[G.R. No. 125948.

December 29, 1998]

FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner,
vs. COURT OF APPEALS, HONORABLE PATERNO V. TAC-
AN, BATANGAS CITY and ADORACION C. ARELLANO, in
her official capacity as City Treasurer of
Batangas, respondents.
D E C I S I O N
MARTINEZ, J.:
This petition for review on certiorari assails the Decision of the
Court of Appeals dated November 29, 1995, in CA-G.R. SP No. 36801,
affirming the decision of the Regional Trial Court of Batangas City,
Branch 84, in Civil Case No. 4293, which dismissed petitioners'
complaint for a business tax refund imposed by the City of Batangas.
Petitioner is a grantee of a pipeline concession under Republic
Act No. 387, as amended, to contract, install and operate oil
pipelines. The original pipeline concession was granted in
1967
[1]
and renewed by the Energy Regulatory Board in 1992.
[2]

Sometime in January 1995, petitioner applied for a mayor's
permit with the Office of the Mayor of Batangas City. However, before
the mayor's permit could be issued, the respondent City Treasurer
required petitioner to pay a local tax based on its gross receipts for
the fiscal year 1993 pursuant to the Local Government Code.
[3]
The
respondent City Treasurer assessed a business tax on the petitioner
amounting toP956,076.04 payable in four installments based on the
gross receipts for products pumped at GPS-1 for the fiscal year 1993
which amounted to P181,681,151.00. In order not to hamper its
operations, petitioner paid the tax under protest in the amount
of P239,019.01 for the first quarter of 1993.
On January 20, 1994, petitioner filed a letter-protest addressed
to the respondent City Treasurer, the pertinent portion of which
reads:
"Please note that our Company (FPIC) is a pipeline operator with a
government concession granted under the Petroleum Act. It is
engaged in the business of transporting petroleum products from the
Batangas refineries, via pipeline, to Sucat and JTF Pandacan
Terminals. As such, our Company is exempt from paying tax on gross
receipts under Section 133 of the Local Government Code of 1991 x x
x x
"Moreover, Transportation contractors are not included in the
enumeration of contractors under Section 131, Paragraph (h) of the
Local Government Code. Therefore, the authority to impose tax 'on
contractors and other independent contractors' under Section 143,
Paragraph (e) of the Local Government Code does not include the
power to levy on transportation contractors.
"The imposition and assessment cannot be categorized as a mere fee
authorized under Section 147 of the Local Government Code. The
said section limits the imposition of fees and charges on business to
such amounts as may be commensurate to the cost of regulation,
inspection, and licensing. Hence, assuming arguendo that FPIC is
liable for the license fee, the imposition thereof based on gross
receipts is violative of the aforecited provision. The amount
of P956,076.04 (P239,019.01 per quarter) is not commensurate to
the cost of regulation, inspection and licensing. The fee is already a
revenue raising measure, and not a mere regulatory imposition."
[4]

On March 8, 1994, the respondent City Treasurer denied the
protest contending that petitioner cannot be considered engaged in
transportation business, thus it cannot claim exemption under
Section 133 (j) of the Local Government Code.
[5]

On June 15, 1994, petitioner filed with the Regional Trial Court of
Batangas City a complaint
[6]
for tax refund with prayer for a writ of
preliminary injunction against respondents City of Batangas and
Adoracion Arellano in her capacity as City Treasurer. In its
complaint, petitioner alleged, inter alia, that: (1) the imposition and
collection of the business tax on its gross receipts violates Section
133 of the Local Government Code; (2) the authority of cities to
impose and collect a tax on the gross receipts of "contractors and
independent contractors" under Sec. 141 (e) and 151 does not
include the authority to collect such taxes on transportation
contractors for, as defined under Sec. 131 (h), the term "contractors"
excludes transportation contractors; and, (3) the City Treasurer
illegally and erroneously imposed and collected the said tax, thus
meriting the immediate refund of the tax paid.
[7]

Traversing the complaint, the respondents argued that petitioner
cannot be exempt from taxes under Section 133 (j) of the Local
Government Code as said exemption applies only to "transportation
contractors and persons engaged in the transportation by hire and
common carriers by air, land and water." Respondents assert that
pipelines are not included in the term "common carrier" which refers
solely to ordinary carriers such as trucks, trains, ships and the
like. Respondents further posit that the term "common carrier"
under the said code pertains to the mode or manner by which a
product is delivered to its destination.
[8]

On October 3, 1994, the trial court rendered a decision
dismissing the complaint, ruling in this wise:
"xxx Plaintiff is either a contractor or other independent contractor.
xxx the exemption to tax claimed by the plaintiff has become
unclear. It is a rule that tax exemptions are to be strictly construed
against the taxpayer, taxes being the lifeblood of the
government. Exemption may therefore be granted only by clear and
unequivocal provisions of law.
"Plaintiff claims that it is a grantee of a pipeline concession under
Republic Act 387, (Exhibit A) whose concession was lately renewed
by the Energy Regulatory Board (Exhibit B). Yet neither said law nor
the deed of concession grant any tax exemption upon the plaintiff.
"Even the Local Government Code imposes a tax on franchise holders
under Sec. 137 of the Local Tax Code. Such being the situation
obtained in this case (exemption being unclear and equivocal) resort
to distinctions or other considerations may be of help:
1. That the exemption granted under Sec. 133 (j)
encompasses only common carriers so as not
to overburden the riding public or commuters
with taxes. Plaintiff is not a common carrier,
but a special carrier extending its services and
facilities to a single specific or "special
customer" under a "special contract."
2. The Local Tax Code of 1992 was basically
enacted to give more and effective local
autonomy to local governments than the
previous enactments, to make them
economically and financially viable to serve
the people and discharge their functions with
a concomitant obligation to accept certain
devolution of powers, x x x So, consistent with
this policy even franchise grantees are taxed
(Sec. 137) and contractors are also taxed
under Sec. 143 (e) and 151 of the Code."
[9]

Petitioner assailed the aforesaid decision before this Court via a
petition for review. On February 27, 1995, we referred the case to
the respondent Court of Appeals for consideration and
adjudication.
[10]
On November 29, 1995, the respondent court
rendered a decision
[11]
affirming the trial court's dismissal of
petitioner's complaint. Petitioner's motion for reconsideration was
denied on July 18, 1996.
[12]

Hence, this petition. At first, the petition was denied due course
in a Resolution dated November 11, 1996.
[13]
Petitioner moved for a
reconsideration which was granted by this Court in a Resolution
[14]
of
January 20, 1997. Thus, the petition was reinstated.
Petitioner claims that the respondent Court of Appeals erred in
holding that (1) the petitioner is not a common carrier or a
transportation contractor, and (2) the exemption sought for by
petitioner is not clear under the law.
There is merit in the petition.
A "common carrier" may be defined, broadly, as one who holds
himself out to the public as engaged in the business of transporting
persons or property from place to place, for compensation, offering
his services to the public generally.
Article 1732 of the Civil Code defines a "common carrier" as "any
person, corporation, firm or association engaged in the business of
carrying or transporting passengers or goods or both, by land, water,
or air, for compensation, offering their services to the public."
The test for determining whether a party is a common carrier of
goods is:
1. He must be engaged in the business of carrying goods
for others as a public employment, and must hold
himself out as ready to engage in the transportation of
goods for person generally as a business and not as a
casual occupation;
2. He must undertake to carry goods of the kind to which
his business is confined;
3. He must undertake to carry by the method by which
his business is conducted and over his established
roads; and
4. The transportation must be for hire.
[15]

Based on the above definitions and requirements, there is no
doubt that petitioner is a common carrier. It is engaged in the
business of transporting or carrying goods, i.e. petroleum products,
for hire as a public employment. It undertakes to carry for all
persons indifferently, that is, to all persons who choose to employ its
services, and transports the goods by land and for compensation. The
fact that petitioner has a limited clientele does not exclude it from the
definition of a common carrier. In De Guzman vs. Court of
Appeals
[16]
we ruled that:
"The above article (Art. 1732, Civil Code) 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 x x
x 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 1877 deliberately
refrained from 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.'
"(Underscoring Supplied)
Also, respondent's argument that the term "common carrier" as
used in Section 133 (j) of the Local Government Code refers only to
common carriers transporting goods and passengers through moving
vehicles or vessels either by land, sea or water, is erroneous.
As correctly pointed out by petitioner, the definition of "common
carriers" in the Civil Code makes no distinction as to the means of
transporting, as long as it is by land, water or air. It does not provide
that the transportation of the passengers or goods should be by
motor vehicle. In fact, in the United States, oil pipe line operators are
considered common carriers.
[17]

Under the Petroleum Act of the Philippines (Republic Act 387),
petitioner is considered a "common carrier." Thus, Article 86 thereof
provides that:
"Art. 86. Pipe line concessionaire as a common carrier. - A pipe
line shall have the preferential right to utilize installations for the
transportation of petroleum owned by him, but is obligated to utilize
the remaining transportation capacity pro rata for the transportation
of such other petroleum as may be offered by others for transport,
and to charge without discrimination such rates as may have been
approved by the Secretary of Agriculture and Natural Resources."
Republic Act 387 also regards petroleum operation as a public
utility. Pertinent portion of Article 7 thereof provides:
"that everything relating to the exploration for and exploitation of
petroleum x x and everything relating to the manufacture, refining,
storage, or transportation by special methods of petroleum, is
hereby declared to be apublic utility." (Underscoring Supplied)
The Bureau of Internal Revenue likewise considers the petitioner
a "common carrier." In BIR Ruling No. 069-83, it declared:
"x x x since [petitioner] is a pipeline concessionaire that is engaged
only in transporting petroleum products, it is considered a common
carrier under Republic Act No. 387 x x x. Such being the case, it is not
subject to withholding tax prescribed by Revenue Regulations No. 13-
78, as amended."
From the foregoing disquisition, there is no doubt that petitioner
is a "common carrier" and, therefore, exempt from the business tax as
provided for in Section 133 (j), of the Local Government Code, to wit:
"Section 133. Common Limitations on the Taxing Powers of Local
Government Units. - Unless otherwise provided herein, the exercise of
the taxing powers of provinces, cities, municipalities, and barangays
shall not extend to the levy of the following :
x x x x x x x x x
(j) Taxes on the gross receipts of transportation
contractors and persons engaged in the
transportation of passengers or freight by hire and
common carriers by air, land or water, except as
provided in this Code."
The deliberations conducted in the House of Representatives on
the Local Government Code of 1991 are illuminating:
"MR. AQUINO (A). Thank you, Mr. Speaker.
Mr. Speaker, we would like to proceed to page 95, line 1. It states :
"SEC.121 [now Sec. 131]. Common Limitations on the Taxing Powers
of Local Government Units." x x x
MR. AQUINO (A.). Thank you Mr. Speaker.
Still on page 95, subparagraph 5, on taxes on the business of
transportation. This appears to be one of those being deemed to be
exempted from the taxing powers of the local government units. May
we know the reason why the transportation business is being
excluded from the taxing powers of the local government units?
MR. JAVIER (E.). Mr. Speaker, there is an exception contained in
Section 121 (now Sec. 131), line 16, paragraph 5. It states that local
government units may not impose taxes on the business of
transportation, except as otherwise provided in this code.
Now, Mr. Speaker, if the Gentleman would care to go to page 98 of
Book II, one can see there that provinces have the power to impose a
tax on business enjoying a franchise at the rate of not more than one-
half of 1 percent of the gross annual receipts. So, transportation
contractors who are enjoying a franchise would be subject to tax by
the province. That is the exception, Mr. Speaker.
What we want to guard against here, Mr. Speaker, is the
imposition of taxes by local government units on the carrier
business. Local government units may impose taxes on top of what
is already being imposed by the National Internal Revenue Code
which is the so-called "common carriers tax." We do not want a
duplication of this tax, so we just provided for an
exception under Section 125 [now Sec. 137] that a province may
impose this tax at a specific rate.
MR. AQUINO (A.). Thank you for that clarification, Mr. Speaker. x x
x
[18]

It is clear that the legislative intent in excluding from the taxing
power of the local government unit the imposition of business tax
against common carriers is to prevent a duplication of the so-called
"common carrier's tax."
Petitioner is already paying three (3%) percent common
carrier's tax on its gross sales/earnings under the National Internal
Revenue Code.
[19]
To tax petitioner again on its gross receipts in its
transportation of petroleum business would defeat the purpose of the
Local Government Code.
WHEREFORE, the petition is hereby GRANTED. The decision of
the respondent Court of Appeals dated November 29, 1995 in CA-G.R.
SP No. 36801 is REVERSED and SET ASIDE.
SO ORDERED.
Bellosillo, (Chairman), Puno, and Mendoza, JJ., concur.
First Philippine Industrial Corp. vs. CA
Facts:
Petitioner is a grantee of a pipeline concession under Republic Act
No. 387. Sometime in January 1995, petitioner applied for mayors
permit in Batangas. However, the Treasurer required petitioner to
pay a local tax based on gross receipts amounting to P956,076.04. In
order not to hamper its operations, petitioner paid the taxes for the
first quarter of 1993 amounting to P239,019.01 under protest. On
January 20, 1994, petitioner filed a letter-protest to the City
Treasurer, claiming that it is exempt from local tax since it is engaged
in transportation business. The respondent City Treasurer denied the
protest, thus, petitioner filed a complaint before the Regional Trial
Court of Batangas for tax refund. Respondents assert that pipelines
are not included in the term common carrier which refers solely to
ordinary carriers or motor vehicles. The trial court dismissed the
complaint, and such was affirmed by the Court of Appeals.
Issue:
Whether a pipeline business is included in the term common carrier
so as to entitle the petitioner to the exemption
Held:
Article 1732 of the Civil Code defines a "common carrier" as "any
person, corporation, firm or association engaged in the business of
carrying or transporting passengers or goods or both, by land, water,
or air, for compensation, offering their services to the public."
The test for determining whether a party is a common carrier of
goods is:
(1) He must be engaged in the business of carrying goods for others
as a public employment, and must hold himself out as ready to engage
in the transportation of goods for person generally as a business and
not as a casual occupation;
(2) He must undertake to carry goods of the kind to which his
business is confined;
(3) He must undertake to carry by the method by which his business
is conducted and over his established roads; and
(4) The transportation must be for hire.
Based on the above definitions and requirements, there is no doubt
that petitioner is a common carrier. It is engaged in the business of
transporting or carrying goods, i.e. petroleum products, for hire as a
public employment. It undertakes to carry for all persons
indifferently, that is, to all persons who choose to employ its services,
and transports the goods by land and for compensation. The fact that
petitioner has a limited clientele does not exclude it from the
definition of a common carrier.
[G.R. No. 111127. July 26, 1996]
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.
D E C I S I O N
MENDOZA, J.:
This is a petition for review on certiorari of the decision of the
Court of Appeals
[1]
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;
3) P50,000.00 as moral 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.
[2]
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.
[3]
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
[4]
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.
[5]
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.
[6]

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.
[7]
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.
[8]

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.
[9]

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:
[10]

Art. 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water, or air for compensation,
offering their services to the public.
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 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.
[11]
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.
[12]
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.
[13]

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,
[14]
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
[15]
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,
[16]
Batangas Laguna Tayabas Bus Co. v. Intermediate Appellate
Court,
[17]
and Metro Manila Transit Corporation v. Court of
Appeals,
[18]
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,
[19]
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.
[20]

It is true that in Philippine Rabbit Bus Lines, Inc. v. Court of
Appeals
[21]
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 Viluanv. The Court
of Appeals, et al., G.R. Nos. L-21477-81, April 29, 1966, 16 SCRA 742) .
. .
[22]

As in the case of BLTB, private respondents in this case and her
co-plaintiffs 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
[23]
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;
3) P20,000.00 as moral damages;
4) P20,000.00 as exemplary damages;
5) 25% of the recoverable amount as attorneys fees; and
6) costs of suit.
SO ORDERED.
Regalado, (Chairman), Romero, Puno, and Torres, Jr., JJ., concur.

Facts: Petitioners were owners of 1982 model Mazda minibus. They
are the bus principally in connection with a bus service for their
children which they operated in Manila. They hired Cabil as their
driver. On November 2, 1982, private respondent word for the World
Christian Fellowship (WWCF) arranged with petitioners for the
transportation of members of young adult ministry from Manila to La
Union and back. The usual route to la Union was through Carmen
Pangasinan but unfortunately, the bridge of Carmen was under repair
so that the driver was forced to take the detour through Lingayen. At
the right, they met an accident, the bus hit a fence and a coconut tree
that caused passengers to be injured including respondent
Antonio. The latter filed a criminal complaint against the driver, the
trial court decided in favor of respondents. All evidence presented
have shown the negligent set of the defendants, which ultimately
resulted to the accident. Court of Appeals affirmed the decision of the
Trial Court, hence this petition.
Issue: Whether petitioners were negligent and liable for the injuries
suffered by respondents.
Held: Petitioners failed to exercise due negligence in the operation of
which considering the time and the place of the accident. The fact
that he was driving so fast, it was raining so dark, the driving was
going negligent and should be liable for the injuries suffered by
respondents.

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'sprincipal occupation was not the carriage of goods for
others. There is no dispute that private respondent charged his
customers a fee for hauling their goods; that fee frequently fell below
commercial freight rates is not relevant here.
The Court of Appeals referred to the fact that private respondent held
no certificate of public convenience, and concluded he was not a
common carrier. This is palpable error. A certificate of public
convenience is not a requisite for the incurring of liability under the
Civil Code provisions governing common carriers. That liability arises
the moment a person or firm acts as a common carrier, without
regard to whether or not such carrier has also complied with the
requirements of the applicable regulatory statute and implementing
regulations and has been granted a certificate of public convenience
or other franchise. To exempt private respondent from the liabilities
of a common carrier because he has not secured the necessary
certificate of public convenience, would be offensive to sound public
policy; that would be to reward private respondent precisely for
failing to comply with applicable statutory requirements. The
business of a common carrier impinges directly and intimately upon
the safety and well being and property of those members of the
general community who happen to deal with such carrier. The law
imposes duties and liabilities upon common carriers for the safety
and protection of those who utilize their services and the law cannot
allow a common carrier to render such duties and liabilities merely
facultative by simply failing to obtain the necessary permits and
authorizations.
We turn then to the liability of private respondent as a common
carrier.
Common carriers, "by the nature of their business and for reasons of
public policy"
2
are held to a very high degree of care and diligence
("extraordinary diligence") in the carriage of goods as well as of
passengers. The specific import of extraordinary diligence in the care
of goods transported by a common carrier is, according to Article
1733, "further expressed in Articles 1734,1735 and 1745, numbers 5,
6 and 7" of the Civil Code.
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 donot act with grave or
irresistible threat, violence or force, is
dispensed with or diminished; and
(7) that the common carrier shall not
responsible for the loss, destruction or
deterioration of goods on account of
the defective condition of the car
vehicle, ship, airplane or other
equipment used in the contract of
carriage. (Emphasis supplied)
Under Article 1745 (6) above, a common carrier is held responsible
and will not be allowed to divest or to diminish such responsibility
even for acts of strangers like thieves or robbers, except where
such thieves or robbers in fact acted "with grave or irresistible threat,
violence or force." We believe and so hold that the limits of the duty
of extraordinary diligence in the vigilance over the goods carried are
reached where the goods are lost as a result of a robbery which is
attended by "grave or irresistible threat, violence or force."
In the instant case, armed men held up the second truck owned by
private respondent which carried petitioner's cargo. The record
shows that an 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.
Fernan, C.J., Gutierrez, Jr., Bidin and Cortes, JJ., concur.

Facts:
Respondent Ernesto Cendana was engaged in buying up used bottles
and scrap metal in Pangasinan. After collection, respondent would
bring such material to Manila for resale. He utilized (2) two six-
wheelers trucks which he owned for the purpose. Upon returning to
Pangasinan, he would load his vehicle with cargo belonging to
different merchants for delivery to different establishments in
Pangasisnan for which respondent charged a freight fee.
Sometime in November 1970, petitioner Pedro de Guzman, a
merchant and dealer of General Milk Company Inc. in Pangasinan
contracted with respondent for hauling 750 cartons of milk.
Unfortunately, only 150 cartons were delivered, as the other 600
cartons were intercepted by hijackers along Marcos Highway. Hence,
petitioner commenced an action against private respondent.
In his defense, respondent argued that he cannot be held liable due to
force majeure, and that he is not a common carrier, hence not
required to exercise extraordinary diligence.
Issues:
1. Whether or not respondent is a common carrier.
2. Whether or not respondent can be held liable for loss of the 600
cartons of milk due to force majeure.
Held:
1. Respondent is a common carrier. Article 1732 of the New Civil
Code does not distinguish 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. It also avoids a distinction
between a person or enterprise offering transportation services on a
regular or scheduled basis and one offering such services on an
occasional, episodic, and unscheduled basis.
2. The court ruled in the affirmative. The circumstances do not fall
under the exemption from liability as enumerated in Article 1734 of
the Civil Code. The general rule is established by the article 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:
a. Flood, storm, earthquake, lightning or other natural disasters;
b. Act of the public enemy, whether international or civil;
c. Act or omission of the shipper or owner of the goods;
d. Character of the goods or defects in the packing;
e. Order or act of competent public authority.


G.R. No. 150403 January 25, 2007
CEBU SALVAGE CORPORATION, Petitioner,
vs.
PHILIPPINE HOME ASSURANCE CORPORATION, Respondent.
D E C I S I O N
CORONA, J.:
May a carrier be held liable for the loss of cargo resulting from the
sinking of a ship it does not own?
This is the issue presented for the Courts resolution in this petition
for review on certiorari
1
assailing the March 16, 2001 decision
2
and
September 17, 2001 resolution
3
of the Court of Appeals (CA) in CA-
G.R. CV No. 40473 which in turn affirmed the December 27, 1989
decision
4
of the Regional Trial Court (RTC), Branch 145, Makati,
Metro Manila.
5

The pertinent facts follow.
On November 12, 1984, petitioner Cebu Salvage Corporation (as
carrier) and Maria Cristina Chemicals Industries, Inc. [MCCII] (as
charterer) entered into a voyage charter
6
wherein petitioner was to
load 800 to 1,100 metric tons of silica quartz on board the M/T
Espiritu Santo
7
at Ayungon, Negros Occidental for transport to and
discharge at Tagoloan, Misamis Oriental to consignee Ferrochrome
Phils., Inc.
8

Pursuant to the contract, on December 23, 1984, petitioner received
and loaded 1,100 metric tons of silica quartz on board the M/T
Espiritu Santo which left Ayungon for Tagoloan the next day.
9
The
shipment never reached its destination, however, because the M/T
Espiritu Santo sank in the afternoon of December 24, 1984 off the
beach of Opol, Misamis Oriental, resulting in the total loss of the
cargo.
10

MCCII filed a claim for the loss of the shipment with its insurer,
respondent Philippine Home Assurance Corporation.
11
Respondent
paid the claim in the amount of P211,500 and was subrogated to the
rights of MCCII.
12
Thereafter, it filed a case in the RTC
13
against
petitioner for reimbursement of the amount it paid MCCII.
After trial, the RTC rendered judgment in favor of respondent. It
ordered petitioner to pay respondent P211,500 plus legal interest,
attorneys fees equivalent to 25% of the award and costs of suit.
On appeal, the CA affirmed the decision of the RTC. Hence, this
petition.
Petitioner and MCCII entered into a "voyage charter," also known as a
contract of affreightment wherein the ship was leased for a single
voyage for the conveyance of goods, in consideration of the payment
of freight.
14
Under a voyage charter, the shipowner retains the
possession, command and navigation of the ship, the charterer or
freighter merely having use of the space in the vessel in return for his
payment of freight.
15
An owner who retains possession of the ship
remains liable as carrier and must answer for loss or non-delivery of
the goods received for transportation.
16

Petitioner argues that the CA erred when it affirmed the RTC finding
that the voyage charter it entered into with MCCII was a contract of
carriage.
17
It insists that the agreement was merely a contract of hire
wherein MCCII hired the vessel from its owner, ALS Timber
Enterprises (ALS).
18
Not being the owner of the M/T Espiritu Santo,
petitioner did not have control and supervision over the vessel, its
master and crew.
19
Thus, it could not be held liable for the loss of the
shipment caused by the sinking of a ship it did not own.
We disagree.
Based on the agreement signed by the parties and the testimony of
petitioners operations manager, it is clear that it was a contract of
carriage petitioner signed with MCCII. It actively negotiated and
solicited MCCIIs account, offered its services to ship the silica quartz
and proposed to utilize the M/T Espiritu Santo in lieu of the M/T
Seebees or the M/T Shirley (as previously agreed upon in the voyage
charter) since these vessels had broken down.
20

There is no dispute that petitioner was a common carrier. At the time
of the loss of the cargo, it was engaged in the business of carrying and
transporting goods by water, for compensation, and offered its
services to the public.
21

From the nature of their business and for reasons of public policy,
common carriers are bound to observe extraordinary diligence over
the goods they transport according to the circumstances of each
case.
22
In the event of loss of the goods, common carriers are
responsible, unless they can prove that this was brought about by the
causes specified in Article 1734 of the Civil Code.
23
In all other cases,
common carriers are presumed to be at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence.
24

Petitioner was the one which contracted with MCCII for the transport
of the cargo. It had control over what vessel it would use. All
throughout its dealings with MCCII, it represented itself as a common
carrier. The fact that it did not own the vessel it decided to use to
consummate the contract of carriage did not negate its character and
duties as a common carrier. The MCCII (respondents subrogor) could
not be reasonably expected to inquire about the ownership of the
vessels which petitioner carrier offered to utilize. As a practical
matter, it is very difficult and often impossible for the general public
to enforce its rights of action under a contract of carriage if it should
be required to know who the actual owner of the vessel is.
25
In fact, in
this case, the voyage charter itself denominated petitioner as the
"owner/operator" of the vessel.
26

Petitioner next contends that if there was a contract of carriage, then
it was between MCCII and ALS as evidenced by the bill of lading ALS
issued.
27

Again, we disagree.
The bill of lading was merely a receipt issued by ALS to evidence the
fact that the goods had been received for transportation. It was not
signed by MCCII, as in fact it was simply signed by the supercargo of
ALS.
28
This is consistent with the fact that MCCII did not contract
directly with ALS. While it is true that a bill of lading may serve as the
contract of carriage between the parties,
29
it cannot prevail over the
express provision of the voyage charter that MCCII and petitioner
executed:
[I]n cases where a Bill of Lading has been issued by a carrier covering
goods shipped aboard a vessel under a charter party, and the
charterer is also the holder of the bill of lading, "the bill of lading
operates as the receipt for the goods, and as document of title passing
the property of the goods, but not as varying the contract between
the charterer and the shipowner." The Bill of Lading becomes,
therefore, only a receipt and not the contract of carriage in a charter
of the entire vessel, for the contract is the Charter Party, and is the
law between the parties who are bound by its terms and condition
provided that these are not contrary to law, morals, good customs,
public order and public policy.
30

Finally, petitioner asserts that MCCII should be held liable for its own
loss since the voyage charter stipulated that cargo insurance was for
the charterers account.
31
This deserves scant consideration. This
simply meant that the charterer would take care of having the goods
insured. It could not exculpate the carrier from liability for the breach
of its contract of carriage. The law, in fact, prohibits it and condemns
it as unjust and contrary to public policy.
32

To summarize, a contract of carriage of goods was shown to exist; the
cargo was loaded on board the vessel; loss or non-delivery of the
cargo was proven; and petitioner failed to prove that it exercised
extraordinary diligence to prevent such loss or that it was due to
some casualty or force majeure. The voyage charter here being a
contract of affreightment, the carrier was answerable for the loss of
the goods received for transportation.
33

The idea proposed by petitioner is not only preposterous, it is also
dangerous. It says that a carrier that enters into a contract of carriage
is not liable to the charterer or shipper if it does not own the vessel it
chooses to use. MCCII never dealt with ALS and yet petitioner insists
that MCCII should sue ALS for reimbursement for its loss. Certainly,
to permit a common carrier to escape its responsibility for the goods
it agreed to transport (by the expedient of alleging non-ownership of
the vessel it employed) would radically derogate from the carrier's
duty of extraordinary diligence. It would also open the door to
collusion between the carrier and the supposed owner and to the
possible shifting of liability from the carrier to one without any
financial capability to answer for the resulting damages.
34

WHEREFORE, the petition is hereby DENIED.
Costs against petitioner.
SO ORDERED.
FACTS:
On November 12, 1984, CSC & Maria Christina Chemicals Industries,
Inc., (MCCII) entered into a voyage charter wherein CSC was to load
800-1,100 metric tons of silica quartz on board the M/T Espiritu
Santo at Ayungon, Negros Occidental for transport to and discharge at
Tagoloan, Misamis Oriental to consigned Ferrochrome Phils., Inc.
Pursuant to the contract, on December 23, 1984, CSC received &
loaded 1,100 metric tons of silica quartz on board the M/T Espiritu
Santo which left Ayungon for Tagoloan the next day.
However, the shipment never reached its destination because the
M/T Espiritu Santo sank in the afternoon of December 24, 1984 off
the beach of Opol, Misamis Oriental, resulting in the total loss of the
cargo.
MCCII filed a claim for the loss of the shipment with its insurer, PHAC.
PHAC paid the claim in the amount of P211,500 and was surrogated
to MCCIIs rights. It thereafter filed a case in the RTC against CSC for
reimbursement of the amount it paid MCCII.
However, CSC claims no liability insisting that the agreement was
merely a contract of hire wherein MCCII hired the vessel from its
owner, ALS Timber Enterprises. Not being the owner of the M/T
Espiritu Santo, petitioner did not have control over the vessel, its
master & crew. Thus, it could not allegedly be held liable for the loss
of the shipment caused by the sinking of a ship it didnt own.
ISSUES:
1. Whether there is a contract of carriage between CSC and MCCII.
2. Whether CSC is a common carrier despite not being the owner of
the vessel it used.
3. Whether the bill of lading should prevail over the voyage charter as
the contract of carriage between the parties.
4. Whether MCCII should be held liable for its own loss
5. Whether a carrier that enters into a contract of carriage is not
liable to the charterer/shipper if it does not own the vessel it chooses
to use.
HELD:
1. Yes. The cargo was loaded on board the vessel; loss/non-delivery
of the cargo was proven; and petitioner failed to prove that it
exercised extraordinary diligence to prevent such loss or that it was
due to some casualty or force majeure. The voyage charter here being
a contract of affreightment, the carrier was answerable for the loss of
the goods received for transportation.
2. CSC was the one which contracted with MCCII for the transport of
the cargo. It had control over what vessel it would use. All throughout
its dealings with MCCII, it represented itself as a common carrier. The
fact that it did not own the vessel it decided to use to consummate the
contract of carriage did not negate its character & duties as a common
carrier. The MCCII could not be reasonably expected to inquire about
the ownership of the vessels which petitioner carrier offered to
utilize. It is very difficult & often impossible for the general public to
enforce its rights of action under a contract of carriage if it should be
required to know who the actual owner of the vehicle is. In this case,
the voyage charter itself denominated the petitioner as the
owner/operator of the vessel.
3. No. The bill of lading was merely a receipt issued by ALS to
evidence the fact that the goods had been received for transportation.
It was not signed by MCCII, as in fact it was simply signed by the
supercargo of ALS. This is consistent with the fact that MCCII did not
contract directly with ALS. While it is true that a bill of lading may
serve as the contract of carriage between the parties, it cannot prevail
over the express provision of the voyage charter that MCCII and
petitioner executed.
4. No. It deserves scant consideration that the voyage charter
stipulated that cargo insurance was for the charterers account. This
meant that the charterer would take care of having the goods insured.
It could not exculpate the carrier from liability for the breach of its
contract of carriage. The law prohibits it and condemns it as unjust &
contrary to public policy.
5. The idea proposed by CSC is preposterous & dangerous. MCCII
never dealt with ALS and yet petitioner insists that MCCII should sue
ALS for reimbursement for its loss. Certainly, to permit a common
carrier to escape its responsibility for the goods it agreed to transport
(by expedient of alleging non-ownership of the vessel it employed)
would radically derogate from the carriers duty of extraordinary
diligence. It would also open the door to collusion between the
carrier & the supposed owner and to the possible shifting of liability
from the carrier to one without any financial capability to answer for
the resulting damages.

[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.
D E C I S I O N
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.
[1]

Prudent appealed to the Court of Appeals. On 27 August 2000,
the appellate court promulgated its now assailed decision
exonerating Prudent from any liability for the death of Nicanor
Navidad and, instead, holding the LRTA and Roman jointly and
severally liable thusly:
WHEREFORE, the assailed judgment is hereby MODIFIED, by
exonerating the appellants from any liability for the death of Nicanor
Navidad, Jr. Instead, appellees Rodolfo Roman and the Light Rail
Transit Authority (LRTA) are held liable for his death and are hereby
directed to pay jointly and severally to the plaintiffs-appellees, the
following amounts:
a) P44,830.00 as actual damages;
b) P50,000.00 as nominal damages;
c) P50,000.00 as moral damages;
d) P50,000.00 as indemnity for the death of the deceased; and
e) P20,000.00 as and for attorneys fees.
[2]

The appellate court ratiocinated that while the deceased might
not have then as yet boarded the train, a contract of carriage
theretofore had already existed when the victim entered the place
where passengers were supposed to be after paying the fare and
getting the corresponding token therefor. In exempting Prudent from
liability, the court stressed that there was nothing to link the security
agency to the death of Navidad. It said that Navidad failed to show
that Escartin inflicted fist blows upon the victim and the evidence
merely established the fact of death of Navidad by reason of his
having been hit by the train owned and managed by the LRTA and
operated at the time by Roman. The appellate court faulted
petitioners for their failure to present expert evidence to establish
the fact that the application of emergency brakes could not have
stopped the train.
The appellate court denied petitioners motion for
reconsideration in its resolution of 10 October 2000.
In their present recourse, petitioners recite alleged errors on the
part of the appellate court; viz:
I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY
DISREGARDING THE FINDINGS OF FACTS BY THE TRIAL COURT
II.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING
THAT PETITIONERS ARE LIABLE FOR THE DEATH OF NICANOR
NAVIDAD, JR.
III.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING
THAT RODOLFO ROMAN IS AN EMPLOYEE OF LRTA.
[3]

Petitioners would contend that the appellate court ignored the
evidence and the factual findings of the trial court by holding them
liable on the basis of a sweeping conclusion that the presumption of
negligence on the part of a common carrier was not
overcome. Petitioners would insist that Escartins assault upon
Navidad, which caused the latter to fall on the tracks, was an act of a
stranger that could not have been foreseen or prevented. The LRTA
would add that the appellate courts conclusion on the existence of an
employer-employee relationship between Roman and LRTA lacked
basis because Roman himself had testified being an employee of
Metro Transit and not of the LRTA.
Respondents, supporting the decision of the appellate court,
contended that a contract of carriage was deemed created from the
moment Navidad paid the fare at the LRT station and entered the
premises of the latter, entitling Navidad to all the rights and
protection under a contractual relation, and that the appellate court
had correctly held LRTA and Roman liable for the death of Navidad in
failing to exercise extraordinary diligence imposed upon a common
carrier.
Law and jurisprudence dictate that a common carrier, both from
the nature of its business and for reasons of public policy, is burdened
with the duty of exercising utmost diligence in ensuring the safety of
passengers.
[4]
The Civil Code, governing the liability of a common
carrier for death of or injury to its passengers, provides:
Article 1755. A common carrier is bound to carry the passengers
safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with a due regard for all
the circumstances.
Article 1756. In case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence as prescribed in articles 1733 and 1755.
Article 1759. Common carriers are liable for the death of or injuries
to passengers through the negligence or willful acts of the formers
employees, although such employees may have acted beyond the
scope of their authority or in violation of the orders of the common
carriers.
This liability of the common carriers does not cease upon proof that
they exercised all the diligence of a good father of a family in the
selection and supervision of their employees.
Article 1763. A common carrier is responsible for injuries suffered
by a passenger on account of the willful acts or negligence of other
passengers or of strangers, if the common carriers employees
through the exercise of the diligence of a good father of a family could
have prevented or stopped the act or omission.
The law requires common carriers to carry passengers safely
using the utmost diligence of very cautious persons with due regard
for all circumstances.
[5]
Such duty of a common carrier to provide
safety to its passengers so obligates it not only during the course of
the trip but for so long as the passengers are within its premises and
where they ought to be in pursuance to the contract of
carriage.
[6]
The statutory provisions render a common carrier liable
for death of or injury to passengers (a) through the negligence or
wilful acts of its employees or b) on account of wilful acts or
negligence of other passengers or of strangers if the common
carriers employees through the exercise of due diligence could
have prevented or stopped the act or omission.
[7]
In case of such
death or injury, a carrier is presumed to have been at fault or been
negligent, and
[8]
by simple proof of injury, the passenger is relieved of
the duty to still establish the fault or negligence of the carrier or of its
employees and the burden shifts upon the carrier to prove that the
injury is due to an unforeseen event or to force majeure.
[9]
In the
absence of satisfactory explanation by the carrier on how the accident
occurred, which petitioners, according to the appellate court, have
failed to show, the presumption would be that it has been at
fault,
[10]
an exception from the general rule that negligence must be
proved.
[11]

The foundation of LRTAs liability is the contract of carriage and
its obligation to indemnify the victim arises from the breach of that
contract by reason of its failure to exercise the high diligence
required of the common carrier. In the discharge of its commitment
to ensure the safety of passengers, a carrier may choose to hire its
own employees or avail itself of the services of an outsider or an
independent firm to undertake the task. In either case, the common
carrier is not relieved of its responsibilities under the contract of
carriage.
Should Prudent be made likewise liable? If at all, that liability
could only be for tort under the provisions of Article 2176
[12]
and
related provisions, in conjunction with Article 2180,
[13]
of the Civil
Code. The premise, however, for the employers liability is negligence
or fault on the part of the employee. Once such fault is established,
the employer can then be made liable on the basis of the
presumption juris tantum that the employer failed to
exercise diligentissimi patris families in the selection and supervision
of its employees. The liability is primary and can only be negated by
showing due diligence in the selection and supervision of the
employee, a factual matter that has not been shown. Absent such a
showing, one might ask further, how then must the liability of the
common carrier, on the one hand, and an independent contractor, on
the other hand, be described? It would be solidary. A contractual
obligation can be breached by tort and when the same act or
omission causes the injury, one resulting in culpa contractual and the
other in culpa aquiliana, Article 2194
[14]
of the Civil Code can well
apply.
[15]
In fine, a liability for tort may arise even under a contract,
where tort is that which breaches the contract.
[16]
Stated differently,
when an act which constitutes a breach of contract would have itself
constituted the source of a quasi-delictual liability had no contract
existed between the parties, the contract can be said to have been
breached by tort, thereby allowing the rules on tort to apply.
[17]

Regrettably for LRT, as well as perhaps the surviving spouse and
heirs of the late Nicanor Navidad, this Court is concluded by the
factual finding of the Court of Appeals that there is nothing to link
(Prudent) to the death of Nicanor (Navidad), for the reason that the
negligence of its employee, Escartin, has not been duly proven x x
x. This finding of the appellate court is not without substantial
justification in our own review of the records of the case.
There being, similarly, no showing that petitioner Rodolfo
Roman himself is guilty of any culpable act or omission, he must also
be absolved from liability. Needless to say, the contractual tie
between the LRT and Navidad is not itself a juridical relation between
the latter and Roman; thus, Roman can be made liable only for his
own fault or negligence.
The award of nominal damages in addition to actual damages is
untenable. Nominal damages are adjudicated in order that a right of
the plaintiff, which has been violated or invaded by the defendant,
may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him.
[18]
It is an
established rule that nominal damages cannot co-exist with
compensatory damages.
[19]

WHEREFORE, the assailed decision of the appellate court is
AFFIRMED with MODIFICATION but only in that (a) the award of
nominal damages is DELETED and (b) petitioner Rodolfo Roman is
absolved from liability. No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio and Azcuna,
JJ., concur.

Lessons Applicable: Actionable Document (transportation)
Laws Cited: Art. 1755,Art. 1756,Art. 1759,Art. 1763

FACTS:
October 14, 1993, 7:30 p.m. : Drunk Nicanor Navidad (Nicanor)
entered the EDSA LRT station after purchasing a token.
While Nicanor was standing at the platform near the LRT tracks,
the guard Junelito Escartin approached him.
Due to misunderstanding, they had a fist fight
Nicanor fell on the tracks and killed instantaneously upon being
hit by a moving trainoperated by Rodolfo Roman
December 8, 1994: The widow of Nicanor, along with her
children, filed a complaint for damages against Escartin, Roman,
LRTA, Metro Transit Org. Inc. and Prudent (agency of security
guards) for the death of her husband.
LRTA and Roman filed a counter-claim against Nicanor and a
cross-claim against Escartin and Prudent
Prudent: denied liability averred that it had exercised due
diligence in the selection and surpervision of its security guards
LRTA and Roman: presented evidence
Prudent and Escartin: demurrer contending that Navidad had
failed to prove that Escartin was negligent in his assigned task
RTC: In favour of widow and against Prudent and Escartin,
complaint against LRT and Roman were dismissed for lack
of merit
CA: reversed by exonerating Prudent and held LRTA and Roman
liable

ISSUE: W/N LRTA and Roman should be liable according to the
contract of carriage

HELD: NO. Affirmed with Modification: (a) nominal damages is
DELETED (CANNOT co-exist w/ compensatory damages) (b) Roman
is absolved.
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 off exercising utmost diligence in
ensuring the safety of passengers
Civil Code:
Art. 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
Art. 1756. In case of death 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
Art. 1759. 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

Art. 1763. A common carrier is responsible for injuries suffered
by a passenger on account of the wilful 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.
Carriers presumed to be at fault or been negligent and by simple
proof of injury, the passenger is relieaved 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
Where it hires its own employees or avail itself of the services of
an outsider or an independent firm to undertake the task, the
common carrier is NOT relieved of its responsibilities under the
contract of carriage
GR: Prudent can be liable only for tort under Art. 2176 and
related provisions in conjunction with Art. 2180 of the Civil Code.
(Tort may arise even under a contract, where tort [quasi-delict
liability] is that which breaches the contract)
EX: if employers liability is negligence or fault on the part of the
employee, employer can 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.
EX to the EX: Upon showing due diligence in the selection and
supervision of the employee
Factual finding of the CA: NO link bet. Prudent and the death of
Nicanor for the reason that the negligence of Escartin was NOT
proven
NO showing that Roman himself is guilty of any culpable act or
omission, he must also be absolved from liability
Contractual tie bet. LRT and Nicanor is NOT itself a juridical
relation bet. Nicanor and Roman
Roman can be liable only for his own fault or negligence

G.R. No. 95582 October 7, 1991
DANGWA TRANSPORTATION CO., INC. and THEODORE
LARDIZABAL y MALECDAN, petitioners,
vs.
COURT OF APPEALS, INOCENCIA CUDIAMAT, EMILIA
CUDIAMAT BANDOY, FERNANDO CUDLAMAT, MARRIETA
CUDIAMAT, NORMA CUDIAMAT, DANTE CUDIAMAT, SAMUEL
CUDIAMAT and LIGAYA CUDIAMAT, all Heirs of the late
Pedrito Cudiamat represented by Inocencia
Cudiamat, respondents.
Francisco S. Reyes Law Office for petitioners.
Antonio C. de Guzman for private respondents.

REGALADO, J.:p
On May 13, 1985, private respondents filed a complaint 1 for
damages against petitioners for the death of Pedrito Cudiamat as
a result of a vehicular accident which occurred on March 25, 1985
at Marivic, Sapid, Mankayan, Benguet. Among others, it was
alleged that on said date, while petitioner Theodore M. Lardizabal
was driving a passenger bus belonging to petitioner corporation
in a reckless and imprudent manner and without due regard to
traffic rules and regulations and safety to persons and property, it
ran over its passenger, Pedrito Cudiamat. However, instead of
bringing Pedrito immediately to the nearest hospital, the said
driver, in utter bad faith and without regard to the welfare of the
victim, first brought his other passengers and cargo to their
respective destinations before banging said victim to the Lepanto
Hospital where he expired.
On the other hand, petitioners alleged that they had observed and
continued to observe the extraordinary diligence required in the
operation of the transportation company and the supervision of
the employees, even as they add that they are not absolute
insurers of the safety of the public at large. Further, it was alleged
that it was the victim's own carelessness and negligence which
gave rise to the subject incident, hence they prayed for the
dismissal of the complaint plus an award of damages in their
favor by way of a counterclaim.
On July 29, 1988, the trial court rendered a decision, effectively in
favor of petitioners, with this decretal portion:
IN VIEW OF ALL THE FOREGOING, judgment is hereby
pronounced that Pedrito Cudiamat was negligent, which
negligence was the proximate cause of his death. Nonetheless,
defendants in equity, are hereby ordered to pay the heirs of
Pedrito Cudiamat the sum of P10,000.00 which approximates the
amount defendants initially offered said heirs for the amicable
settlement of the case. No costs.
SO ORDERED. 2
Not satisfied therewith, private respondents appealed to the
Court of Appeals which, in a decision 3 in CA-G.R. CV No. 19504
promulgated on August 14, 1990, set aside the decision of the
lower court, and ordered petitioners to pay private respondents:
1. The sum of Thirty Thousand (P30,000.00) Pesos by way of
indemnity for death of the victim Pedrito Cudiamat;
2. The sum of Twenty Thousand (P20,000.00) by way of moral
damages;
3. The sum of Two Hundred Eighty Eight Thousand (P288,000.00)
Pesos as actual and compensatory damages;
4. The costs of this suit. 4
Petitioners' motion for reconsideration was denied by the Court
of Appeals in its resolution dated October 4, 1990,5 hence this
petition with the central issue herein being whether respondent
court erred in reversing the decision of the trial court and in
finding petitioners negligent and liable for the damages claimed.
It is an established principle that the factual findings of the Court
of Appeals as a rule are final and may not be reviewed by this
Court on appeal. However, this is subject to settled exceptions,
one of which is when the findings of the appellate court are
contrary to those of the trial court, in which case a reexamination
of the facts and evidence may be undertaken. 6
In the case at bar, the trial court and the Court of Appeal have
discordant positions as to who between the petitioners an the
victim is guilty of negligence. Perforce, we have had to conduct an
evaluation of the evidence in this case for the prope calibration of
their conflicting factual findings and legal conclusions.
The lower court, in declaring that the victim was negligent, made
the following findings:
This Court is satisfied that Pedrito Cudiamat was negligent in
trying to board a moving vehicle, especially with one of his hands
holding an umbrella. And, without having given the driver or the
conductor any indication that he wishes to board the bus. But
defendants can also be found wanting of the necessary diligence.
In this connection, it is safe to assume that when the deceased
Cudiamat attempted to board defendants' bus, the vehicle's door
was open instead of being closed. This should be so, for it is hard
to believe that one would even attempt to board a vehicle (i)n
motion if the door of said vehicle is closed. Here lies the
defendant's lack of diligence. Under such circumstances, equity
demands that there must be something given to the heirs of the
victim to assuage their feelings. This, also considering that
initially, defendant common carrier had made overtures to
amicably settle the case. It did offer a certain monetary
consideration to the victim's heirs. 7
However, respondent court, in arriving at a different opinion,
declares that:
From the testimony of appellees'own witness in the person of
Vitaliano Safarita, it is evident that the subject bus was at full stop
when the victim Pedrito Cudiamat boarded the same as it was
precisely on this instance where a certain Miss Abenoja alighted
from the bus. Moreover, contrary to the assertion of the appellees,
the victim did indicate his intention to board the bus as can be
seen from the testimony of the said witness when he declared
that Pedrito Cudiamat was no longer walking and made a sign to
board the bus when the latter was still at a distance from him. It
was at the instance when Pedrito Cudiamat was closing his
umbrella at the platform of the bus when the latter made a
sudden jerk movement (as) the driver commenced to accelerate
the bus.
Evidently, the incident took place due to the gross negligence of
the appellee-driver in prematurely stepping on the accelerator
and in not waiting for the passenger to first secure his seat
especially so when we take into account that the platform of the
bus was at the time slippery and wet because of a drizzle. The
defendants-appellees utterly failed to observe their duty and
obligation as common carrier to the end that they should observe
extra-ordinary diligence in the vigilance over the goods and for
the safety of the passengers transported by them according to the
circumstances of each case (Article 1733, New Civil Code). 8
After a careful review of the evidence on record, we find no
reason to disturb the above holding of the Court of Appeals. Its
aforesaid findings are supported by the testimony of petitioners'
own witnesses. One of them, Virginia Abalos, testified on cross-
examination as follows:
Q It is not a fact Madam witness, that at bunkhouse 54, that is
before the place of the incident, there is a crossing?
A The way going to the mines but it is not being pass(ed) by the
bus.
Q And the incident happened before bunkhouse 56, is that not
correct?
A It happened between 54 and 53 bunkhouses. 9
The bus conductor, Martin Anglog, also declared:
Q When you arrived at Lepanto on March 25, 1985, will you
please inform this Honorable Court if there was anv unusual
incident that occurred?
A When we delivered a baggage at Marivic because a person
alighted there between Bunkhouse 53 and 54.
Q What happened when you delivered this passenger at this
particular place in Lepanto?
A When we reached the place, a passenger alighted and I signalled
my driver. When we stopped we went out because I saw an
umbrella about a split second and I signalled again the driver, so
the driver stopped and we went down and we saw Pedrito
Cudiamat asking for help because he was lying down.
Q How far away was this certain person, Pedrito Cudiamat, when
you saw him lying down from the bus how far was he?
A It is about two to three meters.
Q On what direction of the bus was he found about three meters
from the bus, was it at the front or at the back?
A At the back, sir. 10 (Emphasis supplied.)
The foregoing testimonies show that the place of the accident and
the place where one of the passengers alighted were both
between Bunkhouses 53 and 54, hence the finding of the Court of
Appeals that the bus was at full stop when the victim boarded the
same is correct. They further confirm the conclusion that the
victim fell from the platform of the bus when it suddenly
accelerated forward and was run over by the rear right tires of
the vehicle, as shown by the physical evidence on where he was
thereafter found in relation to the bus when it stopped. Under
such circumstances, it cannot be said that the deceased was guilty
of negligence.
The contention of petitioners that the driver and the conductor
had no knowledge that the victim would ride on the bus, since the
latter had supposedly not manifested his intention to board the
same, does not merit consideration. When the bus is not in
motion there is no necessity for a person who wants to ride the
same to signal his intention to board. A public utility bus, once it
stops, is in effect making a continuous offer to bus riders. Hence,
it becomes the duty of the driver and the conductor, every time
the bus stops, to do no act that would have the effect of increasing
the peril to a passenger while he was attempting to board the
same. The premature acceleration of the bus in this case was a
breach of such duty. 11
It is the duty of common carriers of passengers, including
common carriers by railroad train, streetcar, or motorbus, to stop
their conveyances a reasonable length of time in order to afford
passengers an opportunity to board and enter, and they are liable
for injuries suffered by boarding passengers resulting from the
sudden starting up or jerking of their conveyances while they are
doing so. 12
Further, even assuming that the bus was moving, the act of the
victim in boarding the same cannot be considered negligent
under the circumstances. As clearly explained in the testimony of
the aforestated witness for petitioners, Virginia Abalos, th bus
had "just started" and "was still in slow motion" at the point
where the victim had boarded and was on its platform. 13
It is not negligence per se, or as a matter of law, for one attempt to
board a train or streetcar which is moving slowly. 14 An
ordinarily prudent person would have made the attempt board
the moving conveyance under the same or similar circumstances.
The fact that passengers board and alight from slowly moving
vehicle is a matter of common experience both the driver and
conductor in this case could not have been unaware of such an
ordinary practice.
The victim herein, by stepping and standing on the platform of
the bus, is already considered a passenger and is entitled all the
rights and protection pertaining to such a contractual relation.
Hence, it has been held that the duty which the carrier passengers
owes to its patrons extends to persons boarding cars as well as to
those alighting therefrom. 15
Common carriers, from the nature of their business and reasons
of public policy, are bound to observe extraordina diligence for
the safety of the passengers transported by the according to all
the circumstances of each case. 16 A common carrier is bound to
carry the passengers safely as far as human care and foresight can
provide, using the utmost diligence very cautious persons, with a
due regard for all the circumstances. 17
It has also been repeatedly held that in an action based on a
contract of carriage, the court need not make an express finding
of fault or negligence on the part of the carrier in order to hold it
responsible to pay the damages sought by the passenger. By
contract of carriage, the carrier assumes the express obligation to
transport the passenger to his destination safely and observe
extraordinary diligence with a due regard for all the
circumstances, and any injury that might be suffered by the
passenger is right away attributable to the fault or negligence of
the carrier. This is an exception to the general rule that
negligence must be proved, and it is therefore incumbent upon
the carrier to prove that it has exercised extraordinary diligence
as prescribed in Articles 1733 and 1755 of the Civil Code. 18
Moreover, the circumstances under which the driver and the
conductor failed to bring the gravely injured victim immediately
to the hospital for medical treatment is a patent and
incontrovertible proof of their negligence. It defies understanding
and can even be stigmatized as callous indifference. The evidence
shows that after the accident the bus could have forthwith turned
at Bunk 56 and thence to the hospital, but its driver instead opted
to first proceed to Bunk 70 to allow a passenger to alight and to
deliver a refrigerator, despite the serious condition of the victim.
The vacuous reason given by petitioners that it was the wife of
the deceased who caused the delay was tersely and correctly
confuted by respondent court:
... The pretension of the appellees that the delay was due to the
fact that they had to wait for about twenty minutes for Inocencia
Cudiamat to get dressed deserves scant consideration. It is rather
scandalous and deplorable for a wife whose husband is at the
verge of dying to have the luxury of dressing herself up for about
twenty minutes before attending to help her distressed and
helpless husband. 19
Further, it cannot be said that the main intention of petitioner
Lardizabal in going to Bunk 70 was to inform the victim's family
of the mishap, since it was not said bus driver nor the conductor
but the companion of the victim who informed his family
thereof. 20 In fact, it was only after the refrigerator was unloaded
that one of the passengers thought of sending somebody to the
house of the victim, as shown by the testimony of Virginia Abalos
again, to wit:
Q Why, what happened to your refrigerator at that particular
time?
A I asked them to bring it down because that is the nearest place
to our house and when I went down and asked somebody to bring
down the refrigerator, I also asked somebody to call the family of
Mr. Cudiamat.
COURT:
Q Why did you ask somebody to call the family of Mr. Cudiamat?
A Because Mr. Cudiamat met an accident, so I ask somebody to
call for the family of Mr. Cudiamat.
Q But nobody ask(ed) you to call for the family of Mr. Cudiamat?
A No sir. 21
With respect to the award of damages, an oversight was,
however, committed by respondent Court of Appeals in
computing the actual damages based on the gross income of the
victim. The rule is that the amount recoverable by the heirs of a
victim of a tort is not the loss of the entire earnings, but rather the
loss of that portion of the earnings which the beneficiary would
have received. In other words, only net earnings, not gross
earnings, are to be considered, that is, the total of the earnings
less expenses necessary in the creation of such earnings or
income and minus living and other incidental expenses. 22
We are of the opinion that the deductible living and other expense
of the deceased may fairly and reasonably be fixed at P500.00 a
month or P6,000.00 a year. In adjudicating the actual or
compensatory damages, respondent court found that the
deceased was 48 years old, in good health with a remaining
productive life expectancy of 12 years, and then earning
P24,000.00 a year. Using the gross annual income as the basis,
and multiplying the same by 12 years, it accordingly awarded
P288,000. Applying the aforestated rule on computation based on
the net earnings, said award must be, as it hereby is, rectified and
reduced to P216,000.00. However, in accordance with prevailing
jurisprudence, the death indemnity is hereby increased to
P50,000.00. 23
WHEREFORE, subject to the above modifications, the challenged
judgment and resolution of respondent Court of Appeals are
hereby AFFIRMED in all other respects.
SO ORDERED.
Melencio-Herrera (Chairperson), Paras, Padilla and Sarmiento, JJ.,
concur.
Facts:
On March 25, 1985, Pedrito Cudiamat was ran over by a bus operated
by Dangwa Transportation Company, and driven by Theodore
Lardizabal. Lardizabal, being reckless and negligent, has prematurely
stepped on the accelerator of the bus just as when Cudiamat boarded
the same. The sudden jerk movement caused Cudiamat to fall from
the platform and was ran over by they bus. Moreover, the driver did
not immediately brought the victim to the nearest hospital for
medical attention.

Issue:
Whether or not the driver and bus company are liable for the death of
P. Cudiamat.

Held:
They are liable.

Common carriers, from the nature of their business and reasons of
public policy, are bound to observe extraordinary diligence for the
safety of the passengers transported by the according to all the
circumstances of each case. A common carrier is bound to carry the
passengers safely as far as human care and foresight can provide,
using the utmost diligence very cautious persons, with a due regard
for all the circumstances.

It has also been repeatedly held that in an action based on a contract
of carriage, the court need not make an express finding of fault or
negligence on the part of the carrier in order to hold it responsible to
pay the damages sought by the passenger. By contract of carriage, the
carrier assumes the express obligation to transport the passenger to
his destination safely and observe extraordinary diligence with a due
regard for all the circumstances, and any injury that might be suffered
by the passenger is right away attributable to the fault or negligence
of the carrier. This is an exception to the general rule that negligence
must be proved, and it is therefore incumbent upon the carrier to
prove that it has exercised extraordinary diligence as prescribed in
Articles 1733 and 1755 of the Civil Code.

FILCAR TRANSPORT SERVICES,
Petitioner,




- versus -




JOSE A. ESPINAS,
Respondent.


G.R. No. 174156

Present:

CARPIO, J., Chairperson,
BRION,
PEREZ,
SERENO, and
REYES, JJ.

Promulgated:

June 20, 2012

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


DECISION

BRION, J.:





We resolve the present petition for review on certiorari
[1]
filed
by petitioner Filcar Transport Services (Filcar), challenging the
decision
[2]
and the resolution
[3]
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
employer-employee 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.
Domingo
[8]
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.

x x x x

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.

x x x x

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
itsagent.
[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. 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.
Topic:
-Vehicular accident
-According to Filcar, it cannot be held liable under the
subject provisions because the driver of its vehicleat the time of the
accident, Floresca, is not its employee but that of its Corporate
Secretary, Atty. Flor.
ISSUE:
whether Filcar, as registered owner of the motor vehicle which
figured in an accident, may beheld liable for the damages caused to
Espinas.

Held :

The petition is without merit.Filcar, as registered owner, is deemed
the employer of the driver, Floresca, and is thus vicariously
liableunder Article 2176 in relation with Article 2180 of the Civil
CodeAs a general rule, one is only responsible for his own act or
omission.9 Thus, a person will generally beheld liable only for the
torts committed by himself and not by another. This general rule is
laid down inArticle 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, isobliged to pay for the
damage done. Such fault or negligence, if there is no pre-existing
contractualrelation 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 oromission. The law, however, provides
for exceptions when it makes certain persons liable for the act
oromission 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 Artic
le 2176 is demandable not only for ones own acts or
omissions, but also for those of persons for whom one is
responsible.It is well settled that in case of motor vehicle mishaps, the
registered owner of the motor vehicle isconsidered as the employer
of the tortfeasor-driver, and is made primarily liable for the tort
committedby the latter under Article 2176, in relation with Article
2180, of the Civil Code.
The rationale for the rule that a registered owner is vicariously liable
for damages caused by theoperation of his motor vehicle is explained
by the principle behind motor vehicle registration, which hasbeen
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, orthat any damage or injury is
caused by the vehicle on the public highways, responsibility therefor
can befixed on a definite individual, the registered owner. Instances
are numerous where vehicles running onpublic highways caused
accidents or injuries to pedestrians or other vehicles without
positiveidentification of the owner or drivers, or with very scant
means of identification. It is to forestall thesecircumstances, so
inconvenient or prejudicial to the public, that the motor vehicle
registration isprimarily ordained, in the interest of the determination
of persons responsible for damages or injuriescaused on public
highways. [emphasis ours]Thus, whether there is an employer-
employee relationship between the registered owner and the driveris
irrelevant in determining the liability of the registered owner who
the law holds primarily and directlyresponsible for any accident,
injury or death caused by the operation of the vehicle in the streets
andhighways.The public interest involved in this case must not be
underestimated. Road safety is one of the mostcommon problems
that must be addressed in this country. We are not unaware of news
of roadaccidents involving reckless drivers victimizing our citizens.
Just recently, such pervasive recklessnessamong most drivers took
the life of a professor of our state university.14 What is most
disturbing is thatour existing laws do not seem to deter these road
malefactors from committing acts of recklessness.This does not mean,
however, that Filcar is left without any recourse against the actual
employer of thedriver and the driver himself. Under the civil law
principle of unjust enrichment, the registered owner ofthe motor
vehicle has a right to be indemnified by the actual employer of the
driver of the amount thathe 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 inconveniencecannot
outweigh the more important public policy being advanced by the
law in this case which is theprotection of innocent persons who may
be victims of reckless drivers and irresponsible motor vehicleowners.

G.R. No. L-65510 March 9, 1987
TEJA MARKETING AND/OR ANGEL JAUCIAN, petitioner,
vs.
HONORABLE INTERMEDIATE APPELLATE COURT * AND PEDRO
N. NALE, respondents.
Cirilo A. Diaz, Jr. for petitioner.
Henry V. Briguera for private respondent.

"'Ex pacto illicito' non oritur actio" (No action arises out of illicit
bargain) is the time-honored maxim that must be applied to the
parties in the case at bar. Having entered into an illegal contract,
neither can seek relief from the courts, and each must bear the
consequences of his acts." (Lita Enterprises vs. IAC, 129 SCRA 81.)
The factual background of this case is undisputed. The same is
narrated by the respondent court in its now assailed decision, as
follows:
On May 9, 1975, the defendant bought from the
plaintiff a motorcycle with complete accessories and a
sidecar in the total consideration of P8,000.00 as
shown by Invoice No. 144 (Exh. "A"). Out of the total
purchase price the defendant gave a downpayment of
P1,700.00 with a promise that he would pay plaintiff
the balance within sixty days. The defendant,
however, failed to comply with his promise and so
upon his own request, the period of paying the
balance was extended to one year in monthly
installments until January 1976 when he stopped
paying anymore. The plaintiff made demands but just
the same the defendant failed to comply with the
same thus forcing the plaintiff to consult a lawyer and
file this action for his damage in the amount of
P546.21 for attorney's fees and P100.00 for expenses
of litigation. The plaintiff also claims that as of
February 20, 1978, the total account of the defendant
was already P2,731.06 as shown in a statement of
account (Exhibit. "B"). This amount includes not only
the balance of P1,700.00 but an additional 12%
interest per annum on the said balance from January
26, 1976 to February 27, 1978; a 2% service charge;
and P 546.21 representing attorney's fees.
In this particular transaction a chattel mortgage
(Exhibit 1) was constituted as a security for the
payment of the balance of the purchase price. It has
been the practice of financing firms that whenever
there is a balance of the purchase price the
registration papers of the motor vehicle subject of the
sale are not given to the buyer. The records of the LTC
show that the motorcycle sold to the defendant was
first mortgaged to the Teja Marketing by Angel Jaucian
though the Teja Marketing and Angel Jaucian are one
and the same, because it was made to appear that way
only as the defendant had no franchise of his own and
he attached the unit to the plaintiff's MCH Line. The
agreement also of the parties here was for the plaintiff
to undertake the yearly registration of the motorcycle
with the Land Transportation Commission. Pursuant
to this agreement the defendant on February 22, 1976
gave the plaintiff P90.00, the P8.00 would be for the
mortgage fee and the P82.00 for the registration fee of
the motorcycle. The plaintiff, however failed to
register the motorcycle on that year on the ground
that the defendant failed to comply with some
requirements such as the payment of the insurance
premiums and the bringing of the motorcycle to the
LTC for stenciling, the plaintiff saying that the
defendant was hiding the motorcycle from him. Lastly,
the plaintiff explained also that though the ownership
of the motorcycle was already transferred to the
defendant the vehicle was still mortgaged with the
consent of the defendant to the Rural Bank of
Camaligan for the reason that all motorcycle
purchased from the plaintiff on credit was
rediscounted with the bank.
On his part the defendant did not dispute the sale and
the outstanding balance of P1,700. 00 still payable to
the plaintiff. The defendant was persuaded to buy
from the plaintiff the motorcycle with the side car
because of the condition that the plaintiff would be
the one to register every year the motorcycle with the
Land Transportation Commission. In 1976, however,
the plaintfff failed to register both the chattel
mortgage and the motorcycle with the LTC
notwithstanding the fact that the defendant gave him
P90.00 for mortgage fee and registration fee and had
the motorcycle insured with La Perla Compana de
Seguros (Exhibit "6") as shown also by the Certificate
of cover (Exhibit "3"). Because of this failure of the
plaintiff to comply with his obligation to register the
motorcycle the defendant suffered damages when he
failed to claim any insurance indemnity which would
amount to no less than P15,000.00 for the more than
two times that the motorcycle figured in accidents
aside from the loss of the daily income of P15.00 as
boundary fee beginning October 1976 when the
motorcycle was impounded by the LTC for not being
registered.
The defendant disputed the claim of the plaintiff that
he was hiding from the plaintiff the motorcycle
resulting in its not being registered. The truth being
that the motorcycle was being used for transporting
passengers and it kept on travelling from one place to
another. The motor vehicle sold to him was
mortgaged by the plaintiff with the Rural Bank of
Camaligan without his consent and knowledge and the
defendant was not even given a copy of the mortgage
deed. The defendant claims that it is not true that the
motorcycle was mortgaged because of re-discounting
for rediscounting is only true with Rural Banks and
the Central Bank. The defendant puts the blame on the
plaintiff for not registering the motorcycle with the
LTC and for not giving him the registration papers
inspite of demands made. Finally, the evidence of the
defendant shows that because of the filing of this case
he was forced to retain the services of a lawyer for a
fee on not less than P1,000.00.
xxx xxx xxx
... it also appears and the Court so finds that defendant
purchased the motorcycle in question, particularly for
the purpose of engaging and using the same in the
transportation business and for this purpose said
trimobile unit was attached to the plaintiffs
transportation line who had the franchise, so much so
that in the registration certificate, the plaintiff appears
to be the owner of the unit.Furthermore, it appears to
have been agreed, further between the plaintiff and
the defendant, that plaintiff would undertake the
yearly registration of the unit in question with the
LTC. Thus, for the registration of the unit for the year
1976, per agreement, the defendant gave to the
plaintiff the amount of P82.00 for its registration, as
well as the insurance coverage of the unit.
Eventually, petitioner Teja Marketing and/or Angel Jaucian filed an
action for "Sum of Money with Damages" against private respondent
Pedro N. Nale in the City Court of Naga City. The City Court rendered
judgment in favor of petitioner, the dispositive portion of which
reads:
WHEREFORE, decision is hereby rendered dismissing
the counterclaim and ordering the defendant to pay
plaintiff the sum of P1,700.00 representing the unpaid
balance of the purchase price with legal rate of
interest from the date of the filing of the complaint
until the same is fully paid; to pay plaintiff the sum of
P546.21 as attorney's fees; to pay plaintiff the sum of
P200.00 as expenses of litigation; and to pay the costs.
SO ORDERED.
On appeal to the Court of First Instance of Camarines Sur, the decision
was affirmed in toto. Private respondent filed a petition for review
with the Intermediate Appellate Court and on July 18, 1983 the said
Court promulgated its decision, the pertinent portion of which reads

However, as the purchase of the motorcycle for
operation as a trimobile under the franchise of the
private respondent Jaucian, pursuant to what is
commonly known as the "kabit system", without the
prior approval of the Board of Transportation
(formerly the Public Service Commission) was an
illegal transaction involving the fictitious registration
of the motor vehicle in the name of the private
respondent so that he may traffic with the privileges
of his franchise, or certificate of public convenience, to
operate a tricycle service, the parties being in pari
delicto, neither of them may bring an action against
the other to enforce their illegal contract [Art. 1412
(a), Civil Code].
xxx xxx xxx
WHEREFORE, the decision under review is hereby set
aside. The complaint of respondent Teja Marketing
and/or Angel Jaucian, as well as the counterclaim of
petitioner Pedro Nale in Civil Case No. 1153 of the
Court of First Instance of Camarines Sur (formerly
Civil Case No. 5856 of the City Court of Naga City) are
dismissed. No pronouncement as to costs.
SO ORDERED.
The decision is now before Us on a petition for review, petitioner Teja
Marketing and/or Angel Jaucian presenting a lone assignment of
error whether or not respondent court erred in applying the
doctrine of "pari delicto."
We find the petition devoid of merit.
Unquestionably, the parties herein operated under an arrangement,
commonly known as the "kabit system" whereby a person who has
been granted a certificate of public convenience allows another
person who owns motor vehicles to operate under such franchise for
a fee. A certificate of public convenience is a special privilege
conferred by the government. Abuse of this privilege by the grantees
thereof cannot be countenanced. The "kabit system" has been
Identified as one of the root causes of the prevalence of graft and
corruption in the government transportation offices.
Although not outrightly penalized as a criminal offense, the kabit
system is invariably recognized as being contrary to public policy
and, therefore, void and in existent under Article 1409 of the Civil
Code. It is a fundamental principle that the court will not aid either
party to enforce an illegal contract, but will leave both where it finds
then. Upon this premise it would be error to accord the parties relief
from their predicament. Article 1412 of the Civil Code denies them
such aid. It provides:
Art. 1412. If the act in which the unlawful or forbidden
cause consists does not constitute a criminal offense,
the following rules shall be observed:
1. When the fault is on the part of both contracting
parties, neither may recover that he has given by
virtue of the contract, or demand, the performance of
the other's undertaking.
The defect of in existence of a contract is permanent and cannot be
cured by ratification or by prescription. The mere lapse of time
cannot give efficacy to contracts that are null and void.
WHEREFORE, the petition is hereby dismissed for lack of merit. The
assailed decision of the Intermediate Appellate Court (now the Court
of Appeals) is AFFIRMED. No costs.
SO ORDERED.
Fernan (Chairman), Gutierrez, Jr., Padilla, Bidin and Cortez, JJ., concur.
Alampay, J., took no part.

Teja Marketing v. Intermediate Appellate Court
(148 SCRA 347)

Facts: Pedro Nale bought from Teja Marketing a motorcycle with
complete accessories and a sidecar. A chattel mortgage was
constituted as a security for the payment of the balance of the
purchase price. The records of the Land Transportation Commission
show that the motorcycle sold to the defendant was first mortgaged
to the Teja Marketing by Angel Jaucian though the Teja Marketing and
Angel Jaucian are one and the same, because it was made to appear
that way only as the defendant had no franchise of his own and he
attached the unit to the plaintiff's MCH Line. The agreement also of
the parties here was for the plaintiff to undertake the yearly
registration of the motorcycle with the Land Transportation
Commission. The plaintiff, however failed to register the motorcycle
on that year on the ground that the defendant failed to comply with
some requirements such as the payment of the insurance premiums
and the bringing of the motorcycle to the LTC for stenciling, the
plaintiff said that the defendant was hiding the motorcycle from him.
Lastly, the plaintiff also explained that though the ownership of the
motorcycle was already transferred to the defendant, the vehicle was
still mortgaged with the consent of the defendant to the Rural Bank of
Camaligan for the reason that all motorcycle purchased from the
plaintiff on credit was rediscounted with the bank.

Teja Marketing made demands for the payment of the motorcycle but
just the same Nale failed to comply, thus forcing Teja Marketing to
consult a lawyer and file an action for damage before the City Court of
Naga in the amount of P546.21 for attorney's fees and P100.00 for
expenses of litigation. Teja Marketing also claimed that as of 20
February 1978, the total account of Nale was already P2, 731, 05 as
shown in a statement of account; includes not only the balance of P1,
700.00 but an additional 12% interest per annum on the said balance
from 26 January 1976 to 27 February 1978; a 2% service charge; and
P546.21 representing attorney's fees. On his part, Nale did not
dispute the sale and the outstanding balance of P1,700.00 still
payable to Teja Marketing; but contends that because of this failure of
Teja Marketing to comply with his obligation to register the
motorcycle, Nale suffered damages when he failed to claim any
insurance indemnity which would amount to no less than P15,000.00
for the more than 2 times that the motorcycle figured in accidents
aside from the loss of the daily income of P15.00 as boundary fee
beginning October 1976 when the motorcycle was impounded by the
LTC for not being registered. The City Court rendered judgment in
favor of Teja Marketing, dismissing the counterclaim, and ordered
Nale to pay Teja Marketing On appeal to the Court of First Instance of
Camarines Sur, the decision was affirmed in toto. Nale filed a petition
for review with the Intermediate Appellate Court. On 18 July 1983,
the appellate court set aside the decision under review on the basis of
doctrine of "pari delicto," and accordingly, dismissed the complaint of
Teja Marketing, as well as the counterclaim of Nale; without
pronouncements as to costs. Hence, the petition for review was filed
by Teja Marketing and/or Angel Jaucian.

Issue: Whether the defendant can recover damages against the
plaintiff?

Held: Unquestionably, the parties herein operated under an
arrangement, commonly known as the "kabit system" whereby a
person who has been granted a certificate of public convenience
allows another person who owns motor vehicles to operate under
such franchise for a fee. A certificate of public convenience is a special
privilege conferred by the government. Abuse of this privilege by the
grantees thereof cannot be countenanced.

The "kabit system" has been identified as one of the root causes of the
prevalence of graft and corruption in the government transportation
offices. Although not out rightly penalized as a criminal offense, the
kabit system is invariably recognized as being contrary to public
policy and, therefore, void and in existent under Article 1409 of the
Civil Code. It is a fundamental principle that the court will not aid
either party to enforce an illegal contract, but will leave both where it
finds then. Upon this premise it would be error to accord the parties
relief from their predicament.