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were
brought
to
Pisa
Island.
Eight
passengers,
including
petitioners
son
and
his
wife,
died
during
the
incident.
At
the
time
of
Ruelitos
death,
he
was
28
years
old
and
employed
as
a
contractual
worker
for
Mitsui
Engineering
&
Shipbuilding
Arabia,
Ltd.
in
Saudi
Arabia,
with
a
basic
monthly
salary
of
$900.[3]
Petitioners,
by
letter
of
October
26,
2000,[4]
demanded
indemnification
from
respondent
for
the
death
of
their
son
in
the
amount
of
at
least
P4,000,000.
Replying,
respondent,
by
letter
dated
November
7,
2000,[5]
denied
any
responsibility
for
the
incident
which
it
considered
to
be
a
fortuitous
event.
It
nevertheless
offered,
as
an
act
of
commiseration,
the
amount
of
P10,000
to
petitioners
upon
their
signing
of
a
waiver.
As
petitioners
declined
respondents
offer,
they
filed
the
Complaint,
as
earlier
reflected,
alleging
that
respondent,
as
a
common
carrier,
was
guilty
of
negligence
in
allowing
M/B
Coco
Beach
III
to
sail
notwithstanding
storm
warning
bulletins
issued
by
the
Philippine
Atmospheric,
Geophysical
and
Astronomical
Services
Administration
(PAGASA)
as
early
as
5:00
a.m.
of
September
11,
2000.[6]
In
its
Answer,[7]
respondent
denied
being
a
common
carrier,
alleging
that
its
boats
are
not
available
to
the
general
public
as
they
only
ferry
Resort
guests
and
crew
members.
Nonetheless,
it
claimed
that
it
exercised
the
utmost
diligence
in
ensuring
the
safety
of
its
passengers;
contrary
to
petitioners
allegation,
there
was
no
storm
on
September
11,
2000
as
the
Coast
Guard
in
fact
cleared
the
voyage;
and
M/B
Coco
Beach
III
was
not
filled
to
capacity
and
had
sufficient
life
jackets
for
its
passengers.
By
way
of
Counterclaim,
respondent
alleged
that
it
is
entitled
to
an
award
for
attorneys
fees
and
litigation
expenses
amounting
to
not
less
than
P300,000.
Carlos
Bonquin,
captain
of
M/B
Coco
Beach
III,
averred
that
the
Resort
customarily
requires
four
conditions
to
be
met
before
a
boat
is
allowed
to
sail,
to
wit:
(1)
the
sea
is
calm,
(2)
there
is
clearance
from
the
Coast
Guard,
(3)
there
is
clearance
from
the
captain
and
(4)
there
is
clearance
from
the
Resorts
assistant
manager.[8]
He
added
that
M/B
Coco
Beach
III
met
all
four
conditions
on
September
11,
2000,[9]
but
a
subasco
or
squall,
characterized
by
strong
winds
and
big
waves,
suddenly
occurred,
causing
the
boat
to
capsize.[10]
By
Decision
of
February
16,
2005,[11]
Branch
267
of
the
Pasig
RTC
dismissed
petitioners
Complaint
and
respondents
Counterclaim.
Petitioners
Motion
for
Reconsideration
having
been
denied
by
Order
dated
September
2,
2005,[12]
they
appealed
to
the
Court
of
Appeals.
By
Decision
of
August
19,
2008,[13]
the
appellate
court
denied
petitioners
appeal,
holding,
among
other
things,
that
the
trial
court
correctly
ruled
that
respondent
is
a
private
carrier
which
is
only
required
to
observe
ordinary
diligence;
that
respondent
in
fact
observed
extraordinary
diligence
in
transporting
its
guests
on
board
M/B
Coco
Beach
III;
and
that
the
proximate
cause
of
the
incident
was
a
squall,
a
fortuitous
event.
Petitioners
Motion
for
Reconsideration
having
been
denied
by
Resolution
dated
January
16,
2009,[14]
they
filed
the
present
Petition
for
Review.[15]
Petitioners
maintain
the
position
they
took
before
the
trial
court,
adding
that
respondent
is
a
common
carrier
since
by
its
tour
package,
the
transporting
of
its
guests
is
an
integral
part
of
its
resort
business.
They
inform
that
another
division
of
the
appellate
court
in
fact
held
respondent
liable
for
damages
to
the
other
survivors
of
the
incident.
Upon
the
other
hand,
respondent
contends
that
petitioners
failed
to
present
evidence
to
prove
that
it
is
a
common
carrier;
that
the
Resorts
ferry
services
for
guests
cannot
be
considered
as
ancillary
to
its
business
as
no
income
is
derived
therefrom;
that
it
exercised
extraordinary
diligence
as
shown
by
the
conditions
it
had
imposed
before
allowing
M/B
Coco
Beach
III
to
sail;
that
the
incident
was
caused
by
a
fortuitous
event
without
any
contributory
negligence
on
its
part;
and
that
the
other
case
wherein
the
appellate
court
held
it
liable
for
damages
involved
different
plaintiffs,
issues
and
evidence.[16]
The
petition
is
impressed
with
merit.
Petitioners
correctly
rely
on
De
Guzman
v.
Court
of
Appeals[17]
in
characterizing
respondent
as
a
common
carrier.
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.
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
1733
deliberately
refrained
from
making
such
distinctions.
So
understood,
the
concept
of
common
carrier
under
Article
1732
may
be
seen
to
coincide
neatly
with
the
notion
of
public
service,
under
the
Public
Service
Act
(Commonwealth
Act
No.
1416,
as
amended)
which
at
least
partially
supplements
the
law
on
common
carriers
set
forth
in
the
Civil
Code.
Under
Section
13,
paragraph
(b)
of
the
Public
Service
Act,
public
service
includes:
.
.
.
every
person
that
now
or
hereafter
may
own,
operate,
manage,
or
control
in
the
Philippines,
for
hire
or
compensation,
with
general
or
limited
clientele,
whether
permanent,
occasional
or
accidental,
and
done
for
general
business
purposes,
any
common
carrier,
railroad,
street
railway,
traction
railway,
subway
motor
vehicle,
either
for
freight
or
passenger,
or
both,
with
or
without
fixed
route
and
whatever
may
be
its
classification,
freight
or
carrier
service
of
any
class,
express
service,
steamboat,
or
steamship
line,
pontines,
ferries
and
water
craft,
engaged
in
the
transportation
of
passengers
or
freight
or
both,
shipyard,
marine
repair
shop,
wharf
or
dock,
ice
plant,
ice-refrigeration
plant,
canal,
irrigation
system,
gas,
electric
light,
heat
and
power,
water
supply
and
power
petroleum,
sewerage
system,
wire
or
wireless
communications
systems,
wire
or
wireless
broadcasting
stations
and
other
similar
public
services
.
.
.[18]
(emphasis
and
underscoring
supplied.)
Indeed,
respondent
is
a
common
carrier.
Its
ferry
services
are
so
intertwined
with
its
main
business
as
to
be
properly
considered
ancillary
thereto.
The
constancy
of
respondents
ferry
services
in
its
resort
operations
is
underscored
by
its
having
its
own
Coco
Beach
boats.
And
the
tour
packages
it
offers,
which
include
the
ferry
services,
may
be
availed
of
by
anyone
who
can
afford
to
pay
the
same.
These
services
are
thus
available
to
the
public.
That
respondent
does
not
charge
a
separate
fee
or
fare
for
its
ferry
services
is
of
no
moment.
It
would
be
imprudent
to
suppose
that
it
provides
said
services
at
a
loss.
The
Court
is
aware
of
the
practice
of
beach
resort
operators
offering
tour
packages
to
factor
the
transportation
fee
in
arriving
at
the
tour
package
price.
That
guests
who
opt
not
to
avail
of
respondents
ferry
services
pay
the
same
amount
is
likewise
inconsequential.
These
guests
may
only
be
deemed
to
have
overpaid.
As
De
Guzman
instructs,
Article
1732
of
the
Civil
Code
defining
common
carriers
has
deliberately
refrained
from
making
distinctions
on
whether
the
carrying
of
persons
or
goods
is
the
carriers
principal
business,
whether
it
is
offered
on
a
regular
basis,
or
whether
it
is
offered
to
the
general
public.
The
intent
of
the
law
is
thus
to
not
consider
such
distinctions.
Otherwise,
there
is
no
telling
how
many
other
distinctions
may
be
concocted
by
unscrupulous
businessmen
engaged
in
the
carrying
of
persons
or
goods
in
order
to
avoid
the
legal
obligations
and
liabilities
of
common
carriers.
Under
the
Civil
Code,
common
carriers,
from
the
nature
of
their
business
and
for
reasons
of
public
policy,
are
bound
to
observe
extraordinary
diligence
for
the
safety
of
the
passengers
transported
by
them,
according
to
all
the
circumstances
of
each
case.[19]
They
are
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.[20]
When
a
passenger
dies
or
is
injured
in
the
discharge
of
a
contract
of
carriage,
it
is
presumed
that
the
common
carrier
is
at
fault
or
negligent.
In
fact,
there
is
even
no
need
for
the
court
to
make
an
express
finding
of
fault
or
negligence
on
the
part
of
the
common
carrier.
This
statutory
presumption
may
only
be
overcome
by
evidence
that
the
carrier
exercised
extraordinary
diligence.[21]
Respondent
nevertheless
harps
on
its
strict
compliance
with
the
earlier
mentioned
conditions
of
voyage
before
it
allowed
M/B
Coco
Beach
III
to
sail
on
September
11,
2000.
Respondents
position
does
not
impress.
The
evidence
shows
that
PAGASA
issued
24-hour
public
weather
forecasts
and
tropical
cyclone
warnings
for
shipping
on
September
10
and
11,
2000
advising
of
tropical
depressions
in
Northern
Luzon
which
would
also
affect
the
province
of
Mindoro.[22]
By
the
testimony
of
Dr.
Frisco
Nilo,
supervising
weather
specialist
of
PAGASA,
squalls
are
to
be
expected
under
such
weather
condition.[23]
A
very
cautious
person
exercising
the
utmost
diligence
would
thus
not
brave
such
stormy
weather
and
put
other
peoples
lives
at
risk.
The
extraordinary
diligence
required
of
common
carriers
demands
that
they
take
care
of
the
goods
or
lives
entrusted
to
their
hands
as
if
they
were
their
own.
This
respondent
failed
to
do.
Respondents
insistence
that
the
incident
was
caused
by
a
fortuitous
event
does
not
impress
either.
The
elements
of
a
"fortuitous
event"
are:
(a)
the
cause
of
the
unforeseen
and
unexpected
occurrence,
or
the
failure
of
the
debtors
to
comply
with
their
obligations,
must
have
been
independent
of
human
will;
(b)
the
event
that
constituted
the
caso
fortuito
must
have
been
impossible
to
foresee
or,
if
foreseeable,
impossible
to
avoid;
(c)
the
occurrence
must
have
been
such
as
to
render
it
impossible
for
the
debtors
to
fulfill
their
obligation
in
a
normal
manner;
and
(d)
the
obligor
must
have
been
free
from
any
participation
in
the
aggravation
of
the
resulting
injury
to
the
creditor.[24]
To
fully
free
a
common
carrier
from
any
liability,
the
fortuitous
event
must
have
been
the
proximate
and
only
cause
of
the
loss.
And
it
should
have
exercised
due
diligence
to
prevent
or
minimize
the
loss
before,
during
and
after
the
occurrence
of
the
fortuitous
event.[25]
Respondent
cites
the
squall
that
occurred
during
the
voyage
as
the
fortuitous
event
that
overturned
M/B
Coco
Beach
III.
As
reflected
above,
however,
the
occurrence
of
squalls
was
expected
under
the
weather
condition
of
September
11,
2000.
Moreover,
evidence
shows
that
M/B
Coco
Beach
III
suffered
engine
trouble
before
it
capsized
and
sank.[26]
The
incident
was,
therefore,
not
completely
free
from
human
intervention.
The
Court
need
not
belabor
how
respondents
evidence
likewise
fails
to
demonstrate
that
it
exercised
due
diligence
to
prevent
or
minimize
the
loss
before,
during
and
after
the
occurrence
of
the
squall.
Article
1764[27]
vis--vis
Article
2206[28]
of
the
Civil
Code
holds
the
common
carrier
in
breach
of
its
contract
of
carriage
that
results
in
the
death
of
a
passenger
liable
to
pay
the
following:
(1)
indemnity
for
death,
(2)
indemnity
for
loss
of
earning
capacity
and
(3)
moral
damages.
Petitioners
are
entitled
to
indemnity
for
the
death
of
Ruelito
which
is
fixed
at
P50,000.[29]
As
for
damages
representing
unearned
income,
the
formula
for
its
computation
is:
Net
Earning
Capacity
=
life
expectancy
x
(gross
annual
income
-
reasonable
and
necessary
living
expenses).
Life
expectancy
is
determined
in
accordance
with
the
formula:
2
/
3
x
[80
age
of
deceased
at
the
time
of
death][30]
The
first
factor,
i.e.,
life
expectancy,
is
computed
by
applying
the
formula
(2/3
x
[80
age
at
death])
adopted
in
the
American
Expectancy
Table
of
Mortality
or
the
Actuarial
of
Combined
Experience
Table
of
Mortality.[31]
The
second
factor
is
computed
by
multiplying
the
life
expectancy
by
the
net
earnings
of
the
deceased,
i.e.,
the
total
earnings
less
expenses
necessary
in
the
creation
of
such
earnings
or
income
and
less
living
and
other
incidental
expenses.[32]
The
loss
is
not
equivalent
to
the
entire
earnings
of
the
deceased,
but
only
such
portion
as
he
would
have
used
to
support
his
dependents
or
heirs.
Hence,
to
be
deducted
from
his
gross
earnings
are
the
necessary
expenses
supposed
to
be
used
by
the
deceased
for
his
own
needs.[33]
In
computing
the
third
factor
necessary
living
expense,
Smith
Bell
Dodwell
Shipping
Agency
Corp.
v.
Borja[34]
teaches
that
when,
as
in
this
case,
there
is
no
showing
that
the
living
expenses
constituted
the
smaller
percentage
of
the
gross
income,
the
living
expenses
are
fixed
at
half
of
the
gross
income.
Applying
the
above
guidelines,
the
Court
determines
Ruelito's
life
expectancy
as
follows:
Life
expectancy
=
2/3
x
[80
-
age
of
deceased
at
the
time
of
death]
2/3
x
[80
-
28]
2/3
x
[52]
Life
expectancy
=
35
Documentary
evidence
shows
that
Ruelito
was
earning
a
basic
monthly
salary
of
$900[35]
which,
when
converted
to
Philippine
peso
applying
the
annual
average
exchange
rate
of
$1
=
P44
in
2000,[36]
amounts
to
P39,600.
Ruelitos
net
earning
capacity
is
thus
computed
as
follows:
Net
Earning
Capacity
=
life
expectancy
x
(gross
annual
income
-
reasonable
and
necessary
living
expenses).
=
35
x
(P475,200
-
P237,600)
=
35
x
(P237,600)
Net
Earning
Capacity
=
P8,316,000
Respecting
the
award
of
moral
damages,
since
respondent
common
carriers
breach
of
contract
of
carriage
resulted
in
the
death
of
petitioners
son,
following
Article
1764
vis--vis
Article
2206
of
the
Civil
Code,
petitioners
are
entitled
to
moral
damages.
Since
respondent
failed
to
prove
that
it
exercised
the
extraordinary
diligence
required
of
common
carriers,
it
is
presumed
to
have
acted
recklessly,
thus
warranting
the
award
too
of
exemplary
damages,
which
are
granted
in
contractual
obligations
if
the
defendant
acted
in
a
wanton,
fraudulent,
reckless,
oppressive
or
malevolent
manner.[37]
Under
the
circumstances,
it
is
reasonable
to
award
petitioners
the
amount
of
P100,000
as
moral
damages
and
P100,000
as
exemplary
damages.[38]
Pursuant
to
Article
2208[39]
of
the
Civil
Code,
attorney's
fees
may
also
be
awarded
where
exemplary
damages
are
awarded.
The
Court
finds
that
10%
of
the
total
amount
adjudged
against
respondent
is
reasonable
for
the
purpose.
Finally,
Eastern
Shipping
Lines,
Inc.
v.
Court
of
Appeals[40]
teaches
that
when
an
obligation,
regardless
of
its
source,
i.e.,
law,
contracts,
quasi-contracts,
delicts
or
quasi-delicts
is
breached,
the
contravenor
can
be
held
liable
for
payment
of
interest
in
the
concept
of
actual
and
compensatory
damages,
subject
to
the
following
rules,
to
wit
A.F.
SANCHEZ
BROKERAGE
INC.,
petitioners,
vs.
THE
HON.
COURT
OF
APPEALS
and
FGU
INSURANCE
CORPORATION,
respondents.
D
E
C
I
S
I
O
N
CARPIO
MORALES,
J.:
Before
this
Court
on
a
petition
for
Certiorari
is
the
appellate
courts
Decision[1]
of
August
10,
2000
reversing
and
setting
aside
the
judgment
of
Branch
133,
Regional
Trial
Court
of
Makati
City,
in
Civil
Case
No.
93-76B
which
dismissed
the
complaint
of
respondent
FGU
Insurance
Corporation
(FGU
Insurance)
against
petitioner
A.F.
Sanchez
Brokerage,
Inc.
(Sanchez
Brokerage).
On
July
8,
1992,
Wyeth-Pharma
GMBH
shipped
on
board
an
aircraft
of
KLM
Royal
Dutch
Airlines
at
Dusseldorf,
Germany
oral
contraceptives
consisting
of
86,800
Blisters
Femenal
tablets,
14,000
Blisters
Nordiol
tablets
and
42,000
Blisters
Trinordiol
tablets
for
delivery
to
Manila
in
favor
of
the
consignee,
Wyeth-Suaco
Laboratories,
Inc.[2]
The
Femenal
tablets
were
placed
in
124
cartons
and
the
Nordiol
tablets
were
placed
in
20
cartons
which
were
packed
together
in
one
(1)
LD3
aluminum
container,
while
the
Trinordial
tablets
were
packed
in
two
pallets,
each
of
which
contained
30
cartons.[3]
Wyeth-Suaco
insured
the
shipment
against
all
risks
with
FGU
Insurance
which
issued
Marine
Risk
Note
No.
4995
pursuant
to
Marine
Open
Policy
No.
138.[4]
Upon
arrival
of
the
shipment
on
July
11,
1992
at
the
Ninoy
Aquino
International
Airport
(NAIA),[5]
it
was
discharged
without
exception[6]
and
delivered
to
the
warehouse
of
the
Philippine
Skylanders,
Inc.
(PSI)
located
also
at
the
NAIA
for
safekeeping.[7]
In
order
to
secure
the
release
of
the
cargoes
from
the
PSI
and
the
Bureau
of
Customs,
Wyeth-Suaco
engaged
the
services
of
Sanchez
Brokerage
which
had
been
its
licensed
broker
since
1984.[8]
As
its
customs
broker,
Sanchez
Brokerage
calculates
and
pays
the
customs
duties,
taxes
and
storage
fees
for
the
cargo
and
thereafter
delivers
it
to
Wyeth-Suaco.[9]
On
July
29,
1992,
Mitzi
Morales
and
Ernesto
Mendoza,
representatives
of
Sanchez
Brokerage,
paid
PSI
storage
fee
amounting
to
P8,572.35
a
receipt
for
which,
Official
Receipt
No.
016992,[10]
was
issued.
On
the
receipt,
another
representative
of
Sanchez
Brokerage,
M.
Sison,[11]
acknowledged
that
he
received
the
cargoes
consisting
of
three
pieces
in
good
condition.[12]
Wyeth-Suaco
being
a
regular
importer,
the
customs
examiner
did
not
inspect
the
cargoes[13]
which
were
thereupon
stripped
from
the
aluminum
containers[14]
and
loaded
inside
two
transport
vehicles
hired
by
Sanchez
Brokerage.[15]
Among
those
who
witnessed
the
release
of
the
cargoes
from
the
PSI
warehouse
were
Ruben
Alonso
and
Tony
Akas,[16]
employees
of
Elite
Adjusters
and
Surveyors
Inc.
(Elite
Surveyors),
a
marine
and
cargo
surveyor
and
insurance
claim
adjusters
firm
engaged
by
Wyeth-Suaco
on
behalf
of
FGU
Insurance.
Upon
instructions
of
Wyeth-Suaco,
the
cargoes
were
delivered
to
Hizon
Laboratories
Inc.
in
Antipolo
City
for
quality
control
check.[17]
The
delivery
receipt,
bearing
No.
07037
dated
July
29,
1992,
indicated
that
the
delivery
consisted
of
one
container
with
144
cartons
of
Femenal
and
Nordiol
and
1
pallet
containing
Trinordiol.[18]
On
July
31,
1992,
Ronnie
Likas,
a
representative
of
Wyeth-Suaco,
acknowledged
the
delivery
of
the
cargoes
by
affixing
his
signature
on
the
delivery
receipt.[19]
Upon
inspection,
however,
he,
together
with
Ruben
Alonzo
of
Elite
Surveyors,
discovered
that
44
cartons
containing
Femenal
and
Nordiol
tablets
were
in
bad
order.[20]
He
thus
placed
a
note
above
his
signature
on
the
delivery
receipt
stating
that
44
cartons
of
oral
contraceptives
were
in
bad
order.
The
remaining
160
cartons
of
oral
contraceptives
were
accepted
as
complete
and
in
good
order.
Ruben
Alonzo
thus
prepared
and
signed,
along
with
Ronnie
Likas,
a
survey
report[21]
dated
July
31,
1992
stating
that
41
cartons
of
Femenal
tablets
and
3
cartons
of
Nordiol
tablets
were
wetted
(sic).[22]
The
Elite
Surveyors
later
issued
Certificate
No.
CS-0731-1538/92[23]
attached
to
which
was
an
Annexed
Schedule
whereon
it
was
indicated
that
prior
to
the
loading
of
the
cargoes
to
the
brokers
trucks
at
the
NAIA,
they
were
inspected
and
found
to
be
in
apparent
good
condition.[24]
Also
noted
was
that
at
the
time
of
delivery
to
the
warehouse
of
Hizon
Laboratories
Inc.,
slight
to
heavy
rains
fell,
which
could
account
for
the
wetting
of
the
44
cartons
of
Femenal
and
Nordiol
tablets.[25]
On
August
4,
1992,
the
Hizon
Laboratories
Inc.
issued
a
Destruction
Report[26]
confirming
that
38
x
700
blister
packs
of
Femenal
tablets,
3
x
700
blister
packs
of
Femenal
tablets
and
3
x
700
blister
packs
of
Nordiol
tablets
were
heavily
damaged
with
water
and
emitted
foul
smell.
On
August
5,
1992,
Wyeth-Suaco
issued
a
Notice
of
Materials
Rejection[27]
of
38
cartons
of
Femenal
and
3
cartons
of
Nordiol
on
the
ground
that
they
were
delivered
to
Hizon
Laboratories
with
heavy
water
damaged
(sic)
causing
the
cartons
to
sagged
(sic)
emitting
a
foul
order
and
easily
attracted
flies.[28]
Wyeth-Suaco
later
demanded,
by
letter[29]
of
August
25,
1992,
from
Sanchez
Brokerage
the
payment
of
P191,384.25
representing
the
value
of
its
loss
arising
from
the
damaged
tablets.
As
the
Sanchez
Brokerage
refused
to
heed
the
demand,
Wyeth-Suaco
filed
an
insurance
claim
against
FGU
Insurance
which
paid
Wyeth-Suaco
the
amount
of
P181,431.49
in
settlement
of
its
claim
under
Marine
Risk
Note
Number
4995.
The
extraordinary
diligence
in
the
vigilance
over
the
goods
tendered
for
shipment
requires
the
common
carrier
to
know
and
to
follow
the
required
precaution
for
avoiding
damage
to,
or
destruction
of
the
goods
entrusted
to
it
for
sale,
carriage
and
delivery.
It
requires
common
carriers
to
render
service
with
the
greatest
skill
and
foresight
and
to
use
all
reasonable
means
to
ascertain
the
nature
and
characteristics
of
goods
tendered
for
shipment,
and
to
exercise
due
care
in
the
handling
and
stowage,
including
such
methods
as
their
nature
requires.[48]
In
the
case
at
bar,
it
was
established
that
petitioner
received
the
cargoes
from
the
PSI
warehouse
in
NAIA
in
good
order
and
condition;[49]
and
that
upon
delivery
by
petitioner
to
Hizon
Laboratories
Inc.,
some
of
the
cargoes
were
found
to
be
in
bad
order,
as
noted
in
the
Delivery
Receipt[50]
issued
by
petitioner,
and
as
indicated
in
the
Survey
Report
of
Elite
Surveyors[51]
and
the
Destruction
Report
of
Hizon
Laboratories,
Inc.[52]
In
an
attempt
to
free
itself
from
responsibility
for
the
damage
to
the
goods,
petitioner
posits
that
they
were
damaged
due
to
the
fault
or
negligence
of
the
shipper
for
failing
to
properly
pack
them
and
to
the
inherent
characteristics
of
the
goods[53];
and
that
it
should
not
be
faulted
for
following
the
instructions
of
Calicdan
of
Wyeth-Suaco
to
proceed
with
the
delivery
despite
information
conveyed
to
the
latter
that
some
of
the
cartons,
on
examination
outside
the
PSI
warehouse,
were
found
to
be
wet.[54]
While
paragraph
No.
4
of
Article
1734[55]
of
the
Civil
Code
exempts
a
common
carrier
from
liability
if
the
loss
or
damage
is
due
to
the
character
of
the
goods
or
defects
in
the
packing
or
in
the
containers,
the
rule
is
that
if
the
improper
packing
is
known
to
the
carrier
or
his
employees
or
is
apparent
upon
ordinary
observation,
but
he
nevertheless
accepts
the
same
without
protest
or
exception
notwithstanding
such
condition,
he
is
not
relieved
of
liability
for
the
resulting
damage.[56]
If
the
claim
of
petitioner
that
some
of
the
cartons
were
already
damaged
upon
delivery
to
it
were
true,
then
it
should
naturally
have
received
the
cargo
under
protest
or
with
reservations
duly
noted
on
the
receipt
issued
by
PSI.
But
it
made
no
such
protest
or
reservation.[57]
Moreover,
as
observed
by
the
appellate
court,
if
indeed
petitioners
employees
only
examined
the
cargoes
outside
the
PSI
warehouse
and
found
some
to
be
wet,
they
would
certainly
have
gone
back
to
PSI,
showed
to
the
warehouseman
the
damage,
and
demanded
then
and
there
for
Bad
Order
documents
or
a
certification
confirming
the
damage.[58]
Or,
petitioner
would
have
presented,
as
witness,
the
employees
of
the
PSI
from
whom
Morales
and
Domingo
took
delivery
of
the
cargo
to
prove
that,
indeed,
part
of
the
cargoes
was
already
damaged
when
the
container
was
allegedly
opened
outside
the
warehouse.[59]
Petitioner
goes
on
to
posit
that
contrary
to
the
report
of
Elite
Surveyors,
no
rain
fell
that
day.
Instead,
it
asserts
that
some
of
the
cargoes
were
already
wet
on
delivery
by
PSI
outside
the
PSI
warehouse
but
such
notwithstanding
Calicdan
directed
Morales
to
proceed
with
the
delivery
to
Hizon
Laboratories,
Inc.
While
Calicdan
testified
that
he
received
the
purported
telephone
call
of
Morales
on
July
29,
1992,
he
failed
to
specifically
declare
what
time
he
received
the
call.
As
to
whether
the
call
was
made
at
the
PSI
warehouse
when
the
shipment
was
stripped
from
the
airport
containers,
or
when
the
cargoes
were
already
in
transit
to
Antipolo,
it
is
not
determinable.
Aside
from
that
phone
call,
petitioner
admitted
that
it
had
no
documentary
evidence
to
prove
that
at
the
time
it
received
the
cargoes,
a
part
of
it
was
wet,
damaged
or
in
bad
condition.[60]
The
4-page
weather
data
furnished
by
PAGASA[61]
on
request
of
Sanchez
Brokerage
hardly
impresses,
no
witness
having
identified
it
and
interpreted
the
technical
terms
thereof.
The
possibility
on
the
other
hand
that,
as
found
by
Hizon
Laboratories,
Inc.,
the
oral
contraceptives
were
damaged
by
rainwater
while
in
transit
to
Antipolo
City
is
more
likely
then.
Sanchez
himself
testified
that
in
the
past,
there
was
a
similar
instance
when
the
shipment
of
Wyeth-Suaco
was
also
found
to
be
wet
by
rain.
ATTY.
FLORES:
Q:
Was
there
any
instance
that
a
shipment
of
this
nature,
oral
contraceptives,
that
arrived
at
the
NAIA
were
damaged
and
claimed
by
the
Wyeth-Suaco
without
any
question?
WITNESS:
A:
Yes
sir,
there
was
an
instance
that
one
cartoon
(sic)
were
wetted
(sic)
but
Wyeth-
Suaco
did
not
claim
anything
against
us.
ATTY.
FLORES:
Q:
HOW
IS
IT?
WITNESS:
A:
We
experienced,
there
was
a
time
that
we
experienced
that
there
was
a
cartoon
(sic)
wetted
(sic)
up
to
the
bottom
are
wet
specially
during
rainy
season.[62]
Since
petitioner
received
all
the
cargoes
in
good
order
and
condition
at
the
time
they
were
turned
over
by
the
PSI
warehouseman,
and
upon
their
delivery
to
Hizon
Laboratories,
Inc.
a
portion
thereof
was
found
to
be
in
bad
order,
it
was
incumbent
on
petitioner
to
prove
that
it
exercised
extraordinary
diligence
in
the
carriage
of
the
goods.
It
did
not,
however.
Hence,
its
presumed
negligence
under
Article
1735
of
the
Civil
Code
remains
unrebutted.
WHEREFORE,
the
August
10,
2000
Decision
of
the
Court
of
Appeals
is
hereby
AFFIRMED.
Costs
against
petitioner.
SO
ORDERED.
FIRST
DIVISION
[G.R.
No.
138334.
August
25,
2003]
ESTELA
L.
CRISOSTOMO,
petitioner,
vs.
THE
COURT
OF
APPEALS
and
CARAVAN
TRAVEL
&
TOURS
INTERNATIONAL,
INC.,
respondents.
D
E
C
I
S
I
O
N
YNARES-SANTIAGO,
J.:
In
May
1991,
petitioner
Estela
L.
Crisostomo
contracted
the
services
of
respondent
Caravan
Travel
and
Tours
International,
Inc.
to
arrange
and
facilitate
her
booking,
ticketing
and
accommodation
in
a
tour
dubbed
Jewels
of
Europe.
The
package
tour
included
the
countries
of
England,
Holland,
Germany,
Austria,
Liechstenstein,
Switzerland
and
France
at
a
total
cost
of
P74,322.70.
Petitioner
was
given
a
5%
discount
on
the
amount,
which
included
airfare,
and
the
booking
fee
was
also
waived
because
petitioners
niece,
Meriam
Menor,
was
respondent
companys
ticketing
manager.
Pursuant
to
said
contract,
Menor
went
to
her
aunts
residence
on
June
12,
1991
a
Wednesday
to
deliver
petitioners
travel
documents
and
plane
tickets.
Petitioner,
in
turn,
gave
Menor
the
full
payment
for
the
package
tour.
Menor
then
told
her
to
be
at
the
Ninoy
Aquino
International
Airport
(NAIA)
on
Saturday,
two
hours
before
her
flight
on
board
British
Airways.
Without
checking
her
travel
documents,
petitioner
went
to
NAIA
on
Saturday,
June
15,
1991,
to
take
the
flight
for
the
first
leg
of
her
journey
from
Manila
to
Hongkong.
To
petitioners
dismay,
she
discovered
that
the
flight
she
was
supposed
to
take
had
already
departed
the
previous
day.
She
learned
that
her
plane
ticket
was
for
the
flight
scheduled
on
June
14,
1991.
She
thus
called
up
Menor
to
complain.
Subsequently,
Menor
prevailed
upon
petitioner
to
take
another
tour
the
British
Pageant
which
included
England,
Scotland
and
Wales
in
its
itinerary.
For
this
tour
package,
petitioner
was
asked
anew
to
pay
US$785.00
or
P20,881.00
(at
the
then
prevailing
exchange
rate
of
P26.60).
She
gave
respondent
US$300
or
P7,980.00
as
partial
payment
and
commenced
the
trip
in
July
1991.
Upon
petitioners
return
from
Europe,
she
demanded
from
respondent
the
reimbursement
of
P61,421.70,
representing
the
difference
between
the
sum
she
paid
for
Jewels
of
Europe
and
the
amount
she
owed
respondent
for
the
British
Pageant
tour.
Despite
several
demands,
respondent
company
refused
to
reimburse
the
amount,
contending
that
the
same
was
non-refundable.[1]
Petitioner
was
thus
constrained
to
file
a
complaint
against
respondent
for
breach
of
contract
of
carriage
and
damages,
which
was
docketed
as
Civil
Case
No.
92-133
and
raffled
to
Branch
59
of
the
Regional
Trial
Court
of
Makati
City.
In
her
complaint,[2]
petitioner
alleged
that
her
failure
to
join
Jewels
of
Europe
was
due
to
respondents
fault
since
it
did
not
clearly
indicate
the
departure
date
on
the
plane
ticket.
Respondent
was
also
negligent
in
informing
her
of
the
wrong
flight
schedule
through
its
employee
Menor.
She
insisted
that
the
British
Pageant
was
merely
a
substitute
for
the
Jewels
of
Europe
tour,
such
that
the
cost
of
the
former
should
be
properly
set-off
against
the
sum
paid
for
the
latter.
For
its
part,
respondent
company,
through
its
Operations
Manager,
Concepcion
Chipeco,
denied
responsibility
for
petitioners
failure
to
join
the
first
tour.
Chipeco
insisted
that
petitioner
was
informed
of
the
correct
departure
date,
which
was
clearly
and
legibly
printed
on
the
plane
ticket.
The
travel
documents
were
given
to
petitioner
two
days
ahead
of
the
scheduled
trip.
Petitioner
had
only
herself
to
blame
for
missing
the
flight,
as
she
did
not
bother
to
read
or
confirm
her
flight
schedule
as
printed
on
the
ticket.
Respondent
explained
that
it
can
no
longer
reimburse
the
amount
paid
for
Jewels
of
Europe,
considering
that
the
same
had
already
been
remitted
to
its
principal
in
Singapore,
Lotus
Travel
Ltd.,
which
had
already
billed
the
same
even
if
petitioner
did
not
join
the
tour.
Lotus
European
tour
organizer,
Insight
International
Tours
Ltd.,
determines
the
cost
of
a
package
tour
based
on
a
minimum
number
of
projected
participants.
For
this
reason,
it
is
accepted
industry
practice
to
disallow
refund
for
individuals
who
failed
to
take
a
booked
tour.[3]
Lastly,
respondent
maintained
that
the
British
Pageant
was
not
a
substitute
for
the
package
tour
that
petitioner
missed.
This
tour
was
independently
procured
by
petitioner
after
realizing
that
she
made
a
mistake
in
missing
her
flight
for
Jewels
of
Europe.
Petitioner
was
allowed
to
make
a
partial
payment
of
only
US$300.00
for
the
second
tour
because
her
niece
was
then
an
employee
of
the
travel
agency.
Consequently,
respondent
prayed
that
petitioner
be
ordered
to
pay
the
balance
of
P12,901.00
for
the
British
Pageant
package
tour.
After
due
proceedings,
the
trial
court
rendered
a
decision,[4]
the
dispositive
part
of
which
reads:
WHEREFORE,
premises
considered,
judgment
is
hereby
rendered
as
follows:
1.
Ordering
the
defendant
to
return
and/or
refund
to
the
plaintiff
the
amount
of
Fifty
Three
Thousand
Nine
Hundred
Eighty
Nine
Pesos
and
Forty
Three
Centavos
(P53,989.43)
with
legal
interest
thereon
at
the
rate
of
twelve
percent
(12%)
per
annum
starting
January
16,
1992,
the
date
when
the
complaint
was
filed;
2.
Ordering
the
defendant
to
pay
the
plaintiff
the
amount
of
Five
Thousand
(P5,000.00)
Pesos
as
and
for
reasonable
attorneys
fees;
3.
Dismissing
the
defendants
counterclaim,
for
lack
of
merit;
and
4.
With
costs
against
the
defendant.
SO
ORDERED.[5]
The
trial
court
held
that
respondent
was
negligent
in
erroneously
advising
petitioner
of
her
departure
date
through
its
employee,
Menor,
who
was
not
presented
as
witness
to
rebut
petitioners
testimony.
However,
petitioner
should
have
verified
the
exact
date
and
time
of
departure
by
looking
at
her
ticket
and
should
have
simply
not
relied
on
Menors
verbal
representation.
The
trial
court
thus
declared
that
petitioner
was
guilty
of
contributory
negligence
and
accordingly,
deducted
10%
from
the
amount
being
claimed
as
refund.
Respondent
appealed
to
the
Court
of
Appeals,
which
likewise
found
both
parties
to
be
at
fault.
However,
the
appellate
court
held
that
petitioner
is
more
negligent
than
respondent
because
as
a
lawyer
and
well-traveled
person,
she
should
have
known
better
than
to
simply
rely
on
what
was
told
to
her.
This
being
so,
she
is
not
entitled
to
any
form
of
damages.
Petitioner
also
forfeited
her
right
to
the
Jewels
of
Europe
tour
and
must
therefore
pay
respondent
the
balance
of
the
price
for
the
British
Pageant
tour.
The
dispositive
portion
of
the
judgment
appealed
from
reads
as
follows:
WHEREFORE,
premises
considered,
the
decision
of
the
Regional
Trial
Court
dated
October
26,
1995
is
hereby
REVERSED
and
SET
ASIDE.
A
new
judgment
is
hereby
ENTERED
requiring
the
plaintiff-appellee
to
pay
to
the
defendant-appellant
the
amount
of
P12,901.00,
representing
the
balance
of
the
price
of
the
British
Pageant
Package
Tour,
the
same
to
earn
legal
interest
at
the
rate
of
SIX
PERCENT
(6%)
per
annum,
to
be
computed
from
the
time
the
counterclaim
was
filed
until
the
finality
of
this
decision.
After
this
decision
becomes
final
and
executory,
the
rate
of
TWELVE
PERCENT
(12%)
interest
per
annum
shall
be
additionally
imposed
on
the
total
obligation
until
payment
thereof
is
satisfied.
The
award
of
attorneys
fees
is
DELETED.
Costs
against
the
plaintiff-appellee.
SO
ORDERED.[6]
Upon
denial
of
her
motion
for
reconsideration,[7]
petitioner
filed
the
instant
petition
under
Rule
45
on
the
following
grounds:
I
It
is
respectfully
submitted
that
the
Honorable
Court
of
Appeals
committed
a
reversible
error
in
reversing
and
setting
aside
the
decision
of
the
trial
court
by
ruling
that
the
petitioner
is
not
entitled
to
a
refund
of
the
cost
of
unavailed
Jewels
of
Europe
tour
she
being
equally,
if
not
more,
negligent
than
the
private
respondent,
for
in
the
contract
of
carriage
the
common
carrier
is
obliged
to
observe
utmost
care
and
extra-ordinary
diligence
which
is
higher
in
degree
than
the
ordinary
diligence
required
of
the
passenger.
Thus,
even
if
the
petitioner
and
private
respondent
were
both
negligent,
the
petitioner
cannot
be
considered
to
be
equally,
or
worse,
more
guilty
than
the
private
respondent.
At
best,
petitioners
negligence
is
only
contributory
while
the
private
respondent
[is
guilty]
of
gross
negligence
making
the
principle
of
pari
delicto
inapplicable
in
the
case;
II
The
Honorable
Court
of
Appeals
also
erred
in
not
ruling
that
the
Jewels
of
Europe
tour
was
not
indivisible
and
the
amount
paid
therefor
refundable;
III
The
Honorable
Court
erred
in
not
granting
to
the
petitioner
the
consequential
damages
due
her
as
a
result
of
breach
of
contract
of
carriage.[8]
Petitioner
contends
that
respondent
did
not
observe
the
standard
of
care
required
of
a
common
carrier
when
it
informed
her
wrongly
of
the
flight
schedule.
She
could
not
be
deemed
more
negligent
than
respondent
since
the
latter
is
required
by
law
to
exercise
extraordinary
diligence
in
the
fulfillment
of
its
obligation.
If
she
were
negligent
at
all,
the
same
is
merely
contributory
and
not
the
proximate
cause
of
the
damage
she
suffered.
Her
loss
could
only
be
attributed
to
respondent
as
it
was
the
direct
consequence
of
its
employees
gross
negligence.
Petitioners
contention
has
no
merit.
By
definition,
a
contract
of
carriage
or
transportation
is
one
whereby
a
certain
person
or
association
of
persons
obligate
themselves
to
transport
persons,
things,
or
news
from
one
place
to
another
for
a
fixed
price.[9]
Such
person
or
association
of
persons
are
regarded
as
carriers
and
are
classified
as
private
or
special
carriers
and
common
or
public
carriers.[10]
A
common
carrier
is
defined
under
Article
1732
of
the
Civil
Code
as
persons,
corporations,
firms
or
associations
engaged
in
the
business
of
carrying
or
transporting
passengers
or
goods
or
both,
by
land,
water
or
air,
for
compensation,
offering
their
services
to
the
public.
It
is
obvious
from
the
above
definition
that
respondent
is
not
an
entity
engaged
in
the
business
of
transporting
either
passengers
or
goods
and
is
therefore,
neither
a
private
nor
a
common
carrier.
Respondent
did
not
undertake
to
transport
petitioner
from
one
place
to
another
since
its
covenant
with
its
customers
is
simply
to
make
travel
arrangements
in
their
behalf.
Respondents
services
as
a
travel
agency
include
procuring
tickets
and
facilitating
travel
permits
or
visas
as
well
as
booking
customers
for
tours.
While
petitioner
concededly
bought
her
plane
ticket
through
the
efforts
of
respondent
company,
this
does
not
mean
that
the
latter
ipso
facto
is
a
common
carrier.
At
most,
respondent
acted
merely
as
an
agent
of
the
airline,
with
whom
petitioner
ultimately
contracted
for
her
carriage
to
Europe.
Respondents
obligation
to
petitioner
in
this
regard
was
simply
to
see
to
it
that
petitioner
was
properly
booked
with
the
airline
for
the
appointed
date
and
time.
Her
transport
to
the
place
of
destination,
meanwhile,
pertained
directly
to
the
airline.
The
object
of
petitioners
contractual
relation
with
respondent
is
the
latters
service
of
arranging
and
facilitating
petitioners
booking,
ticketing
and
accommodation
in
the
package
tour.
In
contrast,
the
object
of
a
contract
of
carriage
is
the
transportation
of
passengers
or
goods.
It
is
in
this
sense
that
the
contract
between
the
parties
in
this
case
was
an
ordinary
one
for
services
and
not
one
of
carriage.
Petitioners
submission
is
premised
on
a
wrong
assumption.
The
nature
of
the
contractual
relation
between
petitioner
and
respondent
is
determinative
of
the
degree
of
care
required
in
the
performance
of
the
latters
obligation
under
the
contract.
For
reasons
of
public
policy,
a
common
carrier
in
a
contract
of
carriage
is
bound
by
law
to
carry
passengers
as
far
as
human
care
and
foresight
can
provide
using
the
utmost
diligence
of
very
cautious
persons
and
with
due
regard
for
all
the
circumstances.[11]
As
earlier
stated,
however,
respondent
is
not
a
common
carrier
but
a
travel
agency.
It
is
thus
not
bound
under
the
law
to
observe
extraordinary
diligence
in
the
performance
of
its
obligation,
as
petitioner
claims.
Since
the
contract
between
the
parties
is
an
ordinary
one
for
services,
the
standard
of
care
required
of
respondent
is
that
of
a
good
father
of
a
family
under
Article
1173
of
the
Civil
Code.[12]
This
connotes
reasonable
care
consistent
with
that
which
an
ordinarily
prudent
person
would
have
observed
when
confronted
with
a
similar
situation.
The
test
to
determine
whether
negligence
attended
the
performance
of
an
obligation
is:
did
the
defendant
in
doing
the
alleged
negligent
act
use
that
reasonable
care
and
caution
which
an
ordinarily
prudent
person
would
have
used
in
the
same
situation?
If
not,
then
he
is
guilty
of
negligence.[13]
In
the
case
at
bar,
the
lower
court
found
Menor
negligent
when
she
allegedly
informed
petitioner
of
the
wrong
day
of
departure.
Petitioners
testimony
was
accepted
as
indubitable
evidence
of
Menors
alleged
negligent
act
since
respondent
did
not
call
Menor
to
the
witness
stand
to
refute
the
allegation.
The
lower
court
applied
the
presumption
under
Rule
131,
Section
3
(e)[14]
of
the
Rules
of
Court
that
evidence
willfully
suppressed
would
be
adverse
if
produced
and
thus
considered
petitioners
uncontradicted
testimony
to
be
sufficient
proof
of
her
claim.
On
the
other
hand,
respondent
has
consistently
denied
that
Menor
was
negligent
and
maintains
that
petitioners
assertion
is
belied
by
the
evidence
on
record.
The
date
and
time
of
departure
was
legibly
written
on
the
plane
ticket
and
the
travel
papers
were
delivered
two
days
in
advance
precisely
so
that
petitioner
could
prepare
for
the
trip.
It
performed
all
its
obligations
to
enable
petitioner
to
join
the
tour
and
exercised
due
diligence
in
its
dealings
with
the
latter.
We
agree
with
respondent.
standard
of
diligence
applicable
to
each
and
every
contractual
obligation
and
each
case
must
be
determined
upon
its
particular
facts.
The
degree
of
diligence
required
depends
on
the
circumstances
of
the
specific
obligation
and
whether
one
has
been
negligent
is
a
question
of
fact
that
is
to
be
determined
after
taking
into
account
the
particulars
of
each
case.[21]
The
lower
court
declared
that
respondents
employee
was
negligent.
This
factual
finding,
however,
is
not
supported
by
the
evidence
on
record.
While
factual
findings
below
are
generally
conclusive
upon
this
court,
the
rule
is
subject
to
certain
exceptions,
as
when
the
trial
court
overlooked,
misunderstood,
or
misapplied
some
facts
or
circumstances
of
weight
and
substance
which
will
affect
the
result
of
the
case.[22]
In
the
case
at
bar,
the
evidence
on
record
shows
that
respondent
company
performed
its
duty
diligently
and
did
not
commit
any
contractual
breach.
Hence,
petitioner
cannot
recover
and
must
bear
her
own
damage.
WHEREFORE,
the
instant
petition
is
DENIED
for
lack
of
merit.
The
decision
of
the
Court
of
Appeals
in
CA-G.R.
CV
No.
51932
is
AFFIRMED.
Accordingly,
petitioner
is
ordered
to
pay
respondent
the
amount
of
P12,901.00
representing
the
balance
of
the
price
of
the
British
Pageant
Package
Tour,
with
legal
interest
thereon
at
the
rate
of
6%
per
annum,
to
be
computed
from
the
time
the
counterclaim
was
filed
until
the
finality
of
this
Decision.
After
this
Decision
becomes
final
and
executory,
the
rate
of
12%
per
annum
shall
be
imposed
until
the
obligation
is
fully
settled,
this
interim
period
being
deemed
to
be
by
then
an
equivalent
to
a
forbearance
of
credit.[23]
SO
ORDERED.
In
his
Answer,
private
respondent
denied
that
he
was
a
common
carrier
and
argued
that
he
could
not
be
held
responsible
for
the
value
of
the
lost
goods,
such
loss
having
been
due
to
force
majeure.
On
10
December
1975,
the
trial
court
rendered
a
Decision
1
finding
private
respondent
to
be
a
common
carrier
and
holding
him
liable
for
the
value
of
the
undelivered
goods
(P
22,150.00)
as
well
as
for
P
4,000.00
as
damages
and
P
2,000.00
as
attorney's
fees.
On
appeal
before
the
Court
of
Appeals,
respondent
urged
that
the
trial
court
had
erred
in
considering
him
a
common
carrier;
in
finding
that
he
had
habitually
offered
trucking
services
to
the
public;
in
not
exempting
him
from
liability
on
the
ground
of
force
majeure;
and
in
ordering
him
to
pay
damages
and
attorney's
fees.
The
Court
of
Appeals
reversed
the
judgment
of
the
trial
court
and
held
that
respondent
had
been
engaged
in
transporting
return
loads
of
freight
"as
a
casual
occupation
a
sideline
to
his
scrap
iron
business"
and
not
as
a
common
carrier.
Petitioner
came
to
this
Court
by
way
of
a
Petition
for
Review
assigning
as
errors
the
following
conclusions
of
the
Court
of
Appeals:
1.
that
private
respondent
was
not
a
common
carrier;
2.
that
the
hijacking
of
respondent's
truck
was
force
majeure;
and
3.
that
respondent
was
not
liable
for
the
value
of
the
undelivered
cargo.
(Rollo,
p.
111)
We
consider
first
the
issue
of
whether
or
not
private
respondent
Ernesto
Cendana
may,
under
the
facts
earlier
set
forth,
be
properly
characterized
as
a
common
carrier.
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.
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
1733
deliberaom
making
such
distinctions.
So
understood,
the
concept
of
"common
carrier"
under
Article
1732
may
be
seen
to
coincide
neatly
with
the
notion
of
"public
service,"
under
the
Public
Service
Act
(Commonwealth
Act
No.
1416,
as
amended)
which
at
least
partially
supplements
the
law
on
common
carriers
set
forth
in
the
Civil
Code.
Under
Section
13,
paragraph
(b)
of
the
Public
Service
Act,
"public
service"
includes:
...
every
person
that
now
or
hereafter
may
own,
operate,
manage,
or
control
in
the
Philippines,
for
hire
or
compensation,
with
general
or
limited
clientele,
whether
permanent,
occasional
or
accidental,
and
done
for
general
business
purposes,
any
common
carrier,
railroad,
street
railway,
traction
railway,
subway
motor
vehicle,
either
for
freight
or
passenger,
or
both,
with
or
without
fixed
route
and
whatever
may
be
its
classification,
freight
or
carrier
service
of
any
class,
express
service,
steamboat,
or
steamship
line,
pontines,
ferries
and
water
craft,
engaged
in
the
transportation
of
passengers
or
freight
or
both,
shipyard,
marine
repair
shop,
wharf
or
dock,
ice
plant,
ice-refrigeration
plant,
canal,
irrigation
system,
gas,
electric
light,
heat
and
power,
water
supply
and
power
petroleum,
sewerage
system,
wire
or
wireless
communications
systems,
wire
or
wireless
broadcasting
stations
and
other
similar
public
services.
...
(Emphasis
supplied)
It
appears
to
the
Court
that
private
respondent
is
properly
characterized
as
a
common
carrier
even
though
he
merely
"back-hauled"
goods
for
other
merchants
from
Manila
to
Pangasinan,
although
such
back-hauling
was
done
on
a
periodic
or
occasional
rather
than
regular
or
scheduled
manner,
and
even
though
private
respondent's
principal
occupation
was
not
the
carriage
of
goods
for
others.
There
is
no
dispute
that
private
respondent
charged
his
customers
a
fee
for
hauling
their
goods;
that
fee
frequently
fell
below
commercial
freight
rates
is
not
relevant
here.
The
Court
of
Appeals
referred
to
the
fact
that
private
respondent
held
no
certificate
of
public
convenience,
and
concluded
he
was
not
a
common
carrier.
This
is
palpable
error.
A
certificate
of
public
convenience
is
not
a
requisite
for
the
incurring
of
liability
under
the
Civil
Code
provisions
governing
common
carriers.
That
liability
arises
the
moment
a
person
or
firm
acts
as
a
common
carrier,
without
regard
to
whether
or
not
such
carrier
has
also
complied
with
the
requirements
of
the
applicable
regulatory
statute
and
implementing
regulations
and
has
been
granted
a
certificate
of
public
convenience
or
other
franchise.
To
exempt
private
respondent
from
the
liabilities
of
a
common
carrier
because
he
has
not
secured
the
necessary
certificate
of
public
convenience,
would
be
offensive
to
sound
public
policy;
that
would
be
to
reward
private
respondent
precisely
for
failing
to
comply
with
applicable
statutory
requirements.
The
business
of
a
common
carrier
impinges
directly
and
intimately
upon
the
safety
and
well
being
and
property
of
those
members
of
the
general
community
who
happen
to
deal
with
such
carrier.
The
law
imposes
duties
and
liabilities
upon
common
carriers
for
the
safety
and
protection
of
those
who
utilize
their
services
and
the
law
cannot
allow
a
common
carrier
to
render
such
duties
and
liabilities
merely
facultative
by
simply
failing
to
obtain
the
necessary
permits
and
authorizations.
We
turn
then
to
the
liability
of
private
respondent
as
a
common
carrier.
Common
carriers,
"by
the
nature
of
their
business
and
for
reasons
of
public
policy"
2
are
held
to
a
very
high
degree
of
care
and
diligence
("extraordinary
diligence")
in
the
carriage
of
goods
as
well
as
of
passengers.
The
specific
import
of
extraordinary
diligence
in
the
care
of
goods
transported
by
a
common
carrier
is,
according
to
Article
1733,
"further
expressed
in
Articles
1734,1735
and
1745,
numbers
5,
6
and
7"
of
the
Civil
Code.
Article
1734
establishes
the
general
rule
that
common
carriers
are
responsible
for
the
loss,
destruction
or
deterioration
of
the
goods
which
they
carry,
"unless
the
same
is
due
to
any
of
the
following
causes
only:
(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.
It
is
important
to
point
out
that
the
above
list
of
causes
of
loss,
destruction
or
deterioration
which
exempt
the
common
carrier
for
responsibility
therefor,
is
a
closed
list.
Causes
falling
outside
the
foregoing
list,
even
if
they
appear
to
constitute
a
species
of
force
majeure
fall
within
the
scope
of
Article
1735,
which
provides
as
follows:
In
all
cases
other
than
those
mentioned
in
numbers
1,
2,
3,
4
and
5
of
the
preceding
article,
if
the
goods
are
lost,
destroyed
or
deteriorated,
common
carriers
are
presumed
to
have
been
at
fault
or
to
have
acted
negligently,
unless
they
prove
that
they
observed
extraordinary
diligence
as
required
in
Article
1733.
(Emphasis
supplied)
Applying
the
above-quoted
Articles
1734
and
1735,
we
note
firstly
that
the
specific
cause
alleged
in
the
instant
case
the
hijacking
of
the
carrier's
truck
does
not
fall
within
any
of
the
five
(5)
categories
of
exempting
causes
listed
in
Article
1734.
It
would
follow,
therefore,
that
the
hijacking
of
the
carrier's
vehicle
must
be
dealt
with
under
the
provisions
of
Article
1735,
in
other
words,
that
the
private
respondent
as
common
carrier
is
presumed
to
have
been
at
fault
or
to
have
acted
negligently.
This
presumption,
however,
may
be
overthrown
by
proof
of
extraordinary
diligence
on
the
part
of
private
respondent.
Petitioner
insists
that
private
respondent
had
not
observed
extraordinary
diligence
in
the
care
of
petitioner's
goods.
Petitioner
argues
that
in
the
circumstances
of
this
case,
private
respondent
should
have
hired
a
security
guard
presumably
to
ride
with
the
truck
carrying
the
600
cartons
of
Liberty
filled
milk.
We
do
not
believe,
however,
that
in
the
instant
case,
the
standard
of
extraordinary
diligence
required
private
respondent
to
retain
a
security
guard
to
ride
with
the
truck
and
to
engage
brigands
in
a
firelight
at
the
risk
of
his
own
life
and
the
lives
of
the
driver
and
his
helper.
The
precise
issue
that
we
address
here
relates
to
the
specific
requirements
of
the
duty
of
extraordinary
diligence
in
the
vigilance
over
the
goods
carried
in
the
specific
context
of
hijacking
or
armed
robbery.
As
noted
earlier,
the
duty
of
extraordinary
diligence
in
the
vigilance
over
goods
is,
under
Article
1733,
given
additional
specification
not
only
by
Articles
1734
and
1735
but
also
by
Article
1745,
numbers
4,
5
and
6,
Article
1745
provides
in
relevant
part:
Any
of
the
following
or
similar
stipulations
shall
be
considered
unreasonable,
unjust
and
contrary
to
public
policy:
xxx
xxx
xxx
(5)
that
the
common
carrier
shall
not
be
responsible
for
the
acts
or
omissions
of
his
or
its
employees;
(6)
that
the
common
carrier's
liability
for
acts
committed
by
thieves,
or
of
robbers
who
do
not
act
with
grave
or
irresistible
threat,
violence
or
force,
is
dispensed
with
or
diminished;
and
(7)
that
the
common
carrier
shall
not
responsible
for
the
loss,
destruction
or
deterioration
of
goods
on
account
of
the
defective
condition
of
the
car
vehicle,
ship,
airplane
or
other
equipment
used
in
the
contract
of
carriage.
(Emphasis
supplied)
Under
Article
1745
(6)
above,
a
common
carrier
is
held
responsible
and
will
not
be
allowed
to
divest
or
to
diminish
such
responsibility
even
for
acts
of
strangers
like
thieves
or
robbers,
except
where
such
thieves
or
robbers
in
fact
acted
"with
grave
or
irresistible
threat,
violence
or
force."
We
believe
and
so
hold
that
the
limits
of
the
duty
of
extraordinary
diligence
in
the
vigilance
over
the
goods
carried
are
reached
where
the
goods
are
lost
as
a
result
of
a
robbery
which
is
attended
by
"grave
or
irresistible
threat,
violence
or
force."
In
the
instant
case,
armed
men
held
up
the
second
truck
owned
by
private
respondent
which
carried
petitioner's
cargo.
The
record
shows
that
an
information
for
robbery
in
band
was
filed
in
the
Court
of
First
Instance
of
Tarlac,
Branch
2,
in
Criminal
Case
No.
198
entitled
"People
of
the
Philippines
v.
Felipe
Boncorno,
Napoleon
Presno,
Armando
Mesina,
Oscar
Oria
and
one
John
Doe."
There,
the
accused
were
charged
with
willfully
and
unlawfully
taking
and
carrying
away
with
them
the
second
truck,
driven
by
Manuel
Estrada
and
loaded
with
the
600
cartons
of
contractors"
under
Section
143,
Paragraph
(e)
of
the
Local
Government
Code
does
not
include
the
power
to
levy
on
transportation
contractors.
The
imposition
and
assessment
cannot
be
categorized
as
a
mere
fee
authorized
under
Section
147
of
the
Local
Government
Code.
The
said
section
limits
the
imposition
of
fees
and
charges
on
business
to
such
amounts
as
may
be
commensurate
to
the
cost
of
regulation,
inspection,
and
licensing.
Hence,
assuming
arguendo
that
FPIC
is
liable
for
the
license
fee,
the
imposition
thereof
based
on
gross
receipts
is
violative
of
the
aforecited
provision.
The
amount
of
P956,076.04
(P239,019.01
per
quarter)
is
not
commensurate
to
the
cost
of
regulation,
inspection
and
licensing.
The
fee
is
already
a
revenue
raising
measure,
and
not
a
mere
regulatory
imposition.
4
On
March
8,
1994,
the
respondent
City
Treasurer
denied
the
protest
contending
that
petitioner
cannot
be
considered
engaged
in
transportation
business,
thus
it
cannot
claim
exemption
under
Section
133
(j)
of
the
Local
Government
Code.
5
On
June
15,
1994,
petitioner
filed
with
the
Regional
Trial
Court
of
Batangas
City
a
complaint
6
for
tax
refund
with
prayer
for
writ
of
preliminary
injunction
against
respondents
City
of
Batangas
and
Adoracion
Arellano
in
her
capacity
as
City
Treasurer.
In
its
complaint,
petitioner
alleged,
inter
alia,
that:
(1)
the
imposition
and
collection
of
the
business
tax
on
its
gross
receipts
violates
Section
133
of
the
Local
Government
Code;
(2)
the
authority
of
cities
to
impose
and
collect
a
tax
on
the
gross
receipts
of
"contractors
and
independent
contractors"
under
Sec.
141
(e)
and
151
does
not
include
the
authority
to
collect
such
taxes
on
transportation
contractors
for,
as
defined
under
Sec.
131
(h),
the
term
"contractors"
excludes
transportation
contractors;
and,
(3)
the
City
Treasurer
illegally
and
erroneously
imposed
and
collected
the
said
tax,
thus
meriting
the
immediate
refund
of
the
tax
paid.
7
Traversing
the
complaint,
the
respondents
argued
that
petitioner
cannot
be
exempt
from
taxes
under
Section
133
(j)
of
the
Local
Government
Code
as
said
exemption
applies
only
to
"transportation
contractors
and
persons
engaged
in
the
transportation
by
hire
and
common
carriers
by
air,
land
and
water."
Respondents
assert
that
pipelines
are
not
included
in
the
term
"common
carrier"
which
refers
solely
to
ordinary
carriers
such
as
trucks,
trains,
ships
and
the
like.
Respondents
further
posit
that
the
term
"common
carrier"
under
the
said
code
pertains
to
the
mode
or
manner
by
which
a
product
is
delivered
to
its
destination.
8
On
October
3,
1994,
the
trial
court
rendered
a
decision
dismissing
the
complaint,
ruling
in
this
wise:
.
.
.
Plaintiff
is
either
a
contractor
or
other
independent
contractor.
.
.
.
the
exemption
to
tax
claimed
by
the
plaintiff
has
become
unclear.
It
is
a
rule
that
tax
exemptions
are
to
be
strictly
construed
against
the
taxpayer,
taxes
being
the
lifeblood
of
the
government.
Exemption
may
therefore
be
granted
only
by
clear
and
unequivocal
provisions
of
law.
Plaintiff
claims
that
it
is
a
grantee
of
a
pipeline
concession
under
Republic
Act
387.
(Exhibit
A)
whose
concession
was
lately
renewed
by
the
Energy
Regulatory
Board
(Exhibit
B).
Yet
neither
said
law
nor
the
deed
of
concession
grant
any
tax
exemption
upon
the
plaintiff.
Even
the
Local
Government
Code
imposes
a
tax
on
franchise
holders
under
Sec.
137
of
the
Local
Tax
Code.
Such
being
the
situation
obtained
in
this
case
(exemption
being
unclear
and
equivocal)
resort
to
distinctions
or
other
considerations
may
be
of
help:
1.
That
the
exemption
granted
under
Sec.
133
(j)
encompasses
only
common
carriers
so
as
not
to
overburden
the
riding
public
or
commuters
with
taxes.
Plaintiff
is
not
a
common
carrier,
but
a
special
carrier
extending
its
services
and
facilities
to
a
single
specific
or
"special
customer"
under
a
"special
contract."
2.
The
Local
Tax
Code
of
1992
was
basically
enacted
to
give
more
and
effective
local
autonomy
to
local
governments
than
the
previous
enactments,
to
make
them
economically
and
financially
viable
to
serve
the
people
and
discharge
their
functions
with
a
concomitant
obligation
to
accept
certain
devolution
of
powers,
.
.
.
So,
consistent
with
this
policy
even
franchise
grantees
are
taxed
(Sec.
137)
and
contractors
are
also
taxed
under
Sec.
143
(e)
and
151
of
the
Code.
9
Petitioner
assailed
the
aforesaid
decision
before
this
Court
via
a
petition
for
review.
On
February
27,
1995,
we
referred
the
case
to
the
respondent
Court
of
Appeals
for
consideration
and
adjudication.
10
On
November
29,
1995,
the
respondent
court
rendered
a
decision
11
affirming
the
trial
court's
dismissal
of
petitioner's
complaint.
Petitioner's
motion
for
reconsideration
was
denied
on
July
18,
1996.
12
Hence,
this
petition.
At
first,
the
petition
was
denied
due
course
in
a
Resolution
dated
November
11,
1996.
13
Petitioner
moved
for
a
reconsideration
which
was
granted
by
this
Court
in
a
Resolution
14
of
January
22,
1997.
Thus,
the
petition
was
reinstated.
Petitioner
claims
that
the
respondent
Court
of
Appeals
erred
in
holding
that
(1)
the
petitioner
is
not
a
common
carrier
or
a
transportation
contractor,
and
(2)
the
exemption
sought
for
by
petitioner
is
not
clear
under
the
law.
There
is
merit
in
the
petition.
A
"common
carrier"
may
be
defined,
broadly,
as
one
who
holds
himself
out
to
the
public
as
engaged
in
the
business
of
transporting
persons
or
property
from
place
to
place,
for
compensation,
offering
his
services
to
the
public
generally.
Art.
1732
of
the
Civil
Code
defines
a
"common
carrier"
as
"any
person,
corporation,
firm
or
association
engaged
in
the
business
of
carrying
or
transporting
passengers
or
goods
or
both,
by
land,
water,
or
air,
for
compensation,
offering
their
services
to
the
public."
The
test
for
determining
whether
a
party
is
a
common
carrier
of
goods
is:
1.
He
must
be
engaged
in
the
business
of
carrying
goods
for
others
as
a
public
employment,
and
must
hold
himself
out
as
ready
to
engage
in
the
transportation
of
goods
for
person
generally
as
a
business
and
not
as
a
casual
occupation;
2.
He
must
undertake
to
carry
goods
of
the
kind
to
which
his
business
is
confined;
3.
He
must
undertake
to
carry
by
the
method
by
which
his
business
is
conducted
and
over
his
established
roads;
and
4.
The
transportation
must
be
for
hire.
15
Based
on
the
above
definitions
and
requirements,
there
is
no
doubt
that
petitioner
is
a
common
carrier.
It
is
engaged
in
the
business
of
transporting
or
carrying
goods,
i.e.
petroleum
products,
for
hire
as
a
public
employment.
It
undertakes
to
carry
for
all
persons
indifferently,
that
is,
to
all
persons
who
choose
to
employ
its
services,
and
transports
the
goods
by
land
and
for
compensation.
The
fact
that
petitioner
has
a
limited
clientele
does
not
exclude
it
from
the
definition
of
a
common
carrier.
In
De
Guzman
vs.
Court
of
Appeals
16
we
ruled
that:
The
above
article
(Art.
1732,
Civil
Code)
makes
no
distinction
between
one
whose
principal
business
activity
is
the
carrying
of
persons
or
goods
or
both,
and
one
who
does
such
carrying
only
as
an
ancillary
activity
(in
local
idiom,
as
a
"sideline").
Article
1732
.
.
.
avoids
making
any
distinction
between
a
person
or
enterprise
offering
transportation
service
on
a
regular
or
scheduled
basis
and
one
offering
such
service
on
an
occasional,
episodic
or
unscheduled
basis.
Neither
does
Article
1732
distinguish
between
a
carrier
offering
its
services
to
the
"general
public,"
i.e.,
the
general
community
or
population,
and
one
who
offers
services
or
solicits
business
only
from
a
narrow
segment
of
the
general
population.
We
think
that
Article
1877
deliberately
refrained
from
making
such
distinctions.
So
understood,
the
concept
of
"common
carrier"
under
Article
1732
may
be
seen
to
coincide
neatly
with
the
notion
of
"public
service,"
under
the
Public
Service
Act
(Commonwealth
Act
No.
1416,
as
amended)
which
at
least
partially
supplements
the
law
on
common
carriers
set
forth
in
the
Civil
Code.
Under
Section
13,
paragraph
(b)
of
the
Public
Service
Act,
"public
service"
includes:
every
person
that
now
or
hereafter
may
own,
operate.
manage,
or
control
in
the
Philippines,
for
hire
or
compensation,
with
general
or
limited
clientele,
whether
permanent,
occasional
or
accidental,
and
done
for
general
business
purposes,
any
common
carrier,
railroad,
street
railway,
traction
railway,
subway
motor
vehicle,
either
for
freight
or
passenger,
or
both,
with
or
without
fixed
route
and
whatever
may
be
its
classification,
freight
or
carrier
service
of
any
class,
express
service,
steamboat,
or
steamship
line,
pontines,
ferries
and
water
craft,
engaged
in
the
transportation
of
passengers
or
freight
or
both,
shipyard,
marine
repair
shop,
wharf
or
dock,
ice
plant,
ice-refrigeration
plant,
canal,
irrigation
system
gas,
electric
light
heat
and
power,
water
supply
and
power
petroleum,
sewerage
system,
wire
or
wireless
communications
systems,
wire
or
wireless
broadcasting
stations
and
other
similar
public
services.
(Emphasis
Supplied)
Also,
respondent's
argument
that
the
term
"common
carrier"
as
used
in
Section
133
(j)
of
the
Local
Government
Code
refers
only
to
common
carriers
transporting
goods
and
passengers
through
moving
vehicles
or
vessels
either
by
land,
sea
or
water,
is
erroneous.
As
correctly
pointed
out
by
petitioner,
the
definition
of
"common
carriers"
in
the
Civil
Code
makes
no
distinction
as
to
the
means
of
transporting,
as
long
as
it
is
by
land,
water
or
air.
It
does
not
provide
that
the
transportation
of
the
passengers
or
goods
should
be
by
motor
vehicle.
In
fact,
in
the
United
States,
oil
pipe
line
operators
are
considered
common
carriers.
17
Under
the
Petroleum
Act
of
the
Philippines
(Republic
Act
387),
petitioner
is
considered
a
"common
carrier."
Thus,
Article
86
thereof
provides
that:
Art.
86.
Pipe
line
concessionaire
as
common
carrier.
A
pipe
line
shall
have
the
preferential
right
to
utilize
installations
for
the
transportation
of
petroleum
owned
by
him,
but
is
obligated
to
utilize
the
remaining
transportation
capacity
pro
rata
for
the
transportation
of
such
other
petroleum
as
may
be
offered
by
others
for
transport,
and
to
charge
without
discrimination
such
rates
as
may
have
been
approved
by
the
Secretary
of
Agriculture
and
Natural
Resources.
Republic
Act
387
also
regards
petroleum
operation
as
a
public
utility.
Pertinent
portion
of
Article
7
thereof
provides:
that
everything
relating
to
the
exploration
for
and
exploitation
of
petroleum
.
.
.
and
everything
relating
to
the
manufacture,
refining,
storage,
or
transportation
by
special
methods
of
petroleum,
is
hereby
declared
to
be
a
public
utility.
(Emphasis
Supplied)
The
Bureau
of
Internal
Revenue
likewise
considers
the
petitioner
a
"common
carrier."
In
BIR
Ruling
No.
069-83,
it
declared:
.
.
.
since
[petitioner]
is
a
pipeline
concessionaire
that
is
engaged
only
in
transporting
petroleum
products,
it
is
considered
a
common
carrier
under
Republic
Act
No.
387
.
.
.
.
Such
being
the
case,
it
is
not
subject
to
withholding
tax
prescribed
by
Revenue
Regulations
No.
13-78,
as
amended.
From
the
foregoing
disquisition,
there
is
no
doubt
that
petitioner
is
a
"common
carrier"
and,
therefore,
exempt
from
the
business
tax
as
provided
for
in
Section
133
(j),
of
the
Local
Government
Code,
to
wit:
Sec.
133.
Common
Limitations
on
the
Taxing
Powers
of
Local
Government
Units.
Unless
otherwise
provided
herein,
the
exercise
of
the
taxing
powers
of
provinces,
cities,
municipalities,
and
barangays
shall
not
extend
to
the
levy
of
the
following:
xxx
xxx
xxx
(j)
Taxes
on
the
gross
receipts
of
transportation
contractors
and
persons
engaged
in
the
transportation
of
passengers
or
freight
by
hire
and
common
carriers
by
air,
land
or
water,
except
as
provided
in
this
Code.
The
deliberations
conducted
in
the
House
of
Representatives
on
the
Local
Government
Code
of
1991
are
illuminating:
MR.
AQUINO
(A).
Thank
you,
Mr.
Speaker.
Mr.
Speaker,
we
would
like
to
proceed
to
page
95,
line
1.
It
states:
"SEC.
121
[now
Sec.
131].
Common
Limitations
on
the
Taxing
Powers
of
Local
Government
Units."
.
.
.
MR.
AQUINO
(A.).
Thank
you
Mr.
Speaker.
Still
on
page
95,
subparagraph
5,
on
taxes
on
the
business
of
transportation.
This
appears
to
be
one
of
those
being
deemed
to
be
exempted
from
the
taxing
powers
of
the
local
government
units.
May
we
know
the
reason
why
the
transportation
business
is
being
excluded
from
the
taxing
powers
of
the
local
government
units?
MR.
JAVIER
(E.).
Mr.
Speaker,
there
is
an
exception
contained
in
Section
121
(now
Sec.
131),
line
16,
paragraph
5.
It
states
that
local
government
units
may
not
impose
taxes
on
the
business
of
transportation,
except
as
otherwise
provided
in
this
code.
Now,
Mr.
Speaker,
if
the
Gentleman
would
care
to
go
to
page
98
of
Book
II,
one
can
see
there
that
provinces
have
the
power
to
impose
a
tax
on
business
enjoying
a
franchise
at
the
rate
of
not
more
than
one-half
of
1
percent
of
the
gross
annual
receipts.
So,
transportation
contractors
who
are
enjoying
a
franchise
would
be
subject
to
tax
by
the
province.
That
is
the
exception,
Mr.
Speaker.
What
we
want
to
guard
against
here,
Mr.
Speaker,
is
the
imposition
of
taxes
by
local
government
units
on
the
carrier
business.
Local
government
units
may
impose
taxes
on
top
of
what
is
already
being
imposed
by
the
National
Internal
Revenue
Code
which
is
the
so-called
"common
carriers
tax."
We
do
not
want
a
duplication
of
this
tax,
so
we
just
provided
for
an
exception
under
Section
125
[now
Sec.
137]
that
a
province
may
impose
this
tax
at
a
specific
rate.
MR.
AQUINO
(A.).
Thank
you
for
that
clarification,
Mr.
Speaker.
.
.
.
18
It
is
clear
that
the
legislative
intent
in
excluding
from
the
taxing
power
of
the
local
government
unit
the
imposition
of
business
tax
against
common
carriers
is
to
prevent
a
duplication
of
the
so-called
"common
carrier's
tax."
Petitioner
is
already
paying
three
(3%)
percent
common
carrier's
tax
on
its
gross
sales/earnings
under
the
National
Internal
Revenue
Code.
19
To
tax
petitioner
again
on
its
gross
receipts
in
its
transportation
of
petroleum
business
would
defeat
the
purpose
of
the
Local
Government
Code.
WHEREFORE,
the
petition
is
hereby
GRANTED.
The
decision
of
the
respondent
Court
of
Appeals
dated
November
29,
1995
in
CA-G.R.
SP
No.
36801
is
REVERSED
and
SET
ASIDE.
SO
ORDERED.
without
obtaining
the
requisite
approval,
the
transfer
is
not
binding
on
the
Public
Service
Commission
and,
in
contemplation
of
law,
the
grantee
continues
to
be
responsible
under
the
franchise
in
relation
to
the
Commission
and
to
the
public
for
the
consequences
incident
to
the
operation
of
the
vehicle,
one
of
them
being
the
collision
under
consideration.
(Montoya
v.
Ignacio,
50
O.G.
No.
1.
108;
Vda.
de
Medina,
et
al.
v.
Cresencia,
et
al.,
52
O.G.
No.
10,
4604;
Erezo
v.
Jepte,
et
al.,
G.R.
No.
L-
9605,
Sept.
30,
1957;
Tamayo
v.
Aquino,
56
O.G.
No.
36,5617).
In
the
earlier
case
of
Erezo
vs.
Jepte,
2
which
is
cited
in
the
foregoing
opinion,
this
Court
held
that
the
doctrine
making
the
registered
owner
of
a
common
carrier
answerable
to
the
public
for
negligence
injuries
to
its
passengers
or
third
persons,
even
though
the
vehicle
had
already
been
transferred
to
another,
is
based
upon
the
principle
...
that
in
dealing
with
vehicles
registered
under
the
Public
Service
Law,
the
public
has
the
right
to
assume
or
presume
that
the
registered
owner
is
the
actual
owner
thereof,
for
it
would
be
difficult
for
the
public
to
enforce
the
actions
that
they
may
have
for
injuries
caused
to
them
by
the
vehicles
being
negligently
operated
if
the
public
should
be
required
to
prove
who
the
actual
owner
is.
How
would
the
public
or
third
persons
know
against
whom
to
enforce
their
rights
in
case
of
subsequent
transfers
of
the
vehicles?
We
do
not
imply
by
this
doctrine,
however,
that
the
registered
owner
may
not
recover
whatever
amount
he
had
paid
by
virtue
of
his
liability
to
third
persons
from
the
person
to
whom
he
had
actually
sold,
assigned
or
conveyed
the
vehicle.
In
Tamayo
vs.
Aquino,
3
also
cited
in
Mangusang,
supra,
this
Court,
reiterating
what
was
stated
en
passant
in
Jepte,
supra,
described
the
nature
of
the
liability
of
the
actual
transferee
of
a
vehicle
the
negligent
operation
of
which
gives
rise
to
injuries
to
its
passengers:
The
question
that
is
posed,
therefore,
is
how
should
the
holder
of
the
certificate
of
public
convenience
Tamayo
participate
with
his
transferee
operator
Rayos,
in
the
damages
recoverable
by
the
heirs
of
the
deceased
passenger,
if
their
liability
is
not
that
of
joint
tortfeasors
in
accordance
with
Article
2194
of
the
Civil
Code.
The
following
considerations
must
be
borne
in
mind
in
determining
this
question.
As
Tamayo
is
the
registered
owner
of
the
truck,
his
responsibility
to
the
public
or
to
any
passenger
riding
in
the
vehicle
or
truck
must
be
direct,
for
the
reasons
given
in
our
decision
in
the
case
of
Erezo
vs.
Jepte,
supra,
as
quoted
above.
But
as
the
transferee,
who
operated
the
vehicle
when
the
passenger
died,
is
the
one
directly
responsible
for
the
accident
and
death,
he
should
in
turn
be
made
responsible
to
the
registered
owner
for
what
the
latter
may
have
been
adjudged
to
pay.
In
operating
the
truck
without
transfer
thereof
having
been
approved
by
the
Public
Service
Commission,
the
transferee
acted
merely
as
agent
of
the
registered
owner
and
should
be
responsible
to
him
(the
registered
owner),
for
any
damages
that
he
may
cause
the
latter
by
his
negligence."
Upon
the
foregoing,
it
is
quite
clear
that
the
court
below
erred
in
holding
Panfilo
Alajar,
rather
than
Josefina
Gutierrez,
as
the
one
directly
liable
to
Fe
Perez
for
the
latter's
injuries
and
the
corresponding
damages
incurred.
This
Court
notes
moreover,
that
the
court
below
inexplicably
failed
to
hold
the
driver
(Leopoldo
Cordero),
whom
it
found
guilty
of
reckless
imprudence,
jointly
and
solidarily
liable
with
Josefina
Gutierrez
to
Fe
Perez
in
accordance
with
the
provisions
of
article
2184
in
relation
to
article
2180
of
the
new
Civil
Code.
4
ACCORDINGLY,
the
judgment
below
is
hereby
modified
in
the
sense
that
Josefina
Gutierrez
and
Leopoldo
Cordero
are
hereby
adjudged
directly
and
jointly
and
solidarily
liable
to
Fe
Perez
for
the
sums
adjudicated
in
the
judgment
below
in
her
(Fe
Perez')
favor,
while
Panfilo
Alajar
is,
in
turn,
hereby
held
answerable
to
Josefina
Gutierrez
for
such
amount
as
the
latter
may
pay
to
Fe
Perez
in
satisfaction
of
the
judgment
appealed
from.
Costs
against
both
the
defendant-third
party
plaintiff-
appellee
Josefina
Gutierrez
and
the
third
party
defendant-appellee
Panfilo
Alajar.
beginning
22
July
1990,
i.e.
the
date
of
the
accident.
Upon
the
provisions
of
Art.
2213
of
the
Civil
Code,
interest
"cannot
be
recovered
upon
unliquidated
claims
or
damages,
except
when
the
demand
can
be
established
with
reasonable
certainty."
It
is
axiomatic
that
if
the
suit
were
for
damages,
unliquidated
and
not
known
until
definitely
ascertained,
assessed
and
determined
by
the
courts
after
proof,
interest
at
the
rate
of
six
percent
(6%)
per
annum
should
be
from
the
date
the
judgment
of
the
court
is
made
(at
which
time
the
quantification
of
damages
may
be
deemed
to
be
reasonably
ascertained).14
In
this
case,
the
matter
was
not
a
liquidated
obligation
as
the
assessment
of
the
damage
on
the
vehicle
was
heavily
debated
upon
by
the
parties
with
private
respondent's
demand
for
P236,000.00
being
refuted
by
petitioners
who
argue
that
they
could
have
the
vehicle
repaired
easily
for
P20,000.00.
In
fine,
the
amount
due
private
respondent
was
not
a
liquidated
account
that
was
already
demandable
and
payable.
One
last
word.
We
have
observed
that
private
respondent
left
his
passenger
jeepney
by
the
roadside
at
the
mercy
of
the
elements.
Article
2203
of
the
Civil
Code
exhorts
parties
suffering
from
loss
or
injury
to
exercise
the
diligence
of
a
good
father
of
a
family
to
minimize
the
damages
resulting
from
the
act
or
omission
in
question.
One
who
is
injured
then
by
the
wrongful
or
negligent
act
of
another
should
exercise
reasonable
care
and
diligence
to
minimize
the
resulting
damage.
Anyway,
he
can
recover
from
the
wrongdoer
money
lost
in
reasonable
efforts
to
preserve
the
property
injured
and
for
injuries
incurred
in
attempting
to
prevent
damage
to
it.15
However
we
sadly
note
that
in
the
present
case
petitioners
failed
to
offer
in
evidence
the
estimated
amount
of
the
damage
caused
by
private
respondent's
unconcern
towards
the
damaged
vehicle.
It
is
the
burden
of
petitioners
to
show
satisfactorily
not
only
that
the
injured
party
could
have
mitigated
his
damages
but
also
the
amount
thereof;
failing
in
this
regard,
the
amount
of
damages
awarded
cannot
be
proportionately
reduced.
WHEREFORE,
the
questioned
Decision
awarding
private
respondent
Donato
Gonzales
P236,000.00
with
legal
interest
from
22
July
1990
as
compensatory
damages
and
P30,000.00
as
attorney's
fees
is
MODIFIED.
Interest
at
the
rate
of
six
percent
(6%)
per
annum
shall
be
computed
from
the
time
the
judgment
of
the
lower
court
is
made
until
the
finality
of
this
Decision.
If
the
adjudged
principal
and
interest
remain
unpaid
thereafter,
the
interest
shall
be
twelve
percent
(12%)
per
annum
computed
from
the
time
judgment
becomes
final
and
executory
until
it
is
fully
satisfied.1wphi1.nt
Costs
against
petitioners.
SO
ORDERED.
Another
car
with
Engine
No.
2R-915036
was
likewise
levied
upon
and
sold
at
public
auction
for
P8,000.00
to
a
certain
Mr.
Lopez.
Thereafter,
in
March
1973,
respondent
Nicasio
Ocampo
decided
to
register
his
taxicabs
in
his
name.
He
requested
the
manager
of
petitioner
Lita
Enterprises,
Inc.
to
turn
over
the
registration
papers
to
him,
but
the
latter
allegedly
refused.
Hence,
he
and
his
wife
filed
a
complaint
against
Lita
Enterprises,
Inc.,
Rosita
Sebastian
Vda.
de
Galvez,
Visayan
Surety
&
Insurance
Co.
and
the
Sheriff
of
Manila
for
reconveyance
of
motor
vehicles
with
damages,
docketed
as
Civil
Case
No.
90988
of
the
Court
of
First
Instance
of
Manila.
Trial
on
the
merits
ensued
and
on
July
22,
1975,
the
said
court
rendered
a
decision,
the
dispositive
portion
of
which
reads:
t.hqw
WHEREFORE,
the
complaint
is
hereby
dismissed
as
far
as
defendants
Rosita
Sebastian
Vda.
de
Galvez,
Visayan
Surety
&
Insurance
Company
and
the
Sheriff
of
Manila
are
concerned.
Defendant
Lita
Enterprises,
Inc.,
is
ordered
to
transfer
the
registration
certificate
of
the
three
Toyota
cars
not
levied
upon
with
Engine
Nos.
2R-230026,
2R-688740
and
2R-585884
[Exhs.
A,
B,
C
and
D]
by
executing
a
deed
of
conveyance
in
favor
of
the
plaintiff.
Plaintiff
is,
however,
ordered
to
pay
Lita
Enterprises,
Inc.,
the
rentals
in
arrears
for
the
certificate
of
convenience
from
March
1973
up
to
May
1973
at
the
rate
of
P200
a
month
per
unit
for
the
three
cars.
(Annex
A,
Record
on
Appeal,
p.
102-103,
Rollo)
Petitioner
Lita
Enterprises,
Inc.
moved
for
reconsideration
of
the
decision,
but
the
same
was
denied
by
the
court
a
quo
on
October
27,
1975.
(p.
121,
Ibid.)
On
appeal
by
petitioner,
docketed
as
CA-G.R.
No.
59157-R,
the
Intermediate
Appellate
Court
modified
the
decision
by
including
as
part
of
its
dispositive
portion
another
paragraph,
to
wit:
t.hqw
In
the
event
the
condition
of
the
three
Toyota
rears
will
no
longer
serve
the
purpose
of
the
deed
of
conveyance
because
of
their
deterioration,
or
because
they
are
no
longer
serviceable,
or
because
they
are
no
longer
available,
then
Lita
Enterprises,
Inc.
is
ordered
to
pay
the
plaintiffs
their
fair
market
value
as
of
July
22,
1975.
(Annex
"D",
p.
167,
Rollo.)
Its
first
and
second
motions
for
reconsideration
having
been
denied,
petitioner
came
to
Us,
praying
that:
t.hqw
1.
...
2.
...
after
legal
proceedings,
decision
be
rendered
or
resolution
be
issued,
reversing,
annulling
or
amending
the
decision
of
public
respondent
so
that:
(a)
the
additional
paragraph
added
by
the
public
respondent
to
the
DECISION
of
the
lower
court
(CFI)
be
deleted;
(b)
that
private
respondents
be
declared
liable
to
petitioner
for
whatever
amount
the
latter
has
paid
or
was
declared
liable
(in
Civil
Case
No.
72067)
of
the
Court
of
First
Instance
of
Manila
to
Rosita
Sebastian
Vda.
de
Galvez,
as
heir
of
the
victim
Florante
Galvez,
who
died
as
a
result
ot
the
gross
negligence
of
private
respondents'
driver
while
driving
one
private
respondents'
taxicabs.
(p.
39,
Rollo.)
Unquestionably,
the
parties
herein
operated
under
an
arrangement,
comonly
known
as
the
"kabit
system",
whereby
a
person
who
has
been
granted
a
certificate
of
convenience
allows
another
person
who
owns
motors
vehicles
to
operate
under
such
franchise
for
a
fee.
A
certificate
of
public
convenience
is
a
special
privilege
conferred
by
the
government
.
Abuse
of
this
privilege
by
the
grantees
thereof
cannot
be
countenanced.
The
"kabit
system"
has
been
Identified
as
one
of
the
root
causes
of
the
prevalence
of
graft
and
corruption
in
the
government
transportation
offices.
In
the
words
of
Chief
Justice
Makalintal,
1
"this
is
a
pernicious
system
that
cannot
be
too
severely
condemned.
It
constitutes
an
imposition
upon
the
goo
faith
of
the
government.
Although
not
outrightly
penalized
as
a
criminal
offense,
the
"kabit
system"
is
invariably
recognized
as
being
contrary
to
public
policy
and,
therefore,
void
and
inexistent
under
Article
1409
of
the
Civil
Code,
It
is
a
fundamental
principle
that
the
court
will
not
aid
either
party
to
enforce
an
illegal
contract,
but
will
leave
them
both
where
it
finds
them.
Upon
this
premise,
it
was
flagrant
error
on
the
part
of
both
the
trial
and
appellate
courts
to
have
accorded
the
parties
relief
from
their
predicament.
Article
1412
of
the
Civil
Code
denies
them
such
aid.
It
provides:t.hqw
ART.
1412.
if
the
act
in
which
the
unlawful
or
forbidden
cause
consists
does
not
constitute
a
criminal
offense,
the
following
rules
shall
be
observed;
(1)
when
the
fault,
is
on
the
part
of
both
contracting
parties,
neither
may
recover
what
he
has
given
by
virtue
of
the
contract,
or
demand
the
performance
of
the
other's
undertaking.
The
defect
of
inexistence
of
a
contract
is
permanent
and
incurable,
and
cannot
be
cured
by
ratification
or
by
prescription.
As
this
Court
said
in
Eugenio
v.
Perdido,
2
"the
mere
lapse
of
time
cannot
give
efficacy
to
contracts
that
are
null
void."
The
principle
of
in
pari
delicto
is
well
known
not
only
in
this
jurisdiction
but
also
in
the
United
States
where
common
law
prevails.
Under
American
jurisdiction,
the
doctrine
is
stated
thus:
"The
proposition
is
universal
that
no
action
arises,
in
equity
or
at
law,
from
an
illegal
contract;
no
suit
can
be
maintained
for
its
specific
performance,
or
to
recover
the
property
agreed
to
be
sold
or
delivered,
or
damages
for
its
property
agreed
to
be
sold
or
delivered,
or
damages
for
its
violation.
The
rule
has
sometimes
been
laid
down
as
though
it
was
equally
universal,
that
where
the
parties
are
in
pari
delicto,
no
affirmative
relief
of
any
kind
will
be
given
to
one
against
the
other."
3
Although
certain
exceptions
to
the
rule
are
provided
by
law,
We
see
no
cogent
reason
why
the
full
force
of
the
rule
should
not
be
applied
in
the
instant
case.
WHEREFORE,
all
proceedings
had
in
Civil
Case
No.
90988
entitled
"Nicasio
Ocampo
and
Francisca
P.
Garcia,
Plaintiffs,
versus
Lita
Enterprises,
Inc.,
et
al.,
Defendants"
of
the
Court
of
First
Instance
of
Manila
and
CA-G.R.
No.
59157-R
entitled
"Nicasio
Ocampo
and
Francisca
P.
Garica,
Plaintiffs-Appellees,
versus
Lita
Enterprises,
Inc.,
Defendant-Appellant,"
of
the
Intermediate
Appellate
Court,
as
well
as
the
decisions
rendered
therein
are
hereby
annuleled
and
set
aside.
No
costs.
SO
ORDERED.1wph1.t
only
as
the
defendant
had
no
franchise
of
his
own
and
he
attached
the
unit
to
the
plaintiff's
MCH
Line.
The
agreement
also
of
the
parties
here
was
for
the
plaintiff
to
undertake
the
yearly
registration
of
the
motorcycle
with
the
Land
Transportation
Commission.
Pursuant
to
this
agreement
the
defendant
on
February
22,
1976
gave
the
plaintiff
P90.00,
the
P8.00
would
be
for
the
mortgage
fee
and
the
P82.00
for
the
registration
fee
of
the
motorcycle.
The
plaintiff,
however
failed
to
register
the
motorcycle
on
that
year
on
the
ground
that
the
defendant
failed
to
comply
with
some
requirements
such
as
the
payment
of
the
insurance
premiums
and
the
bringing
of
the
motorcycle
to
the
LTC
for
stenciling,
the
plaintiff
saying
that
the
defendant
was
hiding
the
motorcycle
from
him.
Lastly,
the
plaintiff
explained
also
that
though
the
ownership
of
the
motorcycle
was
already
transferred
to
the
defendant
the
vehicle
was
still
mortgaged
with
the
consent
of
the
defendant
to
the
Rural
Bank
of
Camaligan
for
the
reason
that
all
motorcycle
purchased
from
the
plaintiff
on
credit
was
rediscounted
with
the
bank.
On
his
part
the
defendant
did
not
dispute
the
sale
and
the
outstanding
balance
of
P1,700.
00
still
payable
to
the
plaintiff.
The
defendant
was
persuaded
to
buy
from
the
plaintiff
the
motorcycle
with
the
side
car
because
of
the
condition
that
the
plaintiff
would
be
the
one
to
register
every
year
the
motorcycle
with
the
Land
Transportation
Commission.
In
1976,
however,
the
plaintfff
failed
to
register
both
the
chattel
mortgage
and
the
motorcycle
with
the
LTC
notwithstanding
the
fact
that
the
defendant
gave
him
P90.00
for
mortgage
fee
and
registration
fee
and
had
the
motorcycle
insured
with
La
Perla
Compana
de
Seguros
(Exhibit
"6")
as
shown
also
by
the
Certificate
of
cover
(Exhibit
"3").
Because
of
this
failure
of
the
plaintiff
to
comply
with
his
obligation
to
register
the
motorcycle
the
defendant
suffered
damages
when
he
failed
to
claim
any
insurance
indemnity
which
would
amount
to
no
less
than
P15,000.00
for
the
more
than
two
times
that
the
motorcycle
figured
in
accidents
aside
from
the
loss
of
the
daily
income
of
P15.00
as
boundary
fee
beginning
October
1976
when
the
motorcycle
was
impounded
by
the
LTC
for
not
being
registered.
The
defendant
disputed
the
claim
of
the
plaintiff
that
he
was
hiding
from
the
plaintiff
the
motorcycle
resulting
in
its
not
being
registered.
The
truth
being
that
the
motorcycle
was
being
used
for
transporting
passengers
and
it
kept
on
travelling
from
one
place
to
another.
The
motor
vehicle
sold
to
him
was
mortgaged
by
the
plaintiff
with
the
Rural
Bank
of
Camaligan
without
his
consent
and
knowledge
and
the
defendant
was
not
even
given
a
copy
of
the
mortgage
deed.
The
defendant
claims
that
it
is
not
true
that
the
motorcycle
was
mortgaged
because
of
re-
discounting
for
rediscounting
is
only
true
with
Rural
Banks
and
the
Central
Bank.
The
defendant
puts
the
blame
on
the
plaintiff
for
not
registering
the
motorcycle
with
the
LTC
and
for
not
giving
him
the
registration
papers
inspite
of
demands
made.
Finally,
the
evidence
of
the
defendant
shows
that
because
of
the
filing
of
this
case
he
was
forced
to
retain
the
services
of
a
lawyer
for
a
fee
on
not
less
than
P1,000.00.
xxx
xxx
xxx
...
it
also
appears
and
the
Court
so
finds
that
defendant
purchased
the
motorcycle
in
question,
particularly
for
the
purpose
of
engaging
and
using
the
same
in
the
transportation
business
and
for
this
purpose
said
trimobile
unit
was
attached
to
the
plaintiffs
transportation
line
who
had
the
franchise,
so
much
so
that
in
the
registration
certificate,
the
plaintiff
appears
to
be
the
owner
of
the
unit.
Furthermore,
it
appears
to
have
been
agreed,
further
between
the
plaintiff
and
the
defendant,
that
plaintiff
would
undertake
the
yearly
registration
of
the
unit
in
question
with
the
LTC.
Thus,
for
the
registration
of
the
unit
for
the
year
1976,
per
agreement,
the
defendant
gave
to
the
plaintiff
the
amount
of
P82.00
for
its
registration,
as
well
as
the
insurance
coverage
of
the
unit.
Eventually,
petitioner
Teja
Marketing
and/or
Angel
Jaucian
filed
an
action
for
"Sum
of
Money
with
Damages"
against
private
respondent
Pedro
N.
Nale
in
the
City
Court
of
Naga
City.
The
City
Court
rendered
judgment
in
favor
of
petitioner,
the
dispositive
portion
of
which
reads:
WHEREFORE,
decision
is
hereby
rendered
dismissing
the
counterclaim
and
ordering
the
defendant
to
pay
plaintiff
the
sum
of
P1,700.00
representing
the
unpaid
balance
of
the
purchase
price
with
legal
rate
of
interest
from
the
date
of
the
filing
of
the
complaint
until
the
same
is
fully
paid;
to
pay
plaintiff
the
sum
of
P546.21
as
attorney's
fees;
to
pay
plaintiff
the
sum
of
P200.00
as
expenses
of
litigation;
and
to
pay
the
costs.
SO
ORDERED.
On
appeal
to
the
Court
of
First
Instance
of
Camarines
Sur,
the
decision
was
affirmed
in
toto.
Private
respondent
filed
a
petition
for
review
with
the
Intermediate
Appellate
Court
and
on
July
18,
1983
the
said
Court
promulgated
its
decision,
the
pertinent
portion
of
which
reads
However,
as
the
purchase
of
the
motorcycle
for
operation
as
a
trimobile
under
the
franchise
of
the
private
respondent
Jaucian,
pursuant
to
what
is
commonly
known
as
the
"kabit
system",
without
the
prior
approval
of
the
Board
of
Transportation
(formerly
the
Public
Service
Commission)
was
an
illegal
transaction
involving
the
fictitious
registration
of
the
motor
vehicle
in
the
name
of
the
private
respondent
so
that
he
may
traffic
with
the
privileges
of
his
franchise,
or
certificate
of
public
convenience,
to
operate
a
tricycle
service,
the
parties
being
in
pari
delicto,
neither
of
them
may
bring
an
action
against
the
other
to
enforce
their
illegal
contract
[Art.
1412
(a),
Civil
Code].
xxx
xxx
xxx
WHEREFORE,
the
decision
under
review
is
hereby
set
aside.
The
complaint
of
respondent
Teja
Marketing
and/or
Angel
Jaucian,
as
well
as
the
counterclaim
of
petitioner
Pedro
Nale
in
Civil
Case
No.
1153
of
the
Court
of
First
Instance
of
Camarines
Sur
(formerly
Civil
Case
No.
5856
of
the
City
Court
of
Naga
City)
are
dismissed.
No
pronouncement
as
to
costs.
SO
ORDERED.
The
decision
is
now
before
Us
on
a
petition
for
review,
petitioner
Teja
Marketing
and/or
Angel
Jaucian
presenting
a
lone
assignment
of
error
whether
or
not
respondent
court
erred
in
applying
the
doctrine
of
"pari
delicto."
We
find
the
petition
devoid
of
merit.
Unquestionably,
the
parties
herein
operated
under
an
arrangement,
commonly
known
as
the
"kabit
system"
whereby
a
person
who
has
been
granted
a
certificate
of
public
convenience
allows
another
person
who
owns
motor
vehicles
to
operate
under
such
franchise
for
a
fee.
A
certificate
of
public
convenience
is
a
special
privilege
conferred
by
the
government.
Abuse
of
this
privilege
by
the
grantees
thereof
cannot
be
countenanced.
The
"kabit
system"
has
been
Identified
as
one
of
the
root
causes
of
the
prevalence
of
graft
and
corruption
in
the
government
transportation
offices.
Although
not
outrightly
penalized
as
a
criminal
offense,
the
kabit
system
is
invariably
recognized
as
being
contrary
to
public
policy
and,
therefore,
void
and
in
existent
under
Article
1409
of
the
Civil
Code.
It
is
a
fundamental
principle
that
the
court
will
not
aid
either
party
to
enforce
an
illegal
contract,
but
will
leave
both
where
it
finds
then.
Upon
this
premise
it
would
be
error
to
accord
the
parties
relief
from
their
predicament.
Article
1412
of
the
Civil
Code
denies
them
such
aid.
It
provides:
Art.
1412.
If
the
act
in
which
the
unlawful
or
forbidden
cause
consists
does
not
constitute
a
criminal
offense,
the
following
rules
shall
be
observed:
1.
When
the
fault
is
on
the
part
of
both
contracting
parties,
neither
may
recover
that
he
has
given
by
virtue
of
the
contract,
or
demand,
the
performance
of
the
other's
undertaking.
The
defect
of
in
existence
of
a
contract
is
permanent
and
cannot
be
cured
by
ratification
or
by
prescription.
The
mere
lapse
of
time
cannot
give
efficacy
to
contracts
that
are
null
and
void.
WHEREFORE,
the
petition
is
hereby
dismissed
for
lack
of
merit.
The
assailed
decision
of
the
Intermediate
Appellate
Court
(now
the
Court
of
Appeals)
is
AFFIRMED.
No
costs.
SO
ORDERED.
Except
for
Ocfemia,
all
the
defendants
filed
separate
answers
to
the
complaint.
[Petitioner]
Nostradamus
Villanueva
claimed
that
he
was
no
longer
the
owner
of
the
car
at
the
time
of
the
mishap
because
it
was
swapped
with
a
Pajero
owned
by
Albert
Jaucian/Auto
Palace
Car
Exchange.
For
her
part,
Linda
Gonzales
declared
that
her
presence
at
the
scene
of
the
accident
was
upon
the
request
of
the
actual
owner
of
the
Mitsubishi
Lancer
(PHK
201
91)
[Albert
Jaucian]
for
whom
she
had
been
working
as
agent/seller.
On
the
other
hand,
Auto
Palace
Car
Exchange
represented
by
Albert
Jaucian
claimed
that
he
was
not
the
registered
owner
of
the
car.
Moreover,
it
could
not
be
held
subsidiary
liable
as
employer
of
Ocfemia
because
the
latter
was
off-duty
as
utility
employee
at
the
time
of
the
incident.
Neither
was
Ocfemia
performing
a
duty
related
to
his
employment.[3]
After
trial,
the
trial
court
found
petitioner
liable
and
ordered
him
to
pay
respondent
actual,
moral
and
exemplary
damages
plus
appearance
and
attorneys
fees:
WHEREFORE,
judgment
is
hereby
rendered
for
the
plaintiffs,
ordering
Nostradamus
Villanueva
to
pay
the
amount
of
P99,580
as
actual
damages,
P25,000.00
as
moral
damages,
P25,000.00
as
exemplary
damages
and
attorneys
fees
in
the
amount
of
P10,000.00
plus
appearance
fees
of
P500.00
per
hearing
with
legal
interest
counted
from
the
date
of
judgment.
In
conformity
with
the
law
on
equity
and
in
accordance
with
the
ruling
in
First
Malayan
Lending
and
Finance
Corporation
vs.
Court
of
Appeals
(supra),
Albert
Jaucian
is
hereby
ordered
to
indemnify
Nostradamus
Villanueva
for
whatever
amount
the
latter
is
hereby
ordered
to
pay
under
the
judgment.
SO
ORDERED.[4]
The
CA
upheld
the
trial
courts
decision
but
deleted
the
award
for
appearance
and
attorneys
fees
because
the
justification
for
the
grant
was
not
stated
in
the
body
of
the
decision.
Thus,
this
petition
for
review
which
raises
a
singular
issue:
MAY
THE
REGISTERED
OWNER
OF
A
MOTOR
VEHICLE
BE
HELD
LIABLE
FOR
DAMAGES
ARISING
FROM
A
VEHICULAR
ACCIDENT
INVOLVING
HIS
MOTOR
VEHICLE
WHILE
BEING
OPERATED
BY
THE
EMPLOYEE
OF
ITS
BUYER
WITHOUT
THE
LATTERS
CONSENT
AND
KNOWLEDGE?[5]
Yes.
We
have
consistently
ruled
that
the
registered
owner
of
any
vehicle
is
directly
and
primarily
responsible
to
the
public
and
third
persons
while
it
is
being
operated.[6]
The
rationale
behind
such
doctrine
was
explained
way
back
in
1957
in
Erezo
vs.
Jepte[7]:
The
principle
upon
which
this
doctrine
is
based
is
that
in
dealing
with
vehicles
registered
under
the
Public
Service
Law,
the
public
has
the
right
to
assume
or
presume
that
the
registered
owner
is
the
actual
owner
thereof,
for
it
would
be
difficult
for
the
public
to
enforce
the
actions
that
they
may
have
for
injuries
caused
to
them
by
the
vehicles
being
negligently
operated
if
the
public
should
be
required
to
prove
who
the
actual
owner
is.
How
would
the
public
or
third
persons
know
against
whom
to
enforce
their
rights
in
case
of
subsequent
transfers
of
the
vehicles?
We
do
not
imply
by
his
doctrine,
however,
that
the
registered
owner
may
not
recover
whatever
amount
he
had
paid
by
virtue
of
his
liability
to
third
persons
from
the
person
to
whom
he
had
actually
sold,
assigned
or
conveyed
the
vehicle.
Under
the
same
principle
the
registered
owner
of
any
vehicle,
even
if
not
used
for
a
public
service,
should
primarily
be
responsible
to
the
public
or
to
third
persons
for
injuries
caused
the
latter
while
the
vehicle
is
being
driven
on
the
highways
or
streets.
The
members
of
the
Court
are
in
agreement
that
the
defendant-appellant
should
be
held
liable
to
plaintiff-appellee
for
the
injuries
occasioned
to
the
latter
because
of
the
negligence
of
the
driver,
even
if
the
defendant-appellant
was
no
longer
the
owner
of
the
vehicle
at
the
time
of
the
damage
because
he
had
previously
sold
it
to
another.
What
is
the
legal
basis
for
his
(defendant-appellants)
liability?
There
is
a
presumption
that
the
owner
of
the
guilty
vehicle
is
the
defendant-
appellant
as
he
is
the
registered
owner
in
the
Motor
Vehicles
Office.
Should
he
not
be
allowed
to
prove
the
truth,
that
he
had
sold
it
to
another
and
thus
shift
the
responsibility
for
the
injury
to
the
real
and
actual
owner?
The
defendant
holds
the
affirmative
of
this
proposition;
the
trial
court
held
the
negative.
The
Revised
Motor
Vehicle
Law
(Act
No.
3992,
as
amended)
provides
that
no
vehicle
may
be
used
or
operated
upon
any
public
highway
unless
the
same
is
property
registered.
It
has
been
stated
that
the
system
of
licensing
and
the
requirement
that
each
machine
must
carry
a
registration
number,
conspicuously
displayed,
is
one
of
the
precautions
taken
to
reduce
the
danger
of
injury
to
pedestrians
and
other
travelers
from
the
careless
management
of
automobiles.
And
to
furnish
a
means
of
ascertaining
the
identity
of
persons
violating
the
laws
and
ordinances,
regulating
the
speed
and
operation
of
machines
upon
the
highways
(2
R.C.L.
1176).
Not
only
are
vehicles
to
be
registered
and
that
no
motor
vehicles
are
to
be
used
or
operated
without
being
properly
registered
for
the
current
year,
but
that
dealers
in
motor
vehicles
shall
furnish
thee
Motor
Vehicles
Office
a
report
showing
the
name
and
address
of
each
purchaser
of
motor
vehicle
during
the
previous
month
and
the
manufacturers
serial
number
and
motor
number.
(Section
5(c),
Act
No.
3992,
as
amended.)
Registration
is
required
not
to
make
said
registration
the
operative
act
by
which
ownership
in
vehicles
is
transferred,
as
in
land
registration
cases,
because
the
administrative
proceeding
of
registration
does
not
bear
any
essential
relation
to
the
contract
of
sale
between
the
parties
(Chinchilla
vs.
Rafael
and
Verdaguer,
39
Phil.
888),
but
to
permit
the
use
and
operation
of
the
vehicle
upon
any
public
highway
(section
5
[a],
Act
No.
3992,
as
amended).
The
main
aim
of
motor
vehicle
registration
is
to
identify
the
owner
so
that
if
any
accident
happens,
or
that
any
damage
or
injury
is
caused
by
the
vehicle
on
the
public
highways,
responsibility
therefore
can
be
fixed
on
a
definite
individual,
the
registered
owner.
Instances
are
numerous
where
vehicles
running
on
public
highways
caused
accidents
or
injuries
to
pedestrians
or
other
vehicles
without
positive
identification
of
the
owner
or
drivers,
or
with
very
scant
means
of
identification.
It
is
to
forestall
these
circumstances,
so
inconvenient
or
prejudicial
to
the
public,
that
the
motor
vehicle
registration
is
primarily
ordained,
in
the
interest
of
the
determination
of
persons
responsible
for
damages
or
injuries
caused
on
public
highways:
One
of
the
principal
purposes
of
motor
vehicles
legislation
is
identification
of
the
vehicle
and
of
the
operator,
in
case
of
accident;
and
another
is
that
the
knowledge
that
means
of
detection
are
always
available
may
act
as
a
deterrent
from
lax
observance
of
the
law
and
of
the
rules
of
conservative
and
safe
operation.
Whatever
purpose
there
may
be
in
these
statutes,
it
is
subordinate
at
the
last
to
the
primary
purpose
of
rendering
it
certain
that
the
violator
of
the
law
or
of
the
rules
of
safety
shall
not
escape
because
of
lack
of
means
to
discover
him.
The
purpose
of
the
statute
is
thwarted,
and
the
displayed
number
becomes
a
share
and
delusion,
if
courts
would
entertain
such
defenses
as
that
put
forward
by
appellee
in
this
case.
No
responsible
person
or
corporation
could
be
held
liable
for
the
most
outrageous
acts
of
negligence,
if
they
should
be
allowed
to
pace
a
middleman
between
them
and
the
public,
and
escape
liability
by
the
manner
in
which
they
recompense
servants.
(King
vs.
Brenham
Automobile
Co.,
Inc.
145
S.W.
278,
279.)
With
the
above
policy
in
mind,
the
question
that
defendant-appellant
poses
is:
should
not
the
registered
owner
be
allowed
at
the
trial
to
prove
who
the
actual
and
real
owner
is,
and
in
accordance
with
such
proof
escape
or
evade
responsibility
by
and
lay
the
same
on
the
person
actually
owning
the
vehicle?
We
hold
with
the
trial
court
that
the
law
does
not
allow
him
to
do
so;
the
law,
with
its
aim
and
policy
in
mind,
does
not
relieve
him
directly
of
the
responsibility
that
the
law
fixes
and
places
upon
him
as
an
incident
or
consequence
of
registration.
Were
a
registered
owner
allowed
to
evade
responsibility
by
proving
who
the
supposed
transferee
or
owner
is,
it
would
be
easy
for
him,
by
collusion
with
others
or
otherwise,
to
escape
said
responsibility
and
transfer
the
same
to
an
indefinite
person,
or
to
one
who
possesses
no
property
with
which
to
respond
financially
for
the
damage
or
injury
done.
A
victim
of
recklessness
on
the
public
highways
is
usually
without
means
to
discover
or
identify
the
person
actually
causing
the
injury
or
damage.
He
has
no
means
other
than
by
a
recourse
to
the
registration
in
the
Motor
Vehicles
Office
to
determine
who
is
the
owner.
The
protection
that
the
law
aims
to
extend
to
him
would
become
illusory
were
the
registered
owner
given
the
opportunity
to
escape
liability
by
disproving
his
ownership.
If
the
policy
of
the
law
is
to
be
enforced
and
carried
out,
the
registered
owner
should
not
be
allowed
to
prove
the
contrary
to
the
prejudice
of
the
person
injured,
that
is,
to
prove
that
a
third
person
or
another
has
become
the
owner,
so
that
he
may
thereby
be
relieved
of
the
responsibility
to
the
injured
person.
The
above
policy
and
application
of
the
law
may
appear
quite
harsh
and
would
seem
to
conflict
with
truth
and
justice.
We
do
not
think
it
is
so.
A
registered
owner
who
has
already
sold
or
transferred
a
vehicle
has
the
recourse
to
a
third-party
complaint,
in
the
same
action
brought
against
him
to
recover
for
the
damage
or
injury
done,
against
the
vendee
or
transferee
of
the
vehicle.
The
inconvenience
of
the
suit
is
no
justification
for
relieving
him
of
liability;
said
inconvenience
is
the
price
he
pays
for
failure
to
comply
with
the
registration
that
the
law
demands
and
requires.
In
synthesis,
we
hold
that
the
registered
owner,
the
defendant-appellant
herein,
is
primarily
responsible
for
the
damage
caused
to
the
vehicle
of
the
plaintiff-appellee,
but
he
(defendant-appellant)
has
a
right
to
be
indemnified
by
the
real
or
actual
owner
of
the
amount
that
he
may
be
required
to
pay
as
damage
for
the
injury
caused
to
the
plaintiff-appellant.[8]
Petitioner
insists
that
he
is
not
liable
for
damages
since
the
driver
of
the
vehicle
at
the
time
of
the
accident
was
not
an
authorized
driver
of
the
new
(actual)
owner
of
the
vehicle.
He
claims
that
the
ruling
in
First
Malayan
Leasing
and
Finance
Corporation
vs.
CA[9]
implies
that
to
hold
the
registered
owner
liable
for
damages,
the
driver
of
the
vehicle
must
have
been
authorized,
allowed
and
permitted
by
its
actual
owner
to
operate
and
drive
it.
Thus,
if
the
vehicle
is
driven
without
the
knowledge
and
consent
of
the
actual
owner,
then
the
registered
owner
cannot
be
held
liable
for
damages.
He
further
argues
that
this
was
the
underlying
theory
behind
Duavit
vs.
CA[10]
wherein
the
court
absolved
the
registered
owner
from
liability
after
finding
that
the
vehicle
was
virtually
stolen
from
the
owners
garage
by
a
person
who
was
neither
authorized
nor
employed
by
the
owner.
Petitioner
concludes
that
the
ruling
in
Duavit
and
not
the
one
in
First
Malayan
should
be
applicable
to
him.
Petitioners
argument
lacks
merit.
Whether
the
driver
is
authorized
or
not
by
the
actual
owner
is
irrelevant
to
determining
the
liability
of
the
registered
owner
who
the
law
holds
primarily
and
directly
responsible
for
any
accident,
injury
or
death
caused
by
the
operation
of
the
vehicle
in
the
streets
and
highways.
To
require
the
driver
of
the
vehicle
to
be
authorized
by
the
actual
owner
before
the
registered
owner
can
be
held
accountable
is
to
defeat
the
very
purpose
why
motor
vehicle
legislations
are
enacted
in
the
first
place.
Furthermore,
there
is
nothing
in
First
Malayan
which
even
remotely
suggests
that
the
driver
must
be
authorized
before
the
registered
owner
can
be
held
accountable.
In
First
Malayan,
the
registered
owner,
First
Malayan
Corporation,
was
held
liable
for
damages
arising
from
the
accident
even
if
the
vehicle
involved
was
already
owned
by
another
party:
This
Court
has
consistently
ruled
that
regardless
of
who
the
actual
owner
is
of
a
motor
vehicle
might
be,
the
registered
owner
is
the
operator
of
the
same
with
respect
to
the
public
and
third
persons,
and
as
such,
directly
and
primarily
responsible
for
the
consequences
of
its
operation.
In
contemplation
of
law,
the
owner/operator
of
record
is
the
employer
of
the
driver,
the
actual
operator
and
capacity
and
not
as
an
officer
of
the
Bank,
as
claimed
by
the
Bank.
We
find
no
reason
to
deviate
from
these
decisions.
The
main
purpose
of
vehicle
registration
is
the
easy
identification
of
the
owner
who
can
be
held
responsible
for
any
accident,
damage
or
injury
caused
by
the
vehicle.
Easy
identification
prevents
inconvenience
and
prejudice
to
a
third
party
injured
by
one
who
is
unknown
or
unidentified.
To
allow
a
registered
owner
to
escape
liability
by
claiming
that
the
driver
was
not
authorized
by
the
new
(actual)
owner
results
in
the
public
detriment
the
law
seeks
to
avoid.
Finally,
the
issue
of
whether
or
not
the
driver
of
the
vehicle
during
the
accident
was
authorized
is
not
at
all
relevant
to
determining
the
liability
of
the
registered
owner.
This
must
be
so
if
we
are
to
comply
with
the
rationale
and
principle
behind
the
registration
requirement
under
the
motor
vehicle
law.
WHEREFORE,
the
petition
is
hereby
DENIED.
The
January
26,
2000
decision
of
the
Court
of
Appeals
is
AFFIRMED.
SO
ORDERED.
During
the
trial
of
the
case,
it
was
established
that
the
drivers
of
the
two
vehicles
were
duly
licensed
to
drive
and
that
the
road
where
the
collision
occurred
was
asphalted
and
in
fairly
good
condition.[6]
The
owner-type
jeep
was
travelling
uphill
while
the
passenger
jeepney
was
going
downhill.
It
was
further
established
that
the
owner-type
jeep
was
moderately
moving
and
had
just
passed
a
road
bend
when
its
passengers,
private
respondents
Joseph
Sandoval
and
Rene
Castillo,
saw
the
passenger
jeepney
at
a
distance
of
three
meters
away.
The
passenger
jeepney
was
traveling
fast
when
it
bumped
the
owner
type
jeep.[7]
Moreover,
the
evidence
presented
by
respondents
before
the
trial
court
showed
that
petitioner
Juan
Gonzales
obtained
his
professional
drivers
license
only
on
September
24,
1986,
or
three
months
before
the
accident.
Prior
to
this,
he
was
holder
of
a
student
drivers
permit
issued
on
April
10,
1986.[8]
On
November
24,
1997,
the
trial
court
rendered
a
decision
in
favor
of
respondents,
the
dispositive
portion
of
which
states:
Premises
duly
considered
and
the
plaintiffs
having
satisfactorily
convincingly
and
credibly
presented
evidence
clearly
satisfying
the
requirements
of
preponderance
of
evidence
to
sustain
the
complaint,
this
Court
hereby
declares
judgment
in
favor
of
the
plaintiffs
and
against
the
defendants.
Defendants-spouses
Francisco
Hernandez
and
Aniceta
Abel
Hernandez
and
Juan
Gonzales
are
therefore
directed
to
pay
jointly
and
severally,
the
following:
1)
To
spouses
Lorenzo
Dolor
and
Margarita
Dolor:
a)
P50,000.00
for
the
death
of
their
son,
Lorenzo
Menard
Boyet
Dolor,
Jr.;
b)
P142,000.00
as
actual
and
necessary
funeral
expenses;
c)
P50,000.00
reasonable
value
of
the
totally
wrecked
owner-type
jeep
with
plate
no.
DEB
804
Phil
85;
d)
P20,000.00
as
moral
damages;
e)
P20,000.00
as
reasonable
litigation
expenses
and
attorneys
fees.
2)
To
spouses
Francisco
Valmocina
and
Virginia
Valmocina:
a)
P50,000.00
for
the
death
of
their
son,
Oscar
Balmocina
(sic);
b)
P20,000.00
as
moral
damages;
c)
P18,400.00
for
funeral
expenses;
d)
P10,000.00
for
litigation
expenses
and
attorneys
fees.
3)
To
spouses
Victor
Panopio
and
Martina
Panopio:
a)
P10,450.00
for
the
cost
of
the
artificial
leg
and
crutches
being
used
by
their
son
Fred
Panopio;
b)
P25,000.00
for
hospitalization
and
medical
expenses
they
incurred
for
the
treatment
of
their
son,
Fred
Panopio.
4)
To
Fred
Panopio:
a)
P25,000.00
for
the
loss
of
his
right
leg;
b)
P10,000.00
as
moral
damages.
5)
To
Joseph
Sandoval:
a)
P4,000.00
for
medical
treatment.
The
defendants
are
further
directed
to
pay
the
costs
of
this
proceedings.
SO
ORDERED.[9]
Petitioners
appealed[10]
the
decision
to
the
Court
of
Appeals,
which
affirmed
the
same
with
modifications
as
to
the
amount
of
damages,
actual
expenses
and
attorneys
fees
awarded
to
the
private
respondents.
The
decretal
portion
of
the
decision
of
the
Court
of
Appeals
reads:
WHEREFORE,
the
foregoing
premises
considered,
the
appealed
decision
is
AFFIRMED.
However,
the
award
for
damages,
actual
expenses
and
attorneys
fees
shall
be
MODIFIED
as
follows:
1)
To
spouses
Lorenzo
Dolor
and
Margarita
Dolor:
a)
P50,000.00
civil
indemnity
for
their
son
Lorenzo
Menard
Dolor,
Jr.;
b)
P58,703.00
as
actual
and
necessary
funeral
expenses;
c)
P25,000,00
as
temperate
damages;
d)
P100,000.00
as
moral
damages;
e)
P20,000.00
as
reasonable
litigation
expenses
and
attorneys
fees.
2)
To
Spouses
Francisco
Valmocina
and
Virginia
Valmocina:
a)
P50,000.00
civil
indemnity
for
the
death
of
their
son,
Oscar
Valmocina;
b)
P100,000.00
as
moral
damages;
c)
P10,000.00
as
temperate
damages;
d)
P10,000.00
as
reasonable
litigation
expenses
and
attorneys
fees.
3)
To
Spouses
Victor
Panopio
and
Martina
Panopio:
a)
P10,352.59
as
actual
hospitalization
and
medical
expenses;
b)
P5,000.00
as
temperate
damages.
4)
To
Fred
Panopio:
a)
P50,000.00
as
moral
damages.
5)
To
Joseph
Sandoval:
ARTICLE
2180.
The
obligation
imposed
by
article
2176
is
demandable
not
only
for
one's
own
acts
or
omissions,
but
also
for
those
of
persons
for
whom
one
is
responsible.
The
father
and,
in
case
of
his
death
or
incapacity,
the
mother,
are
responsible
for
the
damages
caused
by
the
minor
children
who
live
in
their
company.
Guardians
are
liable
for
damages
caused
by
the
minors
or
incapacitated
persons
who
are
under
their
authority
and
live
in
their
company.
The
owners
and
managers
of
an
establishment
or
enterprise
are
likewise
responsible
for
damages
caused
by
their
employees
in
the
service
of
the
branches
in
which
the
latter
are
employed
or
on
the
occasion
of
their
functions.
Employers
shall
be
liable
for
the
damages
caused
by
their
employees
and
household
helpers
acting
within
the
scope
of
their
assigned
tasks,
even
though
the
former
are
not
engaged
in
any
business
or
industry.
The
State
is
responsible
in
like
manner
when
it
acts
through
a
special
agent;
but
not
when
the
damage
has
been
caused
by
the
official
to
whom
the
task
done
properly
pertains,
in
which
case
what
is
provided
in
article
2176
shall
be
applicable.
Lastly,
teachers
or
heads
of
establishments
of
arts
and
trades
shall
be
liable
for
damages
caused
by
their
pupils
and
students
or
apprentices,
so
long
as
they
remain
in
their
custody.
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.
(Underscoring
supplied)
On
the
other
hand,
Article
2176
provides
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.
While
the
above
provisions
of
law
do
not
expressly
provide
for
solidary
liability,
the
same
can
be
inferred
from
the
wordings
of
the
first
paragraph
of
Article
2180
which
states
that
the
obligation
imposed
by
article
2176
is
demandable
not
only
for
one's
own
acts
or
omissions,
but
also
for
those
of
persons
for
whom
one
is
responsible.
Moreover,
Article
2180
should
be
read
with
Article
2194
of
the
same
Code,
which
categorically
states
that
the
responsibility
of
two
or
more
persons
who
are
liable
for
quasi-delict
is
solidary.
In
other
words,
the
liability
of
joint
tortfeasors
is
solidary.[12]
Verily,
under
Article
2180
of
the
Civil
Code,
an
employer
may
be
held
solidarily
liable
for
the
negligent
act
of
his
employee.[13]
The
solidary
liability
of
employers
with
their
employees
for
quasi-delicts
having
been
established,
the
next
question
is
whether
Julian
Gonzales
is
an
employee
of
the
Hernandez
spouses.
An
affirmative
answer
will
put
to
rest
any
issue
on
the
solidary
liability
of
the
Hernandez
spouses
for
the
acts
of
Julian
Gonzales.
The
Hernandez
spouses
maintained
that
Julian
Gonzales
is
not
their
employee
since
their
relationship
relative
to
the
use
of
the
jeepney
is
that
of
a
lessor
and
a
lessee.
They
argue
that
Julian
Gonzales
pays
them
a
daily
rental
of
P150.00
for
the
use
of
the
jeepney.[14]
In
essence,
petitioners
are
practicing
the
boundary
system
of
jeepney
operation
albeit
disguised
as
a
lease
agreement
between
them
for
the
use
of
the
jeepney.
We
hold
that
an
employer-employee
relationship
exists
between
the
Hernandez
spouses
and
Julian
Gonzales.
Indeed
to
exempt
from
liability
the
owner
of
a
public
vehicle
who
operates
it
under
the
boundary
system
on
the
ground
that
he
is
a
mere
lessor
would
be
not
only
to
abet
flagrant
violations
of
the
Public
Service
Law,
but
also
to
place
the
riding
public
at
the
mercy
of
reckless
and
irresponsible
drivers
reckless
because
the
measure
of
their
earnings
depends
largely
upon
the
number
of
trips
they
make
and,
hence,
the
speed
at
which
they
drive;
and
irresponsible
because
most
if
not
all
of
them
are
in
no
position
to
pay
the
damages
they
might
cause.[15]
Anent
the
award
of
temperate
damages
to
the
private
respondents,
we
hold
that
the
appellate
court
committed
no
reversible
error
in
awarding
the
same
to
the
respondents.
Temperate
or
moderate
damages
are
damages
which
are
more
than
nominal
but
less
than
compensatory
which
may
be
recovered
when
the
court
finds
that
some
pecuniary
loss
has
been
suffered
but
its
amount
cannot,
from
the
nature
of
the
case,
be
proved
with
certainty.[16]
Temperate
damages
are
awarded
for
those
cases
where,
from
the
nature
of
the
case,
definite
proof
of
pecuniary
loss
cannot
be
offered,
although
the
court
is
convinced
that
there
has
been
such
loss.
A
judge
should
be
empowered
to
calculate
moderate
damages
in
such
cases,
rather
than
the
plaintiff
should
suffer,
without
redress,
from
the
defendants
wrongful
act.[17]
The
assessment
of
temperate
damages
is
left
to
the
sound
discretion
of
the
court
provided
that
such
an
award
is
reasonable
under
the
circumstances.[18]
We
have
gone
through
the
records
of
this
case
and
we
find
that,
indeed,
respondents
suffered
losses
which
cannot
be
quantified
in
monetary
terms.
These
losses
came
in
the
form
of
the
damage
sustained
by
the
owner
type
jeep
of
the
Dolor
spouses;
the
internment
and
burial
of
Oscar
Valmocina;
the
hospitalization
of
Joseph
Sandoval
on
account
of
the
injuries
he
sustained
from
the
collision
and
the
artificial
leg
and
crutches
that
respondent
Fred
Panopio
had
to
use
because
of
the
amputation
of
his
right
leg.
Further,
we
find
that
the
amount
of
temperate
damages
awarded
to
the
respondents
were
reasonable
under
the
circumstances.
As
to
the
amount
of
moral
damages
which
was
awarded
to
respondents,
a
review
of
the
records
of
this
case
shows
that
there
exists
no
cogent
reason
to
overturn
the
action
of
the
appellate
court
on
this
aspect.
Under
Article
2206,
the
spouse,
legitimate
and
illegitimate
descendants
and
ascendants
of
the
deceased
may
demand
moral
damages
for
mental
anguish
for
the
death
of
the
deceased.
The
reason
for
the
grant
of
moral
damages
has
been
explained,
thus:
.
.
.
the
award
of
moral
damages
is
aimed
at
a
restoration,
within
the
limits
possible,
of
the
spiritual
status
quo
ante;
and
therefore,
it
must
be
proportionate
to
the
suffering
inflicted.
The
intensity
of
the
pain
experienced
by
the
relatives
of
the
victim
is
proportionate
to
the
intensity
of
affection
for
him
and
bears
no
relation
whatsoever
with
the
wealth
or
means
of
the
offender.[19]
Moral
damages
are
emphatically
not
intended
to
enrich
a
plaintiff
at
the
expense
of
the
defendant.
They
are
awarded
to
allow
the
former
to
obtain
means,
diversion
or
amusements
that
will
serve
to
alleviate
the
moral
suffering
he
has
undergone
due
to
the
defendants
culpable
action
and
must,
perforce,
be
proportional
to
the
suffering
inflicted.[20]
Truly,
the
pain
of
the
sudden
loss
of
ones
offspring,
especially
of
a
son
who
was
in
the
prime
of
his
youth,
and
who
holds
so
much
promise
waiting
to
be
fulfilled
is
indeed
a
wellspring
of
intense
pain
which
no
parent
should
be
made
to
suffer.
While
it
is
true
that
there
can
be
no
exact
or
uniform
rule
for
measuring
the
value
of
a
human
life
and
the
measure
of
damages
cannot
be
arrived
at
by
a
precise
mathematical
calculation,[21]
we
hold
that
the
Court
of
Appeals
award
of
moral
damages
of
P100,000.00
each
to
the
Spouses
Dolor
and
Spouses
Valmocina
for
the
death
of
their
respective
sons,
Boyet
Dolor
and
Oscar
Valmocina,
is
in
full
accord
with
prevailing
jurisprudence.[22]
With
respect
to
the
award
of
attorneys
fees
to
respondents,
no
sufficient
basis
was
established
for
the
grant
thereof.
It
is
well
settled
that
attorneys
fees
should
not
be
awarded
in
the
absence
of
stipulation
except
under
the
instances
enumerated
in
Article
2208
of
the
Civil
Code.
As
we
have
held
in
Rizal
Surety
and
Insurance
Company
v.
Court
of
Appeals:[23]
Article
2208
of
the
Civil
Code
allows
attorneys
fees
to
be
awarded
by
a
court
when
its
claimant
is
compelled
to
litigate
with
third
persons
or
to
incur
expenses
to
protect
his
interest
by
reason
of
an
unjustified
act
or
omission
of
the
party
from
whom
it
is
sought.
While
judicial
discretion
is
here
extant,
an
award
thereof
demands,
nevertheless,
a
factual,
legal
or
equitable
justification.
The
matter
cannot
and
should
not
be
left
to
speculation
and
conjecture
(Mirasol
vs.
De
la
Cruz,
84
SCRA
337;
Stronghold
Insurance
Company,
Inc.
vs.
Court
of
Appeals,
173
SCRA
619).
In
the
case
at
bench,
the
records
do
not
show
enough
basis
for
sustaining
the
award
for
attorneys
fees
and
to
adjudge
its
payment
by
petitioner.
x
x
x.
Likewise,
this
Court
held
in
Stronghold
Insurance
Company,
Inc.
vs.
Court
of
Appeals
that:
In
Abrogar
v.
Intermediate
Appellate
Court
[G.R.
No.
67970,
January
15,
1988,
157
SCRA
57],
the
Court
had
occasion
to
state
that
[t]he
reason
for
the
award
of
attorneys
fees
must
be
stated
in
the
text
of
the
courts
decision,
otherwise,
if
it
is
stated
only
in
the
dispositive
portion
of
the
decision,
the
same
must
be
disallowed
on
appeal.
x
x
x.[24]
WHEREFORE,
the
petition
is
DENIED.
The
assailed
decision
of
the
Court
of
Appeals
is
AFFIRMED
with
the
MODIFICATION
that
the
grant
of
attorneys
fees
is
DELETED
for
lack
of
basis.
Costs
against
petitioners.
SO
ORDERED.
The
Case
This
is
a
petition
for
review
on
certiorari1
of
the
9
October
2007
Decision2
and
the
18
January
2008
Resolution3
of
the
Court
of
Appeals
in
CA-G.R.
CV
No.
81446.
The
9
October
2007
Decision
affirmed
the
30
October
2003
Decision4
of
the
Regional
Trial
Court
(Branch
35)
of
Gapan
City
in
Civil
Case
No.
2334
ordering
petitioner
to
pay
respondents
damages.
The
18
January
2008
Resolution
denied
petitioners
motion
for
reconsideration.
The
Facts
On
2
September
2000,
an
Isuzu
oil
tanker
running
along
Del
Monte
Avenue
in
Quezon
City
and
bearing
plate
number
TDY
712
hit
Loretta
V.
Baylon
(Loretta),
daughter
of
respondent
spouses
Sergio
P.
Baylon
and
Maritess
Villena-Baylon
(spouses
Baylon).
At
the
time
of
the
accident,
the
oil
tanker
was
registered5
in
the
name
of
petitioner
FEB
Leasing
and
Finance
Corporation6
(petitioner).
The
oil
tanker
was
leased7
to
BG
Hauler,
Inc.
(BG
Hauler)
and
was
being
driven
by
the
latters
driver,
Manuel
Y.
Estilloso.
The
oil
tanker
was
insured8
by
FGU
Insurance
Corp.
(FGU
Insurance).
The
accident
took
place
at
around
2:00
p.m.
as
the
oil
tanker
was
coming
from
Balintawak
and
heading
towards
Manila.
Upon
reaching
the
intersection
of
Bonifacio
Street
and
Del
Monte
Avenue,
the
oil
tanker
turned
left.
While
the
driver
of
the
oil
tanker
was
executing
a
left
turn
side
by
side
with
another
vehicle
towards
Del
Monte
Avenue,
the
oil
tanker
hit
Loretta
who
was
then
crossing
Del
Monte
Avenue
coming
from
Mayon
Street.
Due
to
the
strong
impact,
Loretta
was
violently
thrown
away
about
three
to
five
meters
from
the
point
of
impact.
She
fell
to
the
ground
unconscious.
She
was
brought
for
treatment
to
the
Chinese
General
Hospital
where
she
remained
in
a
coma
until
her
death
two
days
after.9
The
spouses
Baylon
filed
with
the
RTC
(Branch
35)
of
Gapan
City
a
Complaint10
for
damages
against
petitioner,
BG
Hauler,
the
driver,
and
FGU
Insurance.
Petitioner
filed
its
answer
with
compulsory
counterclaim
while
FGU
Insurance
filed
its
answer
with
counterclaim.
On
the
other
hand,
BG
Hauler
filed
its
answer
with
compulsory
counterclaim
and
cross-claim
against
FGU
Insurance.
Petitioner
claimed
that
the
spouses
Baylon
had
no
cause
of
action
against
it
because
under
its
lease
contract
with
BG
Hauler,
petitioner
was
not
liable
for
any
loss,
damage,
or
injury
that
the
leased
oil
tanker
might
cause.
Petitioner
claimed
that
no
employer-employee
relationship
existed
between
petitioner
and
the
driver.
BG
Hauler
alleged
that
neither
do
the
spouses
Baylon
have
a
cause
of
action
against
it
since
the
oil
tanker
was
not
registered
in
its
name.
BG
Hauler
contended
that
the
victim
was
guilty
of
contributory
negligence
in
crossing
the
street.
BG
Hauler
claimed
that
even
if
its
driver
was
at
fault,
BG
Hauler
exercised
the
diligence
of
a
good
father
of
a
family
in
the
selection
and
supervision
of
its
driver.
BG
Hauler
also
contended
that
FGU
Insurance
is
obliged
to
assume
all
liabilities
arising
from
the
use
of
the
insured
oil
tanker.
For
its
part,
FGU
Insurance
averred
that
the
victim
was
guilty
of
contributory
negligence.
FGU
Insurance
concluded
that
the
spouses
Baylon
could
not
expect
to
be
paid
the
full
amount
of
their
claims.
FGU
Insurance
pointed
out
that
the
insurance
policy
covering
the
oil
tanker
limited
any
claim
to
a
maximum
of
P400,000.00.
During
trial,
FGU
Insurance
moved
that
(1)
it
be
allowed
to
deposit
in
court
the
amount
of
P450,000.00
in
the
joint
names
of
the
spouses
Baylon,
petitioner,
and
BG
Hauler
and
(2)
it
be
released
from
further
participating
in
the
proceedings.
After
the
RTC
granted
the
motion,
FGU
Insurance
deposited
in
the
Branch
Clerk
of
Court
a
check
in
the
names
of
the
spouses
Baylon,
petitioner,
and
BG
Hauler.
The
RTC
then
released
FGU
Insurance
from
its
contractual
obligations
under
the
insurance
policy.
The
Ruling
of
the
RTC
After
weighing
the
evidence
submitted
by
the
parties,
the
RTC
found
that
the
death
of
Loretta
was
due
to
the
negligent
act
of
the
driver.
The
RTC
held
that
BG
Hauler,
as
the
employer,
was
solidarily
liable
with
the
driver.
The
RTC
further
held
that
petitioner,
as
the
registered
owner
of
the
oil
tanker,
was
also
solidarily
liable.
The
RTC
found
that
since
FGU
Insurance
already
paid
the
amount
of
P450,000.00
to
the
spouses
Baylon,
BG
Hauler,
and
petitioner,
the
insurers
obligation
has
been
satisfactorily
fulfilled.
The
RTC
thus
dismissed
the
cross-claim
of
BG
Hauler
against
FGU
Insurance.
The
decretal
part
of
the
RTCs
decision
reads:
Wherefore,
premises
considered,
judgment
is
hereby
rendered
in
favor
of
the
plaintiffs
and
against
defendants
FEB
Leasing
(now
BPI
Leasing),
BG
Hauler,
and
Manuel
Estilloso,
to
wit:
1.
Ordering
the
defendants,
jointly
and
severally,
to
pay
plaintiffs
the
following:
a.
the
amount
of
P62,000.00
representing
actual
expenses
incurred
by
the
plaintiffs;
b.
the
amount
of
P50,000.00
as
moral
damages;
c.
the
amount
of
P2,400,000.00
for
loss
of
earning
capacity
of
the
deceased
victim,
Loretta
V.
Baylon;
d.
the
sum
of
P50,000.00
for
death
indemnity;
e.
the
sum
of
P50,000.00
for
and
as
attorneys
fees;
and
f.
with
costs
against
the
defendants.
2.
Ordering
the
dismissal
of
defendants
counter-claim
for
lack
of
merit
and
the
cross
claim
of
defendant
BG
Hauler
against
defendant
FGU
Insurance.
SO
ORDERED.11
Petitioner,
BG
Hauler,
and
the
driver
appealed
the
RTC
Decision
to
the
Court
of
Appeals.
Petitioner
claimed
that
as
financial
lessor,
it
is
exempt
from
liability
resulting
from
any
loss,
damage,
or
injury
the
oil
tanker
may
cause
while
being
operated
by
BG
Hauler
as
financial
lessee.
On
the
other
hand,
BG
Hauler
and
the
driver
alleged
that
no
sufficient
evidence
existed
proving
the
driver
to
be
at
fault.
They
claimed
that
the
RTC
erred
in
finding
BG
Hauler
negligent
despite
the
fact
that
it
had
exercised
the
diligence
of
a
good
father
of
a
family
in
the
selection
and
supervision
of
its
driver
and
in
the
maintenance
of
its
vehicles.
They
contended
that
petitioner,
as
the
registered
owner
of
the
oil
tanker,
should
be
solely
liable
for
Lorettas
death.
The
Ruling
of
the
Court
of
Appeals
The
Court
of
Appeals
held
that
petitioner,
BG
Hauler,
and
the
driver
are
solidarily
liable
for
damages
arising
from
Lorettas
death.
Petitioners
liability
arose
from
the
fact
that
it
was
the
registered
owner
of
the
oil
tanker
while
BG
Haulers
liability
emanated
from
a
provision
in
the
lease
contract
providing
that
the
lessee
shall
be
liable
in
case
of
any
loss,
damage,
or
injury
the
leased
oil
tanker
may
cause.
Thus,
the
Court
of
Appeals
affirmed
the
RTC
Decision
but
with
the
modification
that
the
award
of
attorneys
fees
be
deleted
for
being
speculative.
The
dispositive
part
of
the
appellate
courts
Decision
reads:
WHEREFORE,
in
the
light
of
the
foregoing,
the
instant
appeal
is
DENIED.
Consequently,
the
assailed
Decision
of
the
lower
court
is
AFFIRMED
with
the
MODIFICATION
that
the
award
of
attorneys
fees
is
DELETED.
IT
IS
SO
ORDERED.12
Dissatisfied,
petitioner
and
BG
Hauler,
joined
by
the
driver,
filed
two
separate
motions
for
reconsideration.
In
its
18
January
2008
Resolution,
the
Court
of
Appeals
denied
both
motions
for
lack
of
merit.
Unconvinced,
petitioner
alone
filed
with
this
Court
the
present
petition
for
review
on
certiorari
impleading
the
spouses
Baylon,
BG
Hauler,
and
the
driver
as
respondents.13
The
Issue
The
sole
issue
submitted
for
resolution
is
whether
the
registered
owner
of
a
financially
leased
vehicle
remains
liable
for
loss,
damage,
or
injury
caused
by
the
vehicle
notwithstanding
an
exemption
provision
in
the
financial
lease
contract.
The
Courts
Ruling
Petitioner
contends
that
the
lease
contract
between
BG
Hauler
and
petitioner
specifically
provides
that
BG
Hauler
shall
be
liable
for
any
loss,
damage,
or
injury
the
leased
oil
tanker
may
cause
even
if
petitioner
is
the
registered
owner
of
the
said
oil
tanker.
Petitioner
claims
that
the
Court
of
Appeals
erred
in
holding
petitioner
solidarily
liable
with
BG
Hauler
despite
having
found
the
latter
liable
under
the
lease
contract.
For
their
part,
the
spouses
Baylon
counter
that
the
lease
contract
between
petitioner
and
BG
Hauler
cannot
bind
third
parties
like
them.
The
spouses
Baylon
maintain
that
the
existence
of
the
lease
contract
does
not
relieve
petitioner
of
direct
responsibility
as
the
registered
owner
of
the
oil
tanker
that
caused
the
death
of
their
daughter.
On
the
other
hand,
BG
Hauler
and
the
driver
argue
that
at
the
time
petitioner
and
BG
Hauler
entered
into
the
lease
contract,
Republic
Act
No.
598014
was
still
in
effect.
They
point
out
that
the
amendatory
law,
Republic
Act
No.
8556,15
which
exempts
from
liability
in
case
of
any
loss,
damage,
or
injury
to
third
persons
the
registered
owners
of
vehicles
financially
leased
to
another,
was
not
yet
enacted
at
that
time.
In
point
is
the
2008
case
of
PCI
Leasing
and
Finance,
Inc.
v.
UCPB
General
Insurance
Co.,
Inc.16
There,
we
held
liable
PCI
Leasing
and
Finance,
Inc.,
the
registered
owner
of
an
18-wheeler
Fuso
Tanker
Truck
leased
to
Superior
Gas
&
Equitable
Co.,
Inc.
(SUGECO)
and
being
driven
by
the
latters
driver,
for
damages
arising
from
a
collision.
This
despite
an
express
provision
in
the
lease
contract
to
the
effect
that
the
lessee,
SUGECO,
shall
indemnify
and
hold
the
registered
owner
free
from
any
liabilities,
damages,
suits,
claims,
or
judgments
arising
from
SUGECOs
use
of
the
leased
motor
vehicle.
In
the
instant
case,
Section
5.1
of
the
lease
contract
between
petitioner
and
BG
Hauler
provides:
Sec.
5.1.
It
is
the
principle
of
this
Lease
that
while
the
title
or
ownership
of
the
EQUIPMENT,
with
all
the
rights
consequent
thereof,
are
retained
by
the
LESSOR,
the
risk
of
loss
or
damage
of
the
EQUIPMENT
from
whatever
source
arising,
as
well
as
any
liability
resulting
from
the
ownership,
operation
and/or
possession
thereof,
over
and
above
those
actually
compensated
by
insurance,
are
hereby
transferred
to
and
assumed
by
the
LESSEE
hereunder
which
shall
continue
in
full
force
and
effect.17
(Emphasis
supplied)
If
it
so
wishes,
petitioner
may
proceed
against
BG
Hauler
to
seek
enforcement
of
the
latters
contractual
obligation
under
Section
5.1
of
the
lease
contract.
In
the
present
case,
petitioner
did
not
file
a
cross-claim
against
BG
Hauler.
Hence,
this
Court
cannot
require
BG
Hauler
to
reimburse
petitioner
for
the
latters
liability
to
the
spouses
Baylon.
However,
as
the
registered
owner
of
the
oil
tanker,
petitioner
may
not
escape
its
liability
to
third
persons.
Under
Section
5
of
Republic
Act
No.
4136,18
as
amended,
all
motor
vehicles
used
or
operated
on
or
upon
any
highway
of
the
Philippines
must
be
registered
with
the
Bureau
of
Land
Transportation
(now
Land
Transportation
Office)
for
the
current
year.19
Furthermore,
any
encumbrances
of
motor
vehicles
must
be
recorded
with
the
Land
Transportation
Office
in
order
to
be
valid
against
third
parties.20
In
accordance
with
the
law
on
compulsory
motor
vehicle
registration,
this
Court
has
consistently
ruled
that,
with
respect
to
the
public
and
third
persons,
the
registered
owner
of
a
motor
vehicle
is
directly
and
primarily
responsible
for
the
consequences
of
its
operation
regardless
of
who
the
actual
vehicle
owner
might
be.21
Well-settled
is
the
rule
that
the
registered
owner
of
the
vehicle
is
liable
for
quasi-delicts
resulting
from
its
use.
Thus,
even
if
the
vehicle
has
already
been
sold,
leased,
or
transferred
to
another
person
at
the
time
the
vehicle
figured
in
an
accident,
the
registered
vehicle
owner
would
still
be
liable
for
damages
caused
by
the
accident.
The
sale,
transfer
or
lease
of
the
vehicle,
which
is
not
registered
with
the
Land
Transportation
Office,
will
not
bind
third
persons
aggrieved
in
an
accident
involving
the
vehicle.
The
compulsory
motor
vehicle
registration
underscores
the
importance
of
registering
the
vehicle
in
the
name
of
the
actual
owner.
The
policy
behind
the
rule
is
to
enable
the
victim
to
find
redress
by
the
expedient
recourse
of
identifying
the
registered
vehicle
owner
in
the
records
of
the
Land
Transportation
Office.
The
registered
owner
can
be
reimbursed
by
the
actual
owner,
lessee
or
transferee
who
is
known
to
him.
Unlike
the
registered
owner,
the
innocent
victim
is
not
privy
to
the
lease,
sale,
transfer
or
encumbrance
of
the
vehicle.
Hence,
the
victim
should
not
be
prejudiced
by
the
failure
to
register
such
transaction
or
encumbrance.
As
the
Court
held
in
PCI
Leasing:
The
burden
of
registration
of
the
lease
contract
is
minuscule
compared
to
the
chaos
that
may
result
if
registered
owners
or
operators
of
vehicles
are
freed
from
such
responsibility.
Petitioner
pays
the
price
for
its
failure
to
obey
the
law
on
compulsory
registration
of
motor
vehicles
for
registration
is
a
pre-requisite
for
any
person
to
even
enjoy
the
privilege
of
putting
a
vehicle
on
public
roads.22
In
the
landmark
case
of
Erezo
v.
Jepte,23
the
Court
succinctly
laid
down
the
public
policy
behind
the
rule,
thus:
The
main
aim
of
motor
vehicle
registration
is
to
identify
the
owner
so
that
if
any
accident
happens,
or
that
any
damage
or
injury
is
caused
by
the
vehicle
on
the
public
highways,
responsibility
therefor
can
be
fixed
on
a
definite
individual,
the
registered
owner.
Instances
are
numerous
where
vehicles
running
on
public
highways
caused
accidents
or
injuries
to
pedestrians
or
other
vehicles
without
positive
identification
of
the
owner
or
drivers,
or
with
very
scant
means
of
identification.
It
is
to
forestall
these
circumstances,
so
inconvenient
or
prejudicial
to
the
public,
that
the
motor
vehicle
registration
is
primarily
ordained,
in
the
interest
of
the
determination
of
persons
responsible
for
damages
or
injuries
caused
on
public
highways.
x
x
x
Were
a
registered
owner
allowed
to
evade
responsibility
by
proving
who
the
supposed
transferee
or
owner
is,
it
would
be
easy
for
him,
by
collusion
with
others
or,
or
otherwise,
to
escape
said
responsibility
and
transfer
the
same
to
an
indefinite
person,
or
to
one
who
possesses
no
property
with
which
to
respond
financially
for
the
damage
or
injury
done.
A
victim
of
recklessness
on
the
public
highways
is
usually
without
means
to
discover
or
identify
the
person
actually
causing
the
injury
or
damage.
He
has
no
means
other
than
by
a
recourse
to
the
registration
in
the
Motor
Vehicles
Office
to
determine
who
is
the
owner.
The
protection
that
the
law
aims
to
extend
to
him
would
become
illusory
were
the
registered
owner
given
the
opportunity
to
escape
liability
by
disproving
his
ownership.
If
the
policy
of
the
law
is
to
be
enforced
and
carried
out,
the
registered
owner
should
not
be
allowed
to
prove
the
contrary
to
the
prejudice
of
the
person
injured,
that
is
to
prove
that
a
third
person
or
another
has
become
the
owner,
so
that
he
may
be
thereby
be
relieved
of
the
responsibility
to
the
injured
person.24
In
this
case,
petitioner
admits
that
it
is
the
registered
owner
of
the
oil
tanker
that
figured
in
an
accident
causing
the
death
of
Loretta.
As
the
registered
owner,
it
cannot
escape
liability
for
the
loss
arising
out
of
negligence
in
the
operation
of
the
oil
tanker.
Its
liability
remains
even
if
at
the
time
of
the
accident,
the
oil
tanker
was
leased
to
BG
Hauler
and
was
being
driven
by
the
latters
driver,
and
despite
a
provision
in
the
lease
contract
exonerating
the
registered
owner
from
liability.
As
a
final
point,
we
agree
with
the
Court
of
Appeals
that
the
award
of
attorneys
fees
by
the
RTC
must
be
deleted
for
lack
of
basis.
The
RTC
failed
to
justify
the
award
of
P50,000
attorneys
fees
to
respondent
spouses
Baylon.
The
award
of
attorneys
fees
must
have
some
factual,
legal
and
equitable
bases
and
cannot
be
left
to
speculations
and
conjectures.25
Consistent
with
prevailing
jurisprudence,26
attorneys
fees
as
part
of
damages
are
awarded
only
in
the
instances
enumerated
in
Article
2208
of
the
Civil
Code.27
Thus,
the
award
of
attorneys
fees
is
the
exception
rather
than
the
rule.
Attorneys
fees
are
not
awarded
every
time
a
party
prevails
in
a
suit
because
of
the
policy
that
no
premium
should
be
placed
on
the
right
to
litigate.28
WHEREFORE,
we
DENY
the
petition.
We
AFFIRM
the
9
October
2007
Decision
and
the
18
January
2008
Resolution
of
the
Court
of
Appeals
in
CA-G.R.
CV
No.
81446
affirming
with
modification
the
30
October
2003
Decision
of
the
Regional
Trial
Court
(Branch
35)
of
Gapan
City
in
Civil
Case
No.
2334
ordering
petitioner
FEB
Leasing
and
Finance
Corporation,
BG
Hauler,
Inc.,
and
driver
Manuel
Y.
Estilloso
to
solidarily
pay
respondent
spouses
Sergio
P.
Baylon
and
Maritess
Villena-Baylon
the
following
amounts:
a.
P62,000.00
representing
actual
expenses
incurred
by
the
plaintiffs;
b.
P50,000.00
as
moral
damages;
c.
P2,400,000.00
for
loss
of
earning
capacity
of
the
deceased
victim,
Loretta
V.
Baylon;
and
d.
P50,000.00
for
death
indemnity.
Costs
against
petitioner.
SO
ORDERED.
traversing
the
narrow
path
underneath
the
Magallanes
Interchange
that
was
then
commonly
used
by
Makati-bound
vehicles
as
a
short
cut
into
Makati.
At
the
time,
the
narrow
path
was
marked
by
piles
of
construction
materials
and
parked
passenger
jeepneys,
and
the
railroad
crossing
in
the
narrow
path
had
no
railroad
warning
signs,
or
watchmen,
or
other
responsible
persons
manning
the
crossing.
In
fact,
the
bamboo
barandilla
was
up,
leaving
the
railroad
crossing
open
to
traversing
motorists.
At
about
the
time
the
van
was
to
traverse
the
railroad
crossing,
PNR
Commuter
No.
302
(train),
operated
by
Jhonny
Alano
(Alano),
was
in
the
vicinity
of
the
Magallanes
Interchange
travelling
northbound.
As
the
train
neared
the
railroad
crossing,
Alfaro
drove
the
van
eastward
across
the
railroad
tracks,
closely
tailing
a
large
passenger
bus.
His
view
of
the
oncoming
train
was
blocked
because
he
overtook
the
passenger
bus
on
its
left
side.
The
train
blew
its
horn
to
warn
motorists
of
its
approach.
When
the
train
was
about
50
meters
away
from
the
passenger
bus
and
the
van,
Alano
applied
the
ordinary
brakes
of
the
train.
He
applied
the
emergency
brakes
only
when
he
saw
that
a
collision
was
imminent.
The
passenger
bus
successfully
crossed
the
railroad
tracks,
but
the
van
driven
by
Alfaro
did
not.
The
train
hit
the
rear
end
of
the
van,
and
the
impact
threw
nine
of
the
12
students
in
the
rear,
including
Aaron,
out
of
the
van.
Aaron
landed
in
the
path
of
the
train,
which
dragged
his
body
and
severed
his
head,
instantaneously
killing
him.
Alano
fled
the
scene
on
board
the
train,
and
did
not
wait
for
the
police
investigator
to
arrive.
Devastated
by
the
early
and
unexpected
death
of
Aaron,
the
Zarates
commenced
this
action
for
damages
against
Alfaro,
the
Pereas,
PNR
and
Alano.
The
Pereas
and
PNR
filed
their
respective
answers,
with
cross-claims
against
each
other,
but
Alfaro
could
not
be
served
with
summons.
At
the
pre-trial,
the
parties
stipulated
on
the
facts
and
issues,
viz:
A.
FACTS:
(1))
That
spouses
Zarate
were
the
legitimate
parents
of
Aaron
John
L.
Zarate;
(2))
Spouses
Zarate
engaged
the
services
of
spouses
Perea
for
the
adequate
and
safe
transportation
carriage
of
the
former
spouses'
son
from
their
residence
in
Paraaque
to
his
school
at
the
Don
Bosco
Technical
Institute
in
Makati
City;
(3))
During
the
effectivity
of
the
contract
of
carriage
and
in
the
implementation
thereof,
Aaron,
the
minor
son
of
spouses
Zarate
died
in
connection
with
a
vehicular/train
collision
which
occurred
while
Aaron
was
riding
the
contracted
carrier
Kia
Ceres
van
of
spouses
Perea,
then
driven
and
operated
by
the
latter's
employee/authorized
driver
Clemente
Alfaro,
which
van
collided
with
the
train
of
PNR,
at
around
6:45
A.M.
of
August
22,
1996,
within
the
vicinity
of
the
Magallanes
Interchange
in
Makati
City,
Metro
Manila,
Philippines;
(4))
At
the
time
of
the
vehicular/train
collision,
the
subject
site
of
the
vehicular/train
collision
was
a
railroad
crossing
used
by
motorists
for
crossing
the
railroad
tracks;
(5))
During
the
said
time
of
the
vehicular/train
collision,
there
were
no
appropriate
and
safety
warning
signs
and
railings
at
the
site
commonly
used
for
railroad
crossing;
(6))
At
the
material
time,
countless
number
of
Makati
bound
public
utility
and
private
vehicles
used
on
a
daily
basis
the
site
of
the
collision
as
an
alternative
route
and
short-cut
to
Makati;
(7))
The
train
driver
or
operator
left
the
scene
of
the
incident
on
board
the
commuter
train
involved
without
waiting
for
the
police
investigator;
(8))
The
site
commonly
used
for
railroad
crossing
by
motorists
was
not
in
fact
intended
by
the
railroad
operator
for
railroad
crossing
at
the
time
of
the
vehicular
collision;
(9))
PNR
received
the
demand
letter
of
the
spouses
Zarate;
(10)0)
PNR
refused
to
acknowledge
any
liability
for
the
vehicular/train
collision;
(11))
The
eventual
closure
of
the
railroad
crossing
alleged
by
PNR
was
an
internal
arrangement
between
the
former
and
its
project
contractor;
and
(12))
The
site
of
the
vehicular/train
collision
was
within
the
vicinity
or
less
than
100
meters
from
the
Magallanes
station
of
PNR.
B.
ISSUES
(1)
Whether
or
not
defendant-driver
of
the
van
is,
in
the
performance
of
his
functions,
liable
for
negligence
constituting
the
proximate
cause
of
the
vehicular
collision,
which
resulted
in
the
death
of
plaintiff
spouses'
son;
(2)
Whether
or
not
the
defendant
spouses
Perea
being
the
employer
of
defendant
Alfaro
are
liable
for
any
negligence
which
may
be
attributed
to
defendant
Alfaro;
(3)
Whether
or
not
defendant
Philippine
National
Railways
being
the
operator
of
the
railroad
system
is
liable
for
negligence
in
failing
to
provide
adequate
safety
warning
signs
and
railings
in
the
area
commonly
used
by
motorists
for
railroad
crossings,
constituting
the
proximate
cause
of
the
vehicular
collision
which
resulted
in
the
death
of
the
plaintiff
spouses'
son;
(4)
Whether
or
not
defendant
spouses
Perea
are
liable
for
breach
of
the
contract
of
carriage
with
plaintiff-spouses
in
failing
to
provide
adequate
and
safe
transportation
for
the
latter's
son;
(5)
Whether
or
not
defendants
spouses
are
liable
for
actual,
moral
damages,
exemplary
damages,
and
attorney's
fees;
(6)
Whether
or
not
defendants
spouses
Teodorico
and
Nanette
Perea
observed
the
diligence
of
employers
and
school
bus
operators;
(7)
Whether
or
not
defendant-spouses
are
civilly
liable
for
the
accidental
death
of
Aaron
John
Zarate;
(8)
Whether
or
not
defendant
PNR
was
grossly
negligent
in
operating
the
commuter
train
involved
in
the
accident,
in
allowing
or
tolerating
the
motoring
public
to
cross,
and
its
failure
to
install
safety
devices
or
equipment
at
the
site
of
the
accident
for
the
protection
of
the
public;
(9)
Whether
or
not
defendant
PNR
should
be
made
to
reimburse
defendant
spouses
for
any
and
whatever
amount
the
latter
may
be
held
answerable
or
which
they
may
be
ordered
to
pay
in
favor
of
plaintiffs
by
reason
of
the
action;
(10)
Whether
or
not
defendant
PNR
should
pay
plaintiffs
directly
and
fully
on
the
amounts
claimed
by
the
latter
in
their
Complaint
by
reason
of
its
gross
negligence;
(11)
Whether
or
not
defendant
PNR
is
liable
to
defendants
spouses
for
actual,
moral
and
exemplary
damages
and
attorney's
fees.2
The
Zarates
claim
against
the
Pereas
was
upon
breach
of
the
contract
of
carriage
for
the
safe
transport
of
Aaron;
but
that
against
PNR
was
based
on
quasi-delict
under
Article
2176,
Civil
Code.
In
their
defense,
the
Pereas
adduced
evidence
to
show
that
they
had
exercised
the
diligence
of
a
good
father
of
the
family
in
the
selection
and
supervision
of
Alfaro,
by
making
sure
that
Alfaro
had
been
issued
a
drivers
license
and
had
not
been
involved
in
any
vehicular
accident
prior
to
the
collision;
that
their
own
son
had
taken
the
van
daily;
and
that
Teodoro
Perea
had
sometimes
accompanied
Alfaro
in
the
vans
trips
transporting
the
students
to
school.
For
its
part,
PNR
tended
to
show
that
the
proximate
cause
of
the
collision
had
been
the
reckless
crossing
of
the
van
whose
driver
had
not
first
stopped,
looked
and
listened;
and
that
the
narrow
path
traversed
by
the
van
had
not
been
intended
to
be
a
railroad
crossing
for
motorists.
Ruling
of
the
RTC
The
trial
court
erred
in
finding
defendants-appellants
jointly
and
severally
liable
for
actual,
moral
and
exemplary
damages
and
attorneys
fees
with
the
other
defendants.
The
trial
court
erred
in
dismissing
the
cross-claim
of
the
appellants
Pereas
against
the
Philippine
National
Railways
and
in
not
holding
the
latter
and
its
train
driver
primarily
responsible
for
the
incident.
The
trial
court
erred
in
awarding
excessive
damages
and
attorneys
fees.
The
trial
court
erred
in
awarding
damages
in
the
form
of
deceaseds
loss
of
earning
capacity
in
the
absence
of
sufficient
basis
for
such
an
award.
On
November
13,
2002,
the
CA
promulgated
its
decision,
affirming
the
findings
of
the
RTC,
but
limited
the
moral
damages
to
P
2,500,000.00;
and
deleted
the
attorneys
fees
because
the
RTC
did
not
state
the
factual
and
legal
bases,
to
wit:6
WHEREFORE,
premises
considered,
the
assailed
Decision
of
the
Regional
Trial
Court,
Branch
260
of
Paraaque
City
is
AFFIRMED
with
the
modification
that
the
award
of
Actual
Damages
is
reduced
to
P
59,502.76;
Moral
Damages
is
reduced
to
P
2,500,000.00;
and
the
award
for
Attorneys
Fees
is
Deleted.
SO
ORDERED.
The
CA
upheld
the
award
for
the
loss
of
Aarons
earning
capacity,
taking
cognizance
of
the
ruling
in
Cariaga
v.
Laguna
Tayabas
Bus
Company
and
Manila
Railroad
Company,7
wherein
the
Court
gave
the
heirs
of
Cariaga
a
sum
representing
the
loss
of
the
deceaseds
earning
capacity
despite
Cariaga
being
only
a
medical
student
at
the
time
of
the
fatal
incident.
Applying
the
formula
adopted
in
the
American
Expectancy
Table
of
Mortality:
2/3
x
(80
-
age
at
the
time
of
death)
=
life
expectancy
the
CA
determined
the
life
expectancy
of
Aaron
to
be
39.3
years
upon
reckoning
his
life
expectancy
from
age
of
21
(the
age
when
he
would
have
graduated
from
college
and
started
working
for
his
own
livelihood)
instead
of
15
years
(his
age
when
he
died).
Considering
that
the
nature
of
his
work
and
his
salary
at
the
time
of
Aarons
death
were
unknown,
it
used
the
prevailing
minimum
wage
of
P
280.00/day
to
compute
Aarons
gross
annual
salary
to
be
P
110,716.65,
inclusive
of
the
thirteenth
month
pay.
Multiplying
this
annual
salary
by
Aarons
life
expectancy
of
39.3
years,
his
gross
income
would
aggregate
to
P
4,351,164.30,
from
which
his
estimated
expenses
in
the
sum
of
P
2,189,664.30
was
deducted
to
finally
arrive
at
P
2,161,500.00
as
net
income.
Due
to
Aarons
computed
net
income
turning
out
to
be
higher
than
the
amount
claimed
by
the
Zarates,
only
P
2,109,071.00,
the
amount
expressly
prayed
for
by
them,
was
granted.
On
April
4,
2003,
the
CA
denied
the
Pereas
motion
for
reconsideration.8
Issues
In
this
appeal,
the
Pereas
list
the
following
as
the
errors
committed
by
the
CA,
to
wit:
I.
The
lower
court
erred
when
it
upheld
the
trial
courts
decision
holding
the
petitioners
jointly
and
severally
liable
to
pay
damages
with
Philippine
National
Railways
and
dismissing
their
cross-claim
against
the
latter.
II.
The
lower
court
erred
in
affirming
the
trial
courts
decision
awarding
damages
for
loss
of
earning
capacity
of
a
minor
who
was
only
a
high
school
student
at
the
time
of
his
death
in
the
absence
of
sufficient
basis
for
such
an
award.
III.
The
lower
court
erred
in
not
reducing
further
the
amount
of
damages
awarded,
assuming
petitioners
are
liable
at
all.
Ruling
The
petition
has
no
merit.
1.
Were
the
Pereas
and
PNR
jointly
and
severally
liable
for
damages?
The
Zarates
brought
this
action
for
recovery
of
damages
against
both
the
Pereas
and
the
PNR,
basing
their
claim
against
the
Pereas
on
breach
of
contract
of
carriage
and
against
the
PNR
on
quasi-delict.
The
RTC
found
the
Pereas
and
the
PNR
negligent.
The
CA
affirmed
the
findings.
We
concur
with
the
CA.
To
start
with,
the
Pereas
defense
was
that
they
exercised
the
diligence
of
a
good
father
of
the
family
in
the
selection
and
supervision
of
Alfaro,
the
van
driver,
by
seeing
to
it
that
Alfaro
had
a
drivers
license
and
that
he
had
not
been
involved
in
any
vehicular
accident
prior
to
the
fatal
collision
with
the
train;
that
they
even
had
their
own
son
travel
to
and
from
school
on
a
daily
basis;
and
that
Teodoro
Perea
himself
sometimes
accompanied
Alfaro
in
transporting
the
passengers
to
and
from
school.
The
RTC
gave
scant
consideration
to
such
defense
by
regarding
such
defense
as
inappropriate
in
an
action
for
breach
of
contract
of
carriage.
We
find
no
adequate
cause
to
differ
from
the
conclusions
of
the
lower
courts
that
the
Pereas
operated
as
a
common
carrier;
and
that
their
standard
of
care
was
extraordinary
diligence,
not
the
ordinary
diligence
of
a
good
father
of
a
family.
Although
in
this
jurisdiction
the
operator
of
a
school
bus
service
has
been
usually
regarded
as
a
private
carrier,9
primarily
because
he
only
caters
to
some
specific
or
privileged
individuals,
and
his
operation
is
neither
open
to
the
indefinite
public
nor
for
public
use,
the
exact
nature
of
the
operation
of
a
school
bus
service
has
not
been
finally
settled.
This
is
the
occasion
to
lay
the
matter
to
rest.
A
carrier
is
a
person
or
corporation
who
undertakes
to
transport
or
convey
goods
or
persons
from
one
place
to
another,
gratuitously
or
for
hire.
The
carrier
is
classified
either
as
a
private/special
carrier
or
as
a
common/public
carrier.10
A
private
carrier
is
one
who,
without
making
the
activity
a
vocation,
or
without
holding
himself
or
itself
out
to
the
public
as
ready
to
act
for
all
who
may
desire
his
or
its
services,
undertakes,
by
special
agreement
in
a
particular
instance
only,
to
transport
goods
or
persons
from
one
place
to
another
either
gratuitously
or
for
hire.11
The
provisions
on
ordinary
contracts
of
the
Civil
Code
govern
the
contract
of
private
carriage.The
diligence
required
of
a
private
carrier
is
only
ordinary,
that
is,
the
diligence
of
a
good
father
of
the
family.
In
contrast,
a
common
carrier
is
a
person,
corporation,
firm
or
association
engaged
in
the
business
of
carrying
or
transporting
passengers
or
goods
or
both,
by
land,
water,
or
air,
for
compensation,
offering
such
services
to
the
public.12
Contracts
of
common
carriage
are
governed
by
the
provisions
on
common
carriers
of
the
Civil
Code,
the
Public
Service
Act,13
and
other
special
laws
relating
to
transportation.
A
common
carrier
is
required
to
observe
extraordinary
diligence,
and
is
presumed
to
be
at
fault
or
to
have
acted
negligently
in
case
of
the
loss
of
the
effects
of
passengers,
or
the
death
or
injuries
to
passengers.14
In
relation
to
common
carriers,
the
Court
defined
public
use
in
the
following
terms
in
United
States
v.
Tan
Piaco,15
viz:
"Public
use"
is
the
same
as
"use
by
the
public".
The
essential
feature
of
the
public
use
is
not
confined
to
privileged
individuals,
but
is
open
to
the
indefinite
public.
It
is
this
indefinite
or
unrestricted
quality
that
gives
it
its
public
character.
In
determining
whether
a
use
is
public,
we
must
look
not
only
to
the
character
of
the
business
to
be
done,
but
also
to
the
proposed
mode
of
doing
it.
If
the
use
is
merely
optional
with
the
owners,
or
the
public
benefit
is
merely
incidental,
it
is
not
a
public
use,
authorizing
the
exercise
of
the
jurisdiction
of
the
public
utility
commission.
There
must
be,
in
general,
a
right
which
the
law
compels
the
owner
to
give
to
the
general
public.
It
is
not
enough
that
the
general
prosperity
of
the
public
is
promoted.
Public
use
is
not
synonymous
with
public
interest.
The
true
criterion
by
which
to
judge
the
character
of
the
use
is
whether
the
public
may
enjoy
it
by
right
or
only
by
permission.
In
De
Guzman
v.
Court
of
Appeals,16
the
Court
noted
that
Article
1732
of
the
Civil
Code
avoided
any
distinction
between
a
person
or
an
enterprise
offering
transportation
on
a
regular
or
an
isolated
basis;
and
has
not
distinguished
a
carrier
offering
his
services
to
the
general
public,
that
is,
the
general
community
or
population,
from
one
offering
his
services
only
to
a
narrow
segment
of
the
general
population.
Nonetheless,
the
concept
of
a
common
carrier
embodied
in
Article
1732
of
the
Civil
Code
coincides
neatly
with
the
notion
of
public
service
under
the
Public
Service
Act,
which
supplements
the
law
on
common
carriers
found
in
the
Civil
Code.
Public
service,
according
to
Section
13,
paragraph
(b)
of
the
Public
Service
Act,
includes:
x
x
x
every
person
that
now
or
hereafter
may
own,
operate,
manage,
or
control
in
the
Philippines,
for
hire
or
compensation,
with
general
or
limited
clientle,
whether
permanent
or
occasional,
and
done
for
the
general
business
purposes,
any
common
carrier,
railroad,
street
railway,
traction
railway,
subway
motor
vehicle,
either
for
freight
or
passenger,
or
both,
with
or
without
fixed
route
and
whatever
may
be
its
classification,
freight
or
carrier
service
of
any
class,
express
service,
steamboat,
or
steamship
line,
pontines,
ferries
and
water
craft,
engaged
in
the
transportation
of
passengers
or
freight
or
both,
shipyard,
marine
repair
shop,
ice-refrigeration
plant,
canal,
irrigation
system,
gas,
electric
light,
heat
and
power,
water
supply
and
power
petroleum,
sewerage
system,
wire
or
wireless
communications
systems,
wire
or
wireless
broadcasting
stations
and
other
similar
public
services.
x
x
x.17
Given
the
breadth
of
the
aforequoted
characterization
of
a
common
carrier,
the
Court
has
considered
as
common
carriers
pipeline
operators,18
custom
brokers
and
warehousemen,19
and
barge
operators20
even
if
they
had
limited
clientle.
As
all
the
foregoing
indicate,
the
true
test
for
a
common
carrier
is
not
the
quantity
or
extent
of
the
business
actually
transacted,
or
the
number
and
character
of
the
conveyances
used
in
the
activity,
but
whether
the
undertaking
is
a
part
of
the
activity
engaged
in
by
the
carrier
that
he
has
held
out
to
the
general
public
as
his
business
or
occupation.
If
the
undertaking
is
a
single
transaction,
not
a
part
of
the
general
business
or
occupation
engaged
in,
as
advertised
and
held
out
to
the
general
public,
the
individual
or
the
entity
rendering
such
service
is
a
private,
not
a
common,
carrier.
The
question
must
be
determined
by
the
character
of
the
business
actually
carried
on
by
the
carrier,
not
by
any
secret
intention
or
mental
reservation
it
may
entertain
or
assert
when
charged
with
the
duties
and
obligations
that
the
law
imposes.21
Applying
these
considerations
to
the
case
before
us,
there
is
no
question
that
the
Pereas
as
the
operators
of
a
school
bus
service
were:
(a)
engaged
in
transporting
passengers
generally
as
a
business,
not
just
as
a
casual
occupation;
(b)
undertaking
to
carry
passengers
over
established
roads
by
the
method
by
which
the
business
was
conducted;
and
(c)
transporting
students
for
a
fee.
Despite
catering
to
a
limited
clientle,
the
Pereas
operated
as
a
common
carrier
because
they
held
themselves
out
as
a
ready
transportation
indiscriminately
to
the
students
of
a
particular
school
living
within
or
near
where
they
operated
the
service
and
for
a
fee.
The
common
carriers
standard
of
care
and
vigilance
as
to
the
safety
of
the
passengers
is
defined
by
law.
Given
the
nature
of
the
business
and
for
reasons
of
public
policy,
the
common
carrier
is
bound
"to
observe
extraordinary
diligence
in
the
vigilance
over
the
goods
and
for
the
safety
of
the
passengers
transported
by
them,
according
to
all
the
circumstances
of
each
case."22
Article
1755
of
the
Civil
Code
specifies
that
the
common
carrier
should
"carry
the
passengers
safely
as
far
as
human
care
and
foresight
can
provide,
using
the
utmost
diligence
of
very
cautious
persons,
with
a
due
regard
for
all
the
circumstances."
To
successfully
fend
off
liability
in
an
action
upon
the
death
or
injury
to
a
passenger,
the
common
carrier
must
prove
his
or
its
observance
of
that
extraordinary
diligence;
otherwise,
the
legal
presumption
that
he
or
it
was
at
fault
or
acted
negligently
would
stand.23
No
device,
whether
by
stipulation,
posting
of
notices,
statements
on
tickets,
or
otherwise,
may
dispense
with
or
lessen
the
responsibility
of
the
common
carrier
as
defined
under
Article
1755
of
the
Civil
Code.
24
And,
secondly,
the
Pereas
have
not
presented
any
compelling
defense
or
reason
by
which
the
Court
might
now
reverse
the
CAs
findings
on
their
liability.
On
the
contrary,
an
examination
of
the
records
shows
that
the
evidence
fully
supported
the
findings
of
the
CA.
As
earlier
stated,
the
Pereas,
acting
as
a
common
carrier,
were
already
presumed
to
be
negligent
at
the
time
of
the
accident
because
death
had
occurred
to
their
passenger.25
The
presumption
of
negligence,
being
a
presumption
of
law,
laid
the
burden
of
evidence
on
their
shoulders
to
establish
that
they
had
not
been
negligent.26
It
was
the
law
no
less
that
required
them
to
prove
their
observance
of
extraordinary
diligence
in
seeing
to
the
safe
and
secure
carriage
of
the
passengers
to
their
destination.
Until
they
did
so
in
a
credible
manner,
they
stood
to
be
held
legally
responsible
for
the
death
of
Aaron
and
thus
to
be
held
liable
for
all
the
natural
consequences
of
such
death.
There
is
no
question
that
the
Pereas
did
not
overturn
the
presumption
of
their
negligence
by
credible
evidence.
Their
defense
of
having
observed
the
diligence
of
a
good
father
of
a
family
in
the
selection
and
supervision
of
their
driver
was
not
legally
sufficient.
According
to
Article
1759
of
the
Civil
Code,
their
liability
as
a
common
carrier
did
not
cease
upon
proof
that
they
exercised
all
the
diligence
of
a
good
father
of
a
family
in
the
selection
and
supervision
of
their
employee.
This
was
the
reason
why
the
RTC
treated
this
defense
of
the
Pereas
as
inappropriate
in
this
action
for
breach
of
contract
of
carriage.
The
Pereas
were
liable
for
the
death
of
Aaron
despite
the
fact
that
their
driver
might
have
acted
beyond
the
scope
of
his
authority
or
even
in
violation
of
the
orders
of
the
common
carrier.27
In
this
connection,
the
records
showed
their
drivers
actual
negligence.
There
was
a
showing,
to
begin
with,
that
their
driver
traversed
the
railroad
tracks
at
a
point
at
which
the
PNR
did
not
permit
motorists
going
into
the
Makati
area
to
cross
the
railroad
tracks.
Although
that
point
had
been
used
by
motorists
as
a
shortcut
into
the
Makati
area,
that
fact
alone
did
not
excuse
their
driver
into
taking
that
route.
On
the
other
hand,
with
his
familiarity
with
that
shortcut,
their
driver
was
fully
aware
of
the
risks
to
his
passengers
but
he
still
disregarded
the
risks.
Compounding
his
lack
of
care
was
that
loud
music
was
playing
inside
the
air-conditioned
van
at
the
time
of
the
accident.
The
loudness
most
probably
reduced
his
ability
to
hear
the
warning
horns
of
the
oncoming
train
to
allow
him
to
correctly
appreciate
the
lurking
dangers
on
the
railroad
tracks.
Also,
he
sought
to
overtake
a
passenger
bus
on
the
left
side
as
both
vehicles
traversed
the
railroad
tracks.
In
so
doing,
he
lost
his
view
of
the
train
that
was
then
coming
from
the
opposite
side
of
the
passenger
bus,
leading
him
to
miscalculate
his
chances
of
beating
the
bus
in
their
race,
and
of
getting
clear
of
the
train.
As
a
result,
the
bus
avoided
a
collision
with
the
train
but
the
van
got
slammed
at
its
rear,
causing
the
fatality.
Lastly,
he
did
not
slow
down
or
go
to
a
full
stop
before
traversing
the
railroad
tracks
despite
knowing
that
his
slackening
of
speed
and
going
to
a
full
stop
were
in
observance
of
the
right
of
way
at
railroad
tracks
as
defined
by
the
traffic
laws
and
regulations.28
He
thereby
violated
a
specific
traffic
regulation
on
right
of
way,
by
virtue
of
which
he
was
immediately
presumed
to
be
negligent.29
The
omissions
of
care
on
the
part
of
the
van
driver
constituted
negligence,30
which,
according
to
Layugan
v.
Intermediate
Appellate
Court,31
is
"the
omission
to
do
something
which
a
reasonable
man,
guided
by
those
considerations
which
ordinarily
regulate
the
conduct
of
human
affairs,
would
do,
or
the
doing
of
something
which
a
prudent
and
reasonable
man
would
not
do,32
or
as
Judge
Cooley
defines
it,
(t)he
failure
to
observe
for
the
protection
of
the
interests
of
another
person,
that
degree
of
care,
precaution,
and
vigilance
which
the
circumstances
justly
demand,
whereby
such
other
person
suffers
injury."33
The
test
by
which
to
determine
the
existence
of
negligence
in
a
particular
case
has
been
aptly
stated
in
the
leading
case
of
Picart
v.
Smith,34
thuswise:
The
test
by
which
to
determine
the
existence
of
negligence
in
a
particular
case
may
be
stated
as
follows:
Did
the
defendant
in
doing
the
alleged
negligent
act
use
that
reasonable
care
and
caution
which
an
ordinarily
prudent
person
would
have
used
in
the
same
situation?
If
not,
then
he
is
guilty
of
negligence.
The
law
here
in
effect
adopts
the
standard
supposed
to
be
supplied
by
the
imaginary
conduct
of
the
discreet
paterfamilias
of
the
Roman
law.
The
existence
of
negligence
in
a
given
case
is
not
determined
by
reference
to
the
personal
judgment
of
the
actor
in
the
situation
before
him.
The
law
considers
what
would
be
reckless,
blameworthy,
or
negligent
in
the
man
of
ordinary
intelligence
and
prudence
and
determines
liability
by
that.
The
question
as
to
what
would
constitute
the
conduct
of
a
prudent
man
in
a
given
situation
must
of
course
be
always
determined
in
the
light
of
human
experience
and
in
view
of
the
facts
involved
in
the
particular
case.
Abstract
speculation
cannot
here
be
of
much
value
but
this
much
can
be
profitably
said:
Reasonable
men
govern
their
conduct
by
the
circumstances
which
are
before
them
or
known
to
them.
They
are
not,
and
are
not
supposed
to
be,
omniscient
of
the
future.
Hence
they
can
be
expected
to
take
care
only
when
there
is
something
before
them
to
suggest
or
warn
of
danger.
Could
a
prudent
man,
in
the
case
under
consideration,
foresee
harm
as
a
result
of
the
course
actually
pursued?
If
so,
it
was
the
duty
of
the
actor
to
take
precautions
to
guard
against
that
harm.
Reasonable
foresight
of
harm,
followed
by
the
ignoring
of
the
suggestion
born
of
this
prevision,
is
always
necessary
before
negligence
can
be
held
to
exist.
Stated
in
these
terms,
the
proper
criterion
for
determining
the
existence
of
negligence
in
a
given
case
is
this:
Conduct
is
said
to
be
negligent
when
a
prudent
man
in
the
position
of
the
tortfeasor
would
have
foreseen
that
an
effect
harmful
to
another
was
sufficiently
probable
to
warrant
his
foregoing
the
conduct
or
guarding
against
its
consequences.
(Emphasis
supplied)
Pursuant
to
the
Picart
v.
Smith
test
of
negligence,
the
Pereas
driver
was
entirely
negligent
when
he
traversed
the
railroad
tracks
at
a
point
not
allowed
for
a
motorists
crossing
despite
being
fully
aware
of
the
grave
harm
to
be
thereby
caused
to
his
passengers;
and
when
he
disregarded
the
foresight
of
harm
to
his
passengers
by
overtaking
the
bus
on
the
left
side
as
to
leave
himself
blind
to
the
approach
of
the
oncoming
train
that
he
knew
was
on
the
opposite
side
of
the
bus.
Unrelenting,
the
Pereas
cite
Phil.
National
Railways
v.
Intermediate
Appellate
Court,35
where
the
Court
held
the
PNR
solely
liable
for
the
damages
caused
to
a
passenger
bus
and
its
passengers
when
its
train
hit
the
rear
end
of
the
bus
that
was
then
traversing
the
railroad
crossing.
But
the
circumstances
of
that
case
and
this
one
share
no
similarities.
In
Philippine
National
Railways
v.
Intermediate
Appellate
Court,
no
evidence
of
contributory
negligence
was
adduced
against
the
owner
of
the
bus.
Instead,
it
was
the
owner
of
the
bus
who
proved
the
exercise
of
extraordinary
diligence
by
preponderant
evidence.
Also,
the
records
are
replete
with
the
showing
of
negligence
on
the
part
of
both
the
Pereas
and
the
PNR.
Another
distinction
is
that
the
passenger
bus
in
Philippine
National
Railways
v.
Intermediate
Appellate
Court
was
traversing
the
dedicated
railroad
crossing
when
it
was
hit
by
the
train,
but
the
Pereas
school
van
traversed
the
railroad
tracks
at
a
point
not
intended
for
that
purpose.
At
any
rate,
the
lower
courts
correctly
held
both
the
Pereas
and
the
PNR
"jointly
and
severally"
liable
for
damages
arising
from
the
death
of
Aaron.
They
had
been
impleaded
in
the
same
complaint
as
defendants
against
whom
the
Zarates
had
the
right
to
relief,
whether
jointly,
severally,
or
in
the
alternative,
in
respect
to
or
arising
out
of
the
accident,
and
questions
of
fact
and
of
law
were
common
as
to
the
Zarates.36
Although
the
basis
of
the
right
to
relief
of
the
Zarates
(i.e.,
breach
of
contract
of
carriage)
against
the
Pereas
was
distinct
from
the
basis
of
the
Zarates
right
to
relief
against
the
PNR
(i.e.,
quasi-delict
under
Article
2176,
Civil
Code),
they
nonetheless
could
be
held
jointly
and
severally
liable
by
virtue
of
their
respective
negligence
combining
to
cause
the
death
of
Aaron.
As
to
the
PNR,
the
RTC
rightly
found
the
PNR
also
guilty
of
negligence
despite
the
school
van
of
the
Pereas
traversing
the
railroad
tracks
at
a
point
not
dedicated
by
the
PNR
as
a
railroad
crossing
for
pedestrians
and
motorists,
because
the
PNR
did
not
ensure
the
safety
of
others
through
the
placing
of
crossbars,
signal
lights,
warning
signs,
and
other
permanent
safety
barriers
to
prevent
vehicles
or
pedestrians
from
crossing
there.
The
RTC
observed
that
the
fact
that
a
crossing
guard
had
been
assigned
to
man
that
point
from
7
a.m.
to
5
p.m.
was
a
good
indicium
that
the
PNR
was
aware
of
the
risks
to
others
as
well
as
the
need
to
control
the
vehicular
and
other
traffic
there.
Verily,
the
Pereas
and
the
PNR
were
joint
tortfeasors.
2.
Was
the
indemnity
for
loss
of
Aarons
earning
capacity
proper?
The
RTC
awarded
indemnity
for
loss
of
Aarons
earning
capacity.
Although
agreeing
with
the
RTC
on
the
liability,
the
CA
modified
the
amount.
Both
lower
courts
took
into
consideration
that
Aaron,
while
only
a
high
school
student,
had
been
enrolled
in
one
of
the
reputable
schools
in
the
Philippines
and
that
he
had
been
a
normal
and
able-bodied
child
prior
to
his
death.
The
basis
for
the
computation
of
Aarons
earning
capacity
was
not
what
he
would
have
become
or
what
he
would
have
wanted
to
be
if
not
for
his
untimely
death,
but
the
minimum
wage
in
effect
at
the
time
of
his
death.
Moreover,
the
RTCs
computation
of
Aarons
life
expectancy
rate
was
not
reckoned
from
his
age
of
15
years
at
the
time
of
his
death,
but
on
21
years,
his
age
when
he
would
have
graduated
from
college.
We
find
the
considerations
taken
into
account
by
the
lower
courts
to
be
reasonable
and
fully
warranted.
Yet,
the
Pereas
submit
that
the
indemnity
for
loss
of
earning
capacity
was
speculative
and
unfounded.1wphi1
They
cited
People
v.
Teehankee,
Jr.,37
where
the
Court
deleted
the
indemnity
for
victim
Jussi
Leinos
loss
of
earning
capacity
as
a
pilot
for
being
speculative
due
to
his
having
graduated
from
high
school
at
the
International
School
in
Manila
only
two
years
before
the
shooting,
and
was
at
the
time
of
the
shooting
only
enrolled
in
the
first
semester
at
the
Manila
Aero
Club
to
pursue
his
ambition
to
become
a
professional
pilot.
That
meant,
according
to
the
Court,
that
he
was
for
all
intents
and
purposes
only
a
high
school
graduate.
We
reject
the
Pereas
submission.
First
of
all,
a
careful
perusal
of
the
Teehankee,
Jr.
case
shows
that
the
situation
there
of
Jussi
Leino
was
not
akin
to
that
of
Aaron
here.
The
CA
and
the
RTC
were
not
speculating
that
Aaron
would
be
some
highly-paid
professional,
like
a
pilot
(or,
for
that
matter,
an
engineer,
a
physician,
or
a
lawyer).
Instead,
the
computation
of
Aarons
earning
capacity
was
premised
on
him
being
a
lowly
minimum
wage
earner
despite
his
being
then
enrolled
at
a
prestigious
high
school
like
Don
Bosco
in
Makati,
a
fact
that
would
have
likely
ensured
his
success
in
his
later
years
in
life
and
at
work.
And,
secondly,
the
fact
that
Aaron
was
then
without
a
history
of
earnings
should
not
be
taken
against
his
parents
and
in
favor
of
the
defendants
whose
negligence
not
only
cost
Aaron
his
life
and
his
right
to
work
and
earn
money,
but
also
deprived
his
parents
of
their
right
to
his
presence
and
his
services
as
well.
Our
law
itself
states
that
the
loss
of
the
earning
capacity
of
the
deceased
shall
be
the
liability
of
the
guilty
party
in
favor
of
the
heirs
of
the
deceased,
and
shall
in
every
case
be
assessed
and
awarded
by
the
court
"unless
the
deceased
on
account
of
permanent
physical
disability
not
caused
by
the
defendant,
had
no
earning
capacity
at
the
time
of
his
death."38
Accordingly,
we
emphatically
hold
in
favor
of
the
indemnification
for
Aarons
loss
of
earning
capacity
despite
him
having
been
unemployed,
because
compensation
of
this
nature
is
awarded
not
for
loss
of
time
or
earnings
but
for
loss
of
the
deceaseds
power
or
ability
to
earn
money.39
This
favorable
treatment
of
the
Zarates
claim
is
not
unprecedented.
In
Cariaga
v.
Laguna
Tayabas
Bus
Company
and
Manila
Railroad
Company,40
fourth-year
medical
student
Edgardo
Carriagas
earning
capacity,
although
he
survived
the
accident
but
his
injuries
rendered
him
permanently
incapacitated,
was
computed
to
be
that
of
the
physician
that
he
dreamed
to
become.
The
Court
considered
his
scholastic
record
sufficient
to
justify
the
assumption
that
he
could
have
finished
the
medical
course
and
would
have
passed
the
medical
board
examinations
in
due
time,
and
that
he
could
have
possibly
earned
a
modest
income
as
a
medical
practitioner.
Also,
in
People
v.
Sanchez,41
the
Court
opined
that
murder
and
rape
victim
Eileen
Sarmienta
and
murder
victim
Allan
Gomez
could
have
easily
landed
good-paying
jobs
had
they
graduated
in
due
time,
and
that
their
jobs
would
probably
pay
them
high
monthly
salaries
from
P
10,000.00
to
P
15,000.00
upon
their
graduation.
Their
earning
capacities
were
computed
at
rates
higher
than
the
minimum
wage
at
the
time
of
their
deaths
due
to
their
being
already
senior
agriculture
students
of
the
University
of
the
Philippines
in
Los
Baos,
the
countrys
leading
educational
institution
in
agriculture.
3.
Were
the
amounts
of
damages
excessive?
The
Pereas
plead
for
the
reduction
of
the
moral
and
exemplary
damages
awarded
to
the
Zarates
in
the
respective
amounts
of
P
2,500,000.00
and
P
1,000,000.00
on
the
ground
that
such
amounts
were
excessive.
The
plea
is
unwarranted.
The
moral
damages
of
P
2,500,000.00
were
really
just
and
reasonable
under
the
established
circumstances
of
this
case
because
they
were
intended
by
the
law
to
assuage
the
Zarates
deep
mental
anguish
over
their
sons
unexpected
and
violent
death,
and
their
moral
shock
over
the
senseless
accident.
That
amount
would
not
be
too
much,
considering
that
it
would
help
the
Zarates
obtain
the
means,
diversions
or
amusements
that
would
alleviate
their
suffering
for
the
loss
of
their
child.
At
any
rate,
reducing
the
amount
as
excessive
might
prove
to
be
an
injustice,
given
the
passage
of
a
long
time
from
when
their
mental
anguish
was
inflicted
on
them
on
August
22,
1996.
Anent
the
P
1,000,000.00
allowed
as
exemplary
damages,
we
should
not
reduce
the
amount
if
only
to
render
effective
the
desired
example
for
the
public
good.
As
a
common
carrier,
the
Pereas
needed
to
be
vigorously
reminded
to
observe
their
duty
to
exercise
extraordinary
diligence
to
prevent
a
similarly
senseless
accident
from
happening
again.
Only
by
an
award
of
exemplary
damages
in
that
amount
would
suffice
to
instill
in
them
and
others
similarly
situated
like
them
the
ever-
present
need
for
greater
and
constant
vigilance
in
the
conduct
of
a
business
imbued
with
public
interest.
WHEREFORE,
we
DENY
the
petition
for
review
on
certiorari;
AFFIRM
the
decision
promulgated
on
November
13,
2002;
and
ORDER
the
petitioners
to
pay
the
costs
of
suit.
SO
ORDERED.