G.R. No.
157917               August 29, 2012 the scene on board the train, and did not wait for the police
SPOUSES TEODORO1 and NANETTE PERENA, Petitioners,
vs.
SPOUSES TERESITA PHILIPPINE NICOLAS and L. ZARATE,
NATIONAL RAILWAYS, and the COURT OF
APPEALS Respondents.
DECISION
BERSAMIN, J.:
The operator of a. school bus service is a common carrier in the
eyes of the law. He is bound to observe extraordinary diligence in
the conduct of his business. He is presumed to be negligent when
death occurs to a passenger. His liability may include indemnity for
loss of earning capacity even if the deceased passenger may only be
an unemployed high school student at the time of the accident.
The Case
By petition for review on certiorari, Spouses Teodoro and Nanette
Perefia (Perefias) appeal the adverse decision promulgated on
November 13, 2002, by which the Court of Appeals (CA) affirmed
with modification the decision rendered on December 3, 1999 by
the Regional Trial Court (RTC), Branch 260, in Parañ aque City that
had decreed them jointly and severally liable with Philippine
National Railways (PNR), their co-defendant, to Spouses Nicolas
and Teresita Zarate (Zarates) for the death of their 15-year old son,
Aaron John L. Zarate (Aaron), then a high school student of Don
Bosco Technical Institute (Don Bosco).
Antecedents
The Pereñ as were engaged in the business of transporting students
from their respective residences in Parañ aque City to Don Bosco in
Pasong Tamo, Makati City, and back. In their business, the Pereñ as
used a KIA Ceres Van (van) with Plate No. PYA 896, which had the
capacity to transport 14 students at a time, two of whom would be
seated in the front beside the driver, and the others in the rear,
with six students on either side. They employed Clemente Alfaro
(Alfaro) as driver of the van.
In June 1996, the Zarates contracted the Pereñ as to transport
Aaron to and from Don Bosco. On August 22, 1996, as on previous
school days, the van picked Aaron up around 6:00 a.m. from the
Zarates’ residence. Aaron took his place on the left side of the van
near the rear door. The van, with its air-conditioning unit turned on
and the stereo playing loudly, ultimately carried all the 14 student
riders on their way to Don Bosco. Considering that the students
were due at Don Bosco by 7:15 a.m., and that they were already
running late because of the heavy vehicular traffic on the South
Superhighway, Alfaro took the van to an alternate route at about
6:45 a.m. by traversing the narrow path underneath the Magallanes
Interchange that was then commonly used by Makati-bound
vehicles as a short cut into Makati. At the time, the narrow path
was marked by piles of construction materials and parked
passenger jeepneys, and the railroad crossing in the narrow path
had no railroad warning signs, or watchmen, or other responsible
persons manning the crossing. In fact, the bamboo barandilla was
up, leaving the railroad crossing open to traversing motorists.
At about the time the van was to traverse the railroad crossing,
PNR Commuter No. 302 (train), operated by Jhonny Alano (Alano),
was in the vicinity of the Magallanes Interchange travelling
northbound. As the train neared the railroad crossing, Alfaro drove
the van eastward across the railroad tracks, closely tailing a large
passenger bus. His view of the oncoming train was blocked because
he overtook the passenger bus on its left side. The train blew its
horn to warn motorists of its approach. When the train was about
50 meters away from the passenger bus and the van, Alano applied
the ordinary brakes of the train. He applied the emergency brakes
only when he saw that a collision was imminent. The passenger bus
successfully crossed the railroad tracks, but the van driven by
Alfaro did not. The train hit the rear end of the van, and the impact
threw nine of the 12 students in the rear, including Aaron, out of
the van. Aaron landed in the path of the train, which dragged his
body and severed his head, instantaneously killing him. Alano fled
investigator to arrive.
Devastated by the early and unexpected death of Aaron, the Zarates
commenced this action for damages against Alfaro, the Pereñ as,
PNR and Alano. The Pereñ as and PNR filed their respective
answers, with cross-claims against each other, but Alfaro could not
be served with summons.
At the pre-trial, the parties stipulated on the
facts and issues, viz:
A. FACTS:
(1) That spouses Zarate were the legitimate
parents of Aaron John L. Zarate;
(2) Spouses Zarate engaged the services of
spouses Pereñ a for the adequate and safe
transportation carriage of the former spouses'
son from their residence in Parañ aque to his
school at the Don Bosco Technical Institute in
Makati City;
(3) During the effectivity of the contract of
carriage and in the implementation thereof,
Aaron, the minor son of spouses Zarate died in
connection with a vehicular/train collision
which occurred while Aaron was riding the
contracted carrier Kia Ceres van of spouses
Pereñ a, then driven and operated by the latter's
employee/authorized driver Clemente Alfaro,
which van collided with the train of PNR, at
around 6:45 A.M. of August 22, 1996, within the
vicinity of the Magallanes Interchange in Makati
City, Metro Manila, Philippines;
(4) At the time of the vehicular/train collision,
the subject site of the vehicular/train collision
was a railroad crossing used by motorists for
crossing the railroad tracks;
(5) During the said time of the vehicular/train
collision, there were no appropriate and safety
warning signs and railings at the site commonly
used for railroad crossing;
(6) At the material time, countless number of
Makati bound public utility and private vehicles
used on a daily basis the site of the collision as
an alternative route and short-cut to Makati;
(7) The train driver or operator left the scene
of the incident on board the commuter train
involved without waiting for the police
investigator;
(8) The site commonly used for railroad
crossing by motorists was not in fact intended
by the railroad operator for railroad crossing at
the time of the vehicular collision;
(9) PNR received the demand letter of the
spouses Zarate;
(10) PNR refused to acknowledge any
liability for the vehicular/train collision;
(11) The eventual closure of the railroad
crossing alleged by PNR was an internal
arrangement between the former and its project
contractor; and
(12) The site of the vehicular/train collision
was within the vicinity or less than 100 meters
from the Magallanes station of PNR.
 B. ISSUES
(1) Whether or not defendant-driver of the van
is, in the performance of his functions, liable for
negligence constituting the proximate cause of
the vehicular collision, which resulted in the
death of plaintiff spouses' son;
(2) Whether or not the defendant spouses
Pereñ a being the employer of defendant Alfaro
are liable for any negligence which may be
attributed to defendant Alfaro;
(3) Whether or not defendant Philippine
National Railways being the operator of the
railroad system is liable for negligence in failing
to provide adequate safety warning signs and
railings in the area commonly used by motorists
for railroad crossings, constituting the
proximate cause of the vehicular collision which
resulted in the death of the plaintiff spouses'
son;
(4) Whether or not defendant spouses Pereñ a
are liable for breach of the contract of carriage
with plaintiff-spouses in failing to provide
adequate and safe transportation for the latter's
son;
(5) Whether or not defendants spouses are
liable for actual, moral damages, exemplary
damages, and attorney's fees;
(6) Whether or not defendants spouses
Teodorico and Nanette Pereñ a observed the
diligence of employers and school bus
operators;
(7) Whether or not defendant-spouses are civilly
liable for the accidental death of Aaron John
Zarate;
(8) Whether or not defendant PNR was grossly
negligent in operating the commuter train
involved in the accident, in allowing or
tolerating the motoring public to cross, and its
failure to install safety devices or equipment at
the site of the accident for the protection of the
public;
(9) Whether or not defendant PNR should be
made to reimburse defendant spouses for any
and whatever amount the latter may be held
answerable or which they may be ordered to
pay in favor of plaintiffs by reason of the action;
(10) Whether or not defendant PNR should pay
plaintiffs directly and fully on the amounts
claimed by the latter in their Complaint by
reason of its gross negligence;
(11) Whether or not defendant PNR is liable to
defendants spouses for actual, moral and
exemplary damages and attorney's fees.2
The Zarates’ claim against the Pereñ as was upon breach of the
contract of carriage for the safe transport of Aaron; but that against
PNR was based on quasi-delict under Article 2176, Civil Code.
In their defense, the Pereñ as adduced evidence to show that they
had exercised the diligence of a good father of the family in the
selection and supervision of Alfaro, by making sure that Alfaro had
been issued a driver’s license and had not been involved in any
vehicular accident prior to the collision; that their own son had
taken the van daily; and that Teodoro Pereñ a had sometimes
accompanied Alfaro in the van’s trips transporting the students to
school.
For its part, PNR tended to show that the proximate cause of the
collision had been the reckless crossing of the van whose driver
had not first stopped, looked and listened; and that the narrow
path traversed by the van had not been intended to be a railroad
crossing for motorists.
Ruling of the RTC
On December 3, 1999, the RTC rendered its
decision,3 disposing:
WHEREFORE, premises considered, judgment is
hereby rendered in favor of the plaintiff and
against the defendants ordering them to jointly
and severally pay the plaintiffs as follows:
(1) (for) the death of Aaron- Php50,000.00;
(2) Actual damages in the amount of
Php100,000.00;
(3) For the loss of earning capacity-
Php2,109,071.00;
(4) Moral damages in the amount of
Php4,000,000.00;
(5) Exemplary damages in the amount of
Php1,000,000.00;
(6) Attorney’s fees in the amount of
Php200,000.00; and
(7) Cost of suit.
SO ORDERED.
On June 29, 2000, the RTC denied the Pereñ as’ motion for
reconsideration,4 reiterating that the cooperative gross negligence
of the Pereñ as and PNR had caused the collision that led to the
death of Aaron; and that the damages awarded to the Zarates were
not excessive, but based on the established circumstances.
The CA’s Ruling
Both the Pereñ as and PNR appealed (C.A.-G.R.
CV No. 68916).
PNR assigned the following errors, to wit:5
The Court a quo erred in:
1. In finding the defendant-appellant Philippine
National Railways jointly and severally liable
together with defendant-appellants spouses
Teodorico and Nanette Pereñ a and defendant-
appellant Clemente Alfaro to pay plaintiffs-
appellees for the death of Aaron Zarate and
damages.
2. In giving full faith and merit to the oral
testimonies of plaintiffs-appellees witnesses
despite overwhelming documentary evidence on
record, supporting the case of defendants-
appellants Philippine National Railways.
The Pereñ as ascribed the following errors to the
RTC, namely:
The trial court erred in finding defendants-
appellants jointly and severally liable for actual,
moral and exemplary damages and attorney’s
fees with the other defendants.
 The trial court erred in dismissing the cross-
claim of the appellants Pereñ as against the
Philippine National Railways and in not holding
the latter and its train driver primarily
responsible for the incident.
The trial court erred in awarding excessive
damages and attorney’s fees.
The trial court erred in awarding damages in the
form of deceased’s loss of earning capacity in the
absence of sufficient basis for such an award.
On November 13, 2002, the CA promulgated its decision, affirming
the findings of the RTC, but limited the moral damages to ₱
2,500,000.00; and deleted the attorney’s fees because the RTC did
not state the factual and legal bases, to wit: 6
WHEREFORE, premises considered, the assailed
Decision of the Regional Trial Court, Branch 260
of Parañ aque City is AFFIRMED with the
modification that the award of Actual Damages
is reduced to ₱ 59,502.76; Moral Damages is
reduced to ₱ 2,500,000.00; and the award for
Attorney’s Fees is Deleted.
SO ORDERED.
The CA upheld the award for the loss of Aaron’s earning capacity,
taking cognizance of the ruling in Cariaga v. Laguna Tayabas Bus
Company and Manila Railroad Company,7 wherein the Court gave
the heirs of Cariaga a sum representing the loss of the deceased’s
earning capacity despite Cariaga being only a medical student at
the time of the fatal incident. Applying the formula adopted in the
American Expectancy Table of Mortality:–
2/3 x (80 - age at the time of death) = life expectancy
the CA determined the life expectancy of Aaron to be 39.3 years
upon reckoning his life expectancy from age of 21 (the age when he
would have graduated from college and started working for his
own livelihood) instead of 15 years (his age when he died).
Considering that the nature of his work and his salary at the time of
Aaron’s death were unknown, it used the prevailing minimum
wage of ₱ 280.00/day to compute Aaron’s gross annual salary to be
₱ 110,716.65, inclusive of the thirteenth month pay. Multiplying
this annual salary by Aaron’s life expectancy of 39.3 years, his gross
income would aggregate to ₱ 4,351,164.30, from which his
estimated expenses in the sum of ₱ 2,189,664.30 was deducted to
finally arrive at P 2,161,500.00 as net income. Due to Aaron’s
computed net income turning out to be higher than the amount
claimed by the Zarates, only ₱ 2,109,071.00, the amount expressly
prayed for by them, was granted.
On April 4, 2003, the CA denied the Pereñ as’ motion for
reconsideration.8
Issues
In this appeal, the Pereñ as list the following as the errors
committed by the CA, to wit:
I. The lower court erred when it upheld the trial
court’s decision holding the petitioners jointly
and severally liable to pay damages with
Philippine National Railways and dismissing
their cross-claim against the latter.
II. The lower court erred in affirming the trial
court’s decision awarding damages for loss of
earning capacity of a minor who was only a high
school student at the time of his death in the
absence of sufficient basis for such an award.
III. The lower court erred in not reducing further
the amount of damages awarded, assuming
petitioners are liable at all.
Ruling
The petition has no merit.
1.
Were the Pereñas and PNR jointly
and severally liable for damages?
The Zarates brought this action for recovery of damages against
both the Pereñ as and the PNR, basing their claim against the
Pereñ as on breach of contract of carriage and against the PNR on
quasi-delict.
The RTC found the Pereñ as and the PNR negligent. The CA affirmed
the findings.
We concur with the CA.
To start with, the Pereñ as’ defense was that they exercised the
diligence of a good father of the family in the selection and
supervision of Alfaro, the van driver, by seeing to it that Alfaro had
a driver’s license and that he had not been involved in any
vehicular accident prior to the fatal collision with the train; that
they even had their own son travel to and from school on a daily
basis; and that Teodoro Pereñ a himself sometimes accompanied
Alfaro in transporting the passengers to and from school. The RTC
gave scant consideration to such defense by regarding such defense
as inappropriate in an action for breach of contract of carriage.
We find no adequate cause to differ from the conclusions of the
lower courts that the Pereñ as operated as a common carrier; and
that their standard of care was extraordinary diligence, not the
ordinary diligence of a good father of a family.
Although in this jurisdiction the operator of a school bus service
has been usually regarded as a private carrier, 9 primarily because
he only caters to some specific or privileged individuals, and his
operation is neither open to the indefinite public nor for public use,
the exact nature of the operation of a school bus service has not
been finally settled. This is the occasion to lay the matter to rest.
A carrier is a person or corporation who undertakes to transport or
convey goods or persons from one place to another, gratuitously or
for hire. The carrier is classified either as a private/special carrier
or as a common/public carrier. 10 A private carrier is one who,
without making the activity a vocation, or without holding himself
or itself out to the public as ready to act for all who may desire his
or its services, undertakes, by special agreement in a particular
instance only, to transport goods or persons from one place to
another either gratuitously or for hire. 11 The provisions on
ordinary contracts of the Civil Code govern the contract of private
carriage.The diligence required of a private carrier is only ordinary,
that is, the diligence of a good father of the family. In contrast, a
common carrier is a person, corporation, firm or association
engaged in the business of carrying or transporting passengers or
goods or both, by land, water, or air, for compensation, offering
such services to the public.12 Contracts of common carriage are
governed by the provisions on common carriers of the Civil Code,
the Public Service Act, 13 and other special laws relating to
transportation. A common carrier is required to observe
extraordinary diligence, and is presumed to be at fault or to have
acted negligently in case of the loss of the effects of passengers, or
the death or injuries to passengers.14
In relation to common carriers, the Court defined public use in the
following terms in United States v. Tan Piaco,15 viz:
"Public use" is the same as "use by the public".
The essential feature of the public use is not
confined to privileged individuals, but is open to
the indefinite public. It is this indefinite or
unrestricted quality that gives it its public
character. In determining whether a use is
public, we must look not only to the character of
the business to be done, but also to the proposed
mode of doing it. If the use is merely optional
with the owners, or the public benefit is merely
incidental, it is not a public use, authorizing the
 exercise of the jurisdiction of the public utility
commission. There must be, in general, a right
which the law compels the owner to give to the
general public. It is not enough that the general
prosperity of the public is promoted. Public use
is not synonymous with public interest. The true
criterion by which to judge the character of the
use is whether the public may enjoy it by right
or only by permission.
In De Guzman v. Court of Appeals, 16 the Court noted that Article
1732 of the Civil Code avoided any distinction between a person or
an enterprise offering transportation on a regular or an isolated
basis; and has not distinguished a carrier offering his services to
the general public, that is, the general community or population,
from one offering his services only to a narrow segment of the
general population.
Nonetheless, the concept of a common carrier embodied in Article
1732 of the Civil Code coincides neatly with the notion of public
service under the Public Service Act, which supplements the law on
common carriers found in the Civil Code. Public service, according
to Section 13, paragraph (b) of the Public Service Act, includes:
x x x every person that now or hereafter may
own, operate, manage, or control in the
Philippines, for hire or compensation, with
general or limited clientèle, whether permanent
or occasional, and done for the general business
purposes, any common carrier, railroad, street
railway, traction railway, subway motor vehicle,
either for freight or passenger, or both, with or
without fixed route and whatever may be its
classification, freight or carrier service of any
class, express service, steamboat, or steamship
line, pontines, ferries and water craft, engaged in
the transportation of passengers or freight or
both, shipyard, marine repair shop, ice-
refrigeration plant, canal, irrigation system, gas,
electric light, heat and power, water supply and
power petroleum, sewerage system, wire or
wireless communications systems, wire or
wireless broadcasting stations and other similar
public services. x x x.17
Given the breadth of the aforequoted characterization of a common
carrier, the Court has considered as common carriers pipeline
operators,18 custom brokers and warehousemen,19 and barge
operators20 even if they had limited clientèle.
As all the foregoing indicate, the true test for a common carrier is
not the quantity or extent of the business actually transacted, or the
number and character of the conveyances used in the activity, but
whether the undertaking is a part of the activity engaged in by the
carrier that he has held out to the general public as his business or
occupation. If the undertaking is a single transaction, not a part of
the general business or occupation engaged in, as advertised and
held out to the general public, the individual or the entity rendering
such service is a private, not a common, carrier. The question must
be determined by the character of the business actually carried on
by the carrier, not by any secret intention or mental reservation it
may entertain or assert when charged with the duties and
obligations that the law imposes.21
Applying these considerations to the case before us, there is no
question that the Pereñ as as the operators of a school bus service
were: (a) engaged in transporting passengers generally as a
business, not just as a casual occupation; (b) undertaking to carry
passengers over established roads by the method by which the
business was conducted; and (c) transporting students for a fee.
Despite catering to a limited clientèle, the Pereñ as operated as a
common carrier because they held themselves out as a ready
transportation indiscriminately to the students of a particular
school living within or near where they operated the service and
for a fee.
The common carrier’s standard of care and vigilance as to the
safety of the passengers is defined by law. Given the nature of the
business and for reasons of public policy, the common carrier is
bound "to observe extraordinary diligence in the vigilance over the
goods and for the safety of the passengers transported by them,
according to all the circumstances of each case." 22 Article 1755 of
the Civil Code specifies that the common carrier should "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." To successfully fend off liability in
an action upon the death or injury to a passenger, the common
carrier must prove his or its observance of that extraordinary
diligence; otherwise, the legal presumption that he or it was at fault
or acted negligently would stand.23 No device, whether by
stipulation, posting of notices, statements on tickets, or otherwise,
may dispense with or lessen the responsibility of the common
carrier as defined under Article 1755 of the Civil Code. 24
And, secondly, the Pereñ as have not presented any compelling
defense or reason by which the Court might now reverse the CA’s
findings on their liability. On the contrary, an examination of the
records shows that the evidence fully supported the findings of the
CA.
As earlier stated, the Pereñ as, acting as a common carrier, were
already presumed to be negligent at the time of the accident
because death had occurred to their passenger. 25 The presumption
of negligence, being a presumption of law, laid the burden of
evidence on their shoulders to establish that they had not been
negligent.26 It was the law no less that required them to prove their
observance of extraordinary diligence in seeing to the safe and
secure carriage of the passengers to their destination. Until they
did so in a credible manner, they stood to be held legally
responsible for the death of Aaron and thus to be held liable for all
the natural consequences of such death.
There is no question that the Pereñ as did not overturn the
presumption of their negligence by credible evidence. Their
defense of having observed the diligence of a good father of a
family in the selection and supervision of their driver was not
legally sufficient. According to Article 1759 of the Civil Code, their
liability as a common carrier did not cease upon proof that they
exercised all the diligence of a good father of a family in the
selection and supervision of their employee. This was the reason
why the RTC treated this defense of the Pereñ as as inappropriate in
this action for breach of contract of carriage.
The Pereñ as were liable for the death of Aaron despite the fact that
their driver might have acted beyond the scope of his authority or
even in violation of the orders of the common carrier. 27 In this
connection, the records showed their driver’s actual negligence.
There was a showing, to begin with, that their driver traversed the
railroad tracks at a point at which the PNR did not permit motorists
going into the Makati area to cross the railroad tracks. Although
that point had been used by motorists as a shortcut into the Makati
area, that fact alone did not excuse their driver into taking that
route. On the other hand, with his familiarity with that shortcut,
their driver was fully aware of the risks to his passengers but he
still disregarded the risks. Compounding his lack of care was that
loud music was playing inside the air-conditioned van at the time of
the accident. The loudness most probably reduced his ability to
hear the warning horns of the oncoming train to allow him to
correctly appreciate the lurking dangers on the railroad tracks.
Also, he sought to overtake a passenger bus on the left side as both
vehicles traversed the railroad tracks. In so doing, he lost his view
of the train that was then coming from the opposite side of the
passenger bus, leading him to miscalculate his chances of beating
the bus in their race, and of getting clear of the train. As a result, the
bus avoided a collision with the train but the van got slammed at its
rear, causing the fatality. Lastly, he did not slow down or go to a full
stop before traversing the railroad tracks despite knowing that his
slackening of speed and going to a full stop were in observance of
the right of way at railroad tracks as defined by the traffic laws and
regulations.28 He thereby violated a specific traffic regulation on
right of way, by virtue of which he was immediately presumed to
be negligent.29
The omissions of care on the part of the van driver constituted
negligence,30 which, according to Layugan v. Intermediate
Appellate Court,31 is "the omission to do something which a
reasonable man, guided by those considerations which ordinarily
regulate the conduct of human affairs, would do, or the doing of
something which a prudent and reasonable man would not do, 32 or
as Judge Cooley defines it, ‘(t)he failure to observe for the
protection of the interests of another person, that degree of care,
precaution, and vigilance which the circumstances justly demand,
whereby such other person suffers injury.’" 33
The test by which to determine the existence of
negligence in a particular case has been aptly
stated in the leading case of Picart v. Smith, 34  defendants against whom the Zarates had the right to relief,
thuswise:
The test by which to determine the existence of
negligence in a particular case may be stated as
follows: Did the defendant in doing the alleged
negligent act use that reasonable care and
caution which an ordinarily prudent person
would have used in the same situation? If not,
then he is guilty of negligence. The law here in
effect adopts the standard supposed to be
supplied by the imaginary conduct of the
discreet paterfamilias of the Roman law. The
existence of negligence in a given case is not
determined by reference to the personal
judgment of the actor in the situation before
him. The law considers what would be reckless,
blameworthy, or negligent in the man of
ordinary intelligence and prudence and
determines liability by that.
The question as to what would constitute the
conduct of a prudent man in a given situation
must of course be always determined in the light
of human experience and in view of the facts
involved in the particular case. Abstract
speculation cannot here be of much value but
this much can be profitably said: Reasonable
men govern their conduct by the circumstances
which are before them or known to them. They
are not, and are not supposed to be, omniscient
of the future. Hence they can be expected to take
care only when there is something before them
to suggest or warn of danger. Could a prudent
man, in the case under consideration, foresee
harm as a result of the course actually pursued?
If so, it was the duty of the actor to take
precautions to guard against that harm.
Reasonable foresight of harm, followed by the
ignoring of the suggestion born of this prevision,
is always necessary before negligence can be
held to exist. Stated in these terms, the proper
criterion for determining the existence of
negligence in a given case is this: Conduct is said
to be negligent when a prudent man in the
position of the tortfeasor would have foreseen
that an effect harmful to another was sufficiently
probable to warrant his foregoing the conduct
or guarding against its consequences. (Emphasis
supplied)
Pursuant to the Picart v. Smith test of negligence, the Pereñ as’
driver was entirely negligent when he traversed the railroad tracks
at a point not allowed for a motorist’s crossing despite being fully
aware of the grave harm to be thereby caused to his passengers;
and when he disregarded the foresight of harm to his passengers
by overtaking the bus on the left side as to leave himself blind to
the approach of the oncoming train that he knew was on the
opposite side of the bus.
Unrelenting, the Pereñ as cite Phil. National Railways v.
Intermediate Appellate Court,35 where the Court held the PNR
solely liable for the damages caused to a passenger bus and its
passengers when its train hit the rear end of the bus that was then
traversing the railroad crossing. But the circumstances of that case
and this one share no similarities. In Philippine National Railways
v. Intermediate Appellate Court, no evidence of contributory
negligence was adduced against the owner of the bus. Instead, it
was the owner of the bus who proved the exercise of extraordinary
diligence by preponderant evidence. Also, the records are replete
with the showing of negligence on the part of both the Pereñ as and
the PNR. Another distinction is that the passenger bus in Philippine
National Railways v. Intermediate Appellate Court was traversing
the dedicated railroad crossing when it was hit by the train, but the
Pereñ as’ school van traversed the railroad tracks at a point not
intended for that purpose.
At any rate, the lower courts correctly held both the Pereñ as and
the PNR "jointly and severally" liable for damages arising from the
death of Aaron. They had been impleaded in the same complaint as
whether jointly, severally, or in the alternative, in respect to or
arising out of the accident, and questions of fact and of law were
common as to the Zarates.36 Although the basis of the right to relief
of the Zarates (i.e., breach of contract of carriage) against the
Pereñ as was distinct from the basis of the Zarates’ right to relief
against the PNR (i.e., quasi-delict under Article 2176, Civil Code),
they nonetheless could be held jointly and severally liable by virtue
of their respective negligence combining to cause the death of
Aaron. As to the PNR, the RTC rightly found the PNR also guilty of
negligence despite the school van of the Pereñ as traversing the
railroad tracks at a point not dedicated by the PNR as a railroad
crossing for pedestrians and motorists, because the PNR did not
ensure the safety of others through the placing of crossbars, signal
lights, warning signs, and other permanent safety barriers to
prevent vehicles or pedestrians from crossing there. The RTC
observed that the fact that a crossing guard had been assigned to
man that point from 7 a.m. to 5 p.m. was a good indicium that the
PNR was aware of the risks to others as well as the need to control
the vehicular and other traffic there. Verily, the Pereñ as and the
PNR were joint tortfeasors.
2.
Was the indemnity for loss of
Aaron’s earning capacity proper?
The RTC awarded indemnity for loss of Aaron’s earning capacity.
Although agreeing with the RTC on the liability, the CA modified the
amount. Both lower courts took into consideration that Aaron,
while only a high school student, had been enrolled in one of the
reputable schools in the Philippines and that he had been a normal
and able-bodied child prior to his death. The basis for the
computation of Aaron’s earning capacity was not what he would
have become or what he would have wanted to be if not for his
untimely death, but the minimum wage in effect at the time of his
death. Moreover, the RTC’s computation of Aaron’s life expectancy
rate was not reckoned from his age of 15 years at the time of his
death, but on 21 years, his age when he would have graduated from
college.
We find the considerations taken into account by the lower courts
to be reasonable and fully warranted.
Yet, the Pereñ as submit that the indemnity for loss of earning
capacity was speculative and unfounded.1âwphi1 They cited
People v. Teehankee, Jr.,37 where the Court deleted the indemnity
for victim Jussi Leino’s loss of earning capacity as a pilot for being
speculative due to his having graduated from high school at the
International School in Manila only two years before the shooting,
and was at the time of the shooting only enrolled in the first
semester at the Manila Aero Club to pursue his ambition to become
a professional pilot. That meant, according to the Court, that he was
for all intents and purposes only a high school graduate.
We reject the Pereñ as’ submission.
First of all, a careful perusal of the Teehankee, Jr. case shows that
the situation there of Jussi Leino was not akin to that of Aaron here.
The CA and the RTC were not speculating that Aaron would be
some highly-paid professional, like a pilot (or, for that matter, an
engineer, a physician, or a lawyer). Instead, the computation of
Aaron’s earning capacity was premised on him being a lowly
minimum wage earner despite his being then enrolled at a
prestigious high school like Don Bosco in Makati, a fact that would
have likely ensured his success in his later years in life and at work.
And, secondly, the fact that Aaron was then without a history of
earnings should not be taken against his parents and in favor of the
defendants whose negligence not only cost Aaron his life and his
right to work and earn money, but also deprived his parents of
their right to his presence and his services as well. Our law itself
states that the loss of the earning capacity of the deceased shall be
the liability of the guilty party in favor of the heirs of the deceased,
and 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."38 Accordingly, we emphatically hold in favor of the
indemnification for Aaron’s loss of earning capacity despite him
having been unemployed, because compensation of this nature is
awarded not for loss of time or earnings but for loss of the
deceased’s power or ability to earn money. 39
This favorable treatment of the Zarates’ claim is not
unprecedented. In Cariaga v. Laguna Tayabas Bus Company and
Manila Railroad Company,40 fourth-year medical student Edgardo
Carriaga’s earning capacity, although he survived the accident but
his injuries rendered him permanently incapacitated, was
computed to be that of the physician that he dreamed to become.
The Court considered his scholastic record sufficient to justify the
assumption that he could have finished the medical course and
would have passed the medical board examinations in due time,
and that he could have possibly earned a modest income as a
medical practitioner. Also, in People v. Sanchez, 41 the Court opined
that murder and rape victim Eileen Sarmienta and murder victim
Allan Gomez could have easily landed good-paying jobs had they
graduated in due time, and that their jobs would probably pay
them high monthly salaries from ₱ 10,000.00 to ₱ 15,000.00 upon
their graduation. Their earning capacities were computed at rates
higher than the minimum wage at the time of their deaths due to
their being already senior agriculture students of the University of
the Philippines in Los Bañ os, the country’s leading educational
institution in agriculture.
3.
Were the amounts of damages excessive?
The Pereñ as plead for the reduction of the moral and exemplary
damages awarded to the Zarates in the respective amounts of ₱
2,500,000.00 and ₱ 1,000,000.00 on the ground that such amounts
were excessive.
The plea is unwarranted.
The moral damages of ₱ 2,500,000.00 were really just and
reasonable under the established circumstances of this case
because they were intended by the law to assuage the Zarates’ deep
mental anguish over their son’s unexpected and violent death, and
their moral shock over the senseless accident. That amount would
not be too much, considering that it would help the Zarates obtain
the means, diversions or amusements that would alleviate their
suffering for the loss of their child. At any rate, reducing the
amount as excessive might prove to be an injustice, given the
passage of a long time from when their mental anguish was
inflicted on them on August 22, 1996.
Anent the ₱ 1,000,000.00 allowed as exemplary damages, we
should not reduce the amount if only to render effective the desired
example for the public good. As a common carrier, the Pereñ as
needed to be vigorously reminded to observe their duty to exercise
extraordinary diligence to prevent a similarly senseless accident
from happening again. Only by an award of exemplary damages in
that amount would suffice to instill in them and others similarly
situated like them the ever-present need for greater and constant
vigilance in the conduct of a business imbued with public interest.
WHEREFORE, we DENY the petition for review
on certiorari; AFFIRM the decision promulgated on November 13,
2002; and ORDER the petitioners to pay the costs of suit.
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.4 The Civil Code, governing the liability of a
common carrier for death of or injury to its passengers, provides:
"Article 1755. A common carrier is bound to carry the passengers
safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with a due regard for all
the circumstances.
"Article 1756. In case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence as prescribed in articles 1733 and 1755."
"Article 1759. Common carriers are liable for the death of or
injuries to passengers through the negligence or willful acts of the
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.5 Such duty of a common carrier to provide safety
to its passengers so obligates it not only during the course of the
trip but for so long as the passengers are within its premises and
where they ought to be in pursuance to the contract of carriage. 6 
The statutory provisions render a common carrier liable for death
of or injury to passengers (a) through the negligence or wilful acts
of its employees or b) on account of wilful acts or negligence of
other passengers or of strangers if the common carrier’s employees
through the exercise of due diligence could have prevented or
stopped the act or omission.7 In case of such death or injury, a
carrier is presumed to have been at fault or been negligent, and 8 by
simple proof of injury, the passenger is relieved of the duty to still
establish the fault or negligence of the carrier or of its employees
and the burden shifts upon the carrier to prove that the injury is
due to an unforeseen event or to force majeure. 9 In the absence of
satisfactory explanation by the carrier on how the accident
occurred, which petitioners, according to the appellate court, have
failed to show, the presumption would be that it has been at fault, 10 
an exception from the general rule that negligence must be
proved.11
The foundation of 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 12 and related
provisions, in conjunction with Article 2180, 13 of the Civil Code. 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 219414 of the Civil Code can well apply.15 In fine, a
liability for tort may arise even under a contract, where tort is that
which breaches the contract.16 Stated differently, when an act
which constitutes a breach of contract would have itself constituted
the source of a quasi-delictual liability had no contract existed
between the parties, the contract can be said to have been
breached by tort, thereby allowing the rules on tort to apply. 17
Regrettably for LRT, as well as perhaps the surviving spouse and
heirs of the late Nicanor Navidad, this Court is concluded by the
factual finding of the Court of Appeals that "there is nothing to link
(Prudent) to the death of Nicanor (Navidad), for the reason that the
negligence of its employee, Escartin, has not been duly proven x x
x." This finding of the appellate court is not without substantial
justification in our own review of the records of the case.
There being, similarly, no showing that petitioner Rodolfo Roman
himself is guilty of any culpable act or omission, he must also be
absolved from liability. Needless to say, the contractual tie between
the LRT and Navidad is not itself a juridical relation between the
latter and Roman; thus, Roman can be made liable only for his own
fault or negligence.
The award of nominal damages in addition to actual damages is
untenable. Nominal damages are adjudicated in order that a right
of the plaintiff, which has been violated or invaded by the
defendant, may be vindicated or recognized, and not for the
purpose of indemnifying the plaintiff for any loss suffered by
him.18 It is an established rule that nominal damages cannot co-
exist with compensatory damages.19
WHEREFORE, the assailed decision of the appellate court is
AFFIRMED with MODIFICATION but only in that (a) the award of
nominal damages is DELETED and (b) petitioner Rodolfo Roman is
absolved from liability. No costs.
SO ORDERED.
G.R. No. 125948 December 29, 1998
FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner,
vs.
COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN,
BATANGAS CITY and ADORACION C. ARELLANO, in her official
capacity as City Treasurer of Batangas, respondents.
MARTINEZ, J.:
This petition for review on  certiorari assails the Decision of the
Court of Appeals dated November 29, 1995, in CA-G.R. SP No.
36801, affirming the decision of the Regional Trial Court of
Batangas City, Branch 84, in Civil Case No. 4293, which dismissed
petitioners' complaint for a business tax refund imposed by the
City of Batangas.
Petitioner is a grantee of a pipeline concession under Republic Act
No. 387, as amended, to contract, install and operate oil pipelines.
The original pipeline concession was granted in 1967 1 and
renewed by the Energy Regulatory Board in 1992. 2
Sometime in January 1995, petitioner applied for a mayor's permit
with the Office of the Mayor of Batangas City. However, before the
mayor's permit could be issued, the respondent City Treasurer
required petitioner to pay a local tax based on its gross receipts for
the fiscal year 1993 pursuant to the Local Government Code 3. The
respondent City Treasurer assessed a business tax on the
petitioner amounting to P956,076.04 payable in four installments
based on the gross receipts for products pumped at GPS-1 for the
fiscal year 1993 which amounted to P181,681,151.00. In order not
to hamper its operations, petitioner paid the tax under protest in
the amount of P239,019.01 for the first quarter of 1993.
On January 20, 1994, petitioner filed a letter-protest addressed to
the respondent City Treasurer, the pertinent portion of which
reads:
Please note that our Company (FPIC) is a pipeline operator with a
government concession granted under the Petroleum Act. It is
engaged in the business of transporting petroleum products from
the Batangas refineries, via pipeline, to Sucat and JTF Pandacan
Terminals. As such, our Company is exempt from paying tax on
gross receipts under Section 133 of the Local Government Code of
1991 . . . .
Moreover, Transportation contractors are not included in the
enumeration of contractors under Section 131, Paragraph (h) of the
Local Government Code. Therefore, the authority to impose tax "on
contractors and other independent contractors" under Section 143,
Paragraph (e) of the Local Government Code does not include the
power to levy on transportation contractors.
The imposition and assessment cannot be categorized as a mere fee
authorized under Section 147 of the Local Government Code. The
said section limits the imposition of fees and charges on business to
such amounts as may be commensurate to the cost of regulation,
inspection, and licensing. Hence, assuming arguendo that FPIC is
liable for the license fee, the imposition thereof based on gross
receipts is violative of the aforecited provision. The amount of
P956,076.04 (P239,019.01 per quarter) is not commensurate to the
cost of regulation, inspection and licensing. The fee is already a
revenue raising measure, and not a mere regulatory imposition. 4
On March 8, 1994, the respondent City Treasurer denied the
protest contending that petitioner cannot be considered engaged in
transportation business, thus it cannot claim exemption under
Section 133 (j) of the Local Government Code. 5
On June 15, 1994, petitioner filed with the Regional Trial Court of
Batangas City a complaint 6 for tax refund with prayer for writ of
preliminary injunction against respondents City of Batangas and
Adoracion Arellano in her capacity as City Treasurer. In its
complaint, petitioner alleged, inter alia, that: (1) the imposition and
collection of the business tax on its gross receipts violates Section
133 of the Local Government Code; (2) the authority of cities to
impose and collect a tax on the gross receipts of "contractors and
independent contractors" under Sec. 141 (e) and 151 does not
include the authority to collect such taxes on transportation
contractors for, as defined under Sec. 131 (h), the term
"contractors" excludes transportation contractors; and, (3) the City
Treasurer illegally and erroneously imposed and collected the said
tax, thus meriting the immediate refund of the tax paid. 7
Traversing the complaint, the respondents argued that petitioner
cannot be exempt from taxes under Section 133 (j) of the Local
Government Code as said exemption applies only to
"transportation contractors and persons engaged in the
transportation by hire and common carriers by air, land and
water." Respondents assert that pipelines are not included in the
term "common carrier" which refers solely to ordinary carriers
such as trucks, trains, ships and the like. Respondents further posit
that the term "common carrier" under the said code pertains to the
mode or manner by which a product is delivered to its destination. 8
On October 3, 1994, the trial court rendered a decision dismissing
the complaint, ruling in this wise:
. . . Plaintiff is either a contractor or other independent contractor.
. . . the exemption to tax claimed by the plaintiff has become
unclear. It is a rule that tax exemptions are to be strictly construed
against the taxpayer, taxes being the lifeblood of the government.
Exemption may therefore be granted only by clear and unequivocal
provisions of law.
Plaintiff claims that it is a grantee of a pipeline concession under
Republic Act 387. (Exhibit A) whose concession was lately renewed
by the Energy Regulatory Board (Exhibit B). Yet neither said law
nor the deed of concession grant any tax exemption upon the
plaintiff.
Even the Local Government Code imposes a tax on franchise
holders under Sec. 137 of the Local Tax Code. Such being the
situation obtained in this case (exemption being unclear and
equivocal) resort to distinctions or other considerations may be of
help:
1. That the exemption granted under Sec. 133 (j) encompasses
only common carriers  so as not to overburden the riding public or
commuters with taxes.  Plaintiff is not a common carrier, but a
special carrier extending its services and facilities to a single
specific or "special customer" under a "special contract."
2. The Local Tax Code of 1992 was basically enacted to give more
and effective local autonomy to local governments than the
previous enactments, to make them economically and financially
viable to serve the people and discharge their functions with a
concomitant obligation to accept certain devolution of powers, . . .
So, consistent with this policy even franchise grantees are taxed
(Sec. 137) and contractors are also taxed under Sec. 143 (e) and
151 of the Code.9
Petitioner assailed the aforesaid decision before this Court via  a
petition for review. On February 27, 1995, we referred the case to
the respondent Court of Appeals for consideration and
adjudication. 10 On November 29, 1995, the respondent court
rendered a decision 11 affirming the trial court's dismissal of
petitioner's complaint. Petitioner's motion for reconsideration was
denied on July 18, 1996. 12
Hence, this petition. At first, the petition was denied due course in a
Resolution dated November 11, 1996. 13 Petitioner moved for a
reconsideration which was granted by this Court in a
Resolution 14 of January 22, 1997. Thus, the petition was reinstated.
Petitioner claims that the respondent Court of Appeals erred in
holding that (1) the petitioner is not a common carrier or a
transportation contractor, and (2) the exemption sought for by
petitioner is not clear under the law.
There is merit in the petition.
A "common carrier" may be defined, broadly, as one who holds
himself out to the public as engaged in the business of transporting
persons or property from place to place, for compensation, offering
his services to the public generally.
Art. 1732 of the Civil Code defines a "common carrier" as "any
person, corporation, firm or association engaged in the business of
carrying or transporting passengers or goods or both, by land,
water, or air, for compensation, offering their services to the
public."
The test for determining whether a party is a common carrier of
goods is:
1. He must be engaged in the business of carrying goods for others
as a public employment, and must hold himself out as ready to
engage in the transportation of goods for person generally as a
business and not as a casual occupation;
2. He must undertake to carry goods of the kind to which his
business is confined;
3. He must undertake to carry by the method by which his business
is conducted and over his established roads; and
4. The transportation must be for hire. 15
Based on the above definitions and requirements, there is no doubt
that petitioner is a common carrier. It is engaged in the business of
transporting or carrying goods, i.e. petroleum products, for hire as
a public employment. It undertakes to carry for all persons
indifferently, that is, to all persons who choose to employ its
services, and transports the goods by land and for compensation.
The fact that petitioner has a limited clientele does not exclude it
from the definition of a common carrier. In De Guzman vs. Court of
Appeals  16 we ruled that:
The above article (Art. 1732, Civil Code) makes no distinction
between one whose principal business activity is the carrying of
persons or goods or both, and one who does such carrying only as
an ancillary activity (in local idiom, as a "sideline"). Article 1732 . . .
avoids making any distinction between a person or enterprise
offering transportation service on a regular  or scheduled basis and
one offering such service on an  occasional, episodic or unscheduled
basis. Neither does Article 1732 distinguish between a carrier
offering its services to the "general public," i.e., the general
community or population, and one who offers services or solicits
business only from a narrow segment of the general population.
We think that Article 1877 deliberately refrained from making such
distinctions.
So understood, the concept of "common carrier" under Article 1732
may be seen to coincide neatly with the notion of "public service,"
under the Public Service Act (Commonwealth Act No. 1416, as
amended) which at least partially supplements the law on common
carriers set forth in the Civil Code. Under Section 13, paragraph (b)
of the Public Service Act, "public service" includes:
every person that now or hereafter may own, operate. manage, or
control in the Philippines, for hire or compensation, with general or
limited clientele, whether permanent, occasional or accidental, and
done for general business purposes, any common carrier, railroad,
street railway, traction railway, subway motor vehicle, either for
freight or passenger, or both, with or without fixed route and
whatever may be its classification, freight or carrier service of any
class, express service, steamboat, or steamship line, pontines,
ferries and water craft, engaged in the transportation of passengers
or freight or both, shipyard, marine repair shop, wharf or dock, ice
plant, ice-refrigeration plant, canal, irrigation system gas, electric
light heat and power, water supply and power petroleum, sewerage
system, wire or wireless communications systems, wire or wireless
broadcasting stations and other similar public services. (Emphasis
Supplied)
Also, respondent's argument that the term "common carrier" as
used in Section 133 (j) of the Local Government Code refers only to
common carriers transporting goods and passengers through
moving vehicles or vessels either by land, sea or water, is
erroneous.
As correctly pointed out by petitioner, the definition of "common
carriers" in the Civil Code makes no distinction as to the means of
transporting, as long as it is by land, water or air. It does not
provide that the transportation of the passengers or goods should
be by motor vehicle. In fact, in the United States, oil pipe line
operators are considered common carriers. 17
Under the Petroleum Act of the Philippines (Republic Act 387),
petitioner is considered a "common carrier." Thus, Article 86
thereof provides that:
Art. 86. Pipe line concessionaire as common carrier. — A pipe line
shall have the preferential right to utilize installations for the
transportation of petroleum owned by him, but is obligated to
utilize the remaining transportation capacity pro rata for the
transportation of such other petroleum as may be offered by others
for transport, and to charge without discrimination such rates as
may have been approved by the Secretary of Agriculture and
Natural Resources.
Republic Act 387 also regards petroleum operation as a public
utility. Pertinent portion of Article 7 thereof provides:
that everything relating to the exploration for and exploitation of
petroleum . . . and everything relating to the manufacture, refining,
storage, or transportation by special methods of petroleum, is
hereby declared to be a  public utility. (Emphasis Supplied)
The Bureau of Internal Revenue likewise considers the petitioner a
"common carrier." In BIR Ruling No. 069-83, it declared:
. . . since [petitioner] is a pipeline concessionaire that is engaged
only in transporting petroleum products, it is considered a
common carrier under Republic Act No. 387 . . . . Such being the
case, it is not subject to withholding tax prescribed by Revenue
Regulations No. 13-78, as amended.
From the foregoing disquisition, there is no doubt that petitioner is
a "common carrier" and, therefore, exempt from the business tax as
provided for in Section 133 (j), of the Local Government Code, to
wit:
Sec. 133. Common Limitations on the Taxing Powers of Local
Government Units. — Unless otherwise provided herein, the
exercise of the taxing powers of provinces, cities, municipalities,
and barangays shall not extend to the levy of the following:
x x x           x x x          x x x
(j) Taxes on the gross receipts of transportation contractors and
persons engaged in the transportation of passengers or freight by
hire and common carriers by air, land or water, except as provided
in this Code.
The deliberations conducted in the House of Representatives on
the Local Government Code of 1991 are illuminating:
MR. AQUINO (A). Thank you, Mr. Speaker.
Mr. Speaker, we would like to proceed to page 95, line
1. It states: "SEC. 121 [now Sec. 131]. Common Limitations on the
Taxing Powers of Local Government Units." . . .
MR. AQUINO (A.). Thank you Mr. Speaker.
Still on page 95, subparagraph 5, on taxes on the business of
transportation. This appears to be one of those being deemed to be
exempted from the taxing powers of the local government units.
May we know the reason why the transportation business is being
excluded from the taxing powers of the local government units?
MR. JAVIER (E.). Mr. Speaker, there is an exception contained in
Section 121 (now Sec. 131), line 16, paragraph 5. It states that local
government units may not impose taxes on the business of
transportation, except as otherwise provided in this code.
Now, Mr. Speaker, if the Gentleman would care to go to page 98 of
Book II, one can see there that provinces have the power to impose
a tax on business enjoying a franchise at the rate of not more than
one-half of 1 percent of the gross annual receipts. So,
transportation contractors who are enjoying a franchise would be
subject to tax by the province. That is the exception, Mr. Speaker.
What we want to guard against here, Mr. Speaker, is the imposition
of taxes by local government units on the carrier business. Local
government units may impose taxes on top of what is already being
imposed by the National Internal Revenue Code which is the so-
called "common carriers tax." We do not want a duplication of this
tax, so we just provided for an exception under Section 125 [now
Sec. 137] that a province may impose this tax at a specific rate.
MR. AQUINO (A.). Thank you for that clarification, Mr. Speaker. . . . 18
It is clear that the legislative intent in excluding from the taxing
power of the local government unit the imposition of business tax
against common carriers is to prevent a duplication of the so-called
"common carrier's tax."
Petitioner is already paying three (3%) percent common carrier's
tax on its gross sales/earnings under the National Internal Revenue
Code. 19 To tax petitioner again on its gross receipts in its
transportation of petroleum business would defeat the purpose of
the Local Government Code.
WHEREFORE, the petition is hereby GRANTED. The decision of the
respondent Court of Appeals dated November 29, 1995 in CA-G.R.
SP No. 36801 is REVERSED and SET ASIDE.
SO ORDERED.
G.R. No. 138334               August 25, 2003
ESTELA L. CRISOSTOMO, Petitioner,
vs.
The Court of Appeals and CARAVAN TRAVEL & TOURS
INTERNATIONAL, INC., Respondents.
DECISION
YNARES-SANTIAGO, J.:
In May 1991, petitioner Estela L. Crisostomo contracted the
services of respondent Caravan Travel and Tours International, Inc.
to arrange and facilitate her booking, ticketing and accommodation
in a tour dubbed "Jewels of Europe". The package tour included the
countries of England, Holland, Germany, Austria, Liechstenstein,
Switzerland and France at a total cost of P74,322.70. Petitioner was
given a 5% discount on the amount, which included airfare, and the
booking fee was also waived because petitioner’s niece, Meriam
Menor, was respondent company’s ticketing manager.
Pursuant to said contract, Menor went to her aunt’s residence on
June 12, 1991 – a Wednesday – to deliver petitioner’s travel
documents and plane tickets. Petitioner, in turn, gave Menor the
full payment for the package tour. Menor then told her to be at the
Ninoy Aquino International Airport (NAIA) on Saturday, two hours
before her flight on board British Airways.
Without checking her travel documents, petitioner went to NAIA on
Saturday, June 15, 1991, to take the flight for the first leg of her
journey from Manila to Hongkong. To petitioner’s dismay, she
discovered that the flight she was supposed to take had already
departed the previous day. She learned that her plane ticket was
for the flight scheduled on June 14, 1991. She thus called up Menor
to complain.
Subsequently, Menor prevailed upon petitioner to take another
tour – the "British Pageant" – which included England, Scotland and
Wales in its itinerary. For this tour package, petitioner was asked
anew to pay US$785.00 or P20,881.00 (at the then prevailing
exchange rate of P26.60). She gave respondent US$300 or
P7,980.00 as partial payment and commenced the trip in July 1991.
Upon petitioner’s return from Europe, she demanded from
respondent the reimbursement of P61,421.70, representing the
difference between the sum she paid for "Jewels of Europe" and the
amount she owed respondent for the "British Pageant" tour.
Despite several demands, respondent company refused to
reimburse the amount, contending that the same was non-
refundable.1 Petitioner was thus constrained to file a complaint
against respondent for breach of contract of carriage and damages,
which was docketed as Civil Case No. 92-133 and raffled to Branch
59 of the Regional Trial Court of Makati City.
In her complaint,2 petitioner alleged that her failure to join "Jewels
of Europe" was due to respondent’s fault since it did not clearly
indicate the departure date on the plane ticket. Respondent was
also negligent in informing her of the wrong flight schedule
through its employee Menor. She insisted that the "British Pageant"
was merely a substitute for the "Jewels of Europe" tour, such that
the cost of the former should be properly set-off against the sum
paid for the latter.
For its part, respondent company, through its Operations Manager,
Concepcion Chipeco, denied responsibility for petitioner’s failure to
join the first tour. Chipeco insisted that petitioner was informed of
the correct departure date, which was clearly and legibly printed
on the plane ticket. The travel documents were given to petitioner
two days ahead of the scheduled trip. Petitioner had only herself to
blame for missing the flight, as she did not bother to read or
confirm her flight schedule as printed on the ticket.
Respondent explained that it can no longer reimburse the amount
paid for "Jewels of Europe", considering that the same had already
been remitted to its principal in Singapore, Lotus Travel Ltd., which
had already billed the same even if petitioner did not join the tour.
Lotus’ European tour organizer, Insight International Tours Ltd.,
determines the cost of a package tour based on a minimum number
of projected participants. For this reason, it is accepted industry
practice to disallow refund for individuals who failed to take a
booked tour.3
Lastly, respondent maintained that the "British Pageant" was not a
substitute for the package tour that petitioner missed. This tour
was independently procured by petitioner after realizing that she
made a mistake in missing her flight for "Jewels of Europe".
Petitioner was allowed to make a partial payment of only
US$300.00 for the second tour because her niece was then an
employee of the travel agency. Consequently, respondent prayed
that petitioner be ordered to pay the balance of P12,901.00 for the
"British Pageant" package tour.
After due proceedings, the trial court rendered a decision, 4 the
dispositive part of which reads:
WHEREFORE, premises considered, judgment is hereby rendered
as follows:
1. Ordering the defendant to return and/or refund to the plaintiff
the amount of Fifty Three Thousand Nine Hundred Eighty Nine
Pesos and Forty Three Centavos (P53,989.43) with legal interest
thereon at the rate of twelve percent (12%) per annum starting
January 16, 1992, the date when the complaint was filed;
2. Ordering the defendant to pay the plaintiff the amount of Five
Thousand (P5,000.00) Pesos as and for reasonable attorney’s fees;
3. Dismissing the defendant’s counterclaim, for lack of merit; and
4. With costs against the defendant.
SO ORDERED.5
The trial court held that respondent was negligent in erroneously
advising petitioner of her departure date through its employee,
Menor, who was not presented as witness to rebut petitioner’s
testimony. However, petitioner should have verified the exact date
and time of departure by looking at her ticket and should have
simply not relied on Menor’s verbal representation. The trial court
thus declared that petitioner was guilty of contributory negligence
and accordingly, deducted 10% from the amount being claimed as
refund.
Respondent appealed to the Court of Appeals, which likewise found
both parties to be at fault. However, the appellate court held that
petitioner is more negligent than respondent because as a lawyer
and well-traveled person, she should have known better than to
simply rely on what was told to her. This being so, she is not
entitled to any form of damages. Petitioner also forfeited her right
to the "Jewels of Europe" tour and must therefore pay respondent
the balance of the price for the "British Pageant" tour. The
dispositive portion of the judgment appealed from reads as follows:
WHEREFORE, premises considered, the decision of the Regional
Trial Court dated October 26, 1995 is hereby REVERSED and SET
ASIDE. A new judgment is hereby ENTERED requiring the plaintiff-
appellee to pay to the defendant-appellant the amount of
P12,901.00, representing the balance of the price of the British
Pageant Package Tour, the same to earn legal interest at the rate of
SIX PERCENT (6%) per annum, to be computed from the time the
counterclaim was filed until the finality of this decision. After this
decision becomes final and executory, the rate of TWELVE
PERCENT (12%) interest per annum shall be additionally imposed
on the total obligation until payment thereof is satisfied. The award
of attorney’s fees is DELETED. Costs against the plaintiff-appellee.
SO ORDERED.6
Upon denial of her motion for reconsideration, 7 petitioner filed the
instant petition under Rule 45 on the following grounds:
I
It is respectfully submitted that the Honorable Court of Appeals
committed a reversible error in reversing and setting aside the
decision of the trial court by ruling that the petitioner is not
entitled to a refund of the cost of unavailed "Jewels of Europe" tour
she being equally, if not more, negligent than the private
respondent, for in the contract of carriage the common carrier is
obliged to observe utmost care and extra-ordinary diligence which
is higher in degree than the ordinary diligence required of the
passenger. Thus, even if the petitioner and private respondent
were both negligent, the petitioner cannot be considered to be
equally, or worse, more guilty than the private respondent. At best,
petitioner’s negligence is only contributory while the private
respondent [is guilty] of gross negligence making the principle of
pari delicto inapplicable in the case;
II
The Honorable Court of Appeals also erred in not ruling that the
"Jewels of Europe" tour was not indivisible and the amount paid
therefor refundable;
III
The Honorable Court erred in not granting to the petitioner the
consequential damages due her as a result of breach of contract of
carriage.8
Petitioner contends that respondent did not observe the standard
of care required of a common carrier when it informed her wrongly
of the flight schedule. She could not be deemed more negligent than
respondent since the latter is required by law to exercise
extraordinary diligence in the fulfillment of its obligation. If she
were negligent at all, the same is merely contributory and not the
proximate cause of the damage she suffered. Her loss could only be
attributed to respondent as it was the direct consequence of its
employee’s gross negligence.
Petitioner’s contention has no merit.
By definition, a contract of carriage or transportation is one
whereby a certain person or association of persons obligate
themselves to transport persons, things, or news from one place to
another for a fixed price. 9 Such person or association of persons are
regarded as carriers and are classified as private or special carriers
and common or public carriers. 10 A common carrier is defined
under Article 1732 of the Civil Code as persons, corporations, firms
or associations engaged in the business of carrying or transporting
passengers or goods or both, by land, water or air, for
compensation, offering their services to the public.
It is obvious from the above definition that respondent is not an
entity engaged in the business of transporting either passengers or
goods and is therefore, neither a private nor a common carrier.
Respondent did not undertake to transport petitioner from one
place to another since its covenant with its customers is simply to
make travel arrangements in their behalf. Respondent’s services as
a travel agency include procuring tickets and facilitating travel
permits or visas as well as booking customers for tours.
While petitioner concededly bought her plane ticket through the
efforts of respondent company, this does not mean that the latter
ipso facto is a common carrier. At most, respondent acted merely as
an agent of the airline, with whom petitioner ultimately contracted
for her carriage to Europe. Respondent’s obligation to petitioner in
this regard was simply to see to it that petitioner was properly
booked with the airline for the appointed date and time. Her
transport to the place of destination, meanwhile, pertained directly
to the airline.
The object of petitioner’s contractual relation with respondent is
the latter’s service of arranging and facilitating petitioner’s
booking, ticketing and accommodation in the package tour. In
contrast, the object of a contract of carriage is the transportation of
passengers or goods. It is in this sense that the contract between
the parties in this case was an ordinary one for services and not
one of carriage. Petitioner’s submission is premised on a wrong
assumption.
The nature of the contractual relation between petitioner and
respondent is determinative of the degree of care required in the
performance of the latter’s obligation under the contract. For
reasons of public policy, a common carrier in a contract of carriage
is bound by law to carry passengers as far as human care and
foresight can provide using the utmost diligence of very cautious
persons and with due regard for all the circumstances. 11 As earlier
stated, however, respondent is not a common carrier but a travel
agency. It is thus not bound under the law to observe extraordinary
diligence in the performance of its obligation, as petitioner claims.
Since the contract between the parties is an ordinary one for
services, the standard of care required of respondent is that of a
good father of a family under Article 1173 of the Civil Code. 12 This
connotes reasonable care consistent with that which an ordinarily
prudent person would have observed when confronted with a
similar situation. The test to determine whether negligence
attended the performance of an obligation is: did the defendant in
doing the alleged negligent act use that reasonable care and caution
which an ordinarily prudent person would have used in the same
situation? If not, then he is guilty of negligence. 13
In the case at bar, the lower court found Menor negligent when she
allegedly informed petitioner of the wrong day of departure.
Petitioner’s testimony was accepted as indubitable evidence of
Menor’s alleged negligent act since respondent did not call Menor
to the witness stand to refute the allegation. The lower court
applied the presumption under Rule 131, Section 3 (e) 14 of the
Rules of Court that evidence willfully suppressed would be adverse
if produced and thus considered petitioner’s uncontradicted
testimony to be sufficient proof of her claim.
On the other hand, respondent has consistently denied that Menor
was negligent and maintains that petitioner’s assertion is belied by
the evidence on record. The date and time of departure was legibly
written on the plane ticket and the travel papers were delivered
two days in advance precisely so that petitioner could prepare for
the trip. It performed all its obligations to enable petitioner to join
the tour and exercised due diligence in its dealings with the latter.
We agree with respondent.
Respondent’s failure to present Menor as witness to rebut
petitioner’s testimony could not give rise to an inference
unfavorable to the former. Menor was already working in France at
the time of the filing of the complaint, 15 thereby making it
physically impossible for respondent to present her as a witness.
Then too, even if it were possible for respondent to secure Menor’s
testimony, the presumption under Rule 131, Section 3(e) would
still not apply. The opportunity and possibility for obtaining
Menor’s testimony belonged to both parties, considering that
Menor was not just respondent’s employee, but also petitioner’s
niece. It was thus error for the lower court to invoke the
presumption that respondent willfully suppressed evidence under
Rule 131, Section 3(e). Said presumption would logically be
inoperative if the evidence is not intentionally omitted but is
simply unavailable, or when the same could have been obtained by
both parties.16
In sum, we do not agree with the finding of the lower court that
Menor’s negligence concurred with the negligence of petitioner and
resultantly caused damage to the latter. Menor’s negligence was
not sufficiently proved, considering that the only evidence
presented on this score was petitioner’s uncorroborated narration
of the events. It is well-settled that the party alleging a fact has the
burden of proving it and a mere allegation cannot take the place of
evidence.17 If the plaintiff, upon whom rests the burden of proving
his cause of action, fails to show in a satisfactory manner facts upon
which he bases his claim, the defendant is under no obligation to
prove his exception or defense.18
Contrary to petitioner’s claim, the evidence on record shows that
respondent exercised due diligence in performing its obligations
under the contract and followed standard procedure in rendering
its services to petitioner. As correctly observed by the lower court,
the plane ticket19 issued to petitioner clearly reflected the
departure date and time, contrary to petitioner’s contention. The
travel documents, consisting of the tour itinerary, vouchers and
instructions, were likewise delivered to petitioner two days prior
to the trip. Respondent also properly booked petitioner for the
tour, prepared the necessary documents and procured the plane
tickets. It arranged petitioner’s hotel accommodation as well as
food, land transfers and sightseeing excursions, in accordance with
its avowed undertaking.
Therefore, it is clear that respondent performed its prestation
under the contract as well as everything else that was essential to
book petitioner for the tour. Had petitioner exercised due diligence
in the conduct of her affairs, there would have been no reason for
her to miss the flight. Needless to say, after the travel papers were
delivered to petitioner, it became incumbent upon her to take
ordinary care of her concerns. This undoubtedly would require that
she at least read the documents in order to assure herself of the
important details regarding the trip.
The negligence of the obligor in the performance of the obligation
renders him liable for damages for the resulting loss suffered by
the obligee. Fault or negligence of the obligor consists in his failure
to exercise due care and prudence in the performance of the
obligation as the nature of the obligation so demands. 20 There is no
fixed standard of diligence applicable to each and every contractual
obligation and each case must be determined upon its particular
facts. The degree of diligence required depends on the
circumstances of the specific obligation and whether one has been
negligent is a question of fact that is to be determined after taking
into account the particulars of each case.21 1âwphi1
The lower court declared that respondent’s employee was
negligent. This factual finding, however, is not supported by the
evidence on record. While factual findings below are generally
conclusive upon this court, the rule is subject to certain exceptions,
as when the trial court overlooked, misunderstood, or misapplied
some facts or circumstances of weight and substance which will
affect the result of the case.22
In the case at bar, the evidence on record shows that respondent
company performed its duty diligently and did not commit any
contractual breach. Hence, petitioner cannot recover and must bear
her own damage.
WHEREFORE, the instant petition is DENIED for lack of merit. The
decision of the Court of Appeals in CA-G.R. CV No. 51932 is
AFFIRMED. Accordingly, petitioner is ordered to pay respondent
the amount of P12,901.00 representing the balance of the price of
the British Pageant Package Tour, with legal interest thereon at the
rate of 6% per annum, to be computed from the time the
counterclaim was filed until the finality of this Decision. After this
Decision becomes final and executory, the rate of 12% per annum
shall be imposed until the obligation is fully settled, this interim
period being deemed to be by then an equivalent to a forbearance
of credit.23
SO ORDERED.