THIRD DIVISION

Matute stayed at the Resort from September 8 to 11, 2000. He was originally scheduled
SPOUSES DANTE CRUZ and G.R. No. 186312
LEONORA CRUZ, to leave the Resort in the afternoon of September 10, 2000, but was advised to stay for
Petitioners, Present:
another night because of strong winds and heavy rains.
CARPIO MORALES, J.,
Chairperson,
BRION,
On September 11, 2000, as it was still windy, Matute and 25 other Resort guests
- versus - BERSAMIN,
ABAD,* and including petitioners son and his wife trekked to the other side of
SUN HOLIDAYS, INC., VILLARAMA, JR., JJ.
Respondent. the Coco Beach mountain that was sheltered from the wind where they boarded M/B
Promulgated:
June 29, 2010 Coco Beach III, which was to ferry them to Batangas.

x-------------------------------------------------x
Shortly after the boat sailed, it started to rain. As it moved farther away from Puerto

Galera and into the open seas, the rain and wind got stronger, causing the boat to tilt
DECISION
from side to side and the captain to step forward to the front, leaving the wheel to one

of the crew members.

CARPIO MORALES, J.:

The waves got more unwieldy. After getting hit by two big waves which came
Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on January 25,
one after the other, M/B Coco Beach III capsized putting all passengers underwater.
2001[1] against Sun Holidays, Inc. (respondent) with the Regional Trial Court (RTC) of
The passengers, who had put on their life jackets, struggled to get out of the boat. Upon
Pasig City for damages arising from the death of their son Ruelito C. Cruz (Ruelito) who
seeing the captain, Matute and the other passengers who reached the surface asked
perished with his wife on September 11, 2000 on board the boat M/B Coco Beach
him what they could do to save the people who were still trapped under the boat. The
III that capsized en route to Batangas from Puerto Galera, Oriental Mindoro where the
captain replied Iligtas niyo na lang ang sarili niyo (Just save yourselves).
couple had stayed at Coco Beach Island Resort (Resort) owned and operated by

respondent.
Help came after about 45 minutes when two boats owned by Asia Divers in Sabang,
Puerto Galera passed by the capsized M/B Coco Beach III. Boarded on those two boats
The stay of the newly wed Ruelito and his wife at the Resort from September 9 to 11,
were 22 persons, consisting of 18 passengers and four crew members, who were
2000 was by virtue of a tour package-contract with respondent that included
brought to Pisa Island. Eight passengers, including petitioners son and his wife, died
transportation to and from the Resort and the point of departure in Batangas.
during the incident.

Miguel C. Matute (Matute),[2] a scuba diving instructor and one of the survivors, gave

his account of the incident that led to the filing of the complaint as follows:
At the time of Ruelitos death, he was 28 years old and employed as a contractual a subasco or squall, characterized by strong winds and big waves, suddenly occurred,

worker for Mitsui Engineering & Shipbuilding Arabia, Ltd. in Saudi Arabia, with a basic causing the boat to capsize.[10]

monthly salary of $900.[3] By Decision of February 16, 2005,[11] Branch 267 of the Pasig RTC dismissed

Petitioners, by letter of October 26, 2000,[4] demanded indemnification from respondent petitioners Complaint and respondents Counterclaim.

for the death of their son in the amount of at least P4,000,000.

Petitioners Motion for Reconsideration having been denied by Order dated September

2, 2005,[12] they appealed to the Court of Appeals.

Replying, respondent, by letter dated November 7, 2000,[5] denied any responsibility for

the incident which it considered to be a fortuitous event. It nevertheless offered, as an

By Decision of August 19, 2008,[13] the appellate court denied petitioners
act of commiseration, the amount of P10,000 to petitioners upon their signing of a
appeal, holding, among other things, that the trial court correctly ruled that respondent
waiver.
is a private carrier which is only required to observe ordinary diligence; that respondent

As petitioners declined respondents offer, they filed the Complaint, as earlier reflected, in fact observed extraordinary diligence in transporting its guests on board M/B Coco

alleging that respondent, as a common carrier, was guilty of negligence in allowing M/B Beach III; and that the proximate cause of the incident was a squall, a fortuitous event.

Coco Beach III to sail notwithstanding storm warning bulletins issued by the Philippine

Atmospheric, Geophysical and Astronomical Services Administration (PAGASA) as Petitioners Motion for Reconsideration having been denied by Resolution

early as 5:00 a.m. of September 11, 2000.[6] dated January 16, 2009,[14] they filed the present Petition for Review.[15]

In its Answer,[7] respondent denied being a common carrier, alleging that its boats are
Petitioners maintain the position they took before the trial court, adding that
not available to the general public as they only ferry Resort guests and crew
respondent is a common carrier since by its tour package, the transporting of its guests
members. Nonetheless, it claimed that it exercised the utmost diligence in ensuring the
is an integral part of its resort business. They inform that another division of the
safety of its passengers; contrary to petitioners allegation, there was no storm
appellate court in fact held respondent liable for damages to the other survivors of the
on September 11, 2000 as the Coast Guard in fact cleared the voyage; and M/B Coco
incident.
Beach III was not filled to capacity and had sufficient life jackets for its passengers. By

way of Counterclaim, respondent alleged that it is entitled to an award for attorneys

Upon the other hand, respondent contends that petitioners failed to present evidence
fees and litigation expenses amounting to not less than P300,000.
to prove that it is a common carrier; that the Resorts ferry services for guests cannot

Carlos Bonquin, captain of M/B Coco Beach III, averred that the Resort customarily be considered as ancillary to its business as no income is derived therefrom; that it

requires four conditions to be met before a boat is allowed to sail, to wit: (1) the sea is exercised extraordinary diligence as shown by the conditions it had imposed before

calm, (2) there is clearance from the Coast Guard, (3) there is clearance from the allowing M/B Coco Beach III to sail; that the incident was caused by a fortuitous event

captain and (4) there is clearance from the Resorts assistant manager. [8] He added without any contributory negligence on its part; and that the other case wherein the

that M/B Coco Beach III met all four conditions on September 11, 2000,[9] but
 classification, freight or carrier service of any
appellate court held it liable for damages involved different plaintiffs, issues and class, express service, steamboat, or steamship
line, pontines, ferries and water craft, engaged in
evidence.[16]
the transportation of passengers or freight or both,
shipyard, marine repair shop, wharf or dock, ice
plant, ice-refrigeration plant, canal, irrigation
The petition is impressed with merit. system, gas, electric light, heat and power, water
supply and power petroleum, sewerage system,
wire or wireless communications systems, wire or
Petitioners correctly rely on De Guzman v. Court of Appeals[17] in characterizing wireless broadcasting stations and other similar
public services . . .[18] (emphasis and underscoring
respondent as a common carrier. supplied.)

The Civil Code defines common carriers in the following terms: Indeed, respondent is a common carrier. Its ferry services are so intertwined
Article 1732. Common carriers are persons,
corporations, firms or associations engaged in the with its main business as to be properly considered ancillary thereto. The constancy of
business of carrying or transporting passengers or
goods or both, by land, water, or air for respondents ferry services in its resort operations is underscored by its having its
compensation, offering their services to the public.
own Coco Beach boats. And the tour packages it offers, which include the ferry
The above article makes no distinction between one services, may be availed of by anyone who can afford to pay the same. These services
whose principal business activity is the carrying of persons or
goods or both, and one who does such carrying only as are thus available to the public.
an ancillary activity (in local idiom, as a sideline). Article 1732 also
carefully avoids making any distinction between a person or
enterprise offering transportation service on a regular or scheduled
That respondent does not charge a separate fee or fare for its ferry services
basis and one offering such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732 distinguish is of no moment. It would be imprudent to suppose that it provides said services at a
between a carrier offering its services to the general public, i.e., the
general community or population, and one who offers services or loss. The Court is aware of the practice of beach resort operators offering tour
solicits business only from a narrow segment of the general
population. We think that Article 1733 deliberately refrained from packages to factor the transportation fee in arriving at the tour package price. That
making such distinctions. guests who opt not to avail of respondents ferry services pay the same amount is
So understood, the concept of common carrier under Article 1732 likewise inconsequential. These guests may only be deemed to have overpaid.
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) As De Guzman instructs, Article 1732 of the Civil Code defining common carriers has
of the Public Service Act, public service includes: deliberately refrained from making distinctions on whether the carrying of persons or
. . . every person that now or hereafter may own, goods is the carriers principal business, whether it is offered on a regular basis, or
operate, manage, or control in the Philippines, for
hire or compensation, with general or limited whether it is offered to the general public. The intent of the law is thus to not consider
clientele, whether permanent, occasional or
such distinctions. Otherwise, there is no telling how many other distinctions may be
accidental, and done for general business
purposes, any common carrier, railroad, street concocted by unscrupulous businessmen engaged in the carrying of persons or goods
railway, traction railway, subway motor vehicle,
either for freight or passenger, or both, with or in order to avoid the legal obligations and liabilities of common carriers.
without fixed route and whatever may be its
Under the Civil Code, common carriers, from the nature of their business and for

reasons of public policy, are bound to observe extraordinary diligence for the safety of
the passengers transported by them, according to all the circumstances of each
case.[19] They are bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with due
regard for all the circumstances.[20]
Respondents insistence that the incident was caused by a fortuitous event
does not impress either.
The elements of a "fortuitous event" are: (a) the cause of the unforeseen and
unexpected occurrence, or the failure of the debtors to comply with their obligations,
must have been independent of human will; (b) the event that constituted the caso

fortuito must have been impossible to foresee or, if foreseeable, impossible to avoid;

(c) the occurrence must have been such as to render it impossible for the debtors to
When a passenger dies or is injured in the discharge of a contract of carriage,
fulfill their obligation in a normal manner; and (d) the obligor must have been free from
it is presumed that the common carrier is at fault or negligent. In fact, there is even no
any participation in the aggravation of the resulting injury to the creditor. [24]
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 To fully free a common carrier from any liability, the fortuitous event must have been
the carrier exercised extraordinary diligence.[21] the proximate and only cause of the loss. And it should have exercised due diligence

Respondent nevertheless harps on its strict compliance with the earlier mentioned
conditions of voyage before it allowed M/B Coco Beach III to sail on September 11,
2000. Respondents position does not impress.
to prevent or minimize the loss before, during and after the occurrence of the fortuitous
event.[25]
Respondent cites the squall that occurred during the voyage as the fortuitous event that
overturned M/B Coco Beach III. As reflected above, however, the occurrence of squalls

was expected under the weather condition of September 11, 2000. Moreover, evidence
The evidence shows that PAGASA issued 24-hour public weather forecasts and
shows that M/B Coco Beach III suffered engine trouble before it capsized and
tropical cyclone warnings for shipping on September 10 and 11, 2000 advising of
sank.[26] The incident was, therefore, not completely free from human intervention.
tropical depressions in Northern Luzon which would also affect

the province of Mindoro.[22] By the testimony of Dr. Frisco Nilo, supervising weather
The Court need not belabor how respondents evidence likewise fails to demonstrate
specialist of PAGASA, squalls are to be expected under such weather condition.[23]
that it exercised due diligence to prevent or minimize the loss before, during and after

the occurrence of the squall.

A very cautious person exercising the utmost diligence would thus not brave such
stormy weather and put other peoples lives at risk. The extraordinary diligence required

of common carriers demands that they take care of the goods or lives entrusted to their

hands as if they were their own. This respondent failed to do.

 Article 1764[27] vis--vis Article 2206[28] of the Civil Code holds the common showing that the living expenses constituted the smaller percentage of the gross

carrier in breach of its contract of carriage that results in the death of a passenger liable income, the living expenses are fixed at half of the gross income.

to pay the following: (1) indemnity for death, (2) indemnity for loss of earning capacity

and (3) moral damages. Applying the above guidelines, the Court determines Ruelito's life expectancy

as follows:

Petitioners are entitled to indemnity for the death of Ruelito which is fixed

at P50,000.[29]
Life expectancy = 2/3 x [80 - age of deceased at the time of death]

As for damages representing unearned income, the formula for its 2/3 x [80 - 28]

computation is:
2/3 x [52]
Net Earning Capacity = life expectancy x (gross annual income -
reasonable and Life expectancy = 35
necessary living expenses).

Life expectancy is determined in accordance with the formula: Documentary evidence shows that Ruelito was earning a basic monthly salary
2 / 3 x [80 age of deceased at the time of death][30] of $900[35] which, when converted to Philippine peso applying the annual average

exchange rate of $1 = P44 in 2000,[36] amounts to P39,600. Ruelitos net earning

The first factor, i.e., life expectancy, is computed by applying the formula (2/3 capacity is thus computed as follows:

x [80 age at death]) adopted in the American Expectancy Table of Mortality or the

Actuarial of Combined Experience Table of Mortality. [31] Net Earning Capacity = life expectancy x (gross annual income -
reasonable and necessary living expenses).
The second factor is computed by multiplying the life expectancy by the net
= 35 x (P475,200 - P237,600)
earnings of the deceased, i.e., the total earnings less expenses necessary in the = 35 x (P237,600)
creation of such earnings or income and less living and other incidental
Net Earning Capacity = P8,316,000
expenses.[32] The loss is not equivalent to the entire earnings of the deceased, but only

such portion as he would have used to support his dependents or heirs. Hence, to be

deducted from his gross earnings are the necessary expenses supposed to be used by Respecting the award of moral damages, since respondent common carriers
the deceased for his own needs.[33] breach of contract of carriage resulted in the death of petitioners son, following Article
1764 vis--vis Article 2206 of the Civil Code, petitioners are entitled to moral damages.
In computing the third factor necessary living expense, Smith Bell Dodwell

Shipping Agency Corp. v. Borja[34] teaches that when, as in this case, there is no Since respondent failed to prove that it exercised the extraordinary diligence

required of common carriers, it is presumed to have acted recklessly, thus warranting


the award too of exemplary damages, which are granted in contractual obligations if
the defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner.[37]
Under the circumstances, it is reasonable to award petitioners the amount
of P100,000 as moral damages and P100,000 as exemplary damages.[38]
computation of legal interest shall, in any case, be on the amount
finally adjudged.
3. When the judgment of the court awarding a sum of
money becomes final and executory, the rate of legal interest,
whether the case falls under paragraph 1 or paragraph 2, above,
shall be 12% per annum from such finality until its satisfaction, this
interim period being deemed to be by then an equivalent to a
forbearance of credit. (emphasis supplied).

Since the amounts payable by respondent have been determined with certainty only in

Pursuant to Article 2208[39] of the Civil Code, attorney's fees may also be the present petition, the interest due shall be computed upon the finality of this decision

awarded where exemplary damages are awarded. The Court finds that 10% of the total at the rate of 12% per annum until satisfaction, in accordance with paragraph number

amount adjudged against respondent is reasonable for the purpose. 3 of the immediately cited guideline in Easter Shipping Lines, Inc.

Finally, Eastern Shipping Lines, Inc. v. Court of Appeals[40] teaches that when WHEREFORE, the Court of Appeals Decision of August 19,

an obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or 2008 is REVERSED and SET ASIDE. Judgment is rendered in favor of petitioners

quasi-delicts is breached, the contravenor can be held liable for payment of interest in ordering respondent to pay petitioners the following: (1) P50,000 as indemnity for the

the concept of actual and compensatory damages, subject to the following rules, to wit death of Ruelito Cruz; (2) P8,316,000 as indemnity for Ruelitos loss of earning capacity;

(3) P100,000 as moral damages; (4) P100,000 as exemplary damages; (5) 10% of the

1. When the obligation is breached, and it consists in the total amount adjudged against respondent as attorneys fees; and (6) the costs of suit.
payment of a sum of money, i.e., a loan or forbearance of money,
the interest due should be that which may have been stipulated in
writing. Furthermore, the interest due shall itself earn legal interest The total amount adjudged against respondent shall earn interest at the rate of 12%
from the time it is judicially demanded. In the absence of stipulation,
per annum computed from the finality of this decision until full payment.
the rate of interest shall be 12% per annum to be computed from
default, i.e., from judicial or extrajudicial demand under and subject
to the provisions of Article 1169 of the Civil Code. SO ORDERED.

2. When an obligation, not constituting a loan or

forbearance of money, is breached, an interest on the amount of
damages awarded may be imposed at the discretion of the court at
CONCHITA CARPIO MORALES
the rate of 6% per annum. No interest, however, shall be adjudged
Associate Justice
on unliquidated claims or damages except when or until the demand
Chairperson
can be established with reasonable certainty. Accordingly, where the
demand is established with reasonable certainty, the interest shall
begin to run from the time the claim is made judicially or
extrajudicially (Art. 1169, Civil Code) but when such certainty cannot
WE CONCUR:
be so reasonably established at the time the demand is made, the
interest shall begin to run only from the date the judgment of the court
is made (at which time the quantification of damages may be deemed
to have been reasonably ascertained). The actual base for the

ARTURO D. BRION LUCAS P. BERSAMIN
Associate Justice Associate Justice
THIRD DIVISION
[G.R. No. 147079. December 21, 2004]
A.F. SANCHEZ BROKERAGE INC., petitioners, vs. THE HON. COURT OF
APPEALS and FGU INSURANCE CORPORATION, respondents.
DECISION
CARPIO MORALES, J.:
Before this Court on a petition for Certiorari is the appellate courts Decision[1] of
August 10, 2000 reversing and setting aside the judgment of Branch 133, Regional Trial
Court of Makati City, in Civil Case No. 93-76B which dismissed the complaint of
respondent FGU Insurance Corporation (FGU Insurance) against petitioner A.F.
Sanchez Brokerage, Inc. (Sanchez Brokerage).
On July 8, 1992, Wyeth-Pharma GMBH shipped on board an aircraft of KLM Royal
Dutch Airlines at Dusseldorf, Germany oral contraceptives consisting of 86,800 Blisters
Femenal tablets, 14,000 Blisters Nordiol tablets and 42,000 Blisters Trinordiol tablets
for delivery to Manila in favor of the consignee, Wyeth-Suaco Laboratories, Inc.[2] The
Femenal tablets were placed in 124 cartons and the Nordiol tablets were placed in 20
cartons which were packed together in one (1) LD3 aluminum container, while the
Trinordial tablets were packed in two pallets, each of which contained 30 cartons. [3]
Wyeth-Suaco insured the shipment against all risks with FGU Insurance which
issued Marine Risk Note No. 4995 pursuant to Marine Open Policy No. 138. [4]
Upon arrival of the shipment on July 11, 1992 at the Ninoy Aquino International
Airport (NAIA),[5] it was discharged without exception[6] and delivered to the warehouse
of the Philippine Skylanders, Inc. (PSI) located also at the NAIA for safekeeping. [7]
In order to secure the release of the cargoes from the PSI and the Bureau of
Customs, Wyeth-Suaco engaged the services of Sanchez Brokerage which had been
its licensed broker since 1984.[8] As its customs broker, Sanchez Brokerage calculates
and pays the customs duties, taxes and storage fees for the cargo and thereafter
delivers it to Wyeth-Suaco.[9]
On July 29, 1992, Mitzi Morales and Ernesto Mendoza, representatives of
Sanchez Brokerage, paid PSI storage fee amounting to P8,572.35 a receipt for which,
Official Receipt No. 016992,[10]was issued. On the receipt, another representative of
Sanchez Brokerage, M. Sison,[11] acknowledged that he received the cargoes
consisting of three pieces in good condition.[12]
Wyeth-Suaco being a regular importer, the customs examiner did not inspect the
cargoes[13] which were thereupon stripped from the aluminum containers [14] and loaded
inside two transport vehicles hired by Sanchez Brokerage. [15]
Among those who witnessed the release of the cargoes from the PSI warehouse
were Ruben Alonso and Tony Akas,[16] employees of Elite Adjusters and Surveyors Inc.
(Elite Surveyors), a marine and cargo surveyor and insurance claim adjusters firm
engaged by Wyeth-Suaco on behalf of FGU Insurance.
Upon instructions of Wyeth-Suaco, the cargoes were delivered to Hizon
Laboratories Inc. in Antipolo City for quality control check. [17] The delivery receipt,
bearing No. 07037 dated July 29, 1992, indicated that the delivery consisted of one
container with 144 cartons of Femenal and Nordiol and 1 pallet containing Trinordiol. [18]
On July 31, 1992, Ronnie Likas, a representative of Wyeth-Suaco, acknowledged
the delivery of the cargoes by affixing his signature on the delivery receipt. [19] Upon
inspection, however, he, together with Ruben Alonzo of Elite Surveyors, discovered
that 44 cartons containing Femenal and Nordiol tablets were in bad order. [20] He thus
placed a note above his signature on the delivery receipt stating that 44 cartons of oral
contraceptives were in bad order. The remaining 160 cartons of oral contraceptives
were accepted as complete and in good order.
Ruben Alonzo thus prepared and signed, along with Ronnie Likas, a survey
report[21] dated July 31, 1992 stating that 41 cartons of Femenal tablets and 3 cartons
of Nordiol tablets were wetted (sic).[22]
The Elite Surveyors later issued Certificate No. CS-0731-1538/92[23] attached to
which was an Annexed Schedule whereon it was indicated that prior to the loading of
the cargoes to the brokers trucks at the NAIA, they were inspected and found to be in
apparent good condition.[24] Also noted was that at the time of delivery to the warehouse
of Hizon Laboratories Inc., slight to heavy rains fell, which could account for the wetting
of the 44 cartons of Femenal and Nordiol tablets.[25]
On August 4, 1992, the Hizon Laboratories Inc. issued a Destruction
Report[26] confirming that 38 x 700 blister packs of Femenal tablets, 3 x 700 blister
packs of Femenal tablets and 3 x 700 blister packs of Nordiol tablets were heavily
damaged with water and emitted foul smell.
On August 5, 1992, Wyeth-Suaco issued a Notice of Materials Rejection[27] of 38
cartons of Femenal and 3 cartons of Nordiol on the ground that they were delivered to
Hizon Laboratories with heavy water damaged (sic) causing the cartons to sagged (sic)
emitting a foul order and easily attracted flies.[28]
Wyeth-Suaco later demanded, by letter[29] of August 25, 1992, from Sanchez
Brokerage the payment of P191,384.25 representing the value of its loss arising from
the damaged tablets.
As the Sanchez Brokerage refused to heed the demand, Wyeth-Suaco filed an
insurance claim against FGU Insurance which paid Wyeth-Suaco the amount
of P181,431.49 in settlement of its claim under Marine Risk Note Number 4995.
Wyeth-Suaco thus issued Subrogation Receipt[30] in favor of FGU Insurance.
 On demand by FGU Insurance for payment of the amount of P181,431.49 it paid
Wyeth-Suaco, Sanchez Brokerage, by letter[31] of January 7, 1993, disclaimed liability
for the damaged goods, positing that the damage was due to improper and insufficient
export packaging; that when the sealed containers were opened outside the PSI
warehouse, it was discovered that some of the loose cartons were wet, [32] prompting its
(Sanchez Brokerages) representative Morales to inform the Import-Export Assistant of
Wyeth-Suaco, Ramir Calicdan, about the condition of the cargoes but that the latter
advised to still deliver them to Hizon Laboratories where an adjuster would assess the
damage.[33]
Hence, the filing by FGU Insurance of a complaint for damages before the
Regional Trial Court of Makati City against the Sanchez Brokerage.
The trial court, by Decision[34] of July 29, 1996, dismissed the complaint, holding
that the Survey Report prepared by the Elite Surveyors is bereft of any evidentiary
support and a mere product of pure guesswork.[35]
On appeal, the appellate court reversed the decision of the trial court, it holding
that the Sanchez Brokerage engaged not only in the business of customs brokerage
but also in the transportation and delivery of the cargo of its clients, hence, a common
carrier within the context of Article 1732 of the New Civil Code. [36]
Noting that Wyeth-Suaco adduced evidence that the cargoes were delivered to
petitioner in good order and condition but were in a damaged state when delivered to
Wyeth-Suaco, the appellate court held that Sanchez Brokerage is presumed
negligent and upon it rested the burden of proving that it exercised extraordinary
negligence not only in instances when negligence is directly proven but also in those
cases when the cause of the damage is not known or unknown.[37]
The appellate court thus disposed:
IN THE LIGHT OF ALL THE FOREGOING, the appeal of the Appellant is GRANTED.
The Decision of the Court a quo is REVERSED. Another Decision is hereby rendered
in favor of the Appellant and against the Appellee as follows:
1. The Appellee is hereby ordered to pay the Appellant the principal
amount of P181, 431.49, with interest thereupon at the rate of
6% per annum, from the date of the Decision of the Court, until
the said amount is paid in full;
2. The Appellee is hereby ordered to pay to the Appellant the amount
of P20,000.00 as and by way of attorneys fees; and
3. The counterclaims of the Appellee are DISMISSED.[38]
Sanchez Brokerages Motion for Reconsideration having been denied by the
appellate courts Resolution of December 8, 2000 which was received by petitioner on
January 5, 2001, it comes to this Court on petition for certiorari filed on March 6, 2001.
In the main, petitioner asserts that the appellate court committed grave and
reversible error tantamount to abuse of discretion when it found petitioner a common
carrier within the context of Article 1732 of the New Civil Code.
Respondent FGU Insurance avers in its Comment that the proper course of action
which petitioner should have taken was to file a petition for review on certiorari since
the sole office of a writ of certiorari is the correction of errors of jurisdiction including the
commission of grave abuse of discretion amounting to lack or excess of jurisdiction and
does not include correction of the appellate courts evaluation of the evidence and
factual findings thereon.
On the merits, respondent FGU Insurance contends that petitioner, as a common
carrier, failed to overcome the presumption of negligence, it being documented that
petitioner withdrew from the warehouse of PSI the subject shipment entirely in good
order and condition.[39]
The petition fails.
Rule 45 is clear that decisions, final orders or resolutions of the Court of Appeals
in any case, i.e., regardless of the nature of the action or proceedings involved, may be
appealed to this Court by filing a petition for review, which would be but a continuation
of the appellate process over the original case.[40]
The Resolution of the Court of Appeals dated December 8, 2000 denying the
motion for reconsideration of its Decision of August 10, 2000 was received by petitioner
on January 5, 2001. Since petitioner failed to appeal within 15 days or on or before
January 20, 2001, the appellate courts decision had become final and executory. The
filing by petitioner of a petition for certiorari on March 6, 2001 cannot serve as a
substitute for the lost remedy of appeal.
In another vein, the rule is well settled that in a petition for certiorari, the petitioner
must prove not merely reversible error but also grave abuse of discretion amounting to
lack or excess of jurisdiction.
Petitioner alleges that the appellate court erred in reversing and setting aside the
decision of the trial court based on its finding that petitioner is liable for the damage to
the cargo as a common carrier. What petitioner is ascribing is an error of judgment, not
of jurisdiction, which is properly the subject of an ordinary appeal.
Where the issue or question involves or affects the wisdom or legal soundness of
the decision not the jurisdiction of the court to render said decision the same is beyond
the province of a petition for certiorari.[41] The supervisory jurisdiction of this Court to
issue a cert writ cannot be exercised in order to review the judgment of lower courts as
to its intrinsic correctness, either upon the law or the facts of the case.[42]
Procedural technicalities aside, the petition still fails.
The appellate court did not err in finding petitioner, a customs broker, to be also
a common carrier, as defined under Article 1732 of the Civil Code, to wit:
Art. 1732. Common carriers are persons, corporations, firms or associations engaged
in the business of carrying or transporting passengers or goods or both, by land, water,
or air, for compensation, offering their services to the public.
Anacleto F. Sanchez, Jr., the Manager and Principal Broker of Sanchez
Brokerage, himself testified that the services the firm offers include the delivery of
goods to the warehouse of the consignee or importer.
 ATTY. FLORES:
Q: What are the functions of these license brokers, license customs
broker?
WITNESS:
As customs broker, we calculate the taxes that has to be paid in cargos,
and those upon approval of the importer, we prepare the entry
together for processing and claims from customs and finally deliver
the goods to the warehouse of the importer.[43]
Article 1732 does not distinguish between one whose principal business activity
is the carrying of goods and one who does such carrying only as an ancillary
activity.[44] The contention, therefore, of petitioner that it is not a common carrier but a
customs broker whose principal function is to prepare the correct customs declaration
and proper shipping documents as required by law is bereft of merit. It suffices that
petitioner undertakes to deliver the goods for pecuniary consideration.
In this light, petitioner as a common carrier is mandated to observe, under Article
1733[45] of the Civil Code, extraordinary diligence in the vigilance over the goods it
transports according to all the circumstances of each case. In the event that the goods
are lost, destroyed or deteriorated, it is presumed to have been at fault or to have acted
negligently, unless it proves that it observed extraordinary diligence.[46]
The concept of extra-ordinary diligence was explained in Compania Maritima v.
Court of Appeals:[47]
The extraordinary diligence in the vigilance over the goods tendered for shipment
requires the common carrier to know and to follow the required precaution for avoiding
damage to, or destruction of the goods entrusted to it for sale, carriage and delivery. It
requires common carriers to render service with the greatest skill and foresight and to
use all reasonable means to ascertain the nature and characteristics of goods tendered
for shipment, and to exercise due care in the handling and stowage, including such
methods as their nature requires.[48]
In the case at bar, it was established that petitioner received the cargoes from the
PSI warehouse in NAIA in good order and condition; [49] and that upon delivery by
petitioner to Hizon Laboratories Inc., some of the cargoes were found to be in bad order,
as noted in the Delivery Receipt[50] issued by petitioner, and as indicated in the Survey
Report of Elite Surveyors[51] and the Destruction Report of Hizon Laboratories, Inc.[52]
In an attempt to free itself from responsibility for the damage to the goods,
petitioner posits that they were damaged due to the fault or negligence of the shipper
for failing to properly pack them and to the inherent characteristics of the goods [53]; and
that it should not be faulted for following the instructions of Calicdan of Wyeth-Suaco to
proceed with the delivery despite information conveyed to the latter that some of the
cartons, on examination outside the PSI warehouse, were found to be wet. [54]
While paragraph No. 4 of Article 1734[55] of the Civil Code exempts a common
carrier from liability if the loss or damage is due to the character of the goods or defects
in the packing or in the containers, the rule is that if the improper packing is known to
the carrier or his employees or is apparent upon ordinary observation, but he
nevertheless accepts the same without protest or exception notwithstanding such
condition, he is not relieved of liability for the resulting damage. [56]
If the claim of petitioner that some of the cartons were already damaged upon
delivery to it were true, then it should naturally have received the cargo under protest
or with reservations duly noted on the receipt issued by PSI. But it made no such protest
or reservation.[57]
Moreover, as observed by the appellate court, if indeed petitioners employees
only examined the cargoes outside the PSI warehouse and found some to be wet, they
would certainly have gone back to PSI, showed to the warehouseman the damage, and
demanded then and there for Bad Order documents or a certification confirming the
damage.[58] Or, petitioner would have presented, as witness, the employees of the PSI
from whom Morales and Domingo took delivery of the cargo to prove that, indeed, part
of the cargoes was already damaged when the container was allegedly opened outside
the warehouse.[59]
Petitioner goes on to posit that contrary to the report of Elite Surveyors, no rain
fell that day. Instead, it asserts that some of the cargoes were already wet on delivery
by PSI outside the PSI warehouse but such notwithstanding Calicdan directed Morales
to proceed with the delivery to Hizon Laboratories, Inc.
While Calicdan testified that he received the purported telephone call of Morales
on July 29, 1992, he failed to specifically declare what time he received the call. As to
whether the call was made at the PSI warehouse when the shipment was stripped from
the airport containers, or when the cargoes were already in transit to Antipolo, it is not
determinable. Aside from that phone call, petitioner admitted that it had no documentary
evidence to prove that at the time it received the cargoes, a part of it was wet, damaged
or in bad condition.[60]
The 4-page weather data furnished by PAGASA[61] on request of Sanchez
Brokerage hardly impresses, no witness having identified it and interpreted the
technical terms thereof.
The possibility on the other hand that, as found by Hizon Laboratories, Inc., the
oral contraceptives were damaged by rainwater while in transit to Antipolo City is more
likely then. Sanchez himself testified that in the past, there was a similar instance when
the shipment of Wyeth-Suaco was also found to be wet by rain.
ATTY. FLORES:
Q: Was there any instance that a shipment of this nature, oral
contraceptives, that arrived at the NAIA were damaged and claimed
by the Wyeth-Suaco without any question?
WITNESS:
A: Yes sir, there was an instance that one cartoon (sic) were wetted (sic)
but Wyeth-Suaco did not claim anything against us.
ATTY. FLORES:
Q: HOW IS IT?
WITNESS:
 A: We experienced, there was a time that we experienced that there was a
cartoon (sic) wetted (sic) up to the bottom are wet specially during
rainy season.[62]
Since petitioner received all the cargoes in good order and condition at the time
they were turned over by the PSI warehouseman, and upon their delivery to Hizon
Laboratories, Inc. a portion thereof was found to be in bad order, it was incumbent on
petitioner to prove that it exercised extraordinary diligence in the carriage of the goods.
It did not, however. Hence, its presumed negligence under Article 1735 of the Civil
Code remains unrebutted.
WHEREFORE, the August 10, 2000 Decision of the Court of Appeals is hereby
AFFIRMED.
Costs against petitioner.
SO ORDERED.
Panganiban, (Chairman), Sandoval-Gutierrez, and Garcia, JJ., concur.
Corona, J., on leave.
 FIRST DIVISION
[G.R. No. 138334. August 25, 2003.]
ESTELA L. CRISOSTOMO, petitioner, vs. THE COURT OF
APPEALS and CARAVAN TRAVEL & TOURS
INTERNATIONAL, INC., respondents.
Bonifacio Law Office for petitioner.
Cabochan Reyes & Capones Law Offices for private respondent.
SYNOPSIS
Petitioner Estela L. Crisostomo contracted the services of respondent
Caravan Travel and Tours International, Inc. to facilitate her tour known as "Jewels of
Europe." On June 12, 1991, Meriam Menor, respondent's ticketing manager as well as
petitioner's niece, delivered petitioner's travel documents and plane tickets and
informed her to be at the airport on June 15, 1991, two hours before departure. On the
stated date when the petitioner went to the airport, the flight that she was supposed to
take had departed the previous day. She complained to Menor, but the latter prevailed
upon her to take another tour known as "British Pageant." Upon petitioner's return from
Europe, she demanded from respondent the reimbursement of P61,421.70
representing the difference between the sum she paid for "Jewels of Europe" and the
amount she owed respondent for the "British Pageant" tour, but despite several
demands, respondent company refused to reimburse the amount, contending that the
same was non-refundable. Thus, she filed a complaint against respondent for breach
of contract of carriage and damages. In its answer, respondent denied the responsibility
and insisted that petitioner was duly informed of the correct departure as legibly printed
on the plane ticket two days ahead of the scheduled trip. After trial, the lower court
awarded damages to the petitioner on the basis that the respondent was negligent, but
it deducted 10% from the amount for the contributory negligence of petitioner. On
appeal, the Court of Appeals found petitioner to be more negligent, hence, it directed
her to pay the balance of the price for the "British Pageant." Hence, this petition.
The Court did not agree with the finding of the lower court that Menor's
negligence concurred with the negligence of petitioner and resultantly caused damage
to the latter. Menor's negligence was not sufficiently proved, considering that the only
evidence presented was petitioner's uncorroborated narration of the events. It is well-
settled that the party alleging a fact has the burden of proving it and a mere allegation
cannot take the place of evidence. If the plaintiff, upon whom rests the burden of proving
his cause of action, fails to show in a satisfactory manner facts upon which he bases
his claim, the defendant is under no obligation to prove his exception or defense.
Contrary to petitioner's claim, the evidence on record showed that respondent
exercised due diligence in performing its obligation under the contract and followed
standard procedure in rendering its services to petitioner. Accordingly, petitioner was
ordered to pay respondent the amount of P12,901.00 representing the balance of the
price of the British Pageant Package tour.
SYLLABUS
1. CIVIL LAW; LEASE; COMMON CARRIERS; CONTRACT OF CARRIAGE;
ELUCIDATED. — By definition, a contract of carriage or transportation is one whereby
a certain person or association of persons obligate themselves to transport persons,
things, or news from one place to another for a fixed price. Such person or association
of persons are regarded as carriers and are classified as private or special carriers and
common or public carriers. A common carrier is defined under Article 1732 of the Civil
Code as persons, corporations, firms or associations engaged in the business of
carrying or transporting passengers or goods or both, by land, water or air, for
compensation, offering their services to the public.
2. ID.; ID.; ID.; TRAVEL AGENCY IS NOT A COMMON CARRIER. — It is
obvious from the above definition that respondent is not an entity engaged in the
business of transporting either passengers or goods and is therefore, neither a private
nor a common carrier. Respondent did not undertake to transport petitioner from one
place to another since its covenant with its customers is simply to make travel
arrangements in their behalf. Respondent's services as a travel agency include
procuring tickets and facilitating travel permits or visas as well as booking customers
for tours. While petitioner concededly bought her plane ticket through the efforts of
respondent company, this does not mean that the latter ipso facto is a common carrier.
At most, respondent acted merely as an agent of the airline, with whom petitioner
ultimately contracted for her carriage to Europe.
3. ID.; OBLIGATIONS AND CONTRACTS; CONTRACT BETWEEN THE
TRAVEL AGENCY AND ITS CLIENT IS ONE FOR SERVICES AND NOT ONE OF
CARRIAGE. — Respondent's obligation to petitioner in this regard was simply to see
to it that petitioner was properly booked with the airline for the appointed date and time.
Her transport to the place of destination, meanwhile, pertained directly to the airline.
The object of petitioner's contractual relation with respondent is the latter's service
of arranging and facilitatingpetitioner's booking, ticketing and accommodation in the
package tour. In contrast, the object of a contract of carriage is the transportation of
passengers or goods. It is in this sense that the contract between the parties in this
case was an ordinary one for services and not one of carriage. Petitioner's submission
is premised on a wrong assumption.
4. ID.; ID.; TRAVEL AGENCY IS NOT BOUND TO OBSERVE
EXTRAORDINARY DILIGENCE IN THE PERFORMANCE OF ITS OBLIGATION. —
The nature of the contractual relation between petitioner and respondent is
determinative of the degree of care required in the performance of the latter's obligation
under the contract. For reasons of public policy, a common carrier in a contract of
carriage is bound by law to carry passengers as far as human care and foresight can
provide using the utmost diligence of very cautious persons and with due regard for all
the circumstances. As earlier stated, however, respondent is not a common carrier but
a travel agency. It is thus not bound under the law to observe extraordinary diligence
in the performance of its obligation, as petitioner claims.
5. ID.; ID.; STANDARD OF CARE REQUIRED FOR THE TRAVEL AGENCY
IS THAT OF A GOOD FATHER OF A FAMILY. — Since the contract between the
parties is an ordinary one for services, the standard of care required of respondent is
that of a good father of a family under Article 1173 of the Civil Code. This connotes
reasonable care consistent with that which an ordinarily prudent person would have
observed when confronted with a similar situation. The test to determine whether
negligence attended the performance of an obligation is: did the defendant in doing the
alleged negligent act use that reasonable care and caution which an ordinarily prudent
person would have used in the same situation? If not, then he is guilty of negligence.
6. REMEDIAL LAW; EVIDENCE; PRESUMPTIONS; EVIDENCE WILLFULLY
SUPPRESSED WOULD BE ADVERSE IF PRODUCED; EXCEPTIONS. —
Respondent's failure to present Menor as witness to rebut petitioner's testimony could
not give rise to an inference unfavorable to the former. Menor was already working in
France at the time of the filing of the complaint, thereby making it physically impossible
for respondent to present her as a witness. Then too, even if it were possible for
respondent to secure Menor's testimony, the presumption under Rule 131, Section 3(e)
would still not apply. The opportunity and possibility for obtaining Menor's testimony
belonged to both parties, considering that Menor was not just respondent's employee,
but also petitioner's niece. It was thus error for the lower court to invoke the presumption
that respondent willfully suppressed evidence under Rule 131, Section 3(e). Said
presumption would logically be inoperative if the evidence is not intentionally omitted
but is simply unavailable, or when the same could have been obtained by both parties.
7. ID.; ID.; WEIGHT AND SUFFICIENCY; MERE ALLEGATION CANNOT
TAKE THE PLACE OF EVIDENCE. — In sum, we do not agree with the finding of the
lower court that Menor's negligence concurred with the negligence of petitioner and
resultantly caused damage to the latter. Menor's negligence was not sufficiently proved,
considering that the only evidence presented on this score was petitioner's
uncorroborated narration of the events. It is well-settled that the party alleging a fact
has the burden of proving it and a mere allegation cannot take the place of evidence. If
the plaintiff, upon whom rests the burden of proving his cause of action, fails to show
in a satisfactory manner facts upon which he bases his claim, the defendant is under
no obligation to prove his exception or defense.
8. CIVIL LAW; OBLIGATIONS AND CONTRACTS; TRAVEL AGENCY
EXERCISED DUE DILIGENCE IN PERFORMING ITS OBLIGATIONS UNDER THE
CONTRACT; CASE AT BAR. — Contrary to petitioner's claim the evidence on record
shows that respondent exercised due diligence in performing its obligations under the
contract and followed standard procedure in rendering its services to petitioner. As
correctly observed by the lower court, the plane ticket issued to petitioner clearly
reflected the departure date and time, contrary to petitioner's contention. The travel
documents, consisting of the tour itinerary, vouchers and instructions, were likewise
delivered to petitioner two days prior to the trip. Respondent also properly booked
petitioner for the tour, prepared the necessary documents and procured the plane
tickets. It arranged petitioner's hotel accommodation as well as food, land transfers and
sightseeing excursions, in accordance with its avowed undertaking. Therefore, it is
clear that respondent performed its prestation under the contract as well as everything
else that was essential to book petitioner for the tour. Had petitioner exercised due
diligence in the conduct of her affairs, there would have been no reason for her to miss
the flight. Needless to say, after the travel papers were delivered to petitioner, it became
incumbent upon her to take ordinary care of her concerns. This undoubtedly would
require that she at least read the documents in order to assure herself of the important
details regarding the trip.
9. ID.; ID.; NEGLIGENCE OF THE OBLIGOR IN THE PERFORMANCE OF
THE OBLIGATION RENDERS HIM LIABLE FOR DAMAGES FOR THE RESULTING
LOSS SUFFERED BY THE OBLIGEE. — The negligence of the obligor in the
performance of the obligation renders him liable for damages for the resulting loss
suffered by the obligee. Fault or negligence of the obligor consists in his failure to
exercise due care and prudence in the performance of the obligation as the nature of
the obligation so demands. There is no fixed standard of diligence applicable to each
and every contractual obligation and each case must be determined upon its particular
facts. The degree of diligence required depends on the circumstances of the specific
obligation and whether one has been negligent is a question of fact that is to be
determined after taking into account the particulars of each case.
10. REMEDIAL LAW; EVIDENCE; CREDIBILITY OF WITNESSES;
FACTUAL FINDINGS OF THE TRIAL COURT ARE GENERALLY CONCLUSIVE
UPON THE SUPREME COURT; EXCEPTIONS. — The lower court declared that
respondent's employee was negligent. This factual finding, however, is not supported
by the evidence on record. While factual findings below are generally conclusive upon
this court, the rule is subject to certain exceptions, as when the trial court overlooked,
misunderstood, or misapplied some facts or circumstances of weight and substance
which will affect the result of the case.
DECISION
YNARES-SANTIAGO, J p:
In May 1991, petitioner Estela L. Crisostomo contracted the services of
respondent Caravan Travel and Tours International, Inc. to arrange and facilitate her
booking, ticketing and accommodation in a tour dubbed "Jewels of Europe." The
package tour included the countries of England, Holland, Germany, Austria,
Liechtenstein, Switzerland and France at a total cost of P74,322.70. Petitioner was
given a 5% discount on the amount, which included airfare, and the booking fee was
also waived because petitioner's niece, Meriam Menor, was respondent company's
ticketing manager.
Pursuant to said contract, Menor went to her aunt's residence on June 12,
1991 — a Wednesday — to deliver petitioner's travel documents and plane tickets.
Petitioner, in turn, gave Menor the full payment for the package tour. Menor then told
her to be at the Ninoy Aquino International Airport (NAIA) on Saturday, two hours
before her flight on board British Airways.
Without checking her travel documents, petitioner went to NAIA on Saturday,
June 15, 1991, to take the flight for the first leg of her journey from Manila to Hongkong.
To petitioner's dismay, she discovered that the flight she was supposed to take had
already departed the previous day. She learned that her plane ticket was for the flight
scheduled on June 14, 1991. She thus called up Menor to complain.
Subsequently, Menor prevailed upon petitioner to take another tour — the
"British Pageant" — which included England, Scotland and Wales in its itinerary. For
this tour package, petitioner was asked anew to pay US$785.00 or P20,881.00 (at the
then prevailing exchange rate of P26.60). She gave respondent US$300 or P7,980.00
as partial payment and commenced the trip in July 1991.
 Upon petitioner's return from Europe, she demanded from respondent the
reimbursement of P61,421.70, representing the difference between the sum she paid
for "Jewels of Europe" and the amount she owed respondent for the "British Pageant"
tour. Despite several demands, respondent company refused to reimburse the amount,
contending that the same was non-refundable. 1Petitioner was thus constrained to file
a complaint against respondent for breach of contract of carriage and damages, which
was docketed as Civil Case No. 92-133 and raffled to Branch 59 of the Regional Trial
Court of Makati City.
In her complaint, 2 petitioner alleged that her failure to join "Jewels of Europe"
was due to respondent's fault since it did not clearly indicate the departure date on the
plane ticket. Respondent was also negligent in informing her of the wrong flight
schedule through its employee Menor. She insisted that the "British Pageant" was
merely a substitute for the "Jewels of Europe" tour, such that the cost of the former
should be properly set-off against the sum paid for the latter.
For its part, respondent company, through its Operations Manager,
Concepcion Chipeco, denied responsibility for petitioner's failure to join the first tour.
Chipeco insisted that petitioner was informed of the correct departure date, which was
clearly and legibly printed on the plane ticket. The travel documents were given to
petitioner two days ahead of the scheduled trip. Petitioner had only herself to blame for
missing the flight, as she did not bother to read or confirm her flight schedule as printed
on the ticket.
Respondent explained that it can no longer reimburse the amount paid for
"Jewels of Europe," considering that the same had already been remitted to its principal
in Singapore, Lotus Travel Ltd., which had already billed the same even if petitioner did
not join the tour. Lotus' European tour organizer, Insight International Tours Ltd.,
determines the cost of a package tour based on a minimum number of projected
participants. For this reason, it is accepted industry practice to disallow refund for
individuals who failed to take a booked tour. 3
Lastly, respondent maintained that the "British Pageant" was not a substitute
for the package tour that petitioner missed. This tour was independently procured by
petitioner after realizing that she made a mistake in missing her flight for "Jewels of
Europe." Petitioner was allowed to make a partial payment of only US$300.00 for the
second tour because her niece was then an employee of the travel agency.
Consequently, respondent prayed that petitioner be ordered to pay the balance of
P12,901.00 for the "British Pageant" package tour.
After due proceedings, the trial court rendered a decision, 4 the dispositive
part of which reads:
WHEREFORE, premises considered, judgment is hereby
rendered as follows:
1. Ordering the defendant to return and/or refund to the plaintiff
the amount of Fifty Three Thousand Nine Hundred
Eighty Nine Pesos and Forty Three Centavos
(P53,989.43) with legal interest thereon at the rate of
twelve percent (12%) per annum starting January 16,
1992, the date when the complaint was filed;
2. Ordering the defendant to pay the plaintiff the amount of Five
Thousand (P5,000.00) Pesos as and for reasonable
attorney's fees;
3. Dismissing the defendant's counterclaim, for lack of merit; and
4. With costs against the defendant.
SO ORDERED. 5
The trial court held that respondent was negligent in erroneously advising
petitioner of her departure date through its employee, Menor, who was not presented
as witness to rebut petitioner's testimony. However, petitioner should have verified the
exact date and time of departure by looking at her ticket and should have simply not
relied on Menor's verbal representation. The trial court thus declared that petitioner was
guilty of contributory negligence and accordingly, deducted 10% from the amount being
claimed as refund.
Respondent appealed to the Court of Appeals, which likewise found both
parties to be at fault. However, the appellate court held that petitioner is more negligent
than respondent because as a lawyer and well-traveled person, she should have known
better than to simply rely on what was told to her. This being so, she is not entitled to
any form of damages. Petitioner also forfeited her right to the "Jewels of Europe" tour
and must therefore pay respondent the balance of the price for the "British Pageant"
tour. The dispositive portion of the judgment appealed from reads as follows:
WHEREFORE, premises considered, the decision of the
Regional Trial Court dated October 26, 1995 is hereby
REVERSED and SET ASIDE. A new judgment is hereby
ENTERED requiring the plaintiff-appellee to pay to the defendant-
appellant the amount of P12,901.00, representing the balance of
the price of the British Pageant Package Tour, the same to earn
legal interest at the rate of SIX PERCENT (6%) per annum, to be
computed from the time the counterclaim was filed until the finality
of this decision. After this decision becomes final and executory,
the rate of TWELVE PERCENT (12%) interest per annum shall be
additionally imposed on the total obligation until payment thereof
is satisfied. The award of attorney's fees is DELETED. Costs
against the plaintiff-appellee.
SO ORDERED. 6
Upon denial of her motion for reconsideration, 7 petitioner filed the instant
petition under Rule 45 on the following grounds:
I
It is respectfully submitted that the Honorable Court of
Appeals committed a reversible error in reversing and setting aside
the decision of the trial court by ruling that the petitioner is not
entitled to a refund of the cost of unavailed "Jewels of Europe" tour
she being equally, if not more, negligent than the private
respondent, for in the contract of carriage the common carrier is
obliged to observe utmost care and extra-ordinary diligence which
 is higher in degree than the ordinary diligence required of the
passenger. Thus, even if the petitioner and private respondent
were both negligent, the petitioner cannot be considered to be
equally, or worse, more guilty than the private respondent. At best,
petitioner's negligence is only contributory while the private
respondent [is guilty] of gross negligence making the principle
of pari delicto inapplicable in the case;
II
The Honorable Court of Appeals also erred in not ruling
that the "Jewels of Europe" tour was not indivisible and the amount
paid therefor refundable;
III
The Honorable Court erred in not granting to the
petitioner the consequential damages due her as a result of breach
of contract of carriage. 8
Petitioner contends that respondent did not observe the standard of care
required of a common carrier when it informed her wrongly of the flight schedule. She
could not be deemed more negligent than respondent since the latter is required by law
to exercise extraordinary diligence in the fulfillment of its obligation. If she were
negligent at all, the same is merely contributory and not the proximate cause of the
damage she suffered. Her loss could only be attributed to respondent as it was the
direct consequence of its employee's gross negligence.
Petitioner's contention has no merit.
By definition, a contract of carriage or transportation is one whereby a certain
person or association of persons obligate themselves to transport persons, things, or
news from one place to another for a fixed price. 9 Such person or association of
persons are regarded as carriers and are classified as private or special carriers and
common or public carriers. 10 A common carrier is defined under Article 1732 of the
Civil Code as persons, corporations, firms or associations engaged in the business of
carrying or transporting passengers or goods or both, by land, water or air, for
compensation, offering their services to the public.
It is obvious from the above definition that respondent is not an entity engaged
in the business of transporting either passengers or goods and is therefore, neither a
private nor a common carrier. Respondent did not undertake to transport petitioner from
one place to another since its covenant with its customers is simply to make travel
arrangements in their behalf. Respondent's services as a travel agency include
procuring tickets and facilitating travel permits or visas as well as booking customers
for tours.
While petitioner concededly bought her plane ticket through the efforts of
respondent company, this does not mean that the latter ipso facto is a common carrier.
At most, respondent acted merely as an agent of the airline, with whom petitioner
ultimately contracted for her carriage to Europe. Respondent's obligation to petitioner
in this regard was simply to see to it that petitioner was properly booked with the airline
for the appointed date and time. Her transport to the place of destination, meanwhile,
pertained directly to the airline.
The object of petitioner's contractual relation with respondent is the latter's
service of arranging and facilitating petitioner's booking, ticketing and accommodation
in the package tour. In contrast, the object of a contract of carriage is
the transportation of passengers or goods. It is in this sense that the contract between
the parties in this case was an ordinary one for services and not one of carriage.
Petitioner's submission is premised on a wrong assumption.
The nature of the contractual relation between petitioner and respondent is
determinative of the degree of care required in the performance of the latter's obligation
under the contract. For reasons of public policy, a common carrier in a contract of
carriage is bound by law to carry passengers as far as human care and foresight can
provide using the utmost diligence of very cautious persons and with due regard for all
the circumstances. 11 As earlier stated, however, respondent is not a common carrier
but a travel agency. It is thus not bound under the law to observe extraordinary diligence
in the performance of its obligation, as petitioner claims.
Since the contract between the parties is an ordinary one for services, the
standard of care required of respondent is that of a good father of a family under Article
1173 of the Civil Code. 12 This connotes reasonable care consistent with that which an
ordinarily prudent person would have observed when confronted with a similar
situation. The test to determine whether negligence attended the performance of an
obligation is: did the defendant in doing the alleged negligent act use that reasonable
care and caution which an ordinarily prudent person would have used in the same
situation? If not, then he is guilty of negligence. 13
In the case at bar, the lower court found Menor negligent when she allegedly
informed petitioner of the wrong day of departure. Petitioner's testimony was accepted
as indubitable evidence of Menor's alleged negligent act since respondent did not call
Menor to the witness stand to refute the allegation. The lower court applied the
presumption under Rule 131, Section 3 (e) 14 of the Rules of Court that evidence
willfully suppressed would be adverse if produced and thus considered petitioner's
uncontradicted testimony to be sufficient proof of her claim.
On the other hand, respondent has consistently denied that Menor was
negligent and maintains that petitioner's assertion is belied by the evidence on record.
The date and time of departure was legibly written on the plane ticket and the travel
papers were delivered two days in advance precisely so that petitioner could prepare
for the trip. It performed all its obligations to enable petitioner to join the tour and
exercised due diligence in its dealings with the latter.
We agree with respondent.
Respondent's failure to present Menor as witness to rebut petitioner's
testimony could not give rise to an inference unfavorable to the former. Menor was
already working in France at the time of the filing of the complaint, 15 thereby making
it physically impossible for respondent to present her as a witness. Then too, even if it
were possible for respondent to secure Menor's testimony, the presumption under Rule
131, Section 3(e) would still not apply. The opportunity and possibility for obtaining
Menor's testimony belonged to both parties, considering that Menor was not just
respondent's employee, but also petitioner's niece. It was thus error for the lower court
to invoke the presumption that respondent willfully suppressed evidence under Rule
131, Section 3(e). Said presumption would logically be inoperative if the evidence is
not intentionally omitted but is simply unavailable, or when the same could have been
obtained by both parties. 16
In sum, we do not agree with the finding of the lower court that Menor's
negligence concurred with the negligence of petitioner and resultantly caused damage
to the latter. Menor's negligence was not sufficiently proved, considering that the only
evidence presented on this score was petitioner's uncorroborated narration of the
events. It is well-settled that the party alleging a fact has the burden of proving it and a
mere allegation cannot take the place of evidence. 17 If the plaintiff, upon whom rests
the burden of proving his cause of action, fails to show in a satisfactory manner facts
upon which he bases his claim, the defendant is under no obligation to prove his
exception or defense. 18
Contrary to petitioner's claim, the evidence on record shows that respondent
exercised due diligence in performing its obligations under the contract and followed
standard procedure in rendering its services to petitioner. As correctly observed by the
lower court, the plane ticket 19 issued to petitioner clearly reflected the departure date
and time, contrary to petitioner's contention. The travel documents, consisting of the
tour itinerary, vouchers and instructions, were likewise delivered to petitioner two days
prior to the trip. Respondent also properly booked petitioner for the tour, prepared the
necessary documents and procured the plane tickets. It arranged petitioner's hotel
accommodation as well as food, land transfers and sightseeing excursions, in
accordance with its avowed undertaking.
Therefore, it is clear that respondent performed its prestation under the
contract as well as everything else that was essential to book petitioner for the tour.
Had petitioner exercised due diligence in the conduct of her affairs, there would have
been no reason for her to miss the flight. Needless to say, after the travel papers were
delivered to petitioner, it became incumbent upon her to take ordinary care of her
concerns. This undoubtedly would require that she at least read the documents in order
to assure herself of the important details regarding the trip.
The negligence of the obligor in the performance of the obligation renders him
liable for damages for the resulting loss suffered by the obligee. Fault or negligence of
the obligor consists in his failure to exercise due care and prudence in the performance
of the obligation as the nature of the obligation so demands. 20 There is no fixed
standard of diligence applicable to each and every contractual obligation and each case
must be determined upon its particular facts. The degree of diligence required depends
on the circumstances of the specific obligation and whether one has been negligent is
a question of fact that is to be determined after taking into account the particulars of
each case. 21
The lower court declared that respondent's employee was negligent. This
factual finding, however, is not supported by the evidence on record. While factual
findings below are generally conclusive upon this court, the rule is subject to certain
exceptions, as when the trial court overlooked, misunderstood, or misapplied some
facts or circumstances of weight and substance which will affect the result of the
case. 22
In the case at bar, the evidence on record shows that respondent company
performed its duty diligently and did not commit any contractual breach. Hence,
petitioner cannot recover and must bear her own damage.
WHEREFORE, the instant petition is DENIED for lack of merit. The decision
of the Court of Appeals in CA-G.R. CV No. 51932 is AFFIRMED. Accordingly, petitioner
is ordered to pay respondent the amount of P12,901.00 representing the balance of the
price of the British Pageant Package Tour, with legal interest thereon at the rate of 6%
per annum, to be computed from the time the counterclaim was filed until the finality of
this Decision. After this Decision becomes final and executory, the rate of 12% per
annum shall be imposed until the obligation is fully settled, this interim period being
deemed to be by then an equivalent to a forbearance of credit. 23
SO ORDERED.
THIRD DIVISION
[G.R. No. L-47822. December 22, 1988.]
PEDRO DE GUZMAN, petitioner, vs. COURT OF APPEALS an
d ERNESTO CENDAÑA, respondents.
Vicente D. Millora for petitioner.
Jacinto Callanta for private respondent.
SYLLABUS
1. CIVIL CODE; COMMON CARRIERS; ARTICLE 1732, DEFINITION UNDER
ARTICLE 1732 OF THE CODE. — The Civil Code defines "common carriers" in the
following terms: "Article 1732. Common carriers are persons, corporations, firms or
associations engaged in the business of carrying or transporting passengers or goods
or both, by land, water, or air for compensation, offering their services to the public."
The above article makes no distinction between one whose principal business activity
is the carrying of persons or goods or both, and one who does such carrying only as
an ancillary activity (in local idiom, as "a sideline"). Article 1732 also carefully avoids
making any distinction between a person or enterprise offering transportation service
on a regular or scheduled basis and one offering such service on an occasional,
episodic or unscheduled basis. Neither does Article 1732 distinguish between a
carrier offering its services to the "general public," i.e., the general community or
population, and one who offers services or solicits business only from a
narrow segment of the general population. We think that Article 1733 deliberately
refrained from making such distinctions.
2. ID.; ID.; ID.; LAW ON COMMON CARRIERS SUPPLEMENTED BY THE PUBLIC
SERVICE ACT; SCOPE OF PUBLIC SERVICE. — So understood, the
concept of "common carrier" under Article 1732 may be seen to coincide neatly with
the notion of "public service," under the Public Service Act (Commonwealth Act No.
1416, as amended) which at least partially supplements the law on common carriers
set forth in the Civil Code. Under Section 13, paragraph (b) of the Public Service Act,
"public service" includes: ". . . every person that now or hereafter may own, operate,
manage, or control in the Philippines, for hire or compensation, with general or limited
clientele, whether permanent, occasional or accidental, and done for general
business purposes, any common carrier, railroad, street railway, traction railway,
subway motor vehicle, either for freight or passenger, or both, with or without fixed
route and whatever may be its classification, freight or carrier service of any class,
express service, steamboat, or steamship line, pontines, ferries and water craft,
engaged in the transportation of passengers or freight or both, shipyard, marine repair
shop, wharf or dock, ice plant, ice-refrigeration plant, canal, irrigation system, gas,
electric light, heat and power, water supply and power petroleum, sewerage system,
wire or wireless communications systems, wire or wireless broadcasting stations and
other similar public services . . ." (Emphasis supplied) It appears to the Court that
private respondent is properly characterized as a common carrier even though he
merely "back-hauled" goods for other merchants from Manila to Pangasinan, although
such backhauling was done on a periodic or occasional rather than regular or
scheduled manner, and even though private respondent's principal occupation was
not the carriage of goods for others. There is no dispute that private respondent
charged his customers a fee for hauling their goods; that fee frequently fell below
commercial freight rates is not relevant here.
3. ID.; ID.; ID.; ID.; CERTIFICATE OF PUBLIC CONVENIENCE; NOT A REQUISITE
FOR INCURRING LIABILITY AS A COMMON CARRIER; NATURE OF THE
BUSINESS OF A COMMON CARRIER. — The Court of Appeals referred to the fact
that private respondent held no certificate of public convenience, and concluded he
was not a common carrier. This is palpable error. A certificate of public convenience
is not a requisite for the incurring of liability under the Civil Code provisions governing
common carriers. That liability arises the moment a person or firm acts as a common
carrier, without regard to whether or not such carrier has also complied with the
requirements of the applicable regulatory statute and implementing regulations and
has been granted a certificate of public convenience or other franchise. To exempt
private respondent from the liabilities of a common carrier because he has not
secured the necessary certificate of public convenience, would be offensive to sound
public policy; that would be to reward private respondent precisely for failing to
comply with applicable statutory requirements. The business of a common carrier
impinges directly and intimately upon the safety and well being and property of those
members of the general community who happen to deal with such carrier. The law
imposes duties and liabilities upon common carriers for the safety and
protection of those who utilize their services and the law cannot allow a common
carrier to render such duties and liabilities merely facultative by simply failing to obtain
the necessary permits and authorizations.
4. ID.; ID.; DEGREE OF DILIGENCE REQUIRED OF, COMMON CARRIERS. —
Common carriers, "by the nature of their business and for reasons of public policy,"
are held to a very high degree of care and diligence ("extraordinary diligence") in the
carriage of goods as well as of passengers. The specific import of extraordinary
diligence in the care of goods transported by a common carrier is, according to Article
1733, "further expressed in Articles 1734, 1735 and 1745, numbers 5, 6 and 7" of the
Civil Code.
5. ID.; ID.; ID.; LIABILITY OF COMMON CARRIERS. — Article 1734 establishes the
general rule that common carriers are responsible for the loss, destruction or
deterioration of the goods which they carry, "unless the same is due to any of the
following causes only: (1) Flood, storm, earthquake, lightning, or other natural disaster
or calamity; (2) Act of the public enemy in war, whether international or civil; (3) Act or
omission of the shipper or owner of the goods; (4) The character of the goods or
defects in the packing or in the containers; and (5) Order or act of competent public
authority." It is important to point out that the above list of causes of loss, destruction
or deterioration which exempt the common carrier for responsibility therefor, is a
closed list. Causes falling outside the foregoing list, even if they appear to constitute a
species of force majeure, fall within the scope of Article 1735, which provides as
follows: "In all cases other than those mentioned in numbers 1, 2, 3, 4 and 5 of the
preceding article, if the goods are lost, destroyed or deteriorated, common carriers
are presumed to have been at fault or to have acted negligently, unless they prove
that they observed extraordinary diligence as required in Article 1733." (Emphasis
supplied)
6. ID.; ID.; ID.; ID.; COMMON CARRIER'S ARE NOT ABSOLUTE INSURERS
AGAINST ALL RISKS; NO LIABILITY ATTACHES IN CASE OFFORTUITOUS
EVENTS. — Under Article 1745 (6) above, a common carrier is held responsible —
and will not be allowed to divest or to diminish such responsibility — even for
acts of strangers like thieves or robbers, except where such thieves or robbers in fact
acted "with grave or irresistible threat, violence or force." We believe and so hold that
the limits of the duty of extraordinary diligence in the vigilance over the goods carried
are reached where the goods are lost as a result of a robbery which is attended by
"grave or irresistible threat, violence or force." In these circumstances, we hold that
the occurrence of the loss must reasonably be regarded as quite beyond the
control of the common carrier and properly regarded as a fortuitous event. It is
necessary to recall that even common carriers are not made absolute insurers against
all risks of travel and of transport of goods, and are not held liable for acts or events
which cannot be foreseen or are inevitable, provided that they shall have complied
with the rigorous standard ofextraordinary diligence.
DECISION
FELICIANO, J p:
Respondent Ernesto Cendaña, a junk dealer, was engaged in buying up used bottles
and scrap metal in Pangasinan. Upon gathering sufficient quantities of such scrap
material, respondent would bring such material to Manila for resale. He utilized two
(2) six-wheeler trucks which he owned for hauling the material to Manila. On the
return trip to Pangasinan, respondent would load his vehicles with cargo which
various merchants wanted delivered to differing establishments in Pangasinan. For
that service, respondent charged freight rates which were commonly lower than
regular commercial rates. llcd
Sometime in November 1970, petitioner Pedro de Guzman, a merchant and
authorized dealer of General Milk Company (Philippines), Inc. in Urdaneta,
Pangasinan, contracted with respondent for the hauling of 750 cartons of Liberty filled
milk from a warehouse ofGeneral Milk in Makati, Rizal, to petitioner's establishment in
Urdaneta on or before 4 December 1970. Accordingly, on 1 December 1970,
respondent loaded in Makati the merchandise on to his trucks: 150 cartons were
loaded on a truck driven by respondent himself; while 600 cartons were placed on
board the other truck which was driven by Manuel Estrada, respondent's driver and
employee.
Only 150 boxes of Liberty filled milk were delivered to petitioner. The other 600 boxes
never reached petitioner, since the truck which carried these boxes was hijacked
somewhere along the MacArthur Highway in Paniqui, Tarlac, by armed men who took
with them the truck, its driver, his helper and the cargo.
On 6 January 1971, petitioner commenced action against private respondent in
the Court of First Instance of Pangasinan, demanding payment of P22,150.00, the
claimed value of the lost merchandise, plus damages and attorney's fees. Petitioner
argued that private respondent, being a common carrier, and having failed to exercise
the extraordinary diligence required of him by the law, should be held liable for the
value of the undelivered goods.
In his Answer, private respondent denied that he was a common carrier and argued
that he could not be held responsible for the value of the lost goods, such loss having
been due to force majeure.
On 10 December 1975, the trial court rendered a Decision' finding private respondent
to be a common carrier and holding him liable for the value of the undelivered goods
(P22,150.00) as well as for P4,000.00 as damages and P2,000.00 as attorney's
fees. cdrep
On appeal before the Court of Appeals, respondent urged that the trial court had
erred in considering him a common carrier; in finding that he had habitually offered
trucking services to the public; in not exempting him from liability on the
ground of force majeure; and in ordering him to pay damages and attorney's fees.
The Court of Appeals reversed the judgment of the trial court and held that
respondent had been engaged in transporting return loads of freight "as a casual
occupation — a sideline to his scrap iron business" and not as a common carrier.
Petitioner came to this Court by way of a Petition for Review assigning as errors the
following conclusions of the Court of Appeals:
1. that private respondent was not a common carrier;
2. that the hijacking of respondent's truck was force majeure; and
3. that respondent was not liable for the value of the undelivered
cargo. (Rollo, p. 111)
We consider first the issue of whether or not private respondent Ernesto Cendaña
may, under the facts earlier set forth, be properly characterized as a common carrier.
The Civil Code defines "common carriers" in the following terms:
"Article 1732. Common carriers are persons, corporations, firms
or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water, or air
for compensation, offering their services to the public."
The above article makes no distinction between one whose principal business activity
is the carrying of persons or goods or both, and one who does such carrying only as
an ancillary activity (in local idiom, as "a sideline"). Article 1732 also carefully avoids
making any distinction between a person or enterprise offering transportation service
on a regular or scheduled basis and one offering such service on an occasional,
episodic or unscheduled basis. Neither does Article 1732 distinguish between a
carrier offering its services to the "general public," i.e., the general community or
population, and one who offers services or solicits business only from a
narrow segment of the general population. We think that Article 1733 deliberately
refrained from making such distinctions.
So understood, the concept of "common carrier" under Article 1732 may be seen to
coincide neatly with the notion of "public service," under the Public
Service Act (Commonwealth Act No. 1416, as amended) which at least partially
supplements the law on common carriers set forth in the Civil Code. Under Section
13, paragraph (b) of the Public Service Act, "public service" includes:
". . . every person that now or hereafter may own, operate,
manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general
business purposes, any common carrier, railroad, street railway,
traction railway, subway motor vehicle, either for freight or
passenger, or both, with or without fixed route and whatever may
be its classification, freight or carrier service of any class, express
service, steamboat, or steamship line, pontines, ferries and water
craft, engaged in the transportation of passengers or freight or
both, shipyard, marine repair shop, wharf or dock, ice plant, ice-
refrigeration plant, canal, irrigation system, gas, electric light,
heat and power, water supply and power petroleum, sewerage
system, wire or wireless communications systems, wire or
wireless broadcasting stations and other similar public services . .
." (Emphasis supplied)
It appears to the Court that private respondent is properly characterized as a common
carrier even though he merely "back-hauled" goods for other merchants from Manila
to Pangasinan, although such backhauling was done on a periodic or occasional
rather than regular or scheduled manner, and even though private
respondent's principal occupation was not the carriage of goods for others. There is
no dispute that private respondent charged his customers a fee for hauling their
goods; that fee frequently fell below commercial freight rates is not relevant here.
The Court of Appeals referred to the fact that private respondent held no
certificate of public convenience, and concluded he was not a common carrier. This is
palpable error. A certificate of public convenience is not a requisite for the
incurring of liability under the Civil Code provisions governing common carriers. That
liability arises the moment a person or firm acts as a common carrier, without regard
to whether or not such carrier has also complied with the requirements of the
applicable regulatory statute and implementing regulations and has been granted a
certificate of public convenience or other franchise. To exempt private respondent
from the liabilities of a common carrier because he has not secured the necessary
certificate of public convenience, would be offensive to sound public policy; that would
be to reward private respondent precisely for failing to comply with applicable
statutory requirements. The business of a common carrier impinges directly and
intimately upon the safety and well being and property ofthose members of the
general community who happen to deal with such carrier. The law imposes duties and
liabilities upon common carriers for the safety and protection of those who utilize their
services and the law cannot allow a common carrier to render such duties and
liabilities merely facultative by simply failing to obtain the necessary permits and
authorizations. cdphil
We turn then to the liability of private respondent as a common carrier.
Common carriers, "by the nature of their business and for reasons of public
policy," 2 are held to a very high degree of care and diligence ("extraordinary
diligence") in the carriage of goods as well as of passengers. The specific
import of extraordinary diligence in the care of goods transported by a common carrier
is, according to Article 1733, "further expressed in Articles 1734, 1735 and 1745,
numbers 5, 6 and 7" of the Civil Code.
Article 1734 establishes the general rule that common carriers are responsible for the
loss, destruction or deterioration of the goods which they carry, "unless the same is
due to any of the following causes only:
(1) Flood, storm, earthquake, lightning, or other natural disaster
or calamity;
(2) Act of the public enemy in war, whether international or civil;
(3) Act or omission of the shipper or owner of the goods;
(4) The character of the goods or defects in the packing or in the
containers; and
(5) Order or act of competent public authority."
It is important to point out that the above list of causes of loss, destruction or
deterioration which exempt the common carrier for responsibility therefor, is a
closed list. Causes falling outside the foregoing list, even if they appear to
constitute a species of force majeure, fall within the scope of Article 1735, which
provides as follows:
"In all cases other than those mentioned in numbers 1, 2, 3, 4
and 5 of the preceding article, if the goods are lost, destroyed or
deteriorated, common carriers are presumed to have been at
fault or to have acted negligently, unless they prove that they
observed extraordinary diligence as required in Article 1733."
(Emphasis supplied)
Applying the above-quoted Articles 1734 and 1735, we note firstly that the specific
cause alleged in the instant case — the hijacking ofthe carrier's truck - does not fall
within any of the five (5) categories of exempting causes listed in Article 1734. It
would follow, therefore, that the hijacking of the carrier's vehicle must be dealt with
under the provisions of Article 1735, in other words, that the private respondent as
common carrier is presumed to have been at fault or to have acted negligently. This
presumption, however, may be overthrown by proof of extraordinary diligence on the
part of private respondent. cdll
Petitioner insists that private respondent had not observed extraordinary diligence in
the care of petitioner's goods. Petitioner argues that in the circumstances of this case,
private respondent should have hired a security guard presumably to ride with the
truck carrying the 600 cartons of Liberty filled milk. We do not believe, however, that
in the instant case, the standard of extraordinary diligence required private
respondent to retain a security guard to ride with the truck and to engage brigands in
a fire fight at the risk of his own life and the lives of the driver and his helper.
The precise issue that we address here relates to the specific requirements of the
duty of extraordinary diligence in the vigilance over the goods carried in the specific
context of hijacking or armed robbery.
As noted earlier, the duty of extraordinary diligence in the vigilance over goods is,
under Article 1733, given additional specification not only by Articles 1734 and 1735
but also by Article 1745, numbers 4, 5 and 6, Article 1745 provides in relevant part:
"Any of the following or similar stipulations shall be considered
unreasonable, unjust and contrary to public policy:
xxx xxx xxx
(5) that the common carrier shall not be
responsible for the acts or omissions of his or its
employees;
(6) that the common carrier's liability for acts
committed by thieves, or of robbers who
do not act with grave or irresistible threat, violence or
force, is dispensed with or diminished; and
(7) that the common carrier shall not
responsible for the loss, destruction or
deterioration of goods on account of the defective
condition of the car, vehicle, ship, airplane or other
equipment used in the contract of carriage." (Emphasis
supplied)
Under Article 1745 (6) above, a common carrier is held responsible — and will not be
allowed to divest or to diminish such responsibility — even for acts of strangers like
thieves or robbers, except where such thieves or robbers in fact acted "with grave or
irresistible threat, violence or force." We believe and so hold that the limits of the
duty of extraordinary diligence in the vigilance over the goods carried are reached
where the goods are lost as a result of a robbery which is attended by "grave or
irresistible threat, violence or force."
In the instant case, armed men held up the second truck owned by private respondent
which carried petitioner's cargo. The record shows that an information for robbery in
band was filed in the Court of First Instance of Tarlac, Branch 2, in Criminal Case No.
198 entitled "People of the Philippines v. Felipe Boncorno, Napoleon Presno,
Armando Mesina, Oscar Oria and one John Doe." There, the accused were charged
with willfully and unlawfully taking and carrying away with them the second truck,
driven by Manuel Estrada and loaded with the 600 cartons of Liberty filled milk
destined for delivery at petitioner's store in Urdaneta, Pangasinan. The decision of the
trial court shows that the accused acted with grave, if not irresistible, threat, violence
or force. 3 Three (3) of the five (5) hold-uppers were armed with firearms. The robbers
not only took away the truck and its cargo but also kidnapped the driver and his
helper, detaining them for several days and later releasing them in another province
(in Zambales). The hijacked truck was subsequently found by the police in Quezon
City. The Court of First Instance convicted all the accused of robbery, though
not ofrobbery in band. 4

In these circumstances, we hold that the occurrence of the loss must reasonably be
regarded as quite beyond the control of the common carrier and properly regarded as
a fortuitous event. It is necessary to recall that even common carriers are not made
absolute insurers against all risks of travel and of transport of goods, and are not held
liable for acts or events which cannot be foreseen or are inevitable, provided that they
shall have complied with the rigorous standard of extraordinary diligence. prLL
We, therefore, agree with the result reached by the Court of Appeals that private
respondent Cendaña is not liable for the value of the undelivered merchandise which
was lost because of an event entirely beyond private respondent's control.

ACCORDINGLY, the Petition for Review on Certiorari is hereby DENIED and the
Decision of the Court of Appeals dated 3 August 1977 is AFFIRMED. No
pronouncement as to costs.
SO ORDERED.
Fernan, C.J., Gutierrez, Jr., Bidin and Cortés, JJ., concur.
||| (De Guzman v. Court of Appeals, G.R. No. L-47822, [December 22, 1988], 250
PHIL 613-624)
 SECOND DIVISION Pertinent portion of Article 7 thereof provides: "that everything relating to the
exploration for and exploitation of petroleum . . . and everything relating to the
manufacturer, refining, storage or transportation by special methods of petroleum,
[G.R. No. 125948. December 29, 1998.] is hereby declared to be a public utility." The Bureau of Internal Revenue likewise
considers the petitioner a "common carrier." The BIR Ruling No. 069-83, it
declared: " . . . since [petitioner] is a pipeline concessionaire that is engaged only
FIRST PHILIPPINE INDUSTRIAL
in transporting petroleum products, it is considered a common carrier
CORPORATION, petitioner, vs. COURT OF APPEALS,
under Republic Act No. 387 . . .. Such being the case, it is not subject to
HONORABLE PATERNO V. TAC-AN, BATANGAS CITY and
withholding tax prescribed by Revenue Regulations No. 13-78 as amended." From
ADORACION C. ARELLANO, in her official capacity as City
the foregoing disquisition there is no doubt that petitioner is a "common carrier"
Treasurer of Batangas,respondents.
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 Power of Local Government Units. — Unless otherwise provided herein,
SYLLABUS the exercise of the taxing powers of provinces, cities, municipalities, and
barangays shall not extend to the levy of the following: . . . (j) Taxes on the gross
receipts of transportation contractors and persons engaged in the transportation of
1. CIVIL LAW; TRANSPORTATION; COMMON CARRIER; DEFINED;
passengers or freight by hire and common carriers by air, land or water except as
APPLICATION IN CASE AT BAR. — A "common carrier" may be defined, broadly,
provided in this Code.
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, DECISION
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 MARTINEZ, J p:
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 This petition for review on certiorari assails the Decision of the Court of
carry by the method by which his business is conducted and over his established Appeals dated November 29, 1995, in CA-G.R. SP No. 36801, affirming the
roads: and 4. The transportation must be for hire. Based on the above definitions decision of the Regional Trial Court of Batangas City, Branch 84, in Civil Case No.
and requirements, there is no doubt that petitioner is a common carrier. It is 4293, which dismissed petitioners' complaint for a business tax refund imposed by
engaged in the business of transporting or carrying goods, i.e., petroleum the City of Batangas. cdll
products, for hire as a public employment. It undertakes to carry for all persons
Petitioner is a grantee of a pipeline concession under Republic Act No.
indifferently, that is, to all persons who choose to employ its services and
387, as amended, to contract, install and operate oil pipelines. The original pipeline
transports the goods by land and for compensation. The fact that petitioner has a
concession was granted in 1967 1 and renewed by the Energy Regulatory Board
limited clientele does not exclude it from the definition of a common carrier. As
in 1992. 2
correctly pointed out by petitioner, the definition of "common carrier" in the Civil
Code makes no distinction as to the means of transporting, as long as it is by land, Sometime in January 1995, petitioner applied for a mayor's permit with
water or air. It does not provide that the transportation of the passengers or goods the Office of the Mayor of Batangas City. However, before the mayor's permit could
should be by motor vehicle. In fact, in the United States, oil pipe line operators are be issued, the respondent City Treasurer required petitioner to pay a local tax
considered common carriers. 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
2. TAXATION; WHEN COMMON CARRIER MAY BE EXEMPT FROM
the petitioner amounting to P956,076.04 payable in four installments based on the
BUSINESS TAX; CASE AT BAR. — Under the Petroleum Actof the Philippines
gross receipts for products pumped at GPS-1 for the fiscal year 1993 which
(Republic Act 387), petitioner is considered a "common carrier." Thus, Article 86
amounted to P181,681,151.00. In order not to hamper its operations, petitioner
thereof provides that: "Article 86. Pipe line concessionaire as common carrier. —
paid the tax under protest in the amount of P239,019.01 for the first quarter of
A pipe line shall have the preferential right to utilize installations for the
1993.
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 On January 20, 1994, petitioner filed a letter-protest addressed to the
may be offered by others for transport and to charge without discrimination such respondent City Treasurer, the pertinent portion of which reads:
rates as may have been approved by the Secretary of Agriculture and Natural
Resources." Republic Act 387 also regards petroleum operation as a public utility.
 "Please note that our Company (FPIC) is a pipeline
operator with a government concession granted under
the Petroleum Act. It is engaged in the business of transporting
petroleum products from the Batangas refineries, via pipeline, to
Sucat and JTF Pandacan Terminals. As such, our Company is
exempt from paying tax on gross receipts under Section 133 of the
Local Government Code of 1991 . . .
"Moreover, Transportation contractors are not included in
the enumeration of contractors under Section 131, Paragraph (h)
of the Local Government Code. Therefore, the authority to impose
tax on contractors and other independent contractors' under
Section 143, Paragraph (e) of the Local Government Code does
not include the power to levy on transportation contractors.
"The imposition and assessment cannot be categorized
as a mere fee authorized under Section 147 of the Local
Government Code. The said section limits the imposition of fees
and charges on business to such amounts as may be
commensurate to the cost of regulation, inspection, and licensing.
Hence, assuming arguendo that FPIC is liable for the license fee,
the imposition thereof based on gross receipts is violative of the
aforecited provision. The amount of P956,076.04 (P239,019.01
per quarter) is not commensurate to the cost of regulation,
inspection and licensing. The fee is already a revenue raising
measure, and not a mere regulatory imposition." 4
On March 8, 1994, the respondent City Treasurer denied the protest
contending that petitioner cannot be considered engaged in transportation
business, thus it cannot claim exemption under Section 133 (j) of the Local
Government Code. 5
On June 15, 1994, petitioner filed with the Regional Trial Court of
Batangas City a complaint 6 for tax refund with prayer for writ of preliminary
injunction against respondents City of Batangas and Adoracion Arellano in her
capacity as City Treasurer. In its complaint, petitioner alleged, inter alia, that: (1)
the imposition and collection of the business tax on its gross receipts violates
Section 133 of the Local Government Code; (2) the authority of cities to impose
and collect a tax on the gross receipts of "contractors and independent contractors"
under Sec. 141(e) and 151 does not include the authority to collect such taxes on
transportation contractors for, as defined under Sec. 131 (h), the term "contractors"
excludes transportation contractors; and, (3) the City Treasurer illegally and
erroneously imposed and collected the said tax, thus meriting the immediate
refund of the tax paid. 7
Traversing the complaint, the respondents argued that petitioner cannot
be exempt from taxes under Section 133 (j) of the Local Government Code as said
exemption applies only to "transportation contractors and persons engaged in the
transportation by hire and common carriers by air, land and water." Respondents
assert that pipelines are not included in the term "common carrier" which refers
solely to ordinary carriers such as trucks, trains, ships and the like. Respondents
further posit that the term "common carrier" under the said code pertains to the
mode or manner by which a product is delivered to its destination. 8
On October 3, 1994, the trial court rendered a decision dismissing the
complaint, ruling in this wise:
". . . Plaintiff is either a contractor or other independent
contractor.
. . . the exemption to tax claimed by the plaintiff has
become unclear. It is a rule that tax exemptions are to be strictly
construed against the taxpayer, taxes being the lifeblood of the
government. Exemption may therefore be granted only by clear
and unequivocal provisions of law.
"Plaintiff claims that it is a grantee of a pipeline
concession under Republic Act 387, (Exhibit A) whose concession
was lately renewed by the Energy Regulatory Board (Exhibit B).
Yet neither said law nor the deed of concession grant any tax
exemption upon the plaintiff.
"Even the Local Government Code imposes a tax on
franchise holders under Sec. 137 of the Local Tax Code. Such
being the situation obtained in this case (exemption being unclear
and equivocal) resort to distinctions or other considerations may
be of help:
1. That the exemption granted under Sec. 133 (j)
encompasses only common carriers so as not
to overburden the riding public or commuters
with taxes. Plaintiff is not a common carrier, but
a special carrier extending its services and
facilities to a single specific or "special
customer" under a "special contract."
2. The Local Tax Code of 1992 was basically enacted to
give more and effective local autonomy to local
governments than the previous enactments, to
make them economically and financially viable
to serve the people and discharge their
functions with a concomitant obligation to
accept certain devolution of powers, . . . So,
consistent with this policy even franchise
grantees are taxed (Sec. 137) and contractors
are also taxed under Sec. 143 (e) and 151 of the
Code." 9
Petitioner assailed the aforesaid decision before this Court via a petition
for review. On February 27, 1995, we referred the case to the respondent Court of
Appeals for consideration and adjudication. 10 On November 29, 1995, the
respondent court rendered a decision 11 affirming the trial court's dismissal of
petitioner's complaint. Petitioner's motion for reconsideration was denied on July
18, 1996. 12
Hence, this petition. At first, the petition was denied due course in a
Resolution dated November 11, 1996. 13 Petitioner moved for a reconsideration
which was granted by this Court in a Resolution 14 of January 22, 1997. Thus, the
petition was reinstated.
Petitioner claims that the respondent Court of Appeals erred in holding
that (1) the petitioner is not a common carrier or a transportation contractor, and
(2) the exemption sought for by petitioner is not clear under the law.
There is merit in the petition.
A "common carrier" may be defined, broadly, as one who holds himself
out to the public as engaged in the business of transporting persons or property
from place to place, for compensation, offering his services to the public generally.
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
Based on the above definitions and requirements, there is no doubt that
petitioner is a common carrier. It is engaged in the business of transporting or
carrying goods, i.e. petroleum products, for hire as a public employment. It
undertakes to carry for all persons indifferently, that is, to all persons who choose
to employ its services, and transports the goods by land and for compensation.
The fact that petitioner has a limited clientele does not exclude it from the definition
of a common carrier. In De Guzman vs. Court of Appeals 16 we ruled that:
"The above article (Art. 1732, Civil Code) makes no
distinction between one whose principal business activity is the
carrying of persons or goods or both, and one who does such
carrying only as an ancillary activity (in local idiom, as a 'sideline').
Article 1732 . . . avoids making any distinction between a person
or enterprise offering transportation service on a regular or
scheduled basis and one offering such service on an occasional,
episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the 'general
public,' i.e., the general community or population, and one who
offers services or solicits business only from a narrow segment of
the general population. We think that Article 1877 deliberately
refrained from making such distinctions.
So understood, the concept of 'common carrier' under
Article 1732 may be seen to coincide neatly with the notion of
'public service,' under the Public Service Act (Commonwealth Act
No. 1416, as amended) which at least partially supplements the
law on common carriers set forth in the Civil Code. Under Section
13, paragraph (b) of the Public Service Act, 'public service'
includes: Cdpr
'every person that now or hereafter may own,
operate, manage, or control in the Philippines, for hire or
compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for
general business purposes, any common carrier,
railroad, street railway, traction railway, subway motor
vehicle, either for freight or passenger, or both, with or
without fixed route and whatever may be its classification,
freight or carrier service of any class, express service,
steamboat, or steamship line, pontines, ferries and water
craft, engaged in the transportation of passengers or
freight or both, shipyard, marine repair shop, wharf or
dock, ice plant, ice-refrigeration plant, canal, irrigation
system gas, electric light heat and power, water supply
and power petroleum, sewerage system, wire or wireless
communications systems, wire or wireless broadcasting
stations and other similar public services." (Emphasis
supplied)
Also, respondent's argument that the term "common carrier" as used in
Section 133 (j) of the Local Government Code refers only to common carriers
transporting goods and passengers through moving vehicles or vessels either by
land, sea or water, is erroneous.
As correctly pointed out by petitioner, the definition of "common carriers"
in the Civil Code makes no distinction as to the means of transporting, as long as
it is by land, water or air. It does not provide that the transportation of the
passengers or goods should be by motor vehicle. In fact, in the United States, oil
pipe line operators are considered common carriers. 17
Under the Petroleum Act of the Philippines (Republic Act 387), petitioner
is considered a "common carrier." Thus, Article 86 thereof provides that:
"Art. 86. Pipe line concessionaire as common carrier.
— A pipe line shall have the preferential right to utilize
installations for the transportation of petroleum owned by him,
but is obliged 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 change without
discrimination such rates as may have been approved by the
Secretary of Agriculture and Natural Resources."
Republic Act 387 also regards petroleum operation as a public utility.
Pertinent portion of Article 7 thereof provides:
 "that everything relating to the exploration for and
exploitation of petroleum . . . and everything relating to the
manufacture, refining, storage, or transportation by special
methods of petroleum, is hereby declared to be a public utility."
(Emphasis Supplied)
The Bureau of Internal Revenue likewise considers the petitioner a
"common carrier." In BIR Ruling No. 069-83, it declared:
". . . since (petitioner) is a pipeline concessionaire that
is engaged only in transporting petroleum products, it is
considered a common carrier under Republic Act No. 387 . . .
Such being the case, it is not subject to withholding tax
prescribed by Revenue Regulations No. 13-78, as amended."
From the foregoing disquisition, there is no doubt that petitioner is a
"common carrier" and, therefore, exempt from the business tax as provided for
in Section 133 (j), of the Local Government Code, to wit:
"Sec. 133. Common Limitations on the Taxing Powers
of Local Government Units. — Unless otherwise provided
herein, the exercise of the taxing powers of provinces, cities,
municipalities, and barangays shall not extend to the levy of the
following:
Now, Mr. Speaker, if the Gentleman would care to go to
page 98 of Book II, one can see there that provinces have the
power to impose a tax on business enjoying a franchise at the rate
of not more than one-half of 1 percent of the gross annual receipts.
So, transportation contractors who are enjoying a franchise would
be subject to tax by the province. That is the exception, Mr.
Speaker.
What we want to guard against here, Mr. Speaker is the
imposition of taxes by local government units on the carrier
business. Local government units may impose taxes on top of
what is already being imposed by the National Internal Revenue
Code which is the so-called "common carriers tax." We do not want
a duplication of this tax, so we just provided for an exception under
Section 125 (now Section 137) that a province may impose this tax
at a specific rate.
MR. AQUINO (A.). Thank you for that clarification, Mr. Speaker. .
. . 18
It is clear that the legislative intent in excluding from the taxing power of
the local government unit the imposition of business tax against common carriers
is to prevent a duplication of the so-called "common carrier's tax."

xxx xxx xxx
(j.) Taxes on the gross receipts of transportation
contractors and persons engaged in the
transportation of passengers or freight by hire
and common carriers by air, land or water,
except as provided in this Code."
The deliberations conducted in the House of Representatives on the
Local Government Code of 1991 are illuminating:
"MR. AQUINO (A). Thank you, Mr. Speaker.
Mr. Speaker, we would like to proceed to page 95, line 1.
It states: "SEC. 121 (now Sec. 131). Common Limitations on the
Taxing Powers of Local Government Units." . . .
MR. AQUINO (A.). Thank you Mr. Speaker.
Petitioner is already paying three (3%) percent common carrier's tax on
its gross sales/earnings under the National Internal Revenue Code. 19 To tax
petitioner again on its gross receipts in its transportation of petroleum business
would defeat the purpose of the Local Government Code.
WHEREFORE, the petition is hereby GRANTED. The decision of the
respondent Court of Appeals dated November 29, 1995 in CA-G.R. SP No. 36801
is REVERSED and SET ASIDE.
SO ORDERED. dctai
Bellosillo, Puno and Mendoza, JJ ., concur.
||| (First Philippine Industrial Corp. v. Court of Appeals, G.R. No. 125948, [December
29, 1998], 360 PHIL 852-864)

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.
 FIRST DIVISION
[G.R. No. L-9605. September 30, 1957.]
GAUDIOSO EREZO, ET AL., plaintiffs.
GAUDIOSO EREZO, plaintiff-
appellee, vs. AGUEDO JEPTE, defendant-appellant.
Gesolgon, Matti & Custodio for appellees.
Aguedo Y. Jepte in his own behalf.
SYLLABUS
1. DAMAGES; MOTOR VEHICLES; PUBLIC SERVICE LAW;
REGISTERED OWNER AS ACTUAL OWNER. — In the dealing with vehicles
registered under the Public Service Law, the public has the right to assume or
presume that the registered owner is the actual owner thereof, for it would be
difficult for the Public to enforce the actions that they may have foe injuries
caused to them by the vehicles being negligently operated if the public should be
required to prove who the actual owner is.
2. ID.; ID.; REGISTERED OWNER PRIMARILY RESPONSIBLE FOR
INJURIES. — The registered owner of any vehicle, even if not used for a public
service, should primarily be responsible to the public or to third persons for
injuries caused the latter while the vehicle is being driven on the highways or
streets.
3. ID.; MOTOR VEHICLES OFFICE; REGISTRATION REQUIRED AS
PERMISSION TO USE PUBLIC HIGHWAY. — 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. 886), but to permit the
use and operation of the vehicle upon any public highway (Section 5 (a) Act No.
3992, as amended).
4. ID.; ID.; IS.; AIM OR PURPOSE OF MOTOR VEHICLE
REGISTRATION. — The main aim of motor vehicle registration is to identify the
owner so that if any accidents 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.
5. ID.; ID.; EVIDENCE; REGISTERED OWNER NOT ALLOWED TO
PROVE ACTUAL OWNER OF VEHICLE; POLICY OF THE LAW. — The law
does not allow the registered owner to prove who the actual owner is; the law,
with its claim 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 the 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.
6. ID.; ID.; ID.; ID.; ID.; REGISTRATION AS MEANS TO IDENTIFY
PERSON CAUSING INJURY OR DAMAGE. — A victim of recklessness on the
public is usually without means to discover or identify the person actually causing
the injury or damage. He has no means other than by a recourse to the
registration in the Motor Vehicles Office to determine who is the owner. The
protection that the law aims to extend to him would become illusory were the
registered owner given the opportunity to escape the 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.
7. ID.; MOTOR VEHICLE REGISTERED OWNER AS PRIMARILY
RESPONSIBLE; RIGHT OF REIMBURSEMENT. — The registered owner of a
motor vehicle is primarily responsible for the damage caused to the vehicle of the
plaintiff-appellee but the registered owner 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.
DECISION
LABRADOR, J p:
Appeal from a judgment of the Court of First Instance of Manila ordering
defendant to pay plaintiff Gaudioso Erezo P3,000 on the death of Ernesto Erezo,
son of plaintiff Gaudioso Erezo.
Defendant-appellant is the registered owner of a six by six truck bearing
plate No. TC-1253. On August 9, 1949, while the same was being driven by
Rodolfo Espino y Garcia, it collided with a taxicab at the intersection of San
Andres and Dakota Streets, Manila. As the truck went off the street, it hit
Ernesto Erezo and another, and the former suffered injuries, as a result of which
he died. The driver was prosecuted for homicide through reckless negligence in
criminal case No. 10663 of the Court of First Instance of Manila. The accused
pleaded guilty and was sentenced to suffer imprisonment and to pay the heirs of
Ernesto Erezo the sum of P3,000. As the amount of the judgment could not be
enforced against him, plaintiff brought this action against the registered owner of
the truck, the defendant-appellant. The circumstances material to the case are
stated by the court in its decision:
"The defendant does not deny that at the time of the
fatal accident the cargo truck driven by Rodolfo Espino y Garcia
was registered in his name. He, however, claims that the vehicle
belonged to the Port Brokerage, of which he was the broker at
 the time of the accident. He explained, and his explanation was defendant holds the affirmative of this proposition; the trial court held the
corroborated by Policarpio Franco, the manager of the negative.
corporation, that the trucks of the corporation were registered in
The Revised Motor Vehicles Law (Act No. 3992, as amended) provides
his name as a convenient arrangement so as to enable the
that no vehicle may be used or operated upon any public highway unless the
corporation to pay the registration fee with his backpay as a pre-
same is properly registered. It has been stated that the system of licensing and
war government employee. Franco, however, admitted that the
the requirement that each machine must carry a registration number,
arrangement was not known to the Motor Vehicles Office."
conspicuously displayed, is one of the precautions taken to reduce the danger of
The trial court held that as the defendant-appellant represented himself injury to pedestrians and other travellers from the careless management of
to be the owner of the truck and the Motor Vehicles Office, relying on his automobiles, and to furnish a means of ascertaining the identity of persons
representation, registered the vehicles in his name, the Government and all violating the laws and ordinances, regulating the speed and operation of
persons affected by the representation had the right to rely on his declaration of machines upon the highways (2 R. C. L. 1176). Not only are vehicles to be
ownership and registration. It, therefore, held that defendant-appellant is liable registered and that no motor vehicles are to be used or operated without being
because he cannot be permitted to repudiate his own declaration. (Section 68 [a], properly registered for the current year, but that dealers in motor vehicles shall
Rule 123, and Art. 1431, New Civil Code.) furnish the Motor Vehicles Office a report showing the name and address of each
purchaser of motor vehicle during the previous month and the manufacturer's
Against the judgment, the defendant has prosecuted this appeal
serial number and motor number. (Section 5 [c], Act No. 3992, as amended.)
claiming that at the time of the accident the relation of employer and employee
between the driver and defendant-appellant was not established, it having been
proved at the trial that the owner of the truck was the Port Brokerage, of which
Registration is required not to make said registration the operative act
defendant-appellant was merely a broker. We find no merit or justice in the above
by which ownership in vehicles is transferred, as in land registration cases,
contention. In previous decisions, We already have held that the registered
because the administrative proceeding of registration does not bear any essential
owner of a certificate of public convenience is liable to the public for the injuries
relation to the contract of sale between the parties (Chinchilla vs. Rafael and
or damages suffered by passengers or third persons caused by the operation of
Verdaguer, 39 Phil. 888), but to permit the use and operation of the vehicle upon
said vehicle, even though the same had been transferred to a third person.
any public highway (section 5 [a], Act No. 3992, as amended). The main aim of
(Montoya vs. Ignacio, 94 Phil., 182, 50 Off. Gaz., 108; Roque vs.Malibay Transit
motor vehicle registration is to identify the owner so that if any accident happens,
Inc., 1 G. R. No. L-8561, November 18, 1955; Vda. de Medina vs. Cresencia, 99
or that any damage or injury is caused by the vehicle on the public highways,
Phil., 506, 52 Off. Gaz., [10], 4606.) The principle upon which this doctrine is
responsibility therefor can be fixed on a definite individual, the registered owner.
based is that in dealing with vehicles registered under the Public Service Law,
Instances are numerous where vehicles running on public highways caused
the public has the right to assume or presume that the registered owner is the
accidents or injuries to pedestrians or other vehicles without positive identification
actual owner thereof, for it would be difficult for the public to enforce the actions
of the owner or drivers, or with very scant means of identification. It is to forestall
that they may have for injuries caused to them by the vehicles being negligently
these circumstances, so inconvenient or prejudicial to the public, that the motor
operated if the public should be required to prove who the actual owner is. How
vehicle registration is primarily ordained, in the interest of the determination of
would the public or third persons know against whom to enforce their rights in
persons responsible for damages or injuries caused on public highways.
case of subsequent transfers of the vehicles? We do not imply by this doctrine,
however, that the registered owner may not recover whatever amount he had "'One of the principal purposes of motor vehicles
paid by virtue of his liability to third persons from the person to whom he had legislation is identification of the vehicle and of the operator, in
actually sold, assigned or conveyed the vehicle. case of accident; and another is that the knowledge that means
of detection are always available may act as a deterrent from lax
Under the same principle the registered owner of any vehicle, even if
observance of the law and of the rules of conservative and safe
not used for a public service, should primarily be responsible to the public or to
operation. Whatever purpose there may be in these statutes, it is
third persons for injuries caused the latter while the vehicle is being driven on the
subordinate at the last to the primary purpose of rendering it
highways or streets. The members of the Court are in agreement that the
certain that the violator of the law or of the rules of safety shall
defendant-appellant should be held liable to plaintiff-appellee for the injuries
not escape because of lack of means to discover him.' The
occasioned to the latter because of the negligence of the driver, even if the
purpose of the statute is thwarted, and the displayed number
defendant- appellant was no longer the owner of the vehicle at the time of the
becomes a 'snare and delusion,' if courts would entertain such
damage because he had previously sold it to another. What is the legal basis for
defenses as that put forward by appellee in this case. No
his (defendant-appellant's) liability?
responsible person or corporation could be held liable for the
There is a presumption that the owner of the guilty vehicle is the most outrageous acts of negligence, if they should be allowed to
defendant-appellant as he is the registered owner in the Motor Vehicles Office. place a "middleman' between them and the public, and escape
Should he not be allowed to prove the truth, that he had sold it to another and liability by the manner in which they recompense their servants."
thus shift the responsibility for the injury to the real and actual owner? The (King vs. Brenham Automobile Co., 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 than by a recourse to the
registration in the Motor Vehicles Office to determine who is the owner. The
protection that the law aims to extend to him would become illusory were the
registered owner given the opportunity to escape liability by disproving his
ownership. If the policy of the law is to be enforced and carried out, the registered
owner should not be allowed to prove the contrary to the prejudice of the person
injured, that is, to prove that a third person or another has become the owner, so
that he may thereby be relieved of the responsibility to the injured person.
The above policy and application of the law may appear quite harsh and
would seem to conflict with truth and justice. We do not think it is so. A registered
owner who has already sold or transferred a vehicle has the recourse to a third-
party complaint, in the same action brought against him to recover for the
damage or injury done, against the vendee or transferee of the vehicle. The
inconvenience of the suit is no justification for relieving him of liability; said
inconvenience is the price he pays for failure to comply with the registration that
the law demands and requires.
In synthesis, we hold that the registered owner, the defendant- appellant
herein, is primarily responsible for the damage caused to the vehicle of the
plaintiff-appellee, but he (defendant-appellant) has a right to be indemnified by
the real or actual owner of the amount that he may be required to pay as damage
for the injury caused to the plaintiff-appellant.
The judgment appealed from is hereby affirmed, with costs against
defendant-appellant.
Parás, C. J., Bengzon, Bautista Angelo, Concepcion, Reyes, J. B. L.,
Endencia and Felix, JJ., concur.
Montemayor, J., concurs in the result.
||| (Erezo v. Jepte, G.R. No. L-9605, [September 30, 1957], 102 PHIL 103-110)
 SECOND DIVISION
[G.R. No. 125817. January 16, 2002.]
ABELARDO LIM and ESMADITO
GUNNABAN, petitioners, vs. COURT OF APPEALS and
DONATO H. GONZALES,respondents.
Tranquilino F. Meris for petitioners.
Narciso E. Ramirez for private respondent.
SYNOPSIS
Private respondent herein purchased an Isuzu passenger jeepney from
Gomercino Vallarta, a holder of a certificate of public convenience for the
operation of a public utility vehicle. He continued to operate the public transport
business without transferring the registration of the vehicle to his name. Thus, the
original owner remained to be the registered owner and operator of the vehicle.
Unfortunately, the vehicle got involved in a road mishap which caused it severe
damage. The ten-wheeler-truck which caused the accident was owned by
petitioner Lim and was driven by co-petitioner Gunnaban. Gunnaban admitted
responsibility for the accident, so that petitioner Lim shouldered the
costs of hospitalization of those wounded, compensation for the heirs of the deceased
passenger and the restoration of the other vehicle involved. He also negotiated for the
repair of the private respondent's jeepney but the latter refused and demanded for its
replacement. Hence, private respondent filed a complaint for damages against
petitioners. Meanwhile, the jeepney was left by the roadside to corrode and decay. The
trial court decided in favor of private respondent and awarded him his claim. On appeal,
the Court of Appeals affirmed the decision of the trial court. Hence, petitioner filed this
petition. The issue herein is whether or not the new owner of a passenger jeepney who
continued to operate the same under the so-called kabit system and in the course
thereof met an accident has the legal personality to bring the action for damages
against the erring vehicle.
The Supreme Court affirmed the subject decision with modification as to the
computation of interest. According to the Court, the thrust of the law in enjoining
the kabit system is not much as to penalize the parties but to identify the person upon
whom responsibility may be fixed in case of an accident with the end view of protecting
the riding public. In the present case, it is once apparent that the evil sought to be
prevented in enjoining the kabit system does not exist. Hence, the private respondent
has the right to proceed against petitioners for the damage caused on his passenger
jeepney as well as on his business.
SYLLABUS
1. CIVIL LAW; COMMON CARRIERS; CERTIFICATE OF PUBLIC
CONVENIENCE; KABIT SYSTEM; DEFINED AND CONSTRUED AS BEING
CONTRARY TO PUBLIC POLICY; RATIONALE. — The kabit system is an
arrangement whereby a person who has been granted a certificate of public
convenience allows other persons who own motor vehicles to operate them under his
license, sometimes for a fee or percentage of the earnings. Although the parties to such
an agreement are not outrightly penalized by law, the kabit system is invariably
recognized as being contrary to public policy and therefore void and inexistent under
Art. 1409 of the Civil Code. In the early case of Dizon v. Octavio the Court explained
that one of the primary factors considered in the granting of a certificate of public
convenience for the business of public transportation is the financial capacity of the
holder of the license, so that liabilities arising from accidents may be duly
compensated. The kabit system renders illusory such purpose and, worse, may still be
availed of by the grantee to escape civil liability caused by a negligent use of a vehicle
owned by another and operated under his license. If a registered owner is allowed to
escape liability by proving who the supposed owner of the vehicle is, it would be easy
for him to transfer the subject vehicle to another who possesses no property with which
to respond financially for the damage done. Thus, for the safety ofpassengers and the
public who may have been wronged and deceived through the baneful kabit system,
the registered owner of the vehicle is not allowed to prove that another person has
become the owner so that he may be thereby relieved of responsibility. Subsequent
cases affirm such basic doctrine. It would seem then that the thrust of the law in
enjoining the kabit system is not so much as to penalize the parties but to identify the
person upon whom responsibility may be fixed in case of an accident with the end
view of protecting the riding public. The policy therefore loses its force if the public at
large is not deceived, much less involved.
2. ID.; TORTS; DAMAGES AWARDED AS A RESULT THEREOF; NOT
LIMITED TO ACTUAL LOSS BUT EXTENDS TO AMOUNT OFPROFIT LOST;
APPLICATION IN CASE AT BAR. — In awarding damages for tortuous injury, it
becomes the sole design of the courts to provide for adequate compensation by putting
the plaintiff in the same financial position he was in prior to the tort. It is a fundamental
principle in the law on damages that a defendant cannot be held liable in damages for
more than the actual loss which he has inflicted and that a plaintiff is entitled to no more
than the just and adequate compensation for the injury suffered. His recovery is, in the
absence of circumstances giving rise to an allowance of punitive damages, limited to a
fair compensation for the harm done. The law will not put him in a position better than
where he should be in had not the wrong happened. In the present case, petitioners
insist that as the passenger jeepney was purchased in 1982 for only P30,000.00 to
award damages considerably greater than this amount would be improper and
unjustified. Petitioners are at best reminded that indemnification for damages
comprehends not only the value of the loss suffered but also that of the profits which
the obligee failed to obtain. In other words, indemnification for damages is not limited
to damnum emergens or actual loss but extends to lucrum cessans or the
amount of profit lost. SDcITH
3. ID.; DAMAGES; UNLIQUIDATED CLAIMS; INTEREST RATE OF SIX
PERCENT (6%) PER ANNUM SHOULD BE COMPUTED FROM DATE
JUDGMENT OF COURT IS MADE; APPLICATION IN CASE AT BAR. — Upon the
provisions of Art. 2213 of the Civil Code, interest "cannot be recovered upon
unliquidated claims or damages, except when the demand can be established with
reasonable certainty." It is axiomatic that if the suit were for damages, unliquidated and
not known until definitely ascertained, assessed and determined by the courts after
proof, interest at the rate of six percent (6%) per annum should be from the date the
judgment of the court is made (at which time the quantification of damages may be
deemed to be reasonably ascertained). In this case, the matter was not a liquidated
obligation as the assessment of the damage on the vehicle was heavily debated upon
by the parties with private respondent's demand for P236,000.00 being refuted by
petitioners who argue that they could have the vehicle repaired easily for P20,000.00.
In fine, the amount due private respondent was not a liquidated account that was
already demandable and payable.
4. ID.; ID.; PARTY INJURED REQUIRED TO EXERCISE
DILIGENCE OF GOOD FATHER OF FAMILY TO MINIMIZE RESULTING DAMAGE.
— Article 2203 of the Civil Code exhorts parties suffering from loss or injury to exercise
the diligence of a good father of a family to minimize the damages resulting from
the act or omission in question. One who is injured then by the wrongful or
negligent act of another should exercise reasonable care and diligence to minimize the
resulting damage. Anyway, he can recover from the wrongdoer money lost in
reasonable efforts to preserve the property injured and for injuries incurred in
attempting to prevent damage to it. However we sadly note that in the present case
petitioners failed to offer in evidence the estimated amount of the damage caused by
private respondent's unconcern towards the damaged vehicle. It is the
burden of petitioners to show satisfactorily not only that the injured party could have
mitigated his damages but also the amount thereof; failing in this regard, the
amount ofdamages awarded cannot be proportionately reduced.
DECISION
BELLOSILLO, J p:
When a passenger jeepney covered by a certificate of public convenience is
sold to another who continues to operate it under the same certificate of public
convenience under the so-called kabit system, and in the course thereof the vehicle
meets an accident through the fault of another vehicle, may the new owner sue for
damages against the erring vehicle? Otherwise stated, does the new owner have any
legal personality to bring the action, or is he the real party in interest in the suit, despite
the fact that he is not the registered owner under the certificate of public convenience?
Sometime in 1982 private respondent Donato Gonzales purchased an Isuzu
passenger jeepney from Gomercino Vallarta, holder of a certificate of public
convenience for the operation of public utility vehicle plying the Monumento-Bulacan
route. While private respondent Gonzales continued offering the jeepney for public
transport services he did not have the registration of the vehicle transferred in his name
nor did he source for himself a certificate of public convenience for its operation. Thus
Vallarta remained on record as its registered owner and operator.
On 22 July 1990, while the jeepney was running northbound along the North
diversion road somewhere in Meycauayan, Bulacan, it collided with a ten-wheeler-truck
owned by petitioner Abelardo Lim and driven by his co-petitioner Esmadito Gunnaban.
Gunnaban owned responsibility for the accident, explaining that while he was traveling
towards Manila the truck suddenly lost its brakes. To avoid colliding with another
vehicle, he swerved to the left until he reached the center island. However, as the center
island eventually came to an end, he veered farther to the left until he smashed into a
Ferroza automobile, and later, into private respondent's passenger jeepney driven by
one Virgilio Gonzales. The impact caused severe damage to both the Ferroza and the
passenger jeepney and left one (1) passenger dead and many others wounded.
Petitioner Lim shouldered the costs for hospitalization of the wounded,
compensated the heirs of the deceased passenger, and had the Ferroza restored to
good condition. He also negotiated with private respondent and offered to have the
passenger jeepney repaired at his shop. Private respondent however did not accept
the offer so Lim offered him P20,000.00, the assessment of the damage as estimated
by his chief mechanic. Again, petitioner Lim's proposition was rejected; instead, private
respondent demanded a brand-new jeep or the amount of P236,000.00. Lim increased
his bid to P40,000.00 but private respondent was unyielding. Under the circumstances,
negotiations had to be abandoned; hence, the filing of the complaint for damages by
private respondent against petitioners.
In his answer Lim denied liability by contending that he exercised due
diligence in the selection and supervision of his employees. He further asserted that as
the jeepney was registered in Vallarta's name, it was Vallarta and not private
respondent who was the real party in interest. 1 For his part, petitioner Gunnaban
averred that the accident was a fortuitous event which was beyond his control. 2
Meanwhile, the damaged passenger jeepney was left by the roadside to
corrode and decay. Private respondent explained that although he wanted to take his
jeepney home he had no capability, financial or otherwise, to tow the damaged
vehicle. 3 ACSaHc
The main point of contention between the parties related to the
amount of damages due private respondent. Private respondent Gonzales averred that
per estimate made by an automobile repair shop he would have to spend P236,000.00
to restore his jeepney to its original condition. 4 On the other hand, petitioners insisted
that they could have the vehicle repaired for P20,000.00. 5
On 1 October 1993 the trial court upheld private respondent's claim and
awarded him P236,000.00 with legal interest from 22 July 1990 as compensatory
damages and P30,000.00 as attorney's fees. In support of its decision, the
trial court ratiocinated that as vendee and current owner of the passenger jeepney
private respondent stood for all intents and purposes as the real party in interest. Even
Vallarta himself supported private respondent's assertion of interest over the jeepney
for, when he was called to testify, he dispossessed himself of any claim or pretension
on the property. Gunnaban was found by the trial court to have caused the accident
since he panicked in the face of an emergency which was rather palpable from
his act of directing his vehicle to a perilous streak down the fast lane of the
superhighway then across the island and ultimately to the opposite lane where it
collided with the jeepney.
On the other hand, petitioner Lim's liability for Gunnaban's negligence was
premised on his want of diligence in supervising his employees. It was admitted during
trial that Gunnaban doubled as mechanic of the ill-fated truck despite the fact that he
was neither tutored nor trained to handle such task. 6
 Forthwith, petitioners appealed to the Court of Appeals which, on 17 July
1996, affirmed the decision of the trial court. In upholding the decision of the court a
quo the appeals court concluded that while an operator under the kabit system could
not sue without joining the registered owner of the vehicle as his principal, equity
demanded that the present case be made an exception. 7Hence this petition.
It is petitioner's contention that the Court of Appeals erred in sustaining the
decision of the trial court despite their opposition to the well-established doctrine that
an operator of a vehicle continues to be its operator as long as he remains the
operator ofrecord. According to petitioners, to recognize an operator under
the kabit system as the real party in interest and to countenance his claim for damages
is utterly subversive of public policy. Petitioners further contend that inasmuch as the
passenger jeepney was purchased by private respondent for only P30,000.00, an
award of P236,000.00 is inconceivably large and would amount to unjust enrichment. 8
Petitioner's attempt to illustrate that an affirmance of the appealed decision
could be supportive of the pernicious kabit system does not persuade. Their labored
efforts to demonstrate how the questioned rulings of the courts a quo are diametrically
opposed to the policy of the law requiring operators of public utility vehicles to secure
a certificate of public convenience for their operation is quite unavailing.
The kabit system is an arrangement whereby a person who has been granted
a certificate of public convenience allows other persons who own motor vehicles to
operate them under his license, sometimes for a fee or percentage of the
earnings. 9 Although the parties to such an agreement are not outrightly penalized by
law, the kabit system is invariably recognized as being contrary to public policy and
therefore void and inexistent under Art. 1409 of the Civil Code.
In the early case of Dizon v. Octavio 10 the Court explained that one of the
primary factors considered in the granting of a certificate of public convenience for the
business of public transportation is the financial capacity of the holder of the license,
so that liabilities arising from accidents may be duly compensated. The kabit system
renders illusory such purpose and, worse, may still be availed of by the grantee to
escape civil liability caused by a negligent use of a vehicle owned by another and
operated under his license. If a registered owner is allowed to escape liability by proving
who the supposed owner of the vehicle is, it would be easy for him to transfer the
subject vehicle to another who possesses no property with which to respond financially
for the damage done. Thus, for the safety of passengers and public who may have
been wronged and deceived through the baneful kabit system, the registered
owner of the vehicle is not allowed to prove that another person has become the owner
so that he may be thereby relieved of responsibility. Subsequent cases affirm such
basic doctrine. 11
It would seem then that the thrust of the law in enjoining the kabit system is
not so much as to penalize the parties but to identify the person upon whom
responsibility may be fixed in case of an accident with the end view of protecting the
riding public. The policy therefore loses its force if the public at large is not deceived,
much less involved. DcTaEH
In the present case it is at once apparent that the evil sought to be prevented
in enjoining the kabit system does not exist. First, neither of the parties to the
pernicious kabit system is being held liable for damages. Second, the case arose from
the negligence ofanother vehicle in using the public road to whom no representation,
or misrepresentation, as regards the ownership and operation ofthe passenger jeepney
was made and to whom no such representation, or misrepresentation, was necessary.
Thus it cannot be said that private respondent Gonzales and the registered
owner of the jeepney were in estoppel for leading the public to believe that the jeepney
belonged to the registered owner. Third, the riding public was not bothered nor
inconvenienced at the very least by the illegal arrangement. On the contrary, it was
private respondent himself who had been wronged and was seeking compensation for
the damage done to him. Certainly, it would be the height of inequity to deny him his
right.
In light of the foregoing, it is evident that private respondent has the right to
proceed against petitioners for the damage caused on his passenger jeepney as well
as on his business. Any effort then to frustrate his claim of damages by the ingenuity
with which petitioners framed the issue should be discouraged, if not repelled.
In awarding damages for the tortuous injury, it becomes the sole design of the
courts to provide for adequate compensation by putting the plaintiff in the same financial
position he was in prior to the tort. It is fundamental principle in the law on damages
that a defendant cannot be held liable in damages for more than actual loss which he
has inflicted and that a plaintiff is entitled to no more than the just and adequate
compensation for the injury suffered. His recovery is, in the absence of circumstances
giving rise to an allowance of punitive damages, limited to a fair compensation for the
harm done. The law will not put him in a position better than where he should be in had
not the wrong happened. 12
In the present case, petitioners insist that as the passenger jeepney was
purchased in 1982 for only P30,000.00 to award damages considerably greater than
this amount would be improper and unjustified. Petitioners are at best reminded that
indemnification for damages comprehends not only the value of the loss suffered but
also that of the profits which the obligee failed to obtain. In other words, indemnification
for damages is not limited to damnum emergens or actual loss but extends to lucrum
cessans or the amount of profit lost. 13
Had private respondent's jeepney not met an accident it could reasonably be
expected that it would have continued earning from the business in which it was
engaged. Private respondent avers that he derives an average income of P300.00 per
day from his passenger jeepney and this earning was included in the award of damages
made by the trial court and upheld by the appeals court. The award
therefore of P236,000.00 as compensatory damages is not beyond reason nor
speculative as it is based on a reasonable estimate of the total damage suffered by
private respondent, i.e. damage wrought upon his jeepney and the income lost from his
transportation business. Petitioners for their part did not offer any substantive evidence
to refute the estimate made by the courts a quo. aCSEcA
However, we are constrained to depart from the conclusion of the lower courts
that upon the award of compensatory damages legal interest should be imposed
beginning 22 July 1990, i.e. the date of the accident. Upon the provisions of Art.
2213 of the Civil Code, interest "cannot be recovered upon unliquidated claims or
damages, except when the demand can be established with reasonable certainty." It is
axiomatic that if the suit were for damages, unliquidated and not known until definitely
ascertained, assessed and determined by the courts after proof, interest at the
rate of six percent (6%) per annum should be from the date the judgment of the court is
made (at which time the quantification of damages may be deemed to be reasonably
ascertained). 14

In this case, the matter was not a liquidated obligation as the

assessment of the damage on the vehicle was heavily debated upon by the parties with
private respondent's demand for P236,000.00 being refuted by petitioners who argue
that they could have the vehicle repaired easily for P20,000.00. In fine, the amount due
private respondent was not a liquidated account that was already demandable and
payable. TAcSCH

One last word. We have observed that private respondent left his passenger
jeepney by the roadside at the mercy of the elements. Article 2203 of the Civil Code
exhorts parties suffering from loss or injury to exercise the diligence of a good
father of a family to minimize the damages resulting from the act or omission in
question. One who is injured then by the wrongful or negligent act of another should
exercise reasonable care and diligence to minimize the resulting damage. Anyway, he
can recover from the wrongdoer money lost in reasonable efforts to preserve the
property injured and for injuries incurred in attempting to prevent damage to it. 15

However we sadly note that in the present case petitioners failed to offer in
evidence the estimated amount of the damage caused by private respondent's
unconcern towards the damaged vehicle. It is the burden of petitioners to show
satisfactorily not only that the injured party could have mitigated his damages but also
the amount thereof; failing in this regard, the amount of damages awarded cannot be
proportionately reduced.
WHEREFORE, the questioned Decision awarding private respondent Donato
Gonzales P236,000.00 with legal interest from 22 July 1990 as compensatory damages
and P30,000.00 as attorney's fees is MODIFIED. Interest at the rate of six percent (6%)
per annum shall be computed from the time the judgment of the lower court is made
until the finality of this Decision. If the adjudged principal and interest remain unpaid
thereafter, the interest shall be twelve percent (12%) per annum computed from the
time judgment becomes final and executory until it is fully satisfied.
Costs against petitioners.
SO ORDERED.
Mendoza, Quisumbing, Buena and De Leon Jr., JJ., concur.

||| (Lim v. Court of Appeals, G.R. No. 125817, [January 16, 2002], 424 PHIL 457-468)
 EN BANC
[G.R. No. 64693. April 27, 1984.]
LITA ENTERPRISES, INC., petitioner, vs. SECOND CIVIL
CASES DIVISION, INTERMEDIATE APPELLATE COURT,
NICASIO M. OCAMPO and FRANCISCA P.
GARCIA, respondents.
SYLLABUS
1. MERCANTILE LAW; TRANSPORTATION; CERTIFICATE OF PUBLIC
CONVENIENCE; USE OF SAME UNDER "KABIT SYSTEM p" CONDEMNED. —
The parties herein operated under an arrangement, commonly known as the "kabit
system," whereby a person who has been granted a certificate of convenience allows
another person who owns motor vehicles to operate under such franchise for a fee. A
certificate of public convenience is a special privilege conferred by the government.
Abuse of this privilege by the grantees thereof cannot be countenanced. The "kabit
system" has been identified as one of the root causes of the prevalence of graft and
corruption in the government transportation offices. In the words of Chief Justice
Makalintal, (Dizon vs. Octavio, 51 O.G. 4059) "this is a pernicious system that cannot
be too severely condemned. It constitutes an imposition upon the good faith of the
government."
2. ID.; ID.; ID.; ID.; AGREEMENT UNDER THE SYSTEM, VOID FOR BEING
CONTRARY TO PUBLIC POLICY. — Although not outrightly penalized as a criminal
offense, the "kabit system" is invariably recognized as being contrary to public policy
and, therefore, void and inexistent under Article 1409 of the Civil Code. It is a
fundamental principle that the court will not aid either party to enforce an illegal
contract, but will leave them both where it finds them. Upon this premise, it was
flagrant error on the part of both the trial and appellate courts to have accorded the
parties relief from their predicament. Article 1412 of the Civil Code denies them such
aid.
3. CIVIL LAW; OBLIGATIONS AND CONTRACTS; VOID CONTRACTS, CANNOT
BE CURED BY RATIFICATION OR PRESCRIPTION. — The defect of inexistence of
a contract is permanent and incurable, and cannot be cured by ratification or by
prescription. As this Courtsaid in Eugenio vs. Perdido, 97 Phil. 41, "the mere lapse of
time cannot give efficacy to contracts that are null and void."
4. ID.; PRINCIPLES OF IN PARI DELICTO, DEFINED; APPLIED IN CASE AT BAR.
— The principle of in pari delicto is well known not only in this jurisdiction but also in
the United States where common law prevails. Under American jurisdiction, the
doctrine is stated thus: "The proposition is universal that no action arises, in equity or
at law, from an illegal contract; no suit can be maintained for its specific performance,
or to recover the property agreed to be sold or delivered, or damages for its violation.
The rule has sometimes been laid down as though it was equally universal, that
where the parties are in pari delicto, no affirmative relief of any kind will be given to
one against the other." (Pomeroy's Equity Jurisprudence, Vol. 3, 5th ed. p. 728)
Although certain exceptions to the rule are provided by law, We see no cogent reason
why the full force of the rule should not be applied in the instant case.
DECISION
ESCOLIN, J p:
"Ex pacto illicito non oritur actio" [No action arises out of an illicit bargain] is the time-
honored maxim that must be applied to the parties in the case at bar. Having entered
into an illegal contract, neither can seek relief from the courts, and each must bear the
consequences of his acts. LLpr
The factual background of this case is undisputed.
Sometime in 1966, the spouses Nicasio M. Ocampo and Francisca Garcia, herein
private respondents, purchased in installment from the Delta Motor Sales Corporation
five (5) Toyota Corona Standard cars to be used as taxicabs. Since they had no
franchise to operate taxicabs, they contracted with petitioner Lita Enterprises, Inc.,
through its representative, Manuel Concordia, for the use of the latter's certificate of
public convenience in consideration of an initial payment of P1,000.00 and a monthly
rental of P200.00 per taxicab unit. To effectuate said agreement, the aforesaid cars
were registered in the name of petitioner Lita Enterprises, Inc. Possession, however,
remained with the spouses Ocampo who operated and maintained the same under
the name Acme Taxi, petitioner's trade name.
About a year later, on March 18, 1967, one of said taxicabs driven by their employee,
Emeterio Martin, collided with a motorcycle whose driver, one Florante Galvez, died
from the head injuries sustained therefrom. A criminal case was eventually filed
against the driver Emeterio Martin, while a civil case for damages was instituted by
Rosita Sebastian Vda. de Galvez, heir of the victim, against LitaEnterprises, Inc., as
registered owner of the taxicab. In the latter case, Civil Case No. 72067 of
the Court of First Instance of Manila, petitioner Lita Enterprises, Inc. was adjudged
liable for damages in the amount of P25,000.00 and P7,000.00 for attorney's fees.
This decision having become final, a writ of execution was issued. One of the vehicles
of respondent spouses with Engine No. 2R- 914472 was levied upon and sold at
public auction for P2,150.00 to one Sonnie Cortez, the highest bidder. Another car
with Engine No. 2R-915036 was likewise levied upon and sold at public auction for
P8,000.00 to a certain Mr. Lopez. LibLex
Thereafter, in March 1973, respondent Nicasio Ocampo decided to register his
taxicabs in his name. He requested the manager of petitioner Lita Enterprises, Inc. to
turn over the registration papers to him, but the latter allegedly refused. Hence, he
and his wife filed a complaint against Lita Enterprises, Inc., Rosita Sebastian Vda. de
Galvez, Visayan Surety & Insurance Co. and the Sheriff of Manila for reconveyance of
motor vehicles with damages, docketed as Civil Case No. 90988 of the Court of First
Instance of Manila. Trial on the merits ensued and on July 22, 1975, the
said court rendered a decision, the dispositive portion of which reads:
 "WHEREFORE, the complaint is hereby dismissed as far as
defendants Rosita Sebastian Vda. de Galvez, Visayan Surety &
Insurance Company and the Sheriff of Manila are concerned.
"Defendant Lita Enterprises, Inc., is ordered to transfer the
registration certificate of the three Toyota cars not levied upon
with Engine Nos. 2R-230026, 2R-688740 and 2R-585884 [Exhs.
A, B, C and D] by executing a deed of conveyance in favor of the
plaintiff.
"Plaintiff is, however, ordered to pay Lita Enterprises, Inc., the
rentals in arrears for the certificate of convenience from March
1973 up to May 1973 at the rate of P200 a month per unit for the
three cars." (Annex A, Record on Appeal, p. 102-103, Rollo).
Petitioner Lita Enterprises, Inc. moved for reconsideration of the decision, but the
same was denied by the court a quo on October 27, 1975. (p. 121, Ibid.)
On appeal by petitioner, docketed as CA-G.R. No. 59157-R,
the Intermediate Appellate Court modified the decision by including as part of its
dispositive portion another paragraph, to wit:
"In the event the condition of the three Toyota cars will no longer
serve the purpose of the deed of conveyance because of their
deterioration, or because they are no longer serviceable, or
because they are no longer available, the Lita Enterprises, Inc. is
ordered to pay the plaintiffs their fair market value as of July 22,
1975." (Annex "D", p. 167, Rollo.).
Its first and second motions for reconsideration having been denied, petitioner came
to Us, praying that:
"1. . . .
"2. . . . after legal proceedings, decision be rendered or resolution
be issued, reversing, annulling or amending the decision of public
respondent so that:
"(a) the additional paragraph added by the public respondent to
the DECISION of the lower court (CFI) be deleted;
"(b) that private respondents be declared liable to petitioner for
whatever amount the latter has paid or was declared liable (in
Civil Case No. 72067) of the Court of First Instance of Manila to
Rosita Sebastian Vda. de Galvez, as heir of the victim Florante
Galvez, who died as a result of the gross negligence of private
respondents' driver while driving one private respondents'
taxicabs." (p. 39, Rollo.)
Unquestionably, the parties herein operated under an arrangement, commonly known
as the "kabit system", whereby a person who has been granted a certificate of
convenience allows another person who owns motor vehicles to operate under such
franchise for a fee. A certificate of public convenience is a special privilege conferred
by the government. Abuse of this privilege by the grantees thereof cannot be
countenanced. The "kabit system" has been identified as one of the root causes of
this prevalence of graft and corruption in the government transportation offices. In the
words of Chief Justice Makalintal, 1 "this is a pernicious system that cannot be too
severely condemned. It constitutes an imposition upon the good faith of the
government." Cdpr
Although not outrightly penalized as a criminal offense, the "kabit system" is invariably
recognized as being contrary to public policy and, therefore, void and inexistent under
Artic1e 1409 of the Civil Code. It is a fundamental principle that the court will not aid
either party to enforce an illegal contract, but will leave them both where it finds them.
Upon this premise, it was flagrant error on the part of both the trial
and appellate courts to have accorded the parties relief from their predicament. Article
1412 of the Civil Code denies them such aid. It provides:
"ART. 1412. If the act in which the unlawful or forbidden cause
consists does not constitute a criminal offense, the following rules
shall be observed:
"(1) when the fault is on the part of both contracting parties,
neither may recover what he has given by virtue of the contract,
or demand the performance of the other's undertaking."
The defect of inexistence of a contract is permanent and incurable, and cannot be
cured by ratification or by prescription. As this Court said in Eugenio v. Perdido, 2 "the
mere lapse of time cannot give efficacy to contracts that are null and void."
The principle of in pari delicto is well known not only in this jurisdiction but also in the
United States where common law prevails. Under American jurisdiction, the doctrina
is stated thus: "The proposition is universal that no action arises, in equity or at law,
from an illegal contract; no suit can be maintained for its specific performance, or to
recover the property agreed to be sold or delivered, or damages for its violation. The
rule has sometimes been laid down as though it was equally universal, that where the
parties are in pari delicto, no affirmative relief of any kind will be given to one against
the other." 3 Although certain exceptions to the rule are provided by law, We see no
cogent reason why the full force of the rule should not be applied in the instant
case. LLphil
WHEREFORE, all proceedings had in Civil Case No. 90988 entitle "Nicasio Ocampo
and Francisca P. Garcia, Plaintiffs, versus LitaEnterprises, Inc., et al., Defendants" of
the Court of First Instance of Manila and CA-G.R. No. 59157-R entitled "Nicasio
Ocampo and Francisca P. Garcia, Plaintiffs-Appellees, versus Lita Enterprises, Inc.,
Defendant-Appellant," of the Intermediate Appellate Court, as well as the decisions
rendered therein are hereby annulled and set aside. No costs.
SO ORDERED.
Fernando, C .J ., Teehankee, Makasiar, Concepcion, Jr., Guerrero, Abad Santos, De
Castro, Melencio-Herrera Plana, Relova, Gutierrez, Jr. and De la Fuente, JJ ., concur.
Aquino, J ., took no part.
||| (Lita Enterprises, Inc. v. Intermediate Appellate Court, G.R. No. 64693, [April 27,
1984], 214 PHIL 63-68)
 SECOND DIVISION
[G.R. No. L-65510. March 9, 1987.]
TEJA MARKETING AND/OR ANGEL
JAUCIAN, petitioner, vs. HONORABLE INTERMEDIATE APPELLATE
COURT ** AND PEDRO N. NALE, respondents.
Cirilo A. Diaz, Jr. for petitioner.
Henry V. Briguera for private respondent.
DECISION
PARAS, J p:
"'Ex pacto illicito' non oritur actio' (No action arises out of illicit bargain)
is the time-honored maxim that must be applied to the parties in the case at bar.
Having entered into an illegal contract, neither can seek relief from the courts,
and each must bear the consequences of his acts." (Lita Enterprises vs. IAC, 129
SCRA 81.)
The factual background of this case is undisputed. The same is narrated by the
respondent court in its now assailed decision, as follows:
"On May 9, 1975, the defendant bought from the plaintiff a
motorcycle with complete accessories and a sidecar in the total
consideration of P8,000.00 as shown by Invoice No. 144 (Exh.
"A"). Out of the total purchase price the defendant gave a
downpayment of P1,700.00 with a promise that he would pay
plaintiff the balance within sixty days. The defendant, however,
failed to comply with his promise and so upon his own request,
the period of paying the balance was extended to one year in
monthly installments until January 1976 when he stopped paying
anymore. The plaintiff made demands but just the same the
defendant failed to comply with the same thus forcing the plaintiff
to consult a lawyer and file this action for his damage in the
amount of P546.21 for attorney's fees and P100.00 for expenses
of litigation. The plaintiff also claims that as of February 20, 1978,
the total account of the defendant was already P2,731,05 as
shown in a statement of account (Exhibit "B"). This amount
includes not only the balance of P1,700.00 but an additional 12%
interest per annum on the said balance from January 26, 1976 to
February 27, 1978; a 2% service charge; and P546.21
representing attorney's fees.
"In this particular transaction a chattel mortgage (Exhibit 1) was
constituted as a security for the payment of the balance of the
purchase price. It has been the practice of financing firms that
whenever there is a balance of the purchase price the registration
papers of the motor vehicle subject of the sale are not given to
the buyer. The records of the LTC show that the motorcycle sold
to the defendant was first mortgaged to the Teja Marketing by
Angel Jaucian though the Teja Marketing and Angel Jaucian are
one and the same, because it was made to appear that way only
as the defendant had no franchise of his own and he attached the
unit to the plaintiff's MCH Line. The agreement also of the parties
here was for the plaintiff to undertake the yearly registration of
the motorcycle with the Land Transportation Commission.
Pursuant to this agreement the defendant on February 22, 1976
gave the plaintiff P90.00, the P8.00 would be for the mortgage
fee and the P82.00 for the registration fee of the motorcycle. The
plaintiff, however failed to register the motorcycle on that year on
the ground that the defendant failed to comply with some
requirements such as the payment of the insurance premiums
and the bringing of the motorcycle to the LTC for stenciling, the
plaintiff saying that the defendant was hiding the motorcycle from
him. Lastly, the plaintiff explained also that though the ownership
of the motorcycle was already transferred to the defendant the
vehicle was still mortgaged with the consent of the defendant to
the Rural Bank of Camaligan for the reason that all motorcycle
purchased from the plaintiff on credit was rediscounted with the
bank.
"On his part the defendant did not dispute the sale and the
outstanding balance of P1,700.00 still payable to the plaintiff. The
defendant was persuaded to buy from the plaintiff the motorcycle
with the side car because of the condition that the plaintiff would
be the one to register every year the motorcycle with the Land
Transportation Commission. In 1976, however, the plaintiff failed
to register both the chattel mortgage and the motorcycle with the
LTC notwithstanding the fact that the defendant gave him P90.00
for mortgage fee and registration fee and had the motorcycle
insured with La Perla Compaña de Seguros (Exhibit "6") as
shown also by the Certificate of cover (Exhibit "3"). Because of
this failure of the plaintiff to comply with his obligation to register
the motorcycle the defendant suffered damages when he failed to
claim any insurance indemnity which would amount to no less
than P15,000.00 for the more than two times that the motorcycle
figured in accidents aside from the loss of the daily income of
P15.00 as boundary fee beginning October 1976 when the
motorcycle was impounded by the LTC for not being registered.
"The defendant disputed the claim of the plaintiff that he was
biding from the plaintiff the motorcycle resulting in its not being
registered. The truth being that the motorcycle was being used
for transporting passengers and it kept on travelling from one
place to another. The motor vehicle sold to him was mortgaged
 by the plaintiff with the Rural Bank of Camaligan without his
consent and knowledge and the defendant was not even given a
copy of the mortgage deed. The defendant claims that it is not
true that the motorcycle was mortgaged because of re-
discounting for re-discounting is only true with Rural Banks and
the Central Bank. The defendant puts the blame on the plaintiff
for not registering the motorcycle with the LTC and for not giving
him the registration papers inspite of demands made. Finally, the
evidence of the defendant shows that because of the filing of this
case he was forced to retain the services of a lawyer for a fee on
not less than P1,000.00.
xxx xxx xxx
". . . it also appears and the Court so finds that
defendant purchased the motorcycle in question,
particularly for the purpose of engaging and using the
same in the transportation business and for this
purpose said trimobile unit was attached to the plaintiff's
transportation line who had the franchise, so much so that
in the registration certificate, the plaintiff appears to be the
owner of the unit. Furthermore, it appears to have been
agreed, further between the plaintiff and the defendant,
that plaintiff would undertake the yearly registration of the
unit in question with the LTC. Thus, for the registration of
the unit for the year 1976, per agreement, the defendant
gave to the plaintiff the amount of P82.00 for its
registration, as well as the insurance coverage of the unit."
Eventually, petitioner Teja Marketing and/or Angel Jaucian filed an action for "Sum of
Money with Damages" against private respondent Pedro N. Nale in the City Court of
Naga City. The City Court rendered judgment in favor of petitioner, the dispositive
portion of which reads: LLjur
"WHEREFORE, decision is hereby rendered dismissing the
counterclaim and ordering the defendant to pay plaintiff the sum
of P1,700.00 representing the unpaid balance of the purchase
price with legal rate of interest from the date of the filing of the
complaint until the same is fully paid; to pay plaintiff the sum of
P546.21 as attorney's fees; to pay plaintiff the sum of P200.00 as
expenses of litigation; and to pay the costs.
"SO ORDERED."
On appeal to the Court of First Instance of Camarines Sur, the decision was
affirmed in toto. Private respondent filed a petition for review with
the Intermediate Appellate Court and on July 18, 1983. The said Court promulgated
its decision, the pertinent portion of which reads —
"However, as the purchase of the motorcycle for operation as a
trimobile under the franchise of the private respondent Jaucian,
pursuant to what is commonly known as the 'kabit system,'
without the prior approval of the Board of Transportation (formerly
the Public Service Commission) was an illegal transaction
involving the fictitious registration of the motor vehicle in the
name of the private respondent so that he may traffic with the
privileges of his franchise, or certificate of public convenience, to
operate a tricycle service, the parties being in pari delicto, neither
of them may bring an action against the other to enforce their
illegal contract [Art. 1412 (a), Civil Code]."
xxx xxx xxx
"WHEREFORE, the decision under review is hereby set aside.
The complaint of respondent Teja Marketing and/or Angel
Jaucian, as well as the counterclaim of petitioner Pedro Nale in
Civil Case No. 1153 of the Court of First Instance of Camarines
Sur (formerly Civil Case No. 5856 of the City Court of Naga City)
are dismissed. No pronouncement as to costs.
"SO ORDERED."
The decision is now before Us on a petition for review,
petitioner Teja Marketing and/or Angel Jaucian presenting a lone assignment of error
— whether or not respondent court erred in applying the doctrine of "pari delicto."
We find the petition devoid of merit. cdrep
Unquestionably, the parties herein operated under an arrangement, commonly known
as the "kabit system" whereby a person who has been granted a certificate of public
convenience allows another person who owns motor vehicles to operate under such
franchise for a fee. A certificate of public convenience is a special privilege conferred
by the government. Abuse of this privilege by the grantees thereof cannot be
countenanced. The "kabit system" has been identified as one of the root causes of
the prevalence of graft and corruption in the government transportation offices.
Although not outrightly penalized as a criminal offense, the kabit system is invariably
recognized as being contrary to public policy and, therefore, void and inexistent under
Article 1409 of the Civil Code. It is a fundamental principle that the court will not aid
either party to enforce an illegal contract, but will leave both where it finds them. Upon
this premise it would be error to accord the parties relief from their predicament.
Article 1412 of the Civil Code denies them such aid. It provides:
"Art. 1412. If the act in which the unlawful or forbidden cause
consists does not constitute a criminal offense, the following rules
shall be observed:
"1. When the fault is on the part of both contracting parties,
neither may recover that he has given by virtue of the contract, or
demand, the performance of the other's undertaking."
The defect of inexistence of a contract is permanent and cannot be cured by
ratification or by prescription. The mere lapse of time cannot give efficacy to contracts
that are null and void. llcd
WHEREFORE, the petition is hereby dismissed for lack of merit. The assailed
decision of the Intermediate Appellate Court (now the Court of Appeals) is
AFFIRMED. No costs.
SO ORDERED.
Fernan (Chairman), Gutierrez, Jr., Padilla, Bidin and Cortez, JJ., concur.
Alampay, J., no part.
||| (Teja Marketing v. Intermediate Appellate Court, G.R. No. L-65510, [March 9,
1987], 232 PHIL 321-327)
 THIRD DIVISION
[G.R. No. 144274. September 20, 2004.]
NOSTRADAMUS VILLANUEVA, petitioner, vs. PRISCILLA R.
DOMINGO and LEANDRO LUIS R. DOMINGO,respondents.
DECISION
CORONA, J p:
This is a petition to review the decision 1 of the Court of Appeals in CA-G.R.
CV No. 52203 affirming in turn the decision of the trial court finding petitioner liable to
respondent for damages. The dispositive portion read:
WHEREFORE, the appealed decision is hereby
AFFIRMED except the award of attorney's fees including
appearance fees which is DELETED.
SO ORDERED. 2
The facts of the case, as summarized by the Court of Appeals, are as follows:
[Respondent] Priscilla R. Domingo is the registered
owner of a silver Mitsubishi Lancer Car model 1980 bearing plate
No. NDW 781 '91 with [co-respondent] Leandro Luis R. Domingo
as authorized driver. [Petitioner] Nostradamus Villanueva was then
the registered "owner" of a green Mitsubishi Lancer bearing Plate
No. PHK 201 '91.
On 22 October 1991 at about 9:45 in the evening,
following a green traffic light, [respondent] Priscilla Domingo's
silver Lancer car with Plate No. NDW 781 '91 then driven by [co-
respondent] Leandro Luis R. Domingo was cruising along the
middle lane of South Superhighway at moderate speed from north
to south. Suddenly, a green Mitsubishi Lancer with plate No. PHK
201 '91 driven by Renato Dela Cruz Ocfemia darted from Vito Cruz
Street towards the South Superhighway directly into the path of
NDW 781 '91 thereby hitting and bumping its left front portion. As
a result of the impact, NDW 781 '91 hit two (2) parked vehicles at
the roadside, the second hitting another parked car in front of
it. ATESCc
Per Traffic Accident Report prepared by Traffic
Investigator Pfc. Patrocinio N. Acido, Renato dela Cruz Ocfemia
was driving with expired license and positive for alcoholic breath.
Hence, Manila Assistant City Prosecutor Oscar A. Pascua
recommended the filing of information for reckless imprudence
resulting to (sic) damage to property and physical injuries.
The original complaint was amended twice: first,
impleading Auto Palace Car Exchange as commercial agent
and/or buyer-seller and second, impleading Albert Jaucian as
principal defendant doing business under the name and style of
Auto Palace Car Exchange.
Except for Ocfemia, all the defendants filed separate
answers to the complaint. [Petitioner] Nostradamus Villanueva
claimed that he was no longer the owner of the car at the time of
the mishap because it was swapped with a Pajero owned by Albert
Jaucian/Auto Palace Car Exchange. For her part, Linda Gonzales
declared that her presence at the scene of the accident was upon
the request of the actual owner of the Mitsubishi Lancer (PHK 201
'91) [Albert Jaucian] for whom she had been working as
agent/seller. On the other hand, Auto Palace Car Exchange
represented by Albert Jaucian claimed that he was not the
registered owner of the car. Moreover, it could not be held
subsidiary liable as employer of Ocfemia because the latter was
off-duty as utility employee at the time of the incident. Neither was
Ocfemia performing a duty related to his employment. 3
After trial, the trial court found petitioner liable and ordered him to pay
respondent actual, moral and exemplary damages plus appearance and attorney's
fees:
WHEREFORE, judgment is hereby rendered for the
plaintiffs, ordering Nostradamus Villanueva to pay the amount of
P99,580 as actual damages, P25,000.00 as moral damages,
P25,000.00 as exemplary damages and attorney's fees in the
amount of P10,000.00 plus appearance fees of P500.00 per
hearing with legal interest counted from the date of judgment. In
conformity with the law on equity and in accordance with the ruling
in First Malayan Lending and Finance Corporation vs. Court of
Appeals (supra), Albert Jaucian is hereby ordered to indemnify
Nostradamus Villanueva for whatever amount the latter is hereby
ordered to pay under the judgment.
SO ORDERED. 4
The CA upheld the trial court's decision but deleted the award for appearance
and attorney's fees because the justification for the grant was not stated in the body of
the decision. Thus, this petition for review which raises a singular issue:
MAY THE REGISTERED OWNER OF A MOTOR VEHICLE BE
HELD LIABLE FOR DAMAGES ARISING FROM A VEHICULAR
ACCIDENT INVOLVING HIS MOTOR VEHICLE WHILE BEING
OPERATED BY THE EMPLOYEE OF ITS BUYER WITHOUT
THE LATTER'S CONSENT AND KNOWLEDGE? 5
Yes.
 We have consistently ruled that the registered owner of any vehicle is directly
and primarily responsible to the public and third persons while it is being
operated. 6 The rationale behind such doctrine was explained way back in 1957
in Erezo vs. Jepte 7 :
The principle upon which this doctrine is based is that in
dealing with vehicles registered under the Public Service Law, the
public has the right to assume or presume that the registered
owner is the actual owner thereof, for it would be difficult for the
public to enforce the actions that they may have for injuries caused
to them by the vehicles being negligently operated if the public
should be required to prove who the actual owner is. How would
the public or third persons know against whom to enforce their
rights in case of subsequent transfers of the vehicles? We do not
imply by his doctrine, however, that the registered owner may not
recover whatever amount he had paid by virtue of his liability to
third persons from the person to whom he had actually sold,
assigned or conveyed the vehicle. ESCcaT
Under the same principle the registered owner of any
vehicle, even if not used for a public service, should primarily be
responsible to the public or to third persons for injuries caused the
latter while the vehicle is being driven on the highways or
streets. The members of the Court are in agreement that the
defendant-appellant should be held liable to plaintiff-appellee for
the injuries occasioned to the latter because of the negligence of
the driver, even if the defendant-appellant was no longer the owner
of the vehicle at the time of the damage because he had previously
sold it to another. What is the legal basis for his (defendant-
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 Vehicles Office. Should he not be allowed to prove the truth,
that he had sold it to another and thus shift the responsibility for
the injury to the real and actual owner? The defendant holds the
affirmative of this proposition; the trial court held the negative.
The Revised Motor Vehicle Law (Act No. 3992, as
amended) provides that no vehicle may be used or operated upon
any public highway unless the same is property registered. It has
been stated that the system of licensing and the requirement that
each machine must carry a registration number, conspicuously
displayed, is one of the precautions taken to reduce the danger of
injury to pedestrians and other travelers from the careless
management of automobiles. And to furnish a means of
ascertaining the identity of persons violating the laws and
ordinances, regulating the speed and operation of machines upon
the highways (2 R.C.L. 1176). Not only are vehicles to be
registered and that no motor vehicles are to be used or operated
without being properly registered for the current year, but that
dealers in motor vehicles shall furnish the Motor Vehicles 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
therefore can be fixed on a definite individual, the registered
owner. Instances are numerous where vehicles running on public
highways caused accidents or injuries to pedestrians or other
vehicles without positive identification of the owner or drivers, or
with very scant means of identification. It is to forestall these
circumstances, so inconvenient or prejudicial to the public, that the
motor vehicle registration is primarily ordained, in the interest of
the determination of persons responsible for damages or injuries
caused on public highways:
One of the principal purposes of motor vehicles
legislation is identification of the vehicle and of the
operator, in case of accident; and another is that the
knowledge that means of detection are always available
may act as a deterrent from lax observance of the law
and of the rules of conservative and safe operation.
Whatever purpose there may be in these statutes, it is
subordinate at the last to the primary purpose of
rendering it certain that the violator of the law or of the
rules of safety shall not escape because of lack of means
to discover him. The purpose of the statute is thwarted,
and the displayed number becomes a "share and
delusion," if courts would entertain such defenses as that
put forward by appellee in this case. No responsible
person or corporation could be held liable for the most
outrageous acts of negligence, if they should be allowed
to place a "middleman" between them and the public, and
escape liability by the manner in which they recompense
servants. (King vs. Brenham Automobile Co., Inc. 145
S.W. 278, 279.)
With the above policy in mind, the question that
defendant-appellant poses is: should not the registered owner be
allowed at the trial to prove who the actual and real owner is, and
in accordance with such proof escape or evade responsibility by
and lay the same on the person actually owning the vehicle? We
hold with the trial court that the law does not allow him to do so;
the law, with its aim and policy in mind, does not relieve him directly
of the responsibility that the law fixes and places upon him as an
 incident or consequence of registration. Were a registered owner
allowed to evade responsibility by proving who the supposed
transferee or owner is, it would be easy for him, by collusion with
others or otherwise, to escape said responsibility and transfer the
same to an indefinite person, or to one who possesses no property
with which to respond financially for the damage or injury done. A
victim of recklessness on the public highways is usually without
means to discover or identify the person actually causing the injury
or damage. He has no means other than by a recourse to the
registration in the Motor Vehicles Office to determine who is the
owner. The protection that the law aims to extend to him would
become illusory were the registered owner given the opportunity
to escape liability by disproving his ownership. If the policy of the
law is to be enforced and carried out, the registered owner should
not be allowed to prove the contrary to the prejudice of the person
injured, that is, to prove that a third person or another has become
the owner, so that he may thereby be relieved of the responsibility
to the injured person.
The above policy and application of the law may appear
quite harsh and would seem to conflict with truth and justice. We
do not think it is so. A registered owner who has already sold or
transferred a vehicle has the recourse to a third-party complaint, in
the same action brought against him to recover for the damage or
injury done, against the vendee or transferee of the vehicle. The
inconvenience of the suit is no justification for relieving him of
liability; said inconvenience is the price he pays for failure to
comply with the registration that the law demands and requires.
In synthesis, we hold that the registered owner, the
defendant-appellant herein, is primarily responsible for the
damage caused to the vehicle of the plaintiff-appellee, but he
(defendant-appellant) has a right to be indemnified by the real or
actual owner of the amount that he may be required to pay as
damage for the injury caused to the plaintiff-appellant. 8
Petitioner insists that he is not liable for damages since the driver of the vehicle
at the time of the accident was not an authorized driver of the new (actual) owner of the
vehicle. He claims that the ruling in First Malayan Leasing and Finance Corporation
vs. CA 9 implies that to hold the registered owner liable for damages, the driver of the
vehicle must have been authorized, allowed and permitted by its actual owner to
operate and drive it. Thus, if the vehicle is driven without the knowledge and consent
of the actual owner, then the registered owner cannot be held liable for damages.
He further argues that this was the underlying theory behind Duavit
vs. CA 10 wherein the court absolved the registered owner from liability after finding
that the vehicle was virtually stolen from the owner's garage by a person who was
neither authorized nor employed by the owner. Petitioner concludes that the ruling
in Duavit and not the one in First Malayan should be applicable to him.
Petitioner's argument lacks merit. Whether the driver is authorized or not by
the actual owner is irrelevant to determining the liability of the registered owner who the
law holds primarily and directly responsible for any accident, injury or death caused by
the operation of the vehicle in the streets and highways. To require the driver of the
vehicle to be authorized by the actual owner before the registered owner can be held
accountable is to defeat the very purpose why motor vehicle legislations are enacted
in the first place.
Furthermore, there is nothing in First Malayan which even remotely suggests
that the driver must be authorized before the registered owner can be held accountable.
In First Malayan, the registered owner, First Malayan Corporation, was held liable for
damages arising from the accident even if the vehicle involved was already owned by
another party:
This Court has consistently ruled that regardless of who
the actual owner is of a motor vehicle might be, the registered
owner is the operator of the same with respect to the public and
third persons, and as such, directly and primarily responsible for
the consequences of its operation. In contemplation of law, the
owner/operator of record is the employer of the driver, the actual
operator and employer being considered merely as his agent
(MYC-Agro-Industrial Corporation vs. Vda. de Caldo, 132 SCRA
10, citing Vargas vs. Langcay, 6 SCRA 174; Tamayo vs. Aquino,
105 Phil. 949). DCTHaS
'We believe that it is immaterial whether or not
the driver was actually employed by the operator of
record. It is even not necessary to prove who the actual
owner of the vehicle and the employer of the driver is.
Granting that, in this case, the father of the driver is the
actual owner and that he is the actual employer, following
the well-settled principle that the operator of record
continues to be the operator of the vehicle in
contemplation of law, as regards the public and third
person, and as such is responsible for the consequences
incident to its operation, we must hold and consider such
owner-operator of record as the employer, in
contemplation of law, of the driver. And, to give effect to
this policy of law as enunciated in the above cited
decisions of this Court, we must now extend the same
and consider the actual operator and employer as the
agent of the operator of record.' 11
Contrary to petitioner's position, the First Malayan ruling is applicable to him
since the case involves the same set of facts — the registered owner had previously
sold the vehicle to someone else and was being driven by an employee of the new
(actual) owner. Duavit is inapplicable since the vehicle there was not transferred to
another; the registered and the actual owner was one and the same person. Besides,
in Duavit, the defense of the registered owner, Gilberto Duavit, was that the vehicle was
practically stolen from his garage by Oscar Sabiano, as affirmed by the latter:
Defendant Sabiano, in his testimony, categorically
admitted that he took the jeep from the garage of defendant Duavit
 without the consent and authority of the latter. He testified further
that Duavit even filed charges against him for the theft of the jeep
but which Duavit did not push through as his (Sabiano's) parents
apologized to Duavit on his behalf. 12

As correctly pointed out by the CA, the Duavit ruling is not applicable to
petitioner's case since the circumstance of unauthorized use was not present. He in
fact voluntarily delivered his car to Albert Jaucian as part of the downpayment for a
vehicle he purchased from Jaucian. Thus, he could not claim that the vehicle was stolen
from him since he voluntarily ceded possession thereof to Jaucian. It was the latter, as
the new (actual) owner, who could have raised the defense of theft to prove that he was
not liable for the acts of his employee Ocfemia. Thus, there is no reason to apply
the Duavit ruling to this case.

The ruling in First Malayan has been reiterated in BA Finance Corporation

vs. CA 13 and more recently in Aguilar, Sr. vs.Commercial Savings Bank. 14 In BA
Finance, we held the registered owner liable even if, at the time of the accident, the
vehicle was leased by another party and was driven by the lessee's employee.
In Aguilar, the registered owner-bank answered for damages for the accident even if
the vehicle was being driven by the Vice-President of the Bank in his private capacity
and not as an officer of the Bank, as claimed by the Bank. We find no reason to deviate
from these decisions.
The main purpose of vehicle registration is the easy identification of the owner
who can be held responsible for any accident, damage or injury caused by the vehicle.
Easy identification prevents inconvenience and prejudice to a third party injured by one
who is unknown or unidentified. To allow a registered owner to escape liability by
claiming that the driver was not authorized by the new (actual) owner results in the
public detriment the law seeks to avoid.
Finally, the issue of whether or not the driver of the vehicle during the accident
was authorized is not at all relevant to determining the liability of the registered owner.
This must be so if we are to comply with the rationale and principle behind the
registration requirement under the motor vehicle law.

WHEREFORE, the petition is hereby DENIED. The January 26, 2000 decision
of the Court of Appeals is AFFIRMED.
SO ORDERED.
Panganiban and Sandoval-Gutierrez, JJ ., concur.
Carpio Morales, J ., is on leave.

||| (Villanueva v. Domingo, G.R. No. 144274, [September 20, 2004], 481 PHIL 837-
851)
 FIRST DIVISION
[G.R. No. 160286. July 30, 2004.]
SPOUSES FRANCISCO M. HERNANDEZ and ANICETA
ABEL-HERNANDEZ and JUAN GONZALES, petitioners, vs.
SPOUSES LORENZO DOLOR and MARGARITA DOLOR,
FRED PANOPIO, JOSEPH SANDOVAL, RENE CASTILLO,
SPOUSES FRANCISCO VALMOCINA and VIRGINIA
VALMOCINA, SPOUSES VICTOR PANOPIO and MARTINA
PANOPIO, and HON. COURT OF APPEALS, respondents.
DECISION
YNARES-SANTIAGO, J p:
This is a petition for review under Rule 45 of the Rules of Court seeking the
reversal of the decision 1 of the Court of Appeals, dated April 29, 2003, in CA-G.R. CV
No. 60357, which affirmed with modification the amount of damages awarded in the
November 24, 1997 decision 2 of the Regional Trial Court of Batangas City, Branch IV.
The undisputed facts are as follows:
At about 3:00 p.m. of December 19, 1986, Lorenzo Menard "Boyet" Dolor, Jr.
was driving an owner-type jeepney with plate no. DEB 804 owned by her mother,
Margarita, towards Anilao, Batangas. As he was traversing the road at Barangay Anilao
East, Mabini, Batangas, his vehicle collided with a passenger jeepney bearing plate no.
DEG 648, driven by petitioner Juan Gonzales and owned by his co-petitioner Francisco
Hernandez, which was travelling towards Batangas City.
Boyet Dolor and his passenger, Oscar Valmocina, died as a result of the
collision. Fred Panopio, Rene Castillo and Joseph Sandoval, who were also on board
the owner-type jeep, which was totally wrecked, suffered physical injuries. The collision
also damaged the passenger jeepney of Francisco Hernandez and caused physical
injuries to its passengers, namely, Virgie Cadavida, Fiscal Artemio Reyes and
Francisca Corona. 3
Consequently, respondents commenced an action 4 for damages against
petitioners before the Regional Trial Court of Batangas City, alleging that driver Juan
Gonzales was guilty of negligence and lack of care and that the Hernandez spouses
were guilty of negligence in the selection and supervision of their employees. 5
Petitioners countered that the proximate cause of the death and injuries
sustained by the passengers of both vehicles was the recklessness of Boyet Dolor, the
driver of the owner-type jeepney, who was driving in a zigzagging manner under the
influence of alcohol. Petitioners also alleged that Gonzales was not the driver-employee
of the Hernandez spouses as the former only leased the passenger jeepney on a daily
basis. The Hernandez spouses further claimed that even if an employer-employee
relationship is found to exist between them, they cannot be held liable because as
employers they exercised due care in the selection and supervision of their employee.
During the trial of the case, it was established that the drivers of the two
vehicles were duly licensed to drive and that the road where the collision occurred was
asphalted and in fairly good condition. 6 The owner-type jeep was travelling uphill while
the passenger jeepney was going downhill. It was further established that the owner-
type jeep was moderately moving and had just passed a road bend when its
passengers, private respondents Joseph Sandoval and Rene Castillo, saw the
passenger jeepney at a distance of three meters away. The passenger jeepney was
traveling fast when it bumped the owner type jeep. 7 Moreover, the evidence presented
by respondents before the trial court showed that petitioner Juan Gonzales obtained
his professional driver's license only on September 24, 1986, or three months before
the accident. Prior to this, he was holder of a student driver's permit issued on April 10,
1986. 8
On November 24, 1997, the trial court rendered a decision in favor of
respondents, the dispositive portion of which states:
Premises duly considered and the plaintiffs having
satisfactorily convincingly and credibly presented evidence clearly
satisfying the requirements of preponderance of evidence to
sustain the complaint, this Court hereby declares judgment in favor
of the plaintiffs and against the defendants. Defendants-spouses
Francisco Hernandez and Aniceta Abel Hernandez and Juan
Gonzales are therefore directed to pay jointly and severally, the
following:
1) To spouses Lorenzo Dolor and Margarita Dolor:
a) P50,000.00 — for the death of their son, Lorenzo
Menard "Boyet" Dolor, Jr.;
b) P142,000.00 — as actual and necessary funeral
expenses;
c) P50,000.00 — reasonable value of the totally
wrecked owner-type jeep with plate no. DEB
804 Phil '85;
d) P20,000.00 — as moral damages;
e) P20,000.00 as reasonable litigation expenses and
attorney's fees.
2) To spouses Francisco Valmocina and Virginia Valmocina:
a) P50,000.00 — for the death of their son, Oscar
Balmocina (sic);
b) P20,000.00 — as moral damages;
c) P18,400.00 — for funeral expenses;
 d) P10,000.00 — for litigation expenses and attorney's
fees.
3) To spouses Victor Panopio and Martina Panopio:
a) P10,450.00 — for the cost of the artificial leg and
crutches being used by their son Fred Panopio;
b) P25,000.00 — for hospitalization and medical
expenses they incurred for the treatment of
their son, Fred Panopio.
4) To Fred Panopio:
a) P25,000.00 — for the loss of his right leg;
b) P10,000.00 — as moral damages.
5) To Joseph Sandoval:
a) P4,000.00 for medical treatment.
The defendants are further directed to pay the costs of
this proceedings.
SO ORDERED. 9
Petitioners appealed 1 0 the decision to the Court of Appeals, which affirmed
the same with modifications as to the amount of damages, actual expenses and
attorney's fees awarded to the private respondents. The decretal portion of the decision
of the Court of Appeals reads:
WHEREFORE, the foregoing premises considered, the
appealed decision is AFFIRMED. However, the award for
damages, actual expenses and attorney's fees shall be MODIFIED
as follows:
1) To spouses Lorenzo Dolor and Margarita Dolor:
a) P50,000.00 — civil indemnity for their son Lorenzo
Menard Dolor, Jr.;
b) P58,703.00 — as actual and necessary funeral
expenses;
c) P25,000.00 — as temperate damages;
d) P100,000.00 — as moral damages;
e) P20,000.00 — as reasonable litigation expenses and
attorney's fees.
2) To Spouses Francisco Valmocina and Virginia Valmocina:
a) P50,000.00 — civil indemnity for the death of their
son, Oscar Valmocina;
b) P100,000.00 — as moral damages;
c) P10,000.00 — as temperate damages;
d) P10,000.00 — as reasonable litigation expenses and
attorney's fees.
3) To Spouses Victor Panopio and Martina Panopio:
a) P10,352.59 — as actual hospitalization and medical
expenses;
b) P5,000.00 — as temperate damages.
4) To Fred Panopio:
a) P50,000.00 — as moral damages.
5) To Joseph Sandoval:
a) P3,000.00 as temperate damages.
SO ORDERED. 11
Hence the present petition raising the following issues:
1. Whether the Court of Appeals was correct when it
pronounced the Hernandez spouses as solidarily liable with Juan
Gonzales, although it is of record that they were not in the
passenger jeepney driven by latter when the accident occurred;
2. Whether the Court of Appeals was correct in awarding
temperate damages to private respondents namely the Spouses
Dolor, Spouses Valmocina and Spouses Panopio and to Joseph
Sandoval, although the grant of temperate damages is not
provided for in decision of the court a quo;
3. Whether the Court of Appeals was correct in increasing
the award of moral damages to respondents, Spouses Dolor,
Spouses Valmocina and Fred Panopio;
4. Whether the Court of Appeals was correct in affirming
the grant of attorney's fees to Spouses Dolor and to Spouses
Valmocina although the lower court did not specify the fact and the
law on which it is based.
Petitioners contend that the absence of the Hernandez spouses inside the
passenger jeepney at the time of the collision militates against holding them solidarily
liable with their co-petitioner, Juan Gonzales, invoking Article 2184 of the Civil Code,
which provides:
ARTICLE 2184. In motor vehicle mishaps, the owner is
solidarily liable with his driver, if the former, who was in the vehicle,
could have, by the use of the due diligence, prevented the
misfortune. It is disputably presumed that a driver was negligent, if
 he had been found guilty of reckless driving or violating traffic
regulations at least twice within the next preceding two months.
If the owner was not in the motor vehicle, the provisions
of article 2180 are applicable.
The Hernandez spouses argues that since they were not inside the jeepney
at the time of the collision, the provisions of Article 2180 of the Civil Code, which does
not provide for solidary liability between employers and employees, should be applied.
We are not persuaded.
Article 2180 provides:
ARTICLE 2180. The obligation imposed by article 2176
is demandable not only for one's own acts or omissions, but also
for those of persons for whom one is responsible.
The father and, in case of his death or incapacity, the
mother, are responsible for the damages caused by the minor
children who live in their company.
Guardians are liable for damages caused by the minors
or incapacitated persons who are under their authority and live in
their company.
The owners and managers of an establishment or
enterprise are likewise responsible for damages caused by their
employees in the service of the branches in which the latter are
employed or on the occasion of their functions.
Employers shall be liable for the damages caused by their
employees and household helpers acting within the scope of their
assigned tasks, even though the former are not engaged in any
business or industry.
The State is responsible in like manner when it acts
through a special agent; but not when the damage has been
caused by the official to whom the task done properly pertains, in
which case what is provided in article 2176 shall be applicable.
Lastly, teachers or heads of establishments of arts and
trades shall be liable for damages caused by their pupils and
students or apprentices, so long as they remain in their custody.
The responsibility treated of in this article shall cease
when the persons herein mentioned prove that they observed all
the diligence of a good father of a family to prevent damage.
(Emphasis supplied)
On the other hand, Article 2176 provides —
Whoever by act or omission causes damage to another,
there being fault or negligence, is obliged to pay for the damage
done. Such fault or negligence, if there is no pre-existing
contractual relation between the parties, is called a quasi-
delict and is governed by the provisions of this Chapter. ICTcDA
While the above provisions of law do not expressly provide for solidary liability,
the same can be inferred from the wordings of the first paragraph of Article 2180 which
states that the obligation imposed by article 2176 is demandable not only for one's own
acts or omissions, but also for those of persons for whom one is responsible.
Moreover, Article 2180 should be read with Article 2194 of the same Code,
which categorically states that the responsibility of two or more persons who are liable
for quasi-delict is solidary. In other words, the liability of joint tortfeasors is
solidary. 12 Verily, under Article 2180 of the Civil Code, an employer may be held
solidarily liable for the negligent act of his employee. 13
The solidary liability of employers with their employees for quasi-
delicts having been established, the next question is whether Julian Gonzales is an
employee of the Hernandez spouses. An affirmative answer will put to rest any issue
on the solidary liability of the Hernandez spouses for the acts of Julian Gonzales. The
Hernandez spouses maintained that Julian Gonzales is not their employee since their
relationship relative to the use of the jeepney is that of a lessor and a lessee. They
argue that Julian Gonzales pays them a daily rental of P150.00 for the use of the
jeepney. 14 In essence, petitioners are practicing the "boundary system" of jeepney
operation albeit disguised as a lease agreement between them for the use of the
jeepney.
We hold that an employer-employee relationship exists between the
Hernandez spouses and Julian Gonzales.
Indeed to exempt from liability the owner of a public vehicle who operates it
under the "boundary system" on the ground that he is a mere lessor would be not only
to abet flagrant violations of the Public Service Law, but also to place the riding public
at the mercy of reckless and irresponsible drivers — reckless because the measure of
their earnings depends largely upon the number of trips they make and, hence, the
speed at which they drive; and irresponsible because most if not all of them are in no
position to pay the damages they might cause. 15
Anent the award of temperate damages to the private respondents, we hold
that the appellate court committed no reversible error in awarding the same to the
respondents.
Temperate or moderate damages are damages which are more than nominal
but less than compensatory which may be recovered when the court finds that some
pecuniary loss has been suffered but its amount cannot, from the nature of the case,
be proved with certainty. 16 Temperate damages are awarded for those cases where,
from the nature of the case, definite proof of pecuniary loss cannot be offered, although
the court is convinced that there has been such loss. A judge should be empowered to
calculate moderate damages in such cases, rather than the plaintiff should suffer,
without redress, from the defendant's wrongful act. 17 The assessment of temperate
damages is left to the sound discretion of the court provided that such an award is
reasonable under the circumstances. 18
We have gone through the records of this case and we find that, indeed,
respondents suffered losses which cannot be quantified in monetary terms. These
losses came in the form of the damage sustained by the owner type jeep of the Dolor
spouses; the internment and burial of Oscar Valmocina; the hospitalization of Joseph
Sandoval on account of the injuries he sustained from the collision and the artificial leg
and crutches that respondent Fred Panopio had to use because of the amputation of
his right leg. Further, we find that the amount of temperate damages awarded to the
respondents were reasonable under the circumstances.
(Mirasol vs. De la Cruz, 84 SCRA 337; Stronghold Insurance
Company, Inc. vs. Court of Appeals, 173 SCRA 619).
In the case at bench, the records do not show enough
basis for sustaining the award for attorney's fees and to adjudge
its payment by petitioner. . . .

As to the amount of moral damages which was awarded to respondents, a Likewise, this Court held in Stronghold Insurance
review of the records of this case shows that there exists no cogent reason to overturn Company, Inc. vs. Court of Appeals that:
the action of the appellate court on this aspect.
"In Abrogar v. Intermediate Appellate
Under Article 2206, the "spouse, legitimate and illegitimate descendants and Court [G.R. No. 67970, January 15, 1988, 157 SCRA 57],
ascendants of the deceased may demand moral damages for mental anguish for the the Court had occasion to state that '[t]he reason for the
death of the deceased." The reason for the grant of moral damages has been award of attorney's fees must be stated in the text of the
explained, thus: court's decision, otherwise, if it is stated only in the
dispositive portion of the decision, the same must be
. . . the award of moral damages is aimed at a restoration, disallowed on appeal.' . . ." 24
within the limits possible, of the spiritual status quo ante; and
therefore, it must be proportionate to the suffering inflicted. The WHEREFORE, the petition is DENIED. The assailed decision of the Court of
intensity of the pain experienced by the relatives of the victim is Appeals is AFFIRMED with the MODIFICATION that the grant of attorney's fees is
proportionate to the intensity of affection for him and bears no DELETED for lack of basis.
relation whatsoever with the wealth or means of the offender. 19
Costs against petitioners.
Moral damages are emphatically not intended to enrich a plaintiff at the SO ORDERED.
expense of the defendant. They are awarded to allow the former to obtain means,
diversion or amusements that will serve to alleviate the moral suffering he has Davide, Jr., C .J ., Quisumbing, Carpio and Azcuna, JJ ., concur.
undergone due to the defendant's culpable action and must, perforce, be proportional
to the suffering inflicted. 20 ||| (Spouses Hernandez v. Spouses Dolor, G.R. No. 160286, [July 30, 2004], 479
PHIL 593-606)
Truly, the pain of the sudden loss of one's offspring, especially of a son who
was in the prime of his youth, and who holds so much promise waiting to be fulfilled is
indeed a wellspring of intense pain which no parent should be made to suffer. While it
is true that there can be no exact or uniform rule for measuring the value of a human
life and the measure of damages cannot be arrived at by a precise mathematical
calculation, 21 we hold that the Court of Appeals' award of moral damages of
P100,000.00 each to the Spouses Dolor and Spouses Valmocina for the death of their
respective sons, Boyet Dolor and Oscar Valmocina, is in full accord with prevailing
jurisprudence. 22

With respect to the award of attorney's fees to respondents, no sufficient basis

was established for the grant thereof.

It is well settled that attorney's fees should not be awarded in the absence of
stipulation except under the instances enumerated in Article 2208 of the Civil Code. As
we have held in Rizal Surety and Insurance Company v. Court of Appeals: 23

Article 2208 of the Civil Code allows attorney's fees to be

awarded by a court when its claimant is compelled to litigate with
third persons or to incur expenses to protect his interest by reason
of an unjustified act or omission of the party from whom it is sought.
While judicial discretion is here extant, an award thereof demands,
nevertheless, a factual, legal or equitable justification. The matter
cannot and should not be left to speculation and conjecture