G.R. No.

L-55347 October 4, 1985

PHILIPPINE NATIONAL RAILWAYS, petitioner, vs. THE
HONORABLE COURT OF APPEALS and ROSARIO
TUPANG,
ESCOLIN, J.:
Invoking the principle of state immunity from suit, the Philippine
National Railways, PNR for short, instituted this petition for review
on certiorari to set aside the decision of the respondent Appellate
Court which held petitioner PNR liable for damages for the death of
Winifredo Tupang, a paying passenger who fell off a train operated by
the petitioner.
The pertinent facts are summarized by the respondent court as
follows:
The facts show that on September 10, 1972, at about 9:00 o'clock in
the evening, Winifredo Tupang, husband of plaintiff Rosario Tupang,
boarded 'Train No. 516 of appellant at Libmanan, Camarines Sur, as a
paying passenger bound for Manila. Due to some mechanical defect,
the train stopped at Sipocot, Camarines Sur, for repairs, taking some
two hours before the train could resume its trip to Manila.
Unfortunately, upon passing Iyam Bridge at Lucena, Quezon,
Winifredo Tupang fell off the train resulting in his death.The train did
not stop despite the alarm raised by the other passengers that
somebody fell from the train. Instead, the train conductor Perfecto
Abrazado, called the station agent at Candelaria, Quezon, and
requested for verification of the information. Police authorities of
Lucena City were dispatched to the Iyam Bridge where they found the
lifeless body of Winifredo Tupang.
As shown by the autopsy report, Winifredo Tupang died of cardiorespiratory failure due to massive cerebral hemorrhage due to
traumatic injury [Exhibits B and C, Folder of Exhibits],Tupang was
later buried in the public cemetery of Lucena City by the local police
authorities. [Rollo, pp. 91-92]
Upon complaint filed by the deceased's widow, Rosario Tupang, the
then Court of First Instance of Rizal, after trial, held the petitioner
PNR liable for damages for breach of contract of carriage and ordered
"to pay the plaintiff the sum of P12,000,00 for the death of Winifredo
Tupang, plus P20,000.00 for loss of his earning capacity and the
further sum of P10,000.00 as moral damages, and P2,000.00 as
attorney's fees, and costs. 1
On appeal, the Appellate Court sustained the holding of the trial court
that the PNR did not exercise the utmost diligence required by law of
a common carrier. It further increased the amount adjudicated by the
trial court by ordering PNR to pay the plaintiff an additional sum of
P5,000.00 as exemplary damages.
Moving for reconsideration of the above decision, the PNR raised for
the first time, as a defense, the doctrine of state immunity from suit.
It alleged that it is a mere agency of the Philippine government
without distinct or separate personality of its own, and that its funds
are governmental in character and, therefore, not subject to
garnishment or execution. The motion was denied; the respondent
court ruled that the ground advanced could not be raised for the first
time on appeal.
Hence, this petition for review.
The petition is devoid of merit. The PNR was created under Rep. Act
4156, as amended. Section 4 of the said Act provides:
The Philippine national Railways shall have the following powers:
a. To do all such other things and to transact all such business directly
or indirectly necessary, incidental or conducive to the attainment of
the purpose of the corporation; and
b. Generally, to exercise all powers of a corporation under the
Corporation Law.

Under the foregoing section, the PNR has all the powers, the
characteristics and attributes of a corporation under the Corporation
Law. There can be no question then that the PNR may sue and be
sued and may be subjected to court processes just like any other
corporation. 2
The petitioner's contention that the funds of the PNR are not subject
to garnishment or execution hardly raises a question of first
impression. In Philippine National Railways v. Union de
Maquinistas, et al., 3 then Justice Fernando, later Chief Justice, said.
"The main issue posed in this certiorari proceeding, whether or not
the funds of the Philippine National Railways, could be garnished or
levied upon on execution was resolved in two recent decisions,
the Philippine National Bank v. Court of Industrial Relations [81
SCRA 314] and Philippine National Bank v. Hon. Judge Pabalan [83
SCRA 595]. This Court in both cases answered the question in the
affirmative. There was no legal bar to garnishment or execution. The
argument based on non-suability of a state allegedly because the
funds are governmental in character was unavailing.So it must be
again."
In support of the above conclusion, Justice Fernando cited the Court's
holding in Philippine National Bank v. Court of Industrial Relations,
to wit: "The premise that the funds could be spoken of as public in
character may be accepted in the sense that the People's Homesite
and Housing Corporation was a government-owned entity. It does not
follow though that they were exempt from garnishment. National
Shipyard and Steel Corporation v. Court of Industrial Relations is
squarely in point. As was explicitly stated in the opinion of then
Justice, later Chief Justice, Concepcion: "The allegation to the effect
that the funds of the NASSCO are public funds of the government,
and that, as such, the same may not be garnished, attached or levied
upon, is untenable for, as a government- owned and controlled
corporation, the NASSCO has a personality of its own, distinct and
separate from that of the Government. It has-pursuant to Section 2 of
Executive Order No. 356, dated October 23, 1950 * * *, pursuant to
which the NASSCO has been established- 'all the powers of a
corporation under the Corporation Law * * *. 4
As far back as 1941, this Court in the case of Manila Hotel Employees
Association v. Manila Hotel Co., 5 laid down the rule that "when the
government enters into commercial business, it abandons its
sovereign capacity and is to be treated like any other corporation.
[Bank of the U.S. v. Planters' Bank, 9 Waitch 904, 6 L. ed. 244]. By
engaging in a particular business through the instrumentality of a
corporation the government divests itself pro hac vice of its sovereign
character, so as to render the corporation subject to the rules of law
governing private corporations. 6 Of Similar import is the
pronouncement in Prisco v. CIR,' that "when the government engages
in business, it abdicates part of its sovereign prerogatives and
descends to the level of a citizen, ... . " In fine, the petitioner PNR
cannot legally set up the doctrine of non-suability as a bar to the
plaintiff's suit for damages.
The appellate court found, the petitioner does not deny, that the train
boarded by the deceased Winifredo Tupang was so over-crowded that
he and many other passengers had no choice but to sit on the open
platforms between the coaches of the train. It is likewise undisputed
that the train did not even slow down when it approached the Iyam
Bridge which was under repair at the time, Neither did the train stop,
despite the alarm raised by other passengers that a person had fallen
off the train at lyam Bridge. 7
The petitioner has the obligation to transport its passengers to their
destinations and to observe extraordinary diligence in doing so. Death
or any injury suffered by any of its passengers gives rise to the
presumption that it was negligent in the performance of its obligation
under the contract of carriage. Thus, as correctly ruled by the
respondent court, the petitioner failed to overthrow such presumption
of negligence with clear and convincing evidence.
But while petitioner failed to exercise extraordinary diligence as
required by law, 8 it appears that the deceased was chargeable with
contributory negligence. Since he opted to sit on the open platform
between the coaches of the train, he should have held tightly and
tenaciously on the upright metal bar found at the side of said platform
to avoid falling off from the speeding train. Such contributory
negligence, while not exempting the PNR from liability, nevertheless
justified the deletion of the amount adjudicated as moral damages. By

the same token, the award of exemplary damages must be set aside.
Exemplary damages may be allowed only in cases where the
defendant acted in a wanton, fraudulent, reckless, oppressive or
malevolent manner. 9 There being no evidence of fraud, malice or bad
faith on the part of petitioner, the grant of exemplary damages should
be discarded.
G.R. No. 145804

February 6, 2003

LIGHT RAIL TRANSIT AUTHORITY & RODOLFO

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

"The compulsory counterclaim of LRTA and Roman are likewise

dismissed."1
Prudent appealed to the Court of Appeals. On 27 August 2000, the
appellate court promulgated its now assailed decision exonerating
Prudent from any liability for the death of Nicanor Navidad and,
instead, holding the LRTA and Roman jointly and severally liable
thusly:
"WHEREFORE, the assailed judgment is hereby MODIFIED, by
exonerating the appellants from any liability for the death of Nicanor
Navidad, Jr. Instead, appellees Rodolfo Roman and the Light Rail
Transit Authority (LRTA) are held liable for his death and are hereby
directed to pay jointly and severally to the plaintiffs-appellees, the
following amounts:

VITUG, J.:
a) P44,830.00 as actual damages;
The case before the Court is an appeal from the decision and
resolution of the Court of Appeals, promulgated on 27 April 2000 and
10 October 2000, respectively, in CA-G.R. CV No. 60720, entitled
"Marjorie Navidad and Heirs of the Late Nicanor Navidad vs. Rodolfo
Roman, et. al.," which has modified the decision of 11 August 1998 of
the Regional Trial Court, Branch 266, Pasig City, exonerating Prudent
Security Agency (Prudent) from liability and finding Light Rail
Transit Authority (LRTA) and Rodolfo Roman liable for damages on
account of the death of Nicanor Navidad.

b) P50,000.00 as nominal damages;

c) P50,000.00 as moral damages;
d) P50,000.00 as indemnity for the death of the
deceased; and
e) P20,000.00 as and for attorneys fees."2

On 14 October 1993, about half an hour past seven oclock in the

evening, Nicanor Navidad, then drunk, entered the EDSA LRT station
after purchasing a "token" (representing payment of the fare). While
Navidad was standing on the platform near the LRT tracks, Junelito
Escartin, the security guard assigned to the area approached Navidad.
A misunderstanding or an altercation between the two apparently
ensued that led to a fist fight. No evidence, however, was adduced to
indicate how the fight started or who, between the two, delivered the
first blow or how Navidad later fell on the LRT tracks. At the exact
moment that Navidad fell, an LRT train, operated by petitioner
Rodolfo Roman, was coming in. Navidad was struck by the moving
train, and he was killed instantaneously.
On 08 December 1994, the widow of Nicanor, herein respondent
Marjorie Navidad, along with her children, filed a complaint for
damages against Junelito Escartin, Rodolfo Roman, the LRTA, the
Metro Transit Organization, Inc. (Metro Transit), and Prudent for the
death of her husband. LRTA and Roman filed a counterclaim against
Navidad and a cross-claim against Escartin and Prudent. Prudent, in
its answer, denied liability and averred that it had exercised due
diligence in the selection and supervision of its security guards.
The LRTA and Roman presented their evidence while Prudent and
Escartin, instead of presenting evidence, filed a demurrer contending
that Navidad had failed to prove that Escartin was negligent in his
assigned task. On 11 August 1998, the trial court rendered its decision;
it adjudged:
"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs
and against the defendants Prudent Security and Junelito Escartin
ordering the latter to pay jointly and severally the plaintiffs the
following:

The appellate court ratiocinated that while the deceased might not
have then as yet boarded the train, a contract of carriage theretofore
had already existed when the victim entered the place where
passengers were supposed to be after paying the fare and getting the
corresponding token therefor. In exempting Prudent from liability,
the court stressed that there was nothing to link the security agency to
the death of Navidad. It said that Navidad failed to show that Escartin
inflicted fist blows upon the victim and the evidence merely
established the fact of death of Navidad by reason of his having been
hit by the train owned and managed by the LRTA and operated at the
time by Roman. The appellate court faulted petitioners for their
failure to present expert evidence to establish the fact that the
application of emergency brakes could not have stopped the train.
The appellate court denied petitioners motion for reconsideration in
its resolution of 10 October 2000.
In their present recourse, petitioners recite alleged errors on the part
of the appellate court; viz:
"I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY
DISREGARDING THE FINDINGS OF FACTS BY THE TRIAL
COURT
"II.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
FINDING THAT PETITIONERS ARE LIABLE FOR THE DEATH OF
NICANOR NAVIDAD, JR.

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

"III.
2) Compensatory damages of P443,520.00;
3) Indemnity for the death of Nicanor Navidad in the sum
of P50,000.00;
"b) Moral damages of P50,000.00;
"c) Attorneys fees of P20,000;
"d) Costs of suit.
"The complaint against defendants LRTA and Rodolfo Roman are
dismissed for lack of merit.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN

FINDING THAT RODOLFO ROMAN IS AN EMPLOYEE OF LRTA." 3
Petitioners would contend that the appellate court ignored the
evidence and the factual findings of the trial court by holding them
liable on the basis of a sweeping conclusion that the presumption of
negligence on the part of a common carrier was not overcome.
Petitioners would insist that Escartins assault upon Navidad, which
caused the latter to fall on the tracks, was an act of a stranger that
could not have been foreseen or prevented. The LRTA would add that
the appellate courts conclusion on the existence of an employeremployee relationship between Roman and LRTA lacked basis
because Roman himself had testified being an employee of Metro
Transit and not of the LRTA.

Respondents, supporting the decision of the appellate court,

contended that a contract of carriage was deemed created from the
moment Navidad paid the fare at the LRT station and entered the
premises of the latter, entitling Navidad to all the rights and
protection under a contractual relation, and that the appellate court
had correctly held LRTA and Roman liable for the death of Navidad in
failing to exercise extraordinary diligence imposed upon a common
carrier.
Law and jurisprudence dictate that a common carrier, both from the
nature of its business and for reasons of public policy, is burdened
with the duty of exercising utmost diligence in ensuring the safety of
passengers.4 The Civil Code, governing the liability of a common
carrier for death of or injury to its passengers, provides:
"Article 1755. A common carrier is bound to carry the passengers
safely as far as human care and foresight can provide, using the
utmost diligence of very cautious persons, with a due regard for all the
circumstances.
"Article 1756. In case of death of or injuries to passengers, common
carriers are presumed to have been at fault or to have acted
negligently, unless they prove that they observed extraordinary
diligence as prescribed in articles 1733 and 1755."
"Article 1759. Common carriers are liable for the death of or injuries
to passengers through the negligence or willful acts of the formers
employees, although such employees may have acted beyond the
scope of their authority or in violation of the orders of the common
carriers.
"This liability of the common carriers does not cease upon proof that
they exercised all the diligence of a good father of a family in the
selection and supervision of their employees."
"Article 1763. A common carrier is responsible for injuries suffered by
a passenger on account of the willful acts or negligence of other
passengers or of strangers, if the common carriers employees
through the exercise of the diligence of a good father of a family could
have prevented or stopped the act or omission."
The law requires common carriers to carry passengers safely using the
utmost diligence of very cautious persons with due regard for all
circumstances.5 Such duty of a common carrier to provide safety to its
passengers so obligates it not only during the course of the trip but for
so long as the passengers are within its premises and where they
ought to be in pursuance to the contract of carriage. 6 The statutory
provisions render a common carrier liable for death of or injury to
passengers (a) through the negligence or wilful acts of its employees
or b) on account of wilful acts or negligence of other passengers or of
strangers if the common carriers employees through the exercise of
due diligence could have prevented or stopped the act or omission. 7 In
case of such death or injury, a carrier is presumed to have been at
fault or been negligent, and 8 by simple proof of injury, the passenger
is relieved of the duty to still establish the fault or negligence of the
carrier or of its employees and the burden shifts upon the carrier to
prove that the injury is due to an unforeseen event or to force
majeure.9 In the absence of satisfactory explanation by the carrier on
how the accident occurred, which petitioners, according to the
appellate court, have failed to show, the presumption would be that it
has been at fault,10 an exception from the general rule that negligence
must be proved.11
The foundation of LRTAs liability is the contract of carriage and its
obligation to indemnify the victim arises from the breach of that
contract by reason of its failure to exercise the high diligence required
of the common carrier. In the discharge of its commitment to ensure
the safety of passengers, a carrier may choose to hire its own
employees or avail itself of the services of an outsider or an
independent firm to undertake the task. In either case, the common
carrier is not relieved of its responsibilities under the contract of
carriage.
Should Prudent be made likewise liable? If at all, that liability could
only be for tort under the provisions of Article 2176 12 and related
provisions, in conjunction with Article 2180, 13 of the Civil Code. The
premise, however, for the employers liability is negligence or fault on
the part of the employee. Once such fault is established, the employer

can then be made liable on the basis of the presumption juris tantum
that the employer failed to exercise diligentissimi patris families in
the selection and supervision of its employees. The liability is primary
and can only be negated by showing due diligence in the selection and
supervision of the employee, a factual matter that has not been
shown. Absent such a showing, one might ask further, how then must
the liability of the common carrier, on the one hand, and an
independent contractor, on the other hand, be described? It would be
solidary. A contractual obligation can be breached by tort and when
the same act or omission causes the injury, one resulting in culpa
contractual and the other in culpa aquiliana, Article 2194 14 of the Civil
Code can well apply.15 In fine, a liability for tort may arise even under
a contract, where tort is that which breaches the contract. 16 Stated
differently, when an act which constitutes a breach of contract would
have itself constituted the source of a quasi-delictual liability had no
contract existed between the parties, the contract can be said to have
been breached by tort, thereby allowing the rules on tort to apply. 17
Regrettably for LRT, as well as perhaps the surviving spouse and heirs
of the late Nicanor Navidad, this Court is concluded by the factual
finding of the Court of Appeals that "there is nothing to link (Prudent)
to the death of Nicanor (Navidad), for the reason that the negligence
of its employee, Escartin, has not been duly proven x x x." This
finding of the appellate court is not without substantial justification in
our own review of the records of the case.
There being, similarly, no showing that petitioner Rodolfo Roman
himself is guilty of any culpable act or omission, he must also be
absolved from liability. Needless to say, the contractual tie between
the LRT and Navidad is not itself a juridical relation between the
latter and Roman; thus, Roman can be made liable only for his own
fault or negligence.
The award of nominal damages in addition to actual damages is
untenable. Nominal damages are adjudicated in order that a right of
the plaintiff, which has been violated or invaded by the defendant,
may be vindicated or recognized, and not for the purpose of
indemnifying the plaintiff for any loss suffered by him. 18 It is an
established rule that nominal damages cannot co-exist with
compensatory damages.19
WHEREFORE, the assailed decision of the appellate court is
AFFIRMED with MODIFICATION but only in that (a) the award of
nominal damages is DELETED and (b) petitioner Rodolfo Roman is
absolved from liability. No costs.
FIRST

PHILIPPINE
INDUSTRIAL
CORPORATION, petitioner,
vs. COURT
OF
APPEALS, HONORABLE PATERNO V. TAC-AN,
BATANGAS CITY and ADORACION C. ARELLANO,
in her official capacity as City Treasurer of
Batangas, respondents.

MARTINEZ, J.:
This petition for review on certiorari assails the Decision of the
Court of Appeals dated November 29, 1995, in CA-G.R. SP No. 36801,
affirming the decision of the Regional Trial Court of Batangas City,
Branch 84, in Civil Case No. 4293, which dismissed petitioners'
complaint for a business tax refund imposed by the City of Batangas.
Petitioner is a grantee of a pipeline concession under Republic
Act No. 387, as amended, to contract, install and operate oil
pipelines. The original pipeline concession was granted in 1967 [1] and
renewed by the Energy Regulatory Board in 1992.[2]
Sometime in January 1995, petitioner applied for a mayor's
permit with the Office of the Mayor of Batangas City. However,
before the mayor's permit could be issued, the respondent City
Treasurer required petitioner to pay a local tax based on its gross
receipts for the fiscal year 1993 pursuant to the Local Government
Code.[3] The respondent City Treasurer assessed a business tax on the
petitioner amounting to P956,076.04 payable in four installments
based on the gross receipts for products pumped at GPS-1 for the
fiscal year 1993 which amounted to P181,681,151.00. In order not to
hamper its operations, petitioner paid the tax under protest in the
amount of P239,019.01 for the first quarter of 1993.

On January 20, 1994, petitioner filed a letter-protest addressed

to the respondent City Treasurer, the pertinent portion of which
reads:

"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:

"Please note that our Company (FPIC) is a pipeline operator with a

government concession granted under the Petroleum Act. It is
engaged in the business of transporting petroleum products from the
Batangas refineries, via pipeline, to Sucat and JTF Pandacan
Terminals. As such, our Company is exempt from paying tax on gross
receipts under Section 133 of the Local Government Code of 1991 x x x
x
"Moreover, Transportation contractors are not included in the
enumeration of contractors under Section 131, Paragraph (h) of the
Local Government Code. Therefore, the authority to impose tax 'on
contractors and other independent contractors' under Section 143,
Paragraph (e) of the Local Government Code does not include the
power to levy on transportation contractors.
"The imposition and assessment cannot be categorized as a mere fee
authorized under Section 147 of the Local Government Code. The
said section limits the imposition of fees and charges on business to
such amounts as may be commensurate to the cost of regulation,
inspection, and licensing. Hence, assuming arguendo that FPIC is
liable for the license fee, the imposition thereof based on gross
receipts is violative of the aforecited provision. The amount
of P956,076.04 (P239,019.01 per quarter) is not commensurate to the
cost of regulation, inspection and licensing. The fee is already a
revenue raising measure, and not a mere regulatory imposition." [4]
On March 8, 1994, the respondent City Treasurer denied the
protest contending that petitioner cannot be considered engaged in
transportation business, thus it cannot claim exemption under
Section 133 (j) of the Local Government Code.[5]
On June 15, 1994, petitioner filed with the Regional Trial Court
of Batangas City a complaint [6] for tax refund with prayer for a 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 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.

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, x x x 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 20, 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.
Article 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]

"xxx Plaintiff is either a contractor or other independent contractor.

xxx 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.

1.

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 x x
x 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.

storage, or transportation by special methods of petroleum, is

hereby declared to be a public utility." (Underscoring Supplied)
The Bureau of Internal Revenue likewise considers the
petitioner a "common carrier." In BIR Ruling No. 069-83, it
declared:
"x x x 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 x x x. Such being the case, it is not
subject to withholding tax prescribed by Revenue Regulations No. 1378, 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:
"Section 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

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.'
"(Underscoring 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:

xxx
(j)

xxx

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." x x x
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 onehalf 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.

"Art. 86. Pipe line concessionaire as a 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."

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.

Republic Act 387 also regards petroleum operation as a public

utility. Pertinent portion of Article 7 thereof provides:

MR. AQUINO (A.). Thank you for that clarification, Mr.

Speaker. x x x[18]

"that everything relating to the exploration for and exploitation of

petroleum x x and everything relating to the manufacture, refining,

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.

"Each local government unit shall have the power

to create its own sources of revenues and to levy
taxes, fees, and charges subject to such guidelines
and limitations as the Congress may provide,
consistent with the basic policy of local
autonomy. Such taxes, fees, and charges shall
accrue exclusively to the local governments."[5]
Section 129 and Section 133 of the Local Government Code read:
"SEC. 129. Power to Create Sources of Revenue. Each local government unit shall exercise its
power to create its own sources of revenue and to
levy taxes, fees, and charges subject to the
provisions herein, consistent with the basic policy
of local autonomy. Such taxes, fees, and charges
shall accrue exclusively to the local government
units."

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.
LAND TRANSPORTATION OFFICE [LTO], represented by
Assistant Secretary Manuel F. Bruan, LTO Regional Office,
Region X represented by its Regional Director, Timoteo A.
Garcia; and LTO Butuan represented by Rosita G. Sadiaga,
its
Registrar, petitioners,
vs.
CITY
OF
BUTUAN,
represented in this case by Democrito D. Plaza II, City
Mayor, respondents.

"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:

DECISION
VITUG, J.:
The 1987 Constitution enunciates the policy that the territorial and
political subdivisions shall enjoy local autonomy. [1] In obedience to
that, mandate of the fundamental law, Republic Act ("R.A.") No.7160,
otherwise known as the Local Government Code, [2] expresses that the
territorial and political subdivisions of the State shall enjoy genuine
and meaningful local autonomy in order to enable them to attain their
fullest development as self-reliant communities and make them more
effective partners in the attainment of national goals, and that it is a
basic aim of the State to provide for a more responsive and
accountable local government structure instituted through a system of
decentralization whereby local government units shall be given more
powers, authority, responsibilities and resources.
While the Constitution seeks to strengthen local units and ensure
their viability, clearly, however, it has never been the intention of that
organic law to create an imperium in imperio and install
an intrasovereign political subdivision independent of a single
sovereign state.
The Court is asked in this instance to resolve the issue of whether
under the present set up the power of the Land Registration
Office ("LTO") to register, tricycles in particular, as well as
to issue licenses for the driving thereof, has likewise
devolved to local government units.
The Regional Trial Court (Branch 2) of Butuan City held:[3] that the
authority to register tricycles, the grant of the corresponding
franchise, the issuance of tricycle drivers' license, and the collection of
fees therefor had all been vested in the Local Government Units
("LGUs"). Accordingly, it decreed the issuance of a permanent writ of
injunction against LTO, prohibiting and enjoining LTO, as well as its
employees and other persons acting in its behalf, from (a) registering
tricycles and (b) issuing licenses to drivers of tricycles. The Court of
Appeals, on appeal to it, sustained the trial court.
The adverse rulings of both the court a quo and the appellate court
prompted the LTO to file the instant petition for review
on certiorari to annul and set aside the decision,[4] dated 17 November
1997, of the Court of Appeals affirming the permanent injunctive writ
order of the Regional Trial Court (Branch 2) of Butuan City.
Respondent City of Butuan asserts that one of the salient provisions
introduced by the Local Government Code is in the area of local
taxation which allows LGUs to collect registration fees or charges
along with, in its view, the corresponding issuance of all kinds of
licenses or permits for the driving of tricycles.
The 1987 Constitution provides:

"xxx.......xxx.......xxx.
"(I) Taxes, fees or charges for the registration of
motor vehicles and for the issuance of all kinds of
licenses or permits for the driving thereof, except
tricycles."
Relying on the foregoing provisions of the law, the Sangguniang
Panglungsod ("SP") of Butuan, on 16 August 1992, passed SP
Ordinance No.916-92 entitled "An Ordinance Regulating the
Operation of Tricycles-for-Hire, providing mechanism for the
issuance of Franchise, Registration and Permit, and Imposing
Penalties for Violations thereof and for other Purposes." The
ordinance provided for, among other things, the payment of franchise
fees for the grant of the franchise of tricycles-for-hire, fees for the
registration of the vehicle, and fees for the issuance of a permit for the
driving thereof.
Petitioner LTO explains that one of the functions of the national
government that, indeed, has been transferred to local government
units is the franchising authority over tricycles-for-hire of the Land
Transportation Franchising and Regulatory Board ("LTFRB") but not,
it asseverates, the authority of LTO to register all motor vehicles and
to issue to qualified persons of licenses to drive such vehicles.
In order to settle the variant positions of the parties, the City of
Butuan, represented by its City Mayor Democrito D. Plaza, filed on 28
June
1994
with
the
trial
court
a
petition
for
"prohibition, mandamus,injunction with a prayer for preliminary
restraining order ex-parte" seeking the declaration of the validity of
SP Ordinance No.962-93 and the prohibition of the registration of
tricycles-for-hire and the issuance of licenses for the driving thereof
by the LTO.
LTO opposed the prayer in the petition.
On 20 March 1995, the trial court rendered a resolution; the
dispositive portion read:
"In view of the foregoing, let a permanent
injunctive writ be issued against the respondent
Land Transportation Office and the other
respondents, prohibiting and enjoining them,
their employees, officers, attorney's or other
persons acting in their behalf from forcing or
compelling Tricycles to be registered with, and
drivers to secure their licenses from respondent
LTO or secure franchise from LTFRB and from
collecting fees thereon. It should be understood
that the registration, franchise of tricycles and
driver's license/permit granted or issued by the

City of Butuan are valid only within the territorial

limits of Butuan City.
"No pronouncement as to costs."[6]
Petitioners timely moved for a reconsideration of the above resolution
but it was to no avail. Petitioners then appealed to the Court of
Appeals. In its now assailed decision, the appellate court, on 17
November 1997, sustained the trial court. It ruled:
"WHEREFORE,
the
petition
is
hereby
DISMISSED and the questioned permanent
injunctive writ issued by the court a quo dated
March 20, 1995 AFFIRMED."[7]
Coming up to this Court, petitioners raise this sole assignment of
error, to wit:
"The Court of Appeals [has] erred in sustaining
the validity of the writ of injunction issued by the
trial court which enjoined LTO from (1)
registering tricycles-for-hire and (2) issuing
licenses for the driving thereof since the Local
Government Code devolved only the franchising
authority of the LTFRB. Functions of the LTO
were not devolved to the LGU's."[8]
The petition is impressed with merit.
The Department of Transportation and Communications [9] ("DOTC"),
through the LTO and the LTFRB, has since been tasked with
implementing laws pertaining to land transportation. The LTO is a
line agency under the DOTC whose powers and functions, pursuant to
Article III, Section 4 (d) (1),[10] of R.A. No.4136, otherwise known
as Land Transportation and Traffic Code, as amended, deal
primarily with the registration of all motor vehicles and the licensing
of drivers thereof. The LTFRB, upon the other hand, is the governing
body tasked by E.O. No. 202, dated 19 June 1987, to regulate the
operation of public utility or "for hire" vehicles and to grant franchises
or certificates of public convenience ("CPC").[11] Finely put,
registration and licensing functions are vested in the LTO
while franchising andregulatory responsibilities had been vested in
the LTFRB.
Under the Local Government Code, certain functions of the DOTC
were transferred to the LGUs, thusly:
"SEC. 458. Powers, Duties, Functions and
Compensation. -
"xxx.......xxx.......xxx
"(3) Subject to the provisions of Book II of this
Code, enact ordinances granting franchises and
authorizing the issuance of permits or licenses,
upon such conditions and for such purposes
intended to promote the general welfare of the
inhabitants of the city and pursuant to this
legislative authority shall:

generally of common right.[13] On the other hand, "to register" means

to record formally and exactly, to enroll, or to enter precisely in a list
or the like,[14] and a "driver's license" is the certificate or license issued
by the government which authorizes a person to operate a motor
vehicle.[15] The devolution of the functions of the DOTC, performed by
the LTFRB, to the LGUs, as so aptly observed by the Solicitor General,
is aimed at curbing the alarming increase of accidents in national
highways involving tricycles. It has been the perception that local
governments are in good position to achieve the end desired by the
law-making body because of their proximity to the situation that can
enable them to address that serious concern better than the national
government.
It may not be amiss to state, nevertheless, that under Article 458 (a)
[3-VI] of the Local Government Code, the power of LGUs to regulate
the operation of tricycles and to grant franchises for the operation
thereof is still subject to the guidelines prescribed by the DOTC. In
compliance therewith, the Department of Transportation and
Communications ("DOTC") issued "Guidelines to Implement the
Devolutionof LTFRBs Franchising Authority over Tricycles-For-Hire
to Local Government units pursuant to the Local Government
Code." Pertinent provisions of the guidelines state:
"In lieu of the Land Transportation Franchising
and Regulatory Board (LTFRB) in the DOTC, the
Sangguniang Bayan/Sangguniang Panglungsod
(SB/SP) shall perform the following:
"(a) Issue, amend, revise, renew, suspend, or
cancel MTOP and prescribe the appropriate
terms and conditions therefor;
"Operating Conditions:
"1. For safety reasons, no tricycles should operate
on national highways utilized by 4 wheel vehicles
greater than 4 tons and where normal speed
exceed 40 KPH. However, the SB/SP may
provide exceptions if there is no alternative routs.
"2. Zones must be within the boundaries of the
municipality/city. However, existing zones within
more than one municipality/city shall be
maintained, provided that operators serving said
zone shall secure MTOP's from each of the
municipalities/cities having jurisdiction over the
areas covered by the zone.
"3. A common color for tricycles-for-hire
operating in the same zone may be imposed.
Each unit shall be assigned and bear an
identification number, aside from its LTO license
plate number.
"4. An operator wishing to stop service
completely, or to suspend service for more than
one month, should report in writing such
termination or suspension to the SB/SP which
originally granted the MTOP prior thereto.
Transfer to another zone may be permitted upon
application.

"xxx.......xxx.......xxx.
"(VI) Subject to the guidelines prescribed by the
Department
of
Transportation
and
Communications, regulate the operation of
tricycles and grant franchises for the
operation thereof
within
the
territorial
jurisdiction of the city." (Emphasis supplied)
LGUs indubitably now have the power to regulate the operation of
tricycles-for-hire and to grant franchises for the operation thereof.
"To regulate" means to fix, establish, or control; to adjust by rule,
method, or established mode; to direct by rule or restriction; or to
subject to governing principles or laws. [12] A franchise is defined to be
a special privilege to do certain things conferred by government on an
individual or corporation, and which does not belong to citizens

"5. The MTOP shall be valid for three (3) years,

renewable for the same period. Transfer to
another zone, change of ownership of unit or
transfer of MTOP shall be construed as an
amendment to an MTOP and shall require
appropriate approval of the SB/SP.
"6. Operators shall employ only drivers duly
licensed by LTO for tricycles-for-hire.
"7. No tricycle-for-hire shall be allowed to carry
more passengers and/or goods than it is designed
for.

"8. A tricycle-for-hire shall be allowed to operate

like a taxi service, i.e., service is rendered upon
demand and without a fixed route within a
zone."[16]
Such as can be gleaned from the explicit language of the statute, as
well as the corresponding guidelines issued by DOTC, the newly
delegated powers pertain to the franchising and regulatory
powers theretofore exercised by the LTFRB and not to the
functions of the LTO relative to the registration of motor
vehicles and issuance of licenses for the driving thereof.
Clearly unaffected by the Local Government Code are the powers of
LTO under R.A. No.4136 requiring the registration of all kinds of
motor vehicles "used or operated on or upon any public highway" in
the country. Thus "SEC. 5. All motor vehicles and other vehicles
must be registered. - (a) No motor vehicle shall
be used or operated on or upon any public
highway of the Philippines unless the same is
properly registered for the current year in
accordance with the provisions of this Act (Article
1, Chapter II, R.A. No. 4136).
The Commissioner of Land Transportation and his deputies are
empowered at anytime to examine and inspect such motor vehicles to
determine whether said vehicles are registered, or are unsightly,
unsafe, improperly marked or equipped, or otherwise unfit to be
operated on because of possible excessive damage to highways,
bridges and other infrastructures.[17] The LTO is additionally charged
with being the central repository and custodian of all records of all
motor vehicles.[18]

of Book III of the Local Government Code in the same manner that
the specific devolution of LTFRB's power on franchising of tricycles
has been provided. Repeal by implication is not favored. [20] The power
over tricycles granted under Section 458(a)(3)(VI) of the Local
Government Code to LGUs is the power to regulate their operation
and to grant franchises for the operation thereof. The exclusionary
clause contained in the tax provisions of Section 133(1) of the Local
Government Code must not be held to have had the effect of
withdrawing the express power of LTO to cause the registration of all
motor vehicles and the issuance of licenses for the driving thereof.
These functions of the LTO are essentially regulatory in nature,
exercised pursuant to the police power of the State, whose basic
objectives are to achieve road safety by insuring the road worthiness
of these motor vehicles and the competence of drivers prescribed by
R. A. 4136. Not insignificant is the rule that a statute must not be
construed in isolation but must be taken in harmony with the extant
body of laws.[21]
The Court cannot end this decision without expressing its
own serious concern over the seeming laxity in the grant of
franchises for the operation of tricycles-for-hire and in
allowing the indiscriminate use by such vehicles on public
highways and principal thoroughfares. Senator Aquilino C.
Pimentel, Jr., the principal author, and sponsor of the bill that
eventually has become to be known as the Local Government Code,
has aptly remarked:
"Tricycles are a popular means of
transportation,
specially
in
the
countryside. They are, unfortunately,
being allowed to drive along highways and
principal thoroughfares where they pose
hazards to their passengers arising from
potential collisions with buses, cars and
jeepneys.

The Court shares the apprehension of the Solicitor General if the

above functions were to likewise devolve to local government units;
he states:

"The operation of tricycles within a

municipality may be regulated by
the Sangguniang
Bayan. In
this
connection, the Sangguniang concerned
would do well to consider prohibiting the
operation of tricycles along or across
highways invite collisions with faster and
bigger vehicles and impede the flow of
traffic."[22]

"If the tricycle registration function of

respondent LTO is decentralized, the incidence of
theft of tricycles will most certainly go up, and
stolen tricycles registered in one local
government could be registered in another with
ease. The determination of ownership thereof will
also become very difficult.
"Fake driver's licenses will likewise proliferate.
This likely scenario unfolds where a tricycle
driver, not qualified by petitioner LTO's testing,
could secure a license from one municipality, and
when the same is confiscated, could just go
another municipality to secure another license.
"Devolution will entail the hiring of additional
personnel charged with inspecting tricycles for
road
worthiness,
testing
drivers,
and
documentation. Revenues raised from tricycle
registration may not be enough to meet salaries
of additional personnel and incidental costs for
tools and equipment."[19]
The reliance made by respondents on the broad taxing power of local
government units, specifically under Section 133 of the Local
Government Code, is tangential. Police power and taxation, along
with eminent domain, are inherent powers of sovereignty which the
State might share with local government units by delegation given
under a constitutional or a statutory fiat. All these inherent powers
are for a public purpose and legislative in nature but the similarities
just about end there. The basic aim of police power is public good and
welfare. Taxation, in its case, focuses on the power of government to
raise revenue in order to support its existence and carry out its
legitimate objectives. Although correlative to each other in many
respects, the grant of one does not necessarily carry with it the grant
of the other. The two powers are, by tradition and jurisprudence,
separate and distinct powers, varying in their respective concepts,
character, scopes and limitations. To construe the tax provisions of
Section 133(1) indistinctively would result in the repeal to that extent
of LTO's regulatory power which evidently has not been intended. If it
were otherwise, the law could have just said so in Section 447 and 458

The need for ensuring public safety and convenience to commuters

and pedestrians alike is paramount. It might be well, indeed, for
public officials concerned to pay heed to a number of provisions in
our laws that can warrant in appropriate cases an incurrence of
criminal and civil liabilities. Thus The Revised Penal Code "Art. 208. Prosecution of offenses; negligence
and tolerance. - The penalty of prision
correccional in its minimum period and
suspension shall be imposed upon any public
officer, or officer of the law, who, in dereliction of
the duties of his office, shall maliciously refrain
from instituting prosecution for the punishment
of violators of the law, or shall tolerate the
commission of offenses."
The Civil Code "Art. 27. Any person suffering material or moral
loss because a public servant or employee refuses
or neglects, without just cause, to perform his
official duty may file an action for damages and
other relief against the latter, without prejudice
to any disciplinary administrative action that
may be taken."
"Art. 34. When a member of a city or municipal
police force refuses or fails to render aid or
protection to any person in case of danger to life
or property, such peace officer shall be primarily

liable for damages, and the city or municipality

shall be subsidiarily responsible therefor. The
civil action herein recognized shall be
independent of any criminal, proceedings, and a
preponderance of evidence shall suffice to
support such action."
"Art. 2189. Provinces, cities and municipalities
shall be liable for damages for the death of, or
injuries suffered by, any person by reason of the
defective condition of roads, streets, bridges,
public buildings, and other public works under
their control or supervision."
The Local Government Code -

1. application for rerouting will not involve any increase of trips or

units nor will involve the purchase of new trucks, while that of
petitioner would call for the use of 10 new trucks, which means a
further depletion of the already depleted dollar reserve of our
government
2. application for re-routing will not involve the acquisition of an
operating right over the national highway from Malolos railroad
crossing up to Guiguinto, while, on the other hand, petitioners
application will involve the acquisition of a new operating right
Issue:
Who has a better right to render the service?

"Sec. 24. Liability for Damages. - Local

government units and their officials are not
exempt from liability for death or injury to
persons or damage to property."
WHEREFORE, the assailed decision which enjoins the Land
Transportation Office from requiring the due registration of tricycles
and a license for the driving thereof is REVERSED and SET ASIDE.

Held:
Litimco. Since it is admitted that he is financially competent and
able to operate the line proposed and is also an operator of a bus
line from Manila to Malolos via Bulacan, we see no plausible reason
why he should not be given preference to operate the service applied
for considering that he is the first one to apply for such line.

Litimco v. La Mallorca
Facts: Tomas Litimco filed a petition before the Public Service
Commission (PSC) praying for authority to operate a TPU service on
the line Manila-Malolos via Sta. Isabel with the use of 10 units.
Several operators filed written oppositions.
Before PSC could render its decision, La Mallorca, another operator,
moved to reopen the case stating that if the petition to operate the line
proposed be granted it would work to its prejudice and so it requested
a reopening in order that it may file its opposition. The motion was
granted.
However, instead of presenting evidence in support of its
opposition, La Mallorca moved for postponement, only to announce
days later that instead of merely objecting to the petition, it decided
to file an application under a separate number (Case No. 63120)
requesting for authority to operate the same line applied for by
petitioner by rerouting 4 of its 10 round trip units of the line
Malolos-Manila via Guiguinto.
The PSC rendered decision denying petitioners application but
granting that of respondent on the ground that the latter has a
better right to render the service applied for.
Petitioner contends that the Public Service Commission
erred because:
1. his application was filed much ahead than that of respondent and

This is in accord with the policy to stave off any act of

discrimination or partiality against any application for operation of
a new line. While there may be cases where an applicant, even if
ahead in time, was not given the service, it is because it was proven
that he was financially incompetent, or otherwise disqualified, to
render the service, If an applicant is qualified financially, and is able
to undertake the service, he should be given the preference as a
matter of fairness and justice.
Priority in the filing of the application for a certificate of public
convenience is, other conditions being equal, an important factor in
determining the right of the public service companies.
The argument that the application of petitioner for the operation of
the new line calls for the purchase of 10 new trucks is of no
consequence, if the operation will redound to the benefit of the
riding public. The operation of a new line as a general proposition
always involves a new investment which may happen even with old
operators. In the course of operation, and with the passing of time,
new equipment and facilities may be found necessary to maintain
an efficient service, which additional expenditure cannot certainly
be considered as a cause for disruption of the service. This is a
matter of finance which concerns exclusively the one who desires to
operate the new line.
At any rate, the new line merely covers 7 kilometers of new territory
which traverses three sparsely populated barrios, and considering
that respondent did not deem it necessary to cover said territory
except after the passing of many years, and only thought of giving
the service when petitioner filed his application, fairness requires
that preference be given to petitioner.

as such it is entitled to preference

G.R. No. L-21061

2. in awarding the line to respondent it in effect gave recognition to

FORTUNATO
F.
vs.
RUPERTO CRUZ, respondent.

the unfair attitude of respondent

June 27, 1968

HALILI, petitioner,

3. to grant the service in favor of respondent will work to the

prejudice of the riding public for it would be allowing respondent to

ZALDIVAR, J.:

abandon a portion of its service on its original line Manila-Malolos

via Guiguinto, a service which was previously found to promote the
need and convenience of the people in said territory.
Respondent reasoned out that its:

This is a petition for review of the decision of the Public Service

Commission, in its Case No. 61-6113, granting to respondent-appellee
Ruperto Cruz a certificate of public convenience to operate a
transportation service for passengers and freight, with authority to
operate ten units on the line he applied for.

Herein respondent filed, on September 19, 1961, with the Public

Service Commission an application, praying for the grant of a
certificate of public convenience to operate, under PUB
denomination, ten buses between Norzagaray (Bulacan) and Piers
(Manila), via Novaliches Road, A. Bonifacio Road, Blumentritt Street,
Rizal Avenue, MacArthur Bridge, Aduana and 13th Streets; and on the
return trip, via Boston Street, MacArthur Bridge, Rizal Avenue,
Blumentritt Street, A. Bonifacio Road, and Novaliches Road. The
application was opposed by De Dios Transportation Co., Inc.,
Raymundo Transportation Co., Inc., PDP Transit Inc., Villa Rey
Transit, Inc., and by herein petitioner-appellant Fortunato F. Halili
who was the operator of the transportation service known as "Halili
Transit." Petitioner, in his opposition alleged, substantially, that he
was an operator of a bus service on the line applied for, enumerating
at the same time the other lines he operated which were traversed by
the route mentioned in respondent's application; that his service, as
well as that of other bus operators on the route, was more than
adequate to meet the demands of the traveling public; that the grant
of the application would merely result in wasteful and ruinous
competition, and that the respondent was not financially capable of
operating and maintaining the service proposed by him.
After several hearings in which the parties presented their evidence,
oral and documentary, the Public Service Commission rendered a
decision, on February 13, 1963, granting a certificate of public
convenience to respondent Ruperto Cruz to operate ten buses under
PUB denomination on the line Norzagaray (Bulacan) Piers
(Manila) passing through the routes applied for. The decision states,
among others, as follows:
After a careful study of the evidence presented by the
contesting parties, we find the following facts established;
that applicant is applying for a service from Norzagaray to
Piers and vice-versa; that not one of the oppositors herein
operate a service up to Piers most of them go up to
Divisoria and the rest up to Folgueras; that there are
commuters starting from Norzagaray up to Piers; that
applicant has the experience in the operation of a PUB
service and that applicant has the means with which to
operate and maintain the service herein applied for.
From the facts in evidence, this Commission is of the belief
that the weight of evidence tips in favor of the applicant.
It appearing, therefore, that applicant is a Filipino citizen,
that he is financially capable to operate and maintain the
service herein applied for, and that public convenience and
necessity will be promoted by the approval of this
application, and furthermore, that the oppositions of the
oppositors herein are without merit, the same are overruled
and the instant application APPROVED.
It is the above-mentioned decision of the Public Service Commission
that is now sought to be reviewed by this Court.
Petitioner contends that:
1. "The finding of the Public Service Commission that there
was a public need for the operation by respondent of ten
buses on the line of Norzagaray (Bulacan) - Piers (Manila)
is not supported by the evidence;
2. "The Public Service Commission erred when it did not
recognize the fact that petitioner-appellant was rendering
sufficient and adequate service on the line in question; and
3. "The Public Service Commission erred in failing to give
petitioner-appellant the right of protection to investment to
which petitioner-appellant is entitled."
In support of his first two contentions petitioner argues that the 500
passengers found by the Commission as commuting daily from
Norzagaray to Manila could easily be accommodated in the buses of
existing operators; that the existing operators were authorized to
operate 31 buses which made around 100 round trips a day; that since
a bus could accommodate about 50 passengers, the existing
authorized services could easily accommodate not only the 500 but

even 5000 passengers a day. Petitioner also asserted that the

Commission failed to consider that 200 of the 500 commuters
worked in the Republic Cement Factory located at Norzagaray and so
there were really only 300 commuters daily traveling on the
Norzagaray Manila line. Petitioner further claimed that the new
terminal proposed in the application was not based on actual need,
because there were no importing firms, or business establishments, or
manufacturing concerns, in Norzagaray, whose employees had to
make trips to the piers at the south harbor in a Manila. On the
question of public necessity, petitioner pointed out that the evidence
presented by the respondent consisted only of the testimony of two
witnesses who did not make any formal or systematic study of the
movement and frequency of public utility buses, so that their
testimonies were based only on casual observations. On the other
hand, as petitioner pointed out, the oppositors presented five
witnesses, two of whom made meticulous, systematic and daily
observations on the line applied for. Petitioner urged that according
to Exhibits "1", "1-A" to "1-R", consisting of different pages of entries
in a checkbook at the various PSC checkpoints in the proposed line,
buses passing the checkpoints were carrying only from 1 to 5
passengers which fact proved that the existing operators more than
adequately served the needs of the public.
Petitioner likewise asserted that public necessity did not require the
operation of the ten buses applied for by the respondent because of
the fact that on December 20, 1961, the Public Service Commission
granted to herein petitioner, in Case No. 61-5807, authority to operate
only 10 buses on the line Norzagaray Manila, even if he had applied
for 20 buses; and that out of the many application to operate buses
from Paradise Farms (Bulacan) to Manila, only 10 buses were
authorized.
The first two contentions of petitioner raise questions of fact. This
Court has repeatedly held that where the Public Service Commission
has reached a finding, after weighing the conflicting evidence, that
public necessity and convenience warrant the operation of additional
public utility service, the finding must not be disturbed as long as
there is evidence reasonably supporting such finding. 1 In reviewing
the decision of the Commission, this Court is not even required to
examine the proof de novo and determine for itself whether or not the
preponderance of evidence really justifies the decision. The only
function of this Court is to determine whether or not there is evidence
before the Commission upon which its decision might reasonably be
based.2
The Commission stated in its decision that "after a careful study of the
evidence presented by the contesting parties ... the Commission is of
the belief that the weight of evidence tips in favor of the application."
There is evidence on record that there are numerous students,
professionals, merchants, and employees in both government and
private concerns, that commute daily between Norzagaray and Manila
and the intermediate points along the line; 3 that along the same line
have emerged numerous centers of population, residential
subdivisions and housing projects, industrial projects like the
Republic Cement Factory, Angat River Dam Hydro-electric Power
Project, and hollow blocks manufacturing establishments; 4 that
commuters experienced difficulties in getting accommodated on
buses traveling between Norzagaray and Manila; that the Villa Rey
Transit used to make two trips from Angat to Manila via Norzagaray,
the La Mallorca Pambusco also two trips from Norzagaray to Manila
via Sta. Maria, and the Halili Transit likewise two trips from
Norzagaray to Manila via the Novaliches Road; that said trips were
fully loaded at Norzagaray such that many commuters from
Norzagaray had to take jeeps which brought them only up to Sta.
Maria and Bocaue and there waited for other means of transportation
to bring them to Manila;5 and that commuters from Manila to
Norzagaray also had to resort to broken trips for lack of direct
trips.6 We are persuaded that the evidence in the record support the
decision appealed from.
Petitioner claims that the Public Service Commission did not consider
the checker's reports (Exhs. 1, 1-A, to 1-R), on the face of which it
appears that there was no overcrowding in the buses checked at the
various checkpoints. The Commission, however, states in its decision
that it had arrived at the finding "after a careful study of the evidence
presented by the contesting parties," and necessarily the evidence
thus studied included the checker's reports. But assuming, gratia
argumenti, that said reports were not considered the failure of the
Commission to consider the reports would not constitute a reversible

error, because we find that the reports refer to trips of buses from
Manila to Ipo, Sapang Palay, San Jose and back, and from upland to
lowland and back, and none of the buses checked had trips along
Norzagaray-Manila or Manila-Norzagaray line. The relative weight of
these checker's reports as evidence must have been considered by the
Commission before making its decision. As we have stated, the
finding of fact of the Public Service Commission is conclusive on this
Court. Thus, in a case, this Court said:
It appearing that the main issues raised by petitioner
merely affect questions of fact which by their very nature
involve an evaluation of the relative weight of the evidence
of both parties, or the credibility of witnesses who testified
before the Commission, following the law and
jurisprudence applicable to the matter in this jurisdiction,
said questions are now conclusive upon this Court, and
cannot be looked into, it appearing that there is sufficient
evidence to support its findings.7
The claim of petitioner, that he was rendering adequate services on
the line in question as would preclude the necessity of another
operator, is untenable. In the first place, as shown in the record,
petitioner does not have a direct line from Norzagaray to the Piers
the line that is applied for by respondent. In the second place, there is
evidence to the effect that oppositor Halili was authorized 48 trips
between Norzagaray and Folgueras,8 but it was making two trips
only.9 This circumstance indicated that there was shortage of
transportation units or facilities, and that the line was not adequately
serviced by the petitioner. Thus, in a case concerning the nonoperation of authorized units, this Court said:
Apart from the existence of competent evidence in support
of these findings, certain undisputed facts therein
contained reveal that the assignment of error under
consideration is manifestly untenable. We refer to the
circumstance that, of the 75 buses that the Raytranco is
authorized to operate in all its lines, its right with respect to
30 has been leased, 14 to Rizman and 16 to Laguna-Tayabas
Bus Company. Again, though still entitled to operate 45
units in its remaining lines, the Raytranco has registered
only 17 buses, aside from the circumstance that such buses
are not in continuous operation. These facts lead to the
conclusion that there must be a shortage of transportation
facilities in the lines aforementioned and that the
Raytranco is unable to meet fully the demands of public
convenience therein.10
Petitioner claims, in his third contention, that the Public Service
Commission failed to give him the protection that he is entitled to,
being an old and established public service operator. As a general
principle public utility operators must be protected from ruinous
competition, such that before permitting a new operator to serve in a
territory already served by another operator, the latter should first be
given opportunity to improve his equipment and service. This
principle, however, is subject to justifiable exceptions. The primary
consideration in the grant of a certificate of public convenience must
always be public convenience. Thus, this Court said:
While it is the duty of the government as far as possible to
protect public utility operators against unfair and
unjustified competition, it is nevertheless obvious that
public convenience must have the first consideration.... 11
The public convenience is properly served if passengers who take
buses at points in one part of a line are able to proceed beyond those
points without having to change buses. On this point this Court said:
It is the convenience of the public that must be taken into account,
other things being equal, and that convenience would be effectuated
by passengers who take buses at points in one part of a line being able
to proceed beyond those points without having to change buses and to
wait the arrival of buses of a competitive operator. We can perceive
how under such conditions one public utility could gain business at
the expense of a rival.12
In the instant case, public convenience would be properly served if
commuters from Norzagaray going to the Piers in Manila could go to
their destination without the need of changing buses. Certainly the

Public Service Commission has power to grant a certificate of public

convenience to a new operator, and the old operator cannot with
reason complain that it had not been given opportunity to improve its
equipment and service, if it is shown that the old operator has not
placed in the service all the units of equipment that it had been
authorized to operate, and also when the old operator has violated, or
has not complied with, important conditions in its certificate. 13 In
the instant case, it has been shown that petitioner had not operated
all the units that it was authorized to operate.
IN VIEW OF THE FOREGOING, the decision of the Public Service
Commission, sought to be reviewed, is affirmed; with costs against
petitioner-appellant. It is so ordered.
EN BANC
[G.R. No. L-7880. May 18, 1956.]
RAYMUNDO TRANSPORTATION Co., INC., Petitioner, vs.
TEOFILO CERDA, Respondent.

BAUTISTA ANGELO, J.:

Teofilo Cerda is a holder of a certificate of public convenience granted
him by the Public Service Commission to operate a bus service for the
transportation of passengers and freight on the line Binangonan
(Rizal) to Manila and vice versa. This certificate is but a conversion
into a permanent one of the emergency certificate previously given
him by the Commission way back in 1947. On September 12, 1953, he
asked for authority to increase his present number of trips by eight
additional round trips with the use of three additional buses on the
ground that public convenience required the operation of the
additional trips. His application was opposed by Raymundo
Transportation Co., A. Gergaray Tanchingco and the Halili Transit
alleging that the services they are rendering on the same line are more
than sufficient to satisfy the needs of the traveling public, and hence
there is no need for the additional trips on the same line.
At the hearing, the applicant presented the testimony of Sisenando
Sison, Pedro Fineza, and Fernando Flores, all residents of
Binangonan, Rizal, while on the part of the Oppositors, only the first
two submitted evidence in support of their opposition, and on the
strength of the evidence submitted, the Commission found that the
preponderance of evidence justifies the authorization of additional
trips on the line although not in the number asked by the applicant
and granted him authority to operate only four additional round trips
with one auto-truck subject to certain specified conditions. From this
decision, Oppositor Raymundo Transportation Co. interposed the
present petition for review.
It is contended for Petitioner that the decision of the Public Service
Commission is erroneous because (1) there is no need for the service
applied for because the present service rendered byPetitioner and
other operators is more than enough to satisfy the needs of the
traveling public; chan roblesvirtualawlibrary(2) the four additional
round trips granted to Respondent would result in ruinous
competition
with
the
service
of Petitioner; chan
roblesvirtualawlibraryand (3) if there is any need for additional
service, Petitionershould be given the preference of rendering it being
an old operator. With regard to the first point, the evidence submitted
by applicant and the Oppositor is conflicting. Yet the Commission
took pains in weighing the credibility of the witnesses and found that
the preponderance was in favor of the applicant. Thus, the
Commission found that there are hours of the day when the means of
transportation are not sufficient because of the volume of traffic at
such hours which can be remedied by authorizing a few additional
trips to take care of the needs of the public. The reports of the
checking made at Taytay of the buses passing by that place and the
number of passengers carried by each bus indicate that there is a
reasonable number of passengers carried throughout the day but that
at certain hours passengers traffic is much heavier. This finding is
supported by sufficient evidence, and following the well-known
precedent that when the decision of the Public Service Commission is
supported by some evidence the same should be left undisturbed, it
can readily be seen that the first point taken by Petitioner cannot be
entertained.
The contention that the additional service might spell ruin to the
business of Petitioner has also no basis for the evidence shows that
the traffic on the line applied for is of such a volume that warrants the
granting of the additional trips. Moreover, there is enough evidence to
show that ifPetitioner had suffered some losses they are due not to
competition but to bad roads and to poor management of the
business. The claim that Respondent should not be allowed to
undertake additional trips because he does not have the financial
means to do so has also no merit for the Commission has found that
he has such means and as a matter of fact he had already acquired one
reserved unit at the time he filed the present application.
As to the claim that Petitioner should be given the privilege of
rendering the additional service because it is an old operator, suffice it

to say that this rule only applies when the old operator offers to meet
the increase in the demand the moment it arises and not after another
operator had offered to render the additional service as was done in
the present case (Angat-Manila Trans. Co., Inc. vs. Victoria Vda. de
Tengco, 95 Phil., 58). The rule protects those who are vigilant in
meeting the needs of the traveling public.
The decision appealed from is affirmed, with costs against Petitioner.

Lita Enterprises vs. IAC Case Digest

Lita Enterprises vs. Intermediate Appellate Court
(129 SCRA 464)
Facts: Spouses Nicasio Ocampo and Francisca Garcia (private
respondents) purchased in installment from the Delta Motor Sales
Corporation five (5) Toyota Corona Standard cars to be used as taxi.
Since they had no franchise to operate taxicabs, they contracted with
petitioner Lita Enterprise, Inc., through its representative Manuel
Concordia, for the use of the latters certificate of public convenience
for a consideration of P1, 000.00 and a monthly rental of
P200.00/taxicab unit. For the agreement to take effect, the cars were
registered in the name of Lita Enterprises, Inc. The possession,
however, remains with spouses Ocampo and Garcia who operated and
maintained the same under Acme Taxi, petitioners trade name.
A year later, one of the taxicabs, driven by their employee, Emeterio
Martin, collided with a motorcycle. Unfortunately the driver of the
motorcycle, Florante Galvez died from the injuries it sustained.
Criminal case was filed against Emeterio Martin, while a civil case was
filed by the heir of the victim against Lita Enterprises. In the decision
of the lower court Lita Enterprises was held liable for damages for the
amount of P25, 000.00 and P7, 000.00 for attorneys fees.
A writ of execution for the decision followed, 2 of the cars of the
respondents spouses were levied and were sold to a public auction.
On March 1973, respondent Ocampo decided to register his taxicabs
in his own name. The manager of petitioner refused to give him the
registration papers. Thus, making spouses file a complaint against
petitioner. In the decision, Lita Enterprise was ordered to return the
three certificate of registration not levied in the prior case.
Petitioner now prays that private respondent be held liable to pay the
amount they have given to the heir of Galvez.
Issue: Whether or not petitioner can recover from private
respondent, knowing they are in an arrangement known as kabit
system.
Held: Kabit system is defined as, when a person who has been
granted a certificate of convenience allows another person who owns
a motor vehicle to operate under such franchise for a fee. This system
is not penalized as a criminal offense but is recognized as one that is
against public policy; therefore it is void and inexistent.
It is fundamental that the court will not aid either of the 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 trial
and appellate courts to have accorded the parties relief from their
predicament. Specifically Article 1412 states that:
If the act in which the unlawful or forbidden cause consists does not
constitute a criminal offense, the following rules shall be observed:
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 others undertaking.
The principle of in pari delicto is evident in this case. 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 sold or delivered, or damages for its
property agreed to be sold or delivered, or damages for its violation.
The parties in this case are in pari delicto, therefore no affirmative
relief can be granted to them.

[G.R.

No.

L-48747.

September

30,

1982.]

ANGEL JEREOS, Petitioner, v. HON. COURT OF APPEALS,

SOLEDAD RODRIGUEZ, FELICIA R. REYES, JOSE
RODRIGUEZ,
JESUS
RODRIGUEZ,
Jr.,
ROBERTO
RODRIGUEZ,
FRANCISCO
RODRIGUEZ,
TERESITA
RODRIGUEZ,
MANUEL
RODRIGUEZ,
ANTONIO
RODRIGUEZ, DOMINGO PARDORLA, Jr., and NARCISO
JARAVILLA, Respondents.

A judge and his wife were hit by a passenger jeepney resulting in the
death of the judge and injuries to his wife. The driver of said jeepney
was convicted for homicide thru reckless imprudence. Thereafter, the
judges widow filed an action for damages against the driver, the
operator (the registered owner) and the actual owner (petitioner
herein), of the jeepney. Petitioner denied ownership of the jeepney
and presented a deed of sale as evidence. The lower court held only
the driver and the operator jointly and severally liable for damages.
On appeal, the Court of Appeals, finding that the sale relied on by the
petitioner was fictitious, held him, together with the driver and the
operator, jointly and severally liable. Hence this petition. Petitioner
claims,that the Court of Appeals is bound by the findings of fact of the
lower court; and that it is the registered owner and not the actual
owner of the jeepney who is jointly and severally liable with the driver
for damages incurred by third persons as a consequence of death or
injuries
sustained
in
the
operation
of
said
vehicle.
The Supreme Court denied the petition and held that since the trial
court relied solely on the deed of sale and ignored the testimonies of
witnesses, the Court of Appeals had reason to exercise its appellate
jurisdiction over the lower court and modify the findings of fact of
said court; and that the actual owner of the vehicle is not exempted
from liability since the right of the registered owner tobe indemnified
by the actual owner of the amount he may be required to pay as
damages for the injury caused is recognized.

SYLLABUS

1. REMEDIAL LAW; APPEALS; FINDINGS OF FACT BY THE

COURT OF APPEALS IS GENERALLY BINDING ON THE
SUPREME COURT; EXCEPTION. The established rule in this
jurisdiction is that findings of fact of the Court of Appeals when
supported by substantial evidence. is not reviewable on appeal
by certiorari. Said findings of the appellate court are final and cannot
be disturbed by the Supreme Court. However, where the findings of
the Court of Appeals are contrary to those of the trial court, a minute
scrutiny by the Supreme Court is in order and resort to duly proven
evidence
becomes
necessary.
2. ID.; ID.; FINDINGS OF FACT BY THE TRIAL COURT
REVIEWABLE BY THE COURT OF APPEALS. The Court of
Appeals found that the trial court, in exempting Angel Jereos from
liability, "relied solely on the deed of sale ignoring altogether the
testimony of Flora Jaravilla (wife of the driver) and of appellee
Domingo Pardorla, Jr." Hence, it had reason to exercise its appellate
jurisdiction over the lower court and notify the findings of fact of the
trial
court.
3. CIVIL LAW; DAMAGES; PERSONS LIABLE THEREFOR FOR
DEATH OR INJURY RESULTING FROM VEHICULAR ACCIDENT.
While the Supreme Court in Vargas v. Langcay (116 Phil. 478) ruled
that the registered owner or operator of a passenger vehicle is jointly
and severally liable with the driver of the said vehicle for damages
incurred by passengers or third persons as a consequence of injuries
or death sustained in the operation of the said vehicle, the Court did
so to correct the erroneous findings of the Court of Appeals that the
liability of the registered owner or operator of a passenger vehicle is
merely subsidiary, as contemplated in Art. 103 of the Revised Penal
Code. In no case did the Court exempt the actual owner of the
passenger vehicle from liability. On the contrary, it adhered to the
rule followed in the cases of Erezo v. Jepte, (102 Phil. 103.), Tamayo v.
Aquino, (105 Phil. 949.) and De Peralta v. Mangusang (120 Phil.
582.), among others, that the registered owner or operator has the
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.
4. ID; ID.; ID.; REMEDY OF REGISTERED OWNER AGAINST
ACTUAL OWNER OF VEHICLE. The right of the registered owner
or operator to be indemnified being recognized, his recovery may be
made in any form either by a cross-claim, third party complaint, or
an independent action. The result is the same.

CONCEPCION, JR., J.:

Review on certiorari of the decision rendered by the respondent

Court of Appeals in case CA-G.R. No. 60232-R, entitled: "Soledad
Rodriguez, Et Al., plaintiffs-appellants, versus Narciso Jaravilla, Et
Al., defendants; Narciso Jaravilla and Domingo Pardorla, Jr.,
defendants-appellants; Angel Jereos,Defendant-Appellee."cralaw
virtua1aw
library
Private respondent, Domingo Pardorla, Jr. is the holder of certificate
of public convenience for the operation of a jeepney line in Iloilo City.
On February 23, 1971, one of his jeepneys, driven by Narciso Jaravilla,
hit Judge Jesus S. Rodriguez and his wife, Soledad, while they were
crossing Bonifacio Drive, Iloilo City, causing injuries to them, which
resulted in the death of Judge Rodriguez. Narciso Jaravilla was

prosecuted and, on his plea of guilty, was convicted of the crime of

Homicide and Physical Injuries through Reckless Imprudence and
sentenced accordingly. Thereafter, Soledad Rodriguez and her
children filed with the Court of First Instance of Iloilo an action for
damages against Narciso Jaravilla, Domingo Pardorla, Jr., and Angel
Jereos,
the
actual
owner
of
the
jeepney.
1
Angel Jereos denied ownership of the jeepney in question and
claimed that the plaintiffs have no cause of action against him. 2
Domingo Pardorla, Jr., upon the other hand, claimed that he was only
the franchise owner and has nothing to do with the actual operation
and supervision of the passenger jeepney in question which is under
the actual control, operation and supervision of Angel Jereos who
operates
the
same
under
the
"kabit
system."
3
After appropriate proceedings, the Court of First Instance of Iloilo
rendered judgment on October 24, 1978, ordering Narciso Jaravilla
and Domingo Pardorla, Jr. to pay, jointly and severally, damages to
the plaintiffs. Angel Jereos was exonerated for the reason that the
Court "found no credible evidence to support plaintiffs as well as
defendant Pardorlas contention that defendant Jereos was the
operator of the passenger jeepney in question at the time of the
accident which happened on February 3, 1971, defendant Jereos sold
on November 19, 1970 the said passenger jeepney to Flaviana Tanoy
as shown in the notarized deed of sale (Exh. 1-Jereos) who later
transferred ownership thereof to defendant Pardorla, Jr., whose
registration certificate thereof is marked Exh. 3-B-Jereos was issued
by the Land Transportation Commission on November 24, 1970." 4
Both plaintiffs and the defendants Narciso Jaravilla and Domingo
Pardorla, Jr., appealed to the Court of Appeals. The plaintiffs
contended that the trial court erred in not finding the defendant
Angel Jereos jointly and severally liable with the other defendants for
the damages incurred by them. The defendants Narciso Jaravilla and
Domingo
Pardorla,
Jr.,
however,
did
not
file
their
brief.chanrobles.com:cralaw:red
On July 10, 1978, the Court of Appeals rendered a decision, modifying
the decision of the trial court, and holding that Angel Jereos is jointly
and severally liable with the other defendants for the damages
awarded by the trial court to the plaintiffs, for the reason that the rule
stated in the case of Vargas v. Langcay (6 SCRA 174) that it is the
registered owner of a passenger vehicle who is jointly and severally
liable with the driver for damages incurred by passengers or third
persons as a consequence of injuries or death sustained in the
operation of said motor vehicle, which is invoked by Angel Jereos,
cannot be applied in this case since the sale of the jeepney by Angel
Jereos to his own sister-in-law, Flaviana Tanoy, and its registration in
the name of Domingo Pardorla, Jr., were simulated, fictitious
transactions, parts and parcel of a strategem, to place Angel Jereos
beyond the reach of his creditors past or future. 5
Angel Jereos appeals from this decision. He contends that the
respondent Court of Appeals erred in holding that the sale of the jeep
to Flaviana Tanoy was simulated and fictitious and hence, it erred in
finding him the actual or real owner of the ill-fated jeepney.
The respondents claim, however, that the issue of whether or not the
sale of the vehicle in question to Flaviana Tanoy and thereafter, to
Domingo Pardorla, Jr. is simulated or fictitious, is one of fact and may
not
be
reviewed
by
this
Court
on
appeal.
But, the petitioner counters that the findings of fact of the respondent
appellate court is reviewable because the said findings are contrary to
those of the trial court which were based upon am evaluation of the
credibility of witnesses and should not have been disturbed by the
appellate court, following the rule that trial courts are in a better
position to judge and evaluate the evidence presented in the course of
the
trial.
The established rule in this jurisdiction is that findings of fact of the
Court of Appeals, when supported by substantial evidence, is not
reviewable on appeal by certiorari. Said findings of the appellate
court are final and cannot be disturbed by the Supreme Court.
However, where the findings of the Court of Appeals are contrary to
those of the trial court, a minute scrutiny by the Supreme Court is in
order and resort to duly proven evidence becomes necessary. 6
In the instant case, the Court of Appeals found that the trial court, in
exempting Angel Jereos from liability, "relied solely on the deed of
sale (Exh. 1-Jereos) ignoring altogether the testimony of Flora
Jaravilla (wife of the driver) and of appellee Domingo Pardorla, Jr."
Hence, it had reason to exercise its appellate jurisdiction over the
lower courts and modify the findings of fact of the trial
court.cralawnad
The respondent Domingo Pardorla, Jr., in whose line the jeepney in
question was registered under the "kabit system" declared
that:jgc:chanrobles.com.ph
". . . this jeep was formerly attached to Imelda Mirasol then one of the

units of Imelda Mirasol met an accident which cost many lives. Now,
Angel Jereos was afraid that later on his jeep might be attached since
there is a pending case against Mirasol. Now according to Angel
Jereos he went to see Imelda Mirasol and asked her to execute a deed
of sale in favor of Angel Jereos. Now, when Angel Jereos came to me
and asked if there is still vacancy in my line I told him there is. He
told me that his jeep will be transferred under my line. I told him yes,
prepare the papers. Now, after he has prepared the papers and he
came back to me he told me he will just put it under the name of
Flaviana Tanoy, his sister-in-law but I asked him that cannot be, what
is your reason. According to him so that later on it can be hardly
traced when something wrong with the case of Imelda Mirasol comes,
then I will just put it under the name of Flaviana Tanoy, my sister-inlaw but the jeep is still mine that is why I am the one who is paying
you."cralaw
virtua1aw
library
His testimony is corroborated by Adriano Saladero, an employee of
Pardorla, Jr., to whom Angel Jereos pays the monthly dues for the
registration of his jeepneys under the certificate of public convenience
issued to Pardorla, Jr., and by Flora Jaravilla, the wife of the driver of
the jeepney, who categorically stated that the jeepney driven by her
husband, Narciso Jaravilla, was owned by Angel Jereos to whom they
pay a daily "boundary" of P16.80; and that they park the said jeepney
near the house of Angel Jereos after returning it at night.
Finally, the petitioner, citing the case of Vargas v. Langcay, 7 contends
that it is the registered owner of the vehicle, rather than the actual
owner, who must be jointly and severally liable with the driver of the
passenger vehicle for damages incurred by third persons as a
consequence of injuries or death sustained in the operation of said
vehicle.
The contention is devoid of merit. While the Court therein ruled that
the registered owner or operator of a passenger vehicle is jointly and
severally liable with the driver of the said vehicle for damages
incurred by passengers or third persons as a consequence of injuries
or death sustained in the operation of the said vehicle, the Court did
so to correct the erroneous findings of the Court of Appeals that the
liability of the registered owner or operator of a passenger vehicle is
merely subsidiary, as contemplated in Art. 103 of the Revised Penal
Code. In no case did the Court exempt the actual owner of the
passenger vehicle from liability. On the contrary, it adhered to the
rule followed in the cases of Erezo v. Jepte, 8 Tamayo v. Aquino, 9
and De Peralta vs Mangusang, 10 among others, that the registered
owner or operator has the 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.
The right to be indemnified being recognized, recovery by the
registered owner or operator may be made in any form either by a
cross-claim, third-party complaint, or an independent action. The
result
is
the
same.
WHEREFORE, the petition should be, as it is hereby, DENIED. With
costs against the petitioner.ch

G.R. No. 98275 November 13, 1992

BA
FINANCE
CORPORATION, petitioner,
vs.
HON. COURT OF APPEALS, REGIONAL TRIAL COURT OF
ANGELES CITY, BRANCH LVI, CARLOS OCAMPO,
INOCENCIO TURLA, SPOUSES MOISES AGAPITO and
SOCORRO M. AGAPITO and NICOLAS CRUZ, respondents.
MELO, J.:
The question of petitioner's responsibility for damages when on
March 6, 1983, an accident occurred involving petitioner's Isuzu tenwheeler truck then driven by an employee of Lino Castro is the thrust
of the petition for review on certiorari now before Us considering that
neither the driver nor Lino Castro appears to be connected with
petitioner.
On October 13, 1988, the disputed decision in the suit below was
rendered by the court of origin in this manner:
1. Ordering Rock B.A. and Rogelio Villar y Amare
jointly and severally to pay the plaintiffs as
follows:
a) To the plaintiff Carlos
Ocampo P121,650.00;

b) To the plaintiff Moises

Ocampo P298,500.00
c) To the plaintiff Nicolas
Cruz P154,740.00
d) To the plaintiff Inocencio
Turla, Sr. 48,000.00
2. Dismissing the case against Lino Castro
3. Dismissing the third-party complaint against
STRONGHOLD
4. Dismissing all the counterclaim of the
defendants and third-party defendants.
5. Ordering ROCK to reimburse B.A. the total
amount of P622,890.00 which the latter is
adjudged to pay to the plaintiffs. (p. 46, Rollo)
Respondent Court of Appeals affirmed the appealed disposition in
toto through Justice Rasul, with Justices De Pano, Jr. and Imperial
concurring, on practically the same grounds arrived at by the court a
quo (p. 28, Rollo). Efforts exerted towards re-evaluation of the
adverse were futile (p. 37, Rollo). Hence, the instant petition.
The lower court ascertained after due trial that Rogelio Villar y
Amare, the driver of the Isuzu truck, was at fault when the mishap
occurred in as much as he was found guilty beyond reasonable doubt
of reckless imprudence resulting in triple homicide with multiple
physical injuries with damage to property in a decision rendered on
February 16, 1984 by the Presiding Judge of Branch 6 of the Regional
Trial Court stationed at Malolos, Bulacan. Petitioner was adjudged
liable for damages in as much as the truck was registered in its name
during the incident in question, following the doctrine laid down by
this Court in Perez vs. Gutierrez (53 SCRA 149 [1973]) and Erezo, et
al. vs. Jepte (102 Phil. 103 [1957]). In the same breadth, Rock
Component Philippines, Inc. was ordered to reimburse petitioner for
any amount that the latter may be adjudged liable to pay herein
private respondents as expressly stipulated in the contract of lease
between petitioner and Rock Component Philippines, Inc. Moreover,
the trial court applied Article 2194 of the new Civil Code on solidary
accountability of join tortfeasors insofar as the liability of the driver,
herein petitioner and Rock Component Philippines was concerned
(pp. 6-7, Decision; pp. 44-45, Rollo).
To the question of whether petitioner can be held responsible to the
victim albeit the truck was leased to Rock Component Philippines
when the incident occurred, the appellate court answered in the
affirmative on the basis of the jurisprudential dogmas which, as
aforesaid, were relied upon by the trial court although respondent
court was quick to add the caveat embodied in the lease covenant
between petitioner and Rock Component Philippines relative to the
latter's duty to reimburse any amount which may be adjudged against
petitioner (pp. 32-33, Rollo).
Petitioner asseverates that it should not have been haled to court and
ordered to respond for the damage in the manner arrived at by both
the trial and appellate courts since paragraph 5 of the complaint
lodged by the plaintiffs below would indicate that petitioner was not
the employer of the negligent driver who was under the control an
supervision of Lino Castro at the time of the accident, apart from the
fact that the Isuzu truck was in the physical possession of Rock
Component Philippines by virtue of the lease agreement.
Aside from casting clouds of doubt on the propriety of invoking
the Perez and Erezo doctrines, petitioner continue to persist with the
idea that the pronouncements of this Court in Duavit vs. Court of
Appeals (173 SCRA 490 [1989]) and Duquillo vs. Bayot (67 Phil 131
[1939]) dovetail with the factual and legal scenario of the case at
hand. Furthermore, petitioner assumes, given the so-called hiatus on
the basis for the award of damages as decreed by the lower and
appellate courts, that Article 2180 of the new Civil Code on vicarious
liability will divest petitioner of any responsibility absent as there is
any employer-employee relationship between petitioner and the
driver.

Contrary to petitioner's expectations, the recourse instituted from the

rebuffs it encountered may not constitute a sufficient foundation for
reversal of the impugned judgment of respondent court. Petitioner is
of the impression that the Perez and Erezo cases are inapplicable due
to the variance of the generative facts in said cases as against those
obtaining in the controversy at bar. A contrario, the lesson imparted
by Justice Labrador in Erezo is still good law, thus:
. . . In previous decisions, We already have held
that the registered owner of a certificate of public
convenience is liable to the public for the injuries
or damages suffered by passengers or third
persons caused by the operation of said vehicle,
even though the same had been transferred to a
third person. (Montoya vs. Ignacio, 94 Phil., 182
50 Off. Gaz., 108; Roque vs. Malibay Transit,
Inc., G.R. No. L-8561, November 18, 1955; Vda.
de Medina vs. Cresencia, 99 Phil., 506, 52 Off.
Gaz., [10], 4606.) 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 presumed that
the registered owner is the actual owner thereof,
for it would be difficult with 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 actual the owner is. How would the public or
third persons know against whom to enforce
their rights in case of subsequent transfer 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.
Under the same principle the registered owner
of any vehicle, even if not used for a public
service, should primarily responsible to the
public or to the 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 defendantappellant was no longer an 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 (defendants-appellant's) 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 Vehicle 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 the
actual owner? The defendants hold the
affirmative of this proposition; the trial court
hold the negative.
The Revised Motor Vehicle Law (Act No. 3992, as
amended) provides that the vehicle may be used
or operated upon any public highway unless the
same is properly 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
of 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 from the current year, furnish

the Motor Vehicle Office a report showing the

name and address of each purchaser of motor
vehicle during the previous month and the
manufacturer's 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 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 obtained, in the interest
of the determinations of persons responsible for
damages or injuries caused on public highways.
One
of
the
principle
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 my 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 their
servants. (King vs. Breham
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 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 then 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 thirdparty 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 (defendantappellant) 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.
If the foregoing words of wisdom were applied in solving the
circumstance whereof the vehicle had been alienated or sold to
another, there certainly can be no serious exception against utilizing
the same rationale to the antecedents of this case where the subject
vehicle was merely leased by petitioner to Rock Component
Philippines, Inc., with petitioner retaining ownership over the vehicle.
Petitioner's reliance on the ruling of this Court in Duavit vs. Court of
Appeals and in Duquillo vs. Bayot (supra) is legally unpalatable for
the purpose of the present discourse. The vehicles adverted to in the
two cases shared a common thread, so to speak, in that the jeep and
the truck were driven in reckless fashion without the consent or
knowledge of the respective owners. Cognizant of the inculpatory
testimony spewed by defendant Sabiniano when he admitted that he
took the jeep from the garage of defendant Dauvit without the consent
or authority of the latter, Justice Gutierrez, Jr. in Duavit remarked;
. . . Herein petitioner does not deny ownership of
the vehicle involved in the mishap but completely
denies having employed the driver Sabiniano or
even having authorized the latter to drive his
jeep. The jeep was virtually stolen from the
petitioner's garage. To hold, therefore, the

petitioner liable for the accident caused by the

negligence of Sabiniano who was neither his
driver nor employee would be absurd as it would
be like holding liable the owner of a stolen vehicle
for an accident caused by the person who stole
such vehicle. In this regard, we cannot ignore the
many cases of vehicles forcibly taken from their
owners at gunpoint or stolen from garages and
parking areas and the instances of service station
attendants or mechanics of auto repair shops
using, without the owner's consent, vehicles
entrusted to them for servicing or repair.(at p.
496.)
In the Duquillo case, the defendant therein cannot, according to
Justice Diaz, be held liable for anything because of circumstances
which indicated that the truck was driven without the consent or
knowledge of the owner thereof.
Consequently, there is no need for Us to discuss the matter of
imputed negligence because petitioner merely presumed, erroneously,
however, that judgment was rendered against it on the basis of such
doctrine embodied under Article 2180 of the new Civil Code.
WHEREFORE, the petition is hereby DISMISSED and decision under
review AFFIRMED without special pronouncement as to costs.
G.R. No. 170071

March 9, 2011

HEIRS OF JOSE MARCIAL K. OCHOA namely: RUBY B.

OCHOA,
MICAELA
B.
OCHOA
and
JOMAR
B.
OCHOA, Petitioners,
vs.
G & S TRANSPORT CORPORATION, Respondent.
x - - - - - - - - - - - - - - - - - - - - - - -x
G.R. No. 170125
G
&
S
TRANSPORT
CORPORATION, Petitioner,
vs.
HEIRS OF JOSE MARCIAL K. OCHOA namely: RUBY B.
OCHOA,
MICAELA
B.
OCHOA
and
JOMAR
B.
OCHOA, Respondents.
DECISION
DEL CASTILLO, J.:
An accident which claimed the life of a passenger is the root of these
two petitions - one brought before us by the common carrier and the
other by the heirs of the deceased.
These consolidated Petitions for Review on Certiorari assail the Court
of Appeals (CA) Decision1 dated June 29, 2005 in CA-G.R. CV No.
75602 which affirmed with modification the December 21, 2001
Decision and March 5, 2002 Order of the trial court. Likewise assailed
is the Resolution2 dated October 12, 2005 denying the parties
respective Motions for Reconsideration thereto.
Factual Antecedents
Jose Marcial K. Ochoa (Jose Marcial) died on the night of March 10,
1995 while on board an Avis taxicab owned and operated by G & S
Transport Corporation (G & S), a common carrier. As narrated by the
trial court, the circumstances attending Jose Marcials death are as
follows:
It appears that sometime in the evening of March 10, 1995, at the
Manila Domestic Airport, the late Jose Marcial K. Ochoa boarded and
rode a taxicab with Plate No. PKR-534, a passenger vehicle for hire
owned and operated by defendant corporation under the business
name "Avis Coupon Taxi" (Avis) and driven by its employee and
authorized driver Bibiano Padilla, Jr. on his way home to Teachers
Village, Diliman, Quezon City.
At about 11:00 p.m., the taxicab was cruising along Epifanio delos
Santos Avenue [EDSA], in front of Camp Aguinaldo in Quezon City at
high speed. While going up the Boni Serrano (Santolan) fly-over, it
overtook another cab driven by Pablo Clave and tried to pass another

vehicle, a ten-wheeler cargo truck. Because of the narrow space

between the left side railing of the fly-over and the ten-wheeler truck,
the Avis cab was unable to pass and because of its speed, its driver
(Padilla) was unable to control it. To avoid colliding with the truck,
Padilla turned the wheel to the left causing his taxicab to ram the
railing throwing itself off the fly-over and fell on the middle surface of
EDSA below. The forceful drop of the vehicle on the floor of the road
broke and split it into two parts. Both driver Padilla and passenger
Jose Marcial K. Ochoa were injured and rushed to the hospital. At the
East Avenue Medical Center, Ochoa was not as lucky as Padilla who
was alive. He was declared dead on arrival from the accident. The
death certificate issued by the Office of the Civil Registrar of Quezon
City cited the cause of his death as vehicular accident. 3
On May 13, 1999, Jose Marcials wife, Ruby Bueno Ochoa, and his two
minor children, Micaela B. Ochoa and Jomar B. Ochoa (the heirs),
through counsel, sent G & S a letter 4 demanding that the latter
indemnify them for Jose Marcials death, his loss of earning capacity,
and funeral expenses in the total amount of P15,000,000.00. As G &
S failed to heed the same, the heirs filed a Complaint5 for Damages
before the Regional Trial Court (RTC) of Pasig City which was raffled
to Branch 164 of said court.
The heirs alleged that G & S, as a common carrier, is under legal
obligation to observe and exercise extraordinary diligence in
transporting its passengers to their destination safely and securely.
However, G & S failed to observe and exercise this extraordinary
diligence because its employee failed to transport Jose Marcial to his
destination safely. They averred that G & S is liable to them for having
breached the contract of common carriage. As an alternative cause of
action, they asserted that G & S is likewise liable for damages based
on quasi-delict pursuant to Article 21806 in relation to Article 2176 7 of
the Civil Code. The heirs thus prayed for G & S to pay them actual
damages, moral damages, exemplary damages, and attorneys fees
and expenses of litigation.
In its Answer With Compulsory Counterclaims, 8 G & S claimed that
Jose Marcial boarded an Avis taxicab driven by its employee, Bibiano
Padilla (Padilla), at the Domestic Airport to bring him to Teachers
Village in Quezon City. While passing the Santolan fly-over, however,
the Avis taxicab was bumped by an on-rushing delivery van at the
right portion causing the taxicab to veer to the left, ram through the
left side of the railings of the fly-over and fall to the center of the
island below. The taxicab was split into two and Jose Marcial was
thrown 10 meters away. G & S posited that the proximate cause of
Jose Marcials death is a
fortuitous event and/or the fault or negligence of the driver of the
delivery van that hit the taxicab. It likewise claimed that it exercised
the diligence required of a good father of a family in the selection and
supervision of its employees including Padilla. By way of compulsory
counterclaim, G & S sought to recover from the heirs the amount
of P300,000.00 as attorneys fees and costs of suit.
Ruling of the Regional Trial Court
On December 27, 2001, the trial court rendered a Decision 9 finding
the vehicular mishap not caused by a fortuitous event but by the
negligence of Padilla. It likewise found the evidence adduced by G & S
to show that it exercised the diligence of a good father of a family in
the selection and supervision of its employees as insufficient. Hence,
the trial court declared G & S civilly liable to the heirs. However, for
lack of receipts or any proof of funeral expenses and other actual
damages, the trial court denied the heirs claim for actual damages. It
also denied them moral and exemplary damages for lack of legal
basis. The dispositive portion of said Decision reads:
WHEREFORE, defendant is hereby adjudged guilty of breach of
contract of carriage and is ordered to pay plaintiffs the following
amounts:
1. P50,000.00 as civil indemnity for the death of deceased
Jose Marcial K. Ochoa;
2. P6,537,244.96 for the loss of earning capacity of the
deceased;
3. P100,00.00 for attorneys fees;
4. And the cost of litigation.
SO ORDERED.10
G & S filed a Notice of Appeal 11 while the heirs filed a Motion for
Partial Reconsideration.12 The heirs averred that they are entitled to

moral damages pursuant to Article 1764 13 in relation to Article

2206(3)14 of the Civil Code. They also cited applicable jurisprudence
providing that moral damages are recoverable in a damage suit
predicated upon a breach of contract of carriage where the mishap
results in the death of the passenger. With respect to their claim for
exemplary damages, the heirs relied upon Article 2232 of the Civil
Code which provides that in contracts and quasi-contracts, the court
may award exemplary damages if the defendant acted in a wanton,
fraudulent, reckless, oppressive or malevolent manner. And, since
Padilla was declared by the trial court to have been grossly negligent
in driving the taxicab, the heirs claimed that they are likewise entitled
to exemplary damages.
After G & S filed its Opposition (To Plaintiffs Motion for Partial
Reconsideration),15 the trial court issued an Order 16 on March 5, 2002.
It found merit in the heirs Motion for Partial Reconsideration and
thus declared them entitled to moral and exemplary damages, viz:
WHEREFORE, the decision dated December 27, 2001 is hereby
modified so as to order defendant Corporation to pay plaintiffs the
amount of P300,000.00 as moral damages and P50,000.00 as
exemplary damages. The dispositive portion of said decision is hereby
amended to read as follows:
WHEREFORE, defendant is hereby adjudged guilty of breach of
contract of carriage and is ordered to pay plaintiffs the following
amounts:
1. P50,000.00 as civil indemnity for the death of the
deceased Jose Marcial K. Ochoa;
2. P6,537,244.96 for the loss of earning capacity of the
deceased.

They claimed that Padilla, while running at a very high speed, acted
negligently when he tried to overtake a ten-wheeler truck at the foot
of the fly-over. This forced him to swerve to the left and as a
consequence, the Avis taxicab hit the center of the railing and was
split into two upon hitting the ground. The manner by which Padilla
drove the taxicab clearly showed that he acted without regard to the
safety of his passenger.
The heirs also averred that in order for a fortuitous event to exempt
one from liability, it is necessary that he has committed no negligence
or conduct that may have occasioned the loss. Thus, to be exempt
from liability for the death of Jose Marcial on this ground, G & S must
clearly show that the proximate cause of the casualty was entirely
independent of human will and that it was impossible to avoid. And
since in the case at bar it was Padillas inexcusable poor judgment,
utter lack of foresight and extreme negligence which were the
immediate and proximate causes of the accident, same cannot be
considered to be due to a fortuitous event. This is bolstered by the fact
that the court trying the case for criminal negligence arising from the
same incident convicted Padilla for said charge.20
At any rate, the heirs contended that regardless of whether G & S
observed due diligence in the selection of its employees, it should
nonetheless be held liable for the death of Jose Marcial pursuant to
Article 1759 of the Civil Code which provides:
ART. 1759 Common carriers are liable for the death of or injuries to
passengers through the negligence or willful acts of the formers
employees, although such employees may have acted beyond the
scope of their authority or in violation of the orders of the common
carriers.
This liability of the common carriers does not cease upon proof that
they exercised all the diligence of a good father of a family in the
selection and supervision of their employees.

3. P300,000.00 as moral damages;

4. P50,000.00 as exemplary damages;
5. P100,000.00 for attorneys fees;
6. And the costs of litigation.
SO ORDERED.17
Because of this, G & S filed another Notice of Appeal 18 and same was
given due course by the trial court in an Order19 dated April 23, 2002.
Ruling of the Court of Appeals
Before the CA, G & S continued to insist that it exercised the diligence
of a good father of the family in the selection and supervision of its
employees. It averred that it has been carrying out not only seminars
for its drivers even before they were made to work, but also periodic
evaluations for their performance. Aside from these, it has also been
conducting monthly check-up of its automobiles and has regularly
issued rules regarding the conduct of its drivers. G & S claimed that it
was able to establish a good name in the industry and maintain a
clientele.
In an effort to build up Padillas character as an experienced and
careful driver, G & S averred that: (1) before G & S employed Padilla,
he was a delivery truck driver of Inter Island Gas Service for 11 years;
(2) Padilla has been an employee of G & S from 1989 to 1996 and
during said period, there was no recorded incident of his being a
negligent driver; (3) despite his qualifications, G & S still required
Padilla to submit an NBI clearance, drivers license and police
clearance; (4) Padillas being a good driver-employee was manifest in
his years of service with G & S, as in fact, he has received
congratulatory messages from the latter as shown by the inter-office
memos dated August 23, 1990 and February 1, 1993; and that (5)
Padilla attended a seminar at the Pope Pius Center sometime in
December 1999 as part of the NAIA Taxi Operation Program.
G & S also argued that the proximate cause of Jose Marcials death is
a fortuitous event and/or the fault or negligence of another and not of
its employee. According to G & S, the collision was totally unforeseen
since Padilla had every right to expect that the delivery van would just
overtake him and not hit the right side of the taxicab. Therefore, what
transpired was beyond Padillas control. There was no negligence on
his part but on the part of the driver of the delivery van. For this
reason, G & S opined that it was not liable to the heirs.
On the other hand, the heirs maintained that Padilla was grossly
negligent in driving the Avis taxicab on the night of March 10, 1995.

In sum, the heirs prayed that the appeal be dismissed for lack of merit
and the assailed Decision and Order of the trial court be affirmed
in toto.
In a Decision21 dated June 29, 2005, the CA ruled in favor of the heirs.
The appellate court gave weight to their argument that in order for a
fortuitous event to exempt one from liability, it is necessary that he
committed no negligence or misconduct that may have occasioned the
loss. In this case, the CA noted that Padilla failed to employ
reasonable foresight, diligence and care needed to exempt G & S from
liability for Jose Marcials death. Said court also quoted pertinent
portions of the MTC decision convicting Padilla of reckless
imprudence resulting in homicide to negate G & S claim that the
proximate cause of the accident was the fault of the driver of the
delivery van who allegedly hit the right side of the taxicab. And just
like the trial court, the CA found insufficient the evidence adduced by
G & S to support its claim that it exercised due diligence in the
selection and supervision of its employees.
With respect to the award of P6,537,244.96 for Jose Marcials loss of
earning capacity, the CA declared the same unwarranted. It found the
Certification22 issued by Jose Marcials employer, the United States
Agency for International Development (USAID) through its Chief of
Human Resources Division Jonas Cruz (Cruz), as self-serving,
unreliable, and biased. While said certification states that Jose
Marcial was earning an annual salary ofP450,844.49 at the time of his
untimely demise, the CA noted that same is unsupported by
competent evidence such as income tax returns or receipts. This is in
view of the ruling in People v. Ereo23 where it was held that "there
must be unbiased proof of the deceaseds average income." Anent
moral damages, the CA found the award of P300,000.00 excessive
and thus reduced the same to P200,000.00 as to make it
proportionate to the award of exemplary damages which
is P50,000.00. The dispositive portion of said Decision reads:
WHEREFORE, the assailed Decision dated December 27, 2001 and
Order dated March 5, 2002 are AFFIRMED with the following
MODIFICATION: appellant is ordered to pay appellees the sum
of P50,000.00 as civil indemnity for the death of the deceased Jose
Marcial K. Ochoa, P200,000.00 as moral damages, P50,000.00 as
exemplary damages, P100,000.00 for attorneys fees and the costs of
litigation. The trial courts award of P6,537,244.96 for the loss of
earning capacity of the deceased is DELETED for lack of basis.
SO ORDERED.
Both parties moved for reconsideration 24 but the CA denied their
respective motions for reconsideration in a Resolution25 dated
October 12, 2005.

Hence, G & S and the heirs filed their respective Petitions for Review
on Certiorari before this Court. The heirs petition was docketed as
G.R. No. 170071 and that of G & S as G.R. No. 170125. These petitions
were later consolidated pursuant to this Courts Resolution of
November 21, 2005.26
G.R. No. 170125
G & S anchors its petition on the following grounds:
I. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
NOT RULING THAT THE PROXIMATE CAUSE OF DEATH OF MR.
JOSE MARCIAL K. OCHOA WAS A FORTUITOUS EVENT AND/OR
WAS DUE TO THE FAULT OR NEGLIGENCE OF ANOTHER AND
SHOULD THUS EXEMPT THE PETITIONER FROM LIABILITY.
II. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
NOT TAKING NOTE OF THE FACT THAT THE PETITIONERS
EMPLOYEE HAD BEEN ACQUITTED OF THE CRIME OF
RECKLESS IMPRUDENCE RESULTING (IN) HOMICIDE.
III. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
UPHOLDING THE TESTIMONY OF A WITNESS WHO SURFACED
MONTHS AFTER THE INCIDENT WHILE DISREGARDING THAT
OF AN EYEWITNESS WHO WAS PRESENT AT THE TIME AND
PLACE OF THE ACCIDENT.
IV. THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN
NOT RULING THAT THE PETITIONER EXERCISED THE
DILIGENCE OF A GOOD FATHER OF A FAMILY IN THE
SELECTION AND SUPERVISION OF ITS EMPLOYEES
PARTICULARLY MR. BIBIANO PADILLA.27
G & S reiterates its arguments that the proximate cause of the
accident is a fortuitous event and/or the negligence of the driver of
the delivery van which bumped the right portion of its taxicab and,
that it exercised the diligence of a good father of a family in the
selection and supervision of its employees. It faults the CA when it
overlooked the fact that the MTC Decision convicting Padilla of
reckless imprudence has already been reversed on appeal by the RTC
with Padilla having been accordingly acquitted of the crime charged.
Moreover, it claims that the appellate court erred in according respect
to the testimony of the lone prosecution witness, Pablo Clave (Clave),
when it concluded that Padilla was driving negligently at the time of
the accident. It asserts that Clave is not a credible witness and so is
his testimony. Thus, G & S prays that the assailed CA Decision and
Resolution be reversed and set aside.
On the other hand, the heirs posit that the determination of the issues
raised by G & S necessarily entails a re-examination of the factual
findings which this Court cannot do in this petition for review
on certiorari. At any rate, they maintain that the trial court itself is
convinced of Claves credibility. They stress the settled rule that the
evaluation of the credibility of witnesses is a matter that particularly
falls within the authority of the trial court because it had the
opportunity to observe the demeanor of the witnesses on the stand.
The heirs assert that fortuitous event was not the proximate cause of
the mishap. They point out that as correctly found by the trial court,
Padilla was running at an extremely high speed. This was why the
impact was so strong when the taxicab rammed the fly-over railings
and was split into two when it hit the ground. Also, while it is true
that the MTC Decision in the criminal case for reckless imprudence
has been reversed by the RTC, this does not excuse G & S from its
liability to the heirs because its liability arises from its breach of
contract of carriage and from its negligence in the selection and
supervision of its employees. Also, since the acquittal of Padilla is
based on reasonable doubt, same does not in any way rule out his
negligence as this may merely mean that the prosecution failed to
meet the requisite quantum of evidence to sustain his conviction.
Therefore, G & S cannot bank on said acquittal to disprove its liability.
G.R. No. 170071
The heirs, on the other hand, advance the following grounds in
support of their petition:
THE COURT OF APPEALS MANIFESTLY AND GRAVELY ERRED
IN COMPLETELY DELETING THE TRIAL COURTS AWARD FOR
THE LOSS OF EARNING CAPACITY OF THE DECEASED.
THE COURT OF APPEALS MANIFESTLY AND GRAVELY ERRED
IN REDUCING THE TRIAL COURTS AWARD FOR MORAL
DAMAGES.28

The focal point of the heirs petition is the CAs deletion of the award
of P6,537,244.96 for Jose Marcials loss of earning capacity as well as
the reduction of the award of moral damages from P300,000.00
to P200,000.00.
The heirs aver that the appellate court gravely erred in relying
upon Ereo as said case is not on all fours with the present case. They
contend that in Ereo, this Court disallowed the award for loss of
income because the only proof presented was a handwritten
statement of the victims spouse stating the daily income of the
deceased as a self-employed fish vendor. The heirs argue that the
reason why this Court declared said handwritten statement as selfserving is because the one who prepared it, the deceaseds wife, was
also the one who would directly and personally benefit from such an
award.29 This cannot be said in the case at bar since the same bias and
personal interest cannot be attributed to Jose Marcials employer, the
USAID. Unlike in Ereo, USAID here does not stand to be benefited
by an award for Jose Marcials loss of earning capacity. Clearly, the
Certification issued by it is far from being self-serving. At any rate, the
heirs contend that Ereo has already been superseded by Pleyto v.
Lomboy30 where this Court held that in awarding damages for loss of
earning capacity, "mere testimonial evidence suffices to establish a
basis for which the court can make a fair and reasonable estimate of
the loss of earning capacity". In addition, the heirs point out that the
authenticity and accuracy of said Certification was neither questioned
by G & S nor discredited by any controverting evidence. In fact, its
admission by the trial court was not even assigned by G & S as an
error in their appeal before the CA.
As to the reduction of moral damages, the heirs claim that since the
CA agreed with the factual circumstances of the case as found by the
trial court, there is therefore no reason for it to alter the award of
damages arising from such factual circumstances. They aver that the
CA may only modify the damages awarded by the trial court when it is
excessive and scandalous as held in Meneses v. Court of
Appeals.31 Here, they claim that the award of moral damages in the
amount of P300,000.00 cannot be considered as excessive and
unreasonable but only commensurate to the sufferings caused by the
incident to a wife who became a young widow at the age of 33 and to
two minor children who lost a father. Moreover, the heirs aver that
the CA should not have reduced the award of moral damages just to
make said amount proportionate to the exemplary damages awarded.
This is because there is no such rule which dictates that the amount of
moral damages should be proportionate to that of the exemplary
damages. The heirs pray that the assailed CA Decision and Resolution
be reversed and set aside insofar as they deleted the award for loss of
earning capacity and reduced the award for moral damages.
For its part, G & S avers that the Certification issued by USAID is selfserving because the USAID officer who issued it has not been put on
the witness stand to validate the contents thereof. Moreover, said
Certification was not supported by competent evidence such as
income tax returns and receipts. G & S likewise finds the reduction of
the award of moral damages appropriate in view of the settled rule
that moral damages are not meant to enrich the complainant at the
expense of the defendant. Hence, it prays that the petition be
dismissed for lack of merit.
Our Ruling
We shall first tackle the issues raised by G & S in its petition.
The first, third and fourth issues raised by G & S involve questions of
fact
We have reviewed said issues and we find that the determination of
the first, third and fourth issues raised entails re-examination of the
evidence presented because they all involve questions of fact.
In Microsoft Corporation v. Maxicorp, Inc.,32 we held that:
Once it is clear that the issue invites a review of the evidence
presented, the question posed is one of fact. If the query requires a reevaluation of the credibility of witnesses, or the existence or relevance
of surrounding circumstances and their relation to each other, the
issue in that query is factual. Our ruling in Paterno v. Paternois
illustrative on this point:
Such questions as whether certain items of evidence should be
accorded probative value or weight, or rejected as feeble or spurious,
or whether or not the proof on one side or the other are clear and
convincing and adequate to establish a proposition in issue, are
without doubt questions of fact. Whether or not the body of proofs
presented by a party, weighed and analyzed in relation to contrary
evidence submitted by adverse party, may be said to be strong, clear
and convincing; whether or not certain documents presented by one
side should be accorded full faith and credit in the face of protests as
to their spurious character by the other side; whether or not
inconsistencies in the body of proofs of a party are of such a gravity as

to justify refusing to give said proofs weight all these are issues of
fact. (Citations omitted)
In this case, the said three issues boil down to the determination of
the following questions: What is the proximate cause of the death of
Jose Marcial? Is the testimony of prosecution witness Clave
credible? Did G & S exercise the diligence of a good father of a family
in the selection and supervision of its employees? Suffice it to say that
these are all questions of fact which require this Court to inquire into
the probative value of the evidence presented before the trial court. As
we have consistently held, "[t]his Court is not a trier of facts. It is not
a function of this court to analyze or weigh evidence. When we give
due course to such situations, it is solely by way of exception. Such
exceptions apply only in the presence of extremely meritorious
circumstances."33 Here, we note that although G & S enumerated in its
Consolidated Memorandum34 the exceptions35 to the rule that a
petition for review on certiorari should only raise questions of law, it
nevertheless did not point out under what exception its case falls.
And, upon review of the records of the case, we are convinced that it
does not fall under any. Hence, we cannot proceed to resolve said
issues and disturb the findings and conclusions of the CA with respect
thereto. As we declared in Diokno v. Cacdac:36
It is aphoristic that a re-examination of factual findings cannot be
done through a petition for review on certiorariunder Rule 45 of the
Rules of Court because as earlier stated, this Court is not a trier of
facts; it reviews only questions of law. The Supreme Court is not dutybound to analyze and weigh again the evidence considered in the
proceedings below. This is already outside the province of the instant
Petition for Certiorari. [Citations omitted.]

bearing in the resolution of the present case. There was therefore no

error on the part of the CA when it resolved this case without regard
to the fact that Padilla has already been acquitted by the RTC in the
criminal case. Moreover, while the CA quoted some portions of the
MTC Decision in said criminal case, we however find that those
quoted portions were only meant to belie G & S claim that the
proximate cause of the accident was the negligence of the driver of the
delivery van which allegedly hit the Avis taxicab. Even without those
quoted portions, the appellate courts ultimate finding that it was
Padillas negligence which was the proximate cause of the mishap
would still be the same. This is because the CA has, in fact, already
made this declaration in the earlier part of its assailed Decision. The
fact that the MTC Decision from which the subject quoted portions
were lifted has already been reversed by the RTC is therefore
immaterial.
In view of the foregoing, we deny G & S petition for lack of merit.
The denial by the CA of the heirs claim for lost earnings is
unwarranted
Going now to the petition filed by the heirs, we note at the outset that
the issues of whether the CA erred in deleting the award for loss of
earning capacity and in reducing the award for moral damages made
by the trial court likewise raise questions of fact as they "involve an
examination of the probative value of the evidence presented by the
parties".40 However, we find that the heirs case falls under one of the
exceptions because the findings of the CA conflict with the findings of
the RTC.41 Since the heirs properly raised the conflicting findings of
the lower courts, it is proper for this Court to resolve such
contradiction.42

There is a contract of carriage between G & S and Jose Marcial

What is clear from the records is that there existed a contract of
carriage between G & S, as the owner and operator of the Avis taxicab,
and Jose Marcial, as the passenger of said vehicle. As a common
carrier, G & S "is bound to carry [Jose Marcial] 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."37 However, Jose Marcial was not able to reach his
destination safely as he died during the course of the travel. "In a
contract of carriage, it is presumed that the common carrier is at fault
or is negligent when a passenger dies or is injured. 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."38Unfortunately, G & S miserably
failed to overcome this presumption. Both the trial court and the CA
found that the accident which led to Jose Marcials death was due to
the reckless driving and gross negligence of G & S driver, Padilla,
thereby holding G & S liable to the heirs of Jose Marcial for breach of
contract of carriage.
The acquittal of Padilla in the criminal case is immaterial to the
instant case for breach of contract
This thus now leaves us with the remaining issue raised by G & S, that
is, whether the CA gravely erred in not taking note of the fact that
Padilla has already been acquitted of the crime of reckless
imprudence resulting in homicide, a charge which arose from the
same incident subject of this case.
Article 31 of the Civil Code provides, viz:
When the civil action is based on an obligation not arising from the
act or omission complained of as a felony, such civil action may
proceed independently of the criminal proceedings and regardless of
the result of the latter.
Thus, in Cancio, Jr. v. Isip,39 we declared:
In the instant case, it must be stressed that the action filed by
petitioner is an independent civil action, which remains separate and
distinct from any criminal prosecution based on the same act. Not
being deemed instituted in the criminal action based on culpa
criminal, a ruling on the culpability of the offender will have
no bearing on said independent civil action based on an
entirely different cause of action, i.e., culpa contractual."
(Emphasis supplied; Citations omitted.)
In this case, the action filed by the heirs is primarily for the recovery
of damages arising from breach of contract of carriage allegedly
committed by G & S. Clearly, it is an independent civil action arising
from contract which is separate and distinct from the criminal action
for reckless imprudence resulting in homicide filed by the heirs
against Padilla by reason of the same incident. Hence, regardless of
Padillas acquittal or conviction in said criminal case, same has no

In Ereo, we denied the claim for loss of income because the

handwritten estimate of the deceaseds daily income as a selfemployed vendor was not supported by competent evidence like
income tax returns or receipts. This was in view of the rule that
compensation for lost income is in the nature of damages and as such
requires due proof of damages suffered. We reiterated this rule
in People v. Yrat43 where we likewise denied the same claim because
the only evidence presented to show that the deceased was
earning P50,000.00 a month was the testimony of the wife. There we
stated that for lost income due to death, there must be unbiased proof
of the deceaseds average income. Self-serving, hence, unreliable
statement is not enough. In People v. Caraig,44 we declared that
"documentary evidence should be presented to substantiate the claim
for damages for loss of earning capacity. By way of exception,
damages therefor may be awarded despite the absence of
documentary evidence, provided that there is testimony that the
victim was either (1) self-employed earning less than the minimum
wage under current labor laws, and judicial notice may be taken of
the fact that in the victims line of work no documentary evidence is
available; or (2) employed as a daily-wage worker earning less than
the minimum wage under current labor laws". However, we
subsequently ruled in Pleyto v. Lomboy45 that "failure to present
documentary evidence to support a claim for loss of earning capacity
of the deceased need not be fatal to its cause. Testimonial evidence
suffices to establish a basis for which the court can make a fair and
reasonable estimate of the loss of earning capacity". Hence, we held as
sufficient to establish a basis for an estimate of damages for loss of
earning capacity the testimony of the victims widow that her husband
was earning a monthly income of P8,000.00. Later, in Victory Liner,
Inc. v. Gammad,46 after finding that the deceaseds earnings does not
fall within the exceptions laid down in Caraig, we deleted the award
for compensatory damages for loss of earning capacity as same was
awarded by the lower courts only on the basis of the husbands
testimony that the deceased was 39 years of age and a Section Chief of
the Bureau of Internal Revenue with a salary of P83,088.00 per
annum at the time of her death. This same rule was also applied in the
2008 case of Licyayo v. People.47
In all of the cases mentioned except for Ereo, the sole basis for the
claim for loss of earning capacity were the testimonies of the
claimants. This is not the case here. Just like in Ereo where the
testimony of the mother of the deceased was accompanied by a
handwritten estimate of her daughters alleged income as a fish
vendor, the testimony of Jose Marcials wife that he was earning
around P450,000.00 a year was corroborated by a Certification
issued by the USAID. However in Ereo, we declared as self-serving
the handwritten estimate submitted by the mother hence we denied
the claim for such award. Based on said ruling, the CA in this case
deleted the award for lost income after it found the USAID
Certification to be self-serving and unreliable.
We disagree. The CA sweepingly concluded that the USAID
Certification is self-serving and unreliable without elaborating on how
it was able to arrive at such a conclusion. A research on USAID
reveals that it is the "principal [United States] agency to extend
assistance to countries recovering from disaster, trying to escape
poverty, and engaging in democratic reforms."48 It is an "independent

federal government agency that receives over-all foreign policy

guidance from the Secretary of the State [of the United
States]."49 Given this background, it is highly improbable that such an
agency will issue a certification containing unreliable information
regarding an employees income. Besides, there exists a presumption
that official duty has been regularly performed. 50 Absent any showing
to the contrary, it is presumed that Cruz, as Chief of Human
Resources Division of USAID, has regularly performed his duty
relative to the issuance of said certification and therefore, the
correctness of its contents can be relied upon. This presumption
remains especially so where the authenticity, due execution and
correctness of said certification have not been put in issue either
before the trial court or the CA. As to its being self-serving, our
discussion on "self-serving evidence" in Heirs of Pedro Clemea y
Zurbano v. Heirs of Irene B. Bien51 is enlightening, viz:

Art. 2206. x x x
(3) The spouse, legitimate and illegitimate descendants and the
ascendants of the deceased may demand moral damages for mental
anguish by reason of the death of the deceased.
Here, there is no question that the heirs are likewise entitled to moral
damages pursuant to the above provisions, considering the mental
anguish suffered by them by reason of Jose Marcials untimely death,
as can be deduced from the following testimony of his wife Ruby:
Atty. Suarez:
Q: How would you describe Jose Marcial Ochoa?

Self-serving evidence, perhaps owing to its descriptive formulation,

is a concept much misunderstood. Not infrequently, the term is
employed as a weapon to devalue and discredit a party's testimony
favorable to his cause. That, it seems, is the sense in which petitioners
are using it now. This is a grave error. "Self-serving evidence" is not to
be taken literally to mean any evidence that serves its proponent's
interest. The term, if used with any legal sense, refers only to
acts or declarations made by a party in his own interest at
some place and time out of court x x x. (Citations omitted;
emphasis supplied.)

(Ruby) A: My husband was a very loving husband, faithful

husband, a very [good] provider[.] I depended on him so
much financially [and] emotionally[.] He was practically my
life then.
Q: How is he as a father?
A: A very good father, he is very committed to Micaela[. H]e
has always time for her[. H]e is a family man, so its really a
great [loss] to me and to Micaela.

Verily, the USAID certification cannot be said to be self-serving

because it does not refer to an act or declaration made out of court by
the heirs themselves as parties to this case.1awphi1

Q: What was your reaction upon learning of your husbands

death?

Clearly, the CA erred in deleting the award for lost income on the
ground that the USAID Certification supporting such claim is selfserving and unreliable. On the contrary, we find said certification
sufficient basis for the court to make a fair and reasonable estimate of
Jose Marcials loss of earning capacity just like in Tamayo v.
Seora52where we based the victims gross annual income on his pay
slip from the Philippine National Police. Hence, we uphold the trial
courts award for Jose Marcials loss of earning capacity.

A: Immediately after I learned of his death, I tried very hard

to keep a clear mind for my little girl, she was 3 and she
could not grasp what death is, so I found [it] so hard to
explain to her [at] that time what happened [e]specially
[because] she just talked to her father from the airport
telling her that he is coming home, tapos hindi na pala.
Q: How did it affect you?

While the trial court applied the formula generally used by the courts
to determine net earning capacity which is, to wit:

A: It was a painful struggle everyday just to get up and

move on when someone who [you] really really love and
[who] is important to you it is very hard to move on and
[it is even] harder to move on [when] I found out that I was
pregnant with my second child, parang tinabunan ka [ng]
lahat eh[. I]ts [too] hard to find happiness, youre
pregnant, when you know wala naman talagang father yung
bata later on x x x

Net Earning Capacity = life expectancy * x (gross annual income reasonable living expenses),53
*

Life expectancy = 2/3 (80 age of the deceased)

we, however, find incorrect the amount of P6,537, 244.96 arrived at.
The award should be P6,611,634.59 as borne out by the following
computation:

xxxx
Q: How did this affect your family?

2 (80-3654)
Net earning capacity =

x 450,844.49 -50%
55

3
88
=

x 225,422.25
3

29.33 x 225,422.25

P6, 611,634.59

The award of moral damages should be modified

While we deemed it proper to modify the amount of moral damages
awarded by the trial court as discussed below, we nevertheless agree
with the heirs that the CA should not have pegged said award in
proportion to the award of exemplary damages. Moral and exemplary
damages are based on different jural foundations. 57 They are different
in nature and require separate determination. 58 The amount of one
cannot be made to depend on the other.
In Victory Liner Inc. v. Gammad59 we awarded P100,000.00 by way
of moral damages to the husband and three children of the deceased,
a 39-year old Section Chief of the Bureau of Internal Revenue, to
compensate said heirs for the grief caused by her death. This is
pursuant to the provisions of Articles 1764 and 2206(3) which
provide:
Art. 1764. Damages in cases comprised in this Section shall be
awarded in accordance with Title XVIII of this Book, concerning
Damages. Articles 2206 shall also apply to the death of a passenger
caused by the breach of contract by a common carrier.

56

A: Yung effect kay Micaela, she [used] to be a gregarious

child, yung happy ganyan, but nung wala na yong father
niya that time, [during] graduation ng nursery that time
naging very very [quiet] siya, so a lot of emotional support
from my own family was given to her at the time para
makacope-up siya sa loss kasi she is very close to the father.
Q: Financially, how did it affect you?
A: I had to make do of what was left by my husband, I
couldnt also work so much at the time because I was.and
hirap eh, I cannot find enthusiasm in what I do, tapos
pregnant pa ako, and hirap talaga.
Q: How else did it affect you?
A: We had to move houses like we used to live in Quezon
City at (the) time of his death, tapos kinuha kami ni Gorjie
my brother-in-law sa compound nila para hindi [to]
support us emotionally (at that time) kasi nga I was
pregnant and then I also decided to move (to make it easy
for me) to adjust yung lifestyle ng mga bata, because I
cannot cope [here] financially on my own[. N]ahihirapan na
ako dito because the living expenses here are quite high
compared sa probinsiya so I decided to move.
Q: If you would assign that pain and suffering that you
suffered as a result of the death of your husband, what will
be the monetary consideration?

A: I struggled with that kasi.I can honestly say no amount

of money can ever repay the [loss] that my children
suffered, future nila yan eh, and my son was not given a
chance to get to know his father, so I cannot imagine kung
ano yung sinasabi nyong amount that will compensate the
suffering that I have to go through and my children will go
through, yon and mahirap bayaran. 60
Under this circumstance, we thus find as sufficient and "somehow
proportional to and in approximation of the suffering inflicted" 61 an
award of moral damages in an amount similar to that awarded
in Victory which isP100,000.00.
From the above discussion, we, thus, partly grant the heirs petition.
WHEREFORE, the petition for review on certiorari in G.R. No.
170071 is PARTLY GRANTED while the petition in G.R. No. 170125 is
DENIED. The assailed Decision and Resolution dated June 29, 2005
and October 12, 2005 of the Court of Appeals in CA-G.R. CV No.
75602 are AFFIRMED with the MODIFICATIONS that G & S is
ordered to pay the heirs of Jose Marcial K. Ochoa the sum
of P6,611,634.59 for loss of earning capacity of the deceased
and P100,000.00 as moral damages.
G.R. No. 172778

November 26, 2012

SABINIANO
DUMAYAG, Petitioner,
vs.
PEOPLE OF THE PHILIPPINES, Respondent.
DECISION
MENDOZA, J.:
Before the Court is a petition for review under Rule 45 of the Rules of
Court seeking the reversal of the November 26, 2004 Decision 1 and
the May 10, 2006 Resolution2 of the Court of Appeals (CA), in CAG.R. CR No. 26513, which affirmed the June 24, 2002 Decision 3 of the
Regional Trial Court, Branch 21, Cebu City (RTC). The RTC decision
upheld with modification the Decision4 of the Municipal Trial Court of
San Fernando, Cebu City (MTC), finding accused Sabiniano Dumayag
(petitioner) guilty of the complex crime of reckless imprudence
resulting in multiple homicide and reckless imprudence resulting in
physical injuries.
The Facts:
On July 6, 1995, at around 11:30 oclock in the morning, along the
national highway in Magtalisay, Sangat, San Fernando, Cebu, a
passenger bus of Petrus Bus Liner (passenger bus), driven by
petitioner, collided with a tricycle driven by Elsie Genayas (Genayas),
resulting in the death of four (4) persons and causing physical injuries
to five (5) others, who were all passengers of the tricycle. 5 The
passenger bus was bound for Dalaguete, Cebu, while the tricycle came
from the opposite direction, going towards Cebu City. At the time of
the mishap, the tricycle was overtaking a Mitsubishi pick-up when it
collided with a passenger bus coming from the opposite direction. 6
Petitioner was charged before the MTC with reckless imprudence
resulting in multiple homicide for the deaths of Genayas, Orlando
Alfanta (Alfanta), Grace Israel (Israel), and Julius Amante (Amante);
and with reckless imprudence resulting in serious physical injuries
sustained by Crispin Caeda, Jannette Bacalso, Carmela Lariosa,
Fediliza Basco (Basco), and Nelfe Agad (Agad) and damage to
property.7
During the trial, one of the witnesses presented by the prosecution
was Rogelio Cagakit (Cagakit), a driver of Badian Island Resort. He
testified that on July 6, 1995, at around 11:30 oclock in the morning,
he was driving a Mitsubishi Pajero with tourist passengers bound for
Cebu City; that along the national highway somewhere in Barangay
Magtalisay, Balud, San Fernando, Cebu, he was trailing a tricycle
bearing a total of 8 passengers; that upon reaching the first blind
curve of the road, he noticed the tricycle following a Mitsubishi pickup; that when the Mitsubishi pick-up slowed down upon reaching the
second blind curve, the tricycle tried to overtake the pick up and,
while overtaking, a fast moving vehicle from the opposite direction hit
the tricycle which was thrown towards his direction; and that two
passengers of the tricycle died on the spot.8

Senior Police Officer 3 Gregorio Patalinghug (SPO3 Patalinghug) was

also presented as a witness and he narrated that on the said date and
time he and Senior Police Officer 2 Felipe Yap (SPO2 Yap) responded
to a report about a traffic accident somewhere in Magtalisay, Balud,
San Fernando, Cebu. When they arrived at the place, SPO2 Yap
immediately boarded the injured victims in a vehicle and brought
them to the hospital. He noticed two lifeless bodies lying on the road,
later identified as those of Alfanta and Genayas. He then inspected
the place of the incident; measured the relative positions of the
tricycle, the Mitsubishi Pajero and passenger bus; and drew a sketch.
From the sketch, he identified the point of impact, which was one (1)
foot away from the centerline of the road, crossing the lane occupied
by the passenger bus. He also pointed to the skid mark, about sixty
(60) feet in length, produced by the bus when its driver stepped on
the brake pedal. Based on his observation from the point of impact
and on the information he gathered from several persons present at
the time of the accident, he was of the opinion that the driver of the
tricycle was at fault.9
The prosecution also presented Caeda, Agad and Basco, who related
the collision they witnessed. The parents of the victims and the owner
of the tricycle, meanwhile, both testified on their respective claims for
damages; while Dr. Rolando Anzano, reported his findings on the
injuries sustained by the victims.
In his defense, petitioner testified that he was a professional driver for
26 years and worked for five (5) different employers, the fifth of which
was the Petrus Bus Liner; that his everyday route was from Dalaguete,
Cebu to Cebu City and back, with two (2) round trips a day; that he
was familiar with the road since he had been traversing it for around
20 years; that the road where the accident happened had two (2)
blind curves and upon approaching the first blind curve, he slowed
down by stepping on the brakes; that while negotiating the second
blind curve, he noticed that his lane was clear and so he stepped on
the accelerator in order to gain momentum; that it was at this
moment that the tricycle while in the process of overtaking a vehicle
ahead of it, suddenly occupied his lane; that he tried to avoid hitting
the tricycle but to no avail; that he could not swerve the bus to the left
because there was another vehicle occupying the same; and he could
not also swerve the bus to the road shoulder on the right side of the
lane because it was sloping down and there was a canal. He posited
that the accident would not have taken place at all if the tricycle driver
had not attempted to overtake another vehicle and occupied his
lane.10
On March 18, 1999, the MTC found petitioner guilty beyond
reasonable doubt of the crime of reckless imprudence resulting in
multiple homicide.11 It explained:
Taking into account the circumstances and condition of the road there
being two (2) blind curves involved, the length of the skidmark
produced at sixty (60) feet in length clearly speaks for itself that the
accused drove and operated the passenger bus negligently without
taking the necessary precautions and without due regard to the road
condition.
Simply stated, if in the exercise of reasonable care as contended by the
accused, the speed of the passenger bus at that time was
commensurate and corresponds with the demands of the
circumstances and conditions of the road where as is obtaining, the
conditions are such as to increase the danger of accident, no matter
how sudden the tricycle appeared at the bus front, indisputably, the
skid mark produced would not have reached that much or the
accident may have been avoided and if not, the damage or injuries
caused could only be slight and manageable.12
The dispositive portion reads:
WHEREFORE, finding the accused, Sabiniano Dumayag, guilty
beyond reasonable doubt of the crime of reckless imprudence
resulting in multiple homicide, he is sentenced to suffer the penalty of
imprisonment of two (2) years and one (1) day minimum to three (3)
years, six (6) months and twenty (20) days maximum and to pay the
following civil liabilities:
1. To the surviving heirs of deceased Orlando Alfanta:
a. P50,000.00 death Indemnity;

b. P50,000.00 for wake, funeral, burial and other

related miscellaneous expenses; and

3.1.3 Twenty Thousand (P20,000.00)

pesos for moral damages

c. P20,000.00 moral damages for the agony,

mental anguish and sorrow suffered by the
surviving heirs;

3.1.4
Ten
Thousand
Pesos
(P10,000.00) for exemplary damages;
3.1.5 Twenty Thousand (P20,000.00)
pesos as attorneys fees.

2. To the surviving heirs of deceased Julius Amante;

a. P50,000.00 death Indemnity;

3.2 To pay Beethoven Bernabe, the owner of the

damaged tricycle, EIGHTY

b. P50,000.00 for wake, funeral, burial and other

related miscellaneous expenses; and

THOUSANDS
PESOS
(P80,000.00)
as
compensatory damage representing the value of
the said property after deducting therefrom its
salvage value and allowance for depreciation; and

c. P20,000.00 moral damages for the agony,

mental anguish and sorrow suffered by the
surviving heirs;

3.3 The costs.

3. To the surviving heirs of deceased Grace Israel:
SO ORDERED.15
a. P50,000.00 death Indemnity;
b. P50,000.00 for wake, funeral, burial and other
related miscellaneous expenses; and
c. P20,000.00 moral damages for the agony,
mental anguish and sorrow suffered by the
surviving heirs;
plus P50,000.00 by way of attorneys fees and
P20,000.00 exemplary damages.
With costs against the accused.

The CA affirmed in toto the decision of the RTC. It found the

petitioner and the tricycle driver equally guilty of negligence, the
former for failing to observe the precautionary measure when
approaching a blind curve and the latter for unsuccessfully overtaking
a vehicle. The CA stated that the petitioner should have been more
careful considering that the area had blind curves and there could be
oncoming vehicles from the other side. The fact that petitioner was
driving on the right side of the road did not relieve him of the
obligation of exercising due and ordinary care to prevent collision and
avoid injury to persons or property, including others who may be on
the wrong side of the road.16
Petitioner filed a motion for reconsideration, but it was denied in a
Resolution, dated May 10, 2006.

SO ORDERED.13
Hence, this petition raising the following issues:
On appeal, the RTC affirmed with modification the decision of the
MTC.14 The modified judgment reads:
WHEREFORE, in view of the foregoing premises, the appealed
decision is hereby AFFIRMED but modified as follows:
1. For the complex crime of reckless imprudence resulting
in multiple homicide of Alfante, Israel and Amante, accused
is sentenced to suffer the indeterminate penalty of TWO (2)
YEARS and FOUR (4) MONTHS (of arresto mayor in its
maximum period to prision correccional in its minimum
period), as minimum, to SIX (6) YEARS (of prision
correccional in its medium and maximum periods), as the
maximum thereof, with all the accessory penalties thereto.
2. For reckless imprudence resulting in slight physical
injuries accused is sentenced to PUBLIC CENSURE for the
injuries sustained by each of the private complainants, to
wit, Canieda, Bacalso, Lariosa, Bascon and Agad. In other
words, accused is sentenced to said penalty for as many
private complainants as were injured.
3. For his civil liabilities, accused is directed
3.1 To pay the surviving heirs of each of the
deceased tricycle passengers, namely, Alfante,
Amante and Israel the following:
3.1.1
Fifty
Thousand
Pesos
(P50,000.00) for the death each of the
defendant;
3.1.2
Thirty
Thousand
Pesos
(P30,000.00) for the wake, funeral,
burial and other related expenses in
connection with the said death;

WHETHER OR NOT NEGLIGENCE, IMPRUDENCE AND

RECKLESSNESS WAS CORRECTLY ATTRIBUTED TO PETITIONER
BY THE COURTS BELOW WHEN THE VEHICULAR MISHAP
COMPLAINED OF IN THIS PROCEEDING OCCURRED LAST 6
JULY 1995;
IF INDEED PETITIONER WAS NEGLIGENT, RECKLESS AND
IMPRUDENT WHEN THE MISHAP LITIGATED IN THIS
PROCEEDING OCCURRED LAST 6 JULY 1995, WHETHER OR NOT
SAID NEGLIGENCE, RECKLESSNESS AND IMPRUDENCE, WAS
THE PROXIMATE CAUSE OF THE SAME;
WHETHER OR NOT PETITIONERS CONVICTION, AS SUSTAINED
BY THE COURT OF APPEALS, IS VIOLATIVE OF HIS
CONSTITUTIONAL RIGHTS TO DUE PROCESS OF LAW AND TO
BE PRESUMED INNOCENT OF THE CRIME CHARGED AT BAR.17
Petitioner argues that his guilt was not proven beyond reasonable
doubt, claiming that the vehicular mishap was purely an accident. He
insists that he was not negligent, reckless and imprudent in the
operation of the motor vehicle at the time of the accident and that he
was driving the bus on the lane properly belonging to him at a
moderate speed.
He asserts that the proximate cause of the accident was the negligent,
reckless and imprudent act of the tricycle driver, who suddenly
overtook another vehicle while approaching a blind curve. He stresses
that had the tricycle driver not attempted to suddenly overtake
another vehicle while approaching a blind curve, the accident would
not have taken place.
Petitioner further avers that, at the time of the accident, the tricycle
was overloaded with eight passengers, in addition to the driver; that
the driver of the tricycle was operating along the national highway, a
route specifically prohibited under the franchise; and that the tricycle
driver also violated Section 41 (a) and (b) of Republic Act (R.A.) No.
4136,18 as amended, otherwise known as the Land Transportation and

Traffic Code of the Philippines when he tried to overtake another

vehicle while approaching a blind curve of the highway. Therefore,
due to serious violations committed by the tricycle driver, the
resulting deaths and injuries arising from the
vehicular accident should be his sole responsibility. 19
The Court finds merit in the petition.
Well-settled is the rule that findings of fact of the trial court,
especially when affirmed by the CA, are binding and conclusive upon
this Court.20 The Court, however, recognizes several exceptions to this
rule, to wit: (1) when the inference made is manifestly mistaken,
absurd or impossible; (2) when there is grave abuse of discretion; (3)
when the findings are grounded entirely on speculations, surmises or
conjectures; (4) when the judgment of the CA is based on
misapprehension of facts; (5) when the findings of fact are conflicting;
(6) when the CA, in making its findings, went beyond the issues of the
case and the same is contrary to the admissions of both appellant and
appellee; (7) when the findings of fact are conclusions without citation
of specific evidence on which they are based; (8) when the CA
manifestly overlooked certain relevant facts not disputed by the
parties and which, if properly considered, would justify a different
conclusion; and (9) when the findings of fact of the CA are premised
on the absence of evidence and are contradicted by the evidence on
record.21 Several exceptions obtain in this case; hence, a departure
from the general rule is warranted.
The MTC, the RTC and the CA found petitioner guilty beyond
reasonable doubt of reckless imprudence resulting in homicide and
physical injuries and damage to property. They all concluded that
petitioner was guilty because he was driving fast at the time of the
collision. Consequently, he was sentenced to suffer the penalty of
imprisonment and ordered to pay the victims civil indemnity.
Reckless imprudence, as defined by our penal law, consists in
voluntarily, but without malice, doing or failing to do an act from
which material damage results by reason of inexcusable lack of
precaution on the part of the person performing or failing to perform
such act, taking into consideration his employment or occupation,
degree of intelligence, physical condition and other circumstances
regarding persons, time and place. 22 In order to establish a motorists
liability for the negligent operation of a vehicle, it must be shown that
there was a direct causal connection between such negligence and the
injuries or damages complained of. 23 Thus, to constitute the offense of
reckless driving, the act must be something more than a mere
negligence in the operation of a motor vehicle, and a willful and
wanton disregard of the consequences is required.24
After going over the records of this case, the Court is unable to sustain
the findings of fact and conclusion reached by the courts below. The
totality of the evidence shows that the proximate cause of the collision
was the reckless negligence of the tricycle driver, who hastily overtook
another vehicle while approaching a blind curve, in violation of traffic
laws.
Proximate cause is defined as that cause, which, in natural and
continuous sequence, unbroken by any efficient intervening cause,
produces the injury, and without which the result would not have
occurred. And more comprehensively, the proximate legal cause is
that acting first and producing the injury, either immediately or by
setting other events in motion, all constituting a natural and
continuous chain of events, each having a close causal connection
with its immediate predecessor, the final event in the chain
immediately effecting the injury as a natural and probable result of
the cause which first acted, under such circumstances that the person
responsible for the first event should, as an ordinary prudent and
intelligent person, have reasonable ground to expect at the moment of
his act or default that an injury to some person might probably result
therefrom.25
The evidence indubitably shows that before the collision, the
passenger bus was cruising along its rightful lane when the tricycle
coming from the opposite direction suddenly swerved and encroached
on its lane. The accident would not have happened had Genayas, the
tricycle driver, stayed on his lane and did not recklessly try to
overtake another vehicle while approaching a blind curve. Section 37
of R.A. No. 4136, as amended, mandates all motorists to drive and

operate vehicles on the right side of the road or highway. When

overtaking another, it should be made only if the highway is clearly
visible and is free from oncoming vehicle. Overtaking while
approaching a curve in the highway, where the drivers view is
obstructed, is not allowed. 26 Corollarily, drivers of automobiles, when
overtaking another vehicle, are charged with a high degree of care and
diligence to avoid collision. The obligation rests upon him to see to it
that vehicles coming from the opposite direction are not taken
unaware by his presence on the side of the road upon which they have
the right to pass.27
The MTC opined that the accident could have been avoided or
damage or injuries could only be slight and manageable, if the speed
of the passenger bus was commensurate with the demands of the
circumstances and the condition of the road. The Court, however,
cannot subscribe to the conclusion that petitioner was driving fast and
without regard to the condition of the road at the time of the collision.
The testimony of Cagakit that the passenger bus was running fast at
the time of the collision lacks probative value. The actual speed of the
bus was not established because he merely stated that when the
tricycle was trying to overtake the Mitsubishi pick-up, a fast moving
vehicle hit it. Also, it was not indubitably shown that petitioner was
driving at a speed beyond the rate allowed by law. 28 In a similar case,
Vallacar Transit, Inc. v. Catubig, 29 the Court, in adopting the
conclusion of the RTC, wrote:
Based on the evidence on record, it is crystal clear that the immediate
and proximate cause of the collision is the reckless and negligent act
of Quintin Catubig, Jr. and not because the Ceres Bus was running
very fast. Even if Ceres Bus is running very fast on its lane, it could
not have caused the collision if not for the fact that Quintin Catubig,
Jr. tried to overtake a cargo truck and encroached on the lane
traversed by the Ceres Bus while approaching a curve. As the driver of
the motorcycle, Quintin Catubig, Jr. has not observed reasonable care
and caution in driving his motorcycle which an ordinary prudent
driver would have done under the circumstances. Recklessness on the
part of Quintin Catubig, Jr. is evident when he tried to overtake a
cargo truck while approaching a curve in Barangay Donggo-an,
Bolisong, Manjuyod, Negros Oriental.
x x x.
Furthermore, it was undisputed that the tricycle was overloaded, with
a total of eight (8) passengers (excluding the driver), which is a clear
violation of traffic rules and regulation. It was likewise admitted by
the owner of the tricycle, Beethoven Bernabe (Bernabe), that his
driver violated the conditions specified in the tricycle franchise which
prohibited all tricycles to travel along the national highway. In fact, he
admitted that Genayas was only the alternate driver of his son and
that he did not interview him anymore when he applied as a company
driver because he was a neighbor and a nephew of his wife. For said
reason, the award of damages to Bernabe by the courts below has no
justifiable basis.
The immediate and proximate cause being the reckless and
imprudent act of the tricycle driver, petitioner should be acquitted.
Nevertheless, he is civilly liable. The rule is that an "acquittal of the
accused, even if based on a finding that he is not guilty, does not carry
with it the extinction of the civil liability based on quasi delict." 30
Under the proven circumstances, there was contributory negligence
on the part of petitioner.1wphi1 It is to be noted that there were two
blind curves along the national highway. Having travelled along it for
the past 20 years, he was aware of the blind curves and should have
taken precaution in operating the passenger bus as it approached
them. In the situation at hand, he did not exercise the necessary
precaution. After negotiating the first curve, he claimed to have
stepped on the accelerator pedal because his lane was clear.
According to SPO2 Patalinghug, he found skid marks produced by the
passenger bus. It could only mean that petitioner had slammed on the
brake brought about by the sudden emergence of the tricycle in front
of him. Notwithstanding, it was still short of reckless or criminal
negligence as he was driving along his rightful lane.
Considering that the proximate cause was the negligence of the
tricycle driver and that negligence on the part of petitioner was only
contributory, there is a need to mitigate the amounts of the civil

liability imposed on the latter. The determination of the mitigation of

the civil liability varies depending on the circumstances of each
case.31 The Court allowed the reduction of 50% in Rakes v. Atlantic
Gulf & Pacific Co.,32 20% in Phoenix Construction, Inc. v. IAC 33 and
LBC Air Cargo, Inc. v. CA, 34 and 40% in Bank of the Philippine
Islands v. CA 35 and Philippine Bank of Commerce v. CA.36
In this case, a reduction of 50% of the actual damages is deemed
equitable considering that the negligence of the tricycle driver was the
proximate cause of the accident and that of petitioner was merely
contributory. Moreover, under the circumstances, petitioner cannot
be made liable for moral and exemplary damages for lack of basis.
The award of attorney's fees is not warranted either.
WHEREFORE, the petition 1s PARTLY GRANTED. Petitioner
Sabiniano Dumayag is hereby ACQUITTED of the crime of reckless
imprudence resulting in homicide and damage to property. He is,
however, civilly liable and, accordingly, ORDERED to pay each of the
surviving heirs of Orlando Alfanta, Grace Israel and Julius Amante
the following:
1 P25,000.00 as civil indemnity; and
2 Pl5,000.00 for funeral expenses.
The award of damages to Beethoven Bernabe, the owner of the
tricycle, is DELETED.
G.R. No. L-24377

October 26, 1968

FAR EASTERN SURETY & INSURANCE COMPANY,

INC., petitioner,
vs.
SOCORRO DANCEL VDA. DE MISA, ARACELI MARIA
PINTO and LA MALLORCA, respondents.
REYES, J.B.L., J.:
Appeal by petition for review from a judgment of the Court of
Appeals, in its Case CA-G.R. No. 30846-R, sentencing the Far Eastern
Surety & Insurance Company to indemnify La Mallorca on its
insurance contract for P9,661.50.
The record discloses that on 3 September 1957 the two respondents,
Socorro Dancel Vda. de Misa and Araceli Pinto, hired a taxicab
operated by respondent La Mallorca in Quezon City. While
proceeding south toward the Archbishop's Palace in Shaw Boulevard,
the taxicab collided with a gravel and sand truck, driven by one
Faustino Nabor, that was proceeding in the opposite direction. As a
result the two passengers of the La Mallorca taxicab were injured, and
filed suit for damages against the taxicab company in the Court of
First Instance. The operator denied liability, but instituted a third
party complaint against herein appellant, Far Eastern Surety and
Insurance Company, to recoup from the latter, based on its Common
Carrier's Accident Insurance No. CCA 106, any damages that might be
recovered by the plaintiffs taxicab passengers. The insurer, likewise,
denied responsibility.
After trial, the Court of First Instance of Quezon City awarded to
plaintiffs Vda. de Misa and Pinto (now respondents) actual, moral,
and exemplary damages and attorney's fees, payable by the taxicab
operator, La Mallorca; and sentenced the insurance company to pay
to La Mallorca P10,000.00 on its third party liability insurance.

IN VIEW WHEREOF, judgment affirmed with

modifications; so that; 1st, on the complaint, appellant La
Mallorca is sentenced to pay unto appellee, Socorro Dancel
Vda. de Misa the sum of P3,910.00 plus P1,000.00
attorney's fees; and unto appellee, Araceli Pinto, the sum of
P3,751.50 plus P1,000.00 attorney's fees; and pursuant to
Art. 2210, of the New Civil Code, this Court orders that the
P3,910.00 awarded unto Socorro Dancel and the P3,751.50
awarded unto Araceli Pinto shall earn interest from the date
of the promulgation of this decision; and 2ndly, on the third
party complaint, condemning Far Eastern Surety and
Insurance Co. Inc., to pay unto La Mallorca the sum of
P4,910.00 corresponding to Socorro Dancel and P4,751.50
corresponding to Araceli Pinto; costs against appellants La
Mallorca and Far Eastern Surety and Insurance Company.
SO ORDERED.
Unable to secure reconsideration, the insurance company appealed to
this Court, but La Mallorca did not. The decision of the Court of
Appeals not having been appealed by the taxicab company, the same
is now final as far as that entity is concerned, and may not be
modified by this Court. The insurance company's first and second
assignments of error, regarding the correctness of the appealed
judgment in holding La Mallorca responsible to the taxicab
passengers, must be, therefore, overruled. The only issue before this
Court at this stage of the litigation is whether or not the appellant
insurer is liable to the insured on its policy of insurance.
In affirming the responsibility of the insurer, the Court of Appeals
reasoned out in this wise:
In the first place, as we have said earlier, the Far Eastern
Surety is not liable under the insurance contract because
the assured La Mallorca is not "legally liable" to the
plaintiffs-appellees. But in the very remote event that the
La Mallorca is held "legally liable" and for which reason
that the Far Eastern Surety may be called upon to answer
under the insurance contract, it is the stand of this
representation that it cannot be answerable to the full
extent of its maximum liability of P5,000.00 per
passenger."
For one thing, the Far Eastern Surety's liability under the
insurance contract does not extend to moral, compensatory
and exemplary damages, and attorney's fees. Its insurance
liability is limited to actual physical injuries. This is so
because under the Common Carrier's Accident Insurance
Contract and its Third Party Liability Insurance Rider
(Annex "C" of the Third-Party Complaint, please see page
59 of the Record on Appeal), the liability of the Far Eastern
Surety is defined as follows:
"l. The Company will subject to the Limits of
Liability indemnify the Insured in the event of
accident caused by or arising out of the use of the
Motor Vehicle or in connection with the loading
or unloading of the Motor Vehicle against all
sums including claimant's costs and expense
which the Insured shall become legally liable to
pay in respect of:
(a) death of or bodily injury to any person
(b) damage to property

On appeal, the Court of Appeals, while holding that the collision was
due to the fault of the driver of the sand truck nevertheless held the
taxicab operator liable in damages to the passengers of its motor
vehicle on the strength of its representation that the passengers were
insured against accidents, as shown by the sticker affixed to the
taxicab; and, overruling the defense of the insurance company that it
was not answerable except for whatever amounts the insured might
be legally liable for in the event of accident caused by, or arising out
of, the use of the motor vehicle, the appellate court adjudged the said
insurer answerable to La Mallorca in view of its third party liability
insurance contract. As a result, it rendered judgment on appeal in the
following terms:

"The above-quoted stipulation exempts the Far

Eastern Surety from paying damages other than
actual bodily injuries sustained by third parties."
(Brief for the Third Party Defendant-Appellant
Far Eastern Surety & Insurance Company, Inc.,
pages 12-13)
but this is wrong, because since La Mallorca has been found
to be "legally liable", it must follow that Far Eastern Surety
must now answer unto it as its insurer; only that the total
liability per passenger should not exceed P5,000.00; nor is

it correct for Far Eastern to say that it should answer only

for "actual bodily injuries" and to no other; for what the
stipulation above copied says and what it therefore must
mean is that said Company:
"will ... indemnify the Insured in the event of
accident caused by or arising out of the use of the
Motor Vehicle ... against all sums ... which the
Insured shall become legally liable in respect of ...
bodily injury;"
otherwise stated, the "bodily injury" is only required to be
the cause of the liability of Far Eastern, but its liability
should extend to "all sums which the Insured shall become
legally liable only that this should not exceed P5,000.00;
the result of all these will be to sustain the decision
appealed from, within the corresponding deductions
outlined above.
We agree with the appellant that the decision of the Court of Appeals
on this point is not legally tenable, for the reason that the policy of
insurance limited the recovery of the insured to "all sums including
claimant's" (passengers in this case) "cost and expenses which the
Insured shall become legally liable" in the "event of accident caused
by or arising out of the use of the Motor Vehicle;" and the appealed
decision itself shows that the indemnity awarded to the passengers of
the La Mallorca taxicab was not because of the accident but was
exclusively predicated on the representation made by the taxicab
company to its passengers that the latter were insured against
accidents. This is plain from the consideranda made in the appealed
decision (pages 10-11):
... indeed, the notice in the sticker evidently being intended
in order to court the riding public into patronizing La
Mallorca, and being placed there right in the taxi, the only
meaning that can be given to it and certainly it must
have a meaning for it could not have been there placed if
intended to be useless was that La Mallorca bound itself,
in its contract of carriage, with that additional stipulation
therein indicated, that the passengers were "Insured", and
if there be any ambiguity in its meaning, such ambiguity
must be construed most strongly against the party causing
the ambiguity, 1377 New Civil Code; and having that as a
basis, this Court must find that La Mallorca had indeed,
insured its pasengers and since such a stipulation was not

at all illegal, it must bind La Mallorca, and would be enough

to render it liable for injuries to the passengers thereof,
even though it had not been at fault, i.e., that the damage
had come from & fortuitous event coming from the fault of
a third party for which it was not responsible, since the Law
also dictates that:
"ART. 1174. Except in cases expressly specified by
the law, or when it is otherwise declared by
stipulation, or when the nature of the obligation
requires the assumption of risk, no person shall
be responsible for those events which could not
be foreseen, or which, though foreseen, are
inevitable." (Art. 1174, New Civil Code)
and the result must be that La Mallorca would have to
answer just the same and the 3rd and 4th assignments of
error must have to be overruled; and this will take the
discussion to the amount of damages awarded, subject of
the 5th error.
While the decision correctly held that la Mallorca was in estoppel, and
could not be heard to deny that its passengers were insured, it does
not necessarily follow that the estoppel, likewise, applied to the
appellant insurer. The Court of Appeals concurred in the finding of
the trial court that only the negligence of the driver of the sand and
gravel truck was the causative factor of the mishap, and made no
pronouncement that the driver of the taxicab in any way contributed
thereto; so that, had it not been for its representation that its
passengers were insured, the taxicab company would not have been
liable at all. As it does not appear that the insurance company
authorized or consented to, or even knew of, the representation made
by the taxicab company to its passengers, it follows that the source of
the award of damages against the taxicab company was beyond, or
outside of, the contemplation of the parties to the contract of Accident
Insurance No. CCA 106, and that the insurer may not be held liable
for such damages.
WHEREFORE, the decision of the Court of Appeals is modified, by
eliminating therefrom the award against the appellant, Far Eastern
Insurance Co., Inc., in favor of the taxicab operator, La Mallorca,
including the sharing of the costs of litigation, which shall be
exclusively borne by the latter entity. Without costs in this instance.