Professional Documents
Culture Documents
Transpo Law Cases
Transpo Law Cases
First Philippine Industrial Corp. vs. Court of Appeals Article 1732 of the Civil Code defines a “common carrier” as
“any person, corporation, firm or association engaged in the
300 SCRA 661, 1998 business of carrying or transporting passengers or goods or
both, by land, water, or air, for compensation, offering their
Facts: Petitioner is a grantee of a pipeline concession under services to the public.
R.A. No. 387, as amended, a contract, install and operate oil
pipelines. The original pipeline concession was granted in The test for determining whether a party is a common carrier
1967 and renewed by the Energy Regulatory Board in 1992. of goods is:
Sometime in January 1995, petitioner applied for a mayor’s 1. He must be engaged in the carrying of goods for others as a
permit with the Office of the Mayor of Batangas City. However, public employment, and must hold himself out as ready to
before the mayor’s permit could be issued, the respondent engage in the transportation of goods or persons generally as
City Treasurer required petitioner to pay a local tax based on a business and not as a casual occupation.
its gross receipts for the fiscal year 1993 pursuant to the 2. He must undertake to carry goods of the kind to which his
Local Government Code. The respondent City Treasure business is confined;
assessed a business tax on the petitioner amounting to 3. He must undertake to carry by the method by which his
P956,076.04 payable in four installments based on the gross business is conducted and over his established roads; and
receipts for products pumped at GPS-1 for the fiscal year 4. The transportation must be for hire.
1993 which amounted to P181,681,151.00. in order not to
hamper its operations, petitioner paid the tax under protest
in the amount of P239, 019.01 for the first quarter of 1993. G.R. No. 157917 August 29, 2012
On June 15, 1994, petitioner filed with the RTC of Batangas
SPOUSES TEODORO1 and NANETTE PERENA, Petitioners,
City a complaint for tax refund with prayer for writ of
vs.
preliminary injunction against respondents City of Batangas
SPOUSES TERESITA PHILIPPINE NICOLAS and L. ZARATE,
and Adoracion Arellano in her capacity as City Treasurer. In
NATIONAL RAILWAYS, and the COURT OF
its complaint, petitioner alleged, inter alia, that: (1) the
APPEALS Respondents.
imposition and collection of the business tax on its gross
receipts violates Sec. 133 of the Local Government Code; (2)
the authority of cities to impose and collect a tax on the gross DECISION
receipts of “contractors and independent contractors” under
Sec. 141(e) and 151 does not include the authority to collect BERSAMIN, J.:
such taxes on transportation contractors for, as defined under
Sec. 131(h), the term “contractors” excludes transportation The operator of a. school bus service is a common carrier in
contactors; and (3) the City Treasurer illegally and the eyes of the law. He is bound to observe extraordinary
erroneously imposed and collected the said tax, thus meriting diligence in the conduct of his business. He is presumed to be
the immediate refund of the tax paid. negligent when death occurs to a passenger. His liability may
include indemnity for loss of earning capacity even if the
deceased passenger may only be an unemployed high school applied the ordinary brakes of the train. He applied the
student at the time of the accident. emergency brakes only when he saw that a collision was
imminent. The passenger bus successfully crossed the
The Case railroad tracks, but the van driven by Alfaro did not. The train
hit the rear end of the van, and the impact threw nine of the
By petition for review on certiorari, Spouses Teodoro and 12 students in the rear, including Aaron, out of the van. Aaron
Nanette Perefia (Perefias) appeal the adverse decision landed in the path of the train, which dragged his body and
promulgated on November 13, 2002, by which the Court of severed his head, instantaneously killing him. Alano fled the
Appeals (CA) affirmed with modification the decision scene on board the train, and did not wait for the police
rendered on December 3, 1999 by the Regional Trial Court investigator to arrive.
(RTC), Branch 260, in Paranñ aque City that had decreed them
jointly and severally liable with Philippine National Railways Devastated by the early and unexpected death of Aaron, the
(PNR), their co-defendant, to Spouses Nicolas and Teresita Zarates commenced this action for damages against Alfaro,
Zarate (Zarates) for the death of their 15-year old son, Aaron the Perenñ as, PNR and Alano. The Perenñ as and PNR filed their
John L. Zarate (Aaron), then a high school student of Don respective answers, with cross-claims against each other, but
Bosco Technical Institute (Don Bosco). Alfaro could not be served with summons.
Antecedents At the pre-trial, the parties stipulated on the facts and issues,
viz:
The Perenñ as were engaged in the business of transporting
students from their respective residences in Paranñ aque City A. FACTS:
to Don Bosco in Pasong Tamo, Makati City, and back. In their
business, the Perenñ as used a KIA Ceres Van (van) with Plate (1) That spouses Zarate were the legitimate parents
No. PYA 896, which had the capacity to transport 14 students of Aaron John L. Zarate;
at a time, two of whom would be seated in the front beside (2) Spouses Zarate engaged the services of spouses
the driver, and the others in the rear, with six students on Perenñ a for the adequate and safe transportation
either side. They employed Clemente Alfaro (Alfaro) as driver carriage of the former spouses' son from their
of the van. residence in Paranñ aque to his school at the Don
Bosco Technical Institute in Makati City;
In June 1996, the Zarates contracted the Perenñ as to transport (3) During the effectivity of the contract of carriage
Aaron to and from Don Bosco. On August 22, 1996, as on and in the implementation thereof, Aaron, the minor
previous school days, the van picked Aaron up around 6:00 son of spouses Zarate died in connection with a
a.m. from the Zarates’ residence. Aaron took his place on the vehicular/train collision which occurred while Aaron
left side of the van near the rear door. The van, with its air- was riding the contracted carrier Kia Ceres van of
conditioning unit turned on and the stereo playing loudly, spouses Perenñ a, then driven and operated by the
ultimately carried all the 14 student riders on their way to latter's employee/authorized driver Clemente Alfaro,
Don Bosco. Considering that the students were due at Don which van collided with the train of PNR, at around
Bosco by 7:15 a.m., and that they were already running late 6:45 A.M. of August 22, 1996, within the vicinity of
because of the heavy vehicular traffic on the South the Magallanes Interchange in Makati City, Metro
Superhighway, Alfaro took the van to an alternate route at Manila, Philippines;
about 6:45 a.m. by traversing the narrow path underneath (4) At the time of the vehicular/train collision, the
the Magallanes Interchange that was then commonly used by subject site of the vehicular/train collision was a
Makati-bound vehicles as a short cut into Makati. At the time, railroad crossing used by motorists for crossing the
the narrow path was marked by piles of construction railroad tracks;
materials and parked passenger jeepneys, and the railroad (5) During the said time of the vehicular/train
crossing in the narrow path had no railroad warning signs, or collision, there were no appropriate and safety
watchmen, or other responsible persons manning the warning signs and railings at the site commonly used
crossing. In fact, the bamboo barandilla was up, leaving the for railroad crossing;
railroad crossing open to traversing motorists. (6) At the material time, countless number of Makati
bound public utility and private vehicles used on a
At about the time the van was to traverse the railroad daily basis the site of the collision as an alternative
crossing, PNR Commuter No. 302 (train), operated by Jhonny route and short-cut to Makati;
Alano (Alano), was in the vicinity of the Magallanes (7) The train driver or operator left the scene of the
Interchange travelling northbound. As the train neared the incident on board the commuter train involved
railroad crossing, Alfaro drove the van eastward across the without waiting for the police investigator;
railroad tracks, closely tailing a large passenger bus. His view (8) The site commonly used for railroad crossing by
of the oncoming train was blocked because he overtook the motorists was not in fact intended by the railroad
passenger bus on its left side. The train blew its horn to warn operator for railroad crossing at the time of the
motorists of its approach. When the train was about 50 vehicular collision;
meters away from the passenger bus and the van, Alano
(9) PNR received the demand letter of the spouses or which they may be ordered to pay in favor of
Zarate; plaintiffs by reason of the action;
(10) PNR refused to acknowledge any liability for
the vehicular/train collision; (10) Whether or not defendant PNR should pay
(11) The eventual closure of the railroad crossing plaintiffs directly and fully on the amounts claimed
alleged by PNR was an internal arrangement by the latter in their Complaint by reason of its gross
between the former and its project contractor; and negligence;
(12) The site of the vehicular/train collision was
within the vicinity or less than 100 meters from the (11) Whether or not defendant PNR is liable to
Magallanes station of PNR. defendants spouses for actual, moral and exemplary
damages and attorney's fees.2
B. ISSUES
Ruling
(1) Whether or not defendant-driver of the van is, in
the performance of his functions, liable for The petition has no merit.
negligence constituting the proximate cause of the
vehicular collision, which resulted in the death of 1.
plaintiff spouses' son; Were the Pereñas and PNR jointly
and severally liable for damages?
(2) Whether or not the defendant spouses Perenñ a
being the employer of defendant Alfaro are liable for The Zarates brought this action for recovery of damages
any negligence which may be attributed to defendant against both the Perenñ as and the PNR, basing their claim
Alfaro; against the Perenñ as on breach of contract of carriage and
against the PNR on quasi-delict.
(3) Whether or not defendant Philippine National
Railways being the operator of the railroad system is The RTC found the Perenñ as and the PNR negligent. The CA
liable for negligence in failing to provide adequate affirmed the findings.
safety warning signs and railings in the area
commonly used by motorists for railroad crossings,
constituting the proximate cause of the vehicular We concur with the CA.
collision which resulted in the death of the plaintiff
spouses' son; To start with, the Perenñ as’ defense was that they exercised
the diligence of a good father of the family in the selection
(4) Whether or not defendant spouses Perenñ a are and supervision of Alfaro, the van driver, by seeing to it that
liable for breach of the contract of carriage with Alfaro had a driver’s license and that he had not been
plaintiff-spouses in failing to provide adequate and involved in any vehicular accident prior to the fatal collision
safe transportation for the latter's son; with the train; that they even had their own son travel to and
from school on a daily basis; and that Teodoro Perenñ a himself
sometimes accompanied Alfaro in transporting the
(5) Whether or not defendants spouses are liable for passengers to and from school. The RTC gave scant
actual, moral damages, exemplary damages, and consideration to such defense by regarding such defense as
attorney's fees; inappropriate in an action for breach of contract of carriage.
(6) Whether or not defendants spouses Teodorico We find no adequate cause to differ from the conclusions of
and Nanette Perenñ a observed the diligence of the lower courts that the Perenñ as operated as a common
employers and school bus operators; carrier; and that their standard of care was extraordinary
diligence, not the ordinary diligence of a good father of a
(7) Whether or not defendant-spouses are civilly family.
liable for the accidental death of Aaron John Zarate;
Although in this jurisdiction the operator of a school bus
(8) Whether or not defendant PNR was grossly service has been usually regarded as a private
negligent in operating the commuter train involved carrier,9primarily because he only caters to some specific or
in the accident, in allowing or tolerating the privileged individuals, and his operation is neither open to
motoring public to cross, and its failure to install the indefinite public nor for public use, the exact nature of the
safety devices or equipment at the site of the operation of a school bus service has not been finally settled.
accident for the protection of the public; This is the occasion to lay the matter to rest.
(9) Whether or not defendant PNR should be made A carrier is a person or corporation who undertakes to
to reimburse defendant spouses for any and transport or convey goods or persons from one place to
whatever amount the latter may be held answerable another, gratuitously or for hire. The carrier is classified
either as a private/special carrier or as a common/public permanent or occasional, and done for the general business
carrier.10 A private carrier is one who, without making the purposes, any common carrier, railroad, street railway,
activity a vocation, or without holding himself or itself out to traction railway, subway motor vehicle, either for freight or
the public as ready to act for all who may desire his or its passenger, or both, with or without fixed route and whatever
services, undertakes, by special agreement in a particular may be its classification, freight or carrier service of any class,
instance only, to transport goods or persons from one place express service, steamboat, or steamship line, pontines,
to another either gratuitously or for hire.11 The provisions on ferries and water craft, engaged in the transportation of
ordinary contracts of the Civil Code govern the contract of passengers or freight or both, shipyard, marine repair shop,
private carriage.The diligence required of a private carrier is ice-refrigeration plant, canal, irrigation system, gas, electric
only ordinary, that is, the diligence of a good father of the light, heat and power, water supply and power petroleum,
family. In contrast, a common carrier is a person, corporation, sewerage system, wire or wireless communications systems,
firm or association engaged in the business of carrying or wire or wireless broadcasting stations and other similar
transporting passengers or goods or both, by land, water, or public services. x x x.17
air, for compensation, offering such services to the
public.12 Contracts of common carriage are governed by the Given the breadth of the aforequoted characterization of a
provisions on common carriers of the Civil Code, the Public common carrier, the Court has considered as common
Service Act,13 and other special laws relating to carriers pipeline operators,18 custom brokers and
transportation. A common carrier is required to observe warehousemen, and barge operators20 even if they had
19
There is no question that the Perenñ as did not overturn the The test by which to determine the existence of negligence in
presumption of their negligence by credible evidence. Their a particular case may be stated as follows: Did the defendant
defense of having observed the diligence of a good father of a in doing the alleged negligent act use that reasonable care
family in the selection and supervision of their driver was not and caution which an ordinarily prudent person would have
legally sufficient. According to Article 1759 of the Civil Code, used in the same situation? If not, then he is guilty of
their liability as a common carrier did not cease upon proof negligence. The law here in effect adopts the standard
that they exercised all the diligence of a good father of a supposed to be supplied by the imaginary conduct of the
family in the selection and supervision of their employee. discreet paterfamilias of the Roman law. The existence of
This was the reason why the RTC treated this defense of the negligence in a given case is not determined by reference to
Perenñ as as inappropriate in this action for breach of contract the personal judgment of the actor in the situation before
of carriage. him. The law considers what would be reckless, blameworthy,
or negligent in the man of ordinary intelligence and prudence
The Perenñ as were liable for the death of Aaron despite the and determines liability by that.
fact that their driver might have acted beyond the scope of his
authority or even in violation of the orders of the common The question as to what would constitute the conduct of a
carrier.27 In this connection, the records showed their driver’s prudent man in a given situation must of course be always
actual negligence. There was a showing, to begin with, that determined in the light of human experience and in view of
their driver traversed the railroad tracks at a point at which the facts involved in the particular case. Abstract speculation
the PNR did not permit motorists going into the Makati area cannot here be of much value but this much can be profitably
to cross the railroad tracks. Although that point had been said: Reasonable men govern their conduct by the
used by motorists as a shortcut into the Makati area, that fact circumstances which are before them or known to them.
alone did not excuse their driver into taking that route. On They are not, and are not supposed to be, omniscient of the
the other hand, with his familiarity with that shortcut, their future. Hence they can be expected to take care only when
driver was fully aware of the risks to his passengers but he there is something before them to suggest or warn of danger.
still disregarded the risks. Compounding his lack of care was Could a prudent man, in the case under consideration,
that loud music was playing inside the air-conditioned van at foresee harm as a result of the course actually pursued? If so,
the time of the accident. The loudness most probably reduced it was the duty of the actor to take precautions to guard
his ability to hear the warning horns of the oncoming train to against that harm. Reasonable foresight of harm, followed by
allow him to correctly appreciate the lurking dangers on the the ignoring of the suggestion born of this prevision, is always
railroad tracks. Also, he sought to overtake a passenger bus necessary before negligence can be held to exist. Stated in
on the left side as both vehicles traversed the railroad tracks. these terms, the proper criterion for determining the
In so doing, he lost his view of the train that was then coming existence of negligence in a given case is this: Conduct is said
from the opposite side of the passenger bus, leading him to to be negligent when a prudent man in the position of the
miscalculate his chances of beating the bus in their race, and tortfeasor would have foreseen that an effect harmful to
another was sufficiently probable to warrant his foregoing 2.
the conduct or guarding against its consequences. (Emphasis Was the indemnity for loss of
supplied) Aaron’s earning capacity proper?
Pursuant to the Picart v. Smith test of negligence, the Perenñ as’ The RTC awarded indemnity for loss of Aaron’s earning
driver was entirely negligent when he traversed the railroad capacity. Although agreeing with the RTC on the liability, the
tracks at a point not allowed for a motorist’s crossing despite CA modified the amount. Both lower courts took into
being fully aware of the grave harm to be thereby caused to consideration that Aaron, while only a high school student,
his passengers; and when he disregarded the foresight of had been enrolled in one of the reputable schools in the
harm to his passengers by overtaking the bus on the left side Philippines and that he had been a normal and able-bodied
as to leave himself blind to the approach of the oncoming child prior to his death. The basis for the computation of
train that he knew was on the opposite side of the bus. Aaron’s earning capacity was not what he would have
become or what he would have wanted to be if not for his
Unrelenting, the Perenñ as cite Phil. National Railways v. untimely death, but the minimum wage in effect at the time of
Intermediate Appellate Court,35 where the Court held the PNR his death. Moreover, the RTC’s computation of Aaron’s life
solely liable for the damages caused to a passenger bus and expectancy rate was not reckoned from his age of 15 years at
its passengers when its train hit the rear end of the bus that the time of his death, but on 21 years, his age when he would
was then traversing the railroad crossing. But the have graduated from college.
circumstances of that case and this one share no similarities.
In Philippine National Railways v. Intermediate Appellate We find the considerations taken into account by the lower
Court, no evidence of contributory negligence was adduced courts to be reasonable and fully warranted.
against the owner of the bus. Instead, it was the owner of the
bus who proved the exercise of extraordinary diligence by Yet, the Perenñ as submit that the indemnity for loss of earning
preponderant evidence. Also, the records are replete with the capacity was speculative and unfounded.1âwphi1 They cited
showing of negligence on the part of both the Perenñ as and the People v. Teehankee, Jr.,37 where the Court deleted the
PNR. Another distinction is that the passenger bus in indemnity for victim Jussi Leino’s loss of earning capacity as a
Philippine National Railways v. Intermediate Appellate Court pilot for being speculative due to his having graduated from
was traversing the dedicated railroad crossing when it was high school at the International School in Manila only two
hit by the train, but the Perenñ as’ school van traversed the years before the shooting, and was at the time of the shooting
railroad tracks at a point not intended for that purpose. only enrolled in the first semester at the Manila Aero Club to
pursue his ambition to become a professional pilot. That
At any rate, the lower courts correctly held both the Perenñ as meant, according to the Court, that he was for all intents and
and the PNR "jointly and severally" liable for damages arising purposes only a high school graduate.
from the death of Aaron. They had been impleaded in the
same complaint as defendants against whom the Zarates had We reject the Perenñ as’ submission.
the right to relief, whether jointly, severally, or in the
alternative, in respect to or arising out of the accident, and First of all, a careful perusal of the Teehankee, Jr. case shows
questions of fact and of law were common as to the that the situation there of Jussi Leino was not akin to that of
Zarates.36 Although the basis of the right to relief of the Aaron here. The CA and the RTC were not speculating that
Zarates (i.e., breach of contract of carriage) against the Aaron would be some highly-paid professional, like a pilot (or,
Perenñ as was distinct from the basis of the Zarates’ right to for that matter, an engineer, a physician, or a lawyer). Instead,
relief against the PNR (i.e., quasi-delict under Article 2176, the computation of Aaron’s earning capacity was premised on
Civil Code), they nonetheless could be held jointly and him being a lowly minimum wage earner despite his being
severally liable by virtue of their respective negligence then enrolled at a prestigious high school like Don Bosco in
combining to cause the death of Aaron. As to the PNR, the Makati, a fact that would have likely ensured his success in
RTC rightly found the PNR also guilty of negligence despite his later years in life and at work.
the school van of the Perenñ as traversing the railroad tracks at
a point not dedicated by the PNR as a railroad crossing for
pedestrians and motorists, because the PNR did not ensure And, secondly, the fact that Aaron was then without a history
the safety of others through the placing of crossbars, signal of earnings should not be taken against his parents and in
lights, warning signs, and other permanent safety barriers to favor of the defendants whose negligence not only cost Aaron
prevent vehicles or pedestrians from crossing there. The RTC his life and his right to work and earn money, but also
observed that the fact that a crossing guard had been deprived his parents of their right to his presence and his
assigned to man that point from 7 a.m. to 5 p.m. was a good services as well. Our law itself states that the loss of the
indicium that the PNR was aware of the risks to others as well earning capacity of the deceased shall be the liability of the
as the need to control the vehicular and other traffic there. guilty party in favor of the heirs of the deceased, and shall in
Verily, the Perenñ as and the PNR were joint tortfeasors. every case be assessed and awarded by the court "unless the
deceased on account of permanent physical disability not
caused by the defendant, had no earning capacity at the time
of his death."38 Accordingly, we emphatically hold in favor of
the indemnification for Aaron’s loss of earning capacity
despite him having been unemployed, because compensation WHEREFORE, we DENY the petition for review
of this nature is awarded not for loss of time or earnings but on certiorari; AFFIRM the decision promulgated on
for loss of the deceased’s power or ability to earn money. 39 November 13, 2002; and ORDER the petitioners to pay the
costs of suit.
This favorable treatment of the Zarates’ claim is not
unprecedented. In Cariaga v. Laguna Tayabas Bus Company SO ORDERED.
and Manila Railroad Company, 40 fourth-year medical student
Edgardo Carriaga’s earning capacity, although he survived the
accident but his injuries rendered him permanently
incapacitated, was computed to be that of the physician that PHILTRANCO SERVICE ENTERPRISES, INC.,
he dreamed to become. The Court considered his scholastic Petitioner,
record sufficient to justify the assumption that he could have -versus-
finished the medical course and would have passed the FELIX PARAS AND INLAND TRAILWAYS, INC., AND HON.
medical board examinations in due time, and that he could COURT OF APPEALS,
have possibly earned a modest income as a medical Respondents.
practitioner. Also, in People v. Sanchez, 41 the Court opined
that murder and rape victim Eileen Sarmienta and murder BERSAMIN, J.:
victim Allan Gomez could have easily landed good-paying
jobs had they graduated in due time, and that their jobs In an action for breach of contract of carriage
would probably pay them high monthly salaries from ₱ commenced by a passenger against his common carrier, the
10,000.00 to ₱ 15,000.00 upon their graduation. Their plaintiff can recover damages from a third-party defendant
earning capacities were computed at rates higher than the brought into the suit by the common carrier upon a claim
minimum wage at the time of their deaths due to their being based on tort or quasi-delict. The liability of the third-party
already senior agriculture students of the University of the defendant is independent from the liability of the common
Philippines in Los Banñ os, the country’s leading educational carrier to the passenger.
institution in agriculture.
Philtranco Service Enterprises, Inc. (Philtranco)
3. appeals the affirmance with modifications by the Court of
Were the amounts of damages excessive? Appeals (CA) of the decision of the Regional Trial Court (RTC)
awarding moral, actual and temperate damages, as well as
The Perenñ as plead for the reduction of the moral and attorneys fees and costs of suit, to respondent Felix Paras
exemplary damages awarded to the Zarates in the respective (Paras), and temperate damages to respondent Inland
amounts of ₱ 2,500,000.00 and ₱ 1,000,000.00 on the ground Trailways, Inc. (Inland), respectively the plaintiff and the
that such amounts were excessive. defendant/third-party plaintiff in this action for breach of
contract of carriage, upon a finding that the negligence of the
petitioner and its driver had caused the serious physical
The plea is unwarranted.
injuries Paras sustained and the material damage Inlands bus
suffered in a vehicular accident.
The moral damages of ₱ 2,500,000.00 were really just and
reasonable under the established circumstances of this case Antecedents
because they were intended by the law to assuage the
Zarates’ deep mental anguish over their son’s unexpected and The antecedent facts, as summarized by the CA, are
violent death, and their moral shock over the senseless as follows:
accident. That amount would not be too much, considering
that it would help the Zarates obtain the means, diversions or Plaintiff-appellant [respondent]
amusements that would alleviate their suffering for the loss Felix Paras (Paras for brevity), who hails
of their child. At any rate, reducing the amount as excessive from Cainta, Rizal is engaged in the buy and
might prove to be an injustice, given the passage of a long sell of fish products. Sometime on 08
time from when their mental anguish was inflicted on them February 1987, on his way home
on August 22, 1996. to Manila from Bicol Region, he boarded a
bus with Body No. 101 and Plate No. EVE
Anent the ₱ 1,000,000.00 allowed as exemplary damages, we 508, owned and operated by Inland
should not reduce the amount if only to render effective the Trailways, Inc. (Inland for brevity) and
desired example for the public good. As a common carrier, the driven by its driver Calvin Coner (Coner for
Perenñ as needed to be vigorously reminded to observe their brevity).
duty to exercise extraordinary diligence to prevent a similarly
senseless accident from happening again. Only by an award of At approximately 3:50 oclock in the
exemplary damages in that amount would suffice to instill in morning of 09 February 1987, while the said
them and others similarly situated like them the ever-present bus was travelling along Maharlika Highway,
need for greater and constant vigilance in the conduct of a Tiaong, Quezon, it was bumped at the rear
business imbued with public interest. by another bus with Plate No. EVB 259,
owned and operated by Philtranco Service complaint, Inland, sought for exoneration of
Enterprises, Inc. (Philtranco for brevity). As its liabilities to Paras, asserting that the
a result of the strong and violent impact, the latters cause of action should be directed
Inland bus was pushed forward and against Philtranco considering that the
smashed into a cargo truck parked along the accident was caused by Miralles lack of care,
outer right portion of the highway and the negligence and reckless imprudence. (pp. 50
shoulder thereof. Consequently, the said to 56, records).
accident bought considerable damage to the
vehicles involved and caused physical
injuries to the passengers and crew of the After trial, the RTC (Branch 71) in Antipolo, Rizal
two buses, including the death of Coner who rendered its judgment on July 18, 1997,[1] viz:
was the driver of the Inland Bus at the time
of the incident. WHEREFORE, third-party defendant
Philtranco and Apolinar Miralles are hereby
Paras was not spared from the ordered to pay plaintiff jointly and severally,
pernicious effects of the accident. After an the following amounts:
emergency treatment at the San
Pablo Medical Center, San Pablo City, Laguna, 1.P54,000.00 as actual damages;
Paras was taken to
the NationalOrthopedic Hospital. At the 2.P50,000.00 as moral damages;
latter hospital, he was found and diagnosed
by Dr. Antonio Tanchuling, Jr. to be affected 3.P20,000.00 as attorneys fees and
with the following injuries: a) costs.
contusion/hematoma; b) dislocation of hip
upon fracture of the fibula on the right leg; SO ORDERED.
c) fractured small bone on the right leg; and
d) close fracture on the tibial plateau of the All the parties appealed to the CA on different
left leg. (Exh. A, p. 157, record) grounds.
The rationale for Article 2224 has been stated in Premiere The omission should be rectified, for there was
Development Bank v. Court of Appeals[28] in the following credible proof of Paras loss of income during his disability.
manner: According to Article 2205, (1), of the Civil Code, damages may
be recovered for loss or impairment of earning capacity in
Even if not recoverable as cases of temporary or permanent personal injury. Indeed,
compensatory damages, Panacor may still be indemnification for damages comprehends not only the loss
awarded damages in the concept of suffered (actual damages or damnum emergens) but also the
temperate or moderate damages. When the claimants lost profits (compensatory damages or lucrum
court finds that some pecuniary loss has cessans).[30] Even so, the formula that has gained acceptance
been suffered but the amount cannot, from over time has limited recovery to net earning capacity; hence,
the nature of the case, be proved with the entire amount of P72,000.00 is not allowable. The
certainty, temperate damages may be premise is obviously that net earning capacity is the persons
recovered. Temperate damages may be capacity to acquire money, less the necessary expense for his
allowed in cases where from the nature of own living.[31] To simplify the determination, therefore, the
the case, definite proof of pecuniary loss net earning capacity of Paras during the 9-month period of
cannot be adduced, although the court is his confinement, surgeries and consequential therapy is
convinced that the aggrieved party suffered pegged at only half of his unearned monthly gross income
some pecuniary loss. of P8,000.00 as a trader, or a total of P36,000.00 for the 9-
month period, the other half being treated as the necessary
The Code Commission, in explaining expense for his own living in that period.
the concept of temperate damages under
Article 2224, makes the following comment: It is relevant to clarify that awarding the temperate
damages (for the substantial pecuniary losses corresponding
In some States of to Parass surgeries and rehabilitation and for the
the American Union, irreparability of Inlands damaged bus) and the actual
temperate damages are damages to compensate lost earnings and costs of medicines
allowed. There are cases give rise to no incompatibility. These damages cover distinct
where from the nature of pecuniary losses suffered by Paras and Inland, [32] and do not
the case, definite proof of infringe the statutory prohibition against recovering damages
pecuniary loss cannot be twice for the same act or omission.[33]
offered, although the court
is convinced that there has 4.
been such loss. For Increase in award of attorneys fees
instance, injury to ones
commercial credit or to the
goodwill of a business firm Although it is a sound policy not to set a premium on the
is often hard to show with right to litigate,[34] we consider the grant to Paras and Inland
certainty in terms of of reasonable attorneys fees warranted. Their entitlement to
money. Should damages be attorneys fees was by virtue of their having been compelled
denied for that reason? The to litigate or to incur expenses to protect their interests, [35] as
judge should be well as by virtue of the Court now further deeming attorneys
empowered to calculate fees to be just and equitable.[36]
moderate damages in such
cases, rather than that the In view of the lapse of a long time in the prosecution of the
plaintiff should suffer, claim,[37] the Court considers it reasonable and proper to
grant attorneys fees to each of Paras and Inland equivalent to
10% of the total amounts hereby awarded to them, in lieu of
only P20,000.00 for that purpose granted to Paras. CEBU SALVAGE CORPORATION
5. Vs
Legal interest on the amounts awarded
PHILIPPINE
HOME
Pursuant to Eastern Shipping Lines, Inc. v. Court of Appeals,
ASSURANCE
[38]
legal interest at the rate of 6% per annum accrues on the
CORPORATION,
amounts adjudged reckoned from July 18, 1997, the date
when the RTC rendered its judgment; and legal interest at the
DECISION
rate of 12% per annum shall be imposed from the finality of
the judgment until its full satisfaction, the interim period
CORONA, J.:
being regarded as the equivalent of a forbearance of credit.
Petitioner argues that the CA erred when it affirmed The bill of lading was merely a receipt issued by ALS
the RTC finding that the voyage charter it entered into with to evidence the fact that the goods had been received for
MCCII was a contract of carriage. [17] It insists that the transportation. It was not signed by MCCII, as in fact it was
agreement was merely a contract of hire wherein MCCII hired simply signed by the supercargo of ALS. [28] This is consistent
the vessel from its owner, ALS Timber Enterprises (ALS). with the fact that MCCII did not contract directly with ALS.
[18]
Not being the owner of the M/T Espiritu Santo, petitioner While it is true that a bill of lading may serve as the contract
did not have control and supervision over the vessel, its of carriage between the parties, [29] it cannot prevail over the
master and crew.[19] Thus, it could not be held liable for the express provision of the voyage charter that MCCII and
loss of the shipment caused by the sinking of a ship it did not petitioner executed:
own.
[I]n cases where a Bill of Lading has been
We disagree. issued by a carrier covering goods shipped
aboard a vessel under a charter party, and
the charterer is also the holder of the bill of
Based on the agreement signed by the parties and lading, the bill of lading operates as the
the testimony of petitioners operations manager, it is clear receipt for the goods, and as document of
that it was a contract of carriage petitioner signed with title passing the property of the goods, but
MCCII.It actively negotiated and solicited MCCIIs account, not as varying the contract between
offered its services to ship the silica quartz and proposed to the charterer and the shipowner. The Bill of
utilize the M/T Espiritu Santo in lieu of the M/T Seebees or Lading becomes, therefore, only a receipt
the M/T Shirley (as previously agreed upon in the voyage and not the contract of carriage in a charter
charter) since these vessels had broken down. [20] of the entire vessel, for the contract is the
Charter Party, and is the law between the
There is no dispute that petitioner was a common parties who are bound by its terms and
carrier. At the time of the loss of the cargo, it was engaged in condition provided that these are not
the business of carrying and transporting goods by water, for contrary to law, morals, good customs,
compensation, and offered its services to the public.[21] public order and public policy. [30]
Finally, petitioner asserts that MCCII should be held
From the nature of their business and for reasons of liable for its own loss since the voyage charter stipulated that
public policy, common carriers are bound to observe cargo insurance was for the charterers account.[31] This
extraordinary diligence over the goods they transport deserves scant consideration. This simply meant that
according to the circumstances of each case. [22] In the event of the charterer would take care of having the goods insured. It
loss of the goods, common carriers are responsible, unless could not exculpate the carrier from liability for the breach of
they can prove that this was brought about by the causes its contract of carriage. The law, in fact, prohibits it and
specified in Article 1734 of the Civil Code. [23] In all other condemns it as unjust and contrary to public policy. [32]
cases, common carriers are presumed to be at fault or to have
acted negligently, unless they prove that they observed To summarize, a contract of carriage of goods was
extraordinary diligence.[24] shown to exist; the cargo was loaded on board the vessel; loss
or non-delivery of the cargo was proven; and petitioner failed
Petitioner was the one which contracted with MCCII to prove that it exercised extraordinary diligence to prevent
for the transport of the cargo. It had control over what vessel such loss or that it was due to some casualty
it would use. All throughout its dealings with MCCII, it or force majeure. The voyage charter here being a contract
represented itself as a common carrier. The fact that it did not of affreightment, the carrier was answerable for the loss of
own the vessel it decided to use to consummate the contract the goods received for transportation.[33]
of carriage did not negate its character and duties as a
common carrier. The MCCII (respondents subrogor) could The idea proposed by petitioner is not only
not be reasonably expected to inquire about the ownership of preposterous, it is also dangerous. It says that a carrier that
the vessels which petitioner carrier offered to utilize. As a enters into a contract of carriage is not liable to
practical matter, it is very difficult and often impossible for the charterer or shipper if it does not own the vessel it
the general public to enforce its rights of action under a chooses to use. MCCII never dealt with ALS and yet petitioner
insists that MCCII should sue ALS for reimbursement for its Subrogation Receipt issued by Unilab in favor of private
loss. Certainly, to permit a common carrier to escape its respondent, the latter filed a complaint for Damages against
responsibility for the goods it agreed to transport (by the APL, UTI and petitioner with the RTC of Makati.
expedient of alleging non-ownership of the vessel it
employed) would radically derogate from the carrier's duty of Issue: Whether or not petitioner is a common carrier.
extraordinary diligence. It would also open the door to
collusion between the carrier and the supposed owner and to Held: Admittedly, petitioner is a freight forwarder. The term
the possible shifting of liability from the carrier to one "freight forwarder" refers to a firm holding itself out to the
without any financial capability to answer for the resulting general public (other than as a pipeline, rail, motor, or water
damages.[34] carrier) to provide transportation of property for
compensation and, in the ordinary course of its business, (1)
WHEREFORE, the petition is hereby DENIED. to assemble and consolidate, or to provide for assembling and
consolidating, shipments, and to perform or provide for
Costs against petitioner. break-bulk and distribution operations of the shipments; (2)
to assume responsibility for the transportation of goods from
the place of receipt to the place of destination; and (3) to use
for any part of the transportation a carrier subject to the
G.R. No. 166250 July 26, 2010 federal law pertaining to common carriers.
UNSWORTH TRANSPORT INTERNATIONAL (PHILS.), A freight forwarder’s liability is limited to damages
INC., Petitioner, arising from its own negligence, including negligence in
vs. choosing the carrier; however, where the forwarder contracts
COURT OF APPEALS and PIONEER INSURANCE AND to deliver goods to their destination instead of merely
SURETY CORPORATION, Respondents. arranging for their transportation, it becomes liable as a
common carrier for loss or damage to goods. A freight
Facts: On August 31, 1992, the shipper Sylvex Purchasing forwarder assumes the responsibility of a carrier, which
Corporation delivered to UTI a shipment of 27 drums of actually executes the transport, even though the forwarder
various raw materials for pharmaceutical manufacturing, does not carry the merchandise itself.
consisting of: "1) 3 drums (of) extracts, flavoring liquid, Undoubtedly, UTI is liable as a common carrier.
flammable liquid x x x banana flavoring; 2) 2 drums (of) Common carriers, as a general rule, are presumed to have
flammable liquids x x x turpentine oil; 2 pallets. STC: 40 bags been at fault or negligent if the goods they transported
dried yeast; and 3) 20 drums (of) Vitabs: Vitamin B Complex deteriorated or got lost or destroyed. That is, unless they
Extract." UTI issued Bill of Lading No. C320/C15991- prove that they exercised extraordinary diligence in
2, covering the aforesaid shipment. The subject shipment was transporting the goods. In order to avoid responsibility for
insured with private respondent Pioneer Insurance and any loss or damage, therefore, they have the burden of
Surety Corporation in favor of Unilab against all risks in the proving that they observed such diligence. Mere proof of
amount of P1,779,664.77 under and by virtue of Marine Risk delivery of the goods in good order to a common carrier and
Note Number MC RM UL 0627 92 and Open Cargo Policy No. of their arrival in bad order at their destination constitutes a
HO-022-RIU. prima facie case of fault or negligence against the carrier. If
On the same day that the bill of lading was issued, no adequate explanation is given as to how the deterioration,
the shipment was loaded in a sealed 1x40 container van, with loss, or destruction of the goods happened, the transporter
no. APLU-982012, boarded on APL’s vessel M/V "Pres. shall be held responsible.
Jackson," Voyage 42, and transshipped to APL’s M/V "Pres.
Taft" for delivery to petitioner in favor of the consignee
United Laboratories, Inc. (Unilab).
On September 30, 1992, the shipment arrived at the
port of Manila. On October 6, 1992, petitioner received the
said shipment in its warehouse after it stamped the Permit to
Deliver Imported Goods procured by the Champs Customs
Brokerage. Three days thereafter, or on October 9, 1992,
Oceanica Cargo Marine Surveyors Corporation (OCMSC)
conducted a stripping survey of the shipment located in
petitioner’s warehouse.
Consequently, Unilab’s quality control representative
rejected one paper bag containing dried yeast and one steel
drum containing Vitamin B Complex as unfit for the intended
purpose. On November 7, 1992, Unilab filed a formal
claim for the damage against private respondent and UTI. On
November 20, 1992, UTI denied liability on the basis of the
gate pass issued by Jardine that the goods were in complete
and good condition; while private respondent paid the
claimed amount on March 23, 1993. By virtue of the Loss and