*-*,;. <)7<)8 See, e.!., Ramos v. Court of #ppeals, H.R. No. ,)D<*D, #ecember ):, ,:::, <), SCR *9D, E)D-E)*. <<7<<8 $he Civil Code pro-ides: rticle. ),;;. Responsibility for fault or negligence under the preceding article is entirely separate and distinct from the ci-il liability arising from negligence under the Penal Code. But the plaintiff cannot reco-er damages t0ice for the same act or omission of the defendant. .n/

D. I #+"*%" ( *3*+$ o2 *!!o+ "48% 2""%

lthough it is a sound policy not to set a premium on the right to litigate, <D
7<D8 0e consider the grant to Paras and &nland of reasonable attorney1s fees

0arranted. $heir entitlement to attorney1s fees 0as by -irtue of their ha-ing been compelled to litigate or to incur e3penses to protect their interests, <*7<*8 as 0ell as by -irtue of the Court no0 further deeming attorney1s fees to be 5ust and e@uitable.<E7<E8

&n -ie0 of the lapse of a long time in the prosecution of the claim, <;7<;8 the Court considers it reasonable and proper to grant attorney1s fees to each of Paras and &nland e@ui-alent to ,+S of the total amounts hereby a0arded to them, in lieu of only P)+,+++.++ for that purpose granted to Paras.

E. L")*' ( !"+"%! o !." *-o& !% *3*+$"$


<D7<D8 /urban #partments Corporation v. %ioneer Insurance and 'uret" Corporation, H.R. No. ,;:D,:, (anuary ,), )+,,, E<: SCR DD,, D*DA see also *an of the %hilippine Islands v. Casa $ontessori International, H.R. Nos. ,D:D*D P ,D:*+;, %ay )9, )++D, D<+ SCR )E,, ):E. <*7<*8 <E7<E8 rticle ))+9, par. ), Civil Code. rticle ))+9, par. ,,, Civil Code.

<;7<;8 2e( 3orld International /evelopment +%hils.,, Inc. v. 245--ilJapan 'hippin! Corp., H.R. No. ,;,DE94,;D)D,, ugust )D, )+,,.

Pursuant to 6astern 'hippin! 1ines, Inc. v. Court of #ppeals,<97<98 legal interest at the rate of ES per annum accrues on the amounts ad5udged rec=oned from (uly ,9, ,::;, the date 0hen the R$C rendered its 5udgmentA and legal interest at the rate of ,)S per annum shall be imposed from the finality of the 5udgment until its full satisfaction, the interim period being regarded as the e@ui-alent of a forbearance of credit.

WHEREFORE, the Court AFFIRMS WITH MODIFICATION the decision of the Court of ppeals promulgated on September )*, )++), by ordering PHILTRANCO SERVICE ENTERPRISES, INC. and APOLINAR MIRALLES to pay, 5ointly and se-erally, as follo0s:

,. $o 2eli3 Paras:

.a/ P,,<:;.:*, as reimbursement for the costs of medicines purchased bet0een 2ebruary ,:9; and (uly ,:9:A .b, P*+,+++.++ as temperate damagesA .c/ P*+,+++.++ as moral damagesA .d/ P<E,+++.++ for lost earningsA
<97<98 H.R. No. :;D,), (uly ,), ,::D, )<D SCR ;9, :E-:;.

.e/ ,+S of the total of items .a/ to .d/ hereof as attorney1s feesA and .f/ &nterest of ES per annum from (uly ,9, ,::; on the total of items .a/ to .d/ hereof until finality of this decision, and ,)S per annum thereafter until full payment.

). $o &nland $rail0ays, &nc.:

+a, P)*+,+++.++ as temperate damagesA +b, ,+S of item .a/ hereofA and

+c, &nterest of ES per annum on item .a/ hereof from (uly ,9, ,::; until finality of this decision, and ,)S per annum thereafter until full payment.

<. $he petitioner shall pay the costs of suit.

SO ORDERED.

LUCAS P. BERSAMIN ssociate (ustice

WE CONCUR:

RENATO C. CORONA Chief (ustice Chairperson

TERESITA F. LEONARDO0DE CASTRO ssociate (ustice

MARIANO C. DEL CASTILLO ssociate (ustice

MARTIN S. VILLARAMA, FR.

ssociate (ustice

CERTIFICATION

Pursuant to Section ,<, rticle '&&& of the Constitution, & certify that the conclusions in the abo-e #ecision had been reached in consultation before the case 0as assigned to the 0riter of the opinion of the Court1s #i-ision.

RENATO C. CORONA Chief (ustice

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