SECOND DIVISION

[ G.R. No. 166250. July 26, 2010 ]

UNSWORTH TRANSPORT INTERNATIONAL (PHILS.), INC., PETITIONER, VS.
COURT OF APPEALS AND PIONEER INSURANCE AND SURETY CORPORATION,
RESPONDENTS.

DECISION
NACHURA, J.:
For review is the Court of Appeals (CA) Decision[1] dated April 29, 2004 and Resolution[2] dated
November 26, 2004. The assailed Decision affirmed the Regional Trial Court (RTC)
decision[3] dated February 22, 2001; while the assailed Resolution denied petitioner Unsworth
Transport International (Philippines), Inc., American President Lines, Ltd. (APL), and Unsworth
Transport International, Inc.'s (UTI's) motion for reconsideration.

The facts of the case are:

On August 31, 1992, the shipper Sylvex Purchasing Corporation delivered to UTI a shipment of
27 drums of various raw materials for pharmaceutical manufacturing, consisting of: "1) 3
drums (of) extracts, flavoring liquid, flammable liquid x x x banana flavoring; 2) 2 drums (of)
flammable liquids x x x turpentine oil; 2 pallets. STC: 40 bags dried yeast; and 3) 20 drums (of)
Vitabs: Vitamin B Complex Extract."[4] UTI issued Bill of Lading No. C320/C15991-2,[5] covering
the aforesaid shipment. The subject shipment was insured with private respondent Pioneer
Insurance and Surety Corporation in favor of Unilab against all risks in the amount of
P1,779,664.77 under and by virtue of Marine Risk Note Number MC RM UL 0627 92 [6] and Open
Cargo Policy No. HO-022-RIU.[7]

On the same day that the bill of lading was issued, the shipment was loaded in a sealed 1x40
container van, with no. APLU-982012, boarded on APL's vessel M/V "Pres. Jackson," Voyage
42, and transshipped to APL's M/V "Pres. Taft"[8] for delivery to petitioner in favor of the
consignee United Laboratories, Inc. (Unilab).

On September 30, 1992, the shipment arrived at the port of Manila. On October 6, 1992,
petitioner received the said shipment in its warehouse after it stamped the Permit to Deliver
Imported Goods[9] procured by the Champs Customs Brokerage.[10] Three days thereafter, or
on October 9, 1992, Oceanica Cargo Marine Surveyors Corporation (OCMSC) conducted a
stripping survey of the shipment located in petitioner's warehouse. The survey results stated:

2-pallets STC 40 bags Dried Yeast, both in good order condition and properly sealed

19- steel drums STC Vitamin B Complex Extract, all in good order condition and properly
sealed

1-steel drum STC Vitamin B Complex Extra[ct] with cut/hole on side, with approx. spilling of
1%[11]

On October 15, 1992, the arrastre Jardine Davies Transport Services, Inc. (Jardine) issued
Gate Pass No. 7614[12] which stated that "22 drums[13] Raw Materials for Pharmaceutical Mfg."
were loaded on a truck with Plate No. PCK-434 facilitated by Champs for delivery to Unilab's
warehouse. The materials were noted to be complete and in good order in the gate pass. [14] On
the same day, the shipment arrived in Unilab's warehouse and was immediately surveyed by
an independent surveyor, J.G. Bernas Adjusters & Surveyors, Inc. (J.G. Bernas). The Report
stated:
1-p/bag torn on side contents partly spilled

1-s/drum #7 punctured and retaped on bottom side content lacking

5-drums shortship/short delivery[15]

On October 23 and 28, 1992, the same independent surveyor conducted final inspection
surveys which yielded the same results. Consequently, Unilab's quality control representative
rejected one paper bag containing dried yeast and one steel drum containing Vitamin B
Complex as unfit for the intended purpose.[16]

On November 7, 1992, Unilab filed a formal claim[17] for the damage against private respondent
and UTI. On November 20, 1992, UTI denied liability on the basis of the gate pass issued by
Jardine that the goods were in complete and good condition; while private respondent paid
the claimed amount on March 23, 1993. By virtue of the Loss and Subrogation Receipt [18]
issued by Unilab in favor of private respondent, the latter filed a complaint
for Damages against APL, UTI and petitioner with the RTC of Makati.[19] The case was
docketed as Civil Case No. 93-3473 and was raffled to Branch 134.

After the termination of the pre-trial conference, trial on the merits ensued. On February 22,
2001, the RTC decided in favor of private respondent and against APL, UTI and petitioner, the
dispositive portion of which reads:

WHEREFORE, judgment is hereby rendered in favor of plaintif PIONEER INSURANCE & SURETY
CORPORATION and against the defendants AMERICAN PRESIDENT LINES and UNSWORTH
TRANSPORT INTERNATIONAL (PHILS.), INC. (now known as JUGRO TRANSPORT INT'L.,
PHILS.), ordering the latter to pay, jointly and severally, the former the following amounts:

1. The sum of SEVENTY SIX THOUSAND TWO HUNDRED THIRTY ONE and 27/100
(Php76,231.27) with interest at the legal rate of 6% per annum to be computed starting
from September 30, 1993 until fully paid, for and as actual damages;
2. The amount equivalent to 25% of the total sum as attorney's fees;
3. Cost of this litigation.
SO ORDERED.[20]

On appeal, the CA affirmed the RTC decision on April 29, 2004. The CA rejected UTI's defense
that it was merely a forwarder, declaring instead that it was a common carrier. The appellate
court added that by issuing the Bill of Lading, UTI acknowledged receipt of the goods and
agreed to transport and deliver them at a specific place to a person named or his order. The
court further concluded that upon the delivery of the subject shipment to petitioner's
warehouse, its liability became similar to that of a depositary. As such, it ought to have
exercised ordinary diligence in the care of the goods. And as found by the RTC, the CA agreed
that petitioner failed to exercise the required diligence. The CA also rejected petitioner's
claim that its liability should be limited to $500 per package pursuant to the Carriage of Goods
by Sea Act (COGSA) considering that the value of the shipment was declared pursuant to the
letter of credit and the pro forma invoice. As to APL, the court considered it as a common
carrier notwithstanding the non-issuance of a bill of lading inasmuch as a bill of lading is not
indispensable for the execution of a contract of carriage. [21]

Unsatisfied, petitioner comes to us in this petition for review on certiorari, raising the
following issues:

1. WHETHER OR NOT THE HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF

DISCRETION AMOUNTING TO LACK OR EXCESS OF JURISDICTION IN UPHOLDING THE
DECISION OF THE REGIONAL TRIAL COURT DATED 22 FEBRUARY 2001, AWARDING THE SUM
OF SEVENTY SIX THOUSAND TWO HUNDRED THIRTY ONE AND 27/100 PESOS (PHP76,231.27)
WITH LEGAL INTEREST AT 6% PER ANNUM AS ACTUAL DAMAGES AND 25% AS ATTORNEY'S
FEES.

2. WHETHER OR NOT PETITIONER UTI IS A COMMON CARRIER.

3. WHETHER OR NOT PETITIONER UTI EXERCISED THE REQUIRED ORDINARY DILIGENCE.

4. WHETHER OR NOT THE PRIVATE RESPONDENT SUFFICIENTLY ESTABLISHED THE

ALLEGED DAMAGE TO ITS CARGO.[22]

Petitioner admits that it is a forwarder but disagrees with the CA's conclusion that it is a
common carrier. It also questions the appellate court's findings that it failed to establish that
it exercised extraordinary or ordinary diligence in the vigilance over the subject shipment. As
to the damages allegedly suffered by private respondent, petitioner counters that they were
not sufficiently proven. Lastly, it insists that its liability, in any event, should be limited to
$500 pursuant to the package limitation rule. Indeed, petitioner wants us to review the factual
findings of the RTC and the CA and to evaluate anew the evidence presented by the parties.

The petition is partly meritorious.

Well established is the rule that factual questions may not be raised in a petition for review
on certiorari as clearly stated in Section 1, Rule 45 of the Rules of Court, viz.:

Section 1. Filing of petition with Supreme Court. - A party desiring to appeal

by certiorari from a judgment or final order or resolution of the Court of Appeals, the
Sandiganbayan, the Regional Trial Court or other courts whenever authorized by law, may file
with the Supreme Court a verified petition for review on certiorari. The petition shall raise
only questions of law which must be distinctly set forth.

Admittedly, petitioner is a freight forwarder. The term "freight forwarder" refers to a firm
holding itself out to the general public (other than as a pipeline, rail, motor, or water carrier) to
provide transportation of property for compensation and, in the ordinary course of its
business, (1) to

assemble and consolidate, or to provide for assembling and consolidating, shipments, and to
perform or provide for break-bulk and distribution operations of the shipments; (2) to assume
responsibility for the transportation of goods from the place of receipt to the place of
destination; and (3) to use for any part of the transportation a carrier subject to the federal
law pertaining to common carriers.[23]

A freight forwarder's liability is limited to damages arising from its own negligence, including
negligence in choosing the carrier; however, where the forwarder contracts to deliver goods
to their destination instead of merely arranging for their transportation, it becomes liable as a
common carrier for loss or damage to goods. A freight forwarder assumes the responsibility of
a carrier, which actually executes the transport, even though the forwarder does not carry the
merchandise itself.[24]

It is undisputed that UTI issued a bill of lading in favor of Unilab. Pursuant thereto, petitioner
undertook to transport, ship, and deliver the 27 drums of raw materials for pharmaceutical
manufacturing to the consignee.

A bill of lading is a written acknowledgement of the receipt of goods and an agreement to

transport and to deliver them at a specified place to a person named or on his or her order.
[25]
It operates both as a receipt and as a contract. It is a receipt for the goods shipped and a
contract to transport and

deliver the same as therein stipulated. As a receipt, it recites the date and place of shipment,
describes the goods as to quantity, weight, dimensions, identification marks, condition,
quality, and value. As a contract, it names the contracting parties, which include the
consignee; fixes the route, destination, and freight rate or charges; and stipulates the rights
and obligations assumed by the parties.[26]

Undoubtedly, UTI is liable as a common carrier. Common carriers, as a general rule, are
presumed to have been at fault or negligent if the goods they transported deteriorated or got
lost or destroyed. That is, unless they prove that they exercised extraordinary diligence in
transporting the goods. In order to avoid responsibility for any loss or damage, therefore, they
have the burden of proving that they observed such diligence. [27] Mere proof of delivery of the
goods in good order to a common carrier and of their arrival in bad order at their destination
constitutes a prima facie case of fault or negligence against the carrier. If no adequate
explanation is given as to how the deterioration, loss, or destruction of the goods happened,
the transporter shall be held responsible.[28]

Though it is not our function to evaluate anew the evidence presented, we refer to the records
of the case to show that, as correctly found by the RTC and the CA, petitioner failed to rebut
the prima facie presumption of negligence in the carriage of the subject shipment.

First, as stated in the bill of lading, the subject shipment was received by UTI in apparent
good order and condition in New York, United States of America. Second, the OCMSC Survey
Report stated that one steel drum STC Vitamin B Complex Extract was discovered to be with a
cut/hole on the side, with approximate spilling of 1%. Third, though Gate Pass No. 7614,
issued by Jardine, noted that the subject shipment was in good order and condition, it was
specifically stated that there were 22 (should be 27 drums per Bill of Lading No. C320/C15991-
2) drums of raw materials for pharmaceutical manufacturing. Last, J.G. Bernas' Survey Report
stated that "1-s/drum was punctured and retaped on the bottom side and the content was
lacking, and there was a short delivery of 5-drums."

All these conclusively prove the fact of shipment in good order and condition, and the
consequent damage to one steel drum of Vitamin B Complex Extract while in the possession
of petitioner which failed to explain the reason for the damage. Further, petitioner failed to
prove that it observed the extraordinary diligence and precaution which the law requires a
common carrier to exercise and to follow in order to avoid damage to or destruction of the
goods entrusted to it for safe carriage and delivery.[29]

However, we affirm the applicability of the Package Limitation Rule under the COGSA,
contrary to the RTC and the CA's findings.

It is to be noted that the Civil Code does not limit the liability of the common carrier to a fixed
amount per package. In all matters not regulated by the Civil Code, the rights and obligations
of common carriers are governed by the Code of Commerce and special laws. Thus, the
COGSA supplements the Civil Code by establishing a provision limiting the carrier's liability in
the absence of a shipper's declaration of a higher value in the bill of lading. [30] Section 4(5) of
the COGSA provides:

(5) Neither the carrier nor the ship shall in any event be or become liable for any loss or
damage to or in connection with the transportation of goods in an amount exceeding $500 per
package of lawful money of the United States, or in case of goods not shipped in packages,
per customary freight unit, or the equivalent of that sum in other currency, unless the nature
and value of such goods have been declared by the shipper before shipment and inserted in
the bill of lading. This declaration, if embodied in the bill of lading, shall be prima
facie evidence, but shall not be conclusive on the carrier.

In the present case, the shipper did not declare a higher valuation of the goods to be shipped.
Contrary to the CA's conclusion, the insertion of the words "L/C No. LC No. 1-187-008394/ NY
69867 covering shipment of raw materials for pharmaceutical Mfg. x x x" cannot be the basis
of petitioner's liability.[31] Furthermore, the insertion of an invoice number does not in itself
sufficiently and convincingly show that petitioner had knowledge of the value of the cargo. [32]

In light of the foregoing, petitioner's liability should be limited to $500 per steel drum. In this
case, as there was only one drum lost, private respondent is entitled to receive only $500 as
damages for the loss. In addition to said amount, as aptly held by the trial court, an interest
rate of 6% per annum should also be imposed, plus 25% of the total sum as attorney's fees.

WHEREFORE, premises considered, the petition is PARTIALLY GRANTED. The Court of

Appeals Decision dated April 29, 2004 and Resolution dated November 26, 2004
are AFFIRMED with MODIFICATION by reducing the principal amount due private respondent
Pioneer Insurance and Surety Corporation from P76,231.27 to $500, with interest of 6% per
annum from date of demand, and 25% of the amount due as attorney's fees.

The other aspects of the assailed Decision and Resolution STAND.

SO ORDERED.
 FIRST DIVISION
[ G.R. No. 149038. April 09, 2003 ]
PHILIPPINE AMERICAN GENERAL INSURANCE COMPANY,
PETITIONER, VS. PKS SHIPPING COMPANY, RESPONDENT.

DECISION

VITUG, J.:

The petition before the Court seeks a review of the decision of the Court of Appeals in
C.A. G.R. CV No. 56470, promulgated on 25 June 2001, which has affirmed in toto the
judgment of the Regional Trial Court (RTC), Branch 65, of Makati, dismissing the
complaint for damages filed by petitioner insurance corporation against respondent
shipping company.
Davao Union Marketing Corporation (DUMC) contracted the services of respondent PKS
Shipping Company (PKS Shipping) for the shipment to Tacloban City of seventy-five
thousand (75,000) bags of cement worth Three Million Three Hundred Seventy-Five
Thousand Pesos (P3,375,000.00). DUMC insured the goods for its full value with
petitioner Philippine American General Insurance Company (Philamgen). The goods
were loaded aboard the dumb barge Limar I belonging to PKS Shipping. On the evening
of 22 December 1988, about nine o’clock, while Limar I was being towed by
respondent’s tugboat, MT Iron Eagle, the barge sank a couple of miles off the coast of
Dumagasa Point, in Zamboanga del Sur, bringing down with it the entire cargo of 75,000
bags of cement.
DUMC filed a formal claim with Philamgen for the full amount of the insurance.
Philamgen promptly made payment; it then sought reimbursement from PKS Shipping
of the sum paid to DUMC but the shipping company refused to pay, prompting
Philamgen to file suit against PKS Shipping with the Makati RTC.
The RTC dismissed the complaint after finding that the total loss of the cargo could have
been caused either by a fortuitous event, in which case the ship owner was not liable, or
through the negligence of the captain and crew of the vessel and that, under Article 587
of the Code of Commerce adopting the “Limited Liability Rule,” the ship owner could
free itself of liability by abandoning, as it apparently so did, the vessel with all her
equipment and earned freightage.

Philamgen interposed an appeal to the Court of Appeals which affirmed in toto the
decision of the trial court. The appellate court ruled that evidence to establish that PKS
Shipping was a common carrier at the time it undertook to transport the bags of cement
was wanting because the peculiar method of the shipping company’s carrying goods for
others was not generally held out as a business but as a casual occupation. It then
concluded that PKS Shipping, not being a common carrier, was not expected to observe
the stringent extraordinary diligence required of common carriers in the care of goods.
The appellate court, moreover, found that the loss of the goods was sufficiently
established as having been due to fortuitous event, negating any liability on the part of
PKS Shipping to the shipper.

In the instant appeal, Philamgen contends that the appellate court has committed a
patent error in ruling that PKS Shipping is not a common carrier and that it is not liable
for the loss of the subject cargo. The fact that respondent has a limited clientele,
petitioner argues, does not militate against respondent’s being a common carrier and
that the only way by which such carrier can be held exempt for the loss of the cargo
would be if the loss were caused by natural disaster or calamity. Petitioner avers that
typhoon "APIANG" has not entered the Philippine area of responsibility and that, even if
it did, respondent would not be exempt from liability because its employees,
particularly the tugmaster, have failed to exercise due diligence to prevent or minimize
the loss.
PKS Shipping, in its comment, urges that the petition should be denied because what
Philamgen seeks is not a review on points or errors of law but a review of the
undisputed factual findings of the RTC and the appellate court. In any event, PKS
Shipping points out, the findings and conclusions of both courts find support from the
evidence and applicable jurisprudence.
The determination of possible liability on the part of PKS Shipping boils down to the
question of whether it is a private carrier or a common carrier and, in either case, to the
other question of whether or not it has observed the proper diligence (ordinary, if a
private carrier, or extraordinary, if a common carrier) required of it given the
circumstances.

The findings of fact made by the Court of Appeals, particularly when such findings are
consistent with those of the trial court, may not at liberty be reviewed by this Court in a
petition for review under Rule 45 of the Rules of Court. [1] The conclusions derived from
those factual findings, however, are not necessarily just matters of fact as when they are
so linked to, or inextricably intertwined with, a requisite appreciation of the applicable
law. In such instances, the conclusions made could well be raised as being appropriate
issues in a petition for review before this Court. Thus, an issue whether a carrier is
private or common on the basis of the facts found by a trial court or the appellate court
can be a valid and reviewable question of law.
The Civil Code defines “common carriers” in the following terms:
“Article 1732. Common carriers are persons, corporations, firms or associations engaged
in the business of carrying or transporting passengers or goods or both, by land, water,
or air for compensation, offering their services to the public.”
Complementary to the codal definition is Section 13, paragraph (b), of the Public Service
Act; it defines “public service” to be –
“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 clientele, whether
permanent, occasional or accidental, and done for general business purposes, any
common carrier, railroad, street 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, 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 communication
systems, wire or wireless broadcasting stations and other similar public services. x x x.
(Italics supplied).”
The prevailing doctrine on the question is that enunciated in the leading case of De
Guzman vs. Court of Appeals.[2] Applying Article 1732 of the Code, in conjunction with
Section 13(b) of the Public Service Act, this Court has held:
“The above article makes no distinction between one whose principal business activity is
the carrying of persons or goods or both, and one who does such carrying only as
an ancillary activity (in local idiom, as `a sideline’). Article 1732 also carefully avoids
making any distinction between a person or enterprise offering transportation service
on a regular or scheduled basis and one offering such service on an occasional, episodic
or unscheduled basis. Neither does Article 1732 distinguish between a carrier offering its
services to the `general public,’ i.e., the general community or population, and one who
offers services or solicits business only from a narrow segment of the general
population. We think that Article 1732 deliberately refrained from making such
distinctions.

“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.”
Much of the distinction between a “common or public carrier” and a ”private or special
carrier” lies in the character of the business, such that if the undertaking is an isolated
transaction, not a part of the business or occupation, and the carrier does not hold itself
out to carry the goods for the general public or to a limited clientele, although involving
the carriage of goods for a fee,[3] the person or corporation providing such service could
very well be just a private carrier. A typical case is that of a charter party which includes
both the vessel and its crew, such as in a bareboat or demise, where the charterer
obtains the use and service of all or some part of a ship for a period of time or a voyage
or voyages[4] and gets the control of the vessel and its crew.[5] Contrary to the conclusion
made by the appellate court, its factual findings indicate that PKS Shipping has engaged
itself in the business of carrying goods for others, although for a limited clientele,
undertaking to carry such goods for a fee. The regularity of its activities in this area
indicates more than just a casual activity on its part.[6] Neither can the concept of a
common carrier change merely because individual contracts are executed or entered
into with patrons of the carrier. Such restrictive interpretation would make it easy for a
common carrier to escape liability by the simple expedient of entering into those
distinct agreements with clients.
Addressing now the issue of whether or not PKS Shipping has exercised the proper
diligence demanded of common carriers, Article 1733 of the Civil Code requires
common carriers to observe extraordinary diligence in the vigilance over the goods they
carry. In case of loss, destruction or deterioration of goods, common carriers are
presumed to have been at fault or to have acted negligently, and the burden of proving
otherwise rests on them.[7] The provisions of Article 1733, notwithstanding, common
carriers are exempt from liability for loss, destruction, or deterioration of the goods due
to any of the following causes:

(1) Flood, storm, earthquake, lightning, or other natural disaster or

calamity;

(2) Act of the public enemy in war, whether international or civil;

(3) Act or omission of the shipper or owner of the goods;

 (4) The character of the goods or defects in the packing or in the
containers; and

(5) Order or act of competent public authority.[8]

The appellate court ruled, gathered from the testimonies and sworn marine protests of
the respective vessel masters of Limar I and MT Iron Eagle, that there was no way by
which the barge’s or the tugboat’s crew could have prevented the sinking of Limar I. The
vessel was suddenly tossed by waves of extraordinary height of six (6) to eight (8) feet
and buffeted by strong winds of 1.5 knots resulting in the entry of water into the barge’s
hatches. The official Certificate of Inspection of the barge issued by the Philippine
Coastguard and the Coastwise Load Line Certificate would attest to the seaworthiness
of Limar I and should strengthen the factual findings of the appellate court.

Findings of fact of the Court of Appeals generally conclude this Court; none of the
recognized exceptions from the rule - (1) when the factual findings of the Court of
Appeals and the trial court are contradictory; (2) when the conclusion is a finding
grounded entirely on speculation, surmises, or conjectures; (3) when the inference
made by the Court of Appeals from its findings of fact is manifestly mistaken, absurd, or
impossible; (4) when there is a grave abuse of discretion in the appreciation of facts; (5)
when the appellate court, in making its findings, went beyond the issues of the case and
such findings are contrary to the admissions of both appellant and appellee; (6) when
the judgment of the Court of Appeals is premised on a misapprehension of facts; (7)
when the Court of Appeals failed to notice certain relevant facts which, if properly
considered, would justify a different conclusion; (8) when the findings of fact are
themselves conflicting; (9) when the findings of fact are conclusions without citation of
the specific evidence on which they are based; and (10) when the findings of fact of the
Court of Appeals are premised on the absence of evidence but such findings are
contradicted by the evidence on record – would appear to be clearly extant in this
instance.

All given then, the appellate court did not err in its judgment absolving PKS Shipping
from liability for the loss of the DUMC cargo.

WHEREFORE, the petition is denied. No costs.

SO ORDERED.
 [ G.R. No. 12219. March 15, 1918 ]
AMADO PICART, PLAINTIFF AND APPELLANT, VS. FRANK SMITH, JR.,
DEFENDANT AND APPELLEE.

DECISION

STREET, J.:

In this action the plaintiff, Amado Picart, seeks to recover of the defendant, Frank Smith,
jr., the sum of P31,100, as damages alleged to have been caused by an automobile
driven by the defendant. From a judgment of the Court of First Instance of the Province
of La Union absolving the defendant from liability the plaintiff has appealed.

The occurrence which gave rise to the institution of this action took place on December
12, 1912, on the Carlatan Bridge, at San Fernando, La Union. It appears that upon the
occasion in question the plaintiff was riding on his pony over said bridge. Before he had
gotten half way across, the defendant approached from the opposite direction in an
automobile, going at the rate of about ten or twelve miles, per hour. As the defendant
neared the bridge he saw a horseman on it and blew his horn to give warning of his
approach. He continued his course and after he had taken the bridge he gave two more
successive blasts, as it appeared to him that the man on horseback before him was not
observing the rule of the road.

The plaintiff, it appears, saw the automobile coming and heard the warning signals.
However, being perturbed by the novelty of the apparition or the rapidity of the approach,
he pulled the pony closely up against the railing on the right side of the bridge instead of
going to the left. He says that the reason he did this was that he thought he did not have
sufficient time to get over to the other side. The bridge is shown to have a length of about
75 meters and a width of 4.80 meters. As the automobile approached, the defendant
guided it toward his left, that being the proper side of the road for the machine. In so
doing the defendant assumed that the horseman would move to the other side. The pony
had not as yet exhibited fright, and the rider had made no sign for the automobile to stop.
Seeing that the pony was apparently quiet, the defendant, instead of veering to the right
while yet some distance away or slowing down, continued to approach directly toward
the horse without diminution of speed. When he had gotten quite near, there being then
no possibility of the horse getting across to the other side, the defendant quickly turned
his car sufficiently to the right to escape hitting the horse alongside of the railing where it
was then standing; but in so doing the automobile passed in such close proximity to the
animal that it became frightened and turned its body across the bridge with its head
toward the railing. In so doing, it was struck on the hock of the left hind leg by the flange
of the car and the limb was broken. The horse fell and its rider was thrown off with some
violence. From the evidence adduced in the case we believe that when the accident
occurred the free space where the pony stood between the automobile and the railing of
the bridge was probably less than one and one half meters. As a result of its injuries the
horse died. The plaintiff received contusions which caused temporary unconsciousness
and required medical attention for several days.

The question presented for decision is whether or not the defendant in maneuvering his
car in the manner above described was guilty of negligence such as gives rise to a civil
obligation to repair the damage done; and we are of the opinion that he is so liable. As the
defendant started across the bridge, he had the right to assume that the horse and rider
would pass over to the proper side; but as he moved toward the center of the bridge it was
demonstrated to his eyes that this would not be done; and he must in a moment have
perceived that it was too late for the horse to cross with safety in front of the moving
vehicle. In the nature of things this change of situation occurred while the automobile
was yet some distance away; and from this moment it was not longer within the power of
the plaintiff to escape being run down by going to a place of greater safety. The control of
the situation had then passed entirely to the defendant; and it was his duty either to bring
his car to an immediate stop or, seeing that there were no other persons on the bridge, to
take the other side and pass sufficiently far away from the horse to avoid the danger of
collision. Instead of doing this, the defendant ran straight on until he was almost upon the
horse. He was, we think, deceived into doing this by the fact that the horse had not yet
exhibited fright. But in view of the known nature of horses, there was an appreciable risk
that, if the animal in question was unacquainted with automobiles, he might get excited
and jump under the conditions which here confronted him. When the defendant exposed
the horse and rider to this danger he was, in our opinion, negligent in the eye of the law.

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 suppose 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.

Applying this test to the conduct of the defendant in the present case we think that
negligence is clearly established. A prudent man, placed in the position of the defendant,
would, in our opinion, have recognized that the course which he was pursuing was
fraught with risk, and would therefore have foreseen harm to the horse and rider as a
reasonable consequence of that course. Under these circumstances the law imposed on
the defendant the duty to guard against the threatened harm.

It goes without saying that the plaintiff himself was not free from fault, for he was guilty
of antecedent negligence in planting himself on the wrong side of the road. But as we
have already stated, the defendant was also negligent; and in such case the problem
always is to discover which agent is immediately and directly responsible. It will be
noted that the negligent acts of the two parties were not contemporaneous, since the
negligence of the defendant succeeded the negligence of the plaintiff by an appreciable
interval. Under these circumstances the law is that the person who has the last fair chance
to avoid the impending harm and fails to do so is chargeable with the consequences,
without reference to the prior negligence of the other party.

The decision in the case of Rakes vs. Atlantic, Gulf and Pacific Co. (7 Phil. Rep., 359)
should perhaps be mentioned in this connection. This Court there held that while
contributory negligence on the part of the person injured did not constitute a bar to
recovery, it could be received in evidence to reduce the damages which would otherwise
have been assessed wholly against the other party. The defendant company had there
employed the plaintiff, a laborer, to assist in transporting iron rails from a barge in
Manila harbor to the company's yards located not far away. The rails were conveyed
upon cars which were hauled along a narrow track. At a certain spot near the water's edge
the track gave way by reason of the combined effect of the weight of the car and the
insecurity of the road bed. The car was in consequence upset; the rails slid off; and the
plaintiff's leg was caught and broken. It appeared in evidence that the accident was due to
the effects of a typhoon which had dislodged one of the supports of the track. The court
found that the defendant company was negligent in having failed to repair the bed of the
track and also that the plaintiff was, at the moment of the accident, guilty of contributory
negligence in walking at the side of the car instead of being in front or behind. It was held
that while the defendant was liable to the plaintiff by reason of its negligence in having
failed to keep the track in proper repair, nevertheless the amount of the damages should
be reduced on account of the contributory negligence of the plaintiff. As will be seen the
defendant's negligence in that case consisted in an omission only. The liability of the
company arose from its responsibility for the dangerous condition of its track. In a case
like the one now before us, where the defendant was actually present and operating the
automobile which caused the damage, we do not feel constrained to attempt to weigh the
negligence of the respective parties in order to apportion the damage according to the
degree of their, relative fault. It is enough to say that the negligence of the defendant was
in this case the immediate and determining cause of the accident and that the antecedent
negligence of the plaintiff was a more remote factor in the case.

A point of minor importance in the case is indicated in the special defense pleaded in the
defendant's answer, to the effect that the subject matter of the action had been previously
adjudicated in the court of a justice of the peace. In this connection it appears that soon
after the accident in question occurred, the plaintiff caused criminal proceedings to be
instituted before a justice of the peace charging the defendant with the infliction of
serious injuries (lesiones graves). At the preliminary investigation the defendant was
discharged by the magistrate and the proceedings were dismissed. Conceding that the
acquittal of the defendant at a trial upon the merits in a criminal prosecution for the
offense mentioned would be res adjudicata, upon the question of his civil liability arising
from negligence—a point upon which it is unnecessary to express an opinion—the action
of the justice of the peace in dismissing the criminal proceeding upon the preliminary
hearing can have no such effect. (See U. S. vs. Banzuela and Banzuela, 31 Phil. Rep.,
564.)

From what has been said it results that the judgment of the lower court must be reversed,
and judgment is here rendered that the plaintiff recover of the defendant the sum of two
hundred pesos (P200), with costs of both instances. The sum here awarded is estimated to
include the value of the horse, medical expenses of the plaintiff, the loss or damage
occasioned to articles of his apparel, and lawful interest on the whole to the date of this
recovery. The other damages claimed by the plaintiff are remote or otherwise of such
character as not to be recoverable. So ordered.
 SECOND DIVISION
[ G.R. No. 194121. July 11, 2016 ]
TORRES-MADRID BROKERAGE, INC., PETITIONER, VS. FEB MITSUI
MARINE INSURANCE CO., INC. AND BENJAMIN P. MANALASTAS,
DOING BUSINESS UNDER THE NAME OF BMT TRUCKING SERVICES,
RESPONDENTS.

DECISION

BRION, J.:

We resolve the petition for review on certiorari challenging the Court of

Appeals' (CA) October 14, 2010 decision in CA-G.R. CV No. 91829. [1]

The CA affirmed the Regional Trial Court's (RTC) decision in Civil Case No. 01-
1596, and found petitioner Torres-Madrid Brokerage, Inc. (TMBI) and respondent
Benjamin P. Manalastas jointly and solidarily liable to respondent FEB Mitsui Marine
Insurance Co., Inc. (Mitsui) for damages from the loss of transported cargo.

Antecedents

On October 7, 2000, a shipment of various electronic goods from Thailand and Malaysia
arrived at the Port of Manila for Sony Philippines, Inc. (Sony). Previous to the arrival,
Sony had engaged the services of TMBI to facilitate, process, withdraw, and deliver the
shipment from the port to its warehouse in Binan, Laguna.[2]

TMBI - who did not own any delivery trucks - subcontracted the services of Benjamin
Manalastas' company, BMT Trucking Services (BMT), to transport the shipment from the
port to the Binan warehouse.[3] Incidentally, TMBI notified Sony who had no objections
to the arrangement.[4]

Four BMT trucks picked up the shipment from the port at about 11:00 a.m. of October 7,
2000. However, BMT could not immediately undertake the delivery because of the truck
ban and because the following day was a Sunday. Thus, BMT scheduled the delivery on
October 9, 2000.

In the early morning of October 9, 2000, the four trucks left BMT's garage for Laguna.
[5]
However, only three trucks arrived at Sony's Binan warehouse.

At around 12:00 noon, the truck driven by Rufo Reynaldo Lapesura (NSF-391) was
found abandoned along the Diversion Road in Filinvest, Alabang, Muntinlupa City.
[6]
Both the driver and the shipment were missing.

Later that evening, BMT's Operations Manager Melchor Manalastas informed Victor
Torres, TMBI's General Manager, of the development.[7] They went to Muntinlupa
together to inspect the truck and to report the matter to the police.[8]

Victor Torres also filed a complaint with the National Bureau of

Investigation (NBI) against Lapesura for "hijacking." [9] The complaint resulted in a
recommendation by the NBI to the Manila City Prosecutor's Office to prosecute Lapesura
for qualified theft.[10]

TMBI notified Sony of the loss through a letter dated October 10, 2000,[11] It also sent
BMT a letter dated March 29, 2001, demanding payment for the lost shipment. BMT
refused to pay, insisting that the goods were "hijacked."

In the meantime, Sony filed an insurance claim with the Mitsui, the insurer of the goods.
After evaluating the merits of the claim, Mitsui paid
Sony PHP7,293,386.23 corresponding to the value of the lost goods.[12]

After being subrogated to Sony's rights, Mitsui sent TMBI a demand letter dated August
30, 2001 for payment of the lost goods. TMBI refused to pay Mitsui's claim. As a result,
Mitsui filed a complaint against TMBI on November 6, 2001,

TMBI, in turn, impleaded Benjamin Manalastas, the proprietor of BMT, as a third-party

defendant. TMBI alleged that BMT's driver, Lapesura, was responsible for the
theft/hijacking of the lost cargo and claimed BMT's negligence as the proximate cause of
the loss. TMBI prayed that in the event it is held liable to Mitsui for the loss, it should be
reimbursed by BMT,

At the trial, it was revealed that BMT and TMBI have been doing business with each
other since the early 80's. It also came out that there had been a previous hijacking
incident involving Sony's cargo in 1997, but neither Sony nor its insurer filed a complaint
against BMT or TMBI.[13]

On August 5, 2008, the RTC found TMBI and Benjamin Manalastas jointly and
solidarity liable to pay Mitsui PHP 7,293,386.23 as actual damages, attorney's fees
equivalent to 25% of the amount claimed, and the costs of the suit.[14] The RTC held that
TMBI and Manalastas were common carriers and had acted negligently.
Both TMBI and BMT appealed the RTC's verdict.

TMBI denied that it was a common carrier required to exercise extraordinary diligence.
It maintains that it exercised the diligence of a good father of a family and should be
absolved of liability because the truck was "hijacked" and this was a fortuitous event.

BMT claimed that it had exercised extraordinary diligence over the lost shipment, and
argued as well that the loss resulted from a fortuitous event.

On October 14, 2010, the CA affirmed the RTC's decision but reduced the award of
attorney's fees to PHP 200,000.

The CA held: (1) that "hijacking" is not necessarily a fortuitous event because the term
refers to the general stealing of cargo during transit;[15] (2) that TMBI is a common carrier
engaged in the business of transporting goods for the general public for a fee; [16] (3) even
if the "hijacking" were a fortuitous event, TMBI's failure to observe extraordinary
diligence in overseeing the cargo and adopting security measures rendered it liable for the
loss; [17] and (4) even if TMBI had not been negligent in the handling, transport and the
delivery of the shipment, TMBI still breached its contractual obligation to Sony when it
failed to deliver the shipment.[18]

TMBI disagreed with the CA's ruling and filed the present petition on December 3, 2010.

The Arguments

TMBI's Petition

TMBI insists that the hijacking of the truck was a fortuitous event. It contests the CA's
finding that neither force nor intimidation was used in the taking of the cargo.
Considering Lapesura was never found, the Court should not discount the possibility that
he was a victim rather than a perpetrator.[19]

TMBI denies being a common carrier because it does not own a single truck to transport
its shipment and it does not offer transport services to the public for compensation.[20] It
emphasizes that Sony knew TMBI did not have its own vehicles and would subcontract
the delivery to a third-party.

Further, TMBI now insists that the service it offered was limited to the processing of
paperwork attendant to the entry of Sony's goods. It denies that delivery of the shipment
was a part of its obligation.[21]

TMBI solely blames BMT as it had full control and custody of the cargo when it was lost.
[22]
BMT, as a common carrier, is presumed negligent and should be responsible for the
loss.

BhtT's Comment

BMT insists that it observed the required standard of care.[23] Like the petitioner, BMT
maintains that the hijacking was a fortuitous event - a force majeure - that exonerates it
from liability.[24] It points out that Lapesura has never been seen again and his fate
remains a mystery. BMT likewise argues that the loss of the cargo necessarily showed
that the taking was with the use of force or intimidation.[25]

If there was any attendant negligence, BMT points the finger on TMBI who failed to send
a representative to accompany the shipment.[26] BMT further blamed TMBI for the latter's
failure to adopt security measures to protect Sony's cargo.[27]

Mitsui's Comment

Mitsui counters that neither TMBI nor BMT alleged or proved during the trial that the
taking of the cargo was accompanied with grave or irresistible threat, violence, or force.
[28]
Hence, the incident cannot be considered "force majeure" and TMBI remains liable for
breach of contract.

Mitsui emphasizes that TMBI's theory - that force or intimidation must have been used
because Lapesura was never found - was only raised for the first time before this Court.
[29]
It also discredits the theory as a mere conjecture for lack of supporting evidence.

Mitsui adopts the CA's reasons to conclude that TMBI is a common carrier. It also points
out Victor Torres' admission during the trial that TMBI's brokerage service includes the
eventual delivery of the cargo to the consignee.[30]

Mitsui invokes as well the legal presumption of negligence against TMBI, pointing out
that TMBI simply entrusted the cargo to BMT without adopting any security measures
despite: (1) a previous hijacking incident, when TMBI lost Sony's cargo; and (2) TMBI's
knowledge that the cargo was worth more than 10 million pesos.[31]

Mitsui affirms that TMBI breached the contract of carriage through its negligent handling
of the cargo, resulting in its loss.

The Court's Ruling

A brokerage may be considered a common

carrier if it also undertakes to deliver the
goods for its customers
Common carriers are persons, corporations, firms or associations engaged in the business
of transporting passengers or goods or both, by land, water, or air, for compensation,
offering their services to the public.[32] By the nature of their business and for reasons of
public policy, they are bound to observe extraordinary diligence in the vigilance over the
goods and in the safety of their passengers.[33]

In A.F. Sanchez Brokerage Inc. v. Court of Appeals,[34]we held that a customs broker -
whose principal business is the preparation of the correct customs declaration and the
proper shipping documents - is still considered a common carrier if it also undertakes to
deliver the goods for its customers. The law does not distinguish between one whose
principal business activity is the carrying of goods and one who undertakes this task only
as an ancillary activity.[35] This ruling has been reiterated in Schmitz Transport
& Brokerage Corp. v. Transport Venture, Inc.,[36] Loadmasters Customs Services, Inc. v.
Glodel Brokerage Corporation,[37] and Wesrwind Shipping Corporation v. UCPB
General Insurance Co., Inc.[38]

Despite TMBI's present denials, we find that the delivery of the goods is an integral,
albeit ancillary, part of its brokerage services. TMBI admitted that it was contracted to
facilitate, process, and clear the shipments from the customs authorities, withdraw them
from the pier, then transport and deliver them to Sony's warehouse in Laguna.[39]

Further, TMBI's General Manager Victor Torres described the nature of its services as
follows:

ATTY. VIRTUDAZO: Could you please tell the court what is the nature of the business
of [TMBI]?

Witness MR. Victor Torres of Torres Madrid: We are engaged in customs brokerage
business. We acquire the release documents from the Bureau of Customs and eventually
deliver the cargoes to the consignee's warehouse and we are engaged in that kind of
business, sir. [40]

That TMBI does not own trucks and has to subcontract the delivery of its clients' goods,
is immaterial. As long as an entity holds itself to the public for the transport of goods as a
business, it is considered a common carrier regardless of whether it owns the vehicle used
or has to actually hire one.[41]

Lastly, TMBI's customs brokerage services - including the transport/delivery of the cargo
- are available to anyone willing to pay its fees. Given these circumstances, we find it
undeniable that TMBI is a common carrier.

Consequently, TMBI should be held responsible for the loss, destruction, or deterioration
of the goods it transports unless it results from:
(1) Flood, storm, earthquake, lightning, or other natural disaster or calamity;

(2) Act of the public enemy in war, whether international or civil;

(3) Act of omission of the shipper or owner of the goods;

(4) The character of the goods or defects in the packing or in the containers;

(5) Order or act of competent public authority.[42]

For all other cases - such as theft or robbery - a common carrier is presumed to have
been at fault or to have acted negligently, unless it can prove that it
observed extraordinary diligence.[43]

Simply put, the theft or the robbery of the goods is not considered a fortuitous event or a
force majeure. Nevertheless, a common carrier may absolve itself of liability for a
resulting loss: (1) if it proves that it exercised extraordinary diligence in transporting and
safekeeping the goods;[44] or (2) if it stipulated with the shipper/owner of the goods to
limit its liability for the loss, destruction, or deterioration of the goods to a degree less
than extraordinary diligence.[45]

However, a stipulation diminishing or dispensing with the common carrier's liability for
acts committed by thieves or robbers who do not act with grave or irresistible threat,
violence, or force is void under Article 1745 of the Civil Code for being contrary to
public policy. [46]Jurisprudence, too, has expanded Article 1734's five exemptions. De
Guzman v. Court of Appeals[47] interpreted Article 1745 to mean that a robbery attended
by "grave or irresistible threat, violence or force" is a fortuitous event that absolves the
common carrier from liability.

In the present case, the shipper, Sony, engaged the services of TMBI, a common carrier,
to facilitate the release of its shipment and deliver the goods to its warehouse. In turn,
TMBI subcontracted a portion of its obligation - the delivery of the cargo - to another
common carrier, BMT.

Despite the subcontract, TMBI remained responsible for the cargo. Under Article 1736, a
common carrier's extraordinary responsibility over the shipper's goods lasts from the time
these goods are unconditionally placed in the possession of, and received by, the carrier
for transportation, until they are delivered, actually or constructively, by the carrier
to the consignee. [48]

That the cargo disappeared during transit while under the custody of BMT - TMBI's
subcontractor - did not diminish nor terminate TMBFs responsibility over the cargo.
Article 1735 of the Civil Code presumes that it was at fault.
Instead of showing that it had acted with extraordinary diligence, TMBI simply argued
that it was not a common carrier bound to observe extraordinary diligence. Its failure to
successfully establish this premise carries with it the presumption of fault or negligence,
thus rendering it liable to Sony/Mitsui for breach of contract.

Specifically, TMBI's current theory - that the hijacking was attended by force or
intimidation - is untenable.

First, TMBI alleged in its Third Party Complaint against BMT that Lapesura was
responsible for hijacking the shipment.[49] Further, Victor Torres filed a criminal
complaint against Lapesura with the NBI.[50] These actions constitute direct and binding
admissions that Lapesura stole the cargo. Justice and fair play dictate that TMBI should
not be allowed to change its legal theory on appeal.

Second, neither TMBI nor BMT succeeded in substantiating this theory through
evidence. Thus, the theory remained an unsupported allegation no better than
speculations and conjectures. The CA therefore correctly disregarded the defense of force
majeure.

TMBI and BMT are not solidarity liable

to Mitsui

We disagree with the lower courts" ruling that TMBI and BMT are solidarity liable to
Mitsui for the loss as joint tortfeasors. The ruling was based on Article 2194 of the Civil
Code:

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

Notably, TMBI's liability to Mitsui does not stem from a quasi-delict (culpa
aquiliana) but from its breach of contract (culpa contractual). The tie that binds TMBI
with Mitsui is contractual, albeit one that passed on to Mitsui as a result of TMBI's
contract of carriage with Sony to which Mitsui had been subrogated as an insurer who
had paid Sony's insurance claim. The legal reality that results from this contractual tie
precludes the application of quasi-delict based Article 2194.

A third party may recover from a

common carrier for quasi-delict
but must prove actual n egligence

We likewise disagree with the finding that BMT is directly liable to Sony/Mitsui for the
loss of the cargo. While it is undisputed that the cargo was lost under the actual custody
of BMT (whose employee is the primary suspect in the hijacking or robbery of the
shipment), no direct contractual relationship existed between Sony/Mitsui and BMT. If at
all, Sony/Mitsui's cause of action against BMT could only arise from quasi-delict, as a
third party suffering damage from the action of another due to the latter's fault or
negligence, pursuant to Article 2176 of the Civil Code.[51]

We have repeatedly distinguished between an action for breach of contract {culpa

contractual) and an action for quasi-delict (culpa aquiliana).

In culpa contractual, the plaintiff only needs to establish the existence of the contract and
the obligor's failure to perform his obligation. It is not necessary for the plaintiff to prove
or even allege that the obligor's non- compliance was due to fault or negligence because
Article 1735 already presumes that the common carrier is negligent. The common carrier
can only free itself from liability by proving that it observed extraordinary diligence. It
cannot discharge this liability by shifting the blame on its agents or servants.[52]

On the other hand, the plaintiff in culpa aquiliana must clearly establish the defendant's
fault or negligence because this is the very basis of the action.[53] Moreover, if the injury
to the plaintiff resulted from the act or omission of the defendant's employee or servant,
the defendant may absolve himself by proving that he observed the diligence of a good
father of a family to prevent the damage,[54]

In the present case, Mitsui's action is solely premised on TMBl's breach of contract.
Mitsui did not even sue BMT, much less prove any negligence on its part. If BMT has
entered the picture at all, it 'is because TMBI sued it for reimbursement for the liability
that TMBI might incur from its contract of carriage with Sony/Mitsui. Accordingly, there
is no basis to directly hold BMT liable to Mitsui for quasi-delict.

BMT is liable to TMBI for breach

of their contract of carriage

We do not hereby say that TMBI must absorb the loss. By subcontracting the cargo
delivery to BMT, TMBI entered into its own contract of carriage with a fellow common
carrier.

The cargo was lost after its transfer to BMT's custody based on its contract of carriage
with TMBI. Following Article 1735, BMT is presumed to be at fault. Since BMT failed
to prove that it observed extraordinary diligence in the performance of its obligation to
TMBI, it is liable to TMBI for breach of their contract of carriage.

In these lights, TMBI is liable to Sony (subrogated by Mitsui) for breaching the contract
of carriage. In turn, TMBI is entitled to reimbursement from BMT due to the latter's own
breach of its contract of carriage with TMBI. The proverbial buck stops with BMT who
may either: (a) absorb the loss, or (b) proceed after its missing driver, the suspected
culprit, pursuant to Article 2181,[55]

WHEREFORE, the Court hereby ORDERS petitioner Torres- Madrid Brokerage, Inc.
to pay the respondent FEB Mitsui Marine Insurance Co., Inc. the following:

a. Actual damages in the amount of PHP 7,293,386.23 plus legal interest from the
time the complaint was filed until it is fully paid;

b. Attorney's fees in the amount of PHP 200,000.00; and

c. Costs of suit.

Respondent Benjamin P. Manalastas is in turn ORDERED to REIMBURSE Torres-

Madrid Brokerage, Inc. of the above-mentioned amounts.

SO ORDERED
 THIRD DIVISION
[ G.R. NO. 150157. January 25, 2007 ]
MAURICIO MANLICLIC AND PHILIPPINE RABBIT BUS LINES, INC.,
PETITIONERS, VS. MODESTO CALAUNAN, RESPONDENT.

DECISION

CHICO-NAZARIO, J.:

Assailed before Us is the decision[1] of the Court of Appeals in CA-G.R. CV No. 55909
which affirmed in toto the decision[2] of the Regional Trial Court (RTC) of Dagupan City,
Branch 42, in Civil Case No. D-10086, finding petitioners Mauricio Manliclic and
Philippine Rabbit Bus Lines, Inc. (PRBLI) solidarily liable to pay damages and attorney’s
fees to respondent Modesto Calaunan.

The factual antecedents are as follows:

The vehicles involved in this case are: (1) Philippine Rabbit Bus No. 353 with plate
number CVD-478, owned by petitioner PRBLI and driven by petitioner Mauricio
Manliclic; and (2) owner-type jeep with plate number PER-290, owned by respondent
Modesto Calaunan and driven by Marcelo Mendoza.

At around 6:00 to 7:00 o’clock in the morning of 12 July 1988, respondent Calaunan,
together with Marcelo Mendoza, was on his way to Manila from Pangasinan on board his
owner-type jeep. The Philippine Rabbit Bus was likewise bound for Manila from
Concepcion, Tarlac. At approximately Kilometer 40 of the North Luzon Expressway in
Barangay Lalangan, Plaridel, Bulacan, the two vehicles collided. The front right side of
the Philippine Rabbit Bus hit the rear left side of the jeep causing the latter to move to the
shoulder on the right and then fall on a ditch with water resulting to further extensive
damage. The bus veered to the left and stopped 7 to 8 meters from point of collision.

Respondent suffered minor injuries while his driver was unhurt. He was first brought for
treatment to the Manila Central University Hospital in Kalookan City by Oscar Buan, the
conductor of the Philippine Rabbit Bus, and was later transferred to the Veterans
Memorial Medical Center.

By reason of such collision, a criminal case was filed before the RTC of Malolos,
Bulacan, charging petitioner Manliclic with Reckless Imprudence Resulting in Damage
to Property with Physical Injuries, docketed as Crim. Case No. 684-M-89. Subsequently
on 2 December 1991, respondent filed a complaint for damages against petitioners
Manliclic and PRBLI before the RTC of Dagupan City, docketed as Civil Case No. D-
10086. The criminal case was tried ahead of the civil case. Among those who testified in
the criminal case were respondent Calaunan, Marcelo Mendoza and Fernando Ramos.

In the civil case (now before this Court), the parties admitted the following:

1. The parties agreed on the capacity of the parties to sue and be sued as well
as the venue and the identities of the vehicles involved;

2. The identity of the drivers and the fact that they are duly licensed;

3. The date and place of the vehicular collision;

4. The extent of the injuries suffered by plaintiff Modesto Calaunan and the
existence of the medical certificate;

5. That both vehicles were going towards the south; the private jeep being
ahead of the bus;

6. That the weather was fair and the road was well paved and straight,
although there was a ditch on the right side where the jeep fell into.[3]

When the civil case was heard, counsel for respondent prayed that the transcripts of
stenographic notes (TSNs)[4] of the testimonies of respondent Calaunan, Marcelo
Mendoza and Fernando Ramos in the criminal case be received in evidence in the civil
case in as much as these witnesses are not available to testify in the civil case.

Francisco Tuliao testified that his brother-in-law, respondent Calaunan, left for abroad
sometime in November, 1989 and has not returned since then. Rogelio Ramos took the
stand and said that his brother, Fernando Ramos, left for Amman, Jordan, to work.
Rosalia Mendoza testified that her husband, Marcelo Mendoza, left their residence to
look for a job. She narrated that she thought her husband went to his hometown in
Panique, Tarlac, when he did not return after one month. She went to her husband’s
hometown to look for him but she was informed that he did not go there.

The trial court subpoenaed the Clerk of Court of Branch 8, RTC, Malolos, Bulacan, the
court where Criminal Case No. 684-M-89 was tried, to bring the TSNs of the testimonies
of respondent Calaunan,[5] Marcelo Mendoza[6] and Fernando Ramos[7] in said case,
together with other documentary evidence marked therein. Instead of the Branch Clerk of
Court, it was Enrique Santos Guevara, Court Interpreter, who appeared before the court
and identified the TSNs of the three afore-named witnesses and other pertinent
documents he had brought.[8] Counsel for respondent wanted to mark other TSNs and
documents from the said criminal case to be adopted in the instant case, but since the
same were not brought to the trial court, counsel for petitioners compromised that said
TSNs and documents could be offered by counsel for respondent as rebuttal evidence.

For the defendants, petitioner Manliclic and bus conductor Oscar Buan testified. The
TSN[9] of the testimony of Donato Ganiban, investigator of the PRBLI, in Criminal Case
No. 684-M-89 was marked and allowed to be adopted in the civil case on the ground that
he was already dead.

Respondent further marked, among other documents, as rebuttal evidence, the TSNs[10] of
the testimonies of Donato Ganiban, Oscar Buan and petitioner Manliclic in Criminal
Case No. 684-M-89.

The disagreement arises from the question: Who is to be held liable for the collision?

Respondent insists it was petitioner Manliclic who should be liable while the latter is
resolute in saying it was the former who caused the smash up.

The versions of the parties are summarized by the trial court as follows:
The parties differed only on the manner the collision between the two (2) vehicles took
place. According to the plaintiff and his driver, the jeep was cruising at the speed of 60 to
70 kilometers per hour on the slow lane of the expressway when the Philippine Rabbit
Bus overtook the jeep and in the process of overtaking the jeep, the Philippine Rabbit Bus
hit the rear of the jeep on the left side. At the time the Philippine Rabbit Bus hit the jeep,
it was about to overtake the jeep. In other words, the Philippine Rabbit Bus was still at
the back of the jeep when the jeep was hit. Fernando Ramos corroborated the testimony
of the plaintiff and Marcelo Mendoza. He said that he was on another jeep following the
Philippine Rabbit Bus and the jeep of plaintiff when the incident took place. He said, the
jeep of the plaintiff overtook them and the said jeep of the plaintiff was followed by the
Philippine Rabbit Bus which was running very fast. The bus also overtook the jeep in
which he was riding. After that, he heard a loud sound. He saw the jeep of the plaintiff
swerved to the right on a grassy portion of the road. The Philippine Rabbit Bus stopped
and they overtook the Philippine Rabbit Bus so that it could not moved (sic), meaning
they stopped in front of the Philippine Rabbit Bus. He testified that the jeep of plaintiff
swerved to the right because it was bumped by the Philippine Rabbit bus from behind.

Both Mauricio Manliclic and his driver, Oscar Buan admitted that the Philippine Rabbit
Bus bumped the jeep in question. However, they explained that when the Philippine
Rabbit bus was about to go to the left lane to overtake the jeep, the latter jeep swerved to
the left because it was to overtake another jeep in front of it. Such was their testimony
before the RTC in Malolos in the criminal case and before this Court in the instant case.
[Thus, which of the two versions of the manner how the collision took place was correct,
would be determinative of who between the two drivers was negligent in the operation of
their respective vehicles.][11]
Petitioner PRBLI maintained that it observed and exercised the diligence of a good father
of a family in the selection and supervision of its employee, specifically petitioner
Manliclic.

On 22 July 1996, the trial court rendered its decision in favor of respondent Calaunan and
against petitioners Manliclic and PRBLI. The dispositive portion of its decision reads:
WHEREFORE, judgment is rendered in favor of the plaintiff and against the defendants
ordering the said defendants to pay plaintiff jointly and solidarily the amount of
P40,838.00 as actual damages for the towing as well as the repair and the materials used
for the repair of the jeep in question; P100,000.00 as moral damages and another
P100,000.00 as exemplary damages and P15,000.00 as attorney’s fees, including
appearance fees of the lawyer. In addition, the defendants are also to pay costs.[12]
Petitioners appealed the decision via Notice of Appeal to the Court of Appeals.[13]

In a decision dated 28 September 2001, the Court of Appeals, finding no reversible error
in the decision of the trial court, affirmed it in all respects.[14]

Petitioners are now before us by way of petition for review assailing the decision of the
Court of Appeals. They assign as errors the following:
I

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN AFFIRMING

THE TRIAL COURT’S QUESTIONABLE ADMISSION IN EVIDENCE OF THE
TSN’s AND OTHER DOCUMENTS PRESENTED IN THE CRIMINAL CASE.

II

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN AFFIRMING

THE TRIAL COURT’S RELIANCE ON THE VERSION OF THE RESPONDENT ON
HOW THE ACCIDENT SUPPOSEDLY OCCURRED.

III

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN AFFIRMING

THE TRIAL COURT’S UNFAIR DISREGARD OF HEREIN PETITIONER PRBL’s
DEFENSE OF EXERCISE OF DUE DILIGENCE IN THE SELECTION AND
SUPERVISION OF ITS EMPLOYEES.

IV

THE COURT OF APPEALS ERRED ON A QUESTION OF LAW IN AFFIRMING

THE TRIAL COURT’S QUESTIONABLE AWARD OF DAMAGES AND
ATTORNEY’S FEE.
With the passing away of respondent Calaunan during the pendency of this appeal with
this Court, we granted the Motion for the Substitution of Respondent filed by his wife,
Mrs. Precila Zarate Vda. De Calaunan, and children, Virgilio Calaunan, Carmelita
Honeycomb, Evelyn Calaunan, Marko Calaunan and Liwayway Calaunan.[15]

In their Reply to respondent’s Comment, petitioners informed this Court of a

Decision[16] of the Court of Appeals acquitting petitioner Manliclic of the charge[17] of
Reckless Imprudence Resulting in Damage to Property with Physical Injuries attaching
thereto a photocopy thereof.

On the first assigned error, petitioners argue that the TSNs containing the testimonies of
respondent Calaunan,[18] Marcelo Mendoza[19] and Fernando Ramos[20] should not be
admitted in evidence for failure of respondent to comply with the requisites of Section
47, Rule 130 of the Rules of Court.

For Section 47, Rule 130[21] to apply, the following requisites must be satisfied: (a) the
witness is dead or unable to testify; (b) his testimony or deposition was given in a former
case or proceeding, judicial or administrative, between the same parties or those
representing the same interests; (c) the former case involved the same subject as that in
the present case, although on different causes of action; (d) the issue testified to by the
witness in the former trial is the same issue involved in the present case; and (e) the
adverse party had an opportunity to cross-examine the witness in the former case.[22]

Admittedly, respondent failed to show the concurrence of all the requisites set forth by
the Rules for a testimony given in a former case or proceeding to be admissible as an
exception to the hearsay rule. Petitioner PRBLI, not being a party in Criminal Case No.
684-M-89, had no opportunity to cross-examine the three witnesses in said case. The
criminal case was filed exclusively against petitioner Manliclic, petitioner PRBLI’s
employee. The cases dealing with the subsidiary liability of employers uniformly declare
that, strictly speaking, they are not parties to the criminal cases instituted against their
employees.[23]

Notwithstanding the fact that petitioner PRBLI was not a party in said criminal case, the
testimonies of the three witnesses are still admissible on the ground that petitioner PRBLI
failed to object on their admissibility.

It is elementary that an objection shall be made at the time when an alleged inadmissible
document is offered in evidence; otherwise, the objection shall be treated as waived,
since the right to object is merely a privilege which the party may waive. Thus, a failure
to except to the evidence because it does not conform to the statute is a waiver of the
provisions of the law. Even assuming ex gratia argumenti that these documents are
inadmissible for being hearsay, but on account of failure to object thereto, the same may
be admitted and considered as sufficient to prove the facts therein asserted.[24] Hearsay
evidence alone may be insufficient to establish a fact in a suit but, when no objection is
made thereto, it is, like any other evidence, to be considered and given the importance it
deserves.[25]

In the case at bar, petitioner PRBLI did not object to the TSNs containing the testimonies
of respondent Calaunan, Marcelo Mendoza and Fernando Ramos in the criminal case
when the same were offered in evidence in the trial court. In fact, the TSNs of the
testimonies of Calaunan and Mendoza were admitted by both petitioners.[26] Moreover,
petitioner PRBLI even offered in evidence the TSN containing the testimony of Donato
Ganiban in the criminal case. If petitioner PRBLI argues that the TSNs of the testimonies
of plaintiff’s witnesses in the criminal case should not be admitted in the instant case,
why then did it offer the TSN of the testimony of Ganiban which was given in the
criminal case? It appears that petitioner PRBLI wants to have its cake and eat it too. It
cannot argue that the TSNs of the testimonies of the witnesses of the adverse party in the
criminal case should not be admitted and at the same time insist that the TSN of the
testimony of the witness for the accused be admitted in its favor. To disallow admission
in evidence of the TSNs of the testimonies of Calaunan, Marcelo Mendoza and Fernando
Ramos in the criminal case and to admit the TSN of the testimony of Ganiban would be
unfair.

We do not subscribe to petitioner PRBLI’s argument that it will be denied due process
when the TSNs of the testimonies of Calaunan, Marcelo Mendoza and Fernando Ramos
in the criminal case are to be admitted in the civil case. It is too late for petitioner PRBLI
to raise denial of due process in relation to Section 47, Rule 130 of the Rules of Court, as
a ground for objecting to the admissibility of the TSNs. For failure to object at the proper
time, it waived its right to object that the TSNs did not comply with Section 47.

In Mangio v. Court of Appeals,[27] this Court, through Associate Justice Reynato S. Puno,
[28]
admitted in evidence a TSN of the testimony of a witness in another case despite
therein petitioner’s assertion that he would be denied due process. In admitting the TSN,
the Court ruled that the raising of denial of due process in relation to Section 47, Rule
130 of the Rules of Court, as a ground for objecting to the admissibility of the TSN was
belatedly done. In so doing, therein petitioner waived his right to object based on said
ground.

Petitioners contend that the documents in the criminal case should not have been
admitted in the instant civil case because Section 47 of Rule 130 refers only to
“testimony or deposition.” We find such contention to be untenable. Though said section
speaks only of testimony and deposition, it does not mean that documents from a former
case or proceeding cannot be admitted. Said documents can be admitted they being part
of the testimonies of witnesses that have been admitted. Accordingly, they shall be given
the same weight as that to which the testimony may be entitled.[29]
On the second assigned error, petitioners contend that the version of petitioner Manliclic
as to how the accident occurred is more credible than respondent’s version. They anchor
their contention on the fact that petitioner Manliclic was acquitted by the Court of
Appeals of the charge of Reckless Imprudence Resulting in Damage to Property with
Physical Injuries.

To be resolved by the Court is the effect of petitioner Manliclic’s acquittal in the civil
case.

From the complaint, it can be gathered that the civil case for damages was one arising
from, or based on, quasi-delict.[30] Petitioner Manliclic was sued for his negligence or
reckless imprudence in causing the collision, while petitioner PRBLI was sued for its
failure to exercise the diligence of a good father in the selection and supervision of its
employees, particularly petitioner Manliclic. The allegations read:
“4. That sometime on July 12, 1988 at around 6:20 A.M. plaintiff was on board the
above-described motor vehicle travelling at a moderate speed along the North Luzon
Expressway heading South towards Manila together with MARCELO MENDOZA, who
was then driving the same;

“5. That approximately at kilometer 40 of the North Luzon Express Way, the above-
described motor vehicle was suddenly bumped from behind by a Philippine Rabbit Bus
with Body No. 353 and with plate No. CVD 478 then being driven by one Mauricio
Manliclic of San Jose, Concepcion, Tarlac, who was then travelling recklessly at a very
fast speed and had apparently lost control of his vehicle;

“6. That as a result of the impact of the collision the above-described motor vehicle was
forced off the North Luzon Express Way towards the rightside where it fell on its driver’s
side on a ditch, and that as a consequence, the above-described motor vehicle which
maybe valued at EIGHTY THOUSAND PESOS (P80,000) was rendered a total wreck as
shown by pictures to be presented during the pre-trial and trial of this case;

“7. That also as a result of said incident, plaintiff sustained bodily injuries which
compounded plaintiff’s frail physical condition and required his hospitalization from July
12, 1988 up to and until July 22, 1988, copy of the medical certificate is hereto attached
as Annex “A” and made an integral part hereof;

“8. That the vehicular collision resulting in the total wreckage of the above-described
motor vehicle as well as bodily (sic) sustained by plaintiff, was solely due to the reckless
imprudence of the defendant driver Mauricio Manliclic who drove his Philippine Rabbit
Bus No. 353 at a fast speed without due regard or observance of existing traffic rules and
regulations;

“9. That defendant Philippine Rabbit Bus Line Corporation failed to exercise the
diligence of a good father of (sic) family in the selection and supervision of its drivers; x
x x”[31]
Can Manliclic still be held liable for the collision and be found negligent notwithstanding
the declaration of the Court of Appeals that there was an absence of negligence on his
part?

In exonerating petitioner Manliclic in the criminal case, the Court of Appeals said:
To the following findings of the court a quo, to wit: that accused-appellant was negligent
“when the bus he was driving bumped the jeep from behind”; that “the proximate cause
of the accident was his having driven the bus at a great speed while closely following the
jeep”; x x x

We do not agree.

The swerving of Calaunan’s jeep when it tried to overtake the vehicle in front of it was
beyond the control of accused-appellant.

xxxx

Absent evidence of negligence, therefore, accused-appellant cannot be held liable for

Reckless Imprudence Resulting in Damage to Property with Physical Injuries as defined
in Article 365 of the Revised Penal Code.[32]
From the foregoing declaration of the Court of Appeals, it appears that petitioner
Manliclic was acquitted not on reasonable doubt, but on the ground that he is not the
author of the act complained of which is based on Section 2(b) of Rule 111 of the Rules
of Criminal Procedure which reads:
(b) Extinction of the penal action does not carry with it extinction of the civil, unless the
extinction proceeds from a declaration in a final judgment that the fact from which the
civil might arise did not exist.
In spite of said ruling, petitioner Manliclic can still be held liable for the mishap. The
afore-quoted section applies only to a civil action arising from crime or ex delicto and not
to a civil action arising from quasi-delict or culpa aquiliana. The extinction of civil
liability referred to in Par. (e) of Section 3, Rule 111 [now Section 2 (b) of Rule 111],
refers exclusively to civil liability founded on Article 100 of the Revised Penal Code,
whereas the civil liability for the same act considered as a quasi-delict only and not as a
crime is not extinguished even by a declaration in the criminal case that the criminal act
charged has not happened or has not been committed by the accused.[33]

A quasi-delict or culpa aquiliana is a separate legal institution under the Civil Code with
a substantivity all its own, and individuality that is entirely apart and independent from a
delict or crime – a distinction exists between the civil liability arising from a crime and
the responsibility for quasi-delicts or culpa extra-contractual. The same negligence
causing damages may produce civil liability arising from a crime under the Penal Code,
or create an action for quasi-delicts or culpa extra-contractual under the Civil Code.[34] It
is now settled that acquittal of the accused, even if based on a finding that he is not guilty,
does not carry with it the extinction of the civil liability based on quasi delict.[35]

In other words, if an accused is acquitted based on reasonable doubt on his guilt, his civil
liability arising from the crime may be proved by preponderance of evidence only.
However, if an accused is acquitted on the basis that he was not the author of the act or
omission complained of (or that there is declaration in a final judgment that the fact from
which the civil might arise did not exist), said acquittal closes the door to civil liability
based on the crime or ex delicto. In this second instance, there being no crime or delict to
speak of, civil liability based thereon or ex delicto is not possible. In this case, a civil
action, if any, may be instituted on grounds other than the delict complained of.

As regards civil liability arising from quasi-delict or culpa aquiliana, same will not be
extinguished by an acquittal, whether it be on ground of reasonable doubt or that accused
was not the author of the act or omission complained of (or that there is declaration in a
final judgment that the fact from which the civil liability might arise did not exist). The
responsibility arising from fault or negligence in a quasi-delict is entirely separate and
distinct from the civil liability arising from negligence under the Penal Code.[36] An
acquittal or conviction in the criminal case is entirely irrelevant in the civil case[37] based
on quasi-delict or culpa aquiliana.

Petitioners ask us to give credence to their version of how the collision occurred and to
disregard that of respondent’s. Petitioners insist that while the PRBLI bus was in the
process of overtaking respondent’s jeep, the latter, without warning, suddenly swerved to
the left (fast) lane in order to overtake another jeep ahead of it, thus causing the collision.

As a general rule, questions of fact may not be raised in a petition for review. The factual
findings of the trial court, especially when affirmed by the appellate court, are binding
and conclusive on the Supreme Court.[38] Not being a trier of facts, this Court will not
allow a review thereof unless:
(1) the conclusion is a finding grounded entirely on speculation, surmise and conjecture;
(2) the inference made is manifestly mistaken; (3) there is grave abuse of discretion; (4)
the judgment is based on a misapprehension of facts; (5) the findings of fact are
conflicting; (6) the Court of Appeals went beyond the issues of the case and its findings
are contrary to the admissions of both appellant and appellees; (7) the findings of fact of
the Court of Appeals are contrary to those of the trial court; (8) said findings of fact are
conclusions without citation of specific evidence on which they are based; (9) the facts
set forth in the petition as well as in the petitioner's main and reply briefs are not disputed
by the respondents; and (10) the findings of fact of the Court of Appeals are premised on
the supposed absence of evidence and contradicted by the evidence on record.[39]
After going over the evidence on record, we do not find any of the exceptions that would
warrant our departure from the general rule. We fully agree in the finding of the trial
court, as affirmed by the Court of Appeals, that it was petitioner Manliclic who was
negligent in driving the PRBLI bus which was the cause of the collision. In giving
credence to the version of the respondent, the trial court has this say:
x x x Thus, which of the two versions of the manner how the collision took place was
correct, would be determinative of who between the two drivers was negligent in the
operation of their respective vehicle.

In this regard, it should be noted that in the statement of Mauricio Manliclic (Exh. 15)
given to the Philippine Rabbit Investigator CV Cabading no mention was made by him
about the fact that the driver of the jeep was overtaking another jeep when the collision
took place. The allegation that another jeep was being overtaken by the jeep of Calaunan
was testified to by him only in Crim. Case No. 684-M-89 before the Regional Trial Court
in Malolos, Bulacan and before this Court. Evidently, it was a product of an afterthought
on the part of Mauricio Manliclic so that he could explain why he should not be held
responsible for the incident. His attempt to veer away from the truth was also apparent
when it would be considered that in his statement given to the Philippine Rabbit
Investigator CV Cabading (Exh. 15), he alleged that the Philippine Rabbit Bus bumped
the jeep of Calaunan while the Philippine Rabbit Bus was behind the said jeep. In his
testimony before the Regional Trial Court in Malolos, Bulacan as well as in this Court, he
alleged that the Philippine Rabbit Bus was already on the left side of the jeep when the
collision took place. For this inconsistency between his statement and testimony, his
explanation regarding the manner of how the collision between the jeep and the bus took
place should be taken with caution. It might be true that in the statement of Oscar Buan
given to the Philippine Rabbit Investigator CV Cabading, it was mentioned by the former
that the jeep of plaintiff was in the act of overtaking another jeep when the collision
between the latter jeep and the Philippine Rabbit Bus took place. But the fact, however,
that his statement was given on July 15, 1988, one day after Mauricio Manliclic gave his
statement should not escape attention. The one-day difference between the giving of the
two statements would be significant enough to entertain the possibility of Oscar Buan
having received legal advise before giving his statement. Apart from that, as between his
statement and the statement of Manliclic himself, the statement of the latter should
prevail. Besides, in his Affidavit of March 10, 1989, (Exh. 14), the unreliability of the
statement of Oscar Buan (Exh. 13) given to CV Cabading rear its “ugly head” when he
did not mention in said affidavit that the jeep of Calaunan was trying to overtake another
jeep when the collision between the jeep in question and the Philippine Rabbit bus took
place.

xxxx

If one would believe the testimony of the defendant, Mauricio Manliclic, and his
conductor, Oscar Buan, that the Philippine Rabbit Bus was already somewhat parallel to
the jeep when the collision took place, the point of collision on the jeep should have been
somewhat on the left side thereof rather than on its rear. Furthermore, the jeep should
have fallen on the road itself rather than having been forced off the road. Useless,
likewise to emphasize that the Philippine Rabbit was running very fast as testified to by
Ramos which was not controverted by the defendants.[40]
Having ruled that it was petitioner Manliclic’s negligence that caused the smash up, there
arises the juris tantum presumption that the employer is negligent, rebuttable only by
proof of observance of the diligence of a good father of a family.[41] Under Article
2180[42] of the New Civil Code, when an injury is caused by the negligence of the
employee, there instantly arises a presumption of law that there was negligence on the
part of the master or employer either in the selection of the servant or employee, or in
supervision over him after selection or both. The liability of the employer under Article
2180 is direct and immediate; it is not conditioned upon prior recourse against the
negligent employee and a prior showing of the insolvency of such employee. Therefore,
it is incumbent upon the private respondents to prove that they exercised the diligence of
a good father of a family in the selection and supervision of their employee.[43]

In the case at bar, petitioner PRBLI maintains that it had shown that it exercised the
required diligence in the selection and supervision of its employees, particularly
petitioner Manliclic. In the matter of selection, it showed the screening process that
petitioner Manliclic underwent before he became a regular driver. As to the exercise of
due diligence in the supervision of its employees, it argues that presence of ready
investigators (Ganiban and Cabading) is sufficient proof that it exercised the required due
diligence in the supervision of its employees.

In the selection of prospective employees, employers are required to examine them as to

their qualifications, experience and service records. In the supervision of employees, the
employer must formulate standard operating procedures, monitor their implementation
and impose disciplinary measures for the breach thereof. To fend off vicarious liability,
employers must submit concrete proof, including documentary evidence, that they
complied with everything that was incumbent on them.[44]

In Metro Manila Transit Corporation v. Court of Appeals,[45] it was explained that:

Due diligence in the supervision of employees on the other hand, includes the
formulation of suitable rules and regulations for the guidance of employees and the
issuance of proper instructions intended for the protection of the public and persons with
whom the employer has relations through his or its employees and the imposition of
necessary disciplinary measures upon employees in case of breach or as may be
warranted to ensure the performance of acts indispensable to the business of and
beneficial to their employer. To this, we add that actual implementation and monitoring
of consistent compliance with said rules should be the constant concern of the employer,
acting through dependable supervisors who should regularly report on their supervisory
functions.
In order that the defense of due diligence in the selection and supervision of employees
may be deemed sufficient and plausible, it is not enough to emptily invoke the existence
of said company guidelines and policies on hiring and supervision. As the negligence of
the employee gives rise to the presumption of negligence on the part of the employer, the
latter has the burden of proving that it has been diligent not only in the selection of
employees but also in the actual supervision of their work. The mere allegation of the
existence of hiring procedures and supervisory policies, without anything more, is
decidedly not sufficient to overcome such presumption.

We emphatically reiterate our holding, as a warning to all employers, that “the

formulation of various company policies on safety without showing that they were being
complied with is not sufficient to exempt petitioner from liability arising from negligence
of its employees. It is incumbent upon petitioner to show that in recruiting and employing
the erring driver the recruitment procedures and company policies on efficiency and
safety were followed.” x x x.
The trial court found that petitioner PRBLI exercised the diligence of a good father of a
family in the selection but not in the supervision of its employees. It expounded as
follows:
From the evidence of the defendants, it seems that the Philippine Rabbit Bus Lines has a
very good procedure of recruiting its driver as well as in the maintenance of its vehicles.
There is no evidence though that it is as good in the supervision of its personnel. There
has been no iota of evidence introduced by it that there are rules promulgated by the bus
company regarding the safe operation of its vehicle and in the way its driver should
manage and operate the vehicles assigned to them. There is no showing that somebody in
the bus company has been employed to oversee how its driver should behave while
operating their vehicles without courting incidents similar to the herein case. In regard to
supervision, it is not difficult to observe that the Philippine Rabbit Bus Lines, Inc. has
been negligent as an employer and it should be made responsible for the acts of its
employees, particularly the driver involved in this case.
We agree. The presence of ready investigators after the occurrence of the accident is not
enough to exempt petitioner PRBLI from liability arising from the negligence of
petitioner Manliclic. Same does not comply with the guidelines set forth in the cases
above-mentioned. The presence of the investigators after the accident is not enough
supervision. Regular supervision of employees, that is, prior to any accident, should have
been shown and established. This, petitioner failed to do. The lack of supervision can
further be seen by the fact that there is only one set of manual containing the rules and
regulations for all the drivers of PRBLI. [46] How then can all the drivers of petitioner
PRBLI know and be continually informed of the rules and regulations when only one
manual is being lent to all the drivers?

For failure to adduce proof that it exercised the diligence of a good father of a family in
the selection and supervision of its employees, petitioner PRBLI is held solidarily
responsible for the damages caused by petitioner Manliclic’s negligence.

We now go to the award of damages. The trial court correctly awarded the amount of
P40,838.00 as actual damages representing the amount paid by respondent for the towing
and repair of his jeep.[47] As regards the awards for moral and exemplary damages, same,
under the circumstances, must be modified. The P100,000.00 awarded by the trial court
as moral damages must be reduced to P50,000.00.[48] Exemplary damages are imposed by
way of example or correction for the public good.[49] The amount awarded by the trial
court must, likewise, be lowered to P50,000.00.[50] The award of P15,000.00 for
attorney’s fees and expenses of litigation is in order and authorized by law.[51]

WHEREFORE, premises considered, the instant petition for review is DENIED. The
decision of the Court of Appeals in CA-G.R. CV No. 55909 is AFFIRMED with
the MODIFICATION that (1) the award of moral damages shall be reduced to
P50,000.00; and (2) the award of exemplary damages shall be lowered to P50,000.00.
Costs against petitioners.

SO ORDERED.
 FIRST DIVISION
[ G.R. No. 166640. July 31, 2009 ]
HERMINIO MARIANO, JR., PETITIONER, VS. ILDEFONSO C. CALLEJAS
AND EDGAR DE BORJA, RESPONDENTS.

DECISION

PUNO, C.J.:

On appeal are the Decision[1] and Resolution[2] of the Court of Appeals in CA-G.R. CV
No. 66891, dated May 21, 2004 and January 7, 2005 respectively, which reversed the
Decision[3] of the Regional Trial Court (RTC) of Quezon City, dated September 13, 1999,
which found respondents jointly and severally liable to pay petitioner damages for the
death of his wife.

First, the facts:

Petitioner Herminio Mariano, Jr. is the surviving spouse of Dr. Frelinda Mariano who
was a passenger of a Celyrosa Express bus bound for Tagaytay when she met her death.
Respondent Ildefonso C. Callejas is the registered owner of Celyrosa Express, while
respondent Edgar de Borja was the driver of the bus on which the deceased was a
passenger.

At around 6:30 p.m. on November 12, 1991, along Aguinaldo Highway, San Agustin,
Dasmariñas, Cavite, the Celyrosa Express bus, carrying Dr. Mariano as its passenger,
collided with an Isuzu truck with trailer bearing plate numbers PJH 906 and TRH 531.
The passenger bus was bound for Tagaytay while the trailer truck came from the opposite
direction, bound for Manila. The trailer truck bumped the passenger bus on its left middle
portion. Due to the impact, the passenger bus fell on its right side on the right shoulder of
the highway and caused the death of Dr. Mariano and physical injuries to four other
passengers. Dr. Mariano was 36 years old at the time of her death. She left behind three
minor children, aged four, three and two years.

Petitioner filed a complaint for breach of contract of carriage and damages against
respondents for their failure to transport his wife and mother of his three minor children
safely to her destination. Respondents denied liability for the death of Dr. Mariano. They
claimed that the proximate cause of the accident was the recklessness of the driver of the
trailer truck which bumped their bus while allegedly at a halt on the shoulder of the road
in its rightful lane. Thus, respondent Callejas filed a third-party complaint against Liong
Chio Chang, doing business under the name and style of La Perla Sugar Supply, the
owner of the trailer truck, for indemnity in the event that he would be held liable for
damages to petitioner.

Other cases were filed. Callejas filed a complaint,[4] docketed as Civil Case No. NC-397
before the RTC of Naic, Cavite, against La Perla Sugar Supply and Arcadio Arcilla, the
truck driver, for damages he incurred due to the vehicular accident. On September 24,
1992, the said court dismissed the complaint against La Perla Sugar Supply for lack of
evidence. It, however, found Arcilla liable to pay Callejas the cost of the repairs of his
passenger bus, his lost earnings, exemplary damages and attorney's fees.[5]

A criminal case, Criminal Case No. 2223-92, was also filed against truck driver Arcilla in
the RTC of Imus, Cavite. On May 3, 1994, the said court convicted truck driver Arcadio
Arcilla of the crime of reckless imprudence resulting to homicide, multiple slight
physical injuries and damage to property.[6]

In the case at bar, the trial court, in its Decision dated September 13, 1999, found
respondents Ildefonso Callejas and Edgar de Borja, together with Liong Chio Chang,
jointly and severally liable to pay petitioner damages and costs of suit. The dispositive
portion of the Decision reads:

ACCORDINGLY, the defendants are ordered to pay as follows:

1. The sum of P50,000.00 as civil indemnity for the loss of life;

2. The sum of P40,000.00 as actual and compensatory damages;
3. The sum of P1,829,200.00 as foregone income;
4. The sum of P30,000.00 as moral damages;
5. The sum of P20,000.00 as exemplary damages;
6. The costs of suit.

SO ORDERED.[7]

Respondents Callejas and De Borja appealed to the Court of Appeals, contending that the
trial court erred in holding them guilty of breach of contract of carriage.

On May 21, 2004, the Court of Appeals reversed the decision of the trial court. It
reasoned:

. . . the presumption of fault or negligence against the carrier is only a disputable

presumption. It gives in where contrary facts are established proving either that the
carrier had exercised the degree of diligence required by law or the injury suffered by the
passenger was due to a fortuitous event. Where, as in the instant case, the injury sustained
by the petitioner was in no way due to any defect in the means of transport or in the
method of transporting or to the negligent or wilful acts of private respondent's
employees, and therefore involving no issue of negligence in its duty to provide safe and
suitable cars as well as competent employees, with the injury arising wholly from causes
created by strangers over which the carrier had no control or even knowledge or could
not have prevented, the presumption is rebutted and the carrier is not and ought not to be
held liable. To rule otherwise would make the common carrier the insurer of the absolute
safety of its passengers which is not the intention of the lawmakers.[8]

The dispositive portion of the Decision reads:

WHEREFORE, the decision appealed from, insofar as it found defendants-appellants

Ildefonso Callejas and Edgar de Borja liable for damages to plaintiff-appellee Herminio
E. Mariano, Jr., is REVERSED and SET ASIDE and another one entered absolving them
from any liability for the death of Dr. Frelinda Cargo Mariano.[9]

The appellate court also denied the motion for reconsideration filed by petitioner.

Hence, this appeal, relying on the following ground:

THE DECISION OF THE HONORABLE COURT OF APPEALS, SPECIAL

FOURTEENTH DIVISION IS NOT IN ACCORD WITH THE FACTUAL BASIS OF
THE CASE.[10]

The following are the provisions of the Civil Code pertinent to the case at bar:

ART. 1733. Common carriers, from the nature of their business and for reasons of public
policy, are 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.

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

ART. 1756. In case of death 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.

In accord with the above provisions, Celyrosa Express, a common carrier, through its
driver, respondent De Borja, and its registered owner, respondent Callejas, has the
express obligation "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,"[11] and to observe extraordinary diligence in the discharge of its duty. The
death of the wife of the petitioner in the course of transporting her to her destination gave
rise to the presumption of negligence of the carrier. To overcome the presumption,
respondents have to show that they observed extraordinary diligence in the discharge of
their duty, or that the accident was caused by a fortuitous event.

This Court interpreted the above quoted provisions in Pilapil v. Court of Appeals.[12] We
elucidated:

While the law requires the highest degree of diligence from common carriers in the safe
transport of their passengers and creates a presumption of negligence against them, it
does not, however, make the carrier an insurer of the absolute safety of its
passengers.

Article 1755 of the Civil Code qualifies the duty of extraordinary care, vigilance and
precaution in the carriage of passengers by common carriers to only such as human care
and foresight can provide. What constitutes compliance with said duty is adjudged with
due regard to all the circumstances.

Article 1756 of the Civil Code, in creating a presumption of fault or negligence on the
part of the common carrier when its passenger is injured, merely relieves the latter, for
the time being, from introducing evidence to fasten the negligence on the former, because
the presumption stands in the place of evidence. Being a mere presumption, however,
the same is rebuttable by proof that the common carrier had exercised
extraordinary diligence as required by law in the performance of its contractual
obligation, or that the injury suffered by the passenger was solely due to a fortuitous
event.

In fine, we can only infer from the law the intention of the Code Commission and
Congress to curb the recklessness of drivers and operators of common carriers in the
conduct of their business.

Thus, it is clear that neither the law nor the nature of the business of a
transportation company makes it an insurer of the passenger's safety, but that its
liability for personal injuries sustained by its passenger rests upon its negligence, its
failure to exercise the degree of diligence that the law requires.

In the case at bar, petitioner cannot succeed in his contention that respondents failed to
overcome the presumption of negligence against them. The totality of evidence shows
that the death of petitioner's spouse was caused by the reckless negligence of the driver of
the Isuzu trailer truck which lost its brakes and bumped the Celyrosa Express bus, owned
and operated by respondents.

First, we advert to the sketch prepared by PO3 Magno S. de Villa, who investigated the
accident. The sketch[13] shows the passenger bus facing the direction of Tagaytay City and
lying on its right side on the shoulder of the road, about five meters away from the point
of impact. On the other hand, the trailer truck was on the opposite direction, about 500
meters away from the point of impact. PO3 De Villa stated that he interviewed De Borja,
respondent driver of the passenger bus, who said that he was about to unload some
passengers when his bus was bumped by the driver of the trailer truck that lost its brakes.
PO3 De Villa checked out the trailer truck and found that its brakes really failed. He
testified before the trial court, as follows:

ATTY. ESTELYDIZ:
q You pointed to the Isuzu truck beyond the point of impact. Did you investigate why
did (sic) the Isuzu truck is beyond the point of impact?
a Because the truck has no brakes.
COURT:
q What is the distance between that circle which is marked as Exh. 1-c to the place where
you found the same?
a More or less 500 meters.
q Why did you say that the truck has no brakes?
a I tested it.
q And you found no brakes?
a Yes, sir.
xxx
q When you went to the scene of accident, what was the position of Celyrosa bus?
a It was lying on its side.
COURT:
q Right side or left side?
a Right side.
ATTY. ESTELYDIZ:
q On what part of the road was it lying?
a On the shoulder of the road.
COURT:
q How many meters from the point of impact?
a Near, about 5 meters.[14]

His police report bolsters his testimony and states:

Said vehicle 1 [passenger bus] was running from Manila toward south direction when, in
the course of its travel, it was hit and bumped by vehicle 2 [truck with trailer] then
running fast from opposite direction, causing said vehicle 1 to fall on its side on the road
shoulder, causing the death of one and injuries of some passengers thereof, and its
damage, after collission (sic), vehicle 2 continiously (sic) ran and stopped at
approximately 500 meters away from the piont (sic) of impact.[15]
In fine, the evidence shows that before the collision, the passenger bus was cruising on its
rightful lane along the Aguinaldo Highway when the trailer truck coming from the
opposite direction, on full speed, suddenly swerved and encroached on its lane, and
bumped the passenger bus on its left middle portion. Respondent driver De Borja had
every right to expect that the trailer truck coming from the opposite direction would stay
on its proper lane. He was not expected to know that the trailer truck had lost its brakes.
The swerving of the trailer truck was abrupt and it was running on a fast speed as it was
found 500 meters away from the point of collision. Secondly, any doubt as to the
culpability of the driver of the trailer truck ought to vanish when he pleaded guilty to the
charge of reckless imprudence resulting to multiple slight physical injuries and damage to
property in Criminal Case No. 2223-92, involving the same incident.

IN VIEW WHEREOF, the petition is DENIED. The Decision dated May 21, 2004 and
the Resolution dated January 7, 2005 of the Court of Appeals in CA-G.R. CV No. 66891
are AFFIRMED.

SO ORDERED.
 THIRD DIVISION
[ G.R. No. 71137. October 05, 1989 ]
SPOUSES FEDERICO FRANCO AND FELICISIMA R. FRANCO,
PETITIONERS, VS. INTERMEDIATE APPELLATE COURT, ANTONIO
REYES, MRS. SUSAN CHUAY AND LOLITA LUGUE, RESPONDENTS.

DECISION

FERNAN, C.J.:

The instant petition for review of a decision of the Court of Appeals deals mainly with
the nature of an employer's liability for his employee's negligent act.

At about 7:30 in the evening of October 18, 1974, Macario Yuro swerved the northbound
Franco Bus with Plate No. XY-320-PUB he was driving to the left to avoid hitting a truck
with a trailer parked facing north along the cemented pavement of the MacArthur
Highway at Barrio Talaga, Capas, Tarlac, thereby taking the lane of an incoming Isuzu
Mini Bus bearing Plate No. YL-735 being driven by one Magdaleno Lugue and making a
collision between the two (2) vehicles an unavoidable and disastrous eventuality.

Dragged fifteen (15) meters from the point of impact (midway the length of the parked
truck with trailer), the mini bus landed right side down facing south in the canal of the
highway, a total wreck. The Franco Bus was also damaged but not as severely. The
collision resulted in the deaths of the two (2) drivers, Macario Yuro and Magdaleno
Lugue, and two (2) passengers of the mini bus, Romeo Bue and Fernando Chuay.

Consequently, Antonio Reyes, the registered owner of the Isuzu Mini Bus, Mrs. Susan
Chuay, the wife of victim Fernando Chuay, and Mrs. Lolita Lugue, the wife of driver-
victim Magdaleno Lugue, filed an action for damages through reckless imprudence
before the Court of First Instance of Pampanga and Angeles City, Branch IV, docketed as
Civil Case No. 2154 against Mr. & Mrs. Federico Franco, the owners and operators of the
Franco Transportation Company. The complaint alleged that: (a) the recklessness and
imprudence of the Franco Bus driver caused the collision which resulted in his own death
and that of the mini bus driver and two (2) other passengers thereof; (b) that as a
consequence of the vehicular mishap, the Isuzu Mini Bus became a total wreck resulting
in actual damages amounting to P50,000.00 and the loss of an average net income of
P120.00 daily or P3,600.00 monthly multiplied by a minimum of one more year of
serviceability of said mini bus or P40,200.00; and, (c) that in view of the death of the
three (3) passengers aforementioned, the heirs of each should be awarded a minimum of
P12,000.00 and the expected average income of P6,000.00 each of the driver and one of
the passengers and P12,000.00 of the Chinese businessman passenger.

In answer to the complaint, defendants set up, among others, the affirmative defense that
as owners and operators of the Franco Transportation Company, they exercised due
diligence in the selection and supervision of all their employees, including the deceased
driver Macario Yuro.

Said defense was, however, rejected by the trial court in its decision dated May 17,
[1]

1978, for the reason that the act of the Franco Bus driver was a negligent act punishable
by law resulting in a civil obligation arising from Article 103 of the Revised Penal Code
and not from Article 2180 of the Civil Code. It said: "This is a case of criminal
negligence out of which civil liability arises, and not a case of civil negligence and the
defense of having acted like a good father of a family or having trained or selected the
drivers of his truck is no defense to avoid civil liability" . On this premise, the trial court
[2]

ruled as follows:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the

plaintiffs, Antonio Reyes, Lolita Lugue, and Susan Chuay, and against the defendants Mr.
and Mrs. Federico Franco, ordering the latter:
(1) To pay Antonio Reyes, actual and compensatory damages in the amount of
P90,000.00 for the Isuzu Mini Bus;
(2) To pay Lolita Lugue, the widow of Magdaleno Lugue, actual and compensatory
damages in the total sum of P18,000.00;
(3) To pay Susan Chuay, the widow of Fernando Chuay, actual and compensatory
damages in the total sum of P24,000.00; and
(4) To pay attorney's fee in the amount of P5,000.00;
All with legal interests from the filing of this suit on November 11, 1974 until paid; and
the costs of this suit.
SO ORDERED. [3]

On appeal by herein petitioners as defendants-appellants, respondent appellate court,

agreeing with the lower court, held that defendants-appellants’ driver who died instantly
in the vehicular collision, was guilty of reckless or criminal imprudence punishable by
law in driving appellants' bus; that the civil obligation of the appellants arises from
Article 103 of the Revised Penal Code resulting in the subsidiary liability of the
appellants under the said provision ; that the case subject of appeal is one involving
[4]
culpable negligence out of which civil liability arises and is not one of civil negligence ; [5]

and that there is nothing in Articles 102 and 103 of the Revised Penal Code which
requires a prior judgment of conviction of the erring vehicle driver and his obligation to
pay his civil liability before the said provisions can be applied. Respondent appellate
[6]

court increased the award of damages granted by the lower court as follows:

WHEREFORE, the decision appealed from is hereby modified as follows:

1. To pay Susan Chuay, widow of Fernando Chuay, the sum of P30,000.00 for the latter's
death and P112,000.00 for loss of earning capacity;
2. To pay Lolita Lugue, widow of Magdaleno Lugue, the sum of P30,000.00 for the
latter's death and P62,000.00 for loss of earning capacity. The rest of the judgment
appealed from is affirmed. Costs against defendants-appellants.
SO ORDERED. [7]

On April 1, 1985, petitioners filed a motion for reconsideration of the aforesaid

respondent appellate court's decision dated January 2, 1985 but the same was denied on
May 13, 1985.

Hence, the instant petition raising two (2) legal questions: first, whether the action for
recovery of damages instituted by herein private respondents was predicated upon crime
or quasi-delict; and second, whether respondent appellate court in an appeal filed by the
defeated parties, herein petitioners, may properly increase the award of damages in favor
of the private respondents Chuay and Lugue, prevailing parties in the lower court, who
did not appeal said court's decision.

Petitioners contend that the allegations in paragraph 9 of the Amended Complaint of [8]

herein private respondents as plaintiffs in Civil Case No. 2154 unequivocally claim that
the former as the employers of Macario Yuro, the driver of the Franco Bus who caused
the vehicular mishap, are jointly and severally liable to the latter for the damages suffered
by them which thus makes Civil Case No. 2154 an action predicated upon a quasi?delict
under the Civil Code subject to the defense that the employer exercised all the diligence
of a good father of a family in the selection and supervision of their employees.

We find merit in this contention. Distinction should be made between the subsidiary
liability of the employer under the Revised Penal Code and the employer's primary
liability under the Civil Code which is quasi-delictual or tortious in character. The first
type of liability is governed by Articles 102 and 103 of the Revised Penal Code which
provide as follows:
Art. 102. Subsidiary civil liability of innkeepers, tavern-keepers and proprietors of
establishments.- In default of the persons criminally liable, innkeepers, tavern-keepers,
and any other persons or corporations shall be civilly liable for crimes committed in their
establishments, in all cases where a violation of municipal ordinances or some
general or special police regulations shall have been committed by them or their
employees.
Innkeepers are also subsidiarily liable for the restitution of goods taken by robbery or
theft within their houses from guests lodging therein, or for the payment of the value
thereof, provided that such guests shall have notified in advance the innkeeper himself,
or the person representing him, of the deposits of such goods within the inn; and shall
furthermore have followed the directions which such innkeeper or his representative
may have given them with respect to the care and vigilance over such goods. No liability
shall attach in case of robbery with violence against or intimidation of persons unless
committed by the innkeeper's employees.
Art. 103. Subsidiary civil liability of other persons.- The subsidiary liability established in
the next preceding article shall also apply to employers, teachers, persons, and
corporations engaged in any kind of industry for felonies committed by the servants,
pupils, workmen, apprentices, or employees in the discharge of their duties;

while the second kind is governed by the following provisions of the Civil Code:

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. 2177. Responsibility for fault or negligence under the preceding article is entirely
separate and distinct from the civil liability arising from negligence under the Penal
Code. But the plaintiff cannot recover damages twice for the same act or omission of
the defendant.
Art. 2180. The obligations 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.
x x x x x
Employers shall be liable for the damages caused by their employees and household
helpers acting within the scope of their assigned tasks, even though the former are not
engaged in any business or industry.
x x x x x
The responsibility treated of in this article shall cease when the persons herein
mentioned prove that they observed all the diligence of a good father of a family to
prevent damage.

Under Article 103 of the Revised Penal Code, liability originates from a delict committed
by the employee who is primarily liable therefor and upon whose primary liability his
employer's subsidiary liability is to be based. Before the employer's subsidiary liability
may be proceeded against, it is imperative that there should be a criminal action whereby
the employee's criminal negligence or delict and corresponding liability therefor are
proved. If no criminal action was instituted, the employer's liability would not be
predicated under Article 103. [9]

In the case at bar, no criminal action was instituted because the person who should stand
as the accused and the party supposed to be primarily liable for the damages suffered by
private respondents as a consequence of the vehicular mishap died. Thus, petitioners'
subsidiary liability has no leg to stand on considering that their liability is merely
secondary to their employee's primary liability. Logically therefore, recourse under this
remedy is not possible.

On the other hand, under Articles 2176 and 2180 of the Civil Code, liability is based
on culpa aquiliana which holds the employer primarily liable for tortious acts of its
employees subject, however, to the defense that the former exercised all the diligence of a
good father of a family in the selection and supervision of his employees.

Respondent appellate court relies on the case of Arambulo, supra, where it was held that
the defense of observance of due diligence of a good father of a family in the selection
and supervision of employees is not applicable to the subsidiary liability provided in
Article 20 of the Penal Code (now Article 103 of the Revised Penal Code). By such
reliance, it would seem that respondent appellate court seeks to enforce the subsidiary
civil liability of the employer without a criminal conviction of the party primarily liable
therefore. This is not only erroneous and absurd but is also fraught with dangerous
consequences. It is erroneous because the conviction of the employee primarily liable is a
condition sine qua non for the employer's subsidiary liability and, at the same time,
[10]

absurd because we will be faced with a situation where the employer is held subsidiarily
liable even without a primary liability being previously established. It is likewise
dangerous because, in effect, the employer's subsidiary liability would partake of a
solidary obligation resulting in the law's amendment without legislative sanction.

The Court in the aforecited M.D. Transit case went further to say that there can be no
automatic subsidiary liability of defendant employer under Article 103 of the Revised
Penal Code where his employee has not been previously criminally convicted.
Having thus established that Civil Case No. 2154 is a civil action to impose the primary
liability of the employer as a result of the tortious act of its alleged reckless driver, we
confront ourselves with the plausibility of defendants?petitioners’ defense that they
observed due diligence of a good father of a family in the selection and supervision of
their employees.

On this point, the appellate court has unequivocally spoken in affirmation of the lower
court's findings, to wit:

Anyway, a perusal of the record shows that the appellants were not able to establish the
defense of a good father of a family in the supervision of their bus driver. The evidence
presented by the appellants in this regard is purely self-serving. No independent
evidence was presented as to the alleged supervision of appellants' bus drivers,
especially with regard to driving habits and reaction to actual traffic conditions. The
appellants in fact admitted that the only kind of supervision given the drivers referred to
the running time between the terminal points of the line (t.s.n., September 16, 1976,
p. 21) Moreover, the appellants who ran a fleet of 12 buses plying the Manila-Laoag
line, have only two inspectors whose duties were only ticket inspection. There is no
evidence that they are really safety inspectors. [11]

Basically, the Court finds that these determinations are factual in nature. As a painstaking
review of the evidence presented in the case at bar fails to disclose any
evidence or circumstance of note sufficient to overrule said factual findings and
conclusions, the Court is inclined to likewise reject petitioners' affirmative defense of due
diligence. The wisdom of this stance is made more apparent by the fact that the appellate
court's conclusions are based on the findings of the lower court which is in a better
position to evaluate the testimonies of the witnesses during trial. As a rule, this Court
respects the factual findings of the appellate and trial courts and accord them a certain
measure of finality. Consequently, therefore, we find petitioners liable for the damages
[12]

claimed pursuant to their primary liability under the Civil Code.

On the second legal issue raised in the instant petition, we agree with petitioners'
contention that the Intermediate Appellate Court (later Court of Appeals) is without
jurisdiction to increase the amount of damages awarded to private respondents Chuay and
Lugue, neither of whom appealed the decision of the lower court. While an appellee who
is not also an appellant may assign error in his brief if his purpose is to maintain the
judgment on other grounds, he cannot ask for modification or reversal of the judgment or
affirmative relief unless he has also appealed. For failure of plaintiffs-appellees, herein
[13]

private respondents, to appeal the lower court's judgment, the amount of actual damages
cannot exceed that awarded by it. [14]
Furthermore, the records show that plaintiffs-private respondents limited their claim for
[15]

actual and compensatory damages to the supposed average income for a period of one (1)
year of P6,000.00 for the driver Magdaleno Lugue and P12,000.00 for the Chinese
businessman Fernando Chuay. We feel that our award should not exceed the said
amounts. [16]

However, the increase in awards for indemnity arising from death to P30,000.00 each
remains, the same having been made in accordance with prevailing jurisprudence
decreeing such increase in view of the depreciated Philippine currency.
[17]

WHEREFORE, the decision of the Court of Appeals is hereby modified decreasing the
award to private respondents of actual and compensatory damages for loss of average
income for the period of one year to P6,000.00 for the deceased Magdaleno Lugue and
P12,000.00 for the deceased Fernando Chuay. The rest of the judgment appealed from is
hereby affirmed. Costs against the private respondents. This decision is immediately
executory.

SO ORDERED.
 SECOND DIVISION
[ G.R. No. 84516. December 05, 1989 ]
DIONISIO CARPIO, PETITIONER, VS. HON. SERGIO DOROJA,
(PRESIDING JUDGE, MTC, BRANCH IV, ZAMBOANGA CITY) AND
EDWIN RAMIREZ Y WEE, RESPONDENTS.

DECISION

PARAS, J.:

Before Us is a petition to review by certiorari the decision of the Municipal Trial Court
of Zamboanga City, Branch IV, which denied petitioner's motion for subsidiary writ of
execution against the owner-operator of the vehicle which figured in the accident.

The facts of the case are undisputed.

Sometime on October 23, 1985, accused-respondent Edwin Ramirez, while driving a

passenger Fuso Jitney owned and operated by Eduardo Toribio, bumped Dionisio Carpio,
a pedestrian crossing the street, as a consequence of which the latter suffered from a
fractured left clavicle as reflected in the medico-legal certificate and sustained injuries
which required medical attention for a period of (3) three months.

An information for Reckless Imprudence Resulting to Serious Physical Injuries was filed
against Edwin Ramirez with the Municipal Trial Court of Zamboanga City, Branch
IV. On January 14, 1987, the accused voluntarily pleaded guilty to a lesser offense and
was accordingly convicted for Reckless Imprudence Resulting to Less Serious Physical
Injuries under an amended information punishable under Article 365 of the Revised Penal
Code. The dispositive portion of the decision handed down on May 27, 1987 reads as
follows:

"WHEREFORE, finding the accused EDWIN RAMIREZ y WEE guilty as a principal

beyond reasonable doubt of the Amended Information to which he voluntarily pleaded
guilty and appreciating this mitigating circumstance in his favor, hereby sentences him to
suffer the penalty of One (1) month and One (1) day to Two (2) months of Arresto Mayor
in its minimum period. The accused is likewise ordered to indemnify the
complainant Dionisio A. Carpio the amount of P45.00 representing the value of the 1/2
can of tomatoes lost; the amount of P200.00 which complainant paid to
the Zamboanga General Hospital, to pay complainant the amount of P1,500.00 as
attorney's fees and to pay the cost of this suit.

"SO ORDERED." (p. 7, Rollo)

Thereafter, the accused filed an application for probation.

At the early stage of the trial, the private prosecutor manifested his desire to present
evidence to establish the civil liability of either the accused driver or the owner-
operator of the vehicle. Accused's counsel moved that the court summon the owner of
the vehicle to afford the latter a day in court, on the ground that the accused is not only
indigent but also jobless and thus cannot answer any civil liability that may be imposed
upon him by the court. The private prosecutor, however, did not move for the appearance
of Eduardo Toribio.

The civil aspect of the above-quoted decision was appealed by the private prosecutor to
the Regional Trial Court Branch XVI, appellant praying for moral damages in the amount
of P10,000.00, compensatory damages at P6,186.40, and attorney's fees of
P5,000.00. The appellate court, on January 20, 1988, modified the trial court's decision,
granting the appellant moral damages in the amount of Five Thousand Pesos (P5,000.00),
while affirming all other civil liabilities.

Thereafter, a writ of execution dated March 10, 1988 was duly served upon the accused
but was, however, returned unsatisfied due to the insolvency of the accused as shown by
the sheriff's return. Thus, complainant moved for a subsidiary writ of execution against
the subsidiary liability of the owner-operator of the vehicle. The same was denied by the
trial court on two grounds, namely, the decision of the appellate court made no mention
of the subsidiary liability of Eduardo Toribio, and the nature of the accident falls under
"culpa-aquiliana" and not "culpa-contractual." A motion for reconsideration of the said
order was disallowed for the reason that complainant having failed to raise the matter of
subsidiary liability with the appellate court, said court rendered its decision which has
become final and executory and the trial court has no power to alter or modify such
decision.

Hence, the instant petition.

Petitioner relies heavily on the case of Pajarito v. Seneris, 87 SCRA 275, which
enunciates that "the subsidiary liability of the owner-operator is fixed by the judgment,
because if a case were to be filed against said operator, the court called upon to act
thereto has no other function than to render a decision based on the indemnity award in
the criminal case without power to amend or modify it even if in his opinion an error has
been committed in the decision." Petitioner maintains that the tenor of the aforesaid
decision implies that the subsidiary liability of the owner-operator may be enforced in the
same proceeding and a separate action is no longer necessary in order to avoid undue
delay, notwithstanding the fact that said employer was not made a party in the criminal
action.

It is the theory of respondent that the owner-operator cannot be validly

held subsidiarily liable for the following reasons, namely: (a) the matter of subsidiary
liability was not raised on appeal; (b) contrary to the case of Pajarito v. Seneris, the
injuries sustained by the complainant did not arise from the so-called "culpa-contractual"
but from "culpa-aquiliana"; (c) the judgments of appellate courts may not be altered,
modified, or changed by the court of origin; and (d) said owner was never made a party to
the criminal proceedings.

Thus, the underlying issue raised in this case is: whether or not the subsidiary liability of
the owner-operator may be enforced in the same criminal proceeding against the driver
where the award was given, or in a separate civil action.

The law involved in the instant case is Article 103 in relation to Article 100, both of the
Revised Penal Code, which reads thus:

"Art. 103. Subsidiary civil liability of other persons. The subsidiary liability established
in the next preceding article shall apply to employers, teachers, persons, and corporations
engaged in any kind of industry for felonies committed by their servants, pupils,
workmen, apprentices, or employees in the discharge of their duties."

Respondent contends that the case of Pajarito v. Seneris cannot be applied to the present
case, the former being an action involving culpa-contractual, while the latter being one
of culpa-aquiliana. Such a declaration is erroneous. The subsidiary liability in Art. 103
should be distinguished from the primary liability of employers, which is quasi-
delictual in character as provided in Art. 2180 of the New Civil Code. Under Art. 103,
the liability emanated from a delict. On the other hand, the liability under Art. 2180 is
founded on culpa aquiliana. The present case is neither an action for culpa?contractual
nor for culpa-aquiliana. This is basically an action to enforce the civil liability arising
from crime under Art. 100 of the Revised Penal Code. In no case can this be regarded as
a civil action for the primary liability of the employer under Art. 2180 of the New Civil
Code, i.e., action for culpa aquiliana.

In order that an employer may be held subsidiarily liable for the employee's civil liability
in the criminal action, it should be shown (1) that the employer, etc. is engaged in any
kind of industry, (2) that the employee committed the offense in the discharge of his
duties and (3) that he is insolvent (Basa Marketing Corp. v. Bolinao, 117 SCRA
156). The subsidiary liability of the employer, however, arises only after conviction of
the employee in the criminal action. All these requisites present, the employer
becomes ipso facto subsidiarily liable upon the employee's conviction and upon proof of
the latter's insolvency. Needless to say, the case at bar satisfies all these requirements.

Furthermore, we are not convinced that the owner-operator has been deprived of his day
in court, because the case before us is not one wherein the operator is sued for a primary
liability under the Civil Code but one in which the subsidiary civil liability incident to
and dependent upon his employee's criminal negligence is sought to be
enforced. Considering the subsidiary liability imposed upon the employer by law, he is
in substance and in effect a party to the criminal case. Ergo, the employer's subsidiary
liability may be determined and enforced in the criminal case as part of the execution
proceedings against the employee. This Court held in the earlier case
of Pajarito v. Seneris, supra, that "The proceeding for the enforcement of the subsidiary
civil liability may be considered as part of the proceeding for the execution of the
judgment. A case in which an execution has been issued is regarded as still pending so
that all proceedings on the execution are proceedings in the suit. There is no question
that the court which rendered the judgment has a general supervisory control over its
process of execution, and this power carries with it the right to determine every question
of fact and law which may be involved in the execution."

The argument that the owner-operator cannot be held subsidiarily liable because the
matter of subsidiary liability was not raised on appeal and in like manner, the appellate
court's decision made no mention of such subsidiary liability is of no moment. As
already discussed, the filing of a separate complaint against the operator for recovery of
subsidiary liability is not necessary since his liability is clear from the decision against
the accused. Such being the case, it is not indispensable for the question of subsidiary
liability to be passed upon by the appellate court. Such subsidiary liability is already
implied from the appellate court's decision. In the recent case
of Vda. de Paman v. Seneris, 115 SCRA 709, this Court reiterated the following
pronouncement: "A judgment of conviction sentencing a defendant employer to pay an
indemnity in the absence of any collusion between the defendant and the offended party,
is conclusive upon the employer in an action for the enforcement of the latter's subsidiary
liability not only with regard to the civil liability, but also with regard to its amount."
This being the case, this Court stated in Rotea v. Halili, 109 Phil. 495, that the court has
no other function than to render decision based upon the indemnity awarded in the
criminal case and has no power to amend or modify it even if in its opinion an error has
been committed in the decision. A separate and independent action is, therefore,
unnecessary and would only unduly prolong the agony of the heirs of the victim."

Finally, the position taken by the respondent appellate court that to grant the motion for
subsidiary writ of execution would in effect be to amend its decision which has already
become final and executory cannot be sustained. Compelling the owner-operator to pay
on the basis of his subsidiary liability does not constitute an amendment of the judgment
because in an action under Art. 103 of the Revised Penal Code, once all the requisites as
earlier discussed are met, the employer becomes ipso facto subsidiarily liable, without
need of a separate action. Such being the case, the subsidiary liability can be enforced in
the same case where the award was given, and this does not constitute an act of amending
the decision. It becomes incumbent upon the court to grant a motion for subsidiary writ
of execution (but only after the employer has been heard), upon conviction of the
employee and after execution is returned unsatisfied due to the employee's insolvency.

WHEREFORE, the order of respondent court disallowing the motion for subsidiary writ
of execution is hereby SET ASIDE. The Court a quo is directed to hear and decide in the
same proceeding the subsidiary liability of the alleged owner?operator of the passenger
jitney. Costs against private respondent.

SO ORDERED.
 THIRD DIVISION
[ G.R. No. 169498. December 11, 2008 ]
OSCAR DELOS SANTOS AND ELIZA DELOS SANTOS, PETITIONERS, VS.
COURT OF APPEALS, RESPONDENT.

DECISION

CHICO-NAZARIO, J.:

Before this Court is a Special Civil Action for Certiorari, Prohibition and
Mandamus under Rule 65 of the Revised Rules of Court filed by petitioners spouses
Oscar and Eliza delos Santos (spouses Delos Santos), seeking to reverse and set aside the
Decision[1] dated 28 June 2005 of the Court of Appeals in CA-G.R. SP No. 83234 for
having been rendered with grave abuse of discretion amounting to lack or excess of
jurisdiction. In its assailed Decision, the Court of Appeals reversed the Orders dated 10
February 2004 and 1 March 2004 of the Regional Trial Court (RTC) of Valenzuela, Branch
172, in Criminal Case No. 1116-V-99, declaring Saturnino Dy, also known as Juanito Dy
(Dy), and Dyson Surface and Coating Corporation (Dyson Corporation) as joint
employers of the accused Antonio Sagosoy (Sagosoy), who should both be held liable
solidarily with Sagosoy for the injury caused to Ferdinand delos Santos (Ferdinand).

The factual and procedural antecedents of this case are as follows:

On 18 March 1998, at around 7:00 o'clock in the morning, the Isuzu forward van driven
by Sagosoy collided with a horse-drawn carriage steered by Oscar delos Santos. Oscar
delos Santos was with his four-year-old son Ferdinand who was seated in the carriage.
The collision left the horse dead and Ferdinand seriously injured with a broken spinal
cord. A surgical operation to repair the broken spinal cord could not be performed on
Ferdinand because of his tender age. Thus, Ferdinand's broken spinal cord further
caused irreversible damage to his vision, speech, and motor skills.

The van driven by Sagosoy bears plate number ULP 725 registered under the name of Dy
of Dyson Corporation.

An Information[2] charging Sagosoy with the crime of Reckless Imprudence Resulting in

Serious Physical Injuries and Damage to Property was eventually filed before the RTC,
which reads:
That on or about the 18th day of March, 1998, in Valenzuela, Metro Manila and within
the jurisdiction of this Honorable Court, the above-named accused, being then the
driver of an Isuzu Forward Van bearing Plate No. 725, did then and there unlawfully and
feloniously drive, manage and operate the same along Tatalon, Ugong, this municipality,
in a reckless, negligent and imprudent manner, without taking the necessary
precautions to avoid accident to person and damage to property, and so, as a result of
such carelessness, negligence and imprudence, said vehicle driven by the accused, hit
and collide with Horse-Drawn Vehicle (Tiburine) causing said Tiburine to be damaged in
the amount of P9,200.00 and causing further the death of the horse valued at
P75,000.00 to the damage and prejudice of the owner thereof, and as further
consequence, Ferdinand delos Santos sustained physical injuries which requires medical
attendance for a period of more than 30 days and incapacitated said Ferdinand delos
Santos from performing his habitual work for the same period of time.
The case was docketed as Criminal Case No. 1116-V-99.

When arraigned, Sagosoy pleaded not guilty.[3]

After trial on the merits, the RTC rendered a Decision [4] on 27 September 2002 in
Criminal Case No. 1116-V-99 finding Sagosoy guilty of the crime charged, thereby
sentencing him to a straight penalty of four (4) months imprisonment and to indemnify
the spouses Delos Santos for actual and moral damages resulting from Ferdinand's
injury. The fallo of the said RTC Decision reads:
WHEREFORE, judgment is hereby rendered finding accused ANTONIO SAGOSOY y
NAMALATA guilty beyond reasonable doubt and as principal of the crime of reckless
imprudence resulting to serious physical injuries and damage to property, without any
attending mitigating or aggravating circumstance and hereby sentences him to a straight
penalty of FOUR (4) MONTHS of arresto mayor. The accused is further sentenced to pay
[the Spouses Delos Santos] the amount of P85,000.00 representing the medical
expenses after deducting the amount of P150,000.00 contributed by the employer of
the accused, the amount of P9,200.00 representing the cost of repair of the damaged
tiburine, the amount of P75,000.00 representing the value of the horse, and the amount
of P300,000.00 representing the cost of the operation to be performed on Ferdinand
upon reaching the age of 18. Finally, the accused is sentenced to pay [the Spouses Delos
Santos] the amount of P500,000.00 as moral damages, to pay Ferdinand delos Santos,
through his parents [the Spouses Delos Santos], the amount of P200,000.00 as
indemnity, to pay the amount equivalent to 10% of the amount to be collected as
reasonable attorney's fees, and to pay the costs of suit, all without subsidiary
imprisonment in case of insolvency.
The spouses Delos Santos filed a Motion for the Issuance of Writ of Execution, [5] which
was favorably acted upon by the RTC. The First Writ of Execution[6] was issued on 3
January 2003 commanding the Sheriff to execute and make effective its 27 September
2002 Decision in Criminal Case No. 1116-V-99.

An attempt to satisfy the judgment was made by the Sheriff, but he found no real or
personal properties of Sagosoy to answer for the latter's civil liability to the spouses
Delos Santos. The unsatisfied Sheriff's Return[7] prompted the spouses Delos Santos to
file a Motion for the Issuance of Alias Writ of Execution[8] against the properties and
income of Dy in light of his subsidiary liability as the employer of Sagosoy. The motion
was opposed by Dy who denied that he was the employer of Sagosoy. According to Dy,
at the time the accident occured, Sagoysoy was merely doing an isolated and non-
business related driving task for him.

After weighing the arguments of the parties, the RTC issued on 30 May 2003 an Order
directing the issuance of an Alias Writ of Execution, not just against the income and
properties of Sagosoy, but also those of Dy.[9] The Alias Writ of Execution[10] was issued
on 3 June 2003.

Subsequently, the RTC, in an Order dated 23 June 2003, denied Dy's Motion for
Reconsideration of its Order dated 30 May 2003.

Dy filed a Petition for Certiorari with the Court of Appeals, docketed as CA-G.R. SP No.
78005, averring that the RTC committed grave abuse of discretion in issuing its Orders
dated 30 May 2003 and 23 June 2003. The appellate court, however, in a
Decision[11] dated 28 September 2004, dismissed Dy's Petition and affirmed the
questioned RTC Orders. Said Decision of the Court of Appeals in CA-G.R. SP No. 78005
became final and executory on 20 October 2004 as evidenced by the Entry of Judgment
already made therein.[12]

In the interregnum, per the Sheriff's Return dated 6 October 2003, the Alias Writ of
Execution was again returned unsatisfied due to the failure of the Sheriff to locate any
real or personal property registered in the name of Dy.[13]
Unrelenting, the spouses Delos Santos filed a Motion for the Issuance of a Second Writ
of Execution before the RTC, identifying Dyson Corporation as the co-employer of
Sagosoy, together with Dy. The spouses Delos Santos called the attention of the trial
court to particular pieces of evidence to establish that Sagosoy, at the time of the
accident, worked for both Dy and Dyson Corporation, namely: (1) Sagosoy's testimony
that Dy was doing business in the name of Dyson Corporation; (2) Sagosoy's Social
Security System (SSS) record showing that Dyson Corporation was his registered
employer; and (3) the Articles of Incorporation of Dyson Corporation establishing that
Dy was one of the majority stockholders of Dyson Corporation.[14] The spouses Delos
Santos also propounded that the accident which caused serious physical injuries to
Ferdinand took place while Sagosoy was undertaking an activity in furtherance of the
business operations of Dyson Corporation.[15]

Dyson Corporation timely opposed the spouses Delos Santos's latest Motion,
underscoring the inconsistencies in the spouses Delos Santos's stand on the crucial issue
of who was the real employer of Sagosoy. Dyson Corporation averred that the spouses
Delos Santos should not be allowed to conveniently shift their position on the said issue,
and now joined Dyson Corporation with Dy as Sagosoy's employers after it turned out
that Dy alone was financially incapable of satisfying the civil liability under the RTC
judgment in Criminal Case No. 1116-V-99.[16]

In an Order[17] dated 10 February 2004, the RTC granted the spouses Delos Santos's
Motion and declared Dy and Dyson Corporation as co-employers of Sagosoy. In its
Order, the RTC explained that while the van driven by Sagosoy was owned by Dy, it was
being used by Dyson Corporation in its business operations. The RTC further justified
that the initial confusion as to the identity of Sagosoy's employer was understandable
and did not render impossible the conclusion that both Dy and Dyson Corporation were
Sagosoy's employers who should both accordingly be held liable for the civil liability
arising from the crime of which Sagosoy was adjudged guilty.

In an Order[18] dated 1 March 2004, the RTC denied the Motion for Reconsideration of
Dyson Corporation for no sufficient merit.

For allegedly having been issued with grave abuse of discretion, the RTC Orders dated
10 February 2004 and 1 March 2004 were challenged by Dyson Corporation before the
Court of Appeals through a Special Civil Action for Certiorari, docketed as CA-G.R. SP No.
83234.

On 28 June 2005, the Court of Appeals promulgated a Decision in CA-G.R. SP No. 83234,
finding therein that the issuance by the RTC of its 10 February 2004 and 1 March 2004
Orders was tainted with grave abuse of discretion. The appellate court reasoned that Dy
and Dyson Corporation could only be treated as joint employers of Sagosoy upon the
piercing of the veil of corporate fiction, which was not warranted in the instant case
since it had not been shown that Dy was hiding behind the cloak of Dyson Corporation
in order to evade liability. Thus, the fallo of the Decision of the Court of Appeals reads:
WHEREFORE, premises considered, the petition is hereby GRANTED. We
hereby ANNUL and SET ASIDE the assailed orders. Costa against [the spouses Delos
Santos].[19]
The spouses Delos Santos filed a Motion for Reconsideration on 10 August 2005
explaining that the delay was caused by their counsel who did not notify them of the
receipt of the Court of Appeals Decision dated 28 June 2005. It was only upon inquiry
with the RTC on 26 July 2005 that they learned of the appellate court's decision.

The Court of Appeals, in a Resolution[20] dated 30 August 2005, refused to give due
course to the spouses Delos Santos's Motion for Reconsideration since it was not filed
within the reglementary period. According to the appellate court, the spouses Delos
Santos thru counsel received a copy of their 28 June 2005 Decision on 26 July 2005.
Hence, the spouses Delos Santos had only until 29 July 2005 to move for the
reconsideration of the judgment or to appeal it. The Motion for Reconsideration was
filed only on 10 August 2005. Resultantly, the Court of Appeals Decision in CA-G.R. SP
No. 83234 became final and executory on 19 September 2005.

The spouses Delos Santos are now before this Court seeking the reversal of the Court of
Appeals disquisition on the ground of grave abuse of discretion. For the resolution of
this Court are the following issues:

I.
WHETHER OR NOT THE FILING OF THE INSTANT SPECIAL CIVIL ACTION
FOR CERTIORARI, IS PROPER IN THE INSTANT CASE.

II.
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ABUSED ITS DISCRETION IN
DENYING THE SPOUSES DELOS SANTOS' MOTION FOR RECONSIDERATION.

III.

WHETHER OR NOT DY AND DYSON CORPORATION ARE JOINT EMPLOYERS OF SAGOSOY

AND SHOULD THEREFORE BE HELD SUBSIDIARILY LIABLE FOR THE CIVIL LIABILITY
ARISING FROM THE CRIME COMMITTED BY SAGOSOY.
The Court first dispenses with the procedural issues raised by the parties, particularly
the propriety of the remedy they chose to avail herein.

The spouses Delos Santos justify their present Petition for Certiorari, Prohibition
and Mandamus by averring the lack of any other plain, speedy or adequate remedy
available in the ordinary course of law that could compensate them for the injury
caused to their son. On the other hand, Dyson Corporation counters by highlighting the
failure of the spouses Delos Santos to timely file their Motion for Reconsideration
before the Court of Appeals in CA-G.R. SP No. 83234. Dyson Corporation argues that the
special civil action of certiorari cannot be invoked as a substitute for the remedy of
appeal that was already lost, less so, when the requisites for certiorari were not
faithfully complied with.

According to Section 1, Rule 65 of the Revised Rules of Court, a petition

for certiorari may be filed under the following circumstances:
SEC. 1. Petition for certiorari -- When any tribunal, board or officer exercising judicial or
quasi-judicial functions has acted without or in excess of its or his jurisdiction, or with
grave abuse of discretion amounting to lack or excess of jurisdiction, and there is no
appeal, nor any plain, speedy, and adequate remedy in the ordinary course of law, a
person aggrieved thereby may file a verified petition in the proper court, alleging the
facts with certainty and praying that judgment be rendered annulling or modifying the
proceedings of such tribunal, board or officer, and granting such incidental reliefs as law
and justice may require.
A writ of certiorari may be issued only for the correction of errors of jurisdiction or grave
abuse of discretion amounting to lack or excess of jurisdiction. The writ cannot be used
for any other purpose, as its function is limited to keeping the inferior court within the
bounds of its jurisdiction. [21]
For certiorari to prosper, the following requisites must concur: (1) the writ is directed
against a tribunal, a board or any officer exercising judicial or quasi-judicial functions; (2)
such tribunal, board or officer has acted without or in excess of jurisdiction, or with
grave abuse of discretion amounting to lack or excess of jurisdiction; and (3) there is no
appeal or any plain, speedy and adequate remedy in the ordinary course of law. [22]

"Without jurisdiction" means that the court acted with absolute lack of authority. There
is "excess of jurisdiction" when the court transcends its power or acts without any
statutory authority. "Grave abuse of discretion" implies such capricious and whimsical
exercise of judgment as to be equivalent to lack or excess of jurisdiction; in other words,
power is exercised in an arbitrary or despotic manner by reason of passion, prejudice, or
personal hostility; and such exercise is so patent or so gross as to amount to an evasion
of a positive duty or to a virtual refusal either to perform the duty enjoined or to act at
all in contemplation of law. [23]

Although the court has absolute discretion to reject and dismiss a petition for certiorari,
in general, it does so only (1) when the petition fails to demonstrate grave abuse of
discretion by any court, agency, or branch of the government; or (2) when there are
procedural errors, like violations of the Rules of Court or Supreme Court Circulars. One
of the procedural errors for which the court could dismiss a petition for certiorari is the
failure of the petitioner to file a motion for reconsideration of the assailed order or
decision.[24] A motion for reconsideration must first be filed with the lower court prior to
resorting to the extraordinary writ of certiorari since a motion for reconsideration is still
considered an adequate remedy in the ordinary course of law. The rationale for the
filing of a motion for reconsideration is to give an opportunity to the lower court to
correct its imputed errors.[25]

In the present case, the spouses Delos Santos did file a Motion for Reconsideration but
they were only able to do so beyond the reglementary period.

Moreover, since the case at bar resonates with a piercing and urgent call for justice for a
four-year-old boy seriously crippled by the accident caused by the negligence of
Sagosoy, the Court is persuaded to excuse the procedural flaw so it could fully heed the
call. Laws and rules should be interpreted and applied not in a vacuum or in isolated
abstraction, but in light of surrounding circumstances and attendant facts in order to
afford justice to all. This Court is not impervious to instances when rules of procedure
must yield to the loftier demands of substantial justice and equity. Procedural rules are
mere tools designed to facilitate the attainment of justice; their application must be
liberalized to promote public interest.[26]

In this instance, the Court has no doubt that substantial justice will be served and patent
injustice will be obviated by giving due course to this Petition in the presence of
compelling reasons to disregard the spouses Delos Santos's procedural mistake. Just as
we had ruled in Aguam v. Court of Appeals[27]:
The court has discretion to dismiss or not to dismiss an appellant's appeal. It is a power
conferred on the court, not a duty. The discretion must be a sound one, to be exercised
in accordance with the tenets of justice and fair play, having in mind the circumstances
obtaining in each case. Technicalities, however, must be avoided. The law abhors
technicalities that impede the cause of justice. The court's primary duty is to render or
dispense justice. A litigation is not a game of technicalities. Law suits, unlike duels are
not to be won by a rapier's thrust. Technicality, when it deserts its proper office as an
aid to justice and becomes its great hindrance and chief enemy, deserves scant
consideration from courts. Litigations must be decided on their merits and not on
technicality. Every party litigant must be afforded the amplest opportunity for the
proper and just determination of his cause, free from the unacceptable plea of
technicalities. Thus, dismissal of appeals purely on technical grounds is frowned upon
where the policy of the court is to encourage hearings of appeals on their merits and the
rules of procedure ought not to be applied in a very rigid, technical sense; rules of
procedure are used only to help secure, not override substantial justice. It is a far better
and more prudent course of action for the court to excuse a technical lapse and afford
the parties a review of the case on appeal to attain the ends of justice rather than
dispose of the case on technicality and cause a grave injustice to the parties, giving a
false impression of speedy disposal of cases while actually resulting in more delay, if not
a miscarriage of justice.
What should guide judicial action is the principle that a party-litigant is to be given the
fullest opportunity to establish the merits of his complaint or defense rather than for
him to lose life, liberty, honor or property on technicalities. The rules of procedure
should be viewed as mere tools designed to facilitate the attainment of justice. Their
strict and rigid application, which would result in technicalities that tend to frustrate
rather than promote substantial justice, must always be eschewed. [28]

The relaxation of procedural rules is even more imperative in the instant Petition where
there is an undeniable need for this Court to settle threshold factual issues to finally give
justice to the parties. It is true that this Court is not a trier of facts, but there are
recognized exceptions to this general rule such as when the appellate court had ignored,
misunderstood, or misinterpreted cogent facts and circumstances which, if considered,
would change the outcome of the case; or when its findings were totally devoid of
support; or when its judgment was based on a misapprehension of facts. [29]

The Court now proceeds to the crucial substantive issue raised in this Petition: whether
Dy and the Dyson Corporation are co-employers of Sagosoy who are subsidiarily liable
for the civil liabilities arising from the crime committed by Sagosoy.

The Court of Appeals did not find Dyson Corporation as the co-employer of Sagosoy,
relying on the Decision dated 28 September 2004 of the same court in CA-G.R. SP No.
78005 which sustained the subsidiary liability of Dy as the employer of Sagosoy and
which had already attained finality. The appellate court also refused to adjudge Dyson
Corporation to be solidarily liable with Dy unless the veil of corporate fiction was
pierced.

The Court does not agree.

The spouses Delos Santos do not controvert the pronouncement of the Court of Appeals
in its 28 September 2004 Decision in CA-G.R. SP No. 78005 that Dy, as the employer of
Sagosoy, was subsidiarily liable for the civil obligations of his insolvent employee who
caused injury to third persons in the course of the latter's employment. Indeed, the
spouses Delos Santos agree with the appellate court that Dy should not be allowed to
run scot-free from his liability in light of the fact that he was the owner of the van
Sagosoy was driving at the time of the accident. What the spouses Delos Santos are
seeking from this Court is the affirmation that in addition to Dy, Dyson Corporation is
also the employer of Sagosoy, as several pieces of evidence would show, which should
likewise be made answerable for the civil liabilities incurred by Sagosoy.

The Court notes that there was no way for the Court of Appeals in CA-G.R. SP No. 78005
to already deduce from the pleadings and evidence presented therein that Sagosoy was
employed not just by Dy, but also by Dyson Corporation. The Petition in CA-G.R. SP No.
78005 was filed by Dy and all arguments and evidence necessarily revolved only around
his liability as an employer. Moreover, the finding of the Court of Appeals in CA-G.R. SP
No. 78005, that Sagosoy was working for Dy, is not necessarily in conflict with a
subsequent ruling in another case that Sagosoy was employed not just by Dy, but also
by Dyson Corporation. It bears to emphasize that Dy remains to be considered an
employer of Sagosoy and still subsidiarily liable for the latter's civil obligations arising
from the crime. However, if Dyson Corporation is declared a co-employer of Sagosoy
together with Dy, then Dyson Corporation and Dy must now solidarily bear the
subsidiary liability.

Justice and fairness dictate that the spouses Delos Santos should be compensated for
the tragic fate of their son, and the rule of law should be enforced against those persons
who may be adjudged liable, brushing aside hornbook procedural principles which
unduly delay the dispensation of justice to an innocent and hapless boy who practically
lost his life to an accident due to the negligence of another.

Since it was duly proven that Sagosoy had no real or personal properties to satisfy the
judgment, then Sagosoy's employer must answer for damages Sagosoy caused. The
statutory basis for an employer's subsidiary liability is found in Articles 102 and 103 of
the Revised Penal Code, which read:
Art. 102. Subsidiary civil liability of innkeepers, tavernkeepers, and proprietors of
establishments. - In default of the persons criminally liable, innkeepers, tavernkeepers,
and any other persons or corporations shall be civilly liable for crimes committed in their
establishments, in all cases where a violation of municipal ordinances or some general
or special police regulation shall have been committed by them or their employees.

Innkeepers are also subsidiarily liable for restitution of goods taken by robbery or theft
within their houses from guests lodging therein, or for the payment of the value thereof,
provided that such guests shall have notified in advance the innkeeper himself, or the
person representing him, of the deposit of such goods within the inn; and shall
furthermore have followed the directions which such innkeeper or his representative
may have given them with respect to the care of and vigilance over such goods. No
liability shall attach in case of robbery with violence against or intimidation of persons
unless committed by the innkeeper's employees.

Art. 103. Subsidiary civil liability of other persons. -- The subsidiary liability established in
the next preceding article shall also apply to employers, teachers, persons, and
corporations engaged in any kind of industry for felonies committed by their servants,
pupils, workmen, apprentices, or employees in the discharge of their duties.
This liability is enforceable in the same criminal proceeding in which the award is made.
This liability attaches when the employees who are convicted of crimes committed in
the performance of their work are found to be insolvent and are thus unable to satisfy
the civil liability adjudged.[30]

The Court has scrupulously examined the records of this case and concluded that
Sagosoy was working for both Dy and Dyson Corporation when the van he was driving
collided with the horse-drawn carriage carrying Ferdinand. In his testimony before the
RTC, Sagosoy narrated that he was employed by Dy who was doing business under the
name of Dyson Corporation. Sagosoy's testimony is validated by the Certificate of
Incorporation of Dyson Corporation showing that Dy is one of the major stockholders of
Dyson Corporation. Also, the SSS records of Sagosoy state that his employer is Dyson
Corporation. These pieces of evidence strongly prove that Sagosoy is also deemed an
employee of Dyson Corporation. In contrast, Dyson Corporation does not at all offer any
controverting evidence, and vainly centers its defense on procedural rhetoric. [31]

In addition, the records are bereft of information on any other business or industry that
Dy is engaged in and for which he personally employs Sagosoy. Sagosoy could not be the
mere private driver of Dy because when the accident occurred, Sagosoy was driving an
Isuzu Forward van, which is primarily used for the delivery of goods and effects. Taking
note of the fact that Dy is the Chief Executive Officer of Dyson Corporation, it would
appear that the van being driven by Sagosoy was only registered in Dy's name, but was
actually being used by Dyson Corporation in the conduct of its business. Given these
circumstances, both Dy and Dyson Corporation should be declared the employers of
Sagosoy who are both subsidiarily liable for Sagosoy's liabilities ex delicto.

Finally, contrary to the ruling of the Court of Appeals, there is no need to pierce the veil
of corporate fiction in this case, considering that Dy and Dyson Corporation are precisely
being treated as separate entities, which is the reason why they are being declared "co-
employers" of Sagosoy. That Dy is hiding behind the personality of Dyson Corporation in
order to escape liability is not even relevant herein. The evidence and the circumstances
establish that Dy is the registered owner of the van driven by Sagosoy in furtherance of
the business of Dyson Corporation; and that Dyson Corporation uses the van driven by
Sagosoy in its business operation and recognizes Sagosoy as one of its employees per
the latter's SSS records. Hence, both Dy and Dyson Corporation can be deemed the
employers of Sagosoy.

With the pronouncement that both Dy and Dyson Corporation are subsidiarily liable for
the damages caused to the spouses Delos Santos, let this much prolonged litigation be
put to an end. The counsels of the parties are herby warned not to employ any
procedural tactics that would further delay the execution of the RTC Decision dated 27
September 2002 in Criminal Case No. 1116-V-99. Litigation is not a game of
technicalities in which one, more deeply schooled and skilled in the subtle art of
movement and position, entraps and destroys the other.[32] In the words of Mr. Justice
Malcolm, "More important than anything else, is that the court should be right and to
render justice where justice is due."[33]

WHEREFORE, in view of the foregoing, the instant Petition is GRANTED. The Decision
dated 28 June 2005 and Resolution dated 30 August 2005 of the Court of Appeals in CA-
G.R. SP No. 83234 are REVERSED and SET ASIDE. The Orders dated 10 February 2004
and 1 March 2004 of the Regional Trial Court of Valenzuela, Branch 172, in Criminal Case
No. 1116-V-99 are hereby REINSTATED. No costs.

SO ORDERED.

SECOND DIVISION
[ G.R. No. 122039. May 31, 2000 ]
 VICENTE CALALAS, PETITIONER, VS. COURT OF APPEALS, ELIZA
JUJEURCHE SUNGA AND FRANCISCO SALVA, RESPONDENTS.

DECISION

MENDOZA, J.:

This is a petition for review on certiorari of the decision[1] of the Court of Appeals, dated
March 31, 1991, reversing the contrary decision of the Regional Trial Court, Branch 36,
Dumaguete City, and awarding damages instead to private respondent Eliza Jujeurche
Sunga as plaintiff in an action for breach of contract of carriage.

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

At 10 o’clock in the morning of August 23, 1989, private respondent Eliza Jujeurche G.
Sunga, then a college freshman majoring in Physical Education at the Siliman University,
took a passenger jeepney owned and operated by petitioner Vicente Calalas. As the
jeepney was filled to capacity of about 24 passengers, Sunga was given by the conductor
an "extension seat," a wooden stool at the back of the door at the rear end of the
vehicle.

On the way to Poblacion Sibulan, Negros Occidental, the jeepney stopped to let a
passenger off. As she was seated at the rear of the vehicle, Sunga gave way to the
outgoing passenger. Just as she was doing so, an Isuzu truck driven by Iglecerio Verena
and owned by Francisco Salva bumped the left rear portion of the jeepney. As a result,
Sunga was injured. She sustained a fracture of the "distal third of the left tibia-fibula
with severe necrosis of the underlying skin." Closed reduction of the fracture, long leg
circular casting, and case wedging were done under sedation. Her confinement in the
hospital lasted from August 23 to September 7, 1989. Her attending physician, Dr.
Danilo V. Oligario, an orthopedic surgeon, certified she would remain on a cast for a
period of three months and would have to ambulate in crutches during said period.

On October 9, 1989, Sunga filed a complaint for damages against Calalas, alleging
violation of the contract of carriage by the former in failing to exercise the diligence
required of him as a common carrier. Calalas, on the other hand, filed a third-party
complaint against Francisco Salva, the owner of the Isuzu truck.
The lower court rendered judgment against Salva as third-party defendant and absolved
Calalas of liability, holding that it was the driver of the Isuzu truck who was responsible
for the accident. It took cognizance of another case (Civil Case No. 3490), filed by Calalas
against Salva and Verena, for quasi-delict, in which Branch 37 of the same court held
Salva and his driver Verena jointly liable to Calalas for the damage to his jeepney.

On appeal to the Court of Appeals, the ruling of the lower court was reversed on the
ground that Sunga’s cause of action was based on a contract of carriage, not quasi-
delict, and that the common carrier failed to exercise the diligence required under the
Civil Code. The appellate court dismissed the third-party complaint against Salva and
adjudged Calalas liable for damages to Sunga. The dispositive portion of its decision
reads:
WHEREFORE, the decision appealed from is hereby REVERSED and SET ASIDE, and
another one is entered ordering defendant-appellee Vicente Calalas to pay plaintiff-
appellant:
(1) P50,000.00 as actual and compensatory damages;

(2) P50,000.00 as moral damages;

(3) P10,000.00 as attorney’s fees; and

(4) P1,000.00 as expenses of litigation; and

(5) to pay the costs.

SO ORDERED.
Hence, this petition. Petitioner contends that the ruling in Civil Case No. 3490 that the
negligence of Verena was the proximate cause of the accident negates his liability and
that to rule otherwise would be to make the common carrier an insurer of the safety of
its passengers. He contends that the bumping of the jeepney by the truck owned by
Salva was a caso fortuito. Petitioner further assails the award of moral damages to
Sunga on the ground that it is not supported by evidence.

The petition has no merit.

The argument that Sunga is bound by the ruling in Civil Case No. 3490 finding the driver
and the owner of the truck liable for quasi-delict ignores the fact that she was never a
party to that case and, therefore, the principle of res judicata does not apply.
Nor are the issues in Civil Case No. 3490 and in the present case the same. The issue in
Civil Case No. 3490 was whether Salva and his driver Verena were liable for quasi-delict
for the damage caused to petitioner’s jeepney. On the other hand, the issue in this case
is whether petitioner is liable on his contract of carriage. The first, quasi-delict, also
known as culpa aquiliana or culpa extra contractual, has as its source the negligence of
the tortfeasor. The second, breach of contract or culpa contractual, is premised upon
the negligence in the performance of a contractual obligation.

Consequently, in quasi-delict, the negligence or fault should be clearly established

because it is the basis of the action, whereas in breach of contract, the action can be
prosecuted merely by proving the existence of the contract and the fact that the obligor,
in this case the common carrier, failed to transport his passenger safely to his
destination.[2] In case of death or injuries to passengers, Art. 1756 of the Civil Code
provides that common carriers are presumed to have been at fault or to have acted
negligently unless they prove that they observed extraordinary diligence as defined in
Arts. 1733 and 1755 of the Code. This provision necessarily shifts to the common carrier
the burden of proof.

There is, thus, no basis for the contention that the ruling in Civil Case No. 3490, finding
Salva and his driver Verena liable for the damage to petitioner’s jeepney, should be
binding on Sunga. It is immaterial that the proximate cause of the collision between the
jeepney and the truck was the negligence of the truck driver. The doctrine of proximate
cause is applicable only in actions for quasi-delict, not in actions involving breach of
contract. The doctrine is a device for imputing liability to a person where there is no
relation between him and another party. In such a case, the obligation is created by law
itself. But, where there is a pre-existing contractual relation between the parties, it is
the parties themselves who create the obligation, and the function of the law is merely
to regulate the relation thus created. Insofar as contracts of carriage are concerned,
some aspects regulated by the Civil Code are those respecting the diligence required of
common carriers with regard to the safety of passengers as well as the presumption of
negligence in cases of death or injury to passengers. It provides:
Art. 1733. Common carriers, from the nature of their business and for reasons of public
policy, are 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.
Such extraordinary diligence in the vigilance over the goods is further expressed in
articles 1734, 1735, and 1746, Nos. 5,6, and 7, while the extraordinary diligence for the
safety of the passengers is further set forth in articles 1755 and 1756.

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

Art. 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 by articles 1733 and 1755.
In the case at bar, upon the happening of the accident, the presumption of negligence at
once arose, and it became the duty of petitioner to prove that he had to observe
extraordinary diligence in the care of his passengers.

Now, did the driver of jeepney carry Sunga "safely as far as human care and foresight
could provide, using the utmost diligence of very cautious persons, with due regard for
all the circumstances" as required by Art. 1755? We do not think so. Several factors
militate against petitioner’s contention.

First, as found by the Court of Appeals, the jeepney was not properly parked, its rear
portion being exposed about two meters from the broad shoulders of the highway, and
facing the middle of the highway in a diagonal angle. This is a violation of the R.A. No.
4136, as amended, or the Land Transportation and Traffic Code, which provides:
Sec. 54. Obstruction of Traffic. - No person shall drive his motor vehicle in such a manner
as to obstruct or impede the passage of any vehicle, nor, while discharging or taking on
passengers or loading or unloading freight, obstruct the free passage of other vehicles
on the highway.
Second, it is undisputed that petitioner’s driver took in more passengers than the
allowed seating capacity of the jeepney, a violation of §32(a) of the same law. It
provides:
Exceeding registered capacity. - No person operating any motor vehicle shall allow more
passengers or more freight or cargo in his vehicle than its registered capacity.
The fact that Sunga was seated in an "extension seat" placed her in a peril greater than
that to which the other passengers were exposed. Therefore, not only was petitioner
unable to overcome the presumption of negligence imposed on him for the injury
sustained by Sunga, but also, the evidence shows he was actually negligent in
transporting passengers.

We find it hard to give serious thought to petitioner’s contention that Sunga’s taking an
"extension seat" amounted to an implied assumption of risk. It is akin to arguing that
the injuries to the many victims of the tragedies in our seas should not be compensated
merely because those passengers assumed a greater risk of drowning by boarding an
overloaded ferry. This is also true of petitioner’s contention that the jeepney being
bumped while it was improperly parked constitutes caso fortuito. A caso fortuito is an
event which could not be foreseen, or which, though foreseen, was inevitable. [3] This
requires that the following requirements be present: (a) the cause of the breach is
independent of the debtor’s will; (b) the event is unforeseeable or unavoidable; (c) the
event is such as to render it impossible for the debtor to fulfill his obligation in a normal
manner, and (d) the debtor did not take part in causing the injury to the creditor.
[4]
Petitioner should have foreseen the danger of parking his jeepney with its body
protruding two meters into the highway.

Finally, petitioner challenges the award of moral damages alleging that it is excessive
and without basis in law. We find this contention well taken.

In awarding moral damages, the Court of Appeals stated:

Plaintiff-appellant at the time of the accident was a first-year college student in that
school year 1989-1990 at the Silliman University, majoring in Physical Education.
Because of the injury, she was not able to enroll in the second semester of that school
year. She testified that she had no more intention of continuing with her schooling,
because she could not walk and decided not to pursue her degree, major in Physical
Education "because of my leg which has a defect already."

Plaintiff-appellant likewise testified that even while she was under confinement, she
cried in pain because of her injured left foot. As a result of her injury, the Orthopedic
Surgeon also certified that she has "residual bowing of the fracture side." She likewise
decided not to further pursue Physical Education as her major subject, because "my left
leg x x x has a defect already."

Those are her physical pains and moral sufferings, the inevitable bedfellows of the
injuries that she suffered. Under Article 2219 of the Civil Code, she is entitled to recover
moral damages in the sum of P50,000.00, which is fair, just and reasonable.
As a general rule, moral damages are not recoverable in actions for damages predicated
on a breach of contract for it is not one of the items enumerated under Art. 2219 of the
Civil Code.[5] As an exception, such damages are recoverable: (1) in cases in which the
mishap results in the death of a passenger, as provided in Art. 1764, in relation to Art.
2206(3) of the Civil Code; and (2) in the cases in which the carrier is guilty of fraud or
bad faith, as provided in Art. 2220.[6]

In this case, there is no legal basis for awarding moral damages since there was no
factual finding by the appellate court that petitioner acted in bad faith in the
performance of the contract of carriage. Sunga’s contention that petitioner’s admission
in open court that the driver of the jeepney failed to assist her in going to a nearby
hospital cannot be construed as an admission of bad faith. The fact that it was the driver
of the Isuzu truck who took her to the hospital does not imply that petitioner was utterly
indifferent to the plight of his injured passenger. If at all, it is merely implied recognition
by Verena that he was the one at fault for the accident.

WHEREFORE, the decision of the Court of Appeals, dated March 31, 1995, and its
resolution, dated September 11, 1995, are AFFIRMED, with the MODIFICATION that the
award of moral damages is DELETED.

SO ORDERED.