Transpo Cases

G.R. No.
L-47822 December 22, 1988

PEDRO DE GUZMAN, petitioner,
vs.
COURT OF APPEALS and ERNESTO CENDANA, respondents.
Vicente D. Millora for petitioner.
Jacinto Callanta for private respondent.
FELICIANO, J.:
Respondent Ernesto Cendana, a junk dealer, was engaged in buying up
used bottles and scrap metal in Pangasinan. Upon gathering sufficient
quantities of such scrap material, respondent would bring such material
to Manila for resale. He utilized two (2) six-wheeler trucks which he
owned for hauling the material to Manila. On the return trip to
Pangasinan, respondent would load his vehicles with cargo which various
merchants wanted delivered to differing establishments in Pangasinan.
For that service, respondent charged freight rates which were commonly
lower than regular commercial rates.
Sometime in November 1970, petitioner Pedro de Guzman a merchant
and authorized dealer of General Milk Company (Philippines), Inc. in
Urdaneta, Pangasinan, contracted with respondent for the hauling of 750
cartons of Liberty filled milk from a warehouse of General Milk in Makati,
Rizal, to petitioner's establishment in Urdaneta on or before 4 December
1970. Accordingly, on 1 December 1970, respondent loaded in Makati
the merchandise on to his trucks: 150 cartons were loaded on a truck
driven by respondent himself, while 600 cartons were placed on board
the other truck which was driven by Manuel Estrada, respondent's driver
and employee.
Only 150 boxes of Liberty filled milk were delivered to petitioner. The
other 600 boxes never reached petitioner, since the truck which carried
these boxes was hijacked somewhere along the MacArthur Highway in
Paniqui, Tarlac, by armed men who took with them the truck, its driver,
his helper and the cargo.
On 6 January 1971, petitioner commenced action against private
respondent in the Court of First Instance of Pangasinan, demanding
payment of P 22,150.00, the claimed value of the lost merchandise, plus
damages and attorney's fees. Petitioner argued that private respondent,
being a common carrier, and having failed to exercise the extraordinary
diligence required of him by the law, should be held liable for the value of
the undelivered goods.
In his Answer, private respondent denied that he was a common carrier
and argued that he could not be held responsible for the value of the lost
goods, such loss having been due to force majeure.
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.
The Civil Code defines "common carriers" in the following terms:
Article 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air for compensation,
offering their services to the public.
The above article makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one who
does such carrying only as an ancillary activity (in local Idiom as "a
sideline"). Article 1732 also carefully avoids making any distinction
between a person or enterprise offering transportation service on a
regular or scheduled basis and one offering such service on an
occasional, episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the "general public,"
i.e., the general community or population, and one who offers services or
solicits business only from a narrow segment of the general population.
We think that Article 1733 deliberaom making such distinctions.
So understood, the concept of "common carrier" under Article 1732 may
be seen to coincide neatly with the notion of "public service," under the
Public Service Act (Commonwealth Act No. 1416, as amended) which at
least partially supplements the law on common carriers set forth in the
Civil Code. Under Section 13, paragraph (b) of the Public Service Act,
"public service" includes:
... every person that now or hereafter may own, operate, manage, or
control in the Philippines, for hire or compensation, with general or limited
clientele, whether permanent, occasional or accidental, and done for

general business purposes, any common carrier, railroad, street railway,
traction railway, subway motor vehicle, either for freight or passenger, or
both, with or without fixed route and whatever may be its classification,
freight or carrier service of any class, express service, steamboat, or
steamship line, pontines, ferries and water craft, engaged in the
transportation of passengers or freight or both, shipyard, marine repair
shop, wharf or dock, ice plant,
ice-refrigeration plant, canal, irrigation system, gas, electric light, heat
and power, water supply and power petroleum, sewerage system, wire or
wireless communications systems, wire or wireless broadcasting stations
and other similar public services. ... (Emphasis supplied)
It appears to the Court that private respondent is properly characterized
as a common carrier even though he merely "back-hauled" goods for
other merchants from Manila to Pangasinan, although such back-hauling
was done on a periodic or occasional rather than regular or scheduled
manner, and even though private respondent's principal occupation was
not the carriage of goods for others. There is no dispute that private
respondent charged his customers a fee for hauling their goods; that fee
frequently fell below commercial freight rates is not relevant here.
The Court of Appeals referred to the fact that private respondent held no
certificate of public convenience, and concluded he was not a common
carrier. This is palpable error. A certificate of public convenience is not a
requisite for the incurring of liability under the Civil Code provisions
governing common carriers. That liability arises the moment a person or
firm acts as a common carrier, without regard to whether or not such
carrier has also complied with the requirements of the applicable
regulatory statute and implementing regulations and has been granted a
certificate of public convenience or other franchise. To exempt private
respondent from the liabilities of a common carrier because he has not
secured the necessary certificate of public convenience, would be
offensive to sound public policy; that would be to reward private
respondent precisely for failing to comply with applicable statutory
requirements. The business of a common carrier impinges directly and
intimately upon the safety and well being and property of those members
of the general community who happen to deal with such carrier. The law
imposes duties and liabilities upon common carriers for the safety and
protection of those who utilize their services and the law cannot allow a
common carrier to render such duties and liabilities merely facultative by
simply failing to obtain the necessary permits and authorizations.
We turn then to the liability of private respondent as a common carrier.
Common carriers, "by the nature of their business and for reasons of
public policy" 2 are held to a very high degree of care and diligence
("extraordinary diligence") in the carriage of goods as well as of
passengers. The specific import of extraordinary diligence in the care of

goods transported by a common carrier is, according to Article 1733,
"further expressed in Articles 1734,1735 and 1745, numbers 5, 6 and 7"
of the Civil Code.
Article 1734 establishes the general rule that common carriers are
responsible for the loss, destruction or deterioration of the goods which
they carry, "unless the same is due to any of the following causes only:
(1) Flood, storm, earthquake, lightning or other natural disaster or
calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character-of the goods or defects in the packing or-in the
containers; and
(5) Order or act of competent public authority.
It is important to point out that the above list of causes of loss, destruction
or deterioration which exempt the common carrier for responsibility
therefor, is a closed list. Causes falling outside the foregoing list, even if
they appear to constitute a species of force majeure fall within the scope
of Article 1735, which provides as follows:
In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of the
preceding article, if the goods are lost, destroyed or deteriorated,
common carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary diligence
as required in Article 1733. (Emphasis supplied)
Applying the above-quoted Articles 1734 and 1735, we note firstly that
the specific cause alleged in the instant case the hijacking of the
carrier's truck does not fall within any of the five (5) categories of
exempting causes listed in Article 1734. It would follow, therefore, that the
hijacking of the carrier's vehicle must be dealt with under the provisions of
Article 1735, in other words, that the private respondent as common
carrier is presumed to have been at fault or to have acted negligently.
This presumption, however, may be overthrown by proof of extraordinary
diligence on the part of private respondent.
Petitioner insists that private respondent had not observed extraordinary
diligence in the care of petitioner's goods. Petitioner argues that in the
circumstances of this case, private respondent should have hired a
security guard presumably to ride with the truck carrying the 600 cartons
of Liberty filled milk. We do not believe, however, that in the instant case,
the standard of extraordinary diligence required private respondent to
retain a security guard to ride with the truck and to engage brigands in a
firelight at the risk of his own life and the lives of the driver and his helper.
The precise issue that we address here relates to the specific
requirements of the duty of extraordinary diligence in the vigilance over
the goods carried in the specific context of hijacking or armed robbery.
As noted earlier, the duty of extraordinary diligence in the vigilance over

goods is, under Article 1733, given additional specification not only by
Articles 1734 and 1735 but also by Article 1745, numbers 4, 5 and 6,
Article 1745 provides in relevant part:
Any of the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy:
xxx xxx xxx
(5) that the common carrier shall not be responsible for the acts or
omissions of his or its employees;
(6) that the common carrier's liability for acts committed by thieves, or of
robbers who do not act with grave or irresistible threat, violence or force,
is dispensed with or diminished; and
(7) that the common carrier shall not responsible for the loss, destruction
or deterioration of goods on account of the defective condition of the car
vehicle, ship, airplane or other equipment used in the contract of carriage.
(Emphasis supplied)
Under Article 1745 (6) above, a common carrier is held responsible
and will not be allowed to divest or to diminish such responsibility even
for acts of strangers like thieves or robbers, except where such thieves or
robbers in fact acted "with grave or irresistible threat, violence or force."
We believe and so hold that the limits of the duty of extraordinary
diligence in the vigilance over the goods carried are reached where the
goods are lost as a result of a robbery which is attended by "grave or
irresistible threat, violence or force."
In the instant case, armed men held up the second truck owned by
private respondent which carried petitioner's cargo. The record shows
that an information for robbery in band was filed in the Court of First
Instance of Tarlac, Branch 2, in Criminal Case No. 198 entitled "People
of the Philippines v. Felipe Boncorno, Napoleon Presno, Armando
Mesina, Oscar Oria and one John Doe." There, the accused were
charged with willfully and unlawfully taking and carrying away with them
the second truck, driven by Manuel Estrada and loaded with the 600
cartons of Liberty filled milk destined for delivery at petitioner's store in
Urdaneta, Pangasinan. The decision of the trial court shows that the
accused acted with grave, if not irresistible, threat, violence or force. 3
Three (3) of the five (5) hold-uppers were armed with firearms. The
robbers not only took away the truck and its cargo but also kidnapped the
driver and his helper, detaining them for several days and later releasing
them in another province (in Zambales). The hijacked truck was
subsequently found by the police in Quezon City. The Court of First
Instance convicted all the accused of robbery, though not of robbery in
band. 4
In these circumstances, we hold that the occurrence of the loss must
reasonably be regarded as quite beyond the control of the common
carrier and properly regarded as a fortuitous event. It is necessary to

recall that even common carriers are not made absolute insurers against
all risks of travel and of transport of goods, and are not held liable for acts
or events which cannot be foreseen or are inevitable, provided that they
shall have complied with the rigorous standard of extraordinary diligence.
We, therefore, agree with the result reached by the Court of Appeals that
private respondent Cendana is not liable for the value of the undelivered
merchandise which was lost because of an event entirely beyond private
respondent's control.
ACCORDINGLY, the Petition for Review on certiorari is hereby DENIED
and the Decision of the Court of Appeals dated 3 August 1977 is
AFFIRMED. No pronouncement as to costs.
SO ORDERED.
MR. & MRS. ENGRACIO FABRE, JR.* and PORFIRIO CABIL,

petitioners, vs. COURT OF APPEALS, THE WORD FOR THE WORLD
CHRISTIAN FELLOWSHIP, INC., AMYLINE ANTONIO, JOHN
RICHARDS, GONZALO GONZALES, VICENTE V. QUE, JR., ICLI
CORDOVA, ARLENE GOJOCCO, ALBERTO ROXAS CORDERO,
RICHARD BAUTISTA, JOCELYN GARCIA, YOLANDA CORDOVA,
NOEL ROQUE, EDWARD TAN, ERNESTO NARCISO, ENRIQUETA
LOCSIN, FRANCIS NORMAN O. LOPEZ, JULIUS CAESAR GARCIA,
ROSARIO MA. V. ORTIZ, MARIETTA C. CLAVO, ELVIE SENIEL,
ROSARIO MARA-MARA, TERESITA REGALA, MELINDA TORRES,
MARELLA MIJARES, JOSEFA CABATINGAN, MARA NADOC, DIANE
MAYO, TESS PLATA, MAYETTE JOCSON, ARLENE Y. MORTIZ, LIZA
MAYO, CARLOS RANARIO, ROSAMARIA T. RADOC and
BERNADETTE FERRER, respondents.
DECISION
MENDOZA, J.:
This is a petition for review on certiorari of the decision of the Court of
Appeals[if !supportFootnotes][1][endif] in CA-GR No. 28245, dated September 30,
1992, which affirmed with modification the decision of the Regional Trial
Court of Makati, Branch 58, ordering petitioners jointly and severally to
pay damages to private respondent Amyline Antonio, and its resolution
which denied petitioners motion for reconsideration for lack of merit.
Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model
Mazda minibus. They used the bus principally in connection with a bus
service for school children which they operated in Manila. The couple had
a driver, Porfirio J. Cabil, whom they hired in 1981, after trying him out for
two weeks. His job was to take school children to and from the St.
Scholasticas College in Malate, Manila.
On November 2, 1984 private respondent Word for the World Christian
Fellowship Inc. (WWCF) arranged with petitioners for the transportation
of 33 members of its Young Adults Ministry from Manila to La Union and
back in consideration of which private respondent paid petitioners the
amount of P3,000.00.
The group was scheduled to leave on November 2, 1984, at 5:00 oclock
in the afternoon. However, as several members of the party were late, the
bus did not leave the Tropical Hut at the corner of Ortigas Avenue and
EDSA until 8:00 oclock in the evening. Petitioner Porfirio Cabil drove the
minibus.
The usual route to Caba, La Union was through Carmen, Pangasinan.
However, the bridge at Carmen was under repair, so that petitioner Cabil,
who was unfamiliar with the area (it being his first trip to La Union), was
forced to take a detour through the town of Ba-ay in Lingayen,
Pangasinan. At 11:30 that night, petitioner Cabil came upon a sharp
curve on the highway, running on a south to east direction, which he

described as siete. The road was slippery because it was raining, causing
the bus, which was running at the speed of 50 kilometers per hour, to
skid to the left road shoulder. The bus hit the left traffic steel brace and
sign along the road and rammed the fence of one Jesus Escano, then
turned over and landed on its left side, coming to a full stop only after a
series of impacts. The bus came to rest off the road. A coconut tree
which it had hit fell on it and smashed its front portion.
Several passengers were injured. Private respondent Amyline Antonio
was thrown on the floor of the bus and pinned down by a wooden seat
which came off after being unscrewed. It took three persons to safely
remove her from this position. She was in great pain and could not move.
The driver, petitioner Cabil, claimed he did not see the curve until it was
too late. He said he was not familiar with the area and he could not have
seen the curve despite the care he took in driving the bus, because it was
dark and there was no sign on the road. He said that he saw the curve
when he was already within 15 to 30 meters of it. He allegedly slowed
down to 30 kilometers per hour, but it was too late.
The Lingayen police investigated the incident the next day, November 3,
1984. On the basis of their finding they filed a criminal complaint against
the driver, Porfirio Cabil. The case was later filed with the Lingayen
Regional Trial Court. Petitioners Fabre paid Jesus Escano P1,500.00 for
the damage to the latters fence. On the basis of Escanos affidavit of
desistance the case against petitioners Fabre was dismissed.
Amyline Antonio, who was seriously injured, brought this case in the RTC
of Makati, Metro Manila. As a result of the accident, she is now suffering
from paraplegia and is permanently paralyzed from the waist down.
During the trial she described the operations she underwent and adduced
evidence regarding the cost of her treatment and therapy. Immediately
after the accident, she was taken to the Nazareth Hospital in Ba-ay,
Lingayen. As this hospital was not adequately equipped, she was
transferred to the Sto. Nio Hospital, also in the town of Ba-ay, where she
was given sedatives. An x-ray was taken and the damage to her spine
was determined to be too severe to be treated there. She was therefore
brought to Manila, first to the Philippine General Hospital and later to the
Makati Medical Center where she underwent an operation to correct the
dislocation of her spine.
In its decision dated April 17, 1989, the trial court found that:
No convincing evidence was shown that the minibus was properly
checked for travel to a long distance trip and that the driver was properly
screened and tested before being admitted for employment. Indeed, all
the evidence presented have shown the negligent act of the defendants
which ultimately resulted to the accident subject of this case.
Accordingly, it gave judgment for private respondents holding:
Considering that plaintiffs Word for the World Christian Fellowship, Inc.
and Ms. Amyline Antonio were the only ones who adduced evidence in
support of their claim for damages, the Court is therefore not in a position
to award damages to the other plaintiffs.
WHEREFORE, premises considered, the Court hereby renders judgment
against defendants Mr. & Mrs. Engracio Fabre, Jr. and Porfirio Cabil y
Jamil pursuant to articles 2176 and 2180 of the Civil Code of the
Philippines and said defendants are ordered to pay jointly and severally
to the plaintiffs the following amount:
1) P93,657.11 as compensatory and actual damages;
2) P500,000.00 as the reasonable amount of loss of earning capacity of
plaintiff Amyline Antonio;
3) P20,000.00 as moral damages;
4) P20,000.00 as exemplary damages; and
5) 25% of the recoverable amount as attorneys fees;
6) Costs of suit.
SO ORDERED.
The Court of Appeals affirmed the decision of the trial court with respect
to Amyline Antonio but dismissed it with respect to the other plaintiffs on
the ground that they failed to prove their respective claims. The Court of
Appeals modified the award of damages as follows:
1) P93,657.11 as actual damages;
2) P600,000.00 as compensatory damages;
4) P20,000.00 as exemplary damages;
5) P10,000.00 as attorneys fees; and
6) Costs of suit.
The Court of Appeals sustained the trial courts finding that petitioner
Cabil failed to exercise due care and precaution in the operation of his
vehicle considering the time and the place of the accident. The Court of
Appeals held that the Fabres were themselves presumptively negligent.
Hence, this petition. Petitioners raise the following issues:
I. WHETHER OR NOT PETITIONERS WERE NEGLIGENT.
II. WHETHER OR NOT PETITIONERS WERE LIABLE FOR THE
INJURIES SUFFERED BY PRIVATE RESPONDENTS.
III. WHETHER OR NOT DAMAGES CAN BE AWARDED AND IN THE
POSITIVE, UP TO WHAT EXTENT.
Petitioners challenge the propriety of the award of compensatory
damages in the amount of P600,000.00. It is insisted that, on the
assumption that petitioners are liable, an award of P600,000.00 is
unconscionable and highly speculative. Amyline Antonio testified that she
was a casual employee of a company called Suaco, earning P1,650.00 a
month, and a dealer of Avon products, earning an average of P1,000.00
monthly. Petitioners contend that as casual employees do not have
security of tenure, the award of P600,000.00, considering Amyline

Antonios earnings, is without factual basis as there is no assurance that
she would be regularly earning these amounts.
With the exception of the award of damages, the petition is devoid of
merit.
First, it is unnecessary for our purpose to determine whether to decide
this case on the theory that petitioners are liable for breach of contract of
carriage or culpa contractual or on the theory of quasi delict or culpa
aquiliana as both the Regional Trial Court and the Court of Appeals held,
for although the relation of passenger and carrier is contractual both in
origin and nature, nevertheless the act that breaks the contract may be
also a tort.[if !supportFootnotes][2][endif] In either case, the question is whether the
bus driver, petitioner Porfirio Cabil, was negligent.
The finding that Cabil drove his bus negligently, while his employer, the
Fabres, who owned the bus, failed to exercise the diligence of a good
father of the family in the selection and supervision of their employee is
fully supported by the evidence on record. These factual findings of the
two courts we regard as final and conclusive, supported as they are by
the evidence. Indeed, it was admitted by Cabil that on the night in
question, it was raining, and, as a consequence, the road was slippery,
and it was dark. He averred these facts to justify his failure to see that
there lay a sharp curve ahead. However, it is undisputed that Cabil drove
his bus at the speed of 50 kilometers per hour and only slowed down
when he noticed the curve some 15 to 30 meters ahead.[if !supportFootnotes][3][endif]
By then it was too late for him to avoid falling off the road. Given the
conditions of the road and considering that the trip was Cabils first one
outside of Manila, Cabil should have driven his vehicle at a moderate
speed. There is testimony[if !supportFootnotes][4][endif] that the vehicles passing on
that portion of the road should only be running 20 kilometers per hour, so
that at 50 kilometers per hour, Cabil was running at a very high speed.
Considering the foregoing the fact that it was raining and the road was
slippery, that it was dark, that he drove his bus at 50 kilometers an hour
when even on a good day the normal speed was only 20 kilometers an
hour, and that he was unfamiliar with the terrain, Cabil was grossly
negligent and should be held liable for the injuries suffered by private
respondent Amyline Antonio.
Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave
rise to the presumption that his employers, the Fabres, were themselves
negligent in the selection and supervision of their employee.
Due diligence in selection of employees is not satisfied by finding that the
applicant possessed a professional drivers license. The employer should
also examine the applicant for his qualifications, experience and record of
service.[if !supportFootnotes][5][endif] Due diligence in supervision, on the other hand,
requires the formulation of rules and regulations for the guidance of
employees and the issuance of proper instructions as well as actual

implementation and monitoring of consistent compliance with the rules.[if !
supportFootnotes][6][endif]
In the case at bar, the Fabres, in allowing Cabil to drive the bus to La
Union, apparently did not consider the fact that Cabil had been driving for
school children only, from their homes to the St. Scholasticas College in
Metro Manila.[if !supportFootnotes][7][endif] They had hired him only after a two-week
apprenticeship. They had tested him for certain matters, such as whether
he could remember the names of the children he would be taking to
school, which were irrelevant to his qualification to drive on a long
distance travel, especially considering that the trip to La Union was his
first. The existence of hiring procedures and supervisory policies cannot
be casually invoked to overturn the presumption of negligence on the part
of an employer.[if !supportFootnotes][8][endif]
Petitioners argue that they are not liable because (1) an earlier departure
(made impossible by the congregations delayed meeting) could have
averted the mishap and (2) under the contract, the WWCF was directly
responsible for the conduct of the trip. Neither of these contentions hold
water. The hour of departure had not been fixed. Even if it had been, the
delay did not bear directly on the cause of the accident. With respect to
the second contention, it was held in an early case that:
[A] person who hires a public automobile and gives the driver directions
as to the place to which he wishes to be conveyed, but exercises no
other control over the conduct of the driver, is not responsible for acts of
negligence of the latter or prevented from recovering for injuries suffered
from a collision between the automobile and a train, caused by the
negligence either of the locomotive engineer or the automobile driver.[if !
As already stated, this case actually involves a contract of carriage.

Petitioners, the Fabres, did not have to be engaged in the business of
public transportation for the provisions of the Civil Code on common
carriers to apply to them. As this Court has held:[if !supportFootnotes][10][endif]
Art. 1732. Common carriers are persons, corporations, firms or
passengers or goods or both, by land, water, or air for compensation,
The above article makes no distinction between one whose principal
does such carrying only as an ancillary activity (in local idiom, as a
sideline). Article 1732 also carefully avoids making any distinction
distinguish between a carrier offering its services to the general public,
We think that Article 1732 deliberately refrained from making such
distinctions.
As common carriers, the Fabres were bound to exercise extraordinary
diligence for the safe transportation of the passengers to their destination.
This duty of care is not excused by proof that they exercised the diligence
of a good father of the family in the selection and supervision of their
employee. As Art. 1759 of the Code provides:
Common carriers are liable for the death of or injuries to passengers
through the negligence or wilful acts of the formers employees, although
such employees may have acted beyond the scope of their authority or in
violation of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they
exercised all the diligence of a good father of a family in the selection and
supervision of their employees.
The same circumstances detailed above, supporting the finding of the
trial court and of the appellate court that petitioners are liable under Arts.
2176 and 2180 for quasi delict, fully justify finding them guilty of breach of
contract of carriage under Arts. 1733, 1755 and 1759 of the Civil Code.
Secondly, we sustain the award of damages in favor of Amyline Antonio.
However, we think the Court of Appeals erred in increasing the amount of
compensatory damages because private respondents did not question
this award as inadequate.[if !supportFootnotes][11][endif] To the contrary, the award of
P500,000.00 for compensatory damages which the Regional Trial Court
made is reasonable considering the contingent nature of her income as a
casual employee of a company and as distributor of beauty products and
the fact that the possibility that she might be able to work again has not
been foreclosed. In fact she testified that one of her previous employers
had expressed willingness to employ her again.
With respect to the other awards, while the decisions of the trial court and
the Court of Appeals do not sufficiently indicate the factual and legal
basis for them, we find that they are nevertheless supported by evidence
in the records of this case. Viewed as an action for quasi delict, this case
falls squarely within the purview of Art. 2219(2) providing for the payment
of moral damages in cases of quasi delict. On the theory that petitioners
are liable for breach of contract of carriage, the award of moral damages
is authorized by Art. 1764, in relation to Art. 2220, since Cabils gross
negligence amounted to bad faith.[if !supportFootnotes][12][endif] Amyline Antonios
testimony, as well as the testimonies of her father and co-passengers,
fully establish the physical suffering and mental anguish she endured as
a result of the injuries caused by petitioners negligence.
The award of exemplary damages and attorneys fees was also properly
made. However, for the same reason that it was error for the appellate
court to increase the award of compensatory damages, we hold that it

was also error for it to increase the award of moral damages and reduce
the award of attorneys fees, inasmuch as private respondents, in whose
favor the awards were made, have not appealed.[if !supportFootnotes][13][endif]
As above stated, the decision of the Court of Appeals can be sustained
either on the theory of quasi delict or on that of breach of contract. The
question is whether, as the two courts below held, petitioners, who are
the owners and driver of the bus, may be made to respond jointly and
severally to private respondent. We hold that they may be. In Dangwa
Trans. Co. Inc. v. Court of Appeals,[if !supportFootnotes][14][endif] on facts similar to
those in this case, this Court held the bus company and the driver jointly
and severally liable for damages for injuries suffered by a passenger.
Again, in Bachelor Express, Inc. v. Court of Appeals[if !supportFootnotes][15][endif] a
driver found negligent in failing to stop the bus in order to let off
passengers when a fellow passenger ran amuck, as a result of which the
passengers jumped out of the speeding bus and suffered injuries, was
held also jointly and severally liable with the bus company to the injured
passengers.
The same rule of liability was applied in situations where the negligence
of the driver of the bus on which plaintiff was riding concurred with the
negligence of a third party who was the driver of another vehicle, thus
causing an accident. In Anuran v. Buo,[if !supportFootnotes][16][endif] Batangas
Laguna Tayabas Bus Co. v. Intermediate Appellate Court,[if !supportFootnotes][17]
[endif] and Metro Manila Transit Corporation v. Court of Appeals,[if !
supportFootnotes][18][endif] the bus company, its driver, the operator of the other
vehicle and the driver of the vehicle were jointly and severally held liable
to the injured passenger or the latters heirs. The basis of this allocation of
liability was explained in Viluan v. Court of Appeals,[if !supportFootnotes][19][endif]
thus:
Nor should it make any difference that the liability of petitioner [bus
owner] springs from contract while that of respondents [owner and driver
of other vehicle] arises from quasi-delict. As early as 1913, we already
ruled in Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of injury to a
passenger due to the negligence of the driver of the bus on which he was
riding and of the driver of another vehicle, the drivers as well as the
owners of the two vehicles are jointly and severally liable for damages.
Some members of the Court, though, are of the view that under the
circumstances they are liable on quasi-delict.[if !supportFootnotes][20][endif]
It is true that in Philippine Rabbit Bus Lines, Inc. v. Court of Appeals[if !
supportFootnotes][21][endif] this Court exonerated the jeepney driver from liability to
the injured passengers and their families while holding the owners of the
jeepney jointly and severally liable, but that is because that case was
expressly tried and decided exclusively on the theory of culpa contractual.
As this Court there explained:
The trial court was therefore right in finding that Manalo [the driver] and
spouses Mangune and Carreon [the jeepney owners] were negligent.
However, its ruling that spouses Mangune and Carreon are jointly and
severally liable with Manalo is erroneous. The driver cannot be held
jointly and severally liable with the carrier in case of breach of the
contract of carriage. The rationale behind this is readily discernible.
Firstly, the contract of carriage is between the carrier and the passenger,
and in the event of contractual liability, the carrier is exclusively
responsible therefore to the passenger, even if such breach be due to the
negligence of his driver (see Viluan v. The Court of Appeals, et al., G.R.
Nos. L-21477-81, April 29, 1966, 16 SCRA 742) . . .[if !supportFootnotes][22][endif]
As in the case of BLTB, private respondents in this case and her coplaintiffs did not stake out their claim against the carrier and the driver
exclusively on one theory, much less on that of breach of contract alone.
After all, it was permitted for them to allege alternative causes of action
and join as many parties as may be liable on such causes of action[if !
supportFootnotes][23][endif] so long as private respondent and her co-plaintiffs do
not recover twice for the same injury. What is clear from the cases is the
intent of the plaintiff there to recover from both the carrier and the driver,
thus justifying the holding that the carrier and the driver were jointly and
severally liable because their separate and distinct acts concurred to
produce the same injury.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED
with MODIFICATION as to the award of damages. Petitioners are
ORDERED to PAY jointly and severally the private respondent Amyline
Antonio the following amounts:
1) P93,657.11 as actual damages;
2) P500,000.00 as the reasonable amount of loss of earning capacity of
plaintiff Amyline Antonio;
4) P20,000.00 as exemplary damages;
5) 25% of the recoverable amount as attorneys fees; and
6) costs of suit.
SO ORDERED.
G.R. No. 101089. April 7, 1993.
ESTRELLITA M. BASCOS, petitioners,

vs.
COURT OF APPEALS and RODOLFO A. CIPRIANO, respondents.
Modesto S. Bascos for petitioner.
Pelaez, Adriano & Gregorio for private respondent.
SYLLABUS
1. CIVIL LAW; COMMON CARRIERS; DEFINED; TEST TO
DETERMINE COMMON CARRIER. Article 1732 of the Civil Code
defines a common carrier as "(a) person, corporation or firm, or
association 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 test to determine a common
carrier is "whether the given undertaking is a part of the business
engaged in by the carrier which he has held out to the general public as
his occupation rather than the quantity or extent of the business
transacted." . . . The holding of the Court in De Guzman vs. Court of
Appeals is instructive. In referring to Article 1732 of the Civil Code, it held
thus: "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
distinguished 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 1732 deliberately refrained from making
such distinctions."
2. ID.; ID.; DILIGENCE REQUIRED IN VIGILANCE OVER GOODS
TRANSPORTED; WHEN PRESUMPTION OF NEGLIGENCE ARISES;
HOW PRESUMPTION OVERCAME; WHEN PRESUMPTION MADE
ABSOLUTE. Common carriers are obliged to observe extraordinary
diligence in the vigilance over the goods transported by them.
Accordingly, they are presumed to have been at fault or to have acted
negligently if the goods are lost, destroyed or deteriorated. There are very
few instances when the presumption of negligence does not attach and
these instances are enumerated in Article 1734. In those cases where the
presumption is applied, the common carrier must prove that it exercised
extraordinary diligence in order to overcome the presumption . . . The
presumption of negligence was raised against petitioner. It was
petitioner's burden to overcome it. Thus, contrary to her assertion, private
respondent need not introduce any evidence to prove her negligence.

Her own failure to adduce sufficient proof of extraordinary diligence made
the presumption conclusive against her.
3. ID.; ID.; HIJACKING OF GOODS; CARRIER PRESUMED
NEGLIGENT; HOW CARRIER ABSOLVED FROM LIABILITY. In De
Guzman vs. Court of Appeals, the Court held that hijacking, not being
included in the provisions of Article 1734, must be dealt with under the
provisions of Article 1735 and thus, the common carrier is presumed to
have been at fault or negligent. To exculpate the carrier from liability
arising from hijacking, he must prove that the robbers or the hijackers
acted with grave or irresistible threat, violence, or force. This is in
accordance with Article 1745 of the Civil Code which provides: "Art. 1745.
Any of the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy . . . (6) That the
common carrier's liability for acts committed by thieves, or of robbers who
do not act with grave or irresistible threat, violences or force, is dispensed
with or diminished"; In the same case, the Supreme Court also held that:
"Under Article 1745 (6) above, a common carrier is held responsible
for acts of strangers like thieves or robbers, except where such thieves or
robbers in fact acted "with grave of irresistible threat, violence of force,"
4. REMEDIAL LAW; EVIDENCE; JUDICIAL ADMISSIONS
CONCLUSIVE. In this case, petitioner herself has made the admission
that she was in the trucking business, offering her trucks to those with
cargo to move. Judicial admissions are conclusive and no evidence is
required to prove the same.
5. ID.; ID.; BURDEN OF PROOF RESTS WITH PARTY WHO ALLEGES
A FACT. Petitioner presented no other proof of the existence of the
contract of lease. He who alleges a fact has the burden of proving it.
6. ID.; ID.; AFFIDAVITS NOT CONSIDERED BEST EVIDENCE IF
AFFIANTS AVAILABLE AS WITNESSES. While the affidavit of Juanito
Morden, the truck helper in the hijacked truck, was presented as
evidence in court, he himself was a witness as could be gleaned from the
contents of the petition. Affidavits are not considered the best evidence if
the affiants are available as witnesses.
7. CIVIL LAW; OBLIGATIONS AND CONTRACTS; CONTRACT IS
WHAT LAW DEFINES IT TO BE. Granting that the said evidence were
not self-serving, the same were not sufficient to prove that the contract
was one of lease. It must be understood that a contract is what the law
defines it to be and not what it is called by the contracting parties.
DECISION
CAMPOS, JR., J p:
This is a petition for review on certiorari of the decision ** of the Court of
Appeals in "RODOLFO A. CIPRIANO, doing business under the name
CIPRIANO TRADING ENTERPRISES plaintiff-appellee, vs.
ESTRELLITA M. BASCOS, doing business under the name of BASCOS
TRUCKING, defendant-appellant," C.A.-G.R. CV No. 25216, the
dispositive portion of which is quoted hereunder:
"PREMISES considered, We find no reversible error in the decision
appealed from, which is hereby affirmed in toto. Costs against appellant."
1
The facts, as gathered by this Court, are as follows:
Rodolfo A. Cipriano representing Cipriano Trading Enterprise
(CIPTRADE for short) entered into a hauling contract 2 with Jibfair
Shipping Agency Corporation whereby the former bound itself to haul the
latter's 2,000 m/tons of soya bean meal from Magallanes Drive, Del Pan,
Manila to the warehouse of Purefoods Corporation in Calamba, Laguna.
To carry out its obligation, CIPTRADE, through Rodolfo Cipriano,
subcontracted with Estrellita Bascos (petitioner) to transport and to
deliver 400 sacks of soya bean meal worth P156,404.00 from the Manila
Port Area to Calamba, Laguna at the rate of P50.00 per metric ton.
Petitioner failed to deliver the said cargo. As a consequence of that
failure, Cipriano paid Jibfair Shipping Agency the amount of the lost
goods in accordance with the contract which stated that:
"1. CIPTRADE shall be held liable and answerable for any loss in bags
due to theft, hijacking and non-delivery or damages to the cargo during
transport at market value, . . ." 3
Cipriano demanded reimbursement from petitioner but the latter refused
to pay. Eventually, Cipriano filed a complaint for a sum of money and
damages with writ of preliminary attachment 4 for breach of a contract of
carriage. The prayer for a Writ of Preliminary Attachment was supported
by an affidavit 5 which contained the following allegations:
"4. That this action is one of those specifically mentioned in Sec. 1, Rule
57 the Rules of Court, whereby a writ of preliminary attachment may
lawfully issue, namely:
"(e) in an action against a party who has removed or disposed of his
property, or is about to do so, with intent to defraud his creditors;"
5. That there is no sufficient security for the claim sought to be enforced
by the present action;
6. That the amount due to the plaintiff in the above-entitled case is above
all legal counterclaims;"
The trial court granted the writ of preliminary attachment on February 17,
1987.
In her answer, petitioner interposed the following defenses: that there
was no contract of carriage since CIPTRADE leased her cargo truck to

load the cargo from Manila Port Area to Laguna; that CIPTRADE was
liable to petitioner in the amount of P11,000.00 for loading the cargo; that
the truck carrying the cargo was hijacked along Canonigo St., Paco,
Manila on the night of October 21, 1988; that the hijacking was
immediately reported to CIPTRADE and that petitioner and the police
exerted all efforts to locate the hijacked properties; that after preliminary
investigation, an information for robbery and carnapping were filed
against Jose Opriano, et al.; and that hijacking, being a force majeure,
exculpated petitioner from any liability to CIPTRADE.
After trial, the trial court rendered a decision *** the dispositive portion of
which reads as follows:
"WHEREFORE, judgment is hereby rendered in favor of plaintiff and
against defendant ordering the latter to pay the former:
1. The amount of ONE HUNDRED FIFTY-SIX THOUSAND FOUR
HUNDRED FOUR PESOS (P156,404.00) as an (sic) for actual damages
with legal interest of 12% per cent per annum to be counted from
December 4, 1986 until fully paid;
2. The amount of FIVE THOUSAND PESOS (P5,000.00) as and for
attorney's fees; and
3. The costs of the suit.
The "Urgent Motion To Dissolve/Lift preliminary Attachment" dated March
10, 1987 filed by defendant is DENIED for being moot and academic.
SO ORDERED." 6
Petitioner appealed to the Court of Appeals but respondent Court
affirmed the trial court's judgment.
Consequently, petitioner filed this petition where she makes the following
assignment of errors; to wit:
"I. THE RESPONDENT COURT ERRED IN HOLDING THAT THE
CONTRACTUAL RELATIONSHIP BETWEEN PETITIONER AND
PRIVATE RESPONDENT WAS CARRIAGE OF GOODS AND NOT
LEASE OF CARGO TRUCK.
II. GRANTING, EX GRATIA ARGUMENTI, THAT THE FINDING OF THE
RESPONDENT COURT THAT THE CONTRACTUAL RELATIONSHIP
BETWEEN PETITIONER AND PRIVATE RESPONDENT WAS
CARRIAGE OF GOODS IS CORRECT, NEVERTHELESS, IT ERRED IN
FINDING PETITIONER LIABLE THEREUNDER BECAUSE THE LOSS
OF THE CARGO WAS DUE TO FORCE MAJEURE, NAMELY,
HIJACKING.
III. THE RESPONDENT COURT ERRED IN AFFIRMING THE FINDING
OF THE TRIAL COURT THAT PETITIONER'S MOTION TO
DISSOLVE/LIFT THE WRIT OF PRELIMINARY ATTACHMENT HAS
BEEN RENDERED MOOT AND ACADEMIC BY THE DECISION OF
THE MERITS OF THE CASE." 7
The petition presents the following issues for resolution: (1) was petitioner
a common carrier?; and (2) was the hijacking referred to a force
majeure?
The Court of Appeals, in holding that petitioner was a common carrier,
found that she admitted in her answer that she did business under the
name A.M. Bascos Trucking and that said admission dispensed with the
presentation by private respondent, Rodolfo Cipriano, of proofs that
petitioner was a common carrier. The respondent Court also adopted in
toto the trial court's decision that petitioner was a common carrier,
Moreover, both courts appreciated the following pieces of evidence as
indicators that petitioner was a common carrier: the fact that the truck
driver of petitioner, Maximo Sanglay, received the cargo consisting of 400
bags of soya bean meal as evidenced by a cargo receipt signed by
Maximo Sanglay; the fact that the truck helper, Juanito Morden, was also
an employee of petitioner; and the fact that control of the cargo was
placed in petitioner's care.
In disputing the conclusion of the trial and appellate courts that petitioner
was a common carrier, she alleged in this petition that the contract
between her and Rodolfo A. Cipriano, representing CIPTRADE, was
lease of the truck. She cited as evidence certain affidavits which referred
to the contract as "lease". These affidavits were made by Jesus Bascos 8
and by petitioner herself. 9 She further averred that Jesus Bascos
confirmed in his testimony his statement that the contract was a lease
contract. 10 She also stated that: she was not catering to the general
public. Thus, in her answer to the amended complaint, she said that she
does business under the same style of A.M. Bascos Trucking, offering
her trucks for lease to those who have cargo to move, not to the general
public but to a few customers only in view of the fact that it is only a small
business. 11
We agree with the respondent Court in its finding that petitioner is a
common carrier.
Article 1732 of the Civil Code defines a common carrier as "(a) person,
corporation or firm, or association 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 test to determine
a common carrier is "whether the given undertaking is a part of the
business engaged in by the carrier which he has held out to the general
public as his occupation rather than the quantity or extent of the business
transacted." 12 In this case, petitioner herself has made the admission
that she was in the trucking business, offering her trucks to those with
cargo to move. Judicial admissions are conclusive and no evidence is
required to prove the same. 13
But petitioner argues that there was only a contract of lease because they
offer their services only to a select group of people and because the
private respondents, plaintiffs in the lower court, did not object to the
presentation of affidavits by petitioner where the transaction was referred
to as a lease contract.
Regarding the first contention, the holding of the Court in De Guzman vs.
Court of Appeals 14 is instructive. In referring to Article 1732 of the Civil
Code, it held thus:
"The above article makes no distinction between one whose principal
does such carrying only as an ancillary activity (in local idiom, as a
"sideline"). Article 1732 also carefully avoids making any distinction
distinguish between a carrier offering its services to the "general public,"
We think that Article 1732 deliberately refrained from making such
distinctions."
Regarding the affidavits presented by petitioner to the court, both the trial
and appellate courts have dismissed them as self-serving and petitioner
contests the conclusion. We are bound by the appellate court's factual
conclusions. Yet, granting that the said evidence were not self-serving,
the same were not sufficient to prove that the contract was one of lease.
It must be understood that a contract is what the law defines it to be and
not what it is called by the contracting parties. 15 Furthermore, petitioner
presented no other proof of the existence of the contract of lease. He who
alleges a fact has the burden of proving it. 16
Likewise, We affirm the holding of the respondent court that the loss of
the goods was not due to force majeure.
Common carriers are obliged to observe extraordinary diligence in the
vigilance over the goods transported by them. 17 Accordingly, they are
presumed to have been at fault or to have acted negligently if the goods
are lost, destroyed or deteriorated. 18 There are very few instances when
the presumption of negligence does not attach and these instances are
enumerated in Article 1734. 19 In those cases where the presumption is
applied, the common carrier must prove that it exercised extraordinary
diligence in order to overcome the presumption.
In this case, petitioner alleged that hijacking constituted force majeure
which exculpated her from liability for the loss of the cargo. In De
Guzman vs. Court of Appeals, 20 the Court held that hijacking, not being
included in the provisions of Article 1734, must be dealt with under the
provisions of Article 1735 and thus, the common carrier is presumed to
have been at fault or negligent. To exculpate the carrier from liability
arising from hijacking, he must prove that the robbers or the hijackers
acted with grave or irresistible threat, violence, or force. This is in

accordance with Article 1745 of the Civil Code which provides:
"Art. 1745. Any of the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy;
xxx xxx xxx
(6) That the common carrier's liability for acts committed by thieves, or of
robbers who do not act with grave or irresistible threat, violences or force,
is dispensed with or diminished;"
In the same case, 21 the Supreme Court also held that:
"Under Article 1745 (6) above, a common carrier is held responsible
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.
To establish grave and irresistible force, petitioner presented her
accusatory affidavit, 22 Jesus Bascos' affidavit, 23 and Juanito Morden's
24 "Salaysay". However, both the trial court and the Court of Appeals
have concluded that these affidavits were not enough to overcome the
presumption. Petitioner's affidavit about the hijacking was based on what
had been told her by Juanito Morden. It was not a first-hand account.
While it had been admitted in court for lack of objection on the part of
private respondent, the respondent Court had discretion in assigning
weight to such evidence. We are bound by the conclusion of the
appellate court. In a petition for review on certiorari, We are not to
determine the probative value of evidence but to resolve questions of law.
Secondly, the affidavit of Jesus Bascos did not dwell on how the hijacking
took place. Thirdly, while the affidavit of Juanito Morden, the truck helper
in the hijacked truck, was presented as evidence in court, he himself was
a witness as could be gleaned from the contents of the petition. Affidavits
are not considered the best evidence if the affiants are available as
witnesses. 25 The subsequent filing of the information for carnapping and
robbery against the accused named in said affidavits did not necessarily
mean that the contents of the affidavits were true because they were yet
to be determined in the trial of the criminal cases.
The presumption of negligence was raised against petitioner. It was
petitioner's burden to overcome it. Thus, contrary to her assertion, private
respondent need not introduce any evidence to prove her negligence.
Her own failure to adduce sufficient proof of extraordinary diligence made
the presumption conclusive against her.
Having affirmed the findings of the respondent Court on the substantial
issues involved, We find no reason to disturb the conclusion that the
motion to lift/dissolve the writ of preliminary attachment has been

rendered moot and academic by the decision on the merits.
In the light of the foregoing analysis, it is Our opinion that the petitioner's
claim cannot be sustained. The petition is DISMISSED and the decision
of the Court of Appeals is hereby AFFIRMED.
SO ORDERED.
[G.R. No. 141910. August 6, 2002]

FGU INSURANCE CORPORATION, petitioner, vs. G.P. SARMIENTO
TRUCKING CORPORATION and LAMBERT M. EROLES,
respondents.
DECISION
VITUG, J.:
G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver on
18 June 1994 thirty (30) units of Condura S.D. white refrigerators aboard
one of its Isuzu truck, driven by Lambert Eroles, from the plant site of
Concepcion Industries, Inc., along South Superhighway in Alabang,
Metro Manila, to the Central Luzon Appliances in Dagupan City. While
the truck was traversing the north diversion road along McArthur highway
in Barangay Anupol, Bamban, Tarlac, it collided with an unidentified
truck, causing it to fall into a deep canal, resulting in damage to the
cargoes.
FGU Insurance Corporation (FGU), an insurer of the shipment, paid
to Concepcion Industries, Inc., the value of the covered cargoes in the
sum of P204,450.00. FGU, in turn, being the subrogee of the rights and
interests of Concepcion Industries, Inc., sought reimbursement of the
amount it had paid to the latter from GPS. Since the trucking company
failed to heed the claim, FGU filed a complaint for damages and breach
of contract of carriage against GPS and its driver Lambert Eroles with the
Regional Trial Court, Branch 66, of Makati City. In its answer,
respondents asserted that GPS was the exclusive hauler only of
Concepcion Industries, Inc., since 1988, and it was not so engaged in
business as a common carrier. Respondents further claimed that the
cause of damage was purely accidental.
The issues having thus been joined, FGU presented its evidence,
establishing the extent of damage to the cargoes and the amount it had
paid to the assured. GPS, instead of submitting its evidence, filed with
leave of court a motion to dismiss the complaint by way of demurrer to
evidence on the ground that petitioner had failed to prove that it was a
common carrier.
The trial court, in its order of 30 April 1996,[if !supportFootnotes][1][endif]
granted the motion to dismiss, explaining thusly:
Under Section 1 of Rule 131 of the Rules of Court, it is provided that
Each party must prove his own affirmative allegation, xxx.
In the instant case, plaintiff did not present any single evidence that
would prove that defendant is a common carrier.
xxxxxxxxx
Accordingly, the application of the law on common carriers is not
warranted and the presumption of fault or negligence on the part of a
common carrier in case of loss, damage or deterioration of goods during

transport under 1735 of the Civil Code is not availing.
Thus, the laws governing the contract between the owner of the cargo to
whom the plaintiff was subrogated and the owner of the vehicle which
transports the cargo are the laws on obligation and contract of the Civil
Code as well as the law on quasi delicts.
Under the law on obligation and contract, negligence or fault is not
presumed. The law on quasi delict provides for some presumption of
negligence but only upon the attendance of some circumstances. Thus,
Article 2185 provides:
Art. 2185. Unless there is proof to the contrary, it is presumed that a
person driving a motor vehicle has been negligent if at the time of the
mishap, he was violating any traffic regulation.
Evidence for the plaintiff shows no proof that defendant was violating any
traffic regulation. Hence, the presumption of negligence is not obtaining.
Considering that plaintiff failed to adduce evidence that defendant is a
common carrier and defendants driver was the one negligent, defendant
cannot be made liable for the damages of the subject cargoes.[if !
The subsequent motion for reconsideration having been denied,[if !

plaintiff interposed an appeal to the Court of Appeals,
contending that the trial court had erred (a) in holding that the appellee
corporation was not a common carrier defined under the law and existing
jurisprudence; and (b) in dismissing the complaint on a demurrer to
evidence.
The Court of Appeals rejected the appeal of petitioner and ruled in
favor of GPS. The appellate court, in its decision of 10 June 1999, [if !
discoursed, among other things, that "x x x in order for the presumption of negligence provided for under the
law governing common carrier (Article 1735, Civil Code) to arise, the
appellant must first prove that the appellee is a common carrier. Should
the appellant fail to prove that the appellee is a common carrier, the
presumption would not arise; consequently, the appellant would have to
prove that the carrier was negligent.
"x x x x x x x x x
"Because it is the appellant who insists that the appellees can still be
considered as a common carrier, despite its `limited clientele, (assuming
it was really a common carrier), it follows that it (appellant) has the
burden of proving the same. It (plaintiff-appellant) `must establish his
case by a preponderance of evidence, which means that the evidence as
a whole adduced by one side is superior to that of the other. (Summa
Insurance Corporation vs. Court of Appeals, 243 SCRA 175). This,
unfortunately, the appellant failed to do -- hence, the dismissal of the
plaintiffs complaint by the trial court is justified.
"x x x x x x x x x
"Based on the foregoing disquisitions and considering the circumstances
that the appellee trucking corporation has been `its exclusive contractor,
hauler since 1970, defendant has no choice but to comply with the
directive of its principal, the inevitable conclusion is that the appellee is a
private carrier.
"x x x x x x x x x
"x x x the lower court correctly ruled that 'the application of the law on
common carriers is not warranted and the presumption of fault or
negligence on the part of a common carrier in case of loss, damage or
deterioration of good[s] during transport under [article] 1735 of the Civil
Code is not availing.' x x x.
"Finally, We advert to the long established rule that conclusions and
findings of fact of a trial court are entitled to great weight on appeal and
should not be disturbed unless for strong and valid reasons."[if !supportFootnotes]
[5][endif]
Petitioner's motion for reconsideration was likewise denied; [i f !

hence, the instant petition,[if !supportFootnotes][7][endif] raising the
following issues:
I
WHETHER RESPONDENT GPS MAY BE CONSIDERED AS A
COMMON CARRIER AS DEFINED UNDER THE LAW AND EXISTING
JURISPRUDENCE.
II
WHETHER RESPONDENT GPS, EITHER AS A COMMON CARRIER
OR A PRIVATE CARRIER, MAY BE PRESUMED TO HAVE BEEN
NEGLIGENT WHEN THE GOODS IT UNDERTOOK TO TRANSPORT
SAFELY WERE SUBSEQUENTLY DAMAGED WHILE IN ITS
PROTECTIVE CUSTODY AND POSSESSION.
III
WHETHER THE DOCTRINE OF RES IPSA LOQUITUR IS APPLICABLE
IN THE INSTANT CASE.
On the first issue, the Court finds the conclusion of the trial court
and the Court of Appeals to be amply justified. GPS, being an exclusive
contractor and hauler of Concepcion Industries, Inc., rendering or offering
its services to no other individual or entity, cannot be considered a
common carrier. Common carriers are persons, corporations, firms or
passengers or goods or both, by land, water, or air, for hire or
compensation, offering their services to the public,[if !supportFootnotes][8][endif]
whether to the public in general or to a limited clientele in particular, but
never on an exclusive basis.[if !supportFootnotes][9][endif] The true test of a common
carrier is the carriage of passengers or goods, providing space for those
who opt to avail themselves of its transportation service for a fee.[if !
Given accepted standards, GPS scarcely falls within the

term common carrier.
The above conclusion nothwithstanding, GPS cannot escape from
liability.
I n culpa contractual, upon which the action of petitioner rests as
being the subrogee of Concepcion Industries, Inc., the mere proof of the
existence of the contract and the failure of its compliance justify, prima
facie, a corresponding right of relief. [if !supportFootnotes][11][endif] The law,
recognizing the obligatory force of contracts,[if !supportFootnotes][12][endif] will not
permit a party to be set free from liability for any kind of misperformance
of the contractual undertaking or a contravention of the tenor thereof. [if !
A breach upon the contract confers upon the injured
party a valid cause for recovering that which may have been lost or
suffered. The remedy serves to preserve the interests of the promisee
that may include his expectation interest, which is his interest in having
the benefit of his bargain by being put in as good a position as he would
have been in had the contract been performed, or his reliance interest,
which is his interest in being reimbursed for loss caused by reliance on
the contract by being put in as good a position as he would have been in
had the contract not been made; or his restitution interest, which is his
interest in having restored to him any benefit that he has conferred on the
other party.[if !supportFootnotes][14][endif] Indeed, agreements can accomplish little,
either for their makers or for society, unless they are made the basis for
action.[if !supportFootnotes][15][endif] The effect of every infraction is to create a new
duty, that is, to make recompense to the one who has been injured by the
failure of another to observe his contractual obligation[if !supportFootnotes][16][endif]
unless he can show extenuating circumstances, like proof of his exercise
of due diligence (normally that of the diligence of a good father of a family
or, exceptionally by stipulation or by law such as in the case of common
carriers, that of extraordinary diligence) or of the attendance of fortuitous
event, to excuse him from his ensuing liability.
Respondent trucking corporation recognizes the existence of a
contract of carriage between it and petitioners assured, and admits that
the cargoes it has assumed to deliver have been lost or damaged while in
its custody. In such a situation, a default on, or failure of compliance with,
the obligation in this case, the delivery of the goods in its custody to the
place of destination - gives rise to a presumption of lack of care and
corresponding liability on the part of the contractual obligor the burden
being on him to establish otherwise. GPS has failed to do so.
Respondent driver, on the other hand, without concrete proof of his
negligence or fault, may not himself be ordered to pay petitioner. The
driver, not being a party to the contract of carriage between petitioners
principal and defendant, may not be held liable under the agreement. A
contract can only bind the parties who have entered into it or their
successors who have assumed their personality or their juridical position.

[if !supportFootnotes][17][endif]
Consonantly with the axiom res inter alios acta aliis
neque nocet prodest, such contract can neither favor nor prejudice a third
person. Petitioners civil action against the driver can only be based on
culpa aquiliana, which, unlike culpa contractual, would require the
claimant for damages to prove negligence or fault on the part of the
defendant.[if !supportFootnotes][18][endif]
A word in passing. Res ipsa loquitur, a doctrine being invoked by
petitioner, holds a defendant liable where the thing which caused the
injury complained of is shown to be under the latters management and
the accident is such that, in the ordinary course of things, cannot be
expected to happen if those who have its management or control use
proper care. It affords reasonable evidence, in the absence of
explanation by the defendant, that the accident arose from want of care. [if !
It is not a rule of substantive law and, as such, it does
not create an independent ground of liability. Instead, it is regarded as a
mode of proof, or a mere procedural convenience since it furnishes a
substitute for, and relieves the plaintiff of, the burden of producing
specific proof of negligence. The maxim simply places on the defendant
the burden of going forward with the proof. [if !supportFootnotes][20][endif] Resort to
the doctrine, however, may be allowed only when (a) the event is of a
kind which does not ordinarily occur in the absence of negligence; (b)
other responsible causes, including the conduct of the plaintiff and third
persons, are sufficiently eliminated by the evidence; and (c) the indicated
negligence is within the scope of the defendant's duty to the plaintiff.[if !
Thus, it is not applicable when an unexplained accident
may be attributable to one of several causes, for some of which the
defendant could not be responsible.[if !supportFootnotes][22][endif]
Res ipsa loquitur generally finds relevance whether or not a contractual
relationship exists between the plaintiff and the defendant, for the
inference of negligence arises from the circumstances and nature of the
occurrence and not from the nature of the relation of the parties.[if !
Nevertheless, the requirement that responsible causes
other than those due to defendants conduct must first be eliminated, for
the doctrine to apply, should be understood as being confined only to
cases of pure (non-contractual) tort since obviously the presumption of
negligence in culpa contractual, as previously so pointed out, immediately
attaches by a failure of the covenant or its tenor. In the case of the truck
driver, whose liability in a civil action is predicated on culpa acquiliana,
while he admittedly can be said to have been in control and management
of the vehicle which figured in the accident, it is not equally shown,
however, that the accident could have been exclusively due to his
negligence, a matter that can allow, forthwith, res ipsa loquitur to work
against him.
If a demurrer to evidence is granted but on appeal the order of

dismissal is reversed, the movant shall be deemed to have waived the
right to present evidence.[if !supportFootnotes][24][endif] Thus, respondent corporation
may no longer offer proof to establish that it has exercised due care in
transporting the cargoes of the assured so as to still warrant a remand of
the case to the trial court.
WHEREFORE, the order, dated 30 April 1996, of the Regional Trial
Court, Branch 66, of Makati City, and the decision, dated 10 June 1999,
of the Court of Appeals, are AFFIRMED only insofar as respondent
Lambert M. Eroles is concerned, but said assailed order of the trial court
and decision of the appellate court are REVERSED as regards G.P.
Sarmiento Trucking Corporation which, instead, is hereby ordered to pay
FGU Insurance Corporation the value of the damaged and lost cargoes in
the amount of P204,450.00. No costs.
SO ORDERED.
G.R. No. L-64693 April 27, 1984

LITA ENTERPRISES, INC., petitioner,
vs.
SECOND CIVIL CASES DIVISION, INTERMEDIATE APPELLATE
COURT, NICASIO M. OCAMPO and FRANCISCA P. GARCIA,
respondents.
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 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.
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. 2R230026, 2R-688740 and 2R-585884 [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.)
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
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.)
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 Makalintal, 1 "this is a pernicious
system that cannot be too severely condemned. It constitutes an
imposition upon the goo faith of the government.
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.
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, Plaintiffs-Appellees, 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.
G.R. No. 174156

June 20, 2012
FILCAR TRANSPORT SERVICES, Petitioner,
vs.
JOSE A. ESPINAS, Respondent.
DECISION
BRION, J.:
We resolve the present petition for review on certiorari1 filed by petitioner
Filcar Transport Services (Filcar), challenging the decision2 and the
resolution3 of the Court of Appeals (CA) in CA-G.R. SP No. 86603.
The facts of the case, gathered from the records, are briefly summarized
below.
On November 22, 1998, at around 6:30 p.m., respondent Jose A.
Espinas was driving his car along Leon Guinto Street in Manila. Upon
reaching the intersection of Leon Guinto and President Quirino Streets,
Espinas stopped his car. When the signal light turned green, he
proceeded to cross the intersection. He was already in the middle of the
intersection when another car, traversing President Quirino Street and
going to Roxas Boulevard, suddenly hit and bumped his car. As a result
of the impact, Espinas car turned clockwise. The other car escaped from
the scene of the incident, but Espinas was able to get its plate number.
After verifying with the Land Transportation Office, Espinas learned that
the owner of the other car, with plate number UCF-545, is Filcar.
Espinas sent several letters to Filcar and to its President and General
Manager Carmen Flor, demanding payment for the damages sustained
by his car. On May 31, 2001, Espinas filed a complaint for damages
against Filcar and Carmen Flor before the Metropolitan Trial Court
(MeTC) of Manila, and the case was raffled to Branch 13. In the
complaint, Espinas demanded that Filcar and Carmen Flor pay the
amount of P97,910.00, representing actual damages sustained by his
car.
Filcar argued that while it is the registered owner of the car that hit and
bumped Espinas car, the car was assigned to its Corporate Secretary
Atty. Candido Flor, the husband of Carmen Flor. Filcar further stated that
when the incident happened, the car was being driven by Atty. Flors
personal driver, Timoteo Floresca.
Atty. Flor, for his part, alleged that when the incident occurred, he was
attending a birthday celebration at a nearby hotel, and it was only later
that night when he noticed a small dent on and the cracked signal light of
the car. On seeing the dent and the crack, Atty. Flor allegedly asked
Floresca what happened, and the driver replied that it was a result of a
"hit and run" while the car was parked in front of Bogota on Pedro Gil
Avenue, Manila.
Filcar denied any liability to Espinas and claimed that the incident was not
due to its fault or negligence since Floresca was not its employee but that
of Atty. Flor. Filcar and Carmen Flor both said that they always exercised
the due diligence required of a good father of a family in leasing or
assigning their vehicles to third parties.
The MeTC Decision
The MeTC, in its decision dated January 20, 2004,4 ruled in favor of
Espinas, and ordered Filcar and Carmen Flor, jointly and severally, to pay
Espinas P97,910.00 as actual damages, representing the cost of repair,
with interest at 6% per annum from the date the complaint was filed;
P50,000.00 as moral damages; P20,000.00 as exemplary damages; and
P20,000.00 as attorneys fees. The MeTC ruled that Filcar, as the
registered owner of the vehicle, is primarily responsible for damages
resulting from the vehicles operation.
The RTC Decision
The Regional Trial Court (RTC) of Manila, Branch 20, in the exercise of
its appellate jurisdiction, affirmed the MeTC decision.5 The RTC ruled that
Filcar failed to prove that Floresca was not its employee as no proof was
adduced that Floresca was personally hired by Atty. Flor. The RTC
agreed with the MeTC that the registered owner of a vehicle is directly
and primarily liable for the damages sustained by third persons as a
consequence of the negligent or careless operation of a vehicle
registered in its name. The RTC added that the victim of recklessness on
the public highways is without means to discover or identify the person
actually causing the injury or damage. Thus, the only recourse is to
determine the owner, through the vehicles registration, and to hold him
responsible for the damages.
The CA Decision
On appeal, the CA partly granted the petition in CA-G.R. SP No. 86603; it
modified the RTC decision by ruling that Carmen Flor, President and
General Manager of Filcar, is not personally liable to Espinas. The
appellate court pointed out that, subject to recognized exceptions, the
liability of a corporation is not the liability of its corporate officers because
a corporate entity subject to well-recognized exceptions has a
separate and distinct personality from its officers and shareholders. Since
the circumstances in the case at bar do not fall under the exceptions
recognized by law, the CA concluded that the liability for damages cannot
attach to Carmen Flor.
The CA, however, affirmed the liability of Filcar to pay Espinas damages.
According to the CA, even assuming that there had been no employeremployee relationship between Filcar and the driver of the vehicle,
Floresca, the former can be held liable under the registered owner rule.
The CA relied on the rule that the registered owner of a vehicle is directly
and primarily responsible to the public and to third persons while the
vehicle is being operated. Citing Erezo, et al. v. Jepte,6 the CA said that
the rationale behind the rule is to avoid circumstances where vehicles
running on public highways cause accidents or injuries to pedestrians or
other vehicles without positive identification of the owner or drivers, or
with very scant means of identification. In Erezo, the Court said that the
main aim of motor vehicle registration is to identify the owner, so that if a
vehicle causes damage or injury to pedestrians or other vehicles,
responsibility can be traced to a definite individual and that individual is
the registered owner of the vehicle.7
The CA did not accept Filcars argument that it cannot be held liable for
damages because the driver of the vehicle was not its employee. In so
ruling, the CA cited the case of Villanueva v. Domingo8 where the Court
said that the question of whether the driver was authorized by the actual
owner is irrelevant in determining the primary and direct responsibility of
the registered owner of a vehicle for accidents, injuries and deaths
caused by the operation of his vehicle.
Filcar filed a motion for reconsideration which the CA denied in its
Resolution dated July 6, 2006.
Hence, the present petition.
The Issue
Simply stated, the issue for the consideration of this Court is: whether
Filcar, as registered owner of the motor vehicle which figured in an
accident, may be held liable for the damages caused to Espinas.
Our Ruling
The petition is without merit.
Filcar, as registered owner, is deemed the employer of the driver,
Floresca, and is thus vicariously liable under Article 2176 in relation with
Article 2180 of the Civil Code
It is undisputed that Filcar is the registered owner of the motor vehicle
which hit and caused damage to Espinas car; and it is on the basis of
this fact that we hold Filcar primarily and directly liable to Espinas for
damages.
As a general rule, one is only responsible for his own act or omission. 9
Thus, a person will generally be held liable only for the torts committed by
himself and not by another. This general rule is laid down in Article 2176
of the Civil Code, which provides to wit:
Article 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 pre-existing contractual relation
between the parties, is called a quasi-delict and is governed by the
provisions of this Chapter.
Based on the above-cited article, the obligation to indemnify another for
damage caused by ones act or omission is imposed upon the tortfeasor
himself, i.e., the person who committed the negligent act or omission.
The law, however, provides for exceptions when it makes certain persons
liable for the act or omission of another.
One exception is an employer who is made vicariously liable for the tort
committed by his employee. Article 2180 of the Civil Code states:
Article 2180. The obligation imposed by Article 2176 is demandable not
only for ones own acts or omissions, but also for those of persons for
whom one is responsible.
xxxx
Employers shall be liable for the damages caused by their employees
and household helpers acting within the scope of their assigned tasks,
even though the former are not engaged in any business or industry.
xxxx
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.
Under Article 2176, in relation with Article 2180, of the Civil Code, an
action predicated on an employees act or omission may be instituted
against the employer who is held liable for the negligent act or omission
committed by his employee.
Although the employer is not the actual tortfeasor, the law makes him
vicariously liable on the basis of the civil law principle of pater familias for
failure to exercise due care and vigilance over the acts of ones
subordinates to prevent damage to another.10 In the last paragraph of
Article 2180 of the Civil Code, the employer may invoke the defense that
he observed all the diligence of a good father of a family to prevent
damage.
As its core defense, Filcar contends that Article 2176, in relation with
Article 2180, of the Civil Code is inapplicable because it presupposes the
existence of an employer-employee relationship. According to Filcar, it
cannot be held liable under the subject provisions because the driver of
its vehicle at the time of the accident, Floresca, is not its employee but
that of its Corporate Secretary, Atty. Flor.
We cannot agree. It is well settled that in case of motor vehicle mishaps,
the registered owner of the motor vehicle is considered as the employer
of the tortfeasor-driver, and is made primarily liable for the tort committed
by the latter under Article 2176, in relation with Article 2180, of the Civil
Code.
In Equitable Leasing Corporation v. Suyom,11 we ruled that in so far as
third persons are concerned, the registered owner of the motor vehicle is
the employer of the negligent driver, and the actual employer is
considered merely as an agent of such owner.
In that case, a tractor registered in the name of Equitable Leasing
Corporation (Equitable) figured in an accident, killing and seriously
injuring several persons. As part of its defense, Equitable claimed that the
tractor was initially leased to Mr. Edwin Lim under a Lease Agreement,
which agreement has been overtaken by a Deed of Sale entered into by
Equitable and Ecatine Corporation (Ecatine). Equitable argued that it
cannot be held liable for damages because the tractor had already been
sold to Ecatine at the time of the accident and the negligent driver was
not its employee but of Ecatine.
In upholding the liability of Equitable, as registered owner of the tractor,
this Court said that "regardless of sales made of a motor vehicle, the
registered owner is the lawful operator insofar as the public and third
persons are concerned; consequently, it is directly and primarily
responsible for the consequences of its operation."12 The Court further
stated that "[i]n contemplation of law, the owner/operator of record is the
employer of the driver, the actual operator and employer being
considered as merely its agent."13 Thus, Equitable, as the registered
owner of the tractor, was considered under the law on quasi delict to be
the employer of the driver, Raul Tutor; Ecatine, Tutors actual employer,
was deemed merely as an agent of Equitable.
Thus, it is clear that for the purpose of holding the registered owner of the
motor vehicle primarily and directly liable for damages under Article 2176,
in relation with Article 2180, of the Civil Code, the existence of an
employer-employee relationship, as it is understood in labor relations law,
is not required. It is sufficient to establish that Filcar is the registered
owner of the motor vehicle causing damage in order that it may be held
vicariously liable under Article 2180 of the Civil Code.
Rationale for holding the registered owner vicariously liable
The rationale for the rule that a registered owner is vicariously liable for
damages caused by the operation of his motor vehicle is explained by the
principle behind motor vehicle registration, which has been discussed by
this Court in Erezo, and cited by the CA in its decision:
The main aim of motor vehicle registration is to identify the owner so that
if any accident happens, or that any damage or injury is caused by the
vehicle on the public highways, responsibility therefor can be fixed on a
definite individual, the registered owner. Instances are numerous where
vehicles running on public highways caused accidents or injuries to
pedestrians or other vehicles without positive identification of the owner
or drivers, or with very scant means of identification. It is to forestall these
circumstances, so inconvenient or prejudicial to the public, that the motor
vehicle registration is primarily ordained, in the interest of the
determination of persons responsible for damages or injuries caused on
public highways. [emphasis ours]
Thus, whether there is an employer-employee relationship between the
registered owner and the driver is irrelevant in determining the liability of
the registered owner who the law holds primarily and directly responsible
for any accident, injury or death caused by the operation of the vehicle in
the streets and highways.

As explained by this Court in Erezo, the general public policy involved in
motor vehicle registration is the protection of innocent third persons who
may have no means of identifying public road malefactors and, therefore,
would find it difficult if not impossible to seek redress for damages
they may sustain in accidents resulting in deaths, injuries and other
damages; by fixing the person held primarily and directly liable for the
damages sustained by victims of road mishaps, the law ensures that
relief will always be available to them.
To identify the person primarily and directly responsible for the damages
would also prevent a situation where a registered owner of a motor
vehicle can easily escape liability by passing on the blame to another
who may have no means to answer for the damages caused, thereby
defeating the claims of victims of road accidents. We take note that some
motor vehicles running on our roads are driven not by their registered
owners, but by employed drivers who, in most instances, do not have the
financial means to pay for the damages caused in case of accidents.
These same principles apply by analogy to the case at bar. Filcar should
not be permitted to evade its liability for damages by conveniently
passing on the blame to another party; in this case, its Corporate
Secretary, Atty. Flor and his alleged driver, Floresca. Following our
reasoning in Equitable, the agreement between Filcar and Atty. Flor to
assign the motor vehicle to the latter does not bind Espinas who was not
a party to and has no knowledge of the agreement, and whose only
recourse is to the motor vehicle registration.
Neither can Filcar use the defenses available under Article 2180 of the
Civil Code - that the employee acts beyond the scope of his assigned
task or that it exercised the due diligence of a good father of a family to
prevent damage - because the motor vehicle registration law, to a certain
extent, modified Article 2180 of the Civil Code by making these defenses
unavailable to the registered owner of the motor vehicle.1awp++i1 Thus,
for as long as Filcar is the registered owner of the car involved in the
vehicular accident, it could not escape primary liability for the damages
caused to Espinas.
The public interest involved in this case must not be underestimated.
Road safety is one of the most common problems that must be
addressed in this country. We are not unaware of news of road accidents
involving reckless drivers victimizing our citizens. Just recently, such
pervasive recklessness among most drivers took the life of a professor of
our state university.14 What is most disturbing is that our existing laws do
not seem to deter these road malefactors from committing acts of
recklessness.
We understand that the solution to the problem does not stop with
legislation. An effective administration and enforcement of the laws must
be ensured to reinforce discipline among drivers and to remind owners of

motor vehicles to exercise due diligence and vigilance over the acts of
their drivers to prevent damage to others.
Thus, whether the driver of the motor vehicle, Floresca, is an employee of
Filcar is irrelevant in arriving at the conclusion that Filcar is primarily and
directly liable for the damages sustained by Espinas. While Republic Act
No. 4136 or the Land Transportation and Traffic Code does not contain
any provision on the liability of registered owners in case of motor vehicle
mishaps, Article 2176, in relation with Article 2180, of the Civil Code
imposes an obligation upon Filcar, as registered owner, to answer for the
damages caused to Espinas car. This interpretation is consistent with the
strong public policy of maintaining road safety, thereby reinforcing the
aim of the State to promote the responsible operation of motor vehicles
by its citizens.
This does not mean, however, that Filcar is left without any recourse
against the actual employer of the driver and the driver himself. Under the
civil law principle of unjust enrichment, the registered owner of the motor
vehicle has a right to be indemnified by the actual employer of the driver
of the amount that he may be required to pay as damages for the injury
caused to another.
The set-up may be inconvenient for the registered owner of the motor
vehicle, but the inconvenience cannot outweigh the more important public
policy being advanced by the law in this case which is the protection of
innocent persons who may be victims of reckless drivers and
irresponsible motor vehicle owners.
WHEREFORE, the petition is DENIED. The decision dated February 16,
2006 and the resolution dated July 6, 2006 of the Court of Appeals are
AFFIRMED. Costs against petitioner Filcar Transport Services.
SO ORDERED.
G.R. No. 161833. July 8, 2005

PHILIPPINE CHARTER INSURANCE CORPORATION, Petitioners,
vs.
UNKNOWN OWNER OF THE VESSEL M/V "NATIONAL HONOR,"
NATIONAL SHIPPING CORPORATION OF THE PHILIPPINES and
INTERNATIONAL CONTAINER SERVICES, INC., Respondents.
DECISION
CALLEJO, SR., J.:
This is a petition for review under Rule 45 of the 1997 Revised Rules of
Civil Procedure assailing the Decision1 dated January 19, 2004 of the
Court of Appeals (CA) in CA-G.R. CV No. 57357 which affirmed the
Decision dated February 17, 1997 of the Regional Trial Court (RTC) of
Manila, Branch 37, in Civil Case No. 95-73338.
The Antecedent
On November 5, 1995, J. Trading Co. Ltd. of Seoul, Korea, loaded a
shipment of four units of parts and accessories in the port of Pusan,
Korea, on board the vessel M/V "National Honor," represented in the
Philippines by its agent, National Shipping Corporation of the Philippines
(NSCP). The shipment was for delivery to Manila, Philippines. Freight
forwarder, Samhwa Inter-Trans Co., Ltd., issued Bill of Lading No.
SH94103062 in the name of the shipper consigned to the order of
Metropolitan Bank and Trust Company with arrival notice in Manila to
ultimate consignee Blue Mono International Company, Incorporated
(BMICI), Binondo, Manila.
NSCP, for its part, issued Bill of Lading No. NSGPBSML5125653 in the
name of the freight forwarder, as shipper, consigned to the order of
Stamm International Inc., Makati, Philippines. It is provided therein that:
12. This Bill of Lading shall be prima facie evidence of the receipt of the
Carrier in apparent good order and condition except as, otherwise, noted
of the total number of Containers or other packages or units enumerated
overleaf. Proof to the contrary shall be admissible when this Bill of Lading
has been transferred to a third party acting in good faith. No
representation is made by the Carrier as to the weight, contents,
measure, quantity, quality, description, condition, marks, numbers, or
value of the Goods and the Carrier shall be under no responsibility
whatsoever in respect of such description or particulars.
13. The shipper, whether principal or agent, represents and warrants that
the goods are properly described, marked, secured, and packed and may
be handled in ordinary course without damage to the goods, ship, or
property or persons and guarantees the correctness of the particulars,
weight or each piece or package and description of the goods and agrees
to ascertain and to disclose in writing on shipment, any condition, nature,
quality, ingredient or characteristic that may cause damage, injury or

detriment to the goods, other property, the ship or to persons, and for the
failure to do so the shipper agrees to be liable for and fully indemnify the
carrier and hold it harmless in respect of any injury or death of any
person and loss or damage to cargo or property. The carrier shall be
responsible as to the correctness of any such mark, descriptions or
representations.4
The shipment was contained in two wooden crates, namely, Crate No. 1
and Crate No. 2, complete and in good order condition, covered by
Commercial Invoice No. YJ-73564 DTD5 and a Packing List.6 There were
no markings on the outer portion of the crates except the name of the
consignee.7 Crate No. 1 measured 24 cubic meters and weighed 3,620
kgs. It contained the following articles: one (1) unit Lathe Machine
complete with parts and accessories; one (1) unit Surface Grinder
complete with parts and accessories; and one (1) unit Milling Machine
complete with parts and accessories. On the flooring of the wooden
crates were three wooden battens placed side by side to support the
weight of the cargo. Crate No. 2, on the other hand, measured 10 cubic
meters and weighed 2,060 kgs. The Lathe Machine was stuffed in the
crate. The shipment had a total invoice value of US$90,000.00 C&F
Manila.8 It was insured for P2,547,270.00 with the Philippine Charter
Insurance Corporation (PCIC) thru its general agent, Family Insurance
and Investment Corporation,9 under Marine Risk Note No. 68043 dated
October 24, 1994.10
The M/V "National Honor" arrived at the Manila International Container
Terminal (MICT) on November 14, 1995. The International Container
Terminal Services, Incorporated (ICTSI) was furnished with a copy of the
crate cargo list and bill of lading, and it knew the contents of the crate.11
The following day, the vessel started discharging its cargoes using its
winch crane. The crane was operated by Olegario Balsa, a winchman
from the ICTSI,12 the exclusive arrastre operator of MICT.
Denasto Dauz, Jr., the checker-inspector of the NSCP, along with the
crew and the surveyor of the ICTSI, conducted an inspection of the
cargo.13 They inspected the hatches, checked the cargo and found it in
apparent good condition.14 Claudio Cansino, the stevedore of the ICTSI,
placed two sling cables on each end of Crate No. 1.15 No sling cable was
fastened on the mid-portion of the crate. In Dauzs experience, this was a
normal procedure.16 As the crate was being hoisted from the vessels
hatch, the mid-portion of the wooden flooring suddenly snapped in the air,
about five feet high from the vessels twin deck, sending all its contents
crashing down hard,17 resulting in extensive damage to the shipment.
BMICIs customs broker, JRM Incorporated, took delivery of the cargo in
such damaged condition.18 Upon receipt of the damaged shipment, BMICI
found that the same could no longer be used for the intended purpose.
The Mariners Adjustment Corporation hired by PCIC conducted a survey

and declared that the packing of the shipment was considered
insufficient. It ruled out the possibility of taxes due to insufficiency of
packing. It opined that three to four pieces of cable or wire rope slings,
held in all equal setting, never by-passing the center of the crate, should
have been used, considering that the crate contained heavy machinery.19
BMICI subsequently filed separate claims against the NSCP,20 the
ICTSI,21 and its insurer, the PCIC,22 for US$61,500.00. When the other
companies denied liability, PCIC paid the claim and was issued a
Subrogation Receipt23 for P1,740,634.50.
On March 22, 1995, PCIC, as subrogee, filed with the RTC of Manila,
Branch 35, a Complaint for Damages24 against the "Unknown owner of
the vessel M/V National Honor," NSCP and ICTSI, as defendants.
PCIC alleged that the loss was due to the fault and negligence of the
defendants. It prayed, among others
WHEREFORE, it is respectfully prayed of this Honorable Court that
judgment be rendered ordering defendants to pay plaintiff, jointly or in the
alternative, the following:
1. Actual damages in the amount of P1,740,634.50 plus legal interest at
the time of the filing of this complaint until fully paid;
2. Attorneys fees in the amount of P100,000.00;
3. Cost of suit.25
ICTSI, for its part, filed its Answer with Counterclaim and Cross-claim
against its co-defendant NSCP, claiming that the loss/damage of the
shipment was caused exclusively by the defective material of the wooden
battens of the shipment, insufficient packing or acts of the shipper.
At the trial, Anthony Abarquez, the safety inspector of ICTSI, testified that
the wooden battens placed on the wooden flooring of the crate was of
good material but was not strong enough to support the weight of the
machines inside the crate. He averred that most stevedores did not know
how to read and write; hence, he placed the sling cables only on those
portions of the crate where the arrow signs were placed, as in the case of
fragile cargo. He said that unless otherwise indicated by arrow signs, the
ICTSI used only two cable slings on each side of the crate and would not
place a sling cable in the mid-section.26 He declared that the crate fell
from the cranes because the wooden batten in the mid-portion was
broken as it was being lifted.27 He concluded that the loss/damage was
caused by the failure of the shipper or its packer to place wooden battens
of strong materials under the flooring of the crate, and to place a sign in
its mid-term section where the sling cables would be placed.
The ICTSI adduced in evidence the report of the R.J. Del Pan & Co., Inc.
that the damage to the cargo could be attributed to insufficient packing
and unbalanced weight distribution of the cargo inside the crate as
evidenced by the types and shapes of items found.28
The trial court rendered judgment for PCIC and ordered the complaint
dismissed, thus:
WHEREFORE, the complaint of the plaintiff, and the respective
counterclaims of the two defendants are dismissed, with costs against the
plaintiff.
SO ORDERED.29
According to the trial court, the loss of the shipment contained in Crate
No. 1 was due to the internal defect and weakness of the materials used
in the fabrication of the crates. The middle wooden batten had a hole
(bukong-bukong). The trial court rejected the certification30 of the shipper,
stating that the shipment was properly packed and secured, as mere
hearsay and devoid of any evidentiary weight, the affiant not having
testified.
Not satisfied, PCIC appealed31 to the CA which rendered judgment on
January 19, 2004 affirming in toto the appealed decision, with this fallo
WHEREFORE, the decision of the Regional Trial Court of Manila, Branch
35, dated February 17, 1997, is AFFIRMED.
SO ORDERED.32
The appellate court held, inter alia, that it was bound by the finding of
facts of the RTC, especially so where the evidence in support thereof is
more than substantial. It ratiocinated that the loss of the shipment was
due to an excepted cause "[t]he character of the goods or defects in the
packing or in the containers" and the failure of the shipper to indicate
signs to notify the stevedores that extra care should be employed in
handling the shipment.33 It blamed the shipper for its failure to use
materials of stronger quality to support the heavy machines and to
indicate an arrow in the middle portion of the cargo where additional
slings should be attached.34 The CA concluded that common carriers are
not absolute insurers against all risks in the transport of the goods.35
Hence, this petition by the PCIC, where it alleges that:
I.
THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW
IN NOT HOLDING THAT RESPONDENT COMMON CARRIER IS
LIABLE FOR THE DAMAGE SUSTAINED BY THE SHIPMENT IN THE
POSSESSION OF THE ARRASTRE OPERATOR.
II.
THE COURT OF APPEALS COMMITTED SERIOUS ERROR OF LAW
IN NOT APPLYING THE STATUTORY PRESUMPTION OF FAULT AND
NEGLIGENCE IN THE CASE AT BAR.
III.
THE COURT OF APPEALS GROSSLY MISCOMPREHENDED THE
FACTS IN FINDING THAT THE DAMAGE SUSTAINED BY THE
[SHIPMENT] WAS DUE TO ITS DEFECTIVE PACKING AND NOT TO
THE FAULT AND NEGLIGENCE OF THE RESPONDENTS.36
The petitioner asserts that the mere proof of receipt of the shipment by
the common carrier (to the carrier) in good order, and their arrival at the
place of destination in bad order makes out a prima facie case against it;
in such case, it is liable for the loss or damage to the cargo absent
satisfactory explanation given by the carrier as to the exercise of
extraordinary diligence. The petitioner avers that the shipment was
sufficiently packed in wooden boxes, as shown by the fact that it was
accepted on board the vessel and arrived in Manila safely. It emphasizes
that the respondents did not contest the contents of the bill of lading, and
that the respondents knew that the manner and condition of the packing
of the cargo was normal and barren of defects. It maintains that it
behooved the respondent ICTSI to place three to four cables or wire
slings in equal settings, including the center portion of the crate to
prevent damage to the cargo:
[A] simple look at the manifesto of the cargo and the bill of lading
would have alerted respondents of the nature of the cargo consisting of
thick and heavy machinery. Extra-care should have been made and
extended in the discharge of the subject shipment. Had the respondent
only bothered to check the list of its contents, they would have been
nervous enough to place additional slings and cables to support those
massive machines, which were composed almost entirely of thick steel,
clearly intended for heavy industries. As indicated in the list, the boxes
contained one lat[h]e machine, one milling machine and one grinding
machine-all coming with complete parts and accessories. Yet, not one
among the respondents were cautious enough. Here lies the utter failure
of the respondents to observed extraordinary diligence in the handling of
the cargo in their custody and possession, which the Court of Appeals
should have readily observed in its appreciation of the pertinent facts.37
The petitioner posits that the loss/damage was caused by the
mishandling of the shipment by therein respondent ICTSI, the arrastre
operator, and not by its negligence.
The petitioner insists that the respondents did not observe extraordinary
diligence in the care of the goods. It argues that in the performance of its
obligations, the respondent ICTSI should observe the same degree of
diligence as that required of a common carrier under the New Civil Code
of the Philippines. Citing Eastern Shipping Lines, Inc. v. Court of
Appeals,38 it posits that respondents are liable in solidum to it, inasmuch
as both are charged with the obligation to deliver the goods in good
condition to its consignee, BMICI.
Respondent NSCP counters that if ever respondent ICTSI is adjudged
liable, it is not solidarily liable with it. It further avers that the "carrier
cannot discharge directly to the consignee because cargo discharging is
the monopoly of the arrastre." Liability, therefore, falls solely upon the
shoulder of respondent ICTSI, inasmuch as the discharging of cargoes
from the vessel was its exclusive responsibility. Besides, the petitioner is
raising questions of facts, improper in a petition for review on certiorari.39
Respondent ICTSI avers that the issues raised are factual, hence,
improper under Rule 45 of the Rules of Court. It claims that it is merely a
depository and not a common carrier; hence, it is not obliged to exercise
extraordinary diligence. It reiterates that the loss/damage was caused by
the failure of the shipper or his packer to place a sign on the sides and
middle portion of the crate that extra care should be employed in handling
the shipment, and that the middle wooden batten on the flooring of the
crate had a hole. The respondent asserts that the testimony of Anthony
Abarquez, who conducted his investigation at the site of the incident,
should prevail over that of Rolando Balatbat. As an alternative, it argues
that if ever adjudged liable, its liability is limited only to P3,500.00 as
expressed in the liability clause of Gate Pass CFS-BR-GP No. 319773.
The petition has no merit.
The well-entrenched rule in our jurisdiction is that only questions of law
may be entertained by this Court in a petition for review on certiorari. This
rule, however, is not ironclad and admits certain exceptions, such as
when (1) the conclusion is grounded on speculations, surmises or
conjectures; (2) the inference is manifestly mistaken, absurd or
impossible; (3) there is grave abuse of discretion; (4) the judgment is
based on a misapprehension of facts; (5) the findings of fact are
conflicting; (6) there is no citation of specific evidence on which the
factual findings are based; (7) the findings of absence of facts are
contradicted by the presence of evidence on record; (8) the findings of
the Court of Appeals are contrary to those of the trial court; (9) the Court
of Appeals manifestly overlooked certain relevant and undisputed facts
that, if properly considered, would justify a different conclusion; (10) the
findings of the Court of Appeals are beyond the issues of the case; and
(11) such findings are contrary to the admissions of both parties.40
We have reviewed the records and find no justification to warrant the
application of any exception to the general rule.
We agree with the contention of the petitioner that common carriers, from
the nature of their business and for reasons of public policy, are
mandated 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.41 The Court has defined
extraordinary diligence in the vigilance over the goods as follows:
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 ascertain the nature and characteristic of goods tendered for
shipment, and to exercise due care in the handling and stowage,

including such methods as their nature requires."42
The common carriers duty to observe the requisite diligence in the
shipment of goods lasts from the time the articles are surrendered to or
unconditionally placed in the possession of, and received by, the carrier
for transportation until delivered to, or until the lapse of a reasonable time
for their acceptance, by the person entitled to receive them.43 When the
goods shipped are either lost or arrive in damaged condition, a
presumption arises against the carrier of its failure to observe that
diligence, and there need not be an express finding of negligence to hold
it liable.44 To overcome the presumption of negligence in the case of loss,
destruction or deterioration of the goods, the common carrier must prove
that it exercised extraordinary diligence.45
However, under Article 1734 of the New Civil Code, the presumption of
negligence does not apply to any of the following causes:
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;
5. Order or act of competent public authority.
It bears stressing that the enumeration in Article 1734 of the New Civil
Code which exempts the common carrier for the loss or damage to the
cargo is a closed list.46 To exculpate itself from liability for the
loss/damage to the cargo under any of the causes, the common carrier is
burdened to prove any of the aforecited causes claimed by it by a
preponderance of evidence. If the carrier succeeds, the burden of
evidence is shifted to the shipper to prove that the carrier is negligent.47
"Defect" is the want or absence of something necessary for
completeness or perfection; a lack or absence of something essential to
completeness; a deficiency in something essential to the proper use for
the purpose for which a thing is to be used.48 On the other hand, inferior
means of poor quality, mediocre, or second rate.49 A thing may be of
inferior quality but not necessarily defective. In other words,
"defectiveness" is not synonymous with "inferiority."
In the present case, the trial court declared that based on the record, the
loss of the shipment was caused by the negligence of the petitioner as
the shipper:
The same may be said with respect to defendant ICTSI. The breakage
and collapse of Crate No. 1 and the total destruction of its contents were
not imputable to any fault or negligence on the part of said defendant in
handling the unloading of the cargoes from the carrying vessel, but was
due solely to the inherent defect and weakness of the materials used in
the fabrication of said crate.

The crate should have three solid and strong wooden batten placed side
by side underneath or on the flooring of the crate to support the weight of
its contents. However, in the case of the crate in dispute, although there
were three wooden battens placed side by side on its flooring, the middle
wooden batten, which carried substantial volume of the weight of the
crates contents, had a knot hole or "bukong-bukong," which considerably
affected, reduced and weakened its strength. Because of the enormous
weight of the machineries inside this crate, the middle wooden batten
gave way and collapsed. As the combined strength of the other two
wooden battens were not sufficient to hold and carry the load, they too
simultaneously with the middle wooden battens gave way and collapsed
(TSN, Sept. 26, 1996, pp. 20-24).
Crate No. 1 was provided by the shipper of the machineries in Seoul,
Korea. There is nothing in the record which would indicate that defendant
ICTSI had any role in the choice of the materials used in fabricating this
crate. Said defendant, therefore, cannot be held as blame worthy for the
loss of the machineries contained in Crate No. 1.50
The CA affirmed the ruling of the RTC, thus:
The case at bar falls under one of the exceptions mentioned in Article
1734 of the Civil Code, particularly number (4) thereof, i.e., the character
of the goods or defects in the packing or in the containers. The trial court
found that the breakage of the crate was not due to the fault or
negligence of ICTSI, but to the inherent defect and weakness of the
materials used in the fabrication of the said crate.
Upon examination of the records, We find no compelling reason to depart
from the factual findings of the trial court.
It appears that the wooden batten used as support for the flooring was
not made of good materials, which caused the middle portion thereof to
give way when it was lifted. The shipper also failed to indicate signs to
notify the stevedores that extra care should be employed in handling the
shipment.
Claudio Cansino, a stevedore of ICTSI, testified before the court their
duties and responsibilities:
"Q: With regard to crates, what do you do with the crates?
A: Everyday with the crates, there is an arrow drawn where the sling is
placed, Maam.
Q: When the crates have arrows drawn and where you placed the slings,
what do you do with these crates?
A: A sling is placed on it, Maam.
Q: After you placed the slings, what do you do with the crates?
A: After I have placed a sling properly, I ask the crane (sic) to haul it,
Maam.
Q: Now, what, if any, were written or were marked on the crate?

A: The thing that was marked on the cargo is an arrow just like of a chain,
Maam.
Q: And where did you see or what parts of the crate did you see those
arrows?
A: At the corner of the crate, Maam.
Q: How many arrows did you see?
A: Four (4) on both sides, Maam.
Q: What did you do with the arrows?

A: When I saw the arrows, thats where I placed the slings, Maam.
Q: Now, did you find any other marks on the crate?

A: Nothing more, Maam.
Q: Now, Mr. Witness, if there are no arrows, would you place slings on
the parts where there are no arrows?
A: You can not place slings if there are no arrows, Maam."
Appellants allegation that since the cargo arrived safely from the port of
[P]usan, Korea without defect, the fault should be attributed to the
arrastre operator who mishandled the cargo, is without merit. The cargo
fell while it was being carried only at about five (5) feet high above the
ground. It would not have so easily collapsed had the cargo been
properly packed. The shipper should have used materials of stronger
quality to support the heavy machines. Not only did the shipper fail to
properly pack the cargo, it also failed to indicate an arrow in the middle
portion of the cargo where additional slings should be attached. At any
rate, the issue of negligence is factual in nature and in this regard, it is
settled that factual findings of the lower courts are entitled to great weight
and respect on appeal, and, in fact, accorded finality when supported by
substantial evidence.51
We agree with the trial and appellate courts.
The petitioner failed to adduce any evidence to counter that of
respondent ICTSI. The petitioner failed to rebut the testimony of Dauz,
that the crates were sealed and that the contents thereof could not be
seen from the outside.52 While it is true that the crate contained
machineries and spare parts, it cannot thereby be concluded that the
respondents knew or should have known that the middle wooden batten
had a hole, or that it was not strong enough to bear the weight of the
shipment.
There is no showing in the Bill of Lading that the shipment was in good
order or condition when the carrier received the cargo, or that the three
wooden battens under the flooring of the cargo were not defective or
insufficient or inadequate. On the other hand, under Bill of Lading No.
NSGPBSML512565 issued by the respondent NSCP and accepted by
the petitioner, the latter represented and warranted that the goods were
properly packed, and disclosed in writing the "condition, nature, quality or
characteristic that may cause damage, injury or detriment to the goods."
Absent any signs on the shipment requiring the placement of a sling
cable in the mid-portion of the crate, the respondent ICTSI was not
obliged to do so.
The statement in the Bill of Lading, that the shipment was in apparent
good condition, is sufficient to sustain a finding of absence of defects in
the merchandise. Case law has it that such statement will create a prima
facie presumption only as to the external condition and not to that not
open to inspection.53
IN LIGHT OF ALL THE FOREGOING, the petition is DENIED for lack of
merit.
SO ORDERED.
[G.R. No. 145804. February 6, 2003]

LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN,
petitioners, vs. MARJORIE NAVIDAD, Heirs of the Late NICANOR
NAVIDAD & PRUDENT SECURITY AGENCY, respondents.
DECISION
VITUG, J.:
The case before the Court is an appeal from the decision and resolution
of the Court of Appeals, promulgated on 27 April 2000 and 10 October
2000, respectively, in CA-G.R. CV No. 60720, entitled Marjorie Navidad
and Heirs of the Late Nicanor Navidad vs. Rodolfo Roman, et. al., which
has modified the decision of 11 August 1998 of the Regional Trial Court,
Branch 266, Pasig City, exonerating Prudent Security Agency (Prudent)
from liability and finding Light Rail Transit Authority (LRTA) and Rodolfo
Roman liable for damages on account of the death of Nicanor Navidad.
On 14 October 1993, about half an hour past seven oclock in the
evening, Nicanor Navidad, then drunk, entered the EDSA LRT station
after purchasing a token (representing payment of the fare). While
Navidad was standing on the platform near the LRT tracks, Junelito
Escartin, the security guard assigned to the area approached Navidad. A
misunderstanding or an altercation between the two apparently ensued
that led to a fist fight. No evidence, however, was adduced to indicate
how the fight started or who, between the two, delivered the first blow or
how Navidad later fell on the LRT tracks. At the exact moment that
Navidad fell, an LRT train, operated by petitioner Rodolfo Roman, was
coming in. Navidad was struck by the moving train, and he was killed
instantaneously.
On 08 December 1994, the widow of Nicanor, herein respondent Marjorie
Navidad, along with her children, filed a complaint for damages against
Junelito Escartin, Rodolfo Roman, the LRTA, the Metro Transit
Organization, Inc. (Metro Transit), and Prudent for the death of her
husband. LRTA and Roman filed a counterclaim against Navidad and a
cross-claim against Escartin and Prudent. Prudent, in its answer, denied
liability and averred that it had exercised due diligence in the selection
and supervision of its security guards.
The LRTA and Roman presented their evidence while Prudent and
Escartin, instead of presenting evidence, filed a demurrer contending that
Navidad had failed to prove that Escartin was negligent in his assigned
task. On 11 August 1998, the trial court rendered its decision; it adjudged:
WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and
against the defendants Prudent Security and Junelito Escartin ordering
the latter to pay jointly and severally the plaintiffs the following:
a) 1) Actual damages of P44,830.00;
2) Compensatory damages of P443,520.00;
3) Indemnity for the death of Nicanor Navidad in the sum of P50,000.00;
b) Moral damages of P50,000.00;

c) Attorneys fees of P20,000;
d) Costs of suit.
The complaint against defendants LRTA and Rodolfo Roman are
dismissed for lack of merit.
The compulsory counterclaim of LRTA and Roman are likewise
dismissed.[if !supportFootnotes][1][endif]
Prudent appealed to the Court of Appeals. On 27 August 2000, the
appellate court promulgated its now assailed decision exonerating
Prudent from any liability for the death of Nicanor Navidad and, instead,
holding the LRTA and Roman jointly and severally liable thusly:
WHEREFORE, the assailed judgment is hereby MODIFIED, by
exonerating the appellants from any liability for the death of Nicanor
Navidad, Jr. Instead, appellees Rodolfo Roman and the Light Rail Transit
Authority (LRTA) are held liable for his death and are hereby directed to
pay jointly and severally to the plaintiffs-appellees, the following amounts:
a) P44,830.00 as actual damages;
b) P50,000.00 as nominal damages;
c) P50,000.00 as moral damages;
d) P50,000.00 as indemnity for the death of the deceased; and
e) P20,000.00 as and for attorneys fees.[if !supportFootnotes][2][endif]
The appellate court ratiocinated that while the deceased might not have
then as yet boarded the train, a contract of carriage theretofore had
already existed when the victim entered the place where passengers
were supposed to be after paying the fare and getting the corresponding
token therefor. In exempting Prudent from liability, the court stressed that
there was nothing to link the security agency to the death of Navidad. It
said that Navidad failed to show that Escartin inflicted fist blows upon the
victim and the evidence merely established the fact of death of Navidad
by reason of his having been hit by the train owned and managed by the
LRTA and operated at the time by Roman. The appellate court faulted
petitioners for their failure to present expert evidence to establish the fact
that the application of emergency brakes could not have stopped the
train.
The appellate court denied petitioners motion for reconsideration in its
resolution of 10 October 2000.
In their present recourse, petitioners recite alleged errors on the part of
the appellate court; viz:
I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY
DISREGARDING THE FINDINGS OF FACTS BY THE TRIAL COURT
II.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
FINDING THAT PETITIONERS ARE LIABLE FOR THE DEATH OF
NICANOR NAVIDAD, JR.

III.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
FINDING THAT RODOLFO ROMAN IS AN EMPLOYEE OF LRTA.[if !
Petitioners would contend that the appellate court ignored the evidence
and the factual findings of the trial court by holding them liable on the
basis of a sweeping conclusion that the presumption of negligence on the
part of a common carrier was not overcome. Petitioners would insist that
Escartins assault upon Navidad, which caused the latter to fall on the
tracks, was an act of a stranger that could not have been foreseen or
prevented. The LRTA would add that the appellate courts conclusion on
the existence of an employer-employee relationship between Roman and
LRTA lacked basis because Roman himself had testified being an
employee of Metro Transit and not of the LRTA.
Respondents, supporting the decision of the appellate court, contended
that a contract of carriage was deemed created from the moment
Navidad paid the fare at the LRT station and entered the premises of the
latter, entitling Navidad to all the rights and protection under a contractual
relation, and that the appellate court had correctly held LRTA and Roman
liable for the death of Navidad in failing to exercise extraordinary
diligence imposed upon a common carrier.
Law and jurisprudence dictate that a common carrier, both from the
nature of its business and for reasons of public policy, is burdened with
the duty of exercising utmost diligence in ensuring the safety of
passengers.[if !supportFootnotes][4][endif] The Civil Code, governing the liability of a
common carrier for death of or injury to its passengers, provides:
Article 1755. A common carrier is bound to carry the passengers safely
as far as human care and foresight can provide, using the utmost
diligence of very cautious persons, with a due regard for all the
circumstances.
Article 1756. In case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to have acted negligently,
unless they prove that they observed extraordinary diligence as
prescribed in articles 1733 and 1755.
Article 1759. Common carriers are liable for the death of or injuries to
passengers through the negligence or willful acts of the formers
employees, although such employees may have acted beyond the scope
of their authority or in violation of the orders of the common carriers.
Article 1763. A common carrier is responsible for injuries suffered by a
passenger on account of the willful acts or negligence of other
passengers or of strangers, if the common carriers employees through

the exercise of the diligence of a good father of a family could have
prevented or stopped the act or omission.
The law requires common carriers to carry passengers safely using the
utmost diligence of very cautious persons with due regard for all
circumstances.[if !supportFootnotes][5][endif] Such duty of a common carrier to
provide safety to its passengers so obligates it not only during the course
of the trip but for so long as the passengers are within its premises and
where they ought to be in pursuance to the contract of carriage.[if !
The statutory provisions render a common carrier liable
for death of or injury to passengers (a) through the negligence or wilful
acts of its employees or b) on account of wilful acts or negligence of
other passengers or of strangers if the common carriers employees
through the exercise of due diligence could have prevented or
stopped the act or omission.[if !supportFootnotes][7][endif] In case of such death or
injury, a carrier is presumed to have been at fault or been negligent,
and[if !supportFootnotes][8][endif] by simple proof of injury, the passenger is relieved
of the duty to still establish the fault or negligence of the carrier or of its
employees and the burden shifts upon the carrier to prove that the injury
is due to an unforeseen event or to force majeure.[if !supportFootnotes][9][endif] In the
absence of satisfactory explanation by the carrier on how the accident
occurred, which petitioners, according to the appellate court, have failed
to show, the presumption would be that it has been at fault,[if !supportFootnotes][10]
[endif]
an exception from the general rule that negligence must be proved.[if !
The foundation of LRTAs liability is the contract of carriage and its

obligation to indemnify the victim arises from the breach of that contract
by reason of its failure to exercise the high diligence required of the
common carrier. In the discharge of its commitment to ensure the safety
of passengers, a carrier may choose to hire its own employees or avail
itself of the services of an outsider or an independent firm to undertake
the task. In either case, the common carrier is not relieved of its
responsibilities under the contract of carriage.
Should Prudent be made likewise liable? If at all, that liability could only
be for tort under the provisions of Article 2176[if !supportFootnotes][12][endif] and
related provisions, in conjunction with Article 2180,[if !supportFootnotes][13][endif] of
the Civil Code. The premise, however, for the employers liability is
negligence or fault on the part of the employee. Once such fault is
established, the employer can then be made liable on the basis of the
presumption juris tantum that the employer failed to exercise
diligentissimi patris families in the selection and supervision of its
employees. The liability is primary and can only be negated by showing
due diligence in the selection and supervision of the employee, a factual
matter that has not been shown. Absent such a showing, one might ask
further, how then must the liability of the common carrier, on the one
hand, and an independent contractor, on the other hand, be described? It
would be solidary. A contractual obligation can be breached by tort and
when the same act or omission causes the injury, one resulting in culpa
contractual and the other in culpa aquiliana, Article 2194[if !supportFootnotes][14]
[endif]
of the Civil Code can well apply.[if !supportFootnotes][15][endif] In fine, a liability
for tort may arise even under a contract, where tort is that which
breaches the contract.[if !supportFootnotes][16][endif] Stated differently, when an act
which constitutes a breach of contract would have itself constituted the
source of a quasi-delictual liability had no contract existed between the
parties, the contract can be said to have been breached by tort, thereby
allowing the rules on tort to apply.[if !supportFootnotes][17][endif]
Regrettably for LRT, as well as perhaps the surviving spouse and heirs of
the late Nicanor Navidad, this Court is concluded by the factual finding of
the Court of Appeals that there is nothing to link (Prudent) to the death of
Nicanor (Navidad), for the reason that the negligence of its employee,
Escartin, has not been duly proven x x x. This finding of the appellate
court is not without substantial justification in our own review of the
records of the case.
There being, similarly, no showing that petitioner Rodolfo Roman himself
is guilty of any culpable act or omission, he must also be absolved from
liability. Needless to say, the contractual tie between the LRT and
Navidad is not itself a juridical relation between the latter and Roman;
thus, Roman can be made liable only for his own fault or negligence.
The award of nominal damages in addition to actual damages is
untenable. Nominal damages are adjudicated in order that a right of the
plaintiff, which has been violated or invaded by the defendant, may be
vindicated or recognized, and not for the purpose of indemnifying the
plaintiff for any loss suffered by him.[if !supportFootnotes][18][endif] It is an established
rule that nominal damages cannot co-exist with compensatory damages.[if
!supportFootnotes][19][endif]
WHEREFORE, the assailed decision of the appellate court is

AFFIRMED with MODIFICATION but only in that (a) the award of nominal
damages is DELETED and (b) petitioner Rodolfo Roman is absolved
from liability. No costs.
SO ORDERED.
[G.R. No. 125817. January 16, 2002]

ABELARDO LIM and ESMADITO GUNNABAN, petitioners, vs.
COURT OF APPEALS and DONATO H. GONZALES, respondents.
DECISION
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.
On 22 July 1990, while the jeepney was running northbound along the
North Diversion Road somewhere in Meycauayan, Bulacan, it collided
with a ten-wheeler-truck owned by petitioner Abelardo Lim and driven by
his co-petitioner Esmadito Gunnaban. Gunnaban owned responsibility for
the accident, explaining that while he was traveling towards Manila the
truck suddenly lost its brakes. To avoid colliding with another vehicle, he
swerved to the left until he reached the center island. However, as the
center island eventually came to an end, he veered farther to the left until
he smashed into a Ferroza automobile, and later, into private
respondent's passenger jeepney driven by one Virgilio Gonzales. The
impact caused severe damage to both the Ferroza and the passenger
jeepney and left one (1) passenger dead and many others wounded.
Petitioner Lim shouldered the costs for hospitalization of the wounded,
compensated the heirs of the deceased passenger, and had the Ferroza
restored to good condition. He also negotiated with private respondent
and offered to have the passenger jeepney repaired at his shop. Private
respondent however did not accept the offer so Lim offered him
P20,000.00, the assessment of the damage as estimated by his chief
mechanic. Again, petitioner Lim's proposition was rejected; instead,
private respondent demanded a brand-new jeep or the amount 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.[if !
For his part, petitioner Gunnaban averred that the
accident was a fortuitous event which was beyond his control.[if !
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.[if !supportFootnotes][3][endif]
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.[if !
On the other hand, petitioners insisted that they could
have the vehicle repaired for P20,000.00.[if !supportFootnotes][5][endif]
On 1 October 1993 the trial court upheld private respondent's claim and
awarded him P236,000.00 with legal interest from 22 July 1990 as
compensatory damages and P30,000.00 as attorney's fees. In support of
its decision, the trial court ratiocinated that as vendee and current owner
of the passenger jeepney private respondent stood for all intents and
purposes as the real party in interest. Even Vallarta himself supported
private respondent's assertion of interest over the jeepney for, when he
was called to testify, he dispossessed himself of any claim or pretension
on the property. Gunnaban was found by the trial court to have caused
the accident since he panicked in the face of an emergency which was
rather palpable from his act of directing his vehicle to a perilous streak
down the fast lane of the superhighway then across the island and
ultimately to the opposite lane where it collided with the jeepney.
On the other hand, petitioner Lim's liability for Gunnaban's negligence
was premised on his want of diligence in supervising his employees. It
was admitted during trial that Gunnaban doubled as mechanic of the illfated truck despite the fact that he was neither tutored nor trained to
handle such task.[if !supportFootnotes][6][endif]
Forthwith, petitioners appealed to the Court of Appeals which, on 17 July
1996, affirmed the decision of the trial court. In upholding the decision of
the court a quo the appeals court concluded that while an operator under
the kabit system could not sue without joining the registered owner of the
vehicle as his principal, equity demanded that the present case be made
an exception.[if !supportFootnotes][7][endif] Hence this petition.
It is petitioners' contention that the Court of Appeals erred in sustaining

the decision of the trial court despite their opposition to the wellestablished 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 only
P30,000.00, an award of P236,000.00 is inconceivably large and would
amount to unjust enrichment.[if !supportFootnotes][8][endif]
Petitioners' attempt to illustrate that an affirmance of the appealed
decision could be supportive of the pernicious kabit system does not
persuade. Their labored efforts to demonstrate how the questioned
rulings of the courts a quo are diametrically opposed to the policy of the
law requiring operators of public utility vehicles to secure a certificate of
public convenience for their operation is quite unavailing.
The kabit system is an arrangement whereby a person who has been
granted a certificate of public convenience allows other persons who own
motor vehicles to operate them under his license, sometimes for a fee or
percentage of the earnings.[if !supportFootnotes][9][endif] Although the parties to such
an agreement are not outrightly penalized by law, the kabit system is
invariably recognized as being contrary to public policy and therefore void
and inexistent under Art. 1409 of the Civil Code.
In the early case of Dizon v. Octavio[if !supportFootnotes][10][endif] the Court
explained that one of the primary factors considered in the granting of a
certificate of public convenience for the business of public transportation
is the financial capacity of the holder of the license, so that liabilities
arising from accidents may be duly compensated. The kabit system
renders illusory such purpose and, worse, may still be availed of by the
grantee to escape civil liability caused by a negligent use of a vehicle
owned by another and operated under his license. If a registered owner is
allowed to escape liability by proving who the supposed owner of the
vehicle is, it would be easy for him to transfer the subject vehicle to
another who possesses no property with which to respond financially for
the damage done. Thus, for the safety of passengers and the public who
may have been wronged and deceived through the baneful kabit system,
the registered owner of the vehicle is not allowed to prove that another
person has become the owner so that he may be thereby relieved of
responsibility. Subsequent cases affirm such basic doctrine.[if !supportFootnotes]
[11][endif]
It would seem then that the thrust of the law in enjoining the kabit system
is not so much as to penalize the parties but to identify the person upon
whom responsibility may be fixed in case of an accident with the end view
of protecting the riding public. The policy therefore loses its force if the
public at large is not deceived, much less involved.

In the present case it is at once apparent that the evil sought to be
prevented in enjoining the kabit system does not exist. First, neither of
the parties to the pernicious kabit system is being held liable for
damages. Second, the case arose from the negligence of another vehicle
in using the public road to whom no representation, or misrepresentation,
as regards the ownership and operation of the passenger jeepney was
made and to whom no such representation, or misrepresentation, was
necessary. Thus it cannot be said that private respondent Gonzales and
the registered owner of the jeepney were in estoppel for leading the
public to believe that the jeepney belonged to the registered owner. Third,
the riding public was not bothered nor inconvenienced at the very least by
the illegal arrangement. On the contrary, it was private respondent
himself who had been wronged and was seeking compensation for the
damage done to him. Certainly, it would be the height of inequity to deny
him his right.
In light of the foregoing, it is evident that private respondent has the right
to proceed against petitioners for the damage caused on his passenger
jeepney as well as on his business. Any effort then to frustrate his claim
of damages by the ingenuity with which petitioners framed the issue
should be discouraged, if not repelled.
In awarding damages for tortuous injury, it becomes the sole design of
the courts to provide for adequate compensation by putting the plaintiff in
the same financial position he was in prior to the tort. It is a fundamental
principle in the law on damages that a defendant cannot be held liable in
damages for more than the actual loss which he has inflicted and that a
plaintiff is entitled to no more than the just and adequate compensation
for the injury suffered. His recovery is, in the absence of circumstances
giving rise to an allowance of punitive damages, limited to a fair
compensation for the harm done. The law will not put him in a position
better than where he should be in had not the wrong happened.[if !
In the present case, petitioners insist that as the passenger jeepney was
purchased in 1982 for only P30,000.00 to award damages considerably
greater than this amount would be improper and unjustified. Petitioners
are at best reminded that indemnification for damages comprehends not
only the value of the loss suffered but also that of the profits which the
obligee failed to obtain. In other words, indemnification for damages is
not limited to damnum emergens or actual loss but extends to lucrum
cessans or the amount of profit lost.[if !supportFootnotes][13][endif]
Had private respondent's jeepney not met an accident it could reasonably
be expected that it would have continued earning from the business in
which it was engaged. Private respondent avers that he derives an
average income of P300.00 per day from his passenger jeepney and this
earning was included in the award of damages made by the trial court
and upheld by the appeals court. The award therefore of P236,000.00 as
compensatory damages is not beyond reason nor speculative as it is
based on a reasonable estimate of the total damage suffered by private
respondent, i.e. damage wrought upon his jeepney and the income lost
from his transportation business. Petitioners for their part did not offer any
substantive evidence to refute the estimate made by the courts a quo.
However, we are constrained to depart from the conclusion of the lower
courts that upon the award of compensatory damages legal interest
should be imposed beginning 22 July 1990, i.e. the date of the accident.
Upon the provisions of Art. 2213 of the Civil Code, interest "cannot be
recovered upon unliquidated claims or damages, except when the
demand can be established with reasonable certainty." It is axiomatic that
if the suit were for damages, unliquidated and not known until definitely
ascertained, assessed and determined by the courts after proof, interest
at the rate of six percent (6%) per annum should be from the date the
judgment of the court is made (at which time the quantification of
damages may be deemed to be reasonably ascertained).[if !supportFootnotes][14]
is MODIFIED. Interest at the rate of six percent (6%) per annum shall be
computed from the time the judgment of the lower court is made until the
finality of this Decision. If the adjudged principal and interest remain
unpaid thereafter, the interest shall be twelve percent (12%) per annum
computed from the time judgment becomes final and executory until it is
fully satisfied.
Costs against petitioners.
SO ORDERED.
[endif]
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.[if !supportFootnotes][15][endif]
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
G.R. No. 92288 February 9, 1993
BRITISH AIRWAYS, INC., petitioner,

vs.
THE HON. COURT OF APPEALS, Twelfth Division, and FIRST
INTERNATIONAL TRADING AND GENERAL SERVICES, respondents.
NOCON, J.:
This is a petition for review on certiorari to annul and set aside the
decision dated November 15, 1989 of the Court of Appeals 1 affirming the
decision of the trial court 2 in ordering petitioner British Airways, Inc. to
pay private respondent First International Trading and General Services
actual damages, moral damages, corrective or exemplary damages,
attorney's fees and the costs as well as the Resolution dated February
15, 1990 3 denying petitioner's Motion for Reconsideration in the appealed
decision.
It appears on record that on February 15, 1981, private respondent First
International Trading and General Services Co., a duly licensed domestic
recruitment and placement agency, received a telex message from its
principal ROLACO Engineering and Contracting Services in Jeddah,
Saudi Arabia to recruit Filipino contract workers in behalf of said principal.
4
During the early part of March 1981, said principal paid to the Jeddah
branch of petitioner British Airways, Inc. airfare tickets for 93 contract
workers with specific instruction to transport said workers to Jeddah on or
before March 30, 1981.
As soon as petitioner received a prepaid ticket advice from its Jeddah
branch to transport the 93 workers, private respondent was immediately
informed by petitioner that its principal had forwarded 93 prepaid tickets.
Thereafter, private respondent instructed its travel agent, ADB Travel and
Tours. Inc., to book the 93 workers with petitioner but the latter failed to
fly said workers, thereby compelling private respondent to borrow money
in the amount of P304,416.00 in order to purchase airline tickets from the
other airlines as evidenced by the cash vouchers (Exhibits "B", "C" and
"C-1 to C-7") for the 93 workers it had recruited who must leave
immediately since the visas of said workers are valid only for 45 days and
the Bureau of Employment Services mandates that contract workers
must be sent to the job site within a period of 30 days.
Sometime in the first week of June, 1981, private respondent was again
informed by the petitioner that it had received a prepaid ticket advice from
its Jeddah branch for the transportation of 27 contract workers.
Immediatety, private respondent instructed its travel agent to book the 27
contract workers with the petitioner but the latter was only able to book
and confirm 16 seats on its June 9, 1981 flight. However, on the date of
the scheduled flight only 9 workers were able to board said flight while
the remaining 7 workers were rebooked to June 30, 1981 which bookings
were again cancelled by the petitioner without any prior notice to either
private respondent or the workers. Thereafter, the 7 workers were
rebooked to the July 4,1981 flight of petitioner with 6 more workers
booked for said flight. Unfortunately, the confirmed bookings of the 13
workers were again cancelled and rebooked to July 7, 1981.
On July 6, 1981, private respondent paid the travel tax of the said
workers as required by the petitioner but when the receipt of the tax
payments was submitted, the latter informed private respondent that it
can only confirm the seats of the 12 workers on its July 7, 1981 flight.
However, the confirmed seats of said workers were again cancelled
without any prior notice either to the private respondent or said workers.
The 12 workers were finally able to leave for Jeddah after private
respondent had bought tickets from the other airlines.
As a result of these incidents, private respondent sent a letter to
petitioner demanding compensation for the damages it had incurred by
the latter's repeated failure to transport its contract workers despite
confirmed bookings and payment of the corresponding travel taxes.
On July 23, 1981, the counsel of private respondent sent another letter to
the petitioner demanding the latter to pay the amount of P350,000.00
representing damages and unrealized profit or income which was denied
by the petitioner.
On August 8, 1981, private respondent received a telex message from its
principal cancelling the hiring of the remaining recruited workers due to
the delay in transporting the workers to Jeddah. 5
On January 27, 1982, private respondent filed a complaint for damages
against petitioner with the Regional Trial Court of Manila, Branch 1 in
Civil Case No. 82-4653.
On the other hand, petitioner, alleged in its Answer with counterclaims
that it received a telex message from Jeddah on March 20, 1981 advising
that the principal of private respondent had prepaid the airfares of 100
persons to transport private respondent's contract workers from Manila to
Jeddah on or before March 30, 1981. However, due to the unavailability
of space and limited time, petitioner had to return to its sponsor in Jeddah
the prepaid ticket advice consequently not even one of the alleged 93
contract workers were booked in any of its flights.
On June 5, 1981, petitioner received another prepaid ticket advice to
transport 16 contract workers of private respondent to Jeddah but the
travel agent of the private respondent booked only 10 contract workers
for petitioner's June 9, 1981 flight. However, only 9 contract workers
boarded the scheduled flight with 1 passenger not showing up as
evidenced by the Philippine Airlines' passenger manifest for Flight BA020 (Exhibit "7", "7-A", "7-B" and "7-C"). 6
Thereafter, private respondent's travel agent booked seats for 5 contract
workers on petitioner's July 4, 1981 flight but said travel agent cancelled
the booking of 2 passengers while the other 3 passengers did not show
up on said flight.
Sometime in July 1981, the travel agent of the private respondent booked
7 more contract workers in addition to the previous 5 contract workers
who were not able to board the July 4, 1981 flight with the petitioner's
July 7, 1981 flight which was accepted by petitioner subject to
reconfirmation.
However on July 6, 1981, petitioner's computer system broke down which
resulted to petitioner's failure to get a reconfirmation from Saudi Arabia
Airlines causing the automatic cancellation of the bookings of private
respondent's 12 contract workers. In the morning of July 7, 1981, the
computer system of the petitioner was reinstalled and immediately
petitioner tried to reinstate the bookings of the 12 workers with either Gulf
Air or Saudi Arabia Airlines but both airlines replied that no seat was
available on that date and had to place the 12 workers on the wait list.
Said information was duly relayed to the private respondent and the 12
workers before the scheduled flight.
After due trial on or on August 27, 1985, the trial court rendered its
decision, the dispositive portion of which reads as follows:
WHEREFORE, in view of all the foregoing, this Court renders judgment:
1. Ordering the defendant to pay the plaintiff actual damages in the sum
of P308,016.00;
2. Ordering defendant to pay moral damages to the plaintiff in the amount
of P20,000.00;
3. Ordering the defendant to pay the plaintiff P10,000.00 by way of
corrective or exemplary damages;
4. Ordering the defendant to pay the plaintiff 30% of its total claim for and
as attorney's fees; and
5. To pay the costs. 7
On March 13, 1986, petitioner appealed said decision to respondent
appellate court after the trial court denied its Motion for Reconsideration
on February 28, 1986.
On November 15, 1989, respondent appellate court affirmed the decision
of the trial court, the dispositive portion of which reads:
WHEREFORE, the decision appealed from is hereby AFFIRMED with
costs against the appellant. 8
On December 9, 1989, petitioner filed a Motion for Reconsideration which
was also denied.
Hence, this petition.
It is the contention of petitioner that private respondent has no cause of
action against it there being no perfected contract of carriage existing
between them as no ticket was ever issued to private respondent's
contract workers and, therefore, the obligation of the petitioner to
transport said contract workers did not arise. Furthermore, private
respondent's failure to attach any ticket in the complaint further proved

that it was never a party to the alleged transaction.
Petitioner's contention is untenable.
Private respondent had a valid cause of action for damages against
petitioner. A cause of action is an act or omission of one party in violation
of the legal right or rights of the other. 9 Petitioner's repeated failures to
transport private respondent's workers in its flight despite confirmed
booking of said workers clearly constitutes breach of contract and bad
faith on its part. In resolving petitioner's theory that private respondent
has no cause of action in the instant case, the appellate court correctly
held that:
In dealing with the contract of common carriage of passengers for
purpose of accuracy, there are two (2) aspects of the same, namely: (a)
the contract "to carry (at some future time)," which contract is consensual
and is necessarily perfected by mere consent (See Article 1356, Civil
Code of the Philippines), and (b) the contract "of carriage" or "of common
carriage" itself which should be considered as a real contract for not until
the carrier is actually used can the carrier be said to have already
assumed the obligation of a carrier. (Paras, Civil Code Annotated, Vol. V,
p. 429, Eleventh Ed.)
In the instant case, the contract "to carry" is the one involved which is
consensual and is perfected by the mere consent of the parties.
There is no dispute as to the appellee's consent to the said contract "to
carry" its contract workers from Manila to Jeddah. The appellant's
consent thereto, on the other hand, was manifested by its acceptance of
the PTA or prepaid ticket advice that ROLACO Engineering has prepaid
the airfares of the appellee's contract workers advising the appellant that
it must transport the contract workers on or before the end of March,
1981 and the other batch in June, 1981.
Even if a PTA is merely an advice from the sponsors that an airline is
authorized to issue a ticket and thus no ticket was yet issued, the fact
remains that the passage had already been paid for by the principal of
the appellee, and the appellant had accepted such payment. The
existence of this payment was never objected to nor questioned by the
appellant in the lower court. Thus, the cause or consideration which is the
fare paid for the passengers exists in this case.
The third essential requisite of a contract is an object certain. In this
contract "to carry", such an object is the transport of the passengers from
the place of departure to the place of destination as stated in the telex.
Accordingly, there could be no more pretensions as to the existence of an
oral contract of carriage imposing reciprocal obligations on both parties.
In the case of appellee, it has fully complied with the obligation, namely,
the payment of the fare and its willingness for its contract workers to
leave for their place of destination.
On the other hand, the facts clearly show that appellant was remiss in its
obligation to transport the contract workers on their flight despite
confirmation and bookings made by appellee's travelling agent.
xxx xxx xxx
Besides, appellant knew very well that time was of the essence as the
prepaid ticket advice had specified the period of compliance therewith,
and with emphasis that it could only be used if the passengers fly on BA.
Under the circumstances, the appellant should have refused acceptance
of the PTA from appellee's principal or to at least inform appellee that it
could not accommodate the contract workers.
xxx xxx xxx
While there is no dispute that ROLACO Engineering advanced the
payment for the airfares of the appellee's contract workers who were
recruited for ROLACO Engineering and the said contract workers were
the intended passengers in the aircraft of the appellant, the said contract
"to carry" also involved the appellee for as recruiter he had to see to it
that the contract workers should be transported to ROLACO Engineering
in Jeddah thru the appellant's transportation. For that matter, the
involvement of the appellee in the said contract "to carry" was well
demonstrated when
the appellant upon receiving the PTA immediately advised the appellee
thereof. 10
Petitioner also contends that the appellate court erred in awarding actual
damages in the amount of P308,016.00 to private respondent since all
expenses had already been subsequently reimbursed by the latter's
principal.
In awarding actual damages to private respondent, the appellate court
held that the amount of P308,016.00 representing actual damages refers
to private respondent's second cause of action involving the expenses
incurred by the latter which were not reimbursed by ROLACO
Engineering. However, in the Complaint 11 filed by private respondent, it
was alleged that private respondent suffered actual damages in the
amount of P308,016.00 representing the money it borrowed from friends
and financiers which is P304,416.00 for the 93 airline tickets and
P3,600.00 for the travel tax of the 12 workers. It is clear therefore that the
actual damages private respondent seeks to recover are the airline
tickets and travel taxes it spent for its workers which were already
reimbursed by its principal and not for any other expenses it had incurred
in the process of recruiting said contract workers. Inasmuch as all
expenses including the processing fees incurred by private respondent
had already been paid for by the latter's principal on a staggered basis as
admitted in open court by its managing director, Mrs. Bienvenida
Brusellas. 12 We do not find anymore justification in the appellate court's
decision in granting actual damages to private respondent.
Thus, while it may be true that private respondent was compelled to

borrow money for the airfare tickets of its contract workers when
petitioner failed to transport said workers, the reimbursements made by
its principal to private respondent failed to support the latter's claim that it
suffered actual damages as a result of petitioner's failure to transport said
workers. It is undisputed that private respondent had consistently
admitted that its principal had reimbursed all its expenses.
Article 2199 of the Civil Code provides that:
Except as provided by law or by stipulations, one is entitled to an
adequate compensation only for such pecuniary loss suffered by him as
he has duly proved. Such compensation is referred to as actual or
compensatory damages.
Furthermore, actual or compensatory damages cannot be presumed, but
must be duly proved, and proved with reasonable degree of certainty. A
court cannot rely on speculation, conjecture or guesswork as to the fact
and amount of damages, but must depend upon competent proof that
they have suffered and on evidence of the actual amount thereof. 13
However, private respondent is entitled to an award of moral and
exemplary damages for the injury suffered as a result of petitioner's
failure to transport the former's workers because of the latter's patent bad
faith in the performance of its obligation. As correctly pointed out by the
appellate court:
As evidence had proved, there was complete failure on the part of the
appellant to transport the 93 contract workers of the appellee on or before
March 30, 1981 despite receipt of the payment for their airfares, and
acceptance of the same by the appellant, with specific instructions from
the appellee's principal to transport the contract workers on or before
March 30, 1981. No previous notice was ever registered by the appellant
that it could not comply with the same. And then followed the detestable
act of appellant in unilaterally cancelling, booking and rebooking
unreasonably the flight of appellee's contract workers in June to July,
1981 without prior notice. And all of these actuations of the appellant
indeed constitute malice and evident bad faith which had caused damage
and besmirched the reputation and business image of the appellee. 14
As to the alleged damages suffered by the petitioner as stated in its
counterclaims, the record shows that no claim for said damages was ever
made by the petitioner immediately after their alleged occurrence
therefore said counterclaims were mere afterthoughts when private
respondent filed the present case.
WHEREFORE, the assailed decision is hereby AFFIRMED with the
MODIFICATION that the award of actual damages be deleted from said
decision.
SO ORDERED.
[G.R. No. 150255. April 22, 2005]
SCHMITZ TRANSPORT & BROKERAGE CORPORATION, petitioner,

vs. TRANSPORT VENTURE, INC., INDUSTRIAL INSURANCE
COMPANY, LTD., and BLACK SEA SHIPPING AND DODWELL now
INCHCAPE SHIPPING SERVICES, respondents.
DECISION
CARPIO-MORALES, J.:
On petition for review is the June 27, 2001 Decision[1] of the Court of
Appeals, as well as its Resolution[2] dated September 28, 2001 denying
the motion for reconsideration, which affirmed that of Branch 21 of the
Regional Trial Court (RTC) of Manila in Civil Case No. 92-63132[3] holding
petitioner Schmitz Transport Brokerage Corporation (Schmitz Transport),
together with Black Sea Shipping Corporation (Black Sea), represented
by its ship agent Inchcape Shipping Inc. (Inchcape), and Transport
Venture (TVI), solidarily liable for the loss of 37 hot rolled steel sheets in
coil that were washed overboard a barge.
On September 25, 1991, SYTCO Pte Ltd. Singapore shipped from the
port of Ilyichevsk, Russia on board M/V Alexander Saveliev (a vessel of
Russian registry and owned by Black Sea) 545 hot rolled steel sheets in
coil weighing 6,992,450 metric tons.
The cargoes, which were to be discharged at the port of Manila in favor of
the consignee, Little Giant Steel Pipe Corporation (Little Giant),[4] were
insured against all risks with Industrial Insurance Company Ltd.
(Industrial Insurance) under Marine Policy No. M-91-3747-TIS.[5]
The vessel arrived at the port of Manila on October 24, 1991 and the
Philippine Ports Authority (PPA) assigned it a place of berth at the
outside breakwater at the Manila South Harbor.[6]
Schmitz Transport, whose services the consignee engaged to secure the
requisite clearances, to receive the cargoes from the shipside, and to
deliver them to its (the consignees) warehouse at Cainta, Rizal,[7] in turn
engaged the services of TVI to send a barge and tugboat at shipside.
On October 26, 1991, around 4:30 p.m., TVIs tugboat Lailani towed the
barge Erika V to shipside.[8]
By 7:00 p.m. also of October 26, 1991, the tugboat, after positioning the
barge alongside the vessel, left and returned to the port terminal.[9] At
9:00 p.m., arrastre operator Ocean Terminal Services Inc. commenced to
unload 37 of the 545 coils from the vessel unto the barge.
By 12:30 a.m. of October 27, 1991 during which the weather condition
had become inclement due to an approaching storm, the unloading unto
the barge of the 37 coils was accomplished.[10] No tugboat pulled the
barge back to the pier, however.
At around 5:30 a.m. of October 27, 1991, due to strong waves,[11] the
crew of the barge abandoned it and transferred to the vessel. The barge
pitched and rolled with the waves and eventually capsized, washing the
37 coils into the sea.[12] At 7:00 a.m., a tugboat finally arrived to pull the
already empty and damaged barge back to the pier.[13]
Earnest efforts on the part of both the consignee Little Giant and
Industrial Insurance to recover the lost cargoes proved futile.[14]
Little Giant thus filed a formal claim against Industrial Insurance which
paid it the amount of P5,246,113.11. Little Giant thereupon executed a
subrogation receipt[15] in favor of Industrial Insurance.
Industrial Insurance later filed a complaint against Schmitz Transport,
TVI, and Black Sea through its representative Inchcape (the defendants)
before the RTC of Manila, for the recovery of the amount it paid to Little
Giant plus adjustment fees, attorneys fees, and litigation expenses.[16]
Industrial Insurance faulted the defendants for undertaking the unloading
of the cargoes while typhoon signal No. 1 was raised in Metro Manila.[17]
By Decision of November 24, 1997, Branch 21 of the RTC held all the
defendants negligent for unloading the cargoes outside of the breakwater
notwithstanding the storm signal.[18] The dispositive portion of the decision
reads:
WHEREFORE, premises considered, the Court renders judgment in favor
of the plaintiff, ordering the defendants to pay plaintiff jointly and severally
the sum of P5,246,113.11 with interest from the date the complaint was
filed until fully satisfied, as well as the sum of P5,000.00 representing the
adjustment fee plus the sum of 20% of the amount recoverable from the
defendants as attorneys fees plus the costs of suit. The counterclaims
and cross claims of defendants are hereby DISMISSED for lack of [m]erit.
[19]
To the trial courts decision, the defendants Schmitz Transport and TVI
filed a joint motion for reconsideration assailing the finding that they are
common carriers and the award of excessive attorneys fees of more than
P1,000,000. And they argued that they were not motivated by gross or
evident bad faith and that the incident was caused by a fortuitous event.
[20]
By resolution of February 4, 1998, the trial court denied the motion for
reconsideration. [21]
All the defendants appealed to the Court of Appeals which, by decision of
June 27, 2001, affirmed in toto the decision of the trial court, [22] it finding
that all the defendants were common carriers Black Sea and TVI for
engaging in the transport of goods and cargoes over the seas as a
regular business and not as an isolated transaction,[23] and Schmitz
Transport for entering into a contract with Little Giant to transport the
cargoes from ship to port for a fee.[24]
In holding all the defendants solidarily liable, the appellate court ruled that
each one was essential such that without each others contributory
negligence the incident would not have happened and so much so that
the person principally liable cannot be distinguished with sufficient
accuracy.[25]
In discrediting the defense of fortuitous event, the appellate court held
that although defendants obviously had nothing to do with the force of
nature, they however had control of where to anchor the vessel, where
discharge will take place and even when the discharging will commence.
[26]
The defendants respective motions for reconsideration having been

denied by Resolution[27] of September 28, 2001, Schmitz Transport
(hereinafter referred to as petitioner) filed the present petition against TVI,
Industrial Insurance and Black Sea.
Petitioner asserts that in chartering the barge and tugboat of TVI, it was
acting for its principal, consignee Little Giant, hence, the transportation
contract was by and between Little Giant and TVI.[28]
By Resolution of January 23, 2002, herein respondents Industrial
Insurance, Black Sea, and TVI were required to file their respective
Comments.[29]
By its Comment, Black Sea argued that the cargoes were received by the
consignee through petitioner in good order, hence, it cannot be faulted, it
having had no control and supervision thereover.[30]
For its part, TVI maintained that it acted as a passive party as it merely
received the cargoes and transferred them unto the barge upon the
instruction of petitioner.[31]
In issue then are:
(1) Whether the loss of the cargoes was due to a fortuitous event,
independent of any act of negligence on the part of petitioner Black Sea
and TVI, and
(2) If there was negligence, whether liability for the loss may attach to
Black Sea, petitioner and TVI.
When a fortuitous event occurs, Article 1174 of the Civil Code absolves
any party from any and all liability arising therefrom:
ART. 1174. Except in cases expressly specified by the law, or when it is
otherwise declared by stipulation, or when the nature of the obligation
requires the assumption of risk, no person shall be responsible for those
events which could not be foreseen, or which though foreseen, were
inevitable.
In order, to be considered a fortuitous event, however, (1) the cause of
the unforeseen and unexpected occurrence, or the failure of the debtor to
comply with his obligation, must be independent of human will; (2) it must
be impossible to foresee the event which constitute the caso fortuito, or if
it can be foreseen it must be impossible to avoid; (3) the occurrence must
be such as to render it impossible for the debtor to fulfill his obligation in
any manner; and (4) the obligor must be free from any participation in the
aggravation of the injury resulting to the creditor.[32]
[T]he principle embodied in the act of God doctrine strictly requires that
the act must be occasioned solely by the violence of nature. Human

intervention is to be excluded from creating or entering into the cause of
the mischief. When the effect is found to be in part the result of the
participation of man, whether due to his active intervention or neglect or
failure to act, the whole occurrence is then humanized and removed from
the rules applicable to the acts of God.[33]
The appellate court, in affirming the finding of the trial court that human
intervention in the form of contributory negligence by all the defendants
resulted to the loss of the cargoes,[34] held that unloading outside the
breakwater, instead of inside the breakwater, while a storm signal was up
constitutes negligence.[35] It thus concluded that the proximate cause of
the loss was Black Seas negligence in deciding to unload the cargoes at
an unsafe place and while a typhoon was approaching.[36]
From a review of the records of the case, there is no indication that there
was greater risk in loading the cargoes outside the breakwater. As the
defendants proffered, the weather on October 26, 1991 remained normal
with moderate sea condition such that port operations continued and
proceeded normally.[37]
The weather data report,[38] furnished and verified by the Chief of the
Climate Data Section of PAG-ASA and marked as a common exhibit of
the parties, states that while typhoon signal No. 1 was hoisted over Metro
Manila on October 23-31, 1991, the sea condition at the port of Manila at
5:00 p.m. - 11:00 p.m. of October 26, 1991 was moderate. It cannot,
therefore, be said that the defendants were negligent in not unloading the
cargoes upon the barge on October 26, 1991 inside the breakwater.
That no tugboat towed back the barge to the pier after the cargoes were
completely loaded by 12:30 in the morning[39] is, however, a material fact
which the appellate court failed to properly consider and appreciate[40] the
proximate cause of the loss of the cargoes. Had the barge been towed
back promptly to the pier, the deteriorating sea conditions
notwithstanding, the loss could have been avoided. But the barge was left
floating in open sea until big waves set in at 5:30 a.m., causing it to sink
along with the cargoes.[41] The loss thus falls outside the act of God
doctrine.
The proximate cause of the loss having been determined, who among the
parties is/are responsible therefor?
Contrary to petitioners insistence, this Court, as did the appellate court,
finds that petitioner is a common carrier. For it undertook to transport the
cargoes from the shipside of M/V Alexander Saveliev to the consignees
warehouse at Cainta, Rizal. As the appellate court put it, as long as a
person or corporation holds [itself] to the public for the purpose of
transporting goods as [a] business, [it] is already considered a common
carrier regardless if [it] owns the vehicle to be used or has to hire one.[42]
That petitioner is a common carrier, the testimony of its own Vice-
President and General Manager Noel Aro that part of the services it
offers to its clients as a brokerage firm includes the transportation of
cargoes reflects so.
Atty. Jubay: Will you please tell us what [are you] functions x x x as
Executive Vice-President and General Manager of said Company?
Mr. Aro: Well, I oversee the entire operation of the brokerage and
transport business of the company. I also handle the various division
heads of the company for operation matters, and all other related
functions that the President may assign to me from time to time, Sir.
Q: Now, in connection [with] your duties and functions as you mentioned,
will you please tell the Honorable Court if you came to know the company
by the name Little Giant Steel Pipe Corporation?
A: Yes, Sir. Actually, we are the brokerage firm of that Company.
Q: And since when have you been the brokerage firm of that company, if
you can recall?
A: Since 1990, Sir.
Q: Now, you said that you are the brokerage firm of this Company. What
work or duty did you perform in behalf of this company?
A: We handled the releases (sic) of their cargo[es] from the Bureau of
Customs. We [are] also in-charged of the delivery of the goods to their
warehouses. We also handled the clearances of their shipment at the
Bureau of Customs, Sir.
xxx
Q: Now, what precisely [was] your agreement with this Little Giant Steel
Pipe Corporation with regards to this shipment? What work did you do
with this shipment?
A: We handled the unloading of the cargo[es] from vessel to lighter and
then the delivery of [the] cargo[es] from lighter to BASECO then to the
truck and to the warehouse, Sir.
Q: Now, in connection with this work which you are doing, Mr. Witness,
you are supposed to perform, what equipment do (sic) you require or did
you use in order to effect this unloading, transfer and delivery to the
warehouse?
A: Actually, we used the barges for the ship side operations, this
unloading [from] vessel to lighter, and on this we hired or we subcontracted with [T]ransport Ventures, Inc. which [was] in-charged (sic) of
the barges. Also, in BASECO compound we are leasing cranes to have
the cargo unloaded from the barge to trucks, [and] then we used trucks to
deliver [the cargoes] to the consignees warehouse, Sir.
Q: And whose trucks do you use from BASECO compound to the
consignees warehouse?
A: We utilized of (sic) our own trucks and we have some other contracted
trucks, Sir.
xxx
ATTY. JUBAY: Will you please explain to us, to the Honorable Court why
is it you have to contract for the barges of Transport Ventures
Incorporated in this particular operation?
A: Firstly, we dont own any barges. That is why we hired the services of
another firm whom we know [al]ready for quite sometime, which is
Transport Ventures, Inc. (Emphasis supplied)[43]
It is settled that under a given set of facts, a customs broker may be
regarded as a common carrier. Thus, this Court, in A.F. Sanchez
Brokerage, Inc. v. The Honorable Court of Appeals,[44] held:
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,
Art. 1732. Common carriers are persons, corporations, firms or
passengers or goods or both, by land, water, or air, for compensation,
xxx
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. 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.[45]
And in Calvo v. UCPB General Insurance Co. Inc.,[46] this Court held that
as the transportation of goods is an integral part of a customs broker, the
customs broker is also a common carrier. For to declare otherwise would
be to deprive those with whom [it] contracts the protection which the law
affords them notwithstanding the fact that the obligation to carry goods for
[its] customers, is part and parcel of petitioners business.[47]
As for petitioners argument that being the agent of Little Giant, any
negligence it committed was deemed the negligence of its principal, it
does not persuade.
True, petitioner was the broker-agent of Little Giant in securing the
release of the cargoes. In effecting the transportation of the cargoes from
the shipside and into Little Giants warehouse, however, petitioner was
discharging its own personal obligation under a contact of carriage.
Petitioner, which did not have any barge or tugboat, engaged the
services of TVI as handler[48] to provide the barge and the tugboat. In their
Service Contract,[49] while Little Giant was named as the consignee,
petitioner did not disclose that it was acting on commission and was
chartering the vessel for Little Giant.[50] Little Giant did not thus
automatically become a party to the Service Contract and was not,
therefore, bound by the terms and conditions therein.
Not being a party to the service contract, Little Giant cannot directly sue
TVI based thereon but it can maintain a cause of action for negligence.[51]
In the case of TVI, while it acted as a private carrier for which it was
under no duty to observe extraordinary diligence, it was still required to
observe ordinary diligence to ensure the proper and careful handling,
care and discharge of the carried goods.
Thus, Articles 1170 and 1173 of the Civil Code provide:
ART. 1170. Those who in the performance of their obligations are guilty
of fraud, negligence, or delay, and those who in any manner contravene
the tenor thereof, are liable for damages.
ART. 1173. The fault or negligence of the obligor consists in the omission
of that diligence which is required by the nature of the obligation and
corresponds with the circumstances of the persons, of the time and of the
place. When negligence shows bad faith, the provisions of articles 1171
and 2202, paragraph 2, shall apply.
If the law or contract does not state the diligence which is to be observed
in the performance, that which is expected of a good father of a family
shall be required.
Was the reasonable care and caution which an ordinarily prudent person
would have used in the same situation exercised by TVI?[52]
This Court holds not.
TVIs failure to promptly provide a tugboat did not only increase the
risk that might have been reasonably anticipated during the shipside
operation, but was the proximate cause of the loss. A man of ordinary
prudence would not leave a heavily loaded barge floating for a
considerable number of hours, at such a precarious time, and in the open
sea, knowing that the barge does not have any power of its own and is
totally defenseless from the ravages of the sea. That it was nighttime
and, therefore, the members of the crew of a tugboat would be charging
overtime pay did not excuse TVI from calling for one such tugboat.
As for petitioner, for it to be relieved of liability, it should, following
Article 1739[53] of the Civil Code, prove that it exercised due diligence to
prevent or minimize the loss, before, during and after the occurrence of
the storm in order that it may be exempted from liability for the loss of the
goods.
While petitioner sent checkers[54] and a supervisor[55] on board the
vessel to counter-check the operations of TVI, it failed to take all available
and reasonable precautions to avoid the loss. After noting that TVI failed
to arrange for the prompt towage of the barge despite the deteriorating
sea conditions, it should have summoned the same or another tugboat to
extend help, but it did not.
This Court holds then that petitioner and TVI are solidarily liable [56]
for the loss of the cargoes. The following pronouncement of the Supreme
Court is instructive:
The foundation of LRTAs liability is the contract of carriage and its

obligation to indemnify the victim arises from the breach of that contract
by reason of its failure to exercise the high diligence required of the
common carrier. In the discharge of its commitment to ensure the safety
of passengers, a carrier may choose to hire its own employees or avail
itself of the services of an outsider or an independent firm to undertake
the task. In either case, the common carrier is not relieved of its
responsibilities under the contract of carriage.
Should Prudent be made likewise liable? If at all, that liability could
only be for tort under the provisions of Article 2176 and related
provisions, in conjunction with Article 2180 of the Civil Code. x x x [O]ne
might ask further, how then must the liability of the common carrier, on
one hand, and an independent contractor, on the other hand, be
described? It would be solidary. A contractual obligation can be breached
by tort and when the same act or omission causes the injury, one
resulting in culpa contractual and the other in culpa aquiliana, Article
2194 of the Civil Code can well apply. In fine, a liability for tort may arise
even under a contract, where tort is that which breaches the contract.
Stated differently, when an act which constitutes a breach of contract
would have itself constituted the source of a quasi-delictual liability had
no contract existed between the parties, the contract can be said to have
been breached by tort, thereby allowing the rules on tort to apply.[57]
As for Black Sea, its duty as a common carrier extended only from
the time the goods were surrendered or unconditionally placed in its
possession and received for transportation until they were delivered
actually or constructively to consignee Little Giant.[58]
Parties to a contract of carriage may, however, agree upon a
definition of delivery that extends the services rendered by the carrier. In
the case at bar, Bill of Lading No. 2 covering the shipment provides that
delivery be made to the port of discharge or so near thereto as she may
safely get, always afloat.[59] The delivery of the goods to the consignee
was not from pier to pier but from the shipside of M/V Alexander Saveliev
and into barges, for which reason the consignee contracted the services
of petitioner. Since Black Sea had constructively delivered the cargoes to
Little Giant, through petitioner, it had discharged its duty.[60]
In fine, no liability may thus attach to Black Sea.
Respecting the award of attorneys fees in an amount over
P1,000,000.00 to Industrial Insurance, for lack of factual and legal basis,
this Court sets it aside. While Industrial Insurance was compelled to
litigate its rights, such fact by itself does not justify the award of attorneys
fees under Article 2208 of the Civil Code. For no sufficient showing of bad
faith would be reflected in a partys persistence in a case other than an
erroneous conviction of the righteousness of his cause.[61] To award
attorneys fees to a party just because the judgment is rendered in its
favor would be tantamount to imposing a premium on ones right to litigate

or seek judicial redress of legitimate grievances.[62]
On the award of adjustment fees: The adjustment fees and
expense of divers were incurred by Industrial Insurance in its voluntary
but unsuccessful efforts to locate and retrieve the lost cargo. They do not
constitute actual damages.[63]
As for the court a quos award of interest on the amount claimed,
the same calls for modification following the ruling in Eastern Shipping
Lines, Inc. v. Court of Appeals[64] that when the demand cannot be
reasonably established at the time the demand is made, the interest shall
begin to run not from the time the claim is made judicially or
extrajudicially but from the date the judgment of the court is made (at
which the time the quantification of damages may be deemed to have
been reasonably ascertained).[65]
WHEREFORE, judgment is hereby rendered ordering petitioner
Schmitz Transport & Brokerage Corporation, and Transport Venture
Incorporation jointly and severally liable for the amount of P5,246,113.11
with the MODIFICATION that interest at SIX PERCENT per annum of the
amount due should be computed from the promulgation on November 24,
1997 of the decision of the trial court.
Costs against petitioner.
SO ORDERED.
G.R. No. 168151

September 4, 2009
REGIONAL CONTAINER LINES (RCL) OF SINGAPORE and EDSA
SHIPPING AGENCY, Petitioners,
vs.
THE NETHERLANDS INSURANCE CO. (PHILIPPINES), INC.,
Respondent.
DECISION
BRION, J.:
For our resolution is the petition for review on certiorari filed by petitioners
Regional Container Lines of Singapore (RCL) and EDSA Shipping
Agency (EDSA Shipping) to annul and set aside the decision1 and
resolution2 of the Court of Appeals (CA) dated May 26, 2004 and May 10,
2005, respectively, in CA-G.R. CV No. 76690.
RCL is a foreign corporation based in Singapore. It does business in the
Philippines through its agent, EDSA Shipping, a domestic corporation
organized and existing under Philippine laws. Respondent Netherlands
Insurance Company (Philippines), Inc. (Netherlands Insurance) is
likewise a domestic corporation engaged in the marine underwriting
business.
FACTUAL ANTECEDENTS
The pertinent facts, based on the records are summarized below.
On October 20, 1995, 405 cartons of Epoxy Molding Compound were
consigned to be shipped from Singapore to Manila for Temic Telefunken
Microelectronics Philippines (Temic). U-Freight Singapore PTE Ltd.3 (UFreight Singapore), a forwarding agent based in Singapore, contracted
the services of Pacific Eagle Lines PTE. Ltd. (Pacific Eagle) to transport
the subject cargo. The cargo was packed, stored, and sealed by Pacific
Eagle in its Refrigerated Container No. 6105660 with Seal No. 13223. As
the cargo was highly perishable, the inside of the container had to be
kept at a temperature of 0 Celsius. Pacific Eagle then loaded the
refrigerated container on board the M/V Piya Bhum, a vessel owned by
RCL, with which Pacific Eagle had a slot charter agreement. RCL duly
issued its own Bill of Lading in favor of Pacific Eagle.
To insure the cargo against loss and damage, Netherlands Insurance
issued a Marine Open Policy in favor of Temic, as shown by MPO-2105081-94 and Marine Risk Note MRN-21 14022, to cover all
losses/damages to the shipment.
On October 25, 1995, the M/V Piya Bhum docked in Manila. After
unloading the refrigerated container, it was plugged to the power terminal
of the pier to keep its temperature constant. Fidel Rocha (Rocha), VicePresident for Operations of Marines Adjustment Corporation,
accompanied by two surveyors, conducted a protective survey of the
cargo. They found that based on the temperature chart, the temperature
reading was constant from October 18, 1995 to October 25, 1995 at 0
Celsius. However, at midnight of October 25, 1995 when the cargo had
already been unloaded from the ship the temperature fluctuated with a
reading of 33 Celsius. Rocha believed the fluctuation was caused by the
burnt condenser fan motor of the refrigerated container.
On November 9, 1995, Temic received the shipment. It found the cargo
completely damaged. Temic filed a claim for cargo loss against
Netherlands Insurance, with supporting claims documents. The
Netherlands Insurance paid Temic the sum of P1,036,497.00 under the
terms of the Marine Open Policy. Temic then executed a loss and
subrogation receipt in favor of Netherlands Insurance.
Seven months from delivery of the cargo or on June 4, 1996, Netherlands
Insurance filed a complaint for subrogation of insurance settlement with
the Regional Trial Court, Branch 5, Manila, against "the unknown owner
of M/V Piya Bhum" and TMS Ship Agencies (TMS), the latter thought to
be the local agent of M/V Piya Bhums unknown owner.4 The complaint
was docketed as Civil Case No. 96-78612.
Netherlands Insurance amended the complaint on January 17, 1997 to
implead EDSA Shipping, RCL, Eagle Liner Shipping Agencies, U-Freight
Singapore, and U-Ocean (Phils.), Inc. (U-Ocean), as additional
defendants. A third amended complaint was later made, impleading
Pacific Eagle in substitution of Eagle Liner Shipping Agencies.
TMS filed its answer to the original complaint. RCL and EDSA Shipping
filed their answers with cross-claim and compulsory counterclaim to the
second amended complaint. U-Ocean likewise filed an answer with
compulsory counterclaim and cross-claim. During the pendency of the
case, U-Ocean, jointly with U-Freight Singapore, filed another answer
with compulsory counterclaim. Only Pacific Eagle and TMS filed their
answers to the third amended complaint.
The defendants all disclaimed liability for the damage caused to the
cargo, citing several reasons why Netherland Insurances claims must be
rejected. Specifically, RCL and EDSA Shipping denied negligence in the
transport of the cargo; they attributed any negligence that may have
caused the loss of the shipment to their co-defendants. They likewise
asserted that no valid subrogation exists, as the payment made by
Netherlands Insurance to the consignee was invalid. By way of
affirmative defenses, RCL and EDSA Shipping averred that the
Netherlands Insurance has no cause of action, and is not the real partyin-interest, and that the claim is barred by laches/prescription.
After Netherlands Insurance had made its formal offer of evidence, the
defendants including RCL and EDSA Shipping sought leave of court to
file their respective motions to dismiss based on demurrer to evidence.
RCL and EDSA Shipping, in their motion, insisted that Netherlands
Insurance had (1) failed to prove any valid subrogation, and (2) failed to
establish that any negligence on their part or that the loss was sustained
while the cargo was in their custody.
On May 22, 2002, the trial court handed down an Order dismissing Civil
Case No. 96-78612 on demurrer to evidence. The trial court ruled that
while there was valid subrogation, the defendants could not be held liable
for the loss or damage, as their respective liabilities ended at the time of
the discharge of the cargo from the ship at the Port of Manila.
Netherlands Insurance seasonably appealed the order of dismissal to the
CA.
On May 26, 2004, the CA disposed of the appeal as follows:
WHEREFORE, in view of the foregoing, the dismissal of the complaint
against defendants Regional Container Lines and Its local agent, EDSA
Shipping Agency, is REVERSED and SET ASIDE. The dismissal of the
complaint against the other defendants is AFFIRMED. Pursuant to
Section 1, Rule 33 of the 1997 Rules of Civil Procedure, defendants
Regional Container Lines and EDSA Shipping Agency are deemed to
have waived the right to present evidence.
As such, defendants Regional Container Lines and EDSA Shipping
Agency are ordered to reimburse plaintiff in the sum of P1,036,497.00
with interest from date hereof until fully paid.
No costs.
SO ORDERED. [Emphasis supplied.]
The CA dismissed Netherland Insurances complaint against the other
defendants after finding that the claim had already been barred by
prescription.5
Having been found liable for the damage to the cargo, RCL and EDSA
Shipping filed a motion for reconsideration, but the CA maintained its
original conclusions.
The sole issue for our resolution is whether the CA correctly held RCL
and EDSA Shipping liable as common carriers under the theory of
presumption of negligence.
THE COURTS RULING
The present case is governed by the following provisions of the Civil
Code:
ART. 1733. Common carriers, from the nature of their business and for
reasons of public policy, are 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.
Such extraordinary diligence in the vigilance over the goods is further
expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while the
extraordinary diligence for the safety of the passengers is further set forth
in articles1755 and 1756.
ART. 1734. Common carriers are responsible for the loss, destruction, or
deterioration of the goods, unless the same is due to any of the following
causes only:
1) Flood, storm, earthquake, lightning, or other natural disaster or
calamity;
2) Act of the public enemy in war, whether international or civil;
3) Act of omission of the shipper or owner of the goods;
4) The character of the goods or defects in the packing or in the
containers;
5) Order or act of competent public authority.
ART. 1735. In all cases other that those mentioned in Nos. 1, 2, 3, 4 and
5 of the preceding article, if the goods are lost, destroyed, or deteriorated,
negligently, unless they prove that they observed extraordinary diligence
as required by article 1733.
ART. 1736. The extraordinary responsibility of the common carrier lasts
from the time the goods are unconditionally placed in the possession of,
and received by the carrier for transportation until the sane are delivered,
actually or constructively, by the carrier to the consignee, or to the person
who has a right to receive them, without prejudice to the provisions of
articles 1738.
ART. 1738. The extraordinary liability of the common carrier continues to
be operative even during the time the goods are stored in a warehouse of
the carrier at the place of destination, until the consignee has been
advised of the arrival of the goods and has had reasonable opportunity
thereafter to remove them or otherwise dispose of them.
ART. 1742. Even if the loss, destruction, or deterioration of the goods
should be caused by the character of the goods, or the faulty nature of
the packing or of the containers, the common carrier must exercise due
diligence to forestall or lessen the loss.
In Central Shipping Company, Inc. v. Insurance Company of North
America,6 we reiterated the rules for the liability of a common carrier for
lost or damaged cargo as follows:
(1) Common carriers are bound to observe extraordinary diligence over
the goods they transport, according to all the circumstances of each
case;
(2) In the event of loss, destruction, or deterioration of the insured goods,
common carriers are responsible, unless they can prove that such loss,
destruction, or deterioration was brought about by, among others, "flood,
storm, earthquake, lightning, or other natural disaster or calamity"; and
(3) In all other cases not specified under Article 1734 of the Civil Code,
negligently, unless they observed extraordinary diligence.7
In the present case, RCL and EDSA Shipping disclaim any responsibility
for the loss or damage to the goods in question. They contend that the
cause of the damage to the cargo was the "fluctuation of the temperature
in the reefer van," which fluctuation occurred after the cargo had already
been discharged from the vessel; no fluctuation, they point out, arose
when the cargo was still on board M/V Piya Bhum. As the cause of the
damage to the cargo occurred after the same was already discharged
from the vessel and was under the custody of the arrastre operator
(International Container Terminal Services, Inc. or ICTSI), RCL and
EDSA Shipping posit that the presumption of negligence provided in
Article 1735 of the Civil Code should not apply. What applies in this case
is Article 1734, particularly paragraphs 3 and 4 thereof, which exempts
the carrier from liability for loss or damage to the cargo when it is caused
either by an act or omission of the shipper or by the character of the
goods or defects in the packing or in the containers. Thus, RCL and
EDSA Shipping seek to lay the blame at the feet of other parties.
We do not find the arguments of RCL and EDSA Shipping meritorious.
A common carrier is presumed to have been negligent if it fails to prove
that it exercised extraordinary vigilance over the goods it transported.8
When the goods shipped are either lost or arrived in damaged condition,
a presumption arises against the carrier of its failure to observe that
diligence, and there need not be an express finding of negligence to hold
it liable.91avvphi1
To overcome the presumption of negligence, the common carrier must
establish by adequate proof that it exercised extraordinary diligence over
the goods. It must do more than merely show that some other party could
be responsible for the damage.10
In the present case, RCL and EDSA Shipping failed to prove that they did
exercise that degree of diligence required by law over the goods they
transported. Indeed, there is sufficient evidence showing that the
fluctuation of the temperature in the refrigerated container van, as
recorded in the temperature chart, occurred after the cargo had been
discharged from the vessel and was already under the custody of the
arrastre operator, ICTSI. This evidence, however, does not disprove that
the condenser fan which caused the fluctuation of the temperature in
the refrigerated container was not damaged while the cargo was being
unloaded from the ship. It is settled in maritime law jurisprudence that
cargoes while being unloaded generally remain under the custody of the
carrier;11 RCL and EDSA Shipping failed to dispute this.1avvphi1
RCL and EDSA Shipping could have offered evidence before the trial
court to show that the damage to the condenser fan did not occur: (1)
while the cargo was in transit; (2) while they were in the act of
discharging it from the vessel; or (3) while they were delivering it actually
or constructively to the consignee. They could have presented proof to
show that they exercised extraordinary care and diligence in the handling
of the goods, but they opted to file a demurrer to evidence. As the order
granting their demurrer was reversed on appeal, the CA correctly ruled
that they are deemed to have waived their right to present evidence,12
and the presumption of negligence must stand.
It is for this reason as well that we find RCL and EDSA Shippings claim
that the loss or damage to the cargo was caused by a defect in the
packing or in the containers. To exculpate itself from liability for the
loss/damage to the cargo under any of the causes, the common carrier is
burdened to prove any of the causes in Article 1734 of the Civil Code
claimed by it by a preponderance of evidence. If the carrier succeeds, the
burden of evidence is shifted to the shipper to prove that the carrier is
negligent.13 RCL and EDSA Shipping, however, failed to satisfy this
standard of evidence and in fact offered no evidence at all on this point; a
reversal of a dismissal based on a demurrer to evidence bars the
defendant from presenting evidence supporting its allegations.
WHEREFORE, we DENY the petition for review on certiorari filed by the
Regional Container Lines of Singapore and EDSA Shipping Agency. The
decision of the Court of Appeals dated May 26, 2004 in CA-G.R. CV No.
76690 is AFFIRMED IN TOTO. Costs against the petitioners.
SO ORDERED.
G.R. No. 170071

March 9, 2011
HEIRS OF JOSE MARCIAL K. OCHOA namely: RUBY B. OCHOA,
MICAELA B. OCHOA and JOMAR B. OCHOA, Petitioners,
vs.
G & S TRANSPORT CORPORATION, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 170125
G & S TRANSPORT CORPORATION, Petitioner,
vs.
HEIRS OF JOSE MARCIAL K. OCHOA namely: RUBY B. OCHOA,
MICAELA B. OCHOA and JOMAR B. OCHOA, Respondents.
DECISION
DEL CASTILLO, J.:
An accident which claimed the life of a passenger is the root of these two
petitions - one brought before us by the common carrier and the other by
the heirs of the deceased.
These consolidated Petitions for Review on Certiorari assail the Court of
Appeals (CA) Decision1 dated June 29, 2005 in CA-G.R. CV No. 75602
which affirmed with modification the December 21, 2001 Decision and
March 5, 2002 Order of the trial court. Likewise assailed is the
Resolution2 dated October 12, 2005 denying the parties respective
Motions for Reconsideration thereto.
Factual Antecedents
Jose Marcial K. Ochoa (Jose Marcial) died on the night of March 10,
1995 while on board an Avis taxicab owned and operated by G & S
Transport Corporation (G & S), a common carrier. As narrated by the trial
court, the circumstances attending Jose Marcials death are as follows:
It appears that sometime in the evening of March 10, 1995, at the Manila
Domestic Airport, the late Jose Marcial K. Ochoa boarded and rode a
taxicab with Plate No. PKR-534, a passenger vehicle for hire owned and
operated by defendant corporation under the business name "Avis
Coupon Taxi" (Avis) and driven by its employee and authorized driver
Bibiano Padilla, Jr. on his way home to Teachers Village, Diliman,
Quezon City.
At about 11:00 p.m., the taxicab was cruising along Epifanio delos Santos
Avenue [EDSA], in front of Camp Aguinaldo in Quezon City at high
speed. While going up the Boni Serrano (Santolan) fly-over, it overtook
another cab driven by Pablo Clave and tried to pass another vehicle, a
ten-wheeler cargo truck. Because of the narrow space between the left
side railing of the fly-over and the ten-wheeler truck, the Avis cab was
unable to pass and because of its speed, its driver (Padilla) was unable
to control it. To avoid colliding with the truck, Padilla turned the wheel to
the left causing his taxicab to ram the railing throwing itself off the fly-over
and fell on the middle surface of EDSA below. The forceful drop of the
vehicle on the floor of the road broke and split it into two parts. Both
driver Padilla and passenger Jose Marcial K. Ochoa were injured and
rushed to the hospital. At the East Avenue Medical Center, Ochoa was
not as lucky as Padilla who was alive. He was declared dead on arrival
from the accident. The death certificate issued by the Office of the Civil
Registrar of Quezon City cited the cause of his death as vehicular
accident.3
On May 13, 1999, Jose Marcials wife, Ruby Bueno Ochoa, and his two
minor children, Micaela B. Ochoa and Jomar B. Ochoa (the heirs),
through counsel, sent G & S a letter4 demanding that the latter indemnify
them for Jose Marcials death, his loss of earning capacity, and funeral
expenses in the total amount of P15,000,000.00. As G & S failed to heed
the same, the heirs filed a Complaint5 for Damages before the Regional
Trial Court (RTC) of Pasig City which was raffled to Branch 164 of said
court.
The heirs alleged that G & S, as a common carrier, is under legal
obligation to observe and exercise extraordinary diligence in transporting
its passengers to their destination safely and securely. However, G & S
failed to observe and exercise this extraordinary diligence because its
employee failed to transport Jose Marcial to his destination safely. They
averred that G & S is liable to them for having breached the contract of
common carriage. As an alternative cause of action, they asserted that G
& S is likewise liable for damages based on quasi-delict pursuant to
Article 21806 in relation to Article 21767 of the Civil Code. The heirs thus
prayed for G & S to pay them actual damages, moral damages,
exemplary damages, and attorneys fees and expenses of litigation.
In its Answer With Compulsory Counterclaims,8 G & S claimed that Jose
Marcial boarded an Avis taxicab driven by its employee, Bibiano Padilla
(Padilla), at the Domestic Airport to bring him to Teachers Village in
Quezon City. While passing the Santolan fly-over, however, the Avis
taxicab was bumped by an on-rushing delivery van at the right portion
causing the taxicab to veer to the left, ram through the left side of the
railings of the fly-over and fall to the center of the island below. The
taxicab was split into two and Jose Marcial was thrown 10 meters away.
G & S posited that the proximate cause of Jose Marcials death is a
fortuitous event and/or the fault or negligence of the driver of the delivery
van that hit the taxicab. It likewise claimed that it exercised the diligence
required of a good father of a family in the selection and supervision of its
employees including Padilla. By way of compulsory counterclaim, G & S
sought to recover from the heirs the amount of P300,000.00 as attorneys
fees and costs of suit.
Ruling of the Regional Trial Court
On December 27, 2001, the trial court rendered a Decision9 finding the
vehicular mishap not caused by a fortuitous event but by the negligence

of Padilla. It likewise found the evidence adduced by G & S to show that it
exercised the diligence of a good father of a family in the selection and
supervision of its employees as insufficient. Hence, the trial court
declared G & S civilly liable to the heirs. However, for lack of receipts or
any proof of funeral expenses and other actual damages, the trial court
denied the heirs claim for actual damages. It also denied them moral and
exemplary damages for lack of legal basis. The dispositive portion of said
Decision reads:
WHEREFORE, defendant is hereby adjudged guilty of breach of contract
of carriage and is ordered to pay plaintiffs the following amounts:
1. P50,000.00 as civil indemnity for the death of deceased Jose Marcial
K. Ochoa;
2. P6,537,244.96 for the loss of earning capacity of the deceased;
3. P100,00.00 for attorneys fees;
4. And the cost of litigation.
SO ORDERED.10
G & S filed a Notice of Appeal11 while the heirs filed a Motion for Partial
Reconsideration.12 The heirs averred that they are entitled to moral
damages pursuant to Article 176413 in relation to Article 2206(3)14 of the
Civil Code. They also cited applicable jurisprudence providing that moral
damages are recoverable in a damage suit predicated upon a breach of
contract of carriage where the mishap results in the death of the
passenger. With respect to their claim for exemplary damages, the heirs
relied upon Article 2232 of the Civil Code which provides that in contracts
and quasi-contracts, the court may award exemplary damages if the
defendant acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner. And, since Padilla was declared by the trial court to
have been grossly negligent in driving the taxicab, the heirs claimed that
they are likewise entitled to exemplary damages.
After G & S filed its Opposition (To Plaintiffs Motion for Partial
Reconsideration),15 the trial court issued an Order16 on March 5, 2002. It
found merit in the heirs Motion for Partial Reconsideration and thus
declared them entitled to moral and exemplary damages, viz:
WHEREFORE, the decision dated December 27, 2001 is hereby
modified so as to order defendant Corporation to pay plaintiffs the
amount of P300,000.00 as moral damages and P50,000.00 as exemplary
damages. The dispositive portion of said decision is hereby amended to
read as follows:
WHEREFORE, defendant is hereby adjudged guilty of breach of contract
of carriage and is ordered to pay plaintiffs the following amounts:
1. P50,000.00 as civil indemnity for the death of the deceased Jose
Marcial K. Ochoa;
2. P6,537,244.96 for the loss of earning capacity of the deceased.
3. P300,000.00 as moral damages;

4. P50,000.00 as exemplary damages;
5. P100,000.00 for attorneys fees;
6. And the costs of litigation.
SO ORDERED.17
Because of this, G & S filed another Notice of Appeal18 and same was
given due course by the trial court in an Order19 dated April 23, 2002.
Ruling of the Court of Appeals
Before the CA, G & S continued to insist that it exercised the diligence of
a good father of the family in the selection and supervision of its
employees. It averred that it has been carrying out not only seminars for
its drivers even before they were made to work, but also periodic
evaluations for their performance. Aside from these, it has also been
conducting monthly check-up of its automobiles and has regularly issued
rules regarding the conduct of its drivers. G & S claimed that it was able
to establish a good name in the industry and maintain a clientele.
In an effort to build up Padillas character as an experienced and careful
driver, G & S averred that: (1) before G & S employed Padilla, he was a
delivery truck driver of Inter Island Gas Service for 11 years; (2) Padilla
has been an employee of G & S from 1989 to 1996 and during said
period, there was no recorded incident of his being a negligent driver; (3)
despite his qualifications, G & S still required Padilla to submit an NBI
clearance, drivers license and police clearance; (4) Padillas being a
good driver-employee was manifest in his years of service with G & S, as
in fact, he has received congratulatory messages from the latter as
shown by the inter-office memos dated August 23, 1990 and February 1,
1993; and that (5) Padilla attended a seminar at the Pope Pius Center
sometime in December 1999 as part of the NAIA Taxi Operation
Program.
G & S also argued that the proximate cause of Jose Marcials death is a
fortuitous event and/or the fault or negligence of another and not of its
employee. According to G & S, the collision was totally unforeseen since
Padilla had every right to expect that the delivery van would just overtake
him and not hit the right side of the taxicab. Therefore, what transpired
was beyond Padillas control. There was no negligence on his part but on
the part of the driver of the delivery van. For this reason, G & S opined
that it was not liable to the heirs.
On the other hand, the heirs maintained that Padilla was grossly
negligent in driving the Avis taxicab on the night of March 10, 1995. They
claimed that Padilla, while running at a very high speed, acted negligently
when he tried to overtake a ten-wheeler truck at the foot of the fly-over.
This forced him to swerve to the left and as a consequence, the Avis
taxicab hit the center of the railing and was split into two upon hitting the
ground. The manner by which Padilla drove the taxicab clearly showed
that he acted without regard to the safety of his passenger.

The heirs also averred that in order for a fortuitous event to exempt one
from liability, it is necessary that he has committed no negligence or
conduct that may have occasioned the loss. Thus, to be exempt from
liability for the death of Jose Marcial on this ground, G & S must clearly
show that the proximate cause of the casualty was entirely independent
of human will and that it was impossible to avoid. And since in the case at
bar it was Padillas inexcusable poor judgment, utter lack of foresight and
extreme negligence which were the immediate and proximate causes of
the accident, same cannot be considered to be due to a fortuitous event.
This is bolstered by the fact that the court trying the case for criminal
negligence arising from the same incident convicted Padilla for said
charge.20
At any rate, the heirs contended that regardless of whether G & S
observed due diligence in the selection of its employees, it should
nonetheless be held liable for the death of Jose Marcial pursuant to
Article 1759 of the Civil Code which provides:
ART. 1759 Common carriers are liable for the death of or injuries to
passengers through the negligence or willful acts of the formers
employees, although such employees may have acted beyond the scope
of their authority or in violation of the orders of the common carriers.
In sum, the heirs prayed that the appeal be dismissed for lack of merit
and the assailed Decision and Order of the trial court be affirmed in toto.
In a Decision21 dated June 29, 2005, the CA ruled in favor of the heirs.
The appellate court gave weight to their argument that in order for a
fortuitous event to exempt one from liability, it is necessary that he
committed no negligence or misconduct that may have occasioned the
loss. In this case, the CA noted that Padilla failed to employ reasonable
foresight, diligence and care needed to exempt G & S from liability for
Jose Marcials death. Said court also quoted pertinent portions of the
MTC decision convicting Padilla of reckless imprudence resulting in
homicide to negate G & S claim that the proximate cause of the accident
was the fault of the driver of the delivery van who allegedly hit the right
side of the taxicab. And just like the trial court, the CA found insufficient
the evidence adduced by G & S to support its claim that it exercised due
diligence in the selection and supervision of its employees.
With respect to the award of P6,537,244.96 for Jose Marcials loss of
earning capacity, the CA declared the same unwarranted. It found the
Certification22 issued by Jose Marcials employer, the United States
Agency for International Development (USAID) through its Chief of
Human Resources Division Jonas Cruz (Cruz), as self-serving,
unreliable, and biased. While said certification states that Jose Marcial
was earning an annual salary of P450,844.49 at the time of his untimely
demise, the CA noted that same is unsupported by competent evidence
such as income tax returns or receipts. This is in view of the ruling in
People v. Ereo23 where it was held that "there must be unbiased proof of
the deceaseds average income." Anent moral damages, the CA found
the award of P300,000.00 excessive and thus reduced the same to
P200,000.00 as to make it proportionate to the award of exemplary
damages which is P50,000.00. The dispositive portion of said Decision
reads:
WHEREFORE, the assailed Decision dated December 27, 2001 and
Order dated March 5, 2002 are AFFIRMED with the following
MODIFICATION: appellant is ordered to pay appellees the sum of
P50,000.00 as civil indemnity for the death of the deceased Jose Marcial
K. Ochoa, P200,000.00 as moral damages, P50,000.00 as exemplary
damages, P100,000.00 for attorneys fees and the costs of litigation. The
trial courts award of P6,537,244.96 for the loss of earning capacity of the
deceased is DELETED for lack of basis.
SO ORDERED.
Both parties moved for reconsideration24 but the CA denied their
respective motions for reconsideration in a Resolution25 dated October
12, 2005.
Hence, G & S and the heirs filed their respective Petitions for Review on
Certiorari before this Court. The heirs petition was docketed as G.R. No.
170071 and that of G & S as G.R. No. 170125. These petitions were later
consolidated pursuant to this Courts Resolution of November 21, 2005.26
G.R. No. 170125
G & S anchors its petition on the following grounds:
I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT
RULING THAT THE PROXIMATE CAUSE OF DEATH OF MR. JOSE
MARCIAL K. OCHOA WAS A FORTUITOUS EVENT AND/OR WAS
DUE TO THE FAULT OR NEGLIGENCE OF ANOTHER AND SHOULD
THUS EXEMPT THE PETITIONER FROM LIABILITY.
II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN NOT
TAKING NOTE OF THE FACT THAT THE PETITIONERS EMPLOYEE
HAD BEEN ACQUITTED OF THE CRIME OF RECKLESS
IMPRUDENCE RESULTING (IN) HOMICIDE.
III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
UPHOLDING THE TESTIMONY OF A WITNESS WHO SURFACED
MONTHS AFTER THE INCIDENT WHILE DISREGARDING THAT OF
AN EYEWITNESS WHO WAS PRESENT AT THE TIME AND PLACE
OF THE ACCIDENT.
IV. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
NOT RULING THAT THE PETITIONER EXERCISED THE DILIGENCE
OF A GOOD FATHER OF A FAMILY IN THE SELECTION AND

SUPERVISION OF ITS EMPLOYEES PARTICULARLY MR. BIBIANO
PADILLA.27
G & S reiterates its arguments that the proximate cause of the accident is
a fortuitous event and/or the negligence of the driver of the delivery van
which bumped the right portion of its taxicab and, that it exercised the
diligence of a good father of a family in the selection and supervision of
its employees. It faults the CA when it overlooked the fact that the MTC
Decision convicting Padilla of reckless imprudence has already been
reversed on appeal by the RTC with Padilla having been accordingly
acquitted of the crime charged. Moreover, it claims that the appellate
court erred in according respect to the testimony of the lone prosecution
witness, Pablo Clave (Clave), when it concluded that Padilla was driving
negligently at the time of the accident. It asserts that Clave is not a
credible witness and so is his testimony. Thus, G & S prays that the
assailed CA Decision and Resolution be reversed and set aside.
On the other hand, the heirs posit that the determination of the issues
raised by G & S necessarily entails a re-examination of the factual
findings which this Court cannot do in this petition for review on certiorari.
At any rate, they maintain that the trial court itself is convinced of Claves
credibility. They stress the settled rule that the evaluation of the credibility
of witnesses is a matter that particularly falls within the authority of the
trial court because it had the opportunity to observe the demeanor of the
witnesses on the stand.
The heirs assert that fortuitous event was not the proximate cause of the
mishap. They point out that as correctly found by the trial court, Padilla
was running at an extremely high speed. This was why the impact was so
strong when the taxicab rammed the fly-over railings and was split into
two when it hit the ground. Also, while it is true that the MTC Decision in
the criminal case for reckless imprudence has been reversed by the RTC,
this does not excuse G & S from its liability to the heirs because its
liability arises from its breach of contract of carriage and from its
negligence in the selection and supervision of its employees. Also, since
the acquittal of Padilla is based on reasonable doubt, same does not in
any way rule out his negligence as this may merely mean that the
prosecution failed to meet the requisite quantum of evidence to sustain
his conviction. Therefore, G & S cannot bank on said acquittal to disprove
its liability.
G.R. No. 170071
The heirs, on the other hand, advance the following grounds in support of
their petition:
THE COURT OF APPEALS MANIFESTLY AND GRAVELY ERRED IN
COMPLETELY DELETING THE TRIAL COURTS AWARD FOR THE
LOSS OF EARNING CAPACITY OF THE DECEASED.
THE COURT OF APPEALS MANIFESTLY AND GRAVELY ERRED IN

REDUCING THE TRIAL COURTS AWARD FOR MORAL DAMAGES.28
The focal point of the heirs petition is the CAs deletion of the award of
P6,537,244.96 for Jose Marcials loss of earning capacity as well as the
reduction of the award of moral damages from P300,000.00 to
P200,000.00.
The heirs aver that the appellate court gravely erred in relying upon
Ereo as said case is not on all fours with the present case. They
contend that in Ereo, this Court disallowed the award for loss of income
because the only proof presented was a handwritten statement of the
victims spouse stating the daily income of the deceased as a selfemployed fish vendor. The heirs argue that the reason why this Court
declared said handwritten statement as self-serving is because the one
who prepared it, the deceaseds wife, was also the one who would
directly and personally benefit from such an award.29 This cannot be said
in the case at bar since the same bias and personal interest cannot be
attributed to Jose Marcials employer, the USAID. Unlike in Ereo, USAID
here does not stand to be benefited by an award for Jose Marcials loss
of earning capacity. Clearly, the Certification issued by it is far from being
self-serving. At any rate, the heirs contend that Ereo has already been
superseded by Pleyto v. Lomboy30 where this Court held that in awarding
damages for loss of earning capacity, "mere testimonial evidence suffices
to establish a basis for which the court can make a fair and reasonable
estimate of the loss of earning capacity". In addition, the heirs point out
that the authenticity and accuracy of said Certification was neither
questioned by G & S nor discredited by any controverting evidence. In
fact, its admission by the trial court was not even assigned by G & S as
an error in their appeal before the CA.
As to the reduction of moral damages, the heirs claim that since the CA
agreed with the factual circumstances of the case as found by the trial
court, there is therefore no reason for it to alter the award of damages
arising from such factual circumstances. They aver that the CA may only
modify the damages awarded by the trial court when it is excessive and
scandalous as held in Meneses v. Court of Appeals.31 Here, they claim
that the award of moral damages in the amount of P300,000.00 cannot
be considered as excessive and unreasonable but only commensurate to
the sufferings caused by the incident to a wife who became a young
widow at the age of 33 and to two minor children who lost a father.
Moreover, the heirs aver that the CA should not have reduced the award
of moral damages just to make said amount proportionate to the
exemplary damages awarded. This is because there is no such rule
which dictates that the amount of moral damages should be proportionate
to that of the exemplary damages. The heirs pray that the assailed CA
Decision and Resolution be reversed and set aside insofar as they
deleted the award for loss of earning capacity and reduced the award for
moral damages.
For its part, G & S avers that the Certification issued by USAID is selfserving because the USAID officer who issued it has not been put on the
witness stand to validate the contents thereof. Moreover, said
Certification was not supported by competent evidence such as income
tax returns and receipts. G & S likewise finds the reduction of the award
of moral damages appropriate in view of the settled rule that moral
damages are not meant to enrich the complainant at the expense of the
defendant. Hence, it prays that the petition be dismissed for lack of merit.
Our Ruling
We shall first tackle the issues raised by G & S in its petition.
The first, third and fourth issues raised by G & S involve questions of fact
We have reviewed said issues and we find that the determination of the
first, third and fourth issues raised entails re-examination of the evidence
presented because they all involve questions of fact. In Microsoft
Corporation v. Maxicorp, Inc.,32 we held that:
Once it is clear that the issue invites a review of the evidence presented,
the question posed is one of fact. If the query requires a re-evaluation of
the credibility of witnesses, or the existence or relevance of surrounding
circumstances and their relation to each other, the issue in that query is
factual. Our ruling in Paterno v. Paterno is illustrative on this point:
Such questions as whether certain items of evidence should be accorded
probative value or weight, or rejected as feeble or spurious, or whether or
not the proof on one side or the other are clear and convincing and
adequate to establish a proposition in issue, are without doubt questions
of fact. Whether or not the body of proofs presented by a party, weighed
and analyzed in relation to contrary evidence submitted by adverse party,
may be said to be strong, clear and convincing; whether or not certain
documents presented by one side should be accorded full faith and credit
in the face of protests as to their spurious character by the other side;
whether or not inconsistencies in the body of proofs of a party are of such
a gravity as to justify refusing to give said proofs weight all these are
issues of fact. (Citations omitted)
In this case, the said three issues boil down to the determination of the
following questions: What is the proximate cause of the death of Jose
Marcial? Is the testimony of prosecution witness Clave credible? Did G &
S exercise the diligence of a good father of a family in the selection and
supervision of its employees? Suffice it to say that these are all questions
of fact which require this Court to inquire into the probative value of the
evidence presented before the trial court. As we have consistently held,
"[t]his Court is not a trier of facts. It is not a function of this court to
analyze or weigh evidence. When we give due course to such situations,
it is solely by way of exception. Such exceptions apply only in the
presence of extremely meritorious circumstances."33 Here, we note that

although G & S enumerated in its Consolidated Memorandum34 the
exceptions35 to the rule that a petition for review on certiorari should only
raise questions of law, it nevertheless did not point out under what
exception its case falls. And, upon review of the records of the case, we
are convinced that it does not fall under any. Hence, we cannot proceed
to resolve said issues and disturb the findings and conclusions of the CA
with respect thereto. As we declared in Diokno v. Cacdac:36
It is aphoristic that a re-examination of factual findings cannot be done
through a petition for review on certiorari under Rule 45 of the Rules of
Court because as earlier stated, this Court is not a trier of facts; it reviews
only questions of law. The Supreme Court is not duty-bound to analyze
and weigh again the evidence considered in the proceedings below. This
is already outside the province of the instant Petition for Certiorari.
[Citations omitted.]
There is a contract of carriage between G & S and Jose Marcial
What is clear from the records is that there existed a contract of carriage
between G & S, as the owner and operator of the Avis taxicab, and Jose
Marcial, as the passenger of said vehicle. As a common carrier, G & S "is
bound to carry [Jose Marcial] safely as far as human care and foresight
can provide, using the utmost diligence of very cautious persons, with
due regard for all the circumstances."37 However, Jose Marcial was not
able to reach his destination safely as he died during the course of the
travel. "In a contract of carriage, it is presumed that the common carrier is
at fault or is negligent when a passenger dies or is injured. In fact, there
is even no need for the court to make an express finding of fault or
negligence on the part of the common carrier. This statutory presumption
may only be overcome by evidence that the carrier exercised
extraordinary diligence."38 Unfortunately, G & S miserably failed to
overcome this presumption. Both the trial court and the CA found that the
accident which led to Jose Marcials death was due to the reckless
driving and gross negligence of G & S driver, Padilla, thereby holding G
& S liable to the heirs of Jose Marcial for breach of contract of carriage.
The acquittal of Padilla in the criminal case is immaterial to the instant
case for breach of contract
This thus now leaves us with the remaining issue raised by G & S, that is,
whether the CA gravely erred in not taking note of the fact that Padilla
has already been acquitted of the crime of reckless imprudence resulting
in homicide, a charge which arose from the same incident subject of this
case.
Article 31 of the Civil Code provides, viz:
When the civil action is based on an obligation not arising from the act or
omission complained of as a felony, such civil action may proceed
independently of the criminal proceedings and regardless of the result of
the latter.
Thus, in Cancio, Jr. v. Isip,39 we declared:
In the instant case, it must be stressed that the action filed by petitioner is
an independent civil action, which remains separate and distinct from any
criminal prosecution based on the same act. Not being deemed instituted
in the criminal action based on culpa criminal, a ruling on the culpability
of the offender will have no bearing on said independent civil action
based on an entirely different cause of action, i.e., culpa
contractual." (Emphasis supplied; Citations omitted.)
In this case, the action filed by the heirs is primarily for the recovery of
damages arising from breach of contract of carriage allegedly committed
by G & S. Clearly, it is an independent civil action arising from contract
which is separate and distinct from the criminal action for reckless
imprudence resulting in homicide filed by the heirs against Padilla by
reason of the same incident. Hence, regardless of Padillas acquittal or
conviction in said criminal case, same has no bearing in the resolution of
the present case. There was therefore no error on the part of the CA
when it resolved this case without regard to the fact that Padilla has
already been acquitted by the RTC in the criminal case. Moreover, while
the CA quoted some portions of the MTC Decision in said criminal case,
we however find that those quoted portions were only meant to belie G &
S claim that the proximate cause of the accident was the negligence of
the driver of the delivery van which allegedly hit the Avis taxicab. Even
without those quoted portions, the appellate courts ultimate finding that it
was Padillas negligence which was the proximate cause of the mishap
would still be the same. This is because the CA has, in fact, already
made this declaration in the earlier part of its assailed Decision. The fact
that the MTC Decision from which the subject quoted portions were lifted
has already been reversed by the RTC is therefore immaterial.
In view of the foregoing, we deny G & S petition for lack of merit.
The denial by the CA of the heirs claim for lost earnings is unwarranted
Going now to the petition filed by the heirs, we note at the outset that the
issues of whether the CA erred in deleting the award for loss of earning
capacity and in reducing the award for moral damages made by the trial
court likewise raise questions of fact as they "involve an examination of
the probative value of the evidence presented by the parties".40 However,
we find that the heirs case falls under one of the exceptions because the
findings of the CA conflict with the findings of the RTC.41 Since the heirs
properly raised the conflicting findings of the lower courts, it is proper for
this Court to resolve such contradiction.42
In Ereo, we denied the claim for loss of income because the handwritten
estimate of the deceaseds daily income as a self-employed vendor was
not supported by competent evidence like income tax returns or receipts.
This was in view of the rule that compensation for lost income is in the
nature of damages and as such requires due proof of damages suffered.

We reiterated this rule in People v. Yrat43 where we likewise denied the
same claim because the only evidence presented to show that the
deceased was earning P50,000.00 a month was the testimony of the
wife. There we stated that for lost income due to death, there must be
unbiased proof of the deceaseds average income. Self-serving, hence,
unreliable statement is not enough. In People v. Caraig,44 we declared
that "documentary evidence should be presented to substantiate the
claim for damages for loss of earning capacity. By way of exception,
damages therefor may be awarded despite the absence of documentary
evidence, provided that there is testimony that the victim was either (1)
self-employed earning less than the minimum wage under current labor
laws, and judicial notice may be taken of the fact that in the victims line
of work no documentary evidence is available; or (2) employed as a
daily-wage worker earning less than the minimum wage under current
labor laws". However, we subsequently ruled in Pleyto v. Lomboy45 that
"failure to present documentary evidence to support a claim for loss of
earning capacity of the deceased need not be fatal to its cause.
Testimonial evidence suffices to establish a basis for which the court can
make a fair and reasonable estimate of the loss of earning capacity".
Hence, we held as sufficient to establish a basis for an estimate of
damages for loss of earning capacity the testimony of the victims widow
that her husband was earning a monthly income of P8,000.00. Later, in
Victory Liner, Inc. v. Gammad,46 after finding that the deceaseds
earnings does not fall within the exceptions laid down in Caraig, we
deleted the award for compensatory damages for loss of earning capacity
as same was awarded by the lower courts only on the basis of the
husbands testimony that the deceased was 39 years of age and a
Section Chief of the Bureau of Internal Revenue with a salary of
P83,088.00 per annum at the time of her death. This same rule was also
applied in the 2008 case of Licyayo v. People.47
In all of the cases mentioned except for Ereo, the sole basis for the
claim for loss of earning capacity were the testimonies of the claimants.
This is not the case here. Just like in Ereo where the testimony of the
mother of the deceased was accompanied by a handwritten estimate of
her daughters alleged income as a fish vendor, the testimony of Jose
Marcials wife that he was earning around P450,000.00 a year was
corroborated by a Certification issued by the USAID. However in Ereo,
we declared as self-serving the handwritten estimate submitted by the
mother hence we denied the claim for such award. Based on said ruling,
the CA in this case deleted the award for lost income after it found the
USAID Certification to be self-serving and unreliable.
We disagree. The CA sweepingly concluded that the USAID Certification
is self-serving and unreliable without elaborating on how it was able to
arrive at such a conclusion. A research on USAID reveals that it is the

"principal [United States] agency to extend assistance to countries
recovering from disaster, trying to escape poverty, and engaging in
democratic reforms."48 It is an "independent federal government agency
that receives over-all foreign policy guidance from the Secretary of the
State [of the United States]."49 Given this background, it is highly
improbable that such an agency will issue a certification containing
unreliable information regarding an employees income. Besides, there
exists a presumption that official duty has been regularly performed.50
Absent any showing to the contrary, it is presumed that Cruz, as Chief of
Human Resources Division of USAID, has regularly performed his duty
relative to the issuance of said certification and therefore, the correctness
of its contents can be relied upon. This presumption remains especially
so where the authenticity, due execution and correctness of said
certification have not been put in issue either before the trial court or the
CA. As to its being self-serving, our discussion on "self-serving evidence"
in Heirs of Pedro Clemea y Zurbano v. Heirs of Irene B. Bien51 is
enlightening, viz:
Self-serving evidence, perhaps owing to its descriptive formulation, is a
concept much misunderstood. Not infrequently, the term is employed as
a weapon to devalue and discredit a party's testimony favorable to his
cause. That, it seems, is the sense in which petitioners are using it now.
This is a grave error. "Self-serving evidence" is not to be taken literally to
mean any evidence that serves its proponent's interest. The term, if
used with any legal sense, refers only to acts or declarations made
by a party in his own interest at some place and time out of court x x
x. (Citations omitted; emphasis supplied.)
Verily, the USAID certification cannot be said to be self-serving because
it does not refer to an act or declaration made out of court by the heirs
themselves as parties to this case.1awphi1
Clearly, the CA erred in deleting the award for lost income on the ground
that the USAID Certification supporting such claim is self-serving and
unreliable. On the contrary, we find said certification sufficient basis for
the court to make a fair and reasonable estimate of Jose Marcials loss of
earning capacity just like in Tamayo v. Seora52 where we based the
victims gross annual income on his pay slip from the Philippine National
Police. Hence, we uphold the trial courts award for Jose Marcials loss of
earning capacity.
While the trial court applied the formula generally used by the courts to
determine net earning capacity which is, to wit:
Net Earning Capacity = life expectancy* x (gross annual income reasonable living expenses),53
*Life expectancy = 2/3 (80 age of the deceased)
we, however, find incorrect the amount of P6,537, 244.96 arrived at. The
award should be P6,611,634.59 as borne out by the following

Q: What was your reaction upon learning of your husbands death?
computation:
A: Immediately after I learned of his death, I tried very hard to keep a
2 (80-3654)
clear mind for my little girl, she was 3 and she could not grasp what
Net earning capacity =
x 450,844.4955-50%
death is, so I found [it] so hard to explain to her [at] that time what
3
happened [e]specially [because] she just talked to her father from the
88
airport telling her that he is coming home, tapos hindi na pala.
=
x 225,422.25 Q: How did it affect you?
3
A: It was a painful struggle everyday just to get up and move on when
=
29.33 x 225,422.25
someone who [you] really really love and [who] is important to you it is
=
P6, 611,634.59
very hard to move on and [it is even] harder to move on [when] I found
The award of moral damages should be modified
out that I was pregnant with my second child, parang tinabunan ka [ng]
While we deemed it proper to modify the amount of moral damages
lahat eh[. I]ts [too] hard to find happiness, youre pregnant, when you
awarded by the trial court as discussed below, we nevertheless agree
know wala naman talagang father yung bata later on x x x
with the heirs that the CA should not have pegged said award in
xxxx
proportion to the award of exemplary damages. Moral and exemplary
Q: How did this affect your family?
damages are based on different jural foundations.57 They are different in
A: Yung effect kay Micaela, she [used] to be a gregarious child, yung
nature and require separate determination.58 The amount of one cannot
happy ganyan, but nung wala na yong father niya that time, [during]
be made to depend on the other.
graduation ng nursery that time naging very very [quiet] siya, so a lot of
In Victory Liner Inc. v. Gammad59 we awarded P100,000.00 by way of
emotional support from my own family was given to her at the time para
moral damages to the husband and three children of the deceased, a 39makacope-up siya sa loss kasi she is very close to the father.
year old Section Chief of the Bureau of Internal Revenue, to compensate
Q: Financially, how did it affect you?
said heirs for the grief caused by her death. This is pursuant to the
A: I had to make do of what was left by my husband, I couldnt also work
provisions of Articles 1764 and 2206(3) which provide:
so much at the time because I was.and hirap eh, I cannot find
Art. 1764. Damages in cases comprised in this Section shall be awarded
enthusiasm in what I do, tapos pregnant pa ako, and hirap talaga.
in accordance with Title XVIII of this Book, concerning Damages. Articles
Q: How else did it affect you?
2206 shall also apply to the death of a passenger caused by the breach
A: We had to move houses like we used to live in Quezon City at (the)
of contract by a common carrier.
time of his death, tapos kinuha kami ni Gorjie my brother-in-law sa
Art. 2206. x x x
compound nila para hindi [to] support us emotionally (at that time) kasi
(3) The spouse, legitimate and illegitimate descendants and the
nga I was pregnant and then I also decided to move (to make it easy for
ascendants of the deceased may demand moral damages for mental
me) to adjust yung lifestyle ng mga bata, because I cannot cope [here]
anguish by reason of the death of the deceased.
financially on my own[. N]ahihirapan na ako dito because the living
Here, there is no question that the heirs are likewise entitled to moral
expenses here are quite high compared sa probinsiya so I decided to
damages pursuant to the above provisions, considering the mental
move.
anguish suffered by them by reason of Jose Marcials untimely death, as
Q: If you would assign that pain and suffering that you suffered as a
can be deduced from the following testimony of his wife Ruby:
result of the death of your husband, what will be the monetary
Atty. Suarez:
consideration?
Q: How would you describe Jose Marcial Ochoa?
A: I struggled with that kasi.I can honestly say no amount of money can
(Ruby) A: My husband was a very loving husband, faithful husband, a
ever repay the [loss] that my children suffered, future nila yan eh, and my
very [good] provider[.] I depended on him so much financially [and]
son was not given a chance to get to know his father, so I cannot imagine
emotionally[.] He was practically my life then.
kung ano yung sinasabi nyong amount that will compensate the suffering
Q: How is he as a father?
that I have to go through and my children will go through, yon and
A: A very good father, he is very committed to Micaela[. H]e has always
mahirap bayaran.60
time for her[. H]e is a family man, so its really a great [loss] to me and to
Under this circumstance, we thus find as sufficient and "somehow
Micaela.
proportional to and in approximation of the suffering inflicted"61 an award
of moral damages in an amount similar to that awarded in Victory which

is P100,000.00.
From the above discussion, we, thus, partly grant the heirs petition.
WHEREFORE, the petition for review on certiorari in G.R. No. 170071 is
PARTLY GRANTED while the petition in G.R. No. 170125 is DENIED.
The assailed Decision and Resolution dated June 29, 2005 and October
12, 2005 of the Court of Appeals in CA-G.R. CV No. 75602 are
AFFIRMED with the MODIFICATIONS that G & S is ordered to pay the
heirs of Jose Marcial K. Ochoa the sum of P6,611,634.59 for loss of
earning capacity of the deceased and P100,000.00 as moral damages.
SO ORDERED.
G.R. No. L-9605

September 30, 1957
GAUDIOSO EREZO, ET AL., plaintiff-appellee,
vs.
AGUEDO JEPTE, defendant-appellant.
Gesolgon, Matti and Custodio for appellees.
Aguedo Y. Jepte in his own behalf.
LABRADOR, J.:
Appeal from a judgment of the Court of First Instance of Manila ordering
defendant to pay plaintiff Gaudioso Erezo P3,000 on the death of Ernesto
Erezo, son of plaintiff Gaudioso Erezo.
Defendant-appellant is the registered owner of a six by six truck bearing
plate No. TC-1253. On August, 9, 1949, while the same was being driven
by Rodolfo Espino y Garcia, it collided with a taxicab at the intersection of
San Andres and Dakota Streets, Manila. As the truck went off the street,
it hit Ernesto Erezo and another, and the former suffered injuries, as a
result of which he died. The driver was prosecuted for homicide through
reckless negligence in criminal case No. 10663 of the Court of First
Instance of Manila. The accused pleaded guilty and was sentenced to
suffer imprisonment and to pay the heirs of Ernesto Erezo the sum of
P3,000. As the amount of the judgment could not be enforced against
him, plaintiff brought this action against the registered owner of the truck,
the defendant-appellant. The circumstances material to the case are
stated by the court in its decision.
The defendant does not deny at the time of the fatal accident the cargo
truck driven by Rodolfo Espino y Garcia was registered in his name. He,
however, claims that the vehicle belonged to the Port Brokerage, of which
he was the broker at the time of the accident. He explained, and his
explanation was corroborated by Policarpio Franco, the manager of the
corporation, that the trucks of the corporation were registered in his name
as a convenient arrangement so as to enable the corporation to pay the
registration fee with his backpay as a pre-war government employee.
Franco, however, admitted that the arrangement was not known to the
Motor Vehicle Office.
The trial court held that as the defendant-appellant represented himself to
be the owner of the truck and the Motor Vehicle Office, relying on his
representation, registered the vehicles in his name, the Government and
all persons affected by the representation had the right to rely on his
declaration of ownership and registration. It, therefore, held that the
defendant-appellant is liable because he cannot be permitted to repudiate
his own declaration. (Section 68 [a], Rule 123, and Art. 1431, New Civil
Code.).
Against the judgment, the defendant has prosecuted this appeal claiming
that at the time of the accident the relation of employer and employee
between the driver and defendant-appellant was not established, it

having been proved at the trial that the owner of the truck was the Port
Brokerage, of which defendant-appellant was merely a broker. We find no
merit or justice in the above contention. In previous decisions, We
already have held that the registered owner of a certificate of public
convenience is liable to the public for the injuries or damages suffered by
passengers or third persons caused by the operation of said vehicle,
even though the same had been transferred to a third person. (Montoya
vs. Ignacio, 94 Phil., 182, 50 Off. Gaz., 108; Roque vs. Malibay Transit
Inc.,1 G. R. No. L- 8561, November 18,1955; Vda. de Medina vs.
Cresencia, 99 Phil., 506, 52 Off. Gaz., [10], 4606.)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 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.
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 plaintiffappellee 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 (defendantappellant's) liability?.
There is a presumption that the owner of the guilty vehicle is the
defendant-appellant as he is the registered owner in the Motor Vehicle
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.
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 properly 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 the Motor
Vehicles Office a report showing the name and address of each
purchaser of motor vehicle during the previous month and the
manufacturer's 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 vehicles 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 those circumstances, so inconvenient or
prejudicial to the public, that the motor vehicle registration is primarily
ordained, in the interest of the determination of persons responsible for
damages or injuries caused on public highways.
One of the principal purposes of motor vehicles legislation is identification
of the vehicle and of the operator, in case of accident; and another is that
the knowledge that means of detection are always available may act as a
deterrent from lax observance of the law and of the rules of conservative
and safe operation. Whatever purpose there may be in these statutes, it
is subordinate at the last to the primary purpose of rendering it certain
that the violator of the law or of the rules of safety shall not escape
because of lack of means to discover him." The purpose of the statute is
thwarted, and the displayed number becomes a "snare and delusion," if
courts will entertain such defenses as that put forward by appellee in this
case. No responsible person or corporation could be held liable for the
most outrageous acts of negligence, if they should be allowed to place a
"middleman" between them and the public, and escape liability by the
manner in which they recompense their servants. (King vs. Brenham
Automobile Co., 145 S. W. 278,279.)
With the above policy in mind, the question that defendant-appellant
poses is: should not be registered owner be allowed at the trial to prove
who the actual and real owner is, and in accordance with such proof
escape or evade responsibility and lay the same on the person actually
owning the vehicle? We hold with the trial court that the laws 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 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.1wphl.nt
The above policy and application of the law may appear quite harsh and
would seem to conflict with truth and justice. We do not think it is so. A
registered owner who has already sold or transferred a vehicle has the
recourse to a third-party complaint, in the same action brought against
him to recover for the damage or injury done, against the vendee or
transferee of the vehicle. The inconvenience of the suit is no justification
for relieving him of liability; said inconvenience is the price he pays for
failure to comply with the registration that the law demands and requires.
In synthesis, we hold that the registered owner, the defendant-appellant
herein, is primarily responsible for the damage caused to the vehicle of
the plaintiff-appellee, but he (defendant-appellant) has a right to be
indemnified by the real or actual owner of the amount that he may be
required to pay as damage for the injury caused to the plaintiffappellant.1wphl.nt
G.R. No. 82318 May 18, 1989

GILBERTO M. DUAVIT, petitioner,
vs.
THE HON. COURT OF APPEALS, Acting through the Third Division,
as Public Respondent, and ANTONIO SARMIENTO, SR. & VIRGILIO
CATUAR respondents.
Rodolfo d. Dela Cruz for petitioner.
Bito, Lozada, Ortega & Castillo for respondents.
GUTIERREZ, JR., J.:
This petition raises the sole issue of whether or not the owner of a private
vehicle which figured in an accident can be held liable under Article 2180
of the Civil Code when the said vehicle was neither driven by an
employee of the owner nor taken with the consent of the latter.
The facts are summarized in the contested decision, as follows:
From the evidence adduced by the plaintiffs, consisting of the testimonies
of witnesses Virgilio Catuar, Antonio Sarmiento, Jr., Ruperto Catuar, Jr.
and Norberto Bernarte it appears that on July 28, 1971 plaintiffs Antonio
Sarmiento, Sr. and Virgilio Catuar were aboard a jeep with plate number
77-99-F-I Manila, 1971, owned by plaintiff, Ruperto Catuar was driving
the said jeep on Ortigas Avenue, San Juan, Rizal; that plaintiff's jeep, at
the time, was running moderately at 20 to 35 kilometers per hour and
while approaching Roosevelt Avenue, Virgilio Catuar slowed down; that
suddenly, another jeep with plate number 99-97-F-J Manila 1971 driven
by defendant Oscar Sabiniano hit and bumped plaintiff's jeep on the
portion near the left rear wheel, and as a result of the impact plaintiff's
jeep fell on its right and skidded by about 30 yards; that as a result
plaintiffs jeep was damaged, particularly the windshield, the differential,
the part near the left rear wheel and the top cover of the jeep; that plaintiff
Virgilio Catuar was thrown to the middle of the road; his wrist was broken
and he sustained contusions on the head; that likewise plaintiff Antonio
Sarmiento, Sr. was trapped inside the fallen jeep, and one of his legs was
fractured.
Evidence also shows that the plaintiff Virgilio Catuar spent a total of
P2,464.00 for repairs of the jeep, as shown by the receipts of payment of
labor and spare parts (Exhs. H to H-7 Plaintiffs likewise tried to prove that
plaintiff Virgilio Catuar, immediately after the accident was taken to
Immaculate Concepcion Hospital, and then was transferred to the
National Orthopedic Hospital; that while plaintiff Catuar was not confined
in the hospital, his wrist was in a plaster cast for a period of one month,
and the contusions on his head were under treatment for about two (2)
weeks; that for hospitalization, medicine and allied expenses, plaintiff
Catuar spent P5,000.00.
Evidence also shows that as a result of the incident, plaintiff Antonio
Sarmiento, Sr. sustained injuries on his leg; that at first, he was taken to
the National Orthopedic Hospital (Exh. K but later he was confined at the
Makati Medical Center from July 29, to August 29, 1971 and then from
September 15 to 25, 1971; that his leg was in a plaster cast for a period
of eight (8) months; and that for hospitalization and medical attendance,
plaintiff Antonio Sarmiento, Sr. spent no less than P13,785.25 as
evidenced by receipts in his possession. (Exhs. N to N-1).
Proofs were adduced also to show that plaintiff Antonio sarmiento Sr. is
employed as Assistant Accountant of the Canlubang Sugar Estate with a
salary of P1,200.00 a month; that as sideline he also works as
accountant of United Haulers Inc. with a salary of P500.00 a month; and
that as a result of this incident, plaintiff Sarmiento was unable to perform
his normal work for a period of at least 8 months. On the other hand,
evidence shows that the other plaintiff Virgilio Catuar is a Chief Clerk in
Canlubang Sugar Estate with a salary of P500.00 a month, and as a
result of the incident, he was incapacitated to work for a period of one (1)
month.
The plaintiffs have filed this case both against Oscar Sabiniano as driver,
and against Gualberto Duavit as owner of the jeep.
Defendant Gualberto Duavit, while admitting ownership of the other jeep
(Plate No. 99-07-F-J Manila, 1971), denied that the other defendant
(Oscar Sabiniano) was his employee. Duavit claimed that he has not
been an employer of defendant Oscar Sabiniano at any time up to the
present.
On the other hand documentary and testimonial evidence show that
defendant Oscar Sabiniano was an employee of the Board of Liquidators
from November 14, 1966 up to January 4, 1973 (Annex A of Answer).
Defendant Sabiniano, in his testimony, categorically admitted that he took
the jeep from the garage of defendant Duavit without the consent or
authority of the latter (TSN, September 7, 1978, p. 8). He testified further,
that Duavit even filed charges against him for theft of the jeep, but which
Duavit did not push through as his (Sabiniano's) parents apologized to
Duavit on his behalf.
Defendant Oscar Sabiniano, on the other hand in an attempt to exculpate
himself from liability, makes it appear that he was taking all necessary
precaution while driving and the accident occurred due to the negligence
of Virgilio Catuar. Sabiniano claims that it was plaintiffs vehicle which hit
and bumped their jeep. (Reno, pp. 21-23)
The trial court found Oscar Sabiniano negligent in driving the vehicle but
found no employer-employee relationship between him and the petitioner
because the latter was then a government employee and he took the
vehicle without the authority and consent of the owner. The petitioner
was, thus, absolved from liability under Article 2180 of the Civil Code.
The private respondents appealed the case.
On January 7, 1988, the Court of Appeals rendered the questioned

decision holding the petitioner jointly and severally liable with Sabiniano.
The appellate court in part ruled:
We cannot go along with appellee's argument. It will be seen that in
Vargas v. Langcay, supra, it was held that it is immaterial whether or not
the driver was actually employed by the operator of record or registered
owner, and it is even not necessary to prove who the actual owner of the
vehicle and who the employer of the driver is. When the Supreme Court
ruled, thus: 'We must hold and consider such owner-operator of record
(registered owner) as the employer in contemplation of law, of the driver,'
it cannot be construed other than that the registered owner is the
employer of the driver in contemplation of law. It is a conclusive
presumption of fact and law, and is not subject to rebuttal of proof to the
contrary. Otherwise, as stated in the decision, we quote:
The purpose of the principles evolved by the decisions in these matters
will be defeated and thwarted if we entertain the argument of petitioner
that she is not liable because the actual owner and employer was
established by the evidence. . . .
Along the same vein, the defendant-appellee Gualberto Duavit cannot be
allowed to prove that the driver Sabiniano was not his employee at the
time of the vehicular accident.
The ruling laid down in Amar V. Soberano (1966), 63 O.G. 6850, by this
Court to the effect that the burden of proving the non-existence of an
employer-employee relationship is upon the defendant and this he must
do by a satisfactory preponderance of evidence, has to defer to the
doctrines evolved by the Supreme Court in cases of damages arising
from vehicular mishaps involving registered motor vehicle. (See Tugade
v. Court of Appeals, 85 SCRA 226, 230). (Rollo, pp. 26-27)
The appellate court also denied the petitioner's motion for
reconsideration. Hence, this petition.
The petitioner contends that the respondent appellate court committed
grave abuse of discretion in holding him jointly and severally liable with
Sabiniano in spite of the absence of an employer-employee relationship
between them and despite the fact that the petitioner's jeep was taken out
of his garage and was driven by Sabiniano without his consent.
As early as in 1939, we have ruled that an owner of a vehicle cannot be
held liable for an accident involving the said vehicle if the same was
driven without his consent or knowledge and by a person not employed
by him. Thus, in Duquillo v. Bayot (67 Phil. 131-133-134) [1939] we said:
Under the facts established, the defendant cannot be held liable for
anything. At the time of the accident, James McGurk was driving the
truck, and he was not an employee of the defendant, nor did he have
anything to do with the latter's business; neither the defendant nor Father
Ayson, who was in charge of her business, consented to have any of her
trucks driven on the day of the accident, as it was a holy day, and much
less by a chauffeur who was not in charge of driving it; the use of the
defendant's truck in the circumstances indicated was done without her
consent or knowledge; it may, therefore, be said, that there was not the
remotest contractual relation between the deceased Pio Duquillo and the
defendant. It necessarily follows from all this that articles 1101 and
following of the Civil Code, cited by the appellant, have no application in
this case, and, therefore, the errors attributed to the inferior court are
without basis.
The Court upholds the above ruling as still relevant and better applicable
to present day circumstances.
The respondent court's misplaced reliance on the cases of Erezo v. Jepte
(102 Phil. 103 [1957] and Vargas v. Langcay (6 SCRA 174 [1962]) cannot
be sustained. In the Erezo case, Jepte, the registered owner of the truck
which collided with a taxicab, and which resulted in the killing of Erezo,
claimed that at the time of the accident, the truck belonged to the Port
Brokerage in an arrangement with the corporation but the same was not
known to the Motor Vehicles Office. This Court sustained the trial court's
ruling that since Jepte represented himself to be the owner of the truck
and the Motor Vehicles Office, relying on his representation, registered
the vehicle in his name, the Government and all persons affected by the
representation had the right to rely on his declaration of ownership and
registration. Thus, even if Jepte were not the owner of the truck at the
time of the accident, he was still held liable for the death of Erezo
significantly, the driver of the truck was fully authorized to drive it.
Likewise, in the Vargas case, just before the accident occurred Vargas
had sold her jeepney to a third person, so that at the time of the accident
she was no longer the owner of the jeepney. This court, nevertheless,
affirmed Vargas' liability since she failed to surrender to the Motor
Vehicles Office the corresponding AC plates in violation of the Revised
Motor Vehicle Law and Commonwealth Act No. 146. We further ruled that
the operator of record continues to be the operator of the vehicle in
contemplation of law, as regards the public and third persons, and as
such is responsible for the consequences incident to its operator. The
vehicle involved was a public utility jeepney for hire. In such cases, the
law does not only require the surrender of the AC plates but orders the
vendor operator to stop the operation of the jeepney as a form of public
transportation until the matter is reported to the authorities.
As can be seen, the circumstances of the above cases are entirely
different from those in the present case. Herein petitioner does not deny
ownership of the vehicle involved in tire mishap but completely denies
having employed the driver Sabiniano or even having authorized the
latter to drive his jeep. The jeep was virtually stolen from the petitioner's
garage. To hold, therefore, the petitioner liable for the accident caused by
the negligence of Sabiniano who was neither his driver nor employee
would be absurd as it would be like holding liable the owner of a stolen
vehicle for an accident caused by the person who stole such vehicle. In
this regard, we cannot ignore the many cases of vehicles forcibly taken
from their owners at gunpoint or stolen from garages and parking areas
and the instances of service station attendants or mechanics of auto
repair shops using, without the owner's consent, vehicles entrusted to
them for servicing or repair.
We cannot blindly apply absolute rules based on precedents whose facts
do not jibe four square with pending cases. Every case must be
determined on its own peculiar factual circumstances. Where, as in this
case, the records of the petition fail to indicate the slightest indicia of an
employer-employee relationship between the owner and the erring driver
or any consent given by the owner for the vehicle's use, we cannot hold
the owner liable.
We, therefore, find that the respondent appellate court committed
reversible error in holding the petitioner jointly and severally liable with
Sabiniano to the private respondent.
WHEREFORE, the petition is GRANTED and the decision and resolution
appealed from are hereby ANNULLED and SET ASIDE. The decision of
the then Court of First Instance (now Regional Trial Court) of Laguna, 8th
Judicial District, Branch 6, dated July 30, 1981 is REINSTATED.
SO ORDERED.
G.R. No. 98275 November 13, 1992

BA FINANCE CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS, REGIONAL TRIAL COURT OF
ANGELES CITY, BRANCH LVI, CARLOS OCAMPO, INOCENCIO
TURLA, SPOUSES MOISES AGAPITO and SOCORRO M. AGAPITO
and NICOLAS CRUZ, respondents.
MELO, J.:
The question of petitioner's responsibility for damages when on March 6,
1983, an accident occurred involving petitioner's Isuzu ten-wheeler truck
then driven by an employee of Lino Castro is the thrust of the petition for
review on certiorari now before Us considering that neither the driver nor
Lino Castro appears to be connected with petitioner.
On October 13, 1988, the disputed decision in the suit below was
rendered by the court of origin in this manner:
1. Ordering Rock B.A. and Rogelio Villar y Amare jointly and severally to
pay the plaintiffs as follows:
a) To the plaintiff Carlos Ocampo P121,650.00;
b) To the plaintiff Moises Ocampo P298,500.00
c) To the plaintiff Nicolas Cruz P154,740.00
d) To the plaintiff Inocencio Turla, Sr. 48,000.00
2. Dismissing the case against Lino Castro
3. Dismissing the third-party complaint against STRONGHOLD
4. Dismissing all the counterclaim of the defendants and third-party
defendants.
5. Ordering ROCK to reimburse B.A. the total amount of P622,890.00
which the latter is adjudged to pay to the plaintiffs. (p. 46, Rollo)
Respondent Court of Appeals affirmed the appealed disposition in toto
through Justice Rasul, with Justices De Pano, Jr. and Imperial
concurring, on practically the same grounds arrived at by the court a quo
(p. 28, Rollo). Efforts exerted towards re-evaluation of the adverse were
futile (p. 37, Rollo). Hence, the instant petition.
The lower court ascertained after due trial that Rogelio Villar y Amare, the
driver of the Isuzu truck, was at fault when the mishap occurred in as
much as he was found guilty beyond reasonable doubt of reckless
imprudence resulting in triple homicide with multiple physical injuries with
damage to property in a decision rendered on February 16, 1984 by the
Presiding Judge of Branch 6 of the Regional Trial Court stationed at
Malolos, Bulacan. Petitioner was adjudged liable for damages in as much
as the truck was registered in its name during the incident in question,
following the doctrine laid down by this Court in Perez vs. Gutierrez (53
SCRA 149 [1973]) and Erezo, et al. vs. Jepte (102 Phil. 103 [1957]). In
the same breadth, Rock Component Philippines, Inc. was ordered to
reimburse petitioner for any amount that the latter may be adjudged liable
to pay herein private respondents as expressly stipulated in the contract
of lease between petitioner and Rock Component Philippines, Inc.
Moreover, the trial court applied Article 2194 of the new Civil Code on
solidary accountability of join tortfeasors insofar as the liability of the
driver, herein petitioner and Rock Component Philippines was concerned
(pp. 6-7, Decision; pp. 44-45, Rollo).
To the question of whether petitioner can be held responsible to the
victim albeit the truck was leased to Rock Component Philippines when
the incident occurred, the appellate court answered in the affirmative on
the basis of the jurisprudential dogmas which, as aforesaid, were relied
upon by the trial court although respondent court was quick to add the
caveat embodied in the lease covenant between petitioner and Rock
Component Philippines relative to the latter's duty to reimburse any
amount which may be adjudged against petitioner (pp. 32-33, Rollo).
Petitioner asseverates that it should not have been haled to court and
ordered to respond for the damage in the manner arrived at by both the
trial and appellate courts since paragraph 5 of the complaint lodged by
the plaintiffs below would indicate that petitioner was not the employer of
the negligent driver who was under the control an supervision of Lino
Castro at the time of the accident, apart from the fact that the Isuzu truck
was in the physical possession of Rock Component Philippines by virtue
of the lease agreement.
Aside from casting clouds of doubt on the propriety of invoking the Perez
and Erezo doctrines, petitioner continue to persist with the idea that the
pronouncements of this Court in Duavit vs. Court of Appeals (173 SCRA
490 [1989]) and Duquillo vs. Bayot (67 Phil 131 [1939]) dovetail with the
factual and legal scenario of the case at hand. Furthermore, petitioner
assumes, given the so-called hiatus on the basis for the award of
damages as decreed by the lower and appellate courts, that Article 2180
of the new Civil Code on vicarious liability will divest petitioner of any
responsibility absent as there is any employer-employee relationship
between petitioner and the driver.
Contrary to petitioner's expectations, the recourse instituted from the
rebuffs it encountered may not constitute a sufficient foundation for
reversal of the impugned judgment of respondent court. Petitioner is of
the impression that the Perez and Erezo cases are inapplicable due to
the variance of the generative facts in said cases as against those
obtaining in the controversy at bar. A contrario, the lesson imparted by
Justice Labrador in Erezo is still good law, thus:
. . . In previous decisions, We already have held that the registered owner
of a certificate of public convenience is liable to the public for the injuries
or damages suffered by passengers or third persons caused by the
operation of said vehicle, even though the same had been transferred to
a third person. (Montoya vs. Ignacio, 94 Phil., 182 50 Off. Gaz., 108;
Roque vs. Malibay Transit, Inc., G.R. No. L-8561, November 18, 1955;
Vda. de Medina vs. Cresencia, 99 Phil., 506, 52 Off. Gaz., [10], 4606.)
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 presumed that the registered owner is the actual owner
thereof, for it would be difficult with 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 actual
the owner is. How would the public or third persons know against whom
to enforce their rights in case of subsequent transfer 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.
Under the same principle the registered owner of any vehicle, even if not
used for a public service, should primarily responsible to the public or to
the 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 plaintiffappellee for the injuries occasioned to the latter because of the
negligence of the driver, even if the defendant-appellant was no longer
an 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 (defendantsappellant's) liability?
There is a presumption that the owner of the guilty vehicle is the
defendant-appellant as he is the registered owner in the Motor Vehicle
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 the
actual owner? The defendants hold the affirmative of this proposition; the
trial court hold the negative.
The Revised Motor Vehicle Law (Act No. 3992, as amended) provides
that the vehicle may be used or operated upon any public highway unless
the same is properly 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 of 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
from the current year, furnish the Motor Vehicle Office a report showing
the name and address of each purchaser of motor vehicle during the
previous month and the manufacturer's serial number and motor number.
(Section 5[c], Act No. 3992, as amended.)
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
injury is caused by the vehicle on the public highways, responsibility
therefor can be fixed on a definite individual, the registered owner.
identification. It is to forestall these circumstances, so inconvenient or
obtained, in the interest of the determinations of persons responsible for
One of the principle purposes of motor vehicles legislation is identification
of the vehicle and of the operator, in case of accident; and another is that
the knowledge that means of detection are always available my 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 their servants. (King vs. Breham
Automobile Co., Inc. 145 S. W. 278, 279.)
poses is: should not the registered owner be allowed at the trial to prove
owning the vehicle? We hold with the trial court that the law does not

or Identify the person actually causing the injury or damage. He has no
means other then by a recourse to the registration in the Motor Vehicles
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.
required to pay as damage for the injury caused to the plaintiff-appellant.
If the foregoing words of wisdom were applied in solving the
circumstance whereof the vehicle had been alienated or sold to another,
there certainly can be no serious exception against utilizing the same
rationale to the antecedents of this case where the subject vehicle was
merely leased by petitioner to Rock Component Philippines, Inc., with
petitioner retaining ownership over the vehicle.
Petitioner's reliance on the ruling of this Court in Duavit vs. Court of
Appeals and in Duquillo vs. Bayot (supra) is legally unpalatable for the
purpose of the present discourse. The vehicles adverted to in the two
cases shared a common thread, so to speak, in that the jeep and the
truck were driven in reckless fashion without the consent or knowledge of
the respective owners. Cognizant of the inculpatory testimony spewed by
defendant Sabiniano when he admitted that he took the jeep from the
garage of defendant Dauvit without the consent or authority of the latter,
Justice Gutierrez, Jr. in Duavit remarked;
. . . Herein petitioner does not deny ownership of the vehicle involved in
the mishap but completely denies having employed the driver Sabiniano
or even having authorized the latter to drive his jeep. The jeep was
virtually stolen from the petitioner's garage. To hold, therefore, the

petitioner liable for the accident caused by the negligence of Sabiniano
who was neither his driver nor employee would be absurd as it would be
like holding liable the owner of a stolen vehicle for an accident caused by
the person who stole such vehicle. In this regard, we cannot ignore the
many cases of vehicles forcibly taken from their owners at gunpoint or
stolen from garages and parking areas and the instances of service
station attendants or mechanics of auto repair shops using, without the
owner's consent, vehicles entrusted to them for servicing or repair.(at p.
496.)
In the Duquillo case, the defendant therein cannot, according to Justice
Diaz, be held liable for anything because of circumstances which
indicated that the truck was driven without the consent or knowledge of
the owner thereof.
Consequently, there is no need for Us to discuss the matter of imputed
negligence because petitioner merely presumed, erroneously, however,
that judgment was rendered against it on the basis of such doctrine
embodied under Article 2180 of the new Civil Code.
WHEREFORE, the petition is hereby DISMISSED and decision under
review AFFIRMED without special pronouncement as to costs.
SO ORDERED.
G.R. No. 162267

July 4, 2008
PCI LEASING AND FINANCE, INC., petitioner,
vs.
UCPB GENERAL INSURANCE CO., INC., respondent.
DECISION
AUSTRIA-MARTINEZ, J.:
Before the Court is a Petition for Review on Certiorari under Rule 45 of
the Rules of Court, seeking a reversal of the Decision1 of the Court of
Appeals (CA) dated December 12, 2003 affirming with modification the
Decision of the Regional Trial Court (RTC) of Makati City which ordered
petitioner and Renato Gonzaga (Gonzaga) to pay, jointly and severally,
respondent the amount of P244,500.00 plus interest; and the CA
Resolution2 dated February 18, 2004 denying petitioner's Motion for
Reconsideration.
The facts, as found by the CA, are undisputed:
On October 19, 1990 at about 10:30 p.m., a Mitsubishi Lancer car with
Plate Number PHD-206 owned by United Coconut Planters Bank was
traversing the Laurel Highway, Barangay Balintawak, Lipa City. The car
was insured with plantiff-appellee [UCPB General Insurance Inc.], then
driven by Flaviano Isaac with Conrado Geronimo, the Asst. Manager of
said bank, was hit and bumped by an 18-wheeler Fuso Tanker Truck with
Plate No. PJE-737 and Trailer Plate No. NVM-133, owned by defendantsappellants PCI Leasing & Finance, Inc. allegedly leased to and operated
by defendant-appellant Superior Gas & Equitable Co., Inc. (SUGECO)
and driven by its employee, defendant appellant Renato Gonzaga.
The impact caused heavy damage to the Mitsubishi Lancer car resulting
in an explosion of the rear part of the car. The driver and passenger
suffered physical injuries. However, the driver defendant-appellant
Gonzaga continued on its [sic] way to its [sic] destination and did not
bother to bring his victims to the hospital.
Plaintiff-appellee paid the assured UCPB the amount of P244,500.00
representing the insurance coverage of the damaged car.
As the 18-wheeler truck is registered under the name of PCI Leasing,
repeated demands were made by plaintiff-appellee for the payment of the
aforesaid amounts. However, no payment was made. Thus, plaintiffappellee filed the instant case on March 13, 1991.3
PCI Leasing and Finance, Inc., (petitioner) interposed the defense that it
could not be held liable for the collision, since the driver of the truck,
Gonzaga, was not its employee, but that of its co-defendant Superior Gas
& Equitable Co., Inc. (SUGECO).4 In fact, it was SUGECO, and not
petitioner, that was the actual operator of the truck, pursuant to a
Contract of Lease signed by petitioner and SUGECO.5 Petitioner,
however, admitted that it was the owner of the truck in question.6
After trial, the RTC rendered its Decision dated April 15, 1999,7 the
dispositive portion of which reads:
WHEREFORE, premises considered, judgment is hereby rendered in
favor of plaintiff UCPB General Insurance [respondent], ordering the
defendants PCI Leasing and Finance, Inc., [petitioner] and Renato
Gonzaga, to pay jointly and severally the former the following amounts:
the principal amount of P244,500.00 with 12% interest as of the filing of
this complaint until the same is paid; P50,000.00 as attorney's fees; and
P20,000.00 as costs of suit.
SO ORDERED.8
Aggrieved by the decision of the trial court, petitioner appealed to the CA.
In its Decision dated December 12, 2003, the CA affirmed the RTC's
decision, with certain modifications, as follows:
WHEREFORE, the appealed decision dated April 15, 1999 is hereby
AFFIRMED with modification that the award of attorney's fees is hereby
deleted and the rate of interest shall be six percent (6%) per annum
computed from the time of the filing of the complaint in the trial court until
the finality of the judgment. If the adjudged principal and the interest
remain unpaid thereafter, the interest rate shall be twelve percent (12%)
per annum computed from the time the judgment becomes final and
executory until it is fully satisfied.
SO ORDERED.9
Petitioner filed a Motion for Reconsideration which the CA denied in its
Resolution dated February 18, 2004.
Hence, herein Petition for Review.
The issues raised by petitioner are purely legal:
Whether petitioner, as registered owner of a motor vehicle that figured in
a quasi-delict may be held liable, jointly and severally, with the driver
thereof, for the damages caused to third parties.
Whether petitioner, as a financing company, is absolved from liability by
the enactment of Republic Act (R.A.) No. 8556, or the Financing
Company Act of 1998.
Anent the first issue, the CA found petitioner liable for the damage
caused by the collision since under the Public Service Act, if the property
covered by a franchise is transferred or leased to another without
obtaining the requisite approval, the transfer is not binding on the Public
Service Commission and, in contemplation of law, the grantee continues
to be responsible under the franchise in relation to the operation of the
vehicle, such as damage or injury to third parties due to collisions.10
Petitioner claims that the CA's reliance on the Public Service Act is
misplaced, since the said law applies only to cases involving common
carriers, or those which have franchises to operate as public utilities. In
contrast, the case before this Court involves a private commercial vehicle
for business use, which is not offered for service to the general public.11
Petitioner's contention has partial merit, as indeed, the vehicles involved

in the case at bar are not common carriers, which makes the Public
Service Act inapplicable.
However, the registered owner of the vehicle driven by a negligent driver
may still be held liable under applicable jurisprudence involving laws on
compulsory motor vehicle registration and the liabilities of employers for
quasi-delicts under the Civil Code.
The principle of holding the registered owner of a vehicle liable for quasidelicts resulting from its use is well-established in jurisprudence. Erezo v.
Jepte,12 with Justice Labrador as ponente, wisely explained the reason
behind this principle, thus:
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
injury is caused by the vehicle on the public highways, responsibility
therefor can be fixed on a definite individual, the registered owner.
identification. It is to forestall these circumstances, so inconvenient or
ordained, in the interest of the determination of persons responsible for
"'One of the principal purposes of motor vehicles legislation is
identification of the vehicle and of the operator, in case of accident; and
another is that the knowledge that means of detection are always
available may act as a deterrent from lax observance of the law and of
the rules of conservative and safe operation. Whatever purpose there
may be in these statutes, it is subordinate at the last to the primary
purpose of rendering it certain that the violator of the law or of the rules of
safety shall not escape because of lack of means to discover him.' The
purpose of the statute is thwarted, and the displayed number becomes a
'snare and delusion,' if courts would entertain such defenses as that put
forward by appellee in this case. No responsible person or corporation
could be held liable for the most outrageous acts of negligence, if they
should be allowed to place a 'middleman' between them and the public,
and escape liability by the manner in which they recompense their
servants." (King vs. Brenham Automobile Co., 145 S.W. 278, 279.)
poses is: should not the registered owner be allowed at the trial to prove
owning the vehicle? We hold with the trial court that the law does not
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
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.
required to pay as damage for the injury caused to the plaintiffappellant.13
The case is still good law and has been consistently cited in subsequent
cases.14 Thus, there is no good reason to depart from its tenets.
For damage or injuries arising out of negligence in the operation of a
motor vehicle, the registered owner may be held civilly liable with the
negligent driver either 1) subsidiarily, if the aggrieved party seeks relief
based on a delict or crime under Articles 100 and 103 of the Revised
Penal Code; or 2) solidarily, if the complainant seeks relief based on a
quasi-delict under Articles 2176 and 2180 of the Civil Code. It is the
option of the plaintiff whether to waive completely the filing of the civil
action, or institute it with the criminal action, or file it separately or
independently of a criminal action;15 his only limitation is that he cannot
recover damages twice for the same act or omission of the defendant.16
In case a separate civil action is filed, the long-standing principle is that
the registered owner of a motor vehicle is primarily and directly
responsible for the consequences of its operation, including the
negligence of the driver, with respect to the public and all third persons.17
In contemplation of law, the registered owner of a motor vehicle is the
employer of its driver, with the actual operator and employer, such as a
lessee, being considered as merely the owner's agent.18 This being the
case, even if a sale has been executed before a tortious incident, the
sale, if unregistered, has no effect as to the right of the public and third
persons to recover from the registered owner.19 The public has the right
to conclusively presume that the registered owner is the real owner, and
may sue accordingly.20
In the case now before the Court, there is not even a sale of the vehicle
involved, but a mere lease, which remained unregistered up to the time of
the occurrence of the quasi-delict that gave rise to the case. Since a
lease, unlike a sale, does not even involve a transfer of title or ownership,
but the mere use or enjoyment of property, there is more reason,
therefore, in this instance to uphold the policy behind the law, which is to
protect the unwitting public and provide it with a definite person to make
accountable for losses or injuries suffered in vehicular accidents.21 This is
and has always been the rationale behind compulsory motor vehicle
registration under the Land Transportation and Traffic Code and similar
laws, which, as early as Erezo, has been guiding the courts in their
disposition of cases involving motor vehicular incidents. It is also
important to emphasize that such principles apply to all vehicles in
general, not just those offered for public service or utility.22
The Court recognizes that the business of financing companies has a
legitimate and commendable purpose.23 In earlier cases, it considered a
financial lease or financing lease a legal contract,24 though subject to the
restrictions of the so-called Recto Law or Articles 1484 and 1485 of the
Civil Code.25 In previous cases, the Court adopted the statutory definition
of a financial lease or financing lease, as:
[A] mode of extending credit through a non-cancelable lease contract
under which the lessor purchases or acquires, at the instance of the
lessee, machinery, equipment, motor vehicles, appliances, business and
office machines, and other movable or immovable property in
consideration of the periodic payment by the lessee of a fixed amount of
money sufficient to amortize at least seventy (70%) of the purchase price
or acquisition cost, including any incidental expenses and a margin of
profit over an obligatory period of not less than two (2) years during which
the lessee has the right to hold and use the leased property, x x x but
with no obligation or option on his part to purchase the leased property
from the owner-lessor at the end of the lease contract. 26
Petitioner presented a lengthy discussion of the purported trend in other
jurisdictions, which apparently tends to favor absolving financing
companies from liability for the consequences of quasi-delictual acts or
omissions involving financially leased property.27 The petition adds that
these developments have been legislated in our jurisdiction in Republic
Act (R.A.) No. 8556,28 which provides:
Section 12. Liability of lessors. - Financing companies shall not be liable
for loss, damage or injury caused by a motor vehicle, aircraft, vessel,
equipment, machinery or other property leased to a third person or entity
except when the motor vehicle, aircraft, vessel, equipment or other
property is operated by the financing company, its employees or agents
at the time of the loss, damage or injury.1avvphi1
Petitioner's argument that the enactment of R.A. No. 8556, especially its
addition of the new Sec. 12 to the old law, is deemed to have absolved
petitioner from liability, fails to convince the Court.
These developments, indeed, point to a seeming emancipation of
financing companies from the obligation to compensate claimants for
losses suffered from the operation of vehicles covered by their lease.
Such, however, are not applicable to petitioner and do not exonerate it
from liability in the present case.
The new law, R.A. No. 8556, notwithstanding developments in foreign
jurisdictions, do not supersede or repeal the law on compulsory motor
vehicle registration. No part of the law expressly repeals Section 5(a) and
(e) of R.A. No. 4136, as amended, otherwise known as the Land
Transportation and Traffic Code, to wit:
Sec. 5. Compulsory registration of motor vehicles. - (a) All motor
vehicles and trailer of any type used or operated on or upon any highway
of the Philippines must be registered with the Bureau of Land
Transportation (now the Land Transportation Office, per Executive Order
No. 125, January 30, 1987, and Executive Order No. 125-A, April 13,
1987) for the current year in accordance with the provisions of this Act.
xxxx
(e) Encumbrances of motor vehicles. - Mortgages, attachments, and
other encumbrances of motor vehicles, in order to be valid against
third parties must be recorded in the Bureau (now the Land
Transportation Office). Voluntary transactions or voluntary encumbrances
shall likewise be properly recorded on the face of all outstanding copies
of the certificates of registration of the vehicle concerned.
Cancellation or foreclosure of such mortgages, attachments, and other
encumbrances shall likewise be recorded, and in the absence of such
cancellation, no certificate of registration shall be issued without the
corresponding notation of mortgage, attachment and/or other

encumbrances.
x x x x (Emphasis supplied)
Neither is there an implied repeal of R.A. No. 4136. As a rule, repeal by
implication is frowned upon, unless there is clear showing that the later
statute is so irreconcilably inconsistent and repugnant to the existing law
that they cannot be reconciled and made to stand together.29 There is
nothing in R.A. No. 4136 that is inconsistent and incapable of
reconciliation.
Thus, the rule remains the same: a sale, lease, or financial lease, for that
matter, that is not registered with the Land Transportation Office, still
does not bind third persons who are aggrieved in tortious incidents, for
the latter need only to rely on the public registration of a motor vehicle as
conclusive evidence of ownership.30 A lease such as the one involved in
the instant case is an encumbrance in contemplation of law, which needs
to be registered in order for it to bind third parties.31 Under this policy, the
evil sought to be avoided is the exacerbation of the suffering of victims of
tragic vehicular accidents in not being able to identify a guilty party. A
contrary ruling will not serve the ends of justice. The failure to register a
lease, sale, transfer or encumbrance, should not benefit the parties
responsible, to the prejudice of innocent victims.
The non-registration of the lease contract between petitioner and its
lessee precludes the former from enjoying the benefits under Section 12
of R.A. No. 8556.
This ruling may appear too severe and unpalatable to leasing and
financing companies, but the Court believes that petitioner and other
companies so situated are not entirely left without recourse. They may
resort to third-party complaints against their lessees or whoever are the
actual operators of their vehicles. In the case at bar, there is, in fact, a
provision in the lease contract between petitioner and SUGECO to the
effect that the latter shall indemnify and hold the former free and
harmless from any "liabilities, damages, suits, claims or judgments"
arising from the latter's use of the motor vehicle.32 Whether petitioner
would act against SUGECO based on this provision is its own option.
The burden of registration of the lease contract is minuscule compared to
the chaos that may result if registered owners or operators of vehicles are
freed from such responsibility. Petitioner pays the price for its failure to
obey the law on compulsory registration of motor vehicles for registration
is a pre-requisite for any person to even enjoy the privilege of putting a
vehicle on public roads.
WHEREFORE, the petition is DENIED. The Decision dated December
12, 2003 and Resolution dated February 18, 2004 of the Court of Appeals
are AFFIRMED.
Costs against petitioner.

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G.R. No.

L-47822 December 22, 1988

value of the undelivered goods (P 22,150.00) as well as for P 4,000.00 as

clientele, whether permanent, occasional or accidental, and done for

passengers. The specific import of extraordinary diligence in the care of

As noted earlier, the duty of extraordinary diligence in the vigilance over

carrier and properly regarded as a fortuitous event. It is necessary to

MR. & MRS. ENGRACIO FABRE, JR.* and PORFIRIO CABIL,

curve on the highway, running on a south to east direction, which he

security of tenure, the award of P600,000.00, considering Amyline

employees and the issuance of proper instructions as well as actual

As already stated, this case actually involves a contract of carriage.

court to increase the award of compensatory damages, we hold that it

G.R. No. 101089. April 7, 1993.

ESTRELLITA M. BASCOS, petitioners,

respondent need not introduce any evidence to prove her negligence.

was no contract of carriage since CIPTRADE leased her cargo truck to

acted with grave or irresistible threat, violence, or force. This is in

motion to lift/dissolve the writ of preliminary attachment has been

[G.R. No. 141910. August 6, 2002]

common carrier in case of loss, damage or deterioration of goods during

The subsequent motion for reconsideration having been denied,[if !

Petitioner's motion for reconsideration was likewise denied; [i f !

Given accepted standards, GPS scarcely falls within the

successors who have assumed their personality or their juridical position.

If a demurrer to evidence is granted but on appeal the order of

G.R. No. L-64693 April 27, 1984

register his taxicabs in his name. He requested the manager of petitioner

private respondents' taxicabs. (p. 39, Rollo.)

Enterprises, Inc., et al., Defendants" of the Court of First Instance of

G.R. No. 174156

the streets and highways.

be ensured to reinforce discipline among drivers and to remind owners of

G.R. No. 161833. July 8, 2005

quality, ingredient or characteristic that may cause damage, injury or

The Mariners Adjustment Corporation hired by PCIC conducted a survey

shipment, and to exercise due care in the handling and stowage,

the fabrication of said crate.

Q: Now, what, if any, were written or were marked on the crate?

Q: What did you do with the arrows?

Q: Now, did you find any other marks on the crate?

[G.R. No. 145804. February 6, 2003]

b) Moral damages of P50,000.00;

NICANOR NAVIDAD, JR.

passengers or of strangers, if the common carriers employees through

The foundation of LRTAs liability is the contract of carriage and its

WHEREFORE, the assailed decision of the appellate court is

[G.R. No. 125817. January 16, 2002]

was unyielding. Under the circumstances, negotiations had to be

Meanwhile, the damaged passenger jeepney was left by the roadside to

It is petitioners' contention that the Court of Appeals erred in sustaining

public at large is not deceived, much less involved.

G.R. No. 92288 February 9, 1993

BRITISH AIRWAYS, INC., petitioner,

respondent's failure to attach any ticket in the complaint further proved

Thus, while it may be true that private respondent was compelled to

SCHMITZ TRANSPORT & BROKERAGE CORPORATION, petitioner,

The defendants respective motions for reconsideration having been

the act must be occasioned solely by the violence of nature. Human

The foundation of LRTAs liability is the contract of carriage and its

favor would be tantamount to imposing a premium on ones right to litigate

G.R. No. 168151

G.R. No. 170071

vehicular mishap not caused by a fortuitous event but by the negligence