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Filcar Transport vs.

We resolve the present petition for review on certiorari[1] filed by On appeal, the CA partly granted the petition in CA-G.R. SP No. 86603;
petitioner Filcar Transport Services (Filcar), challenging the it modified the RTC decision by ruling that Carmen Flor, President and
decision[2]and the resolution[3] of the Court of Appeals (CA) in CA-G.R. General Manager of Filcar, is not personally liable to Espinas. The
SP No. 86603. appellate court pointed out that, subject to recognized exceptions, the
liability of a corporation is not the liability of its corporate officers because
The facts of the case, gathered from the records, are briefly summarized a corporate entity subject to well-recognized exceptions has a separate
below. and distinct personality from its officers and shareholders. Since the
circumstances in the case at bar do not fall under the exceptions
On November 22, 1998, at around 6:30 p.m., respondent Jose A. recognized by law, the CA concluded that the liability for damages
Espinas was driving his car along Leon Guinto Street in Manila. Upon cannot attach to Carmen Flor.
reaching the intersection of Leon Guinto and President Quirino Streets,
Espinas stopped his car. When the signal light turned green, he The CA, however, affirmed the liability of Filcar to pay Espinas
proceeded to cross the intersection. He was already in the middle of the damages. According to the CA, even assuming that there had been no
intersection when another car, traversing President Quirino Street and employer-employee relationship between Filcar and the driver of the
going to Roxas Boulevard, suddenly hit and bumped his car. As a result vehicle, Floresca, the former can be held liable under the registered
of the impact, Espinas car turned clockwise. The other car escaped from owner rule.
the scene of the incident, but Espinas was able to get its plate number.
The CA relied on the rule that the registered owner of a vehicle
After verifying with the Land Transportation Office, Espinas learned that is directly and primarily responsible to the public and to third persons
the owner of the other car, with plate number UCF-545, is Filcar. 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
Espinas sent several letters to Filcar and to its President and General vehicles running on public highways cause accidents or injuries to
Manager Carmen Flor, demanding payment for the damages sustained pedestrians or other vehicles without positive identification of the owner
by his car. On May 31, 2001, Espinas filed a complaint for damages or drivers, or with very scant means of identification. In Erezo, the Court
against Filcar and Carmen Flor before the Metropolitan Trial Court said that the main aim of motor vehicle registration is to identify the
(MeTC) of Manila, and the case was raffled to Branch 13. In the owner, so that if a vehicle causes damage or injury to pedestrians or
complaint, Espinas demanded that Filcar and Carmen Flor pay the other vehicles, responsibility can be traced to a definite individual and
amount of P97,910.00, representing actual damages sustained by his that individual is the registered owner of the vehicle.[7]
The CA did not accept Filcars argument that it cannot be held
Filcar argued that while it is the registered owner of the car liable for damages because the driver of the vehicle was not its
that hit and bumped Espinas car, the car was assigned to its Corporate employee. In so ruling, the CA cited the case of Villanueva v.
Secretary Atty. Candido Flor, the husband of Carmen Flor. Filcar further Domingo[8] where the Court said that the question of whether the driver
stated that when the incident happened, the car was being driven by was authorized by the actual owner is irrelevant in determining the
Atty. Flors personal driver, Timoteo Floresca. primary and direct responsibility of the registered owner of a vehicle for
accidents, injuries and deaths caused by the operation of his vehicle.
Atty. Flor, for his part, alleged that when the incident occurred,
he was attending a birthday celebration at a nearby hotel, and it was Filcar filed a motion for reconsideration which the CA denied
only later that night when he noticed a small dent on and the cracked in its Resolution dated July 6, 2006.
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 Hence, the present petition.
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 The Issue
incident was not due to its fault or negligence since Floresca was not its Simply stated, the issue for the consideration of this Court is:
employee but that of Atty. Flor. Filcar and Carmen Flor both said that whether Filcar, as registered owner of the motor vehicle which figured in
they always exercised the due diligence required of a good father of a an accident, may be held liable for the damages caused to Espinas.
family in leasing or assigning their vehicles to third parties.
Our Ruling
The MeTC Decision
The petition is without merit.
The MeTC, in its decision dated January 20, 2004,[4] ruled in favor of Filcar as registered owner is deemed the employer of the driver
Espinas, and ordered Filcar and Carmen Flor, jointly and severally, to Floresca and is thus vicariously liable under Art. 2176 in relation with Art.
pay Espinas P97,910.00 as actual damages, representing the cost of 2180 of the Civil Code.
repair, with interest at 6% per annum from the date the complaint was It is undisputed that Filcar is the registered owner of the motor
filed; P50,000.00 as moral damages; P20,000.00 as exemplary vehicle which hit and caused damage to Espinas car; and it is on the
damages; and P20,000.00 as attorneys fees. The MeTC ruled that basis of this fact that we hold Filcar primarily and directly liable to
Filcar, as the registered owner of the vehicle, is primarily responsible for Espinas for damages.
damages resulting from the vehicles operation.
As a general rule, one is only responsible for his own act or
The RTC Decision 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
The Regional Trial Court (RTC) of Manila, Branch 20, in the exercise of in Article 2176 of the Civil Code, which provides to wit:
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 Article 2176. Whoever by act or omission
agreed with the MeTC that the registered owner of a vehicle is directly causes damage to another, there being fault or
and primarily liable for the damages sustained by third persons as a negligence, is obliged to pay for the damage done.
consequence of the negligent or careless operation of a vehicle Such fault or negligence, if there is no pre-existing
registered in its name. The RTC added that the victim of recklessness contractual relation between the parties, is called a
on the public highways is without means to discover or identify the quasi-delict and is governed by the provisions of
person actually causing the injury or damage. Thus, the only recourse is this Chapter.
to determine the owner, through the vehicles registration, and to hold
him responsible for the damages.
Based on the above-cited article, the obligation to indemnify another for
The CA Decision damage caused by ones act or omission is imposed upon the tortfeasor
himself, i.e., the person who committed the negligent act or omission. on quasi delict to be the employer of the driver, Raul Tutor; Ecatine,
The law, however, provides for exceptions when it makes certain Tutors actual employer, was deemed merely as an agent of Equitable.
persons liable for the act or omission of another.
Thus, it is clear that for the purpose of holding the registered
One exception is an employer who is made vicariously liable owner of the motor vehicle primarily and directly liable for damages
for the tort committed by his employee. Article 2180 of the Civil Code under Article 2176, in relation with Article 2180, of the Civil Code, the
states: existence of an employer-employee relationship, as it is understood in
labor relations law, is not required. It is sufficient to establish that Filcar
Article 2180. The obligation imposed by is the registered owner of the motor vehicle causing damage in order
Article 2176 is demandable not only for ones own that it may be held vicariously liable under Article 2180 of the Civil Code.
acts or omissions, but also for those of persons for
whom one is responsible.

xxxx Rationale
Employers shall be liable for the holding
damages caused by their employees and the
household helpers acting within the scope of their registered
assigned tasks, even though the former are not owner
engaged in any business or industry. vicariousl
y liable
The rationale for the rule that a registered owner is vicariously
The responsibility treated of in this article liable for damages caused by the operation of his motor vehicle is
shall cease when the persons herein mentioned explained by the principle behind motor vehicle registration, which has
prove that they observed all the diligence of a good been discussed by this Court in Erezo, and cited by the CA in its
father of a family to prevent damage. decision:

The main aim of motor vehicle registration is to

Under Article 2176, in relation with Article 2180, of the Civil identify the owner so that if any accident
Code, an action predicated on an employees act or omission may be happens, or that any damage or injury is caused
instituted against the employer who is held liable for the negligent act or by the vehicle on the public highways,
omission committed by his employee. responsibility therefor can be fixed on a definite
individual, the registered owner. Instances are
Although the employer is not the actual tortfeasor, the law numerous where vehicles running on public
makes him vicariously liable on the basis of the civil law principle of pater highways caused accidents or injuries to
familias for failure to exercise due care and vigilance over the acts of pedestrians or other vehicles without positive
ones subordinates to prevent damage to another. [10] In the last identification of the owner or drivers, or with very
paragraph of Article 2180 of the Civil Code, the employer may invoke scant means of identification. It is to forestall these
the defense that he observed all the diligence of a good father of a family circumstances, so inconvenient or prejudicial to the
to prevent damage. public, that the motor vehicle registration is primarily
ordained, in the interest of the determination of
As its core defense, Filcar contends that Article 2176, in persons responsible for damages or injuries caused
relation with Article 2180, of the Civil Code is inapplicable because it on public highways. [emphasis ours]
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 Thus, whether there is an employer-employee relationship
not its employee but that of its Corporate Secretary, Atty. Flor. between the registered owner and the driver is irrelevant in determining
the liability of the registered owner who the law holds primarily and
We cannot agree. It is well settled that in case of motor vehicle directly responsible for any accident, injury or death caused by the
mishaps, the registered owner of the motor vehicle is considered as operation of the vehicle in the streets and highways.
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 As explained by this Court in Erezo, the general public policy
2180, of the Civil Code. involved in motor vehicle registration is the protection of innocent third
persons who may have no means of identifying public road malefactors
In Equitable Leasing Corporation v. Suyom,[11] we ruled that in and, therefore, would find it difficult if not impossible to seek redress for
so far as third persons are concerned, the registered owner of the damages they may sustain in accidents resulting in deaths, injuries and
motor vehicle is the employer of the negligent driver, and the actual other damages; by fixing the person held primarily and directly liable for
employer is considered merely as an agent of such owner. the damages sustained by victims of road mishaps, the law ensures that
In that case, a tractor registered in the name of Equitable relief will always be available to them.
Leasing Corporation (Equitable) figured in an accident, killing and
seriously injuring several persons. As part of its defense, Equitable To identify the person primarily and directly responsible for the
claimed that the tractor was initially leased to Mr. Edwin Lim under a damages would also prevent a situation where a registered owner of a
Lease Agreement, which agreement has been overtaken by a Deed of motor vehicle can easily escape liability by passing on the blame to
Sale entered into by Equitable and Ecatine Corporation another who may have no means to answer for the damages caused,
(Ecatine). Equitable argued that it cannot be held liable for damages thereby defeating the claims of victims of road accidents. We take note
because the tractor had already been sold to Ecatine at the time of the that some motor vehicles running on our roads are driven not by their
accident and the negligent driver was not its employee but of Ecatine. 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
In upholding the liability of Equitable, as registered owner of accidents.
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 These same principles apply by analogy to the case at bar.
and third persons are concerned; consequently, it is directly and Filcar should not be permitted to evade its liability for damages by
primarily responsible for the consequences of its operation.[12] The Court conveniently passing on the blame to another party; in this case, its
further stated that [i]n contemplation of law, the owner/operator of Corporate Secretary, Atty. Flor and his alleged driver, Floresca.
record is the employer of the driver, the actual operator and Following our reasoning in Equitable, the agreement between Filcar and
employer being considered as merely its agent.[13] Thus, Equitable, Atty. Flor to assign the motor vehicle to the latter does not bind Espinas
as the registered owner of the tractor, was considered under the law
who was not a party to and has no knowledge of the agreement, and that plaintiff's jeep, at the time, was running moderately at 20 to 35
whose only recourse is to the motor vehicle registration. kilometers per hour and while approaching Roosevelt Avenue, Virgilio
Catuar slowed down; that suddenly, another jeep with plate number 99-
Neither can Filcar use the defenses available under Article 97-F-J Manila 1971 driven by defendant Oscar Sabiniano hit and
2180 of the Civil Code - that the employee acts beyond the scope of his bumped plaintiff's jeep on the portion near the left rear wheel, and as a
assigned task or that it exercised the due diligence of a good father of a result of the impact plaintiff's jeep fell on its right and skidded by about
family to prevent damage - because the motor vehicle registration law, 30 yards; that as a result plaintiffs jeep was damaged, particularly the
to a certain extent, modified Article 2180 of the Civil Code by making windshield, the differential, the part near the left rear wheel and the top
these defenses unavailable to the registered owner of the motor vehicle. cover of the jeep; that plaintiff Virgilio Catuar was thrown to the middle
Thus, for as long as Filcar is the registered owner of the car involved in of the road; his wrist was broken and he sustained contusions on the
the vehicular accident, it could not escape primary liability for the head; that likewise plaintiff Antonio Sarmiento, Sr. was trapped inside
damages caused to Espinas. the fallen jeep, and one of his legs was fractured.

The public interest involved in this case must not be

Evidence also shows that the plaintiff Virgilio Catuar spent a
underestimated. Road safety is one of the most common problems that
total of P2,464.00 for repairs of the jeep, as shown by the receipts of
must be addressed in this country. We are not unaware of news of road
payment of labor and spare parts (Exhs. H to H-7 Plaintiffs likewise tried
accidents involving reckless drivers victimizing our citizens. Just
to prove that plaintiff Virgilio Catuar, immediately after the accident was
recently, such pervasive recklessness among most drivers took the life
taken to Immaculate Concepcion Hospital, and then was transferred to
of a professor of our state university.[14] What is most disturbing is that
the National Orthopedic Hospital; that while plaintiff Catuar was not
our existing laws do not seem to deter these road malefactors from
confined in the hospital, his wrist was in a plaster cast for a period of one
committing acts of recklessness.
month, and the contusions on his head were under treatment for about
two (2) weeks; that for hospitalization, medicine and allied expenses,
We understand that the solution to the problem does not stop
plaintiff Catuar spent P5,000.00.
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 Evidence also shows that as a result of the incident, plaintiff
the acts of their drivers to prevent damage to others. Antonio Sarmiento, Sr. sustained injuries on his leg; that at first, he was
Thus, whether the driver of the motor vehicle, Floresca, is an employee taken to the National Orthopedic Hospital (Exh. K but later he was
of Filcar is irrelevant in arriving at the conclusion that Filcar is primarily confined at the Makati Medical Center from July 29, to August 29, 1971
and directly liable for the damages sustained by Espinas. While Republic and then from September 15 to 25, 1971; that his leg was in a plaster
Act No. 4136 or the Land Transportation and Traffic Code does not cast for a period of eight (8) months; and that for hospitalization and
contain any provision on the liability of registered owners in case of medical attendance, plaintiff Antonio Sarmiento, Sr. spent no less than
motor vehicle mishaps, Article 2176, in relation with Article 2180, of the P13,785.25 as evidenced by receipts in his possession. (Exhs. N to N-
Civil Code imposes an obligation upon Filcar, as registered owner, to 1).
answer for the damages caused to Espinas car. This interpretation is
consistent with the strong public policy of maintaining road safety,
Proofs were adduced also to show that plaintiff Antonio sarmiento Sr. is
thereby reinforcing the aim of the State to promote the responsible
operation of motor vehicles by its citizens. employed as Assistant Accountant of the Canlubang Sugar Estate with
a salary of P1,200.00 a month; that as sideline he also works as
accountant of United Haulers Inc. with a salary of P500.00 a month; and
This does not mean, however, that Filcar is left without any recourse
against the actual employer of the driver and the driver himself. Under that as a result of this incident, plaintiff Sarmiento was unable to perform
the civil law principle of unjust enrichment, the registered owner of the his normal work for a period of at least 8 months. On the other hand,
evidence shows that the other plaintiff Virgilio Catuar is a Chief Clerk in
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 Canlubang Sugar Estate with a salary of P500.00 a month, and as a
injury caused to another. result of the incident, he was incapacitated to work for a period of one
(1) month.
The set-up may be inconvenient for the registered owner of the motor
vehicle, but the inconvenience cannot outweigh the more important The plaintiffs have filed this case both against Oscar Sabiniano as driver,
public policy being advanced by the law in this case which is the and against Gualberto Duavit as owner of the jeep.
protection of innocent persons who may be victims of reckless drivers
and irresponsible motor vehicle owners.
Defendant Gualberto Duavit, while admitting ownership of the other jeep
WHEREFORE, the petition is DENIED. The decision dated February 16, (Plate No. 99-07-F-J Manila, 1971), denied that the other defendant
2006 and the resolution dated July 6, 2006 of the Court of Appeals (Oscar Sabiniano) was his employee. Duavit claimed that he has not
are AFFIRMED. Costs against petitioner Filcar Transport Services. been an employer of defendant Oscar Sabiniano at any time up to the
G.R. No. 82318 May 18, 1989 present.

GILBERTO M. DUAVIT, petitioner, On the other hand documentary and testimonial evidence show that
vs. defendant Oscar Sabiniano was an employee of the Board of Liquidators
THE HON. COURT OF APPEALS, Acting through the Third Division, from November 14, 1966 up to January 4, 1973 (Annex A of Answer).
as Public Respondent, and ANTONIO SARMIENTO, SR. & VIRGILIO
CATUAR respondents. Defendant Sabiniano, in his testimony, categorically admitted that he
took the jeep from the garage of defendant Duavit without the consent
This petition raises the sole issue of whether or not the owner of a private or authority of the latter (TSN, September 7, 1978, p. 8). He testified
vehicle which figured in an accident can be held liable under Article 2180 further, that Duavit even filed charges against him for theft of the jeep,
of the Civil Code when the said vehicle was neither driven by an but which Duavit did not push through as his (Sabiniano's) parents
employee of the owner nor taken with the consent of the latter. apologized to Duavit on his behalf.

The facts are summarized in the contested decision, as follows: Defendant Oscar Sabiniano, on the other hand in an attempt to
exculpate himself from liability, makes it appear that he was taking all
necessary precaution while driving and the accident occurred due to the
From the evidence adduced by the plaintiffs, consisting of the negligence of Virgilio Catuar. Sabiniano claims that it was plaintiffs
testimonies of witnesses Virgilio Catuar, Antonio Sarmiento, Jr., Ruperto vehicle which hit and bumped their jeep. (Reno, pp. 21-23)
Catuar, Jr. and Norberto Bernarte it appears that on July 28, 1971
plaintiffs Antonio Sarmiento, Sr. and Virgilio Catuar were aboard a jeep
with plate number 77-99-F-I Manila, 1971, owned by plaintiff, Ruperto The trial court found Oscar Sabiniano negligent in driving the vehicle but
Catuar was driving the said jeep on Ortigas Avenue, San Juan, Rizal; found no employer-employee relationship between him and the
petitioner because the latter was then a government employee and he The respondent court's misplaced reliance on the cases of Erezo v.
took the vehicle without the authority and consent of the owner. The Jepte (102 Phil. 103 [1957] and Vargas v. Langcay (6 SCRA 174 [1962])
petitioner was, thus, absolved from liability under Article 2180 of the Civil cannot be sustained. In the Erezo case, Jepte, the registered owner of
Code. the truck which collided with a taxicab, and which resulted in the killing
of Erezo, claimed that at the time of the accident, the truck belonged to
the Port Brokerage in an arrangement with the corporation but the same
The private respondents appealed the case.
was not known to the Motor Vehicles Office. This Court sustained the
trial court's ruling that since Jepte represented himself to be the owner
On January 7, 1988, the Court of Appeals rendered the questioned of the truck and the Motor Vehicles Office, relying on his representation,
decision holding the petitioner jointly and severally liable with Sabiniano. registered the vehicle in his name, the Government and all persons
The appellate court in part ruled: affected by the representation had the right to rely on his declaration of
ownership and registration. Thus, even if Jepte were not the owner of
the truck at the time of the accident, he was still held liable for the death
We cannot go along with appellee's argument. It will be seen that
of Erezo significantly, the driver of the truck was fully authorized to drive
in Vargas v. Langcay, supra, it was held that it is immaterial whether or it.
not the driver was actually employed by the operator of record or
registered owner, and it is even not necessary to prove who the actual
owner of the vehicle and who the employer of the driver is. When the Likewise, in the Vargas case, just before the accident occurred Vargas
Supreme Court ruled, thus: 'We must hold and consider such owner- had sold her jeepney to a third person, so that at the time of the accident
operator of record (registered owner) as the employer in contemplation she was no longer the owner of the jeepney. This court, nevertheless,
of law, of the driver,' it cannot be construed other than that the registered affirmed Vargas' liability since she failed to surrender to the Motor
owner is the employer of the driver in contemplation of law. It is a Vehicles Office the corresponding AC plates in violation of the Revised
conclusive presumption of fact and law, and is not subject to rebuttal of Motor Vehicle Law and Commonwealth Act No. 146. We further ruled
proof to the contrary. Otherwise, as stated in the decision, we quote: that the operator of record continues to be the operator of the vehicle in
contemplation of law, as regards the public and third persons, and as
such is responsible for the consequences incident to its operator. The
The purpose of the principles evolved by the decisions in these matters
vehicle involved was a public utility jeepney for hire. In such cases, the
will be defeated and thwarted if we entertain the argument of petitioner law does not only require the surrender of the AC plates but orders the
that she is not liable because the actual owner and employer was vendor operator to stop the operation of the jeepney as a form of public
established by the evidence. . . . transportation until the matter is reported to the authorities.

Along the same vein, the defendant-appellee Gualberto Duavit cannot As can be seen, the circumstances of the above cases are entirely
be allowed to prove that the driver Sabiniano was not his employee at different from those in the present case. Herein petitioner does not deny
the time of the vehicular accident. ownership of the vehicle involved in tire mishap but completely denies
having employed the driver Sabiniano or even having authorized the
The ruling laid down in Amar V. Soberano (1966), 63 O.G. 6850, by this latter to drive his jeep. The jeep was virtually stolen from the petitioner's
Court to the effect that the burden of proving the non-existence of an garage. To hold, therefore, the petitioner liable for the accident caused
employer-employee relationship is upon the defendant and this he must by the negligence of Sabiniano who was neither his driver nor employee
do by a satisfactory preponderance of evidence, has to defer to the would be absurd as it would be like holding liable the owner of a stolen
doctrines evolved by the Supreme Court in cases of damages arising vehicle for an accident caused by the person who stole such vehicle. In
from vehicular mishaps involving registered motor vehicle. (See Tugade this regard, we cannot ignore the many cases of vehicles forcibly taken
v. Court of Appeals, 85 SCRA 226, 230). (Rollo, pp. 26-27) from their owners at gunpoint or stolen from garages and parking areas
and the instances of service station attendants or mechanics of auto
repair shops using, without the owner's consent, vehicles entrusted to
The appellate court also denied the petitioner's motion for them for servicing or repair.
reconsideration. Hence, this petition.

We cannot blindly apply absolute rules based on precedents whose

The petitioner contends that the respondent appellate court committed facts do not jibe four square with pending cases. Every case must be
grave abuse of discretion in holding him jointly and severally liable with determined on its own peculiar factual circumstances. Where, as in this
Sabiniano in spite of the absence of an employer-employee relationship case, the records of the petition fail to indicate the slightest indicia of an
between them and despite the fact that the petitioner's jeep was taken employer-employee relationship between the owner and the erring
out of his garage and was driven by Sabiniano without his consent. driver or any consent given by the owner for the vehicle's use, we cannot
hold the owner liable.
As early as in 1939, we have ruled that an owner of a vehicle cannot be
held liable for an accident involving the said vehicle if the same was We, therefore, find that the respondent appellate court committed
driven without his consent or knowledge and by a person not employed reversible error in holding the petitioner jointly and severally liable with
by him. Thus, in Duquillo v. Bayot (67 Phil. 131-133-134) [1939] we said: Sabiniano to the private respondent.

Under the facts established, the defendant cannot be held liable for WHEREFORE, the petition is GRANTED and the decision and
anything. At the time of the accident, James McGurk was driving the resolution appealed from are hereby ANNULLED and SET ASIDE. The
truck, and he was not an employee of the defendant, nor did he have decision of the then Court of First Instance (now Regional Trial Court) of
anything to do with the latter's business; neither the defendant nor Laguna, 8th Judicial District, Branch 6, dated July 30, 1981 is
Father Ayson, who was in charge of her business, consented to have REINSTATED.
any of her trucks driven on the day of the accident, as it was a holy day,
and much less by a chauffeur who was not in charge of driving it; the
use of the defendant's truck in the circumstances indicated was done SO ORDERED.
without her consent or knowledge; it may, therefore, be said, that there
was not the remotest contractual relation between the deceased Pio G.R. No. 162267 July 4, 2008
Duquillo and the defendant. It necessarily follows from all this that
articles 1101 and following of the Civil Code, cited by the appellant, have
no application in this case, and, therefore, the errors attributed to the PCI LEASING AND FINANCE, INC., petitioner,
inferior court are without basis. vs.
The Court upholds the above ruling as still relevant and better applicable
to present day circumstances. Before the Court is a Petition for Review on Certiorari under Rule 45 of
the Rules of Court, seeking a reversal of the Decision1 of the Court of
Appeals (CA) dated December 12, 2003 affirming with modification the SO ORDERED.9
Decision of the Regional Trial Court (RTC) of Makati City which ordered
petitioner and Renato Gonzaga (Gonzaga) to pay, jointly and severally,
Petitioner filed a Motion for Reconsideration which the CA denied in its
respondent the amount of P244,500.00 plus interest; and the CA
Resolution dated February 18, 2004.
Resolution2 dated February 18, 2004 denying petitioner's Motion for
Hence, herein Petition for Review.
The facts, as found by the CA, are undisputed:
The issues raised by petitioner are purely legal:
On October 19, 1990 at about 10:30 p.m., a Mitsubishi Lancer car with
Plate Number PHD-206 owned by United Coconut Planters Bank was Whether petitioner, as registered owner of a motor vehicle that figured
traversing the Laurel Highway, Barangay Balintawak, Lipa City. The car in a quasi-delict may be held liable, jointly and severally, with the driver
was insured with plantiff-appellee [UCPB General Insurance Inc.], then thereof, for the damages caused to third parties.
driven by Flaviano Isaac with Conrado Geronimo, the Asst. Manager of
said bank, was hit and bumped by an 18-wheeler Fuso Tanker Truck
with Plate No. PJE-737 and Trailer Plate No. NVM-133, owned by Whether petitioner, as a financing company, is absolved from liability by
the enactment of Republic Act (R.A.) No. 8556, or the Financing
defendants-appellants PCI Leasing & Finance, Inc. allegedly leased to
and operated by defendant-appellant Superior Gas & Equitable Co., Inc. Company Act of 1998.
(SUGECO) and driven by its employee, defendant appellant Renato
Gonzaga. Anent the first issue, the CA found petitioner liable for the damage
caused by the collision since under the Public Service Act, if the property
The impact caused heavy damage to the Mitsubishi Lancer car resulting covered by a franchise is transferred or leased to another without
obtaining the requisite approval, the transfer is not binding on the Public
in an explosion of the rear part of the car. The driver and passenger
suffered physical injuries. However, the driver defendant-appellant Service Commission and, in contemplation of law, the grantee continues
Gonzaga continued on its [sic] way to its [sic] destination and did not to be responsible under the franchise in relation to the operation of the
vehicle, such as damage or injury to third parties due to collisions. 10
bother to bring his victims to the hospital.

Plaintiff-appellee paid the assured UCPB the amount of P244,500.00 Petitioner claims that the CA's reliance on the Public Service Act is
misplaced, since the said law applies only to cases involving common
representing the insurance coverage of the damaged car.
carriers, or those which have franchises to operate as public utilities. In
contrast, the case before this Court involves a private commercial
As the 18-wheeler truck is registered under the name of PCI Leasing, vehicle for business use, which is not offered for service to the general
repeated demands were made by plaintiff-appellee for the payment of public.11
the aforesaid amounts. However, no payment was made. Thus, plaintiff-
appellee filed the instant case on March 13, 1991.3
Petitioner's contention has partial merit, as indeed, the vehicles involved
in the case at bar are not common carriers, which makes the Public
PCI Leasing and Finance, Inc., (petitioner) interposed the defense that Service Act inapplicable.
it could not be held liable for the collision, since the driver of the truck,
Gonzaga, was not its employee, but that of its co-defendant Superior
Gas & Equitable Co., Inc. (SUGECO).4 In fact, it was SUGECO, and not However, the registered owner of the vehicle driven by a negligent driver
may still be held liable under applicable jurisprudence involving laws on
petitioner, that was the actual operator of the truck, pursuant to a
Contract of Lease signed by petitioner and SUGECO.5 Petitioner, compulsory motor vehicle registration and the liabilities of employers
however, admitted that it was the owner of the truck in question. 6 for quasi-delicts under the Civil Code.

After trial, the RTC rendered its Decision dated April 15, 1999,7 the The principle of holding the registered owner of a vehicle liable for quasi-
dispositive portion of which reads: delicts resulting from its use is well-established in jurisprudence. Erezo
v. Jepte,12 with Justice Labrador as ponente, wisely explained the
reason behind this principle, thus:
WHEREFORE, premises considered, judgment is hereby rendered in
favor of plaintiff UCPB General Insurance [respondent], ordering the
Registration is required not to make said registration the
defendants PCI Leasing and Finance, Inc., [petitioner] and Renato
Gonzaga, to pay jointly and severally the former the following amounts: operative act by which ownership in vehicles is transferred, as in land
the principal amount of P244,500.00 with 12% interest as of the filing of registration cases, because the administrative proceeding of registration
does not bear any essential relation to the contract of sale between the
this complaint until the same is paid; P50,000.00 as attorney's fees;
and P20,000.00 as costs of suit. parties (Chinchilla vs. Rafael and Verdaguer, 39 Phil. 888), but to permit
the use and operation of the vehicle upon any public highway (section 5
[a], Act No. 3992, as amended.) The main aim of motor vehicle
SO ORDERED.8 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
Aggrieved by the decision of the trial court, petitioner appealed to 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
In its Decision dated December 12, 2003, the CA affirmed the RTC's very scant means of identification. It is to forestall these circumstances,
decision, with certain modifications, as follows: 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.
WHEREFORE, the appealed decision dated April 15, 1999 is hereby
AFFIRMED with modification that the award of attorney's fees is hereby
deleted and the rate of interest shall be six percent (6%) per annum "'One of the principal purposes of motor vehicles legislation is
computed from the time of the filing of the complaint in the trial court until identification of the vehicle and of the operator, in case of accident; and
the finality of the judgment. If the adjudged principal and the interest another is that the knowledge that means of detection are always
remain unpaid thereafter, the interest rate shall be twelve percent (12%) available may act as a deterrent from lax observance of the law and of
per annum computed from the time the judgment becomes final and the rules of conservative and safe operation. Whatever purpose there
executory until it is fully satisfied. may be in these statutes, it is subordinate at the last to the primary
purpose of rendering it certain that the violator of the law or of the rules
of safety shall not escape because of lack of means to discover him.'
The purpose of the statute is thwarted, and the displayed number public has the right to conclusively presume that the registered owner is
becomes a 'snare and delusion,' if courts would entertain such defenses the real owner, and may sue accordingly.20
as that put forward by appellee in this case. No responsible person or
corporation could be held liable for the most outrageous acts of
In the case now before the Court, there is not even a sale of the vehicle
negligence, if they should be allowed to place a 'middleman' between
involved, but a mere lease, which remained unregistered up to the time
them and the public, and escape liability by the manner in which they
of the occurrence of the quasi-delict that gave rise to the case. Since a
recompense their servants." (King vs. Brenham Automobile Co., 145
lease, unlike a sale, does not even involve a transfer of title or
S.W. 278, 279.)
ownership, but the mere use or enjoyment of property, there is more
reason, therefore, in this instance to uphold the policy behind the law,
With the above policy in mind, the question that defendant-appellant which is to protect the unwitting public and provide it with a definite
poses is: should not the registered owner be allowed at the trial to prove person to make accountable for losses or injuries suffered in vehicular
who the actual and real owner is, and in accordance with such proof accidents.21 This is and has always been the rationale behind
escape or evade responsibility and lay the same on the person actually compulsory motor vehicle registration under the Land Transportation
owning the vehicle? We hold with the trial court that the law does not and Traffic Code and similar laws, which, as early as Erezo, has been
allow him to do so; the law, with its aim and policy in mind, does not guiding the courts in their disposition of cases involving motor vehicular
relieve him directly of the responsibility that the law fixes and places incidents. It is also important to emphasize that such principles apply to
upon him as an incident or consequence of registration. Were a all vehicles in general, not just those offered for public service or utility.22
registered owner allowed to evade responsibility by proving who the
supposed transferee or owner is, it would be easy for him, by collusion
The Court recognizes that the business of financing companies has a
with others or otherwise, to escape said responsibility and transfer the
legitimate and commendable purpose.23 In earlier cases, it considered a
same to an indefinite person, or to one who possesses no property with
financial lease or financing lease a legal contract,24 though subject to the
which to respond financially for the damage or injury done. A victim of
restrictions of the so-called Recto Law or Articles 1484 and 1485 of the
recklessness on the public highways is usually without means to
Civil Code.25 In previous cases, the Court adopted the statutory
discover or identify the person actually causing the injury or damage. He
definition of a financial lease or financing lease, as:
has no means other than by a recourse to the registration in the Motor
Vehicles Office to determine who is the owner. The protection that the
law aims to extend to him would become illusory were the registered [A] mode of extending credit through a non-cancelable lease
owner given the opportunity to escape liability by disproving his contract under which the lessor purchases or acquires, at the
ownership. If the policy of the law is to be enforced and carried out, the instance of the lessee, machinery, equipment, motor vehicles,
registered owner should not be allowed to prove the contrary to the appliances, business and office machines, and other movable
prejudice of the person injured, that is, to prove that a third person or or immovable property in consideration of the periodic
another has become the owner, so that he may thereby be relieved of payment by the lessee of a fixed amount of money sufficient
the responsibility to the injured person. to amortize at least seventy (70%) of the purchase price or
acquisition cost, including any incidental expenses and a
margin of profit over an obligatory period of not less than two
The above policy and application of the law may appear quite harsh and
(2) years during which the lessee has the right to hold and use
would seem to conflict with truth and justice. We do not think it is so. A
the leased property, x x x but with no obligation or option on
registered owner who has already sold or transferred a vehicle has the
his part to purchase the leased property from the owner-lessor
recourse to a third-party complaint, in the same action brought against
at the end of the lease contract. 26
him to recover for the damage or injury done, against the vendee or
transferee of the vehicle. The inconvenience of the suit is no justification
for relieving him of liability; said inconvenience is the price he pays for Petitioner presented a lengthy discussion of the purported trend in other
failure to comply with the registration that the law demands and requires. jurisdictions, which apparently tends to favor absolving financing
companies from liability for the consequences of quasi-delictual acts or
omissions involving financially leased property.27 The petition adds that
In synthesis, we hold that the registered owner, the defendant-appellant
these developments have been legislated in our jurisdiction in Republic
herein, is primarily responsible for the damage caused to the vehicle of
Act (R.A.) No. 8556,28 which provides:
the plaintiff-appellee, but he (defendant-appellant) has a right to be
indemnified by the real or actual owner of the amount that he may be
required to pay as damage for the injury caused to the plaintiff- Section 12. Liability of lessors. - Financing companies shall not be liable
appellant.13 for loss, damage or injury caused by a motor vehicle, aircraft, vessel,
equipment, machinery or other property leased to a third person or entity
except when the motor vehicle, aircraft, vessel, equipment or other
The case is still good law and has been consistently cited in subsequent
property is operated by the financing company, its employees or agents
cases.14 Thus, there is no good reason to depart from its tenets.
at the time of the loss, damage or injury.1avvphi1

For damage or injuries arising out of negligence in the operation of a

Petitioner's argument that the enactment of R.A. No. 8556, especially its
motor vehicle, the registered owner may be held civilly liable with the
addition of the new Sec. 12 to the old law, is deemed to have absolved
negligent driver either 1) subsidiarily, if the aggrieved party seeks relief
petitioner from liability, fails to convince the Court.
based on a delict or crime under Articles 100 and 103 of the Revised
Penal Code; or 2) solidarily, if the complainant seeks relief based on
a quasi-delict under Articles 2176 and 2180 of the Civil Code. It is the These developments, indeed, point to a seeming emancipation of
option of the plaintiff whether to waive completely the filing of the civil financing companies from the obligation to compensate claimants for
action, or institute it with the criminal action, or file it separately or losses suffered from the operation of vehicles covered by their lease.
independently of a criminal action;15 his only limitation is that he cannot Such, however, are not applicable to petitioner and do not exonerate it
recover damages twice for the same act or omission of the defendant. 16 from liability in the present case.

In case a separate civil action is filed, the long-standing principle is that The new law, R.A. No. 8556, notwithstanding developments in foreign
the registered owner of a motor vehicle is primarily and directly jurisdictions, do not supersede or repeal the law on compulsory motor
responsible for the consequences of its operation, including the vehicle registration. No part of the law expressly repeals Section 5(a)
negligence of the driver, with respect to the public and all third and (e) of R.A. No. 4136, as amended, otherwise known as the Land
persons.17 In contemplation of law, the registered owner of a motor Transportation and Traffic Code, to wit:
vehicle is the employer of its driver, with the actual operator and
employer, such as a lessee, being considered as merely the owner's
agent.18 This being the case, even if a sale has been executed before a Sec. 5. Compulsory registration of motor vehicles. - (a) All
motor vehicles and trailer of any type used or operated on or
tortious incident, the sale, if unregistered, has no effect as to the right of
the public and third persons to recover from the registered owner.19 The upon any highway of the Philippines must be registered with
the Bureau of Land Transportation (now the Land
Transportation Office, per Executive Order No. 125, January G.R. No. L-65510 March 9, 1987
30, 1987, and Executive Order No. 125-A, April 13, 1987) for
the current year in accordance with the provisions of this Act.
N. NALE, respondents.
(e) Encumbrances of motor vehicles. - Mortgages,
attachments, and other encumbrances of motor vehicles, in "'Ex pacto illicito' non oritur actio" (No action arises out of illicit bargain)
order to be valid against third parties must be recorded in is the time-honored maxim that must be applied to the parties in the case
the Bureau (now the Land Transportation Office). Voluntary at bar. Having entered into an illegal contract, neither can seek relief
transactions or voluntary encumbrances shall likewise be from the courts, and each must bear the consequences of his acts." (Lita
properly recorded on the face of all outstanding copies of the Enterprises vs. IAC, 129 SCRA 81.)
certificates of registration of the vehicle concerned.
The factual background of this case is undisputed. The same is narrated
Cancellation or foreclosure of such mortgages, attachments, by the respondent court in its now assailed decision, as follows:
and other encumbrances shall likewise be recorded, and in
the absence of such cancellation, no certificate of registration
On May 9, 1975, the defendant bought from the
shall be issued without the corresponding notation of
plaintiff a motorcycle with complete accessories
mortgage, attachment and/or other encumbrances.
and a sidecar in the total consideration of P8,000.00
as shown by Invoice No. 144 (Exh. "A"). Out of the
x x x x (Emphasis supplied) 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.
Neither is there an implied repeal of R.A. No. 4136. As a rule, repeal by
The defendant, however, failed to comply with his
implication is frowned upon, unless there is clear showing that the later
promise and so upon his own request, the period of
statute is so irreconcilably inconsistent and repugnant to the existing law
paying the balance was extended to one year in
that they cannot be reconciled and made to stand together. 29 There is
monthly installments until January 1976 when he
nothing in R.A. No. 4136 that is inconsistent and incapable of
stopped paying anymore. The plaintiff made
demands but just the same the defendant failed to
comply with the same thus forcing the plaintiff to
Thus, the rule remains the same: a sale, lease, or financial lease, for consult a lawyer and file this action for his damage
that matter, that is not registered with the Land Transportation Office, in the amount of P546.21 for attorney's fees and
still does not bind third persons who are aggrieved in tortious incidents, P100.00 for expenses of litigation. The plaintiff also
for the latter need only to rely on the public registration of a motor vehicle claims that as of February 20, 1978, the total
as conclusive evidence of ownership.30 A lease such as the one involved account of the defendant was already P2,731.06 as
in the instant case is an encumbrance in contemplation of law, which shown in a statement of account (Exhibit. "B"). This
needs to be registered in order for it to bind third parties. 31 Under this amount includes not only the balance of P1,700.00
policy, the evil sought to be avoided is the exacerbation of the suffering but an additional 12% interest per annum on the
of victims of tragic vehicular accidents in not being able to identify a guilty said balance from January 26, 1976 to February 27,
party. A contrary ruling will not serve the ends of justice. The failure to 1978; a 2% service charge; and P 546.21
register a lease, sale, transfer or encumbrance, should not benefit the representing attorney's fees.
parties responsible, to the prejudice of innocent victims.
In this particular transaction a chattel mortgage
The non-registration of the lease contract between petitioner and its (Exhibit 1) was constituted as a security for the
lessee precludes the former from enjoying the benefits under Section 12 payment of the balance of the purchase price. It has
of R.A. No. 8556. 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
This ruling may appear too severe and unpalatable to leasing and
the sale are not given to the buyer. The records of
financing companies, but the Court believes that petitioner and other the LTC show that the motorcycle sold to the
companies so situated are not entirely left without recourse. They may defendant was first mortgaged to the Teja
resort to third-party complaints against their lessees or whoever are the
Marketing by Angel Jaucian though the Teja
actual operators of their vehicles. In the case at bar, there is, in fact, a Marketing and Angel Jaucian are one and the
provision in the lease contract between petitioner and SUGECO to the same, because it was made to appear that way only
effect that the latter shall indemnify and hold the former free and
as the defendant had no franchise of his own and
harmless from any "liabilities, damages, suits, claims or judgments" he attached the unit to the plaintiff's MCH Line. The
arising from the latter's use of the motor vehicle. 32 Whether petitioner agreement also of the parties here was for the
would act against SUGECO based on this provision is its own option.
plaintiff to undertake the yearly registration of the
motorcycle with the Land Transportation
The burden of registration of the lease contract is minuscule compared Commission. Pursuant to this agreement the
to the chaos that may result if registered owners or operators of vehicles defendant on February 22, 1976 gave the plaintiff
are freed from such responsibility. Petitioner pays the price for its failure P90.00, the P8.00 would be for the mortgage fee
to obey the law on compulsory registration of motor vehicles for and the P82.00 for the registration fee of the
registration is a pre-requisite for any person to even enjoy the privilege motorcycle. The plaintiff, however failed to register
of putting a vehicle on public roads. 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
WHEREFORE, the petition is DENIED. The Decision dated December and the bringing of the motorcycle to the LTC for
12, 2003 and Resolution dated February 18, 2004 of the Court of stenciling, the plaintiff saying that the defendant
Appeals are AFFIRMED. was hiding the motorcycle from him. Lastly, the
plaintiff explained also that though the ownership of
Costs against petitioner. the motorcycle was already transferred to the
defendant the vehicle was still mortgaged with the
consent of the defendant to the Rural Bank of
SO ORDERED. Camaligan for the reason that all motorcycle
purchased from the plaintiff on credit was defendant to pay plaintiff the sum of P1,700.00
rediscounted with the bank. 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
On his part the defendant did not dispute the sale
pay plaintiff the sum of P546.21 as attorney's fees;
and the outstanding balance of P1,700. 00 still
to pay plaintiff the sum of P200.00 as expenses of
payable to the plaintiff. The defendant was
litigation; and to pay the costs.
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 SO ORDERED.
motorcycle with the Land Transportation
Commission. In 1976, however, the plaintfff failed
On appeal to the Court of First Instance of Camarines Sur, the decision
to register both the chattel mortgage and the
was affirmed in toto. Private respondent filed a petition for review with
motorcycle with the LTC notwithstanding the fact
the Intermediate Appellate Court and on July 18, 1983 the said Court
that the defendant gave him P90.00 for mortgage
promulgated its decision, the pertinent portion of which reads —
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 However, as the purchase of the motorcycle for
(Exhibit "3"). Because of this failure of the plaintiff operation as a trimobile under the franchise of the
to comply with his obligation to register the private respondent Jaucian, pursuant to what is
motorcycle the defendant suffered damages when commonly known as the "kabit system", without the
he failed to claim any insurance indemnity which prior approval of the Board of Transportation
would amount to no less than P15,000.00 for the (formerly the Public Service Commission) was an
more than two times that the motorcycle figured in illegal transaction involving the fictitious registration
accidents aside from the loss of the daily income of of the motor vehicle in the name of the private
P15.00 as boundary fee beginning October 1976 respondent so that he may traffic with the privileges
when the motorcycle was impounded by the LTC of his franchise, or certificate of public convenience,
for not being registered. 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
The defendant disputed the claim of the plaintiff that
[Art. 1412 (a), Civil Code].
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 xxx xxx xxx
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 WHEREFORE, the decision under review is hereby
Camaligan without his consent and knowledge and set aside. The complaint of respondent Teja
Marketing and/or Angel Jaucian, as well as the
the defendant was not even given a copy of the
mortgage deed. The defendant claims that it is not counterclaim of petitioner Pedro Nale in Civil Case
true that the motorcycle was mortgaged because of No. 1153 of the Court of First Instance of
Camarines Sur (formerly Civil Case No. 5856 of the
re-discounting for rediscounting is only true with
Rural Banks and the Central Bank. The defendant City Court of Naga City) are dismissed. No
puts the blame on the plaintiff for not registering the pronouncement as to costs.
motorcycle with the LTC and for not giving him the
registration papers inspite of demands made. SO ORDERED.
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 The decision is now before Us on a petition for review, petitioner Teja
than P1,000.00. Marketing and/or Angel Jaucian presenting a lone assignment of error
— whether or not respondent court erred in applying the doctrine of "pari
xxx xxx xxx
We find the petition devoid of merit.
... it also appears and the Court so finds that
defendant purchased the motorcycle in question,
particularly for the purpose of engaging and using Unquestionably, the parties herein operated under an arrangement,
the same in the transportation business and for this commonly known as the "kabit system" whereby a person who has been
purpose said trimobile unit was attached to the granted a certificate of public convenience allows another person who
plaintiffs transportation line who had the franchise, owns motor vehicles to operate under such franchise for a fee. A
so much so that in the registration certificate, the certificate of public convenience is a special privilege conferred by the
plaintiff appears to be the owner of the government. Abuse of this privilege by the grantees thereof cannot be
unit. Furthermore, it appears to have been agreed, countenanced. The "kabit system" has been Identified as one of the root
further between the plaintiff and the defendant, that causes of the prevalence of graft and corruption in the government
plaintiff would undertake the yearly registration of transportation offices.
the unit in question with the LTC. Thus, for the
registration of the unit for the year 1976, per Although not outrightly penalized as a criminal offense, the kabit system
agreement, the defendant gave to the plaintiff the is invariably recognized as being contrary to public policy and, therefore,
amount of P82.00 for its registration, as well as the void and in existent under Article 1409 of the Civil Code. It is a
insurance coverage of the unit. 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
Eventually, petitioner Teja Marketing and/or Angel Jaucian filed an it would be error to accord the parties relief from their predicament.
action for "Sum of Money with Damages" against private respondent Article 1412 of the Civil Code denies them such aid. It provides:
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: Art. 1412. If the act in which the unlawful or
forbidden cause consists does not constitute a
WHEREFORE, decision is hereby rendered criminal offense, the following rules shall be
dismissing the counterclaim and ordering the observed:
1. When the fault is on the part of both contracting Lita Enterprises, Inc. to turn over the registration papers to him, but the
parties, neither may recover that he has given by latter allegedly refused. Hence, he and his wife filed a complaint against
virtue of the contract, or demand, the performance Lita Enterprises, Inc., Rosita Sebastian Vda. de Galvez, Visayan Surety
of the other's undertaking. & Insurance Co. and the Sheriff of Manila for reconveyance of motor
vehicles with damages, docketed as Civil Case No. 90988 of the Court
of First Instance of Manila. Trial on the merits ensued and on July 22,
The defect of in existence of a contract is permanent and cannot be
1975, the said court rendered a decision, the dispositive portion of which
cured by ratification or by prescription. The mere lapse of time cannot
reads: têñ.£îhqwâ£
give efficacy to contracts that are null and void.

WHEREFORE, the complaint is hereby dismissed

WHEREFORE, the petition is hereby dismissed for lack of merit. The
as far as defendants Rosita Sebastian Vda. de
assailed decision of the Intermediate Appellate Court (now the Court of
Galvez, Visayan Surety & Insurance Company and
Appeals) is AFFIRMED. No costs.
the Sheriff of Manila are concerned.

Defendant Lita Enterprises, Inc., is ordered to
transfer the registration certificate of the three
G.R. No. L-64693 April 27, 1984 Toyota cars not levied upon with Engine Nos. 2R-
230026, 2R-688740 and 2R-585884 [Exhs. A, B, C
and D] by executing a deed of conveyance in favor
of the plaintiff.
COURT, NICASIO M. OCAMPO and FRANCISCA P. Plaintiff is, however, ordered to pay Lita
GARCIA, respondents. Enterprises, Inc., the rentals in arrears for the
certificate of convenience from March 1973 up to
May 1973 at the rate of P200 a month per unit for
Manuel A. Concordia for petitioner.
the three cars. (Annex A, Record on Appeal, p. 102-
103, Rollo)
Nicasio Ocampo for himself and on behalf of his correspondents.
Petitioner Lita Enterprises, Inc. moved for reconsideration of the
decision, but the same was denied by the court a quo on October 27,
ESCOLIN, J.:ñé+.£ªwph!1 1975. (p. 121, Ibid.)

"Ex pacto illicito non oritur actio" [No action arises out of an illicit bargain] On appeal by petitioner, docketed as CA-G.R. No. 59157-R, the
is the tune-honored maxim that must be applied to the parties in the case Intermediate Appellate Court modified the decision by including as part
at bar. Having entered into an illegal contract, neither can seek relief of its dispositive portion another paragraph, to wit: têñ.£îhqwâ£
from the courts, and each must bear the consequences of his acts.
In the event the condition of the three Toyota rears
The factual background of this case is undisputed. will no longer serve the purpose of the deed of
conveyance because of their deterioration, or
because they are no longer serviceable, or because
Sometime in 1966, the spouses Nicasio M. Ocampo and Francisca they are no longer available, then Lita Enterprises,
Garcia, herein private respondents, purchased in installment from the Inc. is ordered to pay the plaintiffs their fair market
Delta Motor Sales Corporation five (5) Toyota Corona Standard cars to value as of July 22, 1975. (Annex "D", p. 167,
be used as taxicabs. Since they had no franchise to operate taxicabs, Rollo.)
they contracted with petitioner Lita Enterprises, Inc., through its
representative, Manuel Concordia, for the use of the latter's certificate of
public convenience in consideration of an initial payment of P1,000.00 Its first and second motions for reconsideration having been denied,
and a monthly rental of P200.00 per taxicab unit. To effectuate Id petitioner came to Us, praying that: têñ.£îhqwâ£
agreement, the aforesaid cars were registered in the name of petitioner
Lita Enterprises, Inc, Possession, however, remained with tile spouses
1. ...
Ocampo who operated and maintained the same under the name Acme
Taxi, petitioner's trade name.
2. ... after legal proceedings, decision be rendered
or resolution be issued, reversing, annulling or
About a year later, on March 18, 1967, one of said taxicabs driven by amending the decision of public respondent so that:
their employee, Emeterio Martin, collided with a motorcycle whose
driver, one Florante Galvez, died from the head injuries sustained
therefrom. A criminal case was eventually filed against the driver (a) the additional paragraph added by the public
Emeterio Martin, while a civil case for damages was instituted by Rosita respondent to the DECISION of the lower court
Sebastian Vda. de Galvez, heir of the victim, against Lita Enterprises, (CFI) be deleted;
Inc., as registered owner of the taxicab in the latter case, Civil Case No.
72067 of the Court of First Instance of Manila, petitioner Lita Enterprises,
(b) that private respondents be declared liable to
Inc. was adjudged liable for damages in the amount of P25,000.00 and
petitioner for whatever amount the latter has paid or
P7,000.00 for attorney's fees.
was declared liable (in Civil Case No. 72067) of the
Court of First Instance of Manila to Rosita
This decision having become final, a writ of execution was issued. One Sebastian Vda. de Galvez, as heir of the victim
of the vehicles of respondent spouses with Engine No. 2R-914472 was Florante Galvez, who died as a result ot the gross
levied upon and sold at public auction for 12,150.00 to one Sonnie negligence of private respondents' driver while
Cortez, the highest bidder. Another car with Engine No. 2R-915036 was driving one private respondents' taxicabs. (p. 39,
likewise levied upon and sold at public auction for P8,000.00 to a certain Rollo.)
Mr. Lopez.
Unquestionably, the parties herein operated under an arrangement,
Thereafter, in March 1973, respondent Nicasio Ocampo decided to comonly known as the "kabit system", whereby a person who has been
register his taxicabs in his name. He requested the manager of petitioner granted a certificate of convenience allows another person who owns
motors vehicles to operate under such franchise for a fee. A certificate
of public convenience is a special privilege conferred by the government erring vehicle? Otherwise stated, does the new owner have any legal
. Abuse of this privilege by the grantees thereof cannot be personality to bring the action, or is he the real party in interest in the
countenanced. The "kabit system" has been Identified as one of the root suit, despite the fact that he is not the registered owner under the
causes of the prevalence of graft and corruption in the government certificate of public convenience?
transportation offices. In the words of Chief Justice Makalintal, 1 "this is
a pernicious system that cannot be too severely condemned. It Sometime in 1982 private respondent Donato Gonzales
constitutes an imposition upon the goo faith of the government. purchased an Isuzu passenger jeepney from Gomercino Vallarta, holder
of a certificate of public convenience for the operation of public utility
vehicles plying the Monumento-Bulacan route. While private respondent
Although not outrightly penalized as a criminal offense, the "kabit Gonzales continued offering the jeepney for public transport services he
system" is invariably recognized as being contrary to public policy and, did not have the registration of the vehicle transferred in his name nor
therefore, void and inexistent under Article 1409 of the Civil Code, It is a did he secure for himself a certificate of public convenience for its
fundamental principle that the court will not aid either party to enforce an operation. Thus Vallarta remained on record as its registered owner and
illegal contract, but will leave them both where it finds them. Upon this operator.
premise, it was flagrant error on the part of both the trial and appellate
courts to have accorded the parties relief from their predicament. Article On 22 July 1990, while the jeepney was running northbound along
1412 of the Civil Code denies them such aid. It provides:têñ.£îhqw⣠the North Diversion Road somewhere in Meycauayan, Bulacan, it
collided with a ten-wheeler-truck owned by petitioner Abelardo Lim and
driven by his co-petitioner Esmadito Gunnaban. Gunnaban owned
ART. 1412. if the act in which the unlawful or
responsibility for the accident, explaining that while he was traveling
forbidden cause consists does not constitute a
towards Manila the truck suddenly lost its brakes. To avoid colliding with
criminal offense, the following rules shall be
another vehicle, he swerved to the left until he reached the center
island. However, as the center island eventually came to an end, he
veered farther to the left until he smashed into a Ferroza automobile,
(1) when the fault, is on the part of both contracting and later, into private respondent's passenger jeepney driven by one
parties, neither may recover what he has given by Virgilio Gonzales. The impact caused severe damage to both the
virtue of the contract, or demand the performance Ferroza and the passenger jeepney and left one (1) passenger dead and
of the other's undertaking. many others wounded.

Petitioner Lim shouldered the costs for hospitalization of the

The defect of inexistence of a contract is permanent and incurable, and wounded, compensated the heirs of the deceased passenger, and had
cannot be cured by ratification or by prescription. As this Court said the Ferroza restored to good condition. He also negotiated with private
in Eugenio v. Perdido, 2 "the mere lapse of time cannot give efficacy to respondent and offered to have the passenger jeepney repaired at his
contracts that are null void." shop. Private respondent however did not accept the offer so Lim
offered him P20,000.00, the assessment of the damage as estimated by
The principle of in pari delicto is well known not only in this jurisdiction his chief mechanic.Again, petitioner Lim's proposition was rejected;
but also in the United States where common law prevails. Under instead, private respondent demanded a brand-new jeep or the amount
American jurisdiction, the doctrine is stated thus: "The proposition is of P236,000.00. Lim increased his bid to P40,000.00 but private
universal that no action arises, in equity or at law, from an illegal respondent was unyielding. Under the circumstances, negotiations had
contract; no suit can be maintained for its specific performance, or to to be abandoned; hence, the filing of the complaint for damages by
recover the property agreed to be sold or delivered, or damages for its private respondent against petitioners.
property agreed to be sold or delivered, or damages for its violation. The
In his answer Lim denied liability by contending that he exercised
rule has sometimes been laid down as though it was equally universal,
due diligence in the selection and supervision of his employees. He
that where the parties are in pari delicto, no affirmative relief of any kind
further asserted that as the jeepney was registered in Vallartas name, it
will be given to one against the other." 3 Although certain exceptions to
was Vallarta and not private respondent who was the real party in
the rule are provided by law, We see no cogent reason why the full force
interest.[1] For his part, petitioner Gunnaban averred that the accident
of the rule should not be applied in the instant case.
was a fortuitous event which was beyond his control.[2]

WHEREFORE, all proceedings had in Civil Case No. 90988 entitled Meanwhile, the damaged passenger jeepney was left by the
"Nicasio Ocampo and Francisca P. Garcia, Plaintiffs, versus Lita roadside to corrode and decay. Private respondent explained that
Enterprises, Inc., et al., Defendants" of the Court of First Instance of although he wanted to take his jeepney home he had no capability,
Manila and CA-G.R. No. 59157-R entitled "Nicasio Ocampo and financial or otherwise, to tow the damaged vehicle.[3]
Francisca P. Garica, Plaintiffs-Appellees, versus Lita Enterprises, Inc.,
Defendant-Appellant," of the Intermediate Appellate Court, as well as The main point of contention between the parties related to the
amount of damages due private respondent. Private respondent
the decisions rendered therein are hereby annuleled and set aside. No
costs. Gonzales averred that per estimate made by an automobile repair shop
he would have to spend P236,000.00 to restore his jeepney to its original
condition.[4] On the other hand, petitioners insisted that they could have
SO ORDERED.1äwphï1.ñët the vehicle repaired for P20,000.00.[5]

On 1 October 1993 the trial court upheld private respondent's

[G.R. No. 125817. January 16, 2002] claim and awarded him P236,000.00 with legal interest from 22 July
1990 as compensatory damages and P30,000.00 as attorney's fees. In
support of its decision, the trial court ratiocinated that as vendee and
current owner of the passenger jeepney private respondent stood for all
intents and purposes as the real party in interest. Even Vallarta himself
ABELARDO LIM and ESMADITO GUNNABAN, petitioners, supported private respondent's assertion of interest over the jeepney for,
vs. COURT OF APPEALS and DONATO H. when he was called to testify, he dispossessed himself of any claim or
GONZALES, respondents. pretension on the property. Gunnaban was found by the trial court to
DECISION have caused the accident since he panicked in the face of an emergency
which was rather palpable from his act of directing his vehicle to a
BELLOSILLO, J.: perilous streak down the fast lane of the superhighway then across the
island and ultimately to the opposite lane where it collided with the
When a passenger jeepney covered by a certificate of public
convenience is sold to another who continues to operate it under the On the other hand, petitioner Lim's liability for Gunnaban's
same certificate of public convenience under the so-called kabit system, negligence was premised on his want of diligence in supervising his
and in the course thereof the vehicle meets an accident through the fault employees. It was admitted during trial that Gunnaban doubled as
of another vehicle, may the new owner sue for damages against the
mechanic of the ill-fated truck despite the fact that he was neither tutored In awarding damages for tortuous injury, it becomes the sole
nor trained to handle such task.[6] design of the courts to provide for adequate compensation by putting the
plaintiff in the same financial position he was in prior to the tort. It is a
Forthwith, petitioners appealed to the Court of Appeals which, on fundamental principle in the law on damages that a defendant cannot be
17 July 1996, affirmed the decision of the trial court. In upholding the held liable in damages for more than the actual loss which he has
decision of the court a quo the appeals court concluded that while an inflicted and that a plaintiff is entitled to no more than the just and
operator under the kabit system could not sue without joining the adequate compensation for the injury suffered. His recovery is, in the
registered owner of the vehicle as his principal, equity demanded that absence of circumstances giving rise to an allowance of punitive
the present case be made an exception.[7] Hence this petition. damages, limited to a fair compensation for the harm done. The law will
not put him in a position better than where he should be in had not the
It is petitioners' contention that the Court of Appeals erred in
wrong happened.[12]
sustaining the decision of the trial court despite their opposition to the
well-established doctrine that an operator of a vehicle continues to be its In the present case, petitioners insist that as the passenger
operator as long as he remains the operator of record. According to jeepney was purchased in 1982 for only P30,000.00 to award damages
petitioners, to recognize an operator under the kabit system as the real considerably greater than this amount would be improper and
party in interest and to countenance his claim for damages is utterly unjustified. Petitioners are at best reminded that indemnification for
subversive of public policy. Petitioners further contend that inasmuch as damages comprehends not only the value of the loss suffered but also
the passenger jeepney was purchased by private respondent for that of the profits which the obligee failed to obtain. In other words,
only P30,000.00, an award of P236,000.00 is inconceivably large and indemnification for damages is not limited todamnum emergens or
would amount to unjust enrichment.[8] actual loss but extends to lucrum cessans or the amount of profit lost.[13]
Petitioners' attempt to illustrate that an affirmance of the appealed Had private respondent's jeepney not met an accident it could
decision could be supportive of the pernicious kabit system does not reasonably be expected that it would have continued earning from the
persuade.Their labored efforts to demonstrate how the questioned business in which it was engaged. Private respondent avers that he
rulings of the courts a quo are diametrically opposed to the policy of the derives an average income of P300.00 per day from his passenger
law requiring operators of public utility vehicles to secure a certificate of jeepney and this earning was included in the award of damages made
public convenience for their operation is quite unavailing. by the trial court and upheld by the appeals court. The award therefore
of P236,000.00 as compensatory damages is not beyond reason nor
The kabit system is an arrangement whereby a person who has speculative as it is based on a reasonable estimate of the total damage
been granted a certificate of public convenience allows other persons suffered by private respondent, i.e.damage wrought upon his jeepney
who own motor vehicles to operate them under his license, sometimes and the income lost from his transportation business. Petitioners for their
for a fee or percentage of the earnings.[9] Although the parties to such part did not offer any substantive evidence to refute the estimate made
an agreement are not outrightly penalized by law, the kabit system is
by the courts a quo.
invariably recognized as being contrary to public policy and therefore
void and inexistent under Art. 1409 of the Civil Code. However, we are constrained to depart from the conclusion of the
[10] lower courts that upon the award of compensatory damages legal
In the early case of Dizon v. Octavio the Court explained that
interest should be imposed beginning 22 July 1990, i.e. the date of the
one of the primary factors considered in the granting of a certificate of accident. Upon the provisions of Art. 2213 of the Civil Code, interest
public convenience for the business of public transportation is the "cannot be recovered upon unliquidated claims or damages, except
financial capacity of the holder of the license, so that liabilities arising
when the demand can be established with reasonable certainty." It is
from accidents may be duly compensated. The kabit system renders axiomatic that if the suit were for damages, unliquidated and not known
illusory such purpose and, worse, may still be availed of by the grantee until definitely ascertained, assessed and determined by the courts after
to escape civil liability caused by a negligent use of a vehicle owned by
proof, interest at the rate of six percent (6%) per annum should be from
another and operated under his license. If a registered owner is allowed the date the judgment of the court is made (at which time the
to escape liability by proving who the supposed owner of the vehicle is, quantification of damages may be deemed to be reasonably
it would be easy for him to transfer the subject vehicle to another who
possesses no property with which torespond financially for the damage
done. Thus, for the safety of passengers and the public who may have In this case, the matter was not a liquidated obligation as the
been wronged and deceived through the baneful kabit system, the assessment of the damage on the vehicle was heavily debated upon by
registered owner of the vehicle is not allowed to prove that another the parties with private respondent's demand for P236,000.00 being
person has become the owner so that he may be thereby relieved of refuted by petitioners who argue that they could have the vehicle
responsibility. Subsequent cases affirm such basic doctrine. [11] repaired easily for P20,000.00. In fine, the amount due private
respondent was not a liquidated account that was already demandable
It would seem then that the thrust of the law in enjoining and payable.
the kabit system is not so much as to penalize the parties but to identify
the person upon whom responsibility may be fixed in case of an accident One last word. We have observed that private respondent left his
with the end view of protecting the riding public. The policy therefore passenger jeepney by the roadside at the mercy of the elements. Article
loses its force if the public at large is not deceived, much less involved. 2203 of the Civil Code exhorts parties suffering from loss or injury to
exercise the diligence of a good father of a family to minimize the
In the present case it is at once apparent that the evil sought to be
damages resulting from the act or omission in question. One who is
prevented in enjoining the kabit system does not exist. First, neither of injured then by the wrongful or negligent act of another should exercise
the parties to the pernicious kabit system is being held liable for reasonable care and diligence to minimize the resulting
damages. Second, the case arose from the negligence of another
damage. Anyway, he can recover from the wrongdoer money lost in
vehicle in using the public road to whom no representation, or reasonable efforts to preserve the property injured and for injuries
misrepresentation, as regards the ownership and operation of the incurred in attempting to prevent damage to it.[15]
passenger jeepney was made and to whom no such representation, or
misrepresentation, was necessary. Thus it cannot be said that private However we sadly note that in the present case petitioners failed
respondent Gonzales and the registered owner of the jeepney were in to offer in evidence the estimated amount of the damage caused by
estoppel for leading the public to believe that the jeepney belonged to private respondent's unconcern towards the damaged vehicle. It is the
the registered owner. Third, the riding public was not bothered nor burden of petitioners to show satisfactorily not only that the injured party
inconvenienced at the very least by the illegal arrangement. On the could have mitigated his damages but also the amount thereof; failing in
contrary, it was private respondent himself who had been wronged and this regard, the amount of damages awarded cannot be proportionately
was seeking compensation for the damage done to him. Certainly, it reduced.
would be the height of inequity to deny him his right.
WHEREFORE, the questioned Decision awarding private
In light of the foregoing, it is evident that private respondent has respondent Donato Gonzales P236,000.00 with legal interest from 22
the right to proceed against petitioners for the damage caused on his July 1990 as compensatory damages and P30,000.00 as attorney's fees
passenger jeepney as well as on his business. Any effort then to is MODIFIED. Interest at the rate of six percent (6%) per annum shall be
frustrate his claim of damages by the ingenuity with which petitioners computed from the time the judgment of the lower court is made until the
framed the issue should be discouraged, if not repelled.
finality of this Decision. If the adjudged principal and interest remain months before the accident. Prior to this, he was holder of a student
unpaid thereafter, the interest shall be twelve percent (12%) per annum drivers permit issued on April 10, 1986.[8]
computed from the time judgment becomes final and executory until it is
fully satisfied. On November 24, 1997, the trial court rendered a decision in favor
of respondents, the dispositive portion of which states:
Costs against petitioners.
Premises duly considered and the plaintiffs having satisfactorily
SO ORDERED. convincingly and credibly presented evidence clearly satisfying the
requirements of preponderance of evidence to sustain the complaint,
[G.R. No. 160286. July 30, 2004] this Court hereby declares judgment in favor of the plaintiffs and against
the defendants. Defendants-spouses Francisco Hernandez and Aniceta
Abel Hernandez and Juan Gonzales are therefore directed to pay jointly
and severally, the following:
HERNANDEZ and JUAN GONZALES, petitioners, vs. 1) To spouses Lorenzo Dolor and Margarita Dolor:
FRED PANOPIO, JOSEPH SANDOVAL, RENE CASTILLO, a) P50,000.00 for the death of their son, Lorenzo Menard Boyet Dolor,
VALMOCINA, SPOUSES VICTOR PANOPIO and MARTINA b) P142,000.00 as actual and necessary
PANOPIO, and HON. COURT OF APPEALS, respondents. funeral expenses;
DECISION c) P50,000.00 reasonable value of the totally
wrecked owner-type jeep with plate no. DEB
YNARES-SANTIAGO, J.: 804 Phil 85;
d) P20,000.00 as moral damages;
e) P20,000.00 as reasonable litigation expenses and attorneys fees.
This is a petition for review under Rule 45 of the Rules of Court
seeking the reversal of the decision[1] of the Court of Appeals, dated April
29, 2003, in CA-G.R. CV No. 60357, which affirmed with modification 2) To spouses Francisco Valmocina and Virginia Valmocina:
the amount of damages awarded in the November 24, 1997 decision[2] of
the Regional Trial Court of Batangas City, Branch IV. a) P50,000.00 for the death of their son, Oscar
Balmocina (sic);
The undisputed facts are as follows:
b) P20,000.00 as moral damages;
At about 3:00 p.m. of December 19, 1986, Lorenzo Menard Boyet c) P18,400.00 for funeral expenses;
Dolor, Jr. was driving an owner-type jeepney with plate no. DEB 804 d) P10,000.00 for litigation expenses and
owned by her mother, Margarita, towards Anilao, Batangas. As he was attorneys fees.
traversing the road at Barangay Anilao East, Mabini, Batangas, his 3) To spouses Victor Panopio and Martina Panopio:
vehicle collided with a passenger jeepney bearing plate no. DEG 648,
driven by petitioner Juan Gonzales and owned by his co-petitioner a) P10,450.00 for the cost of the artificial leg and crutches being used
Francisco Hernandez, which was travelling towards Batangas City. by their son Fred Panopio;
b) P25,000.00 for hospitalization and medical expenses they incurred
Boyet Dolor and his passenger, Oscar Valmocina, died as a result for the treatment of their son, Fred Panopio.
of the collision. Fred Panopio, Rene Castillo and Joseph Sandoval, who
were also on board the owner-type jeep, which was totally wrecked,
suffered physical injuries. The collision also damaged the passenger 4) To Fred Panopio:
jeepney of Francisco Hernandez and caused physical injuries to its
passengers, namely, Virgie Cadavida, Fiscal Artemio Reyes and
a) P25,000.00 for the loss of his right leg;
Francisca Corona.[3]
b) P10,000.00 as moral damages.
Consequently, respondents commenced an action[4] for damages 5) To Joseph Sandoval:
against petitioners before the Regional Trial Court of Batangas City,
alleging that driver Juan Gonzales was guilty of negligence and lack of a) P4,000.00 for medical treatment.
care and that the Hernandez spouses were guilty of negligence in the
selection and supervision of their employees.[5]
The defendants are further directed to pay the costs of this proceedings.
Petitioners countered that the proximate cause of the death and
injuries sustained by the passengers of both vehicles was the
recklessness of Boyet Dolor, the driver of the owner-type jeepney, who
was driving in a zigzagging manner under the influence of
alcohol. Petitioners also alleged that Gonzales was not the driver- Petitioners appealed[10] the decision to the Court of Appeals,
employee of the Hernandez spouses as the former only leased the which affirmed the same with modifications as to the amount of
passenger jeepney on a daily basis. The Hernandez spouses further damages, actual expenses and attorneys fees awarded to the private
claimed that even if an employer-employee relationship is found to exist respondents. The decretal portion of the decision of the Court of Appeals
between them, they cannot be held liable because as employers they reads:
exercised due care in the selection and supervision of their employee.
WHEREFORE, the foregoing premises considered, the appealed
During the trial of the case, it was established that the drivers of decision is AFFIRMED. However, the award for damages, actual
the two vehicles were duly licensed to drive and that the road where the expenses and attorneys fees shall be MODIFIED as follows:
collision occurred was asphalted and in fairly good condition. [6] The
owner-type jeep was travelling uphill while the passenger jeepney was
1) To spouses Lorenzo Dolor and Margarita Dolor:
going downhill. It was further established that the owner-type jeep was
moderately moving and had just passed a road bend when its
passengers, private respondents Joseph Sandoval and Rene Castillo, a) P50,000.00 civil indemnity for their son Lorenzo Menard Dolor, Jr.;
saw the passenger jeepney at a distance of three meters away. The b) P58,703.00 as actual and necessary funeral
passenger jeepney was traveling fast when it bumped the owner type expenses;
jeep.[7] Moreover, the evidence presented by respondents before the c) P25,000,00 as temperate damages;
trial court showed that petitioner Juan Gonzales obtained his d) P100,000.00 as moral damages;
professional drivers license only on September 24, 1986, or three e) P20,000.00 as reasonable litigation expenses and attorneys fees.
2) To Spouses Francisco Valmocina and Virginia Valmocina: The father and, in case of his death or incapacity, the mother, are
responsible for the damages caused by the minor children who live in
their company.
a) P50,000.00 civil indemnity for the death of
their son, Oscar Valmocina;
b) P100,000.00 as moral damages; Guardians are liable for damages caused by the minors or incapacitated
c) P10,000.00 as temperate damages; persons who are under their authority and live in their company.
d) P10,000.00 as reasonable litigation
expenses and attorneys fees.
The owners and managers of an establishment or enterprise are
3) To Spouses Victor Panopio and Martina Panopio:
likewise responsible for damages caused by their employees in the
service of the branches in which the latter are employed or on the
a) P10,352.59 as actual hospitalization and medical expenses; occasion of their functions.
b) P5,000.00 as temperate damages.
Employers shall be liable for the damages caused by their
4) To Fred Panopio: employees and household helpers acting within the scope of their
assigned tasks, even though the former are not engaged in any
business or industry.
a) P50,000.00 as moral damages.

The State is responsible in like manner when it acts through a special

5) To Joseph Sandoval:
agent; but not when the damage has been caused by the official to whom
the task done properly pertains, in which case what is provided in article
a) P3,000.00 as temperate damages. 2176 shall be applicable.

SO ORDERED.[11] Lastly, teachers or heads of establishments of arts and trades shall be

liable for damages caused by their pupils and students or apprentices,
so long as they remain in their custody.
Hence the present petition raising the following issues:

1. Whether the Court of Appeals was correct when it pronounced the The responsibility treated of in this article shall cease when the persons
Hernandez spouses as solidarily liable with Juan Gonzales, although it herein mentioned prove that they observed all the diligence of a good
is of record that they were not in the passenger jeepney driven by latter father of a family to prevent damage. (Underscoring supplied)
when the accident occurred;
On the other hand, Article 2176 provides
2. Whether the Court of Appeals was correct in awarding temperate
damages to private respondents namely the Spouses Dolor, Spouses Whoever by act or omission causes damage to another, there being fault
Valmocina and Spouses Panopio and to Joseph Sandoval, although the or negligence, is obliged to pay for the damage done. Such fault or
grant of temperate damages is not provided for in decision of the court a negligence, if there is no pre-existing contractual relation between the
quo; parties, is called a quasi-delict and is governed by the provisions of this
3. Whether the Court of Appeals was correct in increasing the award of
moral damages to respondents, Spouses Dolor, Spouses Valmocina While the above provisions of law do not expressly provide for
and Fred Panopio; solidary liability, the same can be inferred from the wordings of the first
paragraph of Article 2180 which states that the obligation imposed by
article 2176 is demandable not only for one's own acts or omissions, but
4. Whether the Court of Appeals was correct in affirming the grant of also for those of persons for whom one is responsible.
attorneys fees to Spouses Dolor and to Spouses Valmocina although
the lower court did not specify the fact and the law on which it is based. Moreover, Article 2180 should be read with Article 2194 of the
same Code, which categorically states that the responsibility of two or
Petitioners contend that the absence of the Hernandez spouses more persons who are liable for quasi-delict is solidary. In other words,
inside the passenger jeepney at the time of the collision militates against the liability of joint tortfeasors is solidary.[12] Verily, under Article 2180 of
holding them solidarily liable with their co-petitioner, Juan Gonzales, the Civil Code, an employer may be held solidarily liable for the negligent
invoking Article 2184 of the Civil Code, which provides: act of his employee.[13]

ARTICLE 2184. In motor vehicle mishaps, the owner is solidarily liable The solidary liability of employers with their employees for quasi-
with his driver, if the former, who was in the vehicle, could have, by the delicts having been established, the next question is whether Julian
use of the due diligence, prevented the misfortune. It is disputably Gonzales is an employee of the Hernandez spouses. An affirmative
presumed that a driver was negligent, if he had been found guilty of answer will put to rest any issue on the solidary liability of the Hernandez
reckless driving or violating traffic regulations at least twice within the spouses for the acts of Julian Gonzales. The Hernandez spouses
next preceding two months. maintained that Julian Gonzales is not their employee since their
relationship relative to the use of the jeepney is that of a lessor and a
lessee. They argue that Julian Gonzales pays them a daily rental of
If the owner was not in the motor vehicle, the provisions of article 2180 P150.00 for the use of the jeepney.[14] In essence, petitioners are
are applicable. practicing the boundary system of jeepney operation albeit disguised as
a lease agreement between them for the use of the jeepney.
The Hernandez spouses argues that since they were not inside We hold that an employer-employee relationship exists between
the jeepney at the time of the collision, the provisions of Article 2180 of
the Hernandez spouses and Julian Gonzales.
the Civil Code, which does not provide for solidary liability between
employers and employees, should be applied. Indeed to exempt from liability the owner of a public vehicle who
operates it under the boundary system on the ground that he is a mere
We are not persuaded.
lessor would be not only to abet flagrant violations of the Public Service
Article 2180 provides: Law, but also to place the riding public at the mercy of reckless and
irresponsible drivers reckless because the measure of their earnings
ARTICLE 2180. The obligation imposed by article 2176 is demandable depends largely upon the number of trips they make and, hence, the
not only for one's own acts or omissions, but also for those of persons speed at which they drive; and irresponsible because most if not all of
for whom one is responsible. them are in no position to pay the damages they might cause.[15]
Anent the award of temperate damages to the private In the case at bench, the records do not show enough basis for
respondents, we hold that the appellate court committed no reversible sustaining the award for attorneys fees and to adjudge its payment by
error in awarding the same to the respondents. petitioner. x x x.

Temperate or moderate damages are damages which are more

than nominal but less than compensatory which may be recovered when Likewise, this Court held in Stronghold Insurance Company, Inc. vs.
the court finds that some pecuniary loss has been suffered but its Court of Appeals that:
amount cannot, from the nature of the case, be proved with
certainty.[16] Temperate damages are awarded for those cases where, In Abrogar v. Intermediate Appellate Court [G.R. No. 67970, January 15,
from the nature of the case, definite proof of pecuniary loss cannot be 1988, 157 SCRA 57], the Court had occasion to state that [t]he reason
offered, although the court is convinced that there has been such loss. A for the award of attorneys fees must be stated in the text of the courts
judge should be empowered to calculate moderate damages in such decision, otherwise, if it is stated only in the dispositive portion of the
cases, rather than the plaintiff should suffer, without redress, from the decision, the same must be disallowed on appeal. x x x.[24]
defendants wrongful act.[17] The assessment of temperate damages is
left to the sound discretion of the court provided that such an award is
reasonable under the circumstances.[18] WHEREFORE, the petition is DENIED. The assailed decision of
the Court of Appeals is AFFIRMED with the MODIFICATION that the
We have gone through the records of this case and we find that, grant of attorneys fees is DELETED for lack of basis.
indeed, respondents suffered losses which cannot be quantified in
monetary terms. These losses came in the form of the damage Costs against petitioners.
sustained by the owner type jeep of the Dolor spouses; the internment
and burial of Oscar Valmocina; the hospitalization of Joseph Sandoval
on account of the injuries he sustained from the collision and the artificial
leg and crutches that respondent Fred Panopio had to use because of PNR vs. Vizcara
the amputation of his right leg. Further, we find that the amount of Nature of the Petition
temperate damages awarded to the respondents were reasonable under
the circumstances. Before this Court is a petition for review on certiorari under Rule 45 of
the 1997 Rules of Civil Procedure, seeking to annul and set aside the
As to the amount of moral damages which was awarded to
respondents, a review of the records of this case shows that there exists Decision[1] dated July 21, 2009 of the Court of Appeals (CA) in CA-G.R.
no cogent reason to overturn the action of the appellate court on this CV No. 90021, which affirmed with modification the Decision[2]dated
aspect. March 20, 2007 of the Regional Trial Court (RTC), Branch 40, Palayan
City, and Resolution[3] dated October 26, 2009, which denied the
Under Article 2206, the spouse, legitimate and illegitimate petitioners motion for reconsideration.
descendants and ascendants of the deceased may demand moral
damages for mental anguish for the death of the deceased. The reason The Antecedent Facts
for the grant of moral damages has been explained, thus:
On May 14, 2004, at about three oclock in the morning,
. . . the award of moral damages is aimed at a restoration, within the Reynaldo Vizcara (Reynaldo) was driving a passenger jeepney headed
limits possible, of the spiritual status quo ante; and therefore, it must be towards Bicol to deliver onion crops, with his companions, namely,
proportionate to the suffering inflicted. The intensity of the pain Cresencio Vizcara (Cresencio), Crispin Natividad (Crispin), Samuel
experienced by the relatives of the victim is proportionate to the intensity Natividad (Samuel), Dominador Antonio (Dominador) and Joel Vizcara
of affection for him and bears no relation whatsoever with the wealth or (Joel). While crossing the railroad track in Tiaong, Quezon, a Philippine
means of the offender.[19] National Railways (PNR) train, then being operated by respondent
Japhet Estranas (Estranas), suddenly turned up and rammed the
passenger jeepney. The collision resulted to the instantaneous death of
Moral damages are emphatically not intended to enrich a plaintiff
Reynaldo, Cresencio, Crispin, and Samuel. On the other hand,
at the expense of the defendant. They are awarded to allow the former
Dominador and Joel, sustained serious physical injuries.[4]
to obtain means, diversion or amusements that will serve to alleviate the
moral suffering he has undergone due to the defendants culpable action
At the time of the accident, there was no level crossing installed at the
and must, perforce, be proportional to the suffering inflicted. [20]
railroad crossing. Additionally, the Stop, Look and Listen signage was
Truly, the pain of the sudden loss of ones offspring, especially of poorly maintained. The Stop signage was already faded while the Listen
a son who was in the prime of his youth, and who holds so much promise signage was partly blocked by another signboard.[5]
waiting to be fulfilled is indeed a wellspring of intense pain which no
parent should be made to suffer. While it is true that there can be no On September 15, 2004, the survivors of the mishap, Joel and
exact or uniform rule for measuring the value of a human life and the Dominador, together with the heirs of the deceased victims, namely,
measure of damages cannot be arrived at by a precise mathematical Purificacion Vizcara, Marivic Vizcara, Cresencia Natividad and Hector
calculation,[21] we hold that the Court of Appeals award of moral Vizcara, filed an action for damages against PNR, Estranas and Ben
damages of P100,000.00 each to the Spouses Dolor and Spouses Saga, the alternate driver of the train, before the RTC of Palayan City.
Valmocina for the death of their respective sons, Boyet Dolor and Oscar The case was raffled to Branch 40 and was docketed as Civil Case No.
Valmocina, is in full accord with prevailing jurisprudence. [22] 0365-P. In their complaint, the respondents alleged that the proximate
cause of the
With respect to the award of attorneys fees to respondents, no fatalities and serious physical injuries sustained by the victims of the
sufficient basis was established for the grant thereof. accident was the petitioners gross negligence in not providing adequate
safety measures to prevent injury to persons and properties. They
It is well settled that attorneys fees should not be awarded in the pointed out that in the railroad track of Tiaong, Quezon where the
absence of stipulation except under the instances enumerated in Article accident happened, there was no level crossing bar, lighting equipment
2208 of the Civil Code. As we have held in Rizal Surety and Insurance or bell installed to warn motorists of the existence of the track and of the
Company v. Court of Appeals:[23] approaching train. They concluded their complaint with a prayer for
actual, moral and compensatory damages, as well as attorneys fees.[6]
Article 2208 of the Civil Code allows attorneys fees to be awarded by a
court when its claimant is compelled to litigate with third persons or to For their part, the petitioners claimed that they exercised due diligence
incur expenses to protect his interest by reason of an unjustified act or in operating the train and monitoring its roadworthiness. They
omission of the party from whom it is sought. While judicial discretion is asseverate that right before the collision, Estranas was driving the train
here extant, an award thereof demands, nevertheless, a factual, legal or at a moderate speed. Four hundred (400) meters away from the railroad
equitable justification. The matter cannot and should not be left to crossing, he started blowing his horn to warn motorists of the
speculation and conjecture (Mirasol vs. De la Cruz, 84 SCRA 337; approaching train. When the train was only fifty (50) meters away from
Stronghold Insurance Company, Inc. vs. Court of Appeals, 173 SCRA the intersection, respondent Estranas noticed that all vehicles on both
619). sides of the track were already at a full stop. Thus, he carefully
proceeded at a speed of twenty-five (25) kilometers per hour, still 2. Costs of suit.
blowing the trains horn. However, when the train was already ten (10)
meters away from the intersection, the passenger jeepney being driven SO ORDERED.[9]
by Reynaldo suddenly crossed the tracks. Estranas immediately
stepped on the brakes to avoid hitting the jeepney but due to the sheer
weight of the train, it did not instantly come to a complete stop until the The Ruling of the CA
jeepney was dragged 20 to 30 meters away from the point of collision.[7]
Unyielding, the petitioners appealed the RTC decision to the
The Ruling of the Trial Court CA. Subsequently, on July 21, 2009, the CA rendered the assailed
decision, affirming the RTC decision with modification with respect to the
After trial on the merits, the RTC rendered its Decision[8] dated March amount of damages awarded to the respondents. The CA disposed,
20, 2007, ruling in favor of the respondents, the dispositive portion of thus:
which reads:
WHEREFORE, instant appeal is PARTIALLY
WHEREFORE, premises considered, judgment is GRANTED. The assailed Decision is AFFIRMED
hereby rendered ordering defendants Philippine WITH MODIFICATION, as follows:
National Railways Corporation (PNR), Japhet
Estranas and Ben Saga to, jointly and severally pay (1) The award of P5,000.00 for re-embalming
the following amounts to: expenses and P40,000.00 for wake/interment
expenses to PURIFICACION VIZCARA is deleted.
1. a) PURIFICACION VIZCARA: In lieu thereof, P25,000.00 as temperate damages
1) P50,000.00, as indemnity for the death is awarded;
of Reynaldo Vizcara;
2) P35,000.00, for funeral expenses; (2) The award of moral damages to
3) P5,000.00 for re-embalming expenses; PURIFICACION VIZCARA, MARIVIC VIZCARA,
4) P40,000.00 for wake/interment HECTOR VIZCARA and CRESENCIA NATIVIDAD
expenses; is hereby reduced from P200,000.00
5) P300,000.00 as reimbursement for the to P100,000.00 each while moral damages
value of the jeepney with license plate no. awarded to JOEL VIZCARA and DOMINADOR
DTW-387; ANTONIO are likewise reduced from P50,000.00
6) P200,000.00 as moral damages; to P25,000.00;
7) P100,000.00 as exemplary damages;
and (3) The award of exemplary damages to
8) P20,000.00 for Attorneys fees. PURIFICACION VIZCARA, MARIVIC VIZCARA,
b) MARIVIC VIZCARA: is hereby reduced from P100,000.00
1) P50,000.00, as indemnity for the death to P50,000.00 each while exemplary damages
of Cresencio Vizcara; awarded to JOEL VIZCARA and DOMINADOR
2) P200,000.00 as moral damages; ANTONIO are likewise reduced from P25,000.00
3) P100,000.00 as exemplary damages; to P12,500.00; and
4) P20,000.00 for Attorneys fees. (4) The award for attorneys fees in favor of the
Appellees as well as the award of P300,000.00 to
c) HECTOR VIZCARA: Appellee PURIFICACION as reimbursement for the
1) P50,000.00 as indemnity for the death of value of the jeepney is DELETED.
Samuel Vizcara;
2) P200,000.00 as moral damages; SO ORDERED.[10]
3) P100,000.00 as exemplary damages;
4) P20,000.00 for Attorneys fees. In the assailed decision, the CA affirmed the RTCs finding of
negligence on the part of the petitioners. It concurred with the trial court's
d) CRESENCIA NATIVIDAD: conclusion that petitioner PNR's failure to install sufficient safety devices
in the area, such as flagbars or safety railroad bars and signage, was
1) P50,000.00 as indemnity for the death of the proximate cause of the accident. Nonetheless, in order to conform
Crispin Natividad; with established jurisprudence, it modified the monetary awards to the
2) P200,000.00 as moral damages; victims and the heirs of those who perished due to the collision.
3) P100,000.00 as exemplary damages;
and The petitioners filed a Motion for Reconsideration[11] of the
4) P20,000.00 for Attorneys fees. decision of the CA. However, in a Resolution[12] dated October 26, 2009,
the CA denied the same.
Aggrieved, the petitioners filed the present petition for review
1) P9,870.00 as reimbursement for his actual on certiorari, raising the following grounds:
2) P50,000.00 as moral damages; I
3) P25,000.00 as exemplary damages; and
4) P10,000.00 for Attorneys fees. THE CA ERRED IN FINDING THAT THE

1) P63,427.00 as reimbursement for his II

actual expenses;
2) P50,000.00 as moral damages; THE CA ERRED IN HOLDING THAT THE
3) P25,000.00 as exemplary damages; and DOCTRINE OF LAST CLEAR CHANCE FINDS
4) P10,000.00 for Attorneys fees. NO APPLICATION IN THE INSTANT CASE;

and III
THE CA ERRED IN FINDING NEGLIGENCE ON Furthermore, in petitions for review on certiorari, only
THE PART OF THE PETITIONERS OR ERRED IN questions of law may be put into issue. Questions of fact cannot be
NOT FINDING AT THE LEAST, CONTRIBUTORY entertained.[21] To distinguish one from the other, a question of
NEGLIGENCE ON THE PART OF THE law exists when the doubt or difference centers on what the law is on a
RESPONDENTS.[13] certain state of facts. A question of fact, on the other hand, exists if the
doubt centers on the truth or falsity of the alleged facts.[22] Certainly, the
finding of negligence by the RTC, which was affirmed by the CA, is a
The petitioners maintain that the proximate cause of the question of fact which this Court cannot pass upon as this would entail
collision was the negligence and recklessness of the driver of the going into the factual matters on which the negligence was
jeepney. They argue that as a professional driver, Reynaldo is presumed based.[23] Moreover, it was not shown that the present case falls under
to be familiar with traffic rules and regulations, including the right of way any of the recognized exceptions[24] to the oft repeated principle
accorded to trains at railroad crossing and the precautionary measures according great weight and respect to the factual findings of the trial
to observe in traversing the same. However, in utter disregard of the court and the CA.
right of way enjoyed by PNR trains, he failed to bring his jeepney to a
full stop before crossing the railroad track and thoughtlessly followed the At any rate, the records bear out that the factual
ten-wheeler truck ahead of them. His failure to maintain a safe distance circumstances of the case were meticulously scrutinized by both the
between the jeepney he was driving and the truck ahead of the same RTC and the CA before arriving at the same finding of negligence on the
prevented him from seeing the PNR signage displayed along the part of the petitioners, and we found no compelling reason to disturb the
crossing.[14] same. Both courts ruled that the petitioners fell short of the diligence
expected of it, taking into consideration the nature of its business, to
In their Comment,[15] the respondents reiterate the findings of forestall any untoward incident. In particular, the petitioners failed to
the RTC and the CA that the petitioners' negligence in maintaining install safety railroad bars to prevent motorists from crossing the tracks
adequate and necessary public safety devices in the area of the accident in order to give way to an approaching train. Aside from the absence of
was the proximate cause of the mishap. They asseverate that if there a crossing bar, the Stop, Look and Listen signage installed in the area
was only a level crossing bar, warning light or sound, or flagman in the was poorly maintained, hence, inadequate to alert the public of the
intersection, the accident would not have happened. Thus, there is no impending danger. A reliable signaling device in good condition, not just
other party to blame but the petitioners for their failure to ensure that a dilapidated Stop, Look and Listen signage, is needed to give notice to
adequate warning devices are installed along the railroad crossing.[16] the public. It is the responsibility of the railroad company to use
reasonable care to keep the signal devices in working order. Failure to
This Courts Ruling do so would be an indication of negligence.[25] Having established the
fact of negligence on the part of the petitioners, they were rightfully held
The petition lacks merit. liable for damages.
The petitioners’ negligence was the approximate cause of the accident There was no contributory negligence on the part of the
Article 2176 of the New Civil Code prescribes a civil liability for damages
caused by a person's act or omission constituting fault or negligence. It As to whether there was contributory negligence on the part of the
states: respondents, this court rule in the negative. Contributory negligence is
conduct on the part of the injured party, contributing as a legal cause to
Article 2176. Whoever by act or omission the harm he has suffered, which falls below the standard which he is
causes damage to another, there being fault or required to conform for his own protection. It is an act or omission
negligence, is obliged to pay for the damage amounting to want of ordinary care on the part of the person injured
done.Such fault or negligence, if there was no pre- which, concurring with the defendants negligence, is the proximate
existing contractual relation between the parties, is cause of the injury.[26] Here, we cannot see how the respondents could
called quasi-delict and is governed by the have contributed to their injury when they were not even aware of the
provisions of this chapter. forthcoming danger. It was established during the trial that the jeepney
carrying the respondents was following a ten-wheeler truck which was
only about three to five meters ahead. When the truck proceeded to
In Layugan v. Intermediate Appellate Court,[17] negligence was defined traverse the railroad track, Reynaldo, the driver of the jeepney, simply
as the omission to do something which a reasonable man, guided by followed through. He did so under the impression that it was safe to
considerations which ordinarily regulate the conduct of human affairs, proceed. It bears noting that the prevailing circumstances immediately
would do, or the doing of something which a prudent and reasonable before the collision did not manifest even the slightest indication of an
man would not do. It is the failure to observe for the protection of the imminent harm. To begin with, the truck they were trailing was able to
interests of another person, that degree of care, precaution, and safely cross the track. Likewise, there was no crossing bar to prevent
vigilance which the circumstances justly demand, whereby such other them from proceeding or, at least, a stoplight or signage to forewarn
person suffers injury.[18] To determine the existence of negligence, the them of the approaching peril. Thus, relying on his faculties of sight and
time-honored test was: Did the defendant in doing the alleged negligent hearing, Reynaldo had no reason to anticipate the impending
act use that reasonable care and caution which an ordinarily prudent danger.[27] He proceeded to cross the track and, all of a sudden, his
person would have used in the same situation? If not, then he is guilty jeepney was rammed by the train being operated by the petitioners.
of negligence. The law here in effect adopts the standard supposed to Even then, the circumstances before the collision negate the imputation
be supplied by the imaginary conduct of the discreet paterfamilias of the of contributory negligence on the part of the respondents. What clearly
Roman law. The existence of negligence in a given case is not appears is that the accident would not have happened had the
determined by reference to the personal judgment of the actor in the petitioners installed reliable and adequate safety devices along the
situation before him. The law considers what would be reckless, crossing to ensure the safety of all those who may utilize the same.
blameworthy, or negligent in the man of ordinary intelligence and
prudence and determines liability by that.[19] At this age of modern transportation, it behooves the PNR to
exert serious efforts to catch up with the trend, including the
In the instant petition, this Court is called upon to determine contemporary standards in railroad safety. As an institution established
whose negligence occasioned the ill-fated incident. The records to alleviate public transportation, it is the duty of the PNR to promote the
however reveal that this issue had been rigorously discussed by both safety and security of the general riding public and provide for their
the RTC and the CA. To emphasize, the RTC ruled that it was the convenience, which to a considerable degree may be accomplished by
petitioners failure to install adequate safety devices at the railroad the installation of precautionary warning devices. Every railroad crossing
crossing which proximately caused the collision. This finding was must be installed with barriers on each side of the track to block the full
affirmed by the CA in its July 21, 2009 Decision. It is a well-established width of the road until after the train runs past the crossing. To even draw
rule that factual findings by the CA are conclusive on the parties and are closer attention, the railroad crossing may be equipped with a device
not reviewable by this Court. They are entitled to great weight and which rings a bell or turns on a signal light to signify the danger or risk
respect, even finality, especially when, as in this case, the CA affirmed of crossing. It is similarly beneficial to mount advance warning signs at
the factual findings arrived at by the trial court.[20] the railroad crossing, such as a reflectorized crossbuck sign to inform
motorists of the existence of the track, and a stop, look and listen
signage to prompt the public to take caution. These warning signs must applicabl
be erected in a place where they will have ample lighting and e.
unobstructed visibility both day and night. If only these safety devices
were installed at the Tiaong railroad crossing and the accident
nevertheless occurred, we could have reached a different disposition in Finally, the CA correctly ruled that the doctrine of last clear chance is not
the extent of the petitioners liability. applicable in the instant case. The doctrine of last clear chance provides
that where both parties are negligent but the negligent act of one is
appreciably later in point of time than that of the other, or where it is
The exacting nature of the responsibility of railroad companies impossible to determine whose fault or negligence brought about the
to secure public safety by the installation of warning devices was occurrence of the incident, the one who had the last clear opportunity to
emphasized in Philippine National Railways v. Court of Appeals,[28] thus: avoid the impending harm but failed to do so, is chargeable with the
consequences arising therefrom. Stated differently, the rule is that the
[I]t may broadly be stated that railroad companies antecedent negligence of a person does not preclude recovery of
owe to the public a duty of exercising a reasonable damages caused by the supervening negligence of the latter, who had
degree of care to avoid injury to persons and the last fair chance to prevent the impending harm by the exercise of
property at railroad crossings, which duties pertain due diligence.[32] To reiterate, the proximate cause of the collision was
both to the operation of trains and to the the petitioners negligence in ensuring that motorists and pedestrians
maintenance of the crossings. Moreover, every alike may safely cross the railroad track. The unsuspecting driver and
corporation constructing or operating a railway shall passengers of the jeepney did not have any participation in the
make and construct at all points where such railway occurrence of the unfortunate incident which befell them. Likewise, they
crosses any public road, good, sufficient, and safe did not exhibit any overt act manifesting disregard for their own safety.
crossings, and erect at such points, at sufficient Thus, absent preceding negligence on the part of the respondents, the
elevation from such road as to admit a free passage doctrine of last clear chance cannot be applied.
of vehicles of every kind, a sign with large and
distinct letters placed thereon, to give notice of the WHEREFORE, premises considered, the petition is DENIED. The
proximity of the railway, and warn persons of the Decision of the Court of Appeals dated July 21, 2009 in CA-G.R. CV No.
necessity of looking out for trains. The failure of the 90021 is hereby AFFIRMED.
PNR to put a cross bar, or signal light, flagman or
switchman, or semaphore is evidence of
negligence and disregard of the safety of the public,
even if there is no law or ordinance requiring it,
because public safety demands that said device or
equipment be installed.[29]

The responsibility of the PNR to secure public safety does not end with
the installation of safety equipment and signages but, with equal
measure of accountability, with the upkeep and repair of the same. Thus,
in Cusi v. Philippine National Railways,[30] we held:

Jurisprudence recognizes that if warning devices

are installed in railroad crossings, the travelling
public has the right to rely on such warning devices
to put them on their guard and take the necessary
precautions before crossing the tracks. A need,
therefore, exists for the railroad company to use
reasonable care to keep such devices in good
condition and in working order, or to give notice that
they are not operating, since if such a signal is
misunderstood it is a menace. Thus, it has been
held that if a railroad company maintains a
signalling device at a crossing to give warning of the
approach of a train, the failure of the device to
operate is generally held to be evidence of
negligence, which maybe considered with all the
circumstances of the case in determining whether
the railroad company was negligent as a matter of
fact. [31]

The maintenance of safety equipment and warning signals at railroad

crossings is equally important as their installation since poorly
maintained safety warning devices court as much danger as when none
was installed at all. The presence of safety warning signals at railroad
crossing carries with it the presumption that they are in good working
condition and that the public may depend on them for assistance. If they
happen to be neglected and inoperative, the public may be misled into
relying on the impression of safety they normally convey and eventually
bring injury to themselves in doing so.

of last
chance is