Vicarious Liability (Imputed Negligence)

G.R. No. 75112 August 17, 1992

FILAMER CHRISTIAN INSTITUTE, petitioner,

vs.
HON. INTERMEDIATE APPELLATE COURT, HON. ENRIQUE P. SUPLICO, in his capacity as
Judge of the Regional Trial Court, Branch XIV, Roxas City and POTENCIANO KAPUNAN,
SR., respondents.

Bedona & Bedona Law Office for petitioner.

Rhodora G. Kapunan for private respondents.

GUTIERREZ, JR., J.:

The private respondents, heirs of the late Potenciano Kapunan, seek reconsideration of the decision
rendered by this Court on October 16, 1990 (Filamer Christian Institute v. Court of Appeals, 190
SCRA 477) reviewing the appellate court's conclusion that there exists an employer-employee
relationship between the petitioner and its co-defendant Funtecha. The Court ruled that the petitioner
is not liable for the injuries caused by Funtecha on the grounds that the latter was not an authorized
driver for whose acts the petitioner shall be directly and primarily answerable, and that Funtecha was
merely a working scholar who, under Section 14, Rule X, Book III of the Rules and Regulations
Implementing the Labor Code is not considered an employee of the petitioner.

The private respondents assert that the circumstances obtaining in the present case call for the
application of Article 2180 of the Civil Code since Funtecha is no doubt an employee of the
petitioner. The private respondents maintain that under Article 2180 an injured party shall have
recourse against the servant as well as the petitioner for whom, at the time of the incident, the
servant was performing an act in furtherance of the interest and for the benefit of the petitioner.
Funtecha allegedly did not steal the school jeep nor use it for a joy ride without the knowledge of the
school authorities.

After a re-examination of the laws relevant to the facts found by the trial court and the appellate
court, the Court reconsiders its decision. We reinstate the Court of Appeals' decision penned by the
late Justice Desiderio Jurado and concurred in by Justices Jose C. Campos, Jr. and Serafin E.
Camilon. Applying Civil Code provisions, the appellate court affirmed the trial court decision which
ordered the payment of the P20,000.00 liability in the Zenith Insurance Corporation policy,
P10,000.00 moral damages, P4,000.00 litigation and actual expenses, and P3,000.00 attorney's
fees.

It is undisputed that Funtecha was a working student, being a part-time janitor and a scholar of
petitioner Filamer. He was, in relation to the school, an employee even if he was assigned to clean
the school premises for only two (2) hours in the morning of each school day.

Having a student driver's license, Funtecha requested the driver, Allan Masa, and was allowed, to
take over the vehicle while the latter was on his way home one late afternoon. It is significant to note
that the place where Allan lives is also the house of his father, the school president, Agustin Masa.
Moreover, it is also the house where Funtecha was allowed free board while he was a student of
Filamer Christian Institute.

Allan Masa turned over the vehicle to Funtecha only after driving down a road, negotiating a sharp
dangerous curb, and viewing that the road was clear. (TSN, April 4, 1983, pp. 78-79) According to
Allan's testimony, a fast moving truck with glaring lights nearly hit them so that they had to swerve to
the right to avoid a collision. Upon swerving, they heard a sound as if something had bumped
against the vehicle, but they did not stop to check. Actually, the Pinoy jeep swerved towards the
pedestrian, Potenciano Kapunan who was walking in his lane in the direction against vehicular
traffic, and hit him. Allan affirmed that Funtecha followed his advise to swerve to the right. (Ibid., p.
79) At the time of the incident (6:30 P.M.) in Roxas City, the jeep had only one functioning headlight.

Allan testified that he was the driver and at the same time a security guard of the petitioner-school.
He further said that there was no specific time for him to be off-duty and that after driving the
students home at 5:00 in the afternoon, he still had to go back to school and then drive home using
the same vehicle.

Driving the vehicle to and from the house of the school president where both Allan and Funtecha
reside is an act in furtherance of the interest of the petitioner-school. Allan's job demands that he
drive home the school jeep so he can use it to fetch students in the morning of the next school day.

It is indubitable under the circumstances that the school president had knowledge that the jeep was
routinely driven home for the said purpose. Moreover, it is not improbable that the school president
also had knowledge of Funtecha's possession of a student driver's license and his desire to undergo
driving lessons during the time that he was not in his classrooms.

In learning how to drive while taking the vehicle home in the direction of Allan's house, Funtecha
definitely was not having a joy ride. Funtecha was not driving for the purpose of his enjoyment or for
a "frolic of his own" but ultimately, for the service for which the jeep was intended by the petitioner
school. (See L. Battistoni v. Thomas, Can SC 144, 1 D.L.R. 577, 80 ALR 722 [1932]; See also
Association of Baptists for World Evangelism, Inc. v. Fieldmen's Insurance Co., Inc. 124 SCRA 618
[1983]). Therefore, the Court is constrained to conclude that the act of Funtecha in taking over the
steering wheel was one done for and in behalf of his employer for which act the petitioner-school
cannot deny any responsibility by arguing that it was done beyond the scope of his janitorial duties.
The clause "within the scope of their assigned tasks" for purposes of raising the presumption of
liability of an employer, includes any act done by an employee, in furtherance of the interests of the
employer or for the account of the employer at the time of the infliction of the injury or damage.
(Manuel Casada, 190 Va 906, 59 SE 2d 47 [1950]) Even if somehow, the employee driving the
vehicle derived some benefit from the act, the existence of a presumptive liability of the employer is
determined by answering the question of whether or not the servant was at the time of the accident
performing any act in furtherance of his master's business. (Kohlman v. Hyland, 210 NW 643, 50
ALR 1437 [1926]; Jameson v. Gavett, 71 P 2d 937 [1937])

Section 14, Rule X, Book III of the Rules implementing the Labor Code, on which the petitioner
anchors its defense, was promulgated by the Secretary of Labor and Employment only for the
purpose of administering and enforcing the provisions of the Labor Code on conditions of
employment. Particularly, Rule X of Book III provides guidelines on the manner by which the powers
of the Labor Secretary shall be exercised; on what records should be kept; maintained and
preserved; on payroll; and on the exclusion of working scholars from, and inclusion of resident
physicians in the employment coverage as far as compliance with the substantive labor provisions
on working conditions, rest periods, and wages, is concerned.
In other words, Rule X is merely a guide to the enforcement of the substantive law on labor. The
Court, thus, makes the distinction and so holds that Section 14, Rule X, Book III of the Rules is not
the decisive law in a civil suit for damages instituted by an injured person during a vehicular accident
against a working student of a school and against the school itself.

The present case does not deal with a labor dispute on conditions of employment between an
alleged employee and an alleged employer. It invokes a claim brought by one for damages for injury
caused by the patently negligent acts of a person, against both doer-employee and his employer.
Hence, the reliance on the implementing rule on labor to disregard the primary liability of an
employer under Article 2180 of the Civil Code is misplaced. An implementing rule on labor cannot be
used by an employer as a shield to avoid liability under the substantive provisions of the Civil Code.

There is evidence to show that there exists in the present case an extra-contractual obligation
arising from the negligence or reckless imprudence of a person "whose acts or omissions are
imputable, by a legal fiction, to other(s) who are in a position to exercise an absolute or limited
control over (him)." (Bahia v. Litonjua and Leynes, 30 Phil. 624 [1915])

Funtecha is an employee of petitioner Filamer. He need not have an official appointment for a
driver's position in order that the petitioner may be held responsible for his grossly negligent act, it
being sufficient that the act of driving at the time of the incident was for the benefit of the petitioner.
Hence, the fact that Funtecha was not the school driver or was not acting within the scope of his
janitorial duties does not relieve the petitioner of the burden of rebutting the presumption juris
tantum that there was negligence on its part either in the selection of a servant or employee, or in
the supervision over him. The petitioner has failed to show proof of its having exercised the required
diligence of a good father of a family over its employees Funtecha and Allan.

The Court reiterates that supervision includes the formulation of suitable rules and regulations for the
guidance of its employees and the issuance of proper instructions intended for the protection of the
public and persons with whom the employer has relations through his employees. (Bahia v. Litonjua
and Leynes, supra, at p. 628; Phoenix Construction, v. Intermediate Appellate Court, 148 SCRA 353
[1987])

An employer is expected to impose upon its employees the necessary discipline called for in the
performance of any act indispensable to the business and beneficial to their employer.

In the present case, the petitioner has not shown that it has set forth such rules and guidelines as
would prohibit any one of its employees from taking control over its vehicles if one is not the official
driver or prohibiting the driver and son of the Filamer president from authorizing another employee to
drive the school vehicle. Furthermore, the petitioner has failed to prove that it had imposed sanctions
or warned its employees against the use of its vehicles by persons other than the driver.

The petitioner, thus, has an obligation to pay damages for injury arising from the unskilled manner by
which Funtecha drove the vehicle. (Cangco v. Manila Railroad Co., 38 Phil. 768, 772 [1918]). In the
absence of evidence that the petitioner had exercised the diligence of a good father of a family in the
supervision of its employees, the law imposes upon it the vicarious liability for acts or omissions of
its employees. (Umali v. Bacani, 69 SCRA 263 [1976]; Poblete v. Fabros, 93 SCRA 200 [1979];
Kapalaran Bus Liner v. Coronado, 176 SCRA 792 [1989]; Franco v. Intermediate Appellate Court,
178 SCRA 331 [1989]; Pantranco North Express, Inc. v. Baesa, 179 SCRA 384 [1989]) The liability
of the employer is, under Article 2180, primary and solidary. However, the employer shall have
recourse against the negligent employee for whatever damages are paid to the heirs of the plaintiff.
It is an admitted fact that the actual driver of the school jeep, Allan Masa, was not made a party
defendant in the civil case for damages. This is quite understandable considering that as far as the
injured pedestrian, plaintiff Potenciano Kapunan, was concerned, it was Funtecha who was the one
driving the vehicle and presumably was one authorized by the school to drive. The plaintiff and his
heirs should not now be left to suffer without simultaneous recourse against the petitioner for the
consequent injury caused by a janitor doing a driving chore for the petitioner even for a short while.
For the purpose of recovering damages under the prevailing circumstances, it is enough that the
plaintiff and the private respondent heirs were able to establish the existence of employer-employee
relationship between Funtecha and petitioner Filamer and the fact that Funtecha was engaged in an
act not for an independent purpose of his own but in furtherance of the business of his employer. A
position of responsibility on the part of the petitioner has thus been satisfactorily demonstrated.

WHEREFORE, the motion for reconsideration of the decision dated October 16, 1990 is hereby
GRANTED. The decision of the respondent appellate court affirming the trial court decision is
REINSTATED.

SO ORDERED.
G.R. No. 143363               February 6, 2002

ST. MARY'S ACADEMY, petitioner,

vs.
WILLIAM CARPITANOS and LUCIA S. CARPITANOS, GUADA DANIEL, JAMES DANIEL II,
JAMES DANIEL, SR., and VIVENCIO VILLANUEVA, respondents.

DECISION

PARDO, J.:

The Case

The case is an appeal via certiorari from the decision of the Court of Appeals as well as the
1 

resolution denying reconsideration, holding petitioner liable for damages arising from an accident
that resulted in the death of a student who had joined a campaign to visit the public schools in
Dipolog City to solicit enrollment.

The Facts

The facts, as found by the Court of Appeals, are as follows:

"Claiming damages for the death of their only son, Sherwin Carpitanos, spouses William Carpitanos
and Lucia Carpitanos filed on June 9, 1995 a case against James Daniel II and his parents, James
Daniel Sr. and Guada Daniel, the vehicle owner, Vivencio Villanueva and St. Mary’s Academy before
the Regional Trial Court of Dipolog City.

"On 20 February 1997, Branch 6 of the Regional Trial Court of Dipolog City rendered its decision the
dispositive portion of which reads as follows:

"‘WHEREFORE, PREMISES CONSIDERED, judgment is hereby rendered in the following manner:

1. Defendant St. Mary’s Academy of Dipolog City, is hereby ordered to pay plaintiffs William
Carpitanos and Luisa Carpitanos, the following sums of money:

a. FIFTY THOUSAND PESOS (P50,000.00) indemnity for the loss of life of Sherwin S. Carpitanos;

b. FORTY THOUSAND PESOS (P40,000.00) actual damages incurred by plaintiffs for burial and
related expenses;

c. TEN THOUSAND PESOS (P10,000.00) for attorney’s fees;

d. FIVE HUNDRED THOUSAND PESOS (P500,000.00) for moral damages; and to pay costs.

2. Their liability being only subsidiary, defendants James Daniel, Sr. and Guada Daniel are hereby
ordered to pay herein plaintiffs the amount of damages above-stated in the event of insolvency of
principal obligor St. Mary’s Academy of Dipolog City;

3. Defendant James Daniel II, being a minor at the time of the commission of the tort and who was
under special parental authority of defendant St. Mary’s Academy, is ABSOLVED from paying the
above-stated damages, same being adjudged against defendants St. Mary’s Academy, and
subsidiarily, against his parents;

4. Defendant Vivencio Villanueva is hereby ABSOLVED of any liability. His counterclaim not being in
order as earlier discussed in this decision, is hereby DISMISSED.

IT IS SO ORDERED."’ (Decision, pp. 32-33; Records, pp. 205-206)."

"From the records it appears that from 13 to 20 February 1995, defendant-appellant St. Mary’s
Academy of Dipolog City conducted an enrollment drive for the school year 1995-1996. A facet of
the enrollment campaign was the visitation of schools from where prospective enrollees were
studying. As a student of St. Mary’s Academy, Sherwin Carpitanos was part of the campaigning
group. Accordingly, on the fateful day, Sherwin, along with other high school students were riding in
a Mitsubishi jeep owned by defendant Vivencio Villanueva on their way to Larayan Elementary
School, Larayan, Dapitan City. The jeep was driven by James Daniel II then 15 years old and a
student of the same school. Allegedly, the latter drove the jeep in a reckless manner and as a result
the jeep turned turtle.

"Sherwin Carpitanos died as a result of the injuries he sustained from the accident." 2

In due time, petitioner St. Mary’s academy appealed the decision to the Court of Appeals. 3

On February 29, 2000, the Court of Appeals promulgated a decision reducing the actual damages to
P25,000.00 but otherwise affirming the decision a quo, in toto. 4

On February 29, 2000, petitioner St. Mary’s Academy filed a motion for reconsideration of the
decision. However, on May 22, 2000, the Court of Appeals denied the motion. 5

Hence, this appeal. 6

The Issues

1) Whether the Court of Appeals erred in holding the petitioner liable for damages for the
death of Sherwin Carpitanos.

2) Whether the Court of Appeals erred in affirming the award of moral damages against the
petitioner.

The Court’s Ruling

We reverse the decision of the Court of Appeals.

The Court of Appeals held petitioner St. Mary’s Academy liable for the death of Sherwin Carpitanos
under Articles 218 and 219 of the Family Code, pointing out that petitioner was negligent in allowing
7  8 

a minor to drive and in not having a teacher accompany the minor students in the jeep.

Under Article 218 of the Family Code, the following shall have special parental authority over a minor
child while under their supervision, instruction or custody: (1) the school, its administrators and
teachers; or (2) the individual, entity or institution engaged in child care. This special parental
authority and responsibility applies to all authorized activities, whether inside or outside the premises
of the school, entity or institution. Thus, such authority and responsibility applies to field trips,
excursions and other affairs of the pupils and students outside the school premises whenever
authorized by the school or its teachers.9

Under Article 219 of the Family Code, if the person under custody is a minor, those exercising
special parental authority are principally and solidarily liable for damages caused by the acts or
omissions of the unemancipated minor while under their supervision, instruction, or custody. 10

However, for petitioner to be liable, there must be a finding that the act or omission considered as
negligent was the proximate cause of the injury caused because the negligence must have a causal
connection to the accident. 11

"In order that there may be a recovery for an injury, however, it must be shown that the ‘injury for
which recovery is sought must be the legitimate consequence of the wrong done; the connection
between the negligence and the injury must be a direct and natural sequence of events, unbroken by
intervening efficient causes.’ In other words, the negligence must be the proximate cause of the
injury. For, ‘negligence, no matter in what it consists, cannot create a right of action unless it is the
proximate cause of the injury complained of.’ And ‘the proximate cause of an injury is that cause,
which, in natural and continuous sequence, unbroken by any efficient intervening cause, produces
the injury, and without which the result would not have occurred.’" 12

In this case, the respondents failed to show that the negligence of petitioner was the proximate
cause of the death of the victim.

Respondents Daniel spouses and Villanueva admitted that the immediate cause of the accident was
not the negligence of petitioner or the reckless driving of James Daniel II, but the detachment of the
steering wheel guide of the jeep.

In their comment to the petition, respondents Daniel spouses and Villanueva admitted the
documentary exhibits establishing that the cause of the accident was the detachment of the steering
wheel guide of the jeep. Hence, the cause of the accident was not the recklessness of James Daniel
II but the mechanical defect in the jeep of Vivencio Villanueva. Respondents, including the spouses
Carpitanos, parents of the deceased Sherwin Carpitanos, did not dispute the report and testimony of
the traffic investigator who stated that the cause of the accident was the detachment of the steering
wheel guide that caused the jeep to turn turtle.

Significantly, respondents did not present any evidence to show that the proximate cause of the
accident was the negligence of the school authorities, or the reckless driving of James Daniel II.
Hence, the respondents’ reliance on Article 219 of the Family Code that "those given the authority
and responsibility under the preceding Article shall be principally and solidarily liable for damages
caused by acts or omissions of the unemancipated minor" was unfounded.

Further, there was no evidence that petitioner school allowed the minor James Daniel II to drive the
jeep of respondent Vivencio Villanueva. It was Ched Villanueva, grandson of respondent Vivencio
Villanueva, who had possession and control of the jeep. He was driving the vehicle and he allowed
James Daniel II, a minor, to drive the jeep at the time of the accident.

Hence, liability for the accident, whether caused by the negligence of the minor driver or mechanical
detachment of the steering wheel guide of the jeep, must be pinned on the minor’s parents primarily.
The negligence of petitioner St. Mary’s Academy was only a remote cause of the accident. Between
the remote cause and the injury, there intervened the negligence of the minor’s parents or the
detachment of the steering wheel guide of the jeep.
"The proximate cause of an injury is that cause, which, in natural and continuous sequence,
unbroken by any efficient intervening cause, produces the injury, and without which the result would
not have occurred." 13

Considering that the negligence of the minor driver or the detachment of the steering wheel guide of
the jeep owned by respondent Villanueva was an event over which petitioner St. Mary’s Academy
had no control, and which was the proximate cause of the accident, petitioner may not be held liable
for the death resulting from such accident.

Consequently, we find that petitioner likewise cannot be held liable for moral damages in the amount
of P500,000.00 awarded by the trial court and affirmed by the Court of Appeals.

Though incapable of pecuniary computation, moral damages may be recovered if they are the
proximate result of the defendant’s wrongful act or omission. In this case, the proximate cause of
14 

the accident was not attributable to petitioner.

For the reason that petitioner was not directly liable for the accident, the decision of the Court of
Appeals ordering petitioner to pay death indemnity to respondent Carpitanos must be deleted.
Moreover, the grant of attorney’s fees as part of damages is the exception rather than the rule. The 15 

power of the court to award attorney’s fees under Article 2208 of the Civil Code demands factual,
legal and equitable justification. Thus, the grant of attorney’s fees against the petitioner is likewise
16 

deleted.

Incidentally, there was no question that the registered owner of the vehicle was respondent
Villanueva. He never denied and in fact admitted this fact.  We have held that the registered owner
1âwphi1

of any vehicle, even if not used for public service, would primarily be responsible to the public or to
third persons for injuries caused the latter while the vehicle was being driven on the highways or
streets." Hence, with the overwhelming evidence presented by petitioner and the respondent Daniel
17 

spouses that the accident occurred because of the detachment of the steering wheel guide of the
jeep, it is not the school, but the registered owner of the vehicle who shall be held responsible for
damages for the death of Sherwin Carpitanos.

The Fallo

WHEREFORE, the Court REVERSES and SETS ASIDE the decision of the Court of Appeals and 18 

that of the trial court. The Court remands the case to the trial court for determination of the liability of
19 

defendants, excluding petitioner St. Mary’s Academy, Dipolog City.

No costs.

SO ORDERED.
G.R. No. L-25142 March 25, 1975

PHILIPPINE RABBIT BUS LINES, INC. and FELIX PANGALANGAN, plaintiffs-appellants,

vs.
PHIL-AMERICAN FORWARDERS, INC., ARCHIMEDES J. BALINGIT and FERNANDO
PINEDA, defendants-appellees.

Angel A. Sison for plaintiffs-appellants.

Fidel Zosimo U. Canilao for defendants-appellees.

AQUINO, J.: ñé+.£ªwph!1

Philippine Rabbit Bus Lines, Inc. and Felix Pangalangan appealed on pure questions of law from the
order of the Court of First Instance of Tarlac, dismissing their complaint against Archimedes J.
Balingit.

The dismissal was based on the ground that Balingit as the manager of Phil-American Forwarders,
Inc., which together with Fernando Pineda and Balingit, was sued for damages in an action based
on quasi-delict or culpa aquiliana, is not the manager of an establishment contemplated in article
2180 of the Civil Code (Civil Case No. 3865).

In the complaint for damages filed by the bus company and Pangalangan against Phil-American
Forwarders, Inc., Balingit and Pineda, it was alleged that on November 24, 1962, Pineda drove
recklessly a freight truck, owned by Phil-American Forwarders, Inc., along the national highway at
Sto. Tomas, Pampanga. The truck bumped the bus driven by Pangalangan, which was owned by
Philippine Rabbit Bus Lines, Inc. As a result of the bumping, Pangalangan suffered injuries and the
bus was damaged and could not be used for seventy-nine days, thus depriving the company of
earnings amounting to P8,665.51. Balingit was the manager of Phil-American Forwarders, Inc.

Among the defenses interposed by the defendants in their answer was that Balingit was not Pineda's
employer.

Balingit moved that the complaint against him be dismissed on the ground that the bus company and
the bus driver had no cause of action against him. As already stated, the lower court dismissed the
action as to Balingit. The bus company and its driver appealed.

The Civil Code provides: têñ.£îhqwâ£

ART. 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if
there is no pre-existing contractual relation between the parties, is called a quasi-
delict and is governed by the provisions of this Chapter.

ART. 2180. The obligation imposed by article 2176 is demandable not only for one's
own acts or omissions, but also for those of persons for whom one is responsible.

xxx xxx xxx

 The owners and managers of an establishment or enterprise are likewise responsible
for damages caused by their employees in the service of the branches in which the
latter are employed or on the occasion of their functions.

Employers shall be liable for the damages caused by their employees and household
helpers acting within the scope of their assigned tasks, even though the former are
not engaged in any business or industry.

xxx xxx xxx

The responsibility treated of in this article shall cease when the persons herein
mentioned prove that they observed all the diligence of a good father of a family to
prevent damage. (1903a)

The novel and unprecedented legal issue in this appeal is whether the terms "employers" and
"owners and managers of an establishment or enterprise" (dueños o directores de un
establicimiento o empresa) used in article 2180 of the Civil Code, formerly article 1903 of the old
Code, embrace the manager of a corporation owning a truck, the reckless operation of which
allegedly resulted in the vehicular accident from which the damage arose.

We are of the opinion that those terms do not include the manager of a corporation. It may be
gathered from the context of article 2180 that the term "manager" ("director" in the Spanish version)
is used in the sense of "employer".

Hence, under the allegations of the complaint, no tortious or quasi-delictual liability can be fastened
on Balingit as manager of Phil-American Forwarders, Inc., in connection with the vehicular accident
already mentioned because he himself may be regarded as an employee or dependiente of his
employer, Phil-American Forwarders, Inc.

Thus, it was held "que es dependiente, a los efectos de la responsabilidad subsidiaria establecida
en el num 3.0 del (art.) 1903, el director de un periodico explotado por una sociedad, porque cualquiera que sea su jerarquia y aunque
Ileve la direccion de determinadas convicciones politicas no por eso deja de estar subordinado a la superior autoridad de la Empresa"
(Decision of Spanish Supreme Court dated December 6, 1912 cited in 12 Manresa, Codigo Civil Español 5th Ed. 662; 1913 Enciclopedia
Juridica Española 992).

The bus company and its driver, in their appellants' brief, injected a new factual issue which was not
alleged in their complaint. They argue that Phil- American Forwarders, Inc. is merely a business
conduit of Balingit because out of its capital stock with a par value of P41,200, Balingit and his wife
had subscribed P40,000 and they paid P10,000 on their subscription, while the other incorporators,
namely, Rodolfo Limjuco, Ponciano Caparas and Rafael Suntay paid P250.25 and P25, respectively.

That argument implies that the veil of corporate fiction should be pierced and that Phil-American
Forwarders, Inc. and Balingit and his wife should be treated as one and the same civil personality.

We cannot countenance that argument in this appeal. It was not raised in the lower court. The case
has to be decided on the basis of the pleadings filed in the trial court where it was assumed that Phil-
American Forwarders, Inc. has a personality separate and distinct from that of the Balingit spouses.

The legal issue, which the plaintiffs-appellants can ventilate in this appeal, is one which was raised
in the lower court and which is within the issues framed by the parties (Sec. 18, Rule 46, Rules of
Court).
When a party deliberately adopts a certain theory and the case is decided upon that theory in the
court below, he will not be permitted to change his theory on appeal because, to permit him to do so,
could be unfair to the adverse party (2 Moran's Comments on the Rules of Court, 1970 Ed. p. 505).

WHEREFORE, the lower court's order of dismissal is affirmed. Costs against the plaintiffs-
appellants.

SO ORDERED.
G.R. No. 120553 June 17, 1997

PHILTRANCO SERVICE ENTERPRISES, INC. and ROGACIONES MANILHIG, petitioner,

vs.
COURT OF APPEALS and HEIRS OF THE LATE RAMON ACUESTA, respondents.

DAVIDE, JR., J.:

The petitioners interposed this appeal by way of a petition for review under Rule 45 of the Rules of
Court from the 31 January 1995 Decision of the Court of Appeals in CA-G.R. CV No.
41140   affirming the 22 January 1993   Decision of Branch 31 of the Regional Trial Court, Calbayog
1 2

City, in Civil Case No. 373, which ordered the petitioners to pay the private respondents damages as
a result of a vehicular accident.

Civil Case No. 373 was an action against herein petitioners for damages instituted by the heirs of
Ramon A. Acuesta, namely, Gregorio O. Acuesta; Julio O. Acuesta; Ramon O. Acuesta, Jr.; Baltazar
O. Acuesta; Rufino O. Acuesta; Maximo O. Acuesta; Neri O. Acuesta; Iluminada O. Acuesta;
Rosario Acuesta-Sanz; and Pamfilo O. Acuesta. Atty. Julio O. Acuesta also appeared as counsel for
the plaintiffs (herein private respondents).   The private respondents alleged that the petitioners were
3

guilty of gross negligence, recklessness, violation of traffic rules and regulations, abandonment of
victim, and attempt to escape from a crime.

To support their allegations, the private respondents presented eight witnesses. On 10 February
1992, after the cross-examination of the last witness, the private respondents' counsel made a
reservation to present a ninth witness. The case was then set for continuation of the trial on 30 and
31 March 1992. Because of the non-appearance of the petitioners' counsel, the 30 March 1992
hearing was cancelled. The next day, private respondents' counsel manifested that he would no
longer present the ninth witness. He thereafter made an oral offer of evidence and rested the case.
The trial court summarized private respondents' evidence in this wise:

[I]n the early morning of March 24, 1990, about 6:00 o'clock, the victim Ramon A.
Acuesta was riding in his easy rider bicycle (Exhibit "O"), along the Gomez Street of
Calbayog City. The Gomez Street is along the side of Nijaga Park. On the
Magsaysay Blvd., also in Calbayog City, defendant Philtranco Service Enterprises,
Inc. (Philtranco for brevity) Bus No. 4025 with plate No. EVA-725 driven by defendant
Rogasiones Manilhig y Dolira was being pushed by some persons in order to start its
engine. The Magsaysay Blvd. runs perpendicular to Gomez St. and the said
Philtranco bus 4025 was heading in the general direction of the said Gomez Street.
Some of the persons who were pushing the bus were on its back, while the others
were on the sides. As the bus was pushed, its engine started thereby the bus
continued on its running motion and it occurred at the time when Ramon A. Acuesta
who was still riding on his bicycle was directly in front of the said bus. As the engine
of the Philtranco bus started abruptly and suddenly, its running motion was also
enhanced by the said functioning engine, thereby the subject bus bumped on the
victim Ramon A. Acuesta who, as a result thereof fell and, thereafter, was run over
by the said bus. The bus did not stop although it had already bumped and ran [sic]
over the victim; instead, it proceeded running towards the direction of the Rosales
Bridge which is located at one side of the Nijaga Park and towards one end of the
 Gomez St., to which direction the victim was then heading when he was riding on his
bicycle. P/Sgt. Yabao who was then jogging thru the Gomez Street and was heading
and meeting the victim Ramon A. Acuesta as the latter was riding on his bicycle, saw
when the Philtranco bus was being pushed by some passengers, when its engine
abruptly started and when the said bus bumped and ran over the victim. He
approached the bus driver defendant Manilhig herein and signalled to him to stop,
but the latter did not listen. So the police officer jumped into the bus and introducing
himself to the driver defendant as policeman, ordered the latter to stop. The said
defendant driver stopped the Philtranco bus near the Nijaga Park and Sgt. Yabao
thereafter, told the driver to proceed to the Police Headquarter which was only 100
meters away from Nijaga Park because he was apprehensive that the said driver
might be harmed by the relatives of the victim who might come to the scene of the
accident. Then Sgt. Yabao cordoned the scene where the vehicular accident
occurred and had P/Cpl. Bartolome Bagot, the Traffic Investigator, conduct an
investigation and make a sketch of the crime scene. Sgt. Yambao Yabao was only
about 20 meters away when he saw the bus of defendant Philtranco bumped [sic]
and [sic] ran over the victim. From the place where the victim was actually bumped
by the bus, the said vehicle still had run to a distance of about 15 meters away.  4

For their part, the petitioners filed an Answer   wherein they alleged that petitioner Philtranco
5

exercised the diligence of a good father of a family in the selection and supervision of its employees,
including petitioner Manilhig who had excellent record as a driver and had undergone months of rigid
training before he was hired. Petitioner Manilhig had always been a prudent professional driver,
religiously observing traffic rules and regulations. In driving Philtranco's buses, he exercised the
diligence of a very cautious person.

As might be expected, the petitioners had a different version of the incident. They alleged that in the
morning of 24 March 1990, Manilhig, in preparation for his trip back to Pasay City, warmed up the
engine of the bus and made a few rounds within the city proper of Calbayog. While the bus was
slowly and moderately cruising along Gomez Street, the victim, who was biking towards the same
direction as the bus, suddenly overtook two tricycles and swerved left to the center of the road. The
swerving was abrupt and so sudden that even as Manilhig applied the brakes and blew the bus horn,
the victim was bumped from behind and run over by the bus. It was neither willful nor deliberate on
Manilhig's part to proceed with the trip after his bus bumped the victim, the truth being that when he
looked at his rear-view window, he saw people crowding around the victim, with others running after
his bus. Fearing that he might be mobbed, he moved away from the scene of the accident and
intended to report the incident to the police. After a man boarded his bus and introduced himself as a
policeman, Manilhig gave himself up to the custody of the police and reported the accident in
question.

The petitioners further claimed that it was the negligence of the victim in overtaking two tricycles,
without taking precautions such as seeing first that the road was clear, which caused the death of
the victim. The latter did not even give any signal of his intention to overtake. The petitioners then
counterclaimed for P50,000 as and for attorney's fees; P1 million as moral damages; and P50,000
for litigation expenses.

However, the petitioners were not able to present their evidence, as they were deemed to have
waived that right by the failure of their counsel to appear at the scheduled hearings on 30 and 31
March 1992. The trial court then issued an Order   declaring the case submitted for decision. Motions
6

for the reconsideration of the said Order were both denied.

On 22 January 1992, the trial court handed down a decision ordering the petitioners to jointly and
severally pay the private respondents the following amounts:

1) P55, 615.72 as actual damages;

2) P200,000 as death indemnity for the death of the victim Ramon A. Acuesta;

3) P1 million as moral damages;

4) P500,000 by way of exemplary damages;

5) P50,000 as attorney's fees; and

6) the costs of suit. 7

Unsatisfied with the judgment, the petitioners appealed to the Court of Appeals imputing upon the
trial court the following errors:

(1) in preventing or barring them from presenting their evidence;

(2) in finding that petitioner Manilhig was at fault;

(3) in not finding that Ramon was the one at fault and his own fault caused, or at least contributed to,
his unfortunate accident;

(4) in awarding damages to the private respondents; and

(5) in finding that petitioner Philtranco was solidarily liable with Manilhig for damages. 
8

In its decision of 31 January 1995, the Court of Appeals affirmed the decision of the trial court. It held
that the petitioners were not denied due process, as they were given an opportunity to present their
defense. The records show that they were notified of the assignment of the case for 30 and 31
March 1992. Yet, their counsel did not appear on the said dates. Neither did he file a motion for
postponement of the hearings, nor did he appeal from the denial of the motions for reconsideration
of the 31 March 1992 Order of the trial court. The petitioners have thereby waived their right to
present evidence. Their expectation that they would have to object yet to a formal offer of evidence
by the private respondents was "misplaced," for it was within the sound discretion of the court to
allow oral offer of evidence.

As to the second and third assigned errors, the respondent court disposed as follows:

. . . We cannot help but accord with the lower court's finding on appellant Manilhig's
fault. First, it is not disputed that the bus driven by appellant Manilhig was being
pushed at the time of the unfortunate happening. It is of common knowledge and
experience that when a vehicle is pushed to a jump-start, its initial movement is far
from slow. Rather, its movement is abrupt and jerky and it takes a while before the
vehicle attains normal speed. The lower court had thus enough basis to conclude, as
it did, that the bumping of the victim was due to appellant Manilhig's actionable
negligence and inattention. Prudence should have dictated against jump-starting the
bus in a busy section of the city. Militating further against appellants' posture was the
fact that the precarious pushing of subject bus to a jumpstart was done where the
 bus had to take a left turn, thereby making the move too risky to take. The possibility
that pedestrians on Gomez Street, where the bus turned left and the victim was
biking, would be unaware of a vehicle being pushed to a jumpstart, was too obvious
to be overlooked. Verily, contrary to their bare arguments, there was gross
negligence on the part of appellants.

The doctrine of last clear chance theorized upon by appellants, is inapplicable under
the premises because the victim, who was bumped from behind, obviously, did not of
course anticipate a Philtranco bus being pushed from a perpendicular street.

The respondent court sustained the awards of moral and exemplary damages and of attorney's fees,
for they are warranted under Articles 2206, 2231, and 2208(1), respectively, of the Civil Code. Anent
the solidary liability of petitioner Philtranco, the same finds support in Articles 2180 and 2194 of the
said Code. The defense that Philtranco exercised the diligence of a good father of a family in the
selection and supervision of its employees crumbles in the face of the gross negligence of its driver,
which caused the untimely death of the victim.

Their motion for reconsideration having been denied, the petitioners came to us claiming that the
Court of Appeals gravely erred

. . . IN HOLDING THAT PETITIONERS WAIVED THEIR RIGHT TO PRESENT

THEIR EVIDENCE, AND THAT PETITIONERS WERE NOT DENIED DUE
PROCESS.

II

. . . IN APPLYING ART. 2194, INSTEAD OF ART. 2180, OF THE CIVIL CODE, AND
IN HOLDING THAT PETITIONER PHILTRANCO CAN NOT INVOKE THE
DEFENSE OF DILIGENCE OF A GOOD FATHER OF A FAMILY.

III

. . . IN AWARDING DAMAGES TO RESPONDENTS AND/OR IN NOT FINDING

THE TRIAL COURT'S AWARD OF DAMAGES EXCESSIVE.

We resolved to give due course to the petition and required the parties to submit their respective
memoranda after due consideration of the allegations, issues, and arguments adduced in the
petition, the comment thereon by the private respondents, and the reply to the comment filed by the
petitioners. The petitioners filed their memorandum in due time; while the private respondents filed
theirs only on 3 January 1997, after their counsel was fined in the amount of P1,000 for failure to
submit the required memorandum.

The first imputed error is without merit. The petitioners and their counsel, Atty. Jose Buban, were
duly notified in open court of the order of the trial court of 10 February 1992 setting the case for
hearing on 30 and 31 March 1992.   On both dates neither the petitioners nor their counsel
9

appeared. In his motion for reconsideration,   Atty. Buban gave the following reasons for his failure
10

to appear on the said hearings:

 1. That when this case was called on March 27, 1992, counsel was very much
indisposed due to the rigors of a very hectic campaign as he is a candidate for City
Councilor of Tacloban; he wanted to leave for Calbayog City, but he was seized with
slight fever on the morning of said date; but then, during the last hearing, counsel
was made to understand that plaintiffs would formally offer their exhibits in writing, for
which reason, counsel for defendants waited for a copy of said formal offer, but
counsel did not receive any copy as counsel for plaintiffs opted to formally offer their
exhibits orally in open court;

2. That counsel for defendants, in good faith believed that he would be given
reasonable time within which to comment on the formal offer in writing, only to know
that counsel for plaintiffs orally offered their exhibits in open court and that the same
were admitted by the Honorable Court; and that when this case was called on March
30 and 31, 1992, the undersigned counsel honestly believed that said schedule
would be cancelled, pending on the submission of the comments made by the
defendants on the formal offer; but it was not so, as the exhibits were admitted in
open court. 11

In its order of 26 May 1992, the trial court denied the motion, finding it to be "devoid of meritorious
basis," as Atty. Buban could have filed a motion for postponement.   Atty. Buban then filed a motion
12

to reconsider   the order of denial, which was likewise denied by the trial court in its order of 12
13

August 1992.   Nothing more was done by the petitioners after receipt of the order of 12 August
14

1992. A perusal of the first and second motions for reconsideration discloses absence of any claim
that the petitioners have meritorious defenses. Clearly, therefore, the trial court committed no error in
declaring the case submitted for decision on the basis of private respondent's evidence.

The second imputed error is without merit either.

Civil Case No. 373 is an action for damages based on quasi-delict   under Article 2176 and 2180 of
15

the Civil Code against petitioner Manilhig and his employer, petitioner Philtranco, respectively.
These articles pertinently provide:

Art. 2176. Whoever by act or omission causes damage to another, there being fault
or negligence, is obliged to pay for the damage done. Such fault or negligence, if
there is no pre-existing contractual relation between the parties, is called a quasi-
delict and is governed by the provisions of this Chapter.

Art. 2180. The obligation imposed by Article 2176 is demandable not only for one's
own acts or omissions, but also for those of persons for whom one is responsible.

xxx xxx xxx

The owners and managers of an establishment or enterprise are likewise responsible

for damages caused by their employees in the service of the branches in which the
latter are employed or on the occasion of their functions.

Employers shall be liable for the damages caused by their employees and household
helpers acting within the scope of their assigned tasks even though the former are
not engaged in any business or industry.

xxx xxx xxx

 The responsibility treated of in this article shall cease when the persons herein
mentioned prove that they observed all the diligence of a good father of a family to
prevent damage.

We have consistently held that the liability of the registered owner of a public service vehicle, like
petitioner Philtranco,   for damages arising from the tortious acts of the driver is primary, direct, and
16

joint and several or solidary with the driver.   As to solidarity, Article 2194 expressly provides:
17

Art. 2194. The responsibility of two or more persons who are liable for a quasi-
delict is solidary.

Since the employer's liability is primary, direct and solidary, its only recourse if the judgment
for damages is satisfied by it is to recover what it has paid from its employee who committed
the fault or negligence which gave rise to the action based on quasi-delict. Article 2181 of the
Civil Code provides:

Art. 2181. Whoever pays for the damage caused by his dependents or employees
may recover from the latter what he has paid or delivered in satisfaction of the claim.

There is, however, merit in the third imputed error.

The trial court erroneously fixed the "death indemnity" at P200,000. The private respondents
defended the award in their Opposition to the Motion for Reconsideration by saying that "[i]n the
case of Philippine Airlines, Inc. vs. Court of Appeals, 185 SCRA 110, our Supreme Court held that
the award of damages for death is computed on the basis of the life expectancy of the deceased." In
that case, the "death indemnity" was computed by multiplying the victim's gross annual income by
his life expectancy, less his yearly living expenses. Clearly then, the "death indemnity" referred to
was the additional indemnity for the loss of earning capacity mentioned in Article 2206(1) of the Civil
Code, and not the basic indemnity for death mentioned in the first paragraph thereof. This article
provides as follows:

Art. 2206. The amount of damages for death caused by a crime or quasi-delict shall
be at least three thousand pesos, even though there may have been mitigating
circumstances. In addition:

(1) The defendant shall be liable for the loss of the earning capacity of the deceased,
and the indemnity shall be paid to the heirs of the latter; such indemnity shall in 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;

(2) If the deceased was obliged to give support according to the provisions of article
291, the recipient who is not an heir called to the decedent's inheritance by the law of
testate or intestate succession, may demand support from the person causing the
death, for a period of not exceeding five years, the exact duration to be fixed by the
court;

(3) The spouse, legitimate and illegitimate descendants and ascendants of the
deceased may demand moral damages for mental anguish by reason of the death of
the deceased.
We concur with petitioners' view that the trial court intended the award of "P200,000.00 as death
indemnity" not as compensation for loss of earning capacity. Even if the trial court intended the
award as indemnity for loss of earning capacity, the same must be struck out for lack of basis. There
is no evidence on the victim's earning capacity and life expectancy.

Only indemnity for death under the opening paragraph of Article 2206 is due, the amount of which
has been fixed by current jurisprudence at P50,000.  18

The award of P1 million for moral damages to the heirs of Ramon Acuesta has no sufficient basis
and is excessive and unreasonable. This was based solely on the testimony of one of the heirs, Atty.
Julio Acuesta, contained in his "Direct Testimony . . . As Plaintiff, conducted by Himself,"   to wit:
19

Q. What was your feeling or reaction as a result of the death of your

father Ramon A. Acuesta?

A. We, the family members, have suffered much from wounded

feelings, moral shock, mental anguish, sleepless nights, to which we
are entitled to moral damages at the reasonable amount of ONE
MILLION (P1,000,000.00) PESOS or at the sound discretion of this
Hon. Court.

Since the other heirs of the deceased did not take the witness stand, the trial court had no basis for
its award of moral damages to those who did not testify thereon.

Moral damages are emphatically not intended to enrich a plaintiff at the expense of the defendant.
They are awarded only to allow the former to obtain means, diversion, or amusements that will serve
to alleviate the moral suffering he has undergone due to the defendant's culpable action and must,
perforce, be proportional to the suffering inflicted.   In light of the circumstances in this case, an
20

award of P50,000 for moral damages is in order.

The award of P500,000 for exemplary damages is also excessive. In quasi-delicts, exemplary
damages may be awarded if the party at fault acted with gross negligence.   The Court of Appeals
21

found that there was gross negligence on the part of petitioner Manilhig.   Under Article 2229 of the
22

Civil Code, exemplary damages are imposed by way of example or correction for the public good, in
addition to the moral, temperate, liquidated, or compensatory damages. Considering its purpose, it
must be fair and reasonable in every case and should not be awarded to unjustly enrich a prevailing
party. In the instant case, an award of P50,000 for the purpose would be adequate, fair, and
reasonable.

Finally, the award of P50,000 for attorney's fees must be reduced. The general rule is that attorney's
fees cannot be recovered as part of damages because of the policy that no premium should be
placed on the right to
litigate.   Stated otherwise, the grant of attorney's fees as part of damages is the exception rather
23

than the rule, as counsel's fees are not awarded every time a party prevails in a suit.   Such
24

attorney's fees can be awarded in the cases enumerated in Article 2208 of the Civil Code, and in all
cases it must be reasonable. In the instant case, the counsel for the plaintiffs is himself a co-plaintiff;
it is then unlikely that he demanded from his brothers and sisters P100,000 as attorney's fees as
alleged in the complaint and testified to by
him.   He did not present any written contract for his fees. He is, however, entitled to a reasonable
25

amount for attorney's fees, considering that exemplary damages are awarded. Among the instances
mentioned in Article 2208 of the Civil Code when attorney's fees may be recovered is "(1) when
exemplary damages are awarded." Under the circumstances in this case, an award of P25,000 for
attorney's fees is reasonable.

The petitioners did not contest the award for actual damages fixed by the trial court. Hence, such
award shall stand.

IN VIEW OF THE FOREGOING, the petition is hereby partly granted and the challenged decision of
CA-G.R. CV No. 41140 is AFFIRMED, subject to modifications as to the damages awarded, which
are reduced as follows:

(a) Death indemnity, from P200,000 to P50,000;

(b) Moral damages, from P1 million to P50,000;

(c) Exemplary damages, from P500,000 to P50,000; and

(d) Attorney's fees, from P50,000 to P25,000.

No pronouncements as to costs in this instance.

SO ORDERED.
G.R. No. 132266 December 21, 1999

CASTILEX INDUSTRIAL CORPORATION, petitioner,

vs.
VICENTE VASQUEZ, JR. and LUISA SO VASQUEZ, and CEBU DOCTORS' HOSPITAL,
INC., respondents.

DAVIDE, JR., C.J.:

The pivotal issue in this petition is whether an employer may be held vicariously liable for the death
resulting from the negligent operation by a managerial employee of a company-issued vehicle.

The antecedents, as succinctly summarized by the Court of Appeals, are as follows:

On 28 August 1988, at around 1:30 to 2:00 in the morning, Romeo So Vasquez, was
driving a Honda motorcycle around Fuente Osmeña Rotunda. He was traveling
counter-clockwise, (the normal flow of traffic in a rotunda) but without any protective
helmet or goggles. He was also only carrying a Student's Permit to Drive at the time.
Upon the other hand, Benjamin Abad [was a] manager of Appellant Castilex
Industrial Corporation, registered owner [of] a Toyota Hi-Lux Pick-up with plate no.
GBW-794. On the same date and time, Abad drove the said company car out of a
parking lot but instead of going around the Osmeña rotunda he made a short cut
against [the] flow of the traffic in proceeding to his route to General Maxilom St. or to
Belvic St.

In the process, the motorcycle of Vasquez and the pick-up of Abad collided with each
other causing severe injuries to the former. Abad stopped his vehicle and brought
Vasquez to the Southern Islands Hospital and later to the Cebu Doctor's Hospital.

On September 5, 1988, Vasquez died at the Cebu Doctor's Hospital. It was there that
Abad signed an acknowledgment of Responsible Party (Exhibit K) wherein he agreed
to pay whatever hospital bills, professional fees and other incidental charges
Vasquez may incur.

After the police authorities had conducted the investigation of the accident, a
Criminal Case was filed against Abad but which was subsequently dismissed for
failure to prosecute. So, the present action for damages was commenced by Vicente
Vasquez, Jr. and Luisa So Vasquez, parents of the deceased Romeo So Vasquez,
against Jose Benjamin Abad and Castilex Industrial Corporation. In the same action,
Cebu Doctor's Hospital intervened to collect unpaid balance for the medical expense
given to Romeo So Vasquez. 1
The trial court ruled in favor of private respondents Vicente and Luisa Vasquez and ordered Jose
Benjamin Abad (hereafter ABAD) and petitioner Castilex Industrial Corporation (hereafter
CASTILEX) to pay jointly and solidarily (1) Spouses Vasquez, the amounts of P8,000.00 for burial
expenses; P50,000.00 as moral damages; P10,000.00 as attorney's fees; and P778,752.00 for loss
of earning capacity; and (2) Cebu Doctor's Hospital, the sum of P50,927.83 for unpaid medical and
hospital bills at 3% monthly interest from 27 July 1989 until fully paid, plus the costs of litigation.
2

CASTILEX and ABAD separately appealed the decision.

In its decision  of 21 May 1997, the Court of Appeals affirmed the ruling of the trial court holding
3

ABAD and CASTILEX liable but held that the liability of the latter is "only vicarious and not solidary"
with the former. It reduced the award of damages representing loss of earning capacity from
P778,752.00 to P214,156.80; and the interest on the hospital and medical bills, from 3% per month
to 12% per annum from 5 September 1988 until fully paid.

Upon CASTILEX's motion for reconsideration, the Court of Appeals modified its decision by (1)
reducing the award of moral damages from P50,000 to P30,000 in view of the deceased's
contributory negligence; (b) deleting the award of attorney's fees for lack of evidence; and (c)
reducing the interest on hospital and medical bills to 6% per annum from 5 September 1988 until
fully paid.
4

Hence, CASTILEX filed the instant petition contending that the Court of Appeals erred in (1) applying
to the case the fifth paragraph of Article 2180 of the Civil Code, instead of the fourth paragraph
thereof; (2) that as a managerial employee, ABAD was deemed to have been always acting within
the scope of his assigned task even outside office hours because he was using a vehicle issued to
him by petitioner; and (3) ruling that petitioner had the burden to prove that the employee was not
acting within the scope of his assigned task.

Jose Benjamin ABAD merely adopted the statement of facts of petitioner which holds fast on the
theory of negligence on the part of the deceased.

On the other hand, respondents Spouses Vasquez argue that their son's death was caused by the
negligence of petitioner's employee who was driving a vehicle issued by petitioner and who was on
his way home from overtime work for petitioner; and that petitioner is thus liable for the resulting
injury and subsequent death of their son on the basis of the fifth paragraph of Article 2180. Even if
the fourth paragraph of Article 2180 were applied, petitioner cannot escape liability therefor. They
moreover argue that the Court of Appeals erred in reducing the amount of compensatory damages
when the award made by the trial court was borne both by evidence adduced during the trial
regarding deceased's wages and by jurisprudence on life expectancy. Moreover, they point out that
the petition is procedurally not acceptable on the following grounds: (1) lack of an explanation for
serving the petition upon the Court of Appeals by registered mail, as required under Section 11, Rule
13 of the Rules of Civil Procedure; and (2) lack of a statement of the dates of the expiration of the
original reglementary period and of the filing of the motion for extension of time to file a petition for
review.

For its part, respondent Cebu Doctor's Hospital maintains that petitioner CASTILEX is indeed
vicariously liable for the injuries and subsequent death of Romeo Vasquez caused by ABAD, who
was on his way home from taking snacks after doing overtime work for petitioner. Although the
incident occurred when ABAD was not working anymore "the inescapable fact remains that said
employee would not have been situated at such time and place had he not been required by
petitioner to do overtime work." Moreover, since petitioner adopted the evidence adduced by ABAD,
it cannot, as the latter's employer, inveigle itself from the ambit of liability, and is thus estopped by
the records of the case, which it failed to refute.

We shall first address the issue raised by the private respondents regarding some alleged
procedural lapses in the petition.

Private respondent's contention of petitioner's violation of Section 11 of Rule 13 and Section 4 of

Rule 45 of the 1997 Rules of Civil Procedure holds no water.

Sec. 11 of Rule 13 provides:

Sec. 11. Priorities in modes of services and filing. — Whenever practicable, the

service and filing of pleadings and other papers shall be done personally. Except with
respect to papers emanating from the court, a resort to other modes must be
accompanied by a written explanation why the service or filing was not done
personally. A violation of this Rule may be cause to consider the paper as not filed.

The explanation why service of a copy of the petition upon the Court of Appeals was done by
registered mail is found on Page 28 of the petition. Thus, there has been compliance with the
aforequoted provision.

As regards the allegation of violation of the material data rule under Section 4 of Rule 45, the same
is unfounded. The material dates required to be stated in the petition are the following: (1) the date
of receipt of the judgment or final order or resolution subject of the petition; (2) the date of filing of a
motion for new trial or reconsideration, if any; and (3) the date of receipt of the notice of the denial of
the motion. Contrary to private respondent's claim, the petition need not indicate the dates of the
expiration of the original reglementary period and the filing of a motion for extension of time to file
the petition. At any rate, aside from the material dates required under Section 4 of Rule 45, petitioner
CASTILEX also stated in the first page of the petition the date it filed the motion for extension of time
to file the petition.

Now on the merits of the case.

The negligence of ABAD is not an issue at this instance. Petitioner CASTILEX presumes said
negligence but claims that it is not vicariously liable for the injuries and subsequent death caused by
ABAD.

Petitioner contends that the fifth paragraph of Article 2180 of the Civil Code should only apply to
instances where the employer is not engaged in business or industry. Since it is engaged in the
business of manufacturing and selling furniture it is therefore not covered by said provision. Instead,
the fourth paragraph should apply.

Petitioner's interpretation of the fifth paragraph is not accurate. The phrase "even though the former
are not engaged in any business or industry" found in the fifth paragraph should be interpreted to
mean that it is not necessary for the employer to be engaged in any business or industry to be liable
for the negligence of his employee who is acting within the scope of his assigned task. 5

A distinction must be made between the two provisions to determine what is applicable. Both
provisions apply to employers: the fourth paragraph, to owners and managers of an establishment or
enterprise; and the fifth paragraph, to employers in general, whether or not engaged in any business
or industry. The fourth paragraph covers negligent acts of employees committed either in the service
of the branches or on the occasion of their functions, while the fifth paragraph encompasses
negligent acts of employees acting within the scope of their assigned task. The latter is an expansion
of the former in both employer coverage and acts included. Negligent acts of employees, whether or
not the employer is engaged in a business or industry, are covered so long as they were acting
within the scope of their assigned task, even though committed neither in the service of the branches
nor on the occasion of their functions. For, admittedly, employees oftentimes wear different hats.
They perform functions which are beyond their office, title or designation but which, nevertheless,
are still within the call of duty.

This court has applied the fifth paragraph to cases where the employer was engaged in a business
or industry such as truck operators  and banks.  The Court of Appeals cannot, therefore, be faulted in
6 7

applying the said paragraph of Article 2180 of the Civil Code to this case.

Under the fifth paragraph of Article 2180, whether or not engaged in any business or industry, an
employer is liable for the torts committed by employees within the scope of his assigned tasks. But it
is necessary to establish the employer-employee relationship; once this is done, the plaintiff must
show, to hold the employer liable, that the employee was acting within the scope of his assigned
task when the tort complained of was committed. It is only then that the employer may find it
necessary to interpose the defense of due diligence in the selection and supervision of the
employee. 8

It is undisputed that ABAD was a Production Manager of petitioner CASTILEX at the time of the tort
occurrence. As to whether he was acting within the scope of his assigned task is a question of fact,
which the court a quo and the Court of Appeals resolved in the affirmative.

Well-entrenched in our jurisprudence is the rule that the factual findings of the Court of Appeals are
entitled to great respect, and even finality at times. This rule is, however, subject to exceptions such
as when the conclusion is grounded on speculations, surmises, or conjectures.  Such exception
9

obtain in the present case to warrant review by this Court of the finding of the Court of Appeals that
since ABAD was driving petitioner's vehicle he was acting within the scope of his duties as a
manager.

Before we pass upon the issue of whether ABAD was performing acts within the range of his
employment, we shall first take up the other reason invoked by the Court of Appeals in holding
petitioner CASTILEX vicariously liable for ABAD's negligence, i.e., that the petitioner did not present
evidence that ABAD was not acting within the scope of his assigned tasks at the time of the motor
vehicle mishap. Contrary to the ruling of the Court of Appeals, it was not incumbent upon the
petitioner to prove the same. It was enough for petitioner CASTILEX to deny that ABAD was acting
within the scope of his duties; petitioner was not under obligation to prove this negative averment. Ei
incumbit probatio qui dicit, non qui negat (He who asserts, not he who denies, must prove). The
Court has consistently applied the ancient rule that if the plaintiff, upon whom rests the burden of
proving his cause of action, fails to show in a satisfactory manner facts which he bases his claim, the
defendant is under no obligation to prove his exception or defense.  10

Now on the issue of whether the private respondents have sufficiently established that ABAD was
acting within the scope of his assigned tasks.

ABAD, who was presented as a hostile witness, testified that at the time of the incident, he was
driving a company-issued vehicle, registered under the name of petitioner. He was then leaving the
restaurant where he had some snacks and had a chat with his friends after having done overtime
work for the petitioner.
No absolutely hard and fast rule can be stated which will furnish the complete answer to the problem
of whether at a given moment, an employee is engaged in his employer's business in the operation
of a motor vehicle, so as to fix liability upon the employer because of the employee's action or
inaction; but rather, the result varies with each state of facts.  11

In Filamer Christian Institute v. Intermediate Appellant Court,   this Court had the occasion to hold
12

that acts done within the scope of the employee's assigned tasks includes "any act done by an
employee in furtherance of the interests of the employer or for the account of the employer at the
time of the infliction of the injury or damages."

The court a quo and the Court of Appeals were one in holding that the driving by a manager of a
company-issued vehicle is within the scope of his assigned tasks regardless of the time and
circumstances.

We do not agree. The mere fact that ABAD was using a service vehicle at the time of the injurious
incident is not of itself sufficient to charge petitioner with liability for the negligent operation of said
vehicle unless it appears that he was operating the vehicle within the course or scope of his
employment.

The following are principles in American Jurisprudence on the employer's liability for the injuries
inflicted by the negligence of an employee in the use of an employer's motor vehicle:

I. Operation of Employer's Motor Vehicle in Going to

or from Meals

It has been held that an employee who uses his employer's vehicle in going from his work to a place
where he intends to eat or in returning to work from a meal is not ordinarily acting within the scope of
his employment in the absence of evidence of some special business benefit to the employer.
Evidence that by using the employer's vehicle to go to and from meals, an employee is enabled to
reduce his time-off and so devote more time to the performance of his duties supports the finding
that an employee is acting within the scope of his employment while so driving the vehicle.  13

II. Operation of Employer's Vehicle in Going to

or from Work

In the same vein, traveling to and from the place of work is ordinarily a personal problem or concern
of the employee, and not a part of his services to his employer. Hence, in the absence of some
special benefit to the employer other than the mere performance of the services available at the
place where he is needed, the employee is not acting within the scope of his employment even
though he uses his employer's motor vehicle.  14

The employer may, however, be liable where he derives some special benefit from having the
employee drive home in the employer's vehicle as when the employer benefits from having the
employee at work earlier and, presumably, spending more time at his actual duties. Where the
employee's duties require him to circulate in a general area with no fixed place or hours of work, or
to go to and from his home to various outside places of work, and his employer furnishes him with a
vehicle to use in his work, the courts have frequently applied what has been called the "special
errand" or "roving commission" rule, under which it can be found that the employee continues in the
service of his employer until he actually reaches home. However, even if the employee be deemed
to be acting within the scope of his employment in going to or from work in his employer's vehicle,
the employer is not liable for his negligence where at the time of the accident, the employee has left
the direct route to his work or back home and is pursuing a personal errand of his own.

III. Use of Employer's Vehicle Outside Regular Working Hours

An employer who loans his motor vehicle to an employee for the latter's personal use outside of
regular working hours is generally not liable for the employee's negligent operation of the vehicle
during the period of permissive use, even where the employer contemplates that a regularly
assigned motor vehicle will be used by the employee for personal as well as business purposes and
there is some incidental benefit to the employer. Even where the employee's personal purpose in
using the vehicle has been accomplished and he has started the return trip to his house where the
vehicle is normally kept, it has been held that he has not resumed his employment, and the
employer is not liable for the employee's negligent operation of the vehicle during the return trip.  15

The foregoing principles and jurisprudence are applicable in our jurisdiction albeit based on the
doctrine of respondent superior, not on the principle of bonus pater familias as in ours. Whether the
fault or negligence of the employee is conclusive on his employer as in American law or
jurisprudence, or merely gives rise to the presumption juris tantum of negligence on the part of the
employer as in ours, it is indispensable that the employee was acting in his employer's business or
within the scope of his assigned task.  16

In the case at bar, it is undisputed that ABAD did some overtime work at the petitioner's office, which
was located in Cabangcalan, Mandaue City. Thereafter, he went to Goldie's Restaurant in Fuente
Osmeña, Cebu City, which is about seven kilometers away from petitioner's place of business.   A 17

witness for the private respondents, a sidewalk vendor, testified that Fuente Osmeña is a "lively
place" even at dawn because Goldie's Restaurant and Back Street were still open and people were
drinking thereat. Moreover, prostitutes, pimps, and drug addicts littered the place. 
18

At the Goldie's Restaurant, ABAD took some snacks and had a chat with friends. It was when ABAD
was leaving the restaurant that the incident in question occurred. That same witness for the private
respondents testified that at the time of the vehicular accident, ABAD was with a woman in his car,
who then shouted: "Daddy, Daddy!"   This woman could not have been ABAD's daughter, for ABAD
19

was only 29 years old at the time.

To the mind of this Court, ABAD was engaged in affairs of his own or was carrying out a personal
purpose not in line with his duties at the time he figured in a vehicular accident. It was then about
2:00 a.m. of 28 August 1988, way beyond the normal working hours. ABAD's working day had
ended; his overtime work had already been completed. His being at a place which, as petitioner put
it, was known as a "haven for prostitutes, pimps, and drug pushers and addicts," had no connection
to petitioner's business; neither had it any relation to his duties as a manager. Rather, using his
service vehicle even for personal purposes was a form of a fringe benefit or one of the perks
attached to his position.

Since there is paucity of evidence that ABAD was acting within the scope of the functions entrusted
to him, petitioner CASTILEX had no duty to show that it exercised the diligence of a good father of a
family in providing ABAD with a service vehicle. Thus, justice and equity require that petitioner be
relieved of vicarious liability for the consequences of the negligence of ABAD in driving its vehicle.  20

WHEREFORE, the petition is GRANTED, and the appealed decision and resolution of the Court of
Appeals is AFFIRMED with the modification that petitioner Castilex Industrial Corporation be
absolved of any liability for the damages caused by its employee, Jose Benjamin Abad.
SO ORDERED.

G.R. No. 119121 August 14, 1998

NATIONAL POWER CORPORATION, petitioner,

vs.
COURT OF APPEALS, Fifteenth Division and PHESCO INCORPORATED, respondents.

ROMERO, J.:

On July 22, 1979, a convoy of four (4) dump trucks owned by the National Power Corporation (NPC)
left Marawi city bound for Iligan city. Unfortunately, enroute to its destination, one of the trucks with
plate no RFT-9-6-673 driven by a certain Gavino Ilumba figured in a head-on-collision with a Toyota
Tamaraw. The incident resulted in the death of three (3) persons riding in the Toyota Tamaraw, as
well as physical injuries to seventeen other passengers.

On June 10, 1980, the heirs of the victims filed a complaint for damages against National Power
Corporation (NPC) and PHESCO Incorporated (PHESCO) before the then Court of First Instance of
Lanao del Norte, Marawi City. When defendant PHESCO filed its answer to the complaint it
contended that it was not the owner of the dump truck which collided with the Toyota Tamaraw but
NPC. Moreover, it asserted that it was merely a contractor of NPC with the main duty of supplying
workers and technicians for the latter's projects. On the other hand, NPC denied any liability and
countered that the driver of the dump truck was the employee of PHESCO.

After trial on the merits, the trial court rendered a decision dated July 25, 1988 absolving NPC of any
liability. The dispositive portion reads:

Consequently, in view of the foregoing consideration, judgment is hereby rendered

ordering PHESCO, Inc. and Gavino Ilumba upon receipt hereof:

1. To pay jointly and severally the plaintiffs thru the Dansalan College the sum of
P954,154.55 representing the actual or compensatory damages incurred by the
plaintiffs; and

2. To pay the sum of P50,000.00 representing Attorney's fees.

SO ORDERED.

Dissatisfied, PHESCO appealed to the Court of Appeals, which on November 10, 1994 reversed the
trial court's judgment. We quote the pertinent portion of the decision:
 A "labor only" contractor is considered merely as an agent of the employer (Deferia
vs. National Labor Relations Commission, 194 SCRA 525). A finding that a
contractor is a "labor only" contractor is equivalent to a finding that there is an
employer-employee relationship between the owner of the project and the employees
of the "labor only" contractor (Industrial Timer Corporation vs. National Labor
Relations Commission, 202 SCRA 465). So, even if Phesco hired driver Gavino
Ilumba, as Phesco is admittedly a "labor only" contractor of Napocor the statute itself
establishes an employer-employee relationship between the employer (Napocor) and
the employee (driver Ilumba) of the labor only contractor (Phesco). (Ecal vs. National
Labor Relations Commission, 195 SCRA 224).

Consequently, we hold Phesco not liable for the tort of driver Gavino Ilumba, as there
was no employment relationship between Phesco and driver Gavino Ilumba. Under
Article 2180 of the Civil Code, to hold the employer liable for torts committed by his
employees within the scope of their assigned task, there must exist an employer-
employee relationship. (Martin vs. Court of Appeals, 205 SCRA 591).

WHEREFORE, we REVERSE the appealed decision. In lieu thereof, the Court

renders judgment sentencing defendant National Power Corporation to pay plaintiffs
the sum of P174,889.20 plus P20,000.00 as attorney's fees and costs.

SO ORDERED.

Chagrined by the sudden turnaround, NPC filed a motion for reconsideration of said decision which
was, however, denied on February 9, 1995.   Hence, this petition.
1

The principal query to be resolved is, as between NPC and PHESCO, who is the employer of
Ilumba, driver of the dumptruck which figured in the accident and which should, therefore, would be
liable for damages to the victims. Specifically, NPC assigns the sole error that:

THE COURT OF APPEALS DECISION FINDING THAT PETITIONER NPC AS THE

EMPLOYER OF THE DRIVER GAVINO ILUMBA, AND CONSEQUENTLY
SENTENCING IT TO PAY THE ACTUAL AND COMPENSATORY DAMAGES
SUSTAINED BY COMPLAINTS, IS NOT IN ACCORD WITH THE LAW OR WITH
THE APPLICABLE RULINGS OF THIS HONORABLE COURT.  2

As earlier stated, NPC denies that the driver of the dump truck was its employee. It alleges that it did
not have the power of selection and dismissal nor the power of control over Ilumba.   PHESCO,
3

meanwhile, argues that it merely acted as a "recruiter" of the necessary workers for and in behalf of
NPC.  4

Before we decide who is the employer of Ilumba, it is evidently necessary to ascertain the
contractual relationship between NPC and PHESCO. Was the relationship one of employer and job
(independent) contractor or one of employer and "labor only" contractor?

Job (independent) contracting is present if the following conditions are met: (a) the contractor carries
on an independent business and undertakes the contract work on his own account under his own
responsibility according to his own manner and method, free from the control and direction of his
employer or principal in all matters connected with the performance of the work except to the result
thereof; and (b) the contractor has substantial capital or investments in the form of tools, equipment,
machineries, work premises and other materials which are necessary in the conduct of his
business.   Absent these requisites, what exists is a "labor only" contract under which the person
5
acting as contractor is considered merely as an agent or intermediary of the principal who is
responsible to the workers in the same manner and to the same extent as if they had been directly
employed by him.   Taking into consideration the above distinction and the provisions of the
6

"Memorandum of Understanding" entered into by PHESCO and NPC, we are convinced that
PHESCO was engaged in "labor only" contracting.

It must be noted that under the Memorandum, NPC had mandate to approve the "critical path
network and rate of expenditure to be undertaken by PHESCO.   Likewise, the manning schedule
7

and pay scale of the workers hired by PHESCO were subject to confirmation by NPC.   Then too, it
8

cannot be ignored that if PHESCO enters into any sub-contract or lease, again NPC's concurrence is
needed.   Another consideration is that even in the procurement of tools and equipment that will be
9

used by PHESCO, NPC's favorable recommendation is still necessary before these tools and
equipment can be purchased.   Notably, it is NPC that will provide the money or funding that will be
10

used by PHESCO to undertake the project.   Furthermore, it must be emphasized that the project
11

being undertaken by PHESCO, i.e., construction of power energy facilities, is related to NPC's

principal business of power generation. In sum, NPC's control over PHESCO in matters concerning
the performance of the latter's work is evident. It is enough that NPC has the right to wield such
power to be considered as the employer.  12

Under this factual milieu, there is no doubt that PHESCO was engaged in "labor-only"
contracting vis-à-vis NPC and as such, it is considered merely an agent of the latter. In labor-only
contracting, an employer-employee relationship between the principal employer and the employees
of the "labor-only" contractor is created. Accordingly, the principal employer is responsible to the
employees of the "labor-only" contractor as if such employees had been directly employed by the
principal employer.   Since PHESCO is only a "labor-only" contractor, the workers it supplied to
13

NPC, including the driver of the ill-fated truck, should be considered as employees of NPC.   After
14

all, it is axiomatic that any person (the principal employer) who enters into an agreement with a job
contractor, either for the performance of a specified work or for the supply of manpower, assumes
responsibility over the employees of the latter.  15

However, NPC maintains that even assuming that a "labor only" contract exists between it and
PHESCO, its liability will not extend to third persons who are injured due to the tortious acts of the
employee of the "labor-only" contractor.   Stated otherwise, its liability shall only be limited to
16

violations of the Labor Code and not quasi-delicts.

To bolster its position, NPC cites Section 9(b), Rule VII, Book III of the Omnibus Rules Implementing
the Labor Code which reads:

(b) Labor only contracting as defined herein is hereby prohibited and the person
acting as contractor shall be considered merely as an agent or intermediary of the
employer who shall be responsible to the workers in the same manner and extent as
if the latter were directly employed by him.

In other words, NPC posits the theory that its liability is limited only to compliance with the
substantive labor provisions on working conditions, rest periods, and wages and shall not extend to
liabilities suffered by third parties, viz.:

Consequently, the responsibilities of the employer contemplated in a "labor only"

contract, should, consistent with the terms expressed in the rule, be restricted "to the
workers." The same can not be expanded to cover liabilities for damages to third
persons resulting from the employees' tortious acts under Article 2180 of the Civil
Code.  17
The reliance is misplaced. It bears stressing that the action was premised on the recovery of
damages as a result of quasi-delict against both NPC and PHESCO, hence, it is the Civil Code and
not the Labor Code which is the applicable law in resolving this case.

To be sure, the pronouncement of this Court in Filamer Christian Institute v. IAC,   is most
18

instructive:

The present case does not deal with a labor dispute on conditions of employment
between an alleged employee and an alleged employer. It invokes a claim brought
by one for damages for injury caused by the patently negligent acts of a person,
against both doer-employee and his employer. Hence, the reliance on the
implementing rule on labor to disregard the primary liability of an employer under
Article 2180 of the Civil Code is misplaced. An implementing rule on labor cannot be
used by an employer as a shield to avoid liability under the substantive provisions of
the Civil Code.

Corollarily from the above doctrine, the ruling in Cuison v. Norton & Harrison Co.,   finds applicability
19

in the instant case, viz.:

It is well to repeat that under the civil law an employer is only liable for the negligence
of his employees in the discharge of their respective duties. The defense of
independent contractor would be a valid one in the Philippines just as it would be in
the United States. Here Ora was a contractor, but it does not necessarily follow that
he was an independent contractor. The reason for this distinction is that the employer
retained the power of directing and controlling the work. The chauffeur and the two
persons on the truck were the employees of Ora, the contractor, but Ora, the
contractor, was an employee of Norton & Harrison Co., charged with the duty of
directing the loading and transportation of the lumber. And it was the negligence in
loading the lumber and the use of minors on the truck which caused the death of the
unfortunate boy. On the facts and the law, Ora was not an independent contractor,
but was the servant of the defendant, and for his negligence defendant was
responsible.

Given the above considerations, it is apparent that Article 2180 of the Civil Code and not the Labor
Code will determine the liability of NPC in a civil suit for damages instituted by an injured person for
any negligent act of the employees of the "labor only" contractor. This is consistent with the ruling
that a finding that a contractor was a "labor-only" contractor is equivalent to a finding that an
employer-employee relationship existed between the owner (principal contractor) and the "labor-
only" contractor, including the latter's workers. 
20

With respect to the liability of NPC as the direct employer, Article 2180 of the Civil Code explicitly
provides:

Employers shall be liable for the damages caused by their employees and household
helpers acting within the scope of their assigned tasks, even though the former are
not engaged in any business or industry.

In this regard, NPC's liability is direct, primary and solidary with PHESCO and the driver.   Of
21

course, NPC, if the judgment for damages is satisfied by it, shall have recourse against PHESCO
and the driver who committed the negligence which gave rise to the action.  22
Finally, NPC, even if it truly believed that it was not the employer of the driver, could still have
disclaimed any liability had it raised the defense of due diligence in the selection or supervision of
PHESCO and Ilumba.   However, for some reason or another, NPC did not invoke said defense.
23

Hence, by opting not to present any evidence that it exercised due diligence in the supervision of the
activities of PHESCO and Ilumba, NPC has foreclosed its right to interpose the same on appeal in
conformity with the rule that points of law, theories, issues of facts and arguments not raised in the
proceedings below cannot be ventilated for the first time on appeal.   Consequently, its liability
24

stands.

WHEREFORE, in view of the foregoing, the assailed decision of the Court of Appeals dated
November 10, 1994 and its accompanying resolution dated February 9, 1995 are AFFIRMED
without prejudice to the right of NPC to demand from PHESCO and Ilumba reimbursement of the
damages it would be adjudged to pay to complainants. No costs.

SO ORDERED.
G.R. No. 145804             February 6, 2003

LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, petitioners,

vs.
MARJORIE NAVIDAD, Heirs of the Late NICANOR NAVIDAD & PRUDENT SECURITY
AGENCY, respondents.

DECISION

VITUG, J.:

The case before the Court is an appeal from the decision and resolution of the Court of Appeals,
promulgated on 27 April 2000 and 10 October 2000, respectively, in CA-G.R. CV No. 60720, entitled
"Marjorie Navidad and Heirs of the Late Nicanor Navidad vs. Rodolfo Roman, et. al.," which has
modified the decision of 11 August 1998 of the Regional Trial Court, Branch 266, Pasig City,
exonerating Prudent Security Agency (Prudent) from liability and finding Light Rail Transit Authority
(LRTA) and Rodolfo Roman liable for damages on account of the death of Nicanor Navidad.

On 14 October 1993, about half an hour past seven o’clock in the evening, Nicanor Navidad, then
drunk, entered the EDSA LRT station after purchasing a "token" (representing payment of the fare).
While Navidad was standing on the platform near the LRT tracks, Junelito Escartin, the security
guard assigned to the area approached Navidad. A misunderstanding or an altercation between the
two apparently ensued that led to a fist fight. No evidence, however, was adduced to indicate how
the fight started or who, between the two, delivered the first blow or how Navidad later fell on the
LRT tracks. At the exact moment that Navidad fell, an LRT train, operated by petitioner Rodolfo
Roman, was coming in. Navidad was struck by the moving train, and he was killed instantaneously.

On 08 December 1994, the widow of Nicanor, herein respondent Marjorie Navidad, along with her
children, filed a complaint for damages against Junelito Escartin, Rodolfo Roman, the LRTA, the
Metro Transit Organization, Inc. (Metro Transit), and Prudent for the death of her husband. LRTA
and Roman filed a counterclaim against Navidad and a cross-claim against Escartin and Prudent.
Prudent, in its answer, denied liability and averred that it had exercised due diligence in the selection
and supervision of its security guards.

The LRTA and Roman presented their evidence while Prudent and Escartin, instead of presenting
evidence, filed a demurrer contending that Navidad had failed to prove that Escartin was negligent in
his assigned task. On 11 August 1998, the trial court rendered its decision; it adjudged:

"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants
Prudent Security and Junelito Escartin ordering the latter to pay jointly and severally the plaintiffs the
following:

"a) 1) Actual damages of P44,830.00;

 2) Compensatory damages of P443,520.00;

3) Indemnity for the death of Nicanor Navidad in the sum of P50,000.00;

"b) Moral damages of P50,000.00;

"c) Attorney’s fees of P20,000;

"d) Costs of suit.

"The complaint against defendants LRTA and Rodolfo Roman are dismissed for lack of merit.

"The compulsory counterclaim of LRTA and Roman are likewise dismissed." 1

Prudent appealed to the Court of Appeals. On 27 August 2000, the appellate court promulgated its
now assailed decision exonerating Prudent from any liability for the death of Nicanor Navidad and,
instead, holding the LRTA and Roman jointly and severally liable thusly:

"WHEREFORE, the assailed judgment is hereby MODIFIED, by exonerating the appellants from any
liability for the death of Nicanor Navidad, Jr. Instead, appellees Rodolfo Roman and the Light Rail
Transit Authority (LRTA) are held liable for his death and are hereby directed to pay jointly and
severally to the plaintiffs-appellees, the following amounts:

a) P44,830.00 as actual damages;

b) P50,000.00 as nominal damages;

c) P50,000.00 as moral damages;

d) P50,000.00 as indemnity for the death of the deceased; and

e) P20,000.00 as and for attorney’s fees." 2

The appellate court ratiocinated that while the deceased might not have then as yet boarded the
train, a contract of carriage theretofore had already existed when the victim entered the place where
passengers were supposed to be after paying the fare and getting the corresponding token therefor.
In exempting Prudent from liability, the court stressed that there was nothing to link the security
agency to the death of Navidad. It said that Navidad failed to show that Escartin inflicted fist blows
upon the victim and the evidence merely established the fact of death of Navidad by reason of his
having been hit by the train owned and managed by the LRTA and operated at the time by Roman.
The appellate court faulted petitioners for their failure to present expert evidence to establish the fact
that the application of emergency brakes could not have stopped the train.

The appellate court denied petitioners’ motion for reconsideration in its resolution of 10 October
2000.

In their present recourse, petitioners recite alleged errors on the part of the appellate court; viz:

"I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY DISREGARDING THE
FINDINGS OF FACTS BY THE TRIAL COURT

"II.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT PETITIONERS

ARE LIABLE FOR THE DEATH OF NICANOR NAVIDAD, JR.

"III.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT RODOLFO

ROMAN IS AN EMPLOYEE OF LRTA." 3

Petitioners would contend that the appellate court ignored the evidence and the factual findings of
the trial court by holding them liable on the basis of a sweeping conclusion that the presumption of
negligence on the part of a common carrier was not overcome. Petitioners would insist that
Escartin’s assault upon Navidad, which caused the latter to fall on the tracks, was an act of a
stranger that could not have been foreseen or prevented. The LRTA would add that the appellate
court’s conclusion on the existence of an employer-employee relationship between Roman and
LRTA lacked basis because Roman himself had testified being an employee of Metro Transit and
not of the LRTA.

Respondents, supporting the decision of the appellate court, contended that a contract of carriage
was deemed created from the moment Navidad paid the fare at the LRT station and entered the
premises of the latter, entitling Navidad to all the rights and protection under a contractual relation,
and that the appellate court had correctly held LRTA and Roman liable for the death of Navidad in
failing to exercise extraordinary diligence imposed upon a common carrier.

Law and jurisprudence dictate that a common carrier, both from the nature of its business and for
reasons of public policy, is burdened with the duty of exercising utmost diligence in ensuring the
safety of passengers. The Civil Code, governing the liability of a common carrier for death of or
4 

injury to its passengers, provides:

"Article 1755. A common carrier is bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with a due regard for all
the circumstances.

"Article 1756. In case of death of or injuries to passengers, common carriers are presumed to have
been at fault or to have acted negligently, unless they prove that they observed extraordinary
diligence as prescribed in articles 1733 and 1755."

"Article 1759. Common carriers are liable for the death of or injuries to passengers through the
negligence or willful acts of the former’s employees, although such employees may have acted
beyond the scope of their authority or in violation of the orders of the common carriers.

"This liability of the common carriers does not cease upon proof that they exercised all the diligence
of a good father of a family in the selection and supervision of their employees."

"Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of the
willful acts or negligence of other passengers or of strangers, if the common carrier’s employees
through the exercise of the diligence of a good father of a family could have prevented or stopped
the act or omission."

The law requires common carriers to carry passengers safely using the utmost diligence of very
cautious persons with due regard for all circumstances. Such duty of a common carrier to provide
5 

safety to its passengers so obligates it not only during the course of the trip but for so long as the
passengers are within its premises and where they ought to be in pursuance to the contract of
carriage. The statutory provisions render a common carrier liable for death of or injury to passengers
6 

(a) through the negligence or wilful acts of its employees or b) on account of wilful acts or negligence
of other passengers or of strangers if the common carrier’s employees through the exercise of due
diligence could have prevented or stopped the act or omission. In case of such death or injury, a
7 

carrier is presumed to have been at fault or been negligent, and by simple proof of injury, the
8 

passenger is relieved of the duty to still establish the fault or negligence of the carrier or of its
employees and the burden shifts upon the carrier to prove that the injury is due to an unforeseen
event or to force majeure. In the absence of satisfactory explanation by the carrier on how the
9 

accident occurred, which petitioners, according to the appellate court, have failed to show, the
presumption would be that it has been at fault, an exception from the general rule that negligence
10 

must be proved. 11

The foundation of LRTA’s liability is the contract of carriage and its obligation to indemnify the victim
arises from the breach of that contract by reason of its failure to exercise the high diligence required
of the common carrier. In the discharge of its commitment to ensure the safety of passengers, a
carrier may choose to hire its own employees or avail itself of the services of an outsider or an
independent firm to undertake the task. In either case, the common carrier is not relieved of its
responsibilities under the contract of carriage.

Should Prudent be made likewise liable? If at all, that liability could only be for tort under the
provisions of Article 2176 and related provisions, in conjunction with Article 2180, of the Civil Code.
12  13 

The premise, however, for the employer’s liability is negligence or fault on the part of the employee.
Once such fault is established, the employer can then be made liable on the basis of the
presumption juris tantum that the employer failed to exercise diligentissimi patris families in the
selection and supervision of its employees. The liability is primary and can only be negated by
showing due diligence in the selection and supervision of the employee, a factual matter that has not
been shown. Absent such a showing, one might ask further, how then must the liability of the
common carrier, on the one hand, and an independent contractor, on the other hand, be described?
It would be solidary. A contractual obligation can be breached by tort and when the same act or
omission causes the injury, one resulting in culpa contractual and the other in culpa aquiliana, Article
2194 of the Civil Code can well apply. In fine, a liability for tort may arise even under a contract,
14  15 

where tort is that which breaches the contract. Stated differently, when an act which constitutes a
16 

breach of contract would have itself constituted the source of a quasi-delictual liability had no
contract existed between the parties, the contract can be said to have been breached by tort,
thereby allowing the rules on tort to apply. 17

Regrettably for LRT, as well as perhaps the surviving spouse and heirs of the late Nicanor Navidad,
this Court is concluded by the factual finding of the Court of Appeals that "there is nothing to link
(Prudent) to the death of Nicanor (Navidad), for the reason that the negligence of its employee,
Escartin, has not been duly proven x x x." This finding of the appellate court is not without substantial
justification in our own review of the records of the case.

There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of any culpable act
or omission, he must also be absolved from liability. Needless to say, the contractual tie between the
LRT and Navidad is not itself a juridical relation between the latter and Roman; thus, Roman can be
made liable only for his own fault or negligence.

The award of nominal damages in addition to actual damages is untenable. Nominal damages are
adjudicated in order that a right of the plaintiff, which has been violated or invaded by the defendant,
may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff for any loss
suffered by him. It is an established rule that nominal damages cannot co-exist with compensatory
18 

damages. 19

WHEREFORE, the assailed decision of the appellate court is AFFIRMED with MODIFICATION but
only in that (a) the award of nominal damages is DELETED and (b) petitioner Rodolfo Roman is
absolved from liability. No costs.

SO ORDERED.