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G.R. No. 125948 December 29, 1998

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

MARTINEZ, J.:

This petition for review oncertiorari assails the Decision of the Court of Appeals datedNovember 29, 1995, in CA-G.R. SP No. 36801, affirming the decision of the RegionalTrial Court of Batangas City, Branch 84, in Civil Case No. 4293, which dismissedpetitioners' complaint for a business tax refund imposed by the City of Batangas.

Petitioner is a grantee of a pipeline concession under Republic Act No. 387, asamended, to contract, install and operate oil pipelines. The original pipeline concessionwas granted in 1967

1and renewed by the Energy Regulatory Board in 1992.

2

Sometime in January 1995, petitioner applied for a mayor's permit with the Office of the

Mayor of Batangas City. However, before the mayor's permit could be issued, therespondent City Treasurer required petitioner to pay a local tax based on its grossreceipts for the fiscal year 1993 pursuant to the Local Government Code

3. The

respondent City Treasurer assessed a business tax on the petitioner amounting toP956,076.04 payable in four installments based on the gross receipts for productspumped at GPS-1 for the fiscal year 1993 which amounted to P181,681,151.00. In ordernot to hamper its operations, petitioner paid the tax under protest in the amount ofP239,019.01 for the first quarter of 1993.

On January 20, 1994, petitioner filed a letter-protest addressed to the respondent CityTreasurer, the pertinent portion of which reads:

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

government concession granted under the Petroleum Act. It isengaged in the business of transporting petroleum products from theBatangas refineries, via pipeline, to Sucat and JTF PandacanTerminals. As such, our Company is exempt from paying tax on grossreceipts under Section 133 of the Local Government Code of 1991 . . ..

Moreover, Transportation contractors are not included in theenumeration of contractors under Section 131, Paragraph (h) of theLocal Government Code. Therefore, the authority to impose tax "oncontractors and other independent contractors" under Section 143,Paragraph (e) of the Local Government Code does not include thepower to levy on transportation contractors.

The imposition and assessment cannot be categorized as a mere feeauthorized under Section 147 of the Local Government Code. The

said section limits the imposition of fees and charges on business tosuch amounts as may be commensurate to the cost of regulation,inspection, and licensing. Hence, assuming arguendo that FPIC isliable for the license fee, the imposition thereof based on grossreceipts is violative of the aforecited provision. The amount ofP956,076.04 (P239,019.01 per quarter) is not commensurate to thecost of regulation, inspection and licensing. The fee is already arevenue 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 claimexemption under Section 133 (j) of the Local Government Code.5

On June 15, 1994, petitioner filed with the Regional Trial Court of Batangas City acomplaint

6for 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 thebusiness 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 "contractorsand independent contractors" under Sec. 141 (e) and 151 does not include the authorityto collect such taxes on transportation contractors for, as defined under Sec. 131 (h), theterm "contractors" excludes transportation contractors; and, (3) the City Treasurerillegally and erroneously imposed and collected the said tax, thus meriting the immediaterefund of the tax paid.

7

Traversing the complaint, the respondents argued that petitioner cannot be exempt fromtaxes under Section 133 (j) of the Local Government Code as said exemption appliesonly to "transportation contractors and persons engaged in the transportation by hireand common carriers by air, land and water." Respondents assert that pipelines are notincluded in the term "common carrier" which refers solely to ordinary carriers such astrucks, trains, ships and the like. Respondents further posit that the term "commoncarrier" under the said code pertains to the mode or manner by which a product isdelivered to its destination.

8

On October 3, 1994, the trial court rendered a decision dismissing the complaint, rulingin 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 st rictly construed against thetaxpayer, taxes being the lifeblood of the government. Exemption maytherefore be granted only by clear and unequivocal provisions of law.

Plaintiff claims that it is a grantee of a pipeline concession underRepublic Act 387. (Exhibit A) whose concession was lately renewedby the Energy Regulatory Board (Exhibit B). Yet neither said law northe deed of concession grant any tax exemption upon the plaintiff.

Even the Local Government Code imposes a tax on franchise holdersunder Sec. 137 of the Local Tax Code. Such being the situation


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obtained in this case (exemption being unclear and equivocal) resortto distinctions or other considerations may be of help:

1. That the exemption grantedunder Sec. 133 (j) encompassesonly common carriers so as not tooverburden the riding public orcommuters with taxes.Plaintiff isnot a common carrier, but aspecial carrier extending its

services and facilities to a singlespecific or "special customer"under a "special contract."

2. The Local Tax Code of 1992was basically enacted to givemore and effective localautonomy to local governmentsthan the previous enactments, tomake them economically andfinancially viable to serve thepeople and discharge theirfunctions with a concomitantobligation to accept certaindevolution of powers, . . . So,consistent with this policy evenfranchise grantees are taxed(Sec. 137) and contractors arealso taxed under Sec. 143 (e) and151 of the Code.

9

Petitioner assailed the aforesaid decision before this Courtvia a petition for review. OnFebruary 27, 1995, we referred the case to the respondent Court of Appeals forconsideration and adjudication.

10On November 29, 1995, the respondent court

rendered a decision11

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 datedNovember 11, 1996.

13Petitioner moved for a reconsideration which was granted by this

Court in a Resolution14

of January 22, 1997. Thus, the petition was reinstated.

Petitioner claims that the respondent Court of Appeals erred in holding that (1) thepetitioner is not a common carrier or a transportation contractor, and (2) the exemptionsought 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 publicas engaged in the business of transporting persons or property from place to place, forcompensation, offering his services to the public generally.

Art. 1732 of the Civil Code defines a "common carrier" as "any person, corporation, firmor association engaged in the business of carrying or transporting passengers or goodsor 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 thebusiness of carrying goods forothers as a public employment,and must hold himself out as

ready to engage in thetransportation of goods for persongenerally as a business and notas a casual occupation;

2. He must undertake to carrygoods of the kind to which hisbusiness is confined;

3. He must undertake to carry bythe method by which his businessis conducted and over hisestablished roads; and

4. The transportation must be forhire.

15

Based on the above definitions and requirements, there is no doubt that petitioner is acommon carrier. It is engaged in the business of t ransporting or carrying goods,i.e.petroleum products, for hire as a public employment. It undertakes to carry for allpersons indifferently, that is, to all persons who choose to employ its services, andtransports the goods by land and for compensation. The fact that petitioner has a limitedclientele does not exclude it from the definition of a common carrier. In De Guzman vs.Court of Appeals

16we ruled that:

The above article (Art. 1732, Civil Code) makes nodistinction between one whose principal businessactivity is the carrying of persons or goods or both,and one who does such carrying only as an ancillaryactivity (in local idiom, as a "sideline"). Article 1732 .. . avoids making any distinction between a personor enterprise offering transportation service on aregular orscheduled basisand one offering suchservice on anoccasional, episodic or unscheduledbasis. Neither does Article 1732 distinguish betweena carrier offering its services to the "general public,"i.e., the general community or population, and onewho offers services or solicits business only from anarrow segment of the general population. We thinkthat Article 1877 deliberately refrained from makingsuch distinctions.


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So understood, the concept of "common carrier"under Article 1732 may be seen to coincide neatlywith the notion of "public service," under the PublicService Act (Commonwealth Act No. 1416, asamended) which at least partially supplements thelaw on common carriers set forth in the Civil Code.Under Section 13, paragraph (b) of the PublicService Act, "public service" includes:

every person that now orhereafter may own, operate.manage, or control in thePhilippines, for hire orcompensation, with general orlimited clientele, whetherpermanent, occasional oraccidental, and done for generalbusiness purposes, any commoncarrier, railroad, street railway,traction railway, subway motorvehicle, either for freight orpassenger, or both, with orwithout fixed route and whatevermay be its classification, freight or

carrier service of any class,express service, steamboat, orsteamship line, pontines, ferriesand water craft, engaged in thetransportation of passengers orfreight or both, shipyard, marinerepair shop, wharf or dock, iceplant, ice-refrigeration plant,canal, irrigation system gas,electric light heat and power,water supply andpowerpetroleum,sewerage system, wireor wireless communications

systems, wire or wirelessbroadcasting stations and othersimilar public services. (EmphasisSupplied)

Also, respondent's argument that the term "common carrier" as used in Section 133 (j) ofthe Local Government Code refers only to common carriers transporting goods andpassengers through moving vehicles or vessels either by land, sea or water, iserroneous.

As correctly pointed out by petitioner, the definition of "common carriers" in the CivilCode makes no distinction as to the means of t ransporting, as long as it is by land, wateror 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 consideredcommon 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 toutilize installations for the transportation ofpetroleum owned by him, but is obligated to utilizethe remaining transportation capacity pro rata forthe transportation of such other petroleum as maybe offered by others for transport, and to chargewithout discrimination such rates as may have beenapproved by the Secretary of Agriculture andNatural Resources.

Republic Act 387 also regards petroleum operation as a public utility. Pertinent portion ofArticle 7 thereof provides:

that everything relating to the exploration for andexploitation of petroleum . . . and everything relatingto the manufacture, refining, storage, ortransportation by special methods of petroleum, ishereby declared to be apublic utility. (EmphasisSupplied)

The Bureau of Internal Revenue likewise considers the petitioner a "common carrier." InBIR Ruling No. 069-83, it declared:

. . . since [petitioner] is a pipeline concessionairethat is engaged only in transporting petroleumproducts, it is considered a common carrier underRepublic Act No. 387 . . . . Such being the case, it isnot subject to withholding tax prescribed byRevenue 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 theLocal Government Code, to wit:

Sec. 133. Common Limitations on the TaxingPowers of Local Government Units.Unlessotherwise provided herein, the exercise of the taxingpowers of provinces, cities, municipalities, andbarangays shall not extend to the levy of thefollowing:

xxx xxx xxx

(j) Taxes on the

gross receiptsoftransportation


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contractors andpersonsengaged in thetransportationof passengersor freight byhire andcommoncarriers by air,land or water,except as

provided in thisCode.

The deliberations conducted in the House of Representatives on the Local GovernmentCode 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 LocalGovernment Units." . . .

MR. AQUINO (A.). Thank you Mr. Speaker.

Still on page 95, subparagraph 5, on taxes on thebusiness of transportation. This appears to be oneof those being deemed to be exempted from thetaxing powers of the local government units. Maywe know the reason why the transportationbusiness is being excluded from the taxing powersof the local government units?

MR. JAVIER (E.). Mr. Speaker, there is anexception contained in Section 121 (now Sec. 131),line 16, paragraph 5. It states that local governmentunits may not impose taxes on the business oftransportation, except as otherwise provided in thiscode.

Now, Mr. Speaker, if the Gentleman would care togo to page 98 of Book II, one can see there thatprovinces have the power to impose a tax onbusiness enjoying a franchise at the rate of notmore than one-half of 1 percent of the gross annual

receipts. So, transportation contractors who areenjoying a franchise would be subject to tax by theprovince. That is the exception, Mr. Speaker.

What we want to guard against here, Mr. Speaker,is the imposition of taxes by local government unitson the carrier business. Local government units mayimpose taxes on top of what is already beingimposed by the National Internal Revenue Codewhich is the so-called "common carriers tax." We donot want a duplication of this tax, so we justprovided for an exception under Section 125 [nowSec. 137] that a province may impose this tax at aspecific 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 localgovernment unit the imposition of business tax against common carriers is to prevent aduplication of the so-called "common carrier's tax."

Petitioner is already paying three (3%) percent common carrier's tax on its grosssales/earnings under the National Internal Revenue Code.

19To tax petitioner again on

its gross receipts in its transportation of petroleum business would defeat the purpose ofthe Local Government Code.

WHEREFORE, the petition is hereby GRANTED. The decision of the respondent Courtof Appeals dated November 29, 1995 in CA-G.R. SP No. 36801 is REVERSED and SETASIDE.

SO ORDERED.


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G.R. No. 111127 July 26, 1996

MR. & MRS. ENGRACIO FABRE, JR. and PORFIRIO CABIL,petitioners,vs.COURT OF APPEALS, THE WORD FOR THE WORLD CHRISTIAN FELLOWSHIP,INC., AMYLINE ANTONIO, JOHN RICHARDS, GONZALO GONZALES, VICENTE V.QUE, JR., ICLI CORDOVA, ARLENE GOJOCCO, ALBERTO ROXAS CORDERO,RICHARD BAUTISTA, JOCELYN GARCIA, YOLANDA CORDOVA, NOEL ROQUE,EDWARD TAN, ERNESTO NARCISO, ENRIQUETA LOCSIN, FRANCIS NORMAN O.LOPES, JULIUS CAESAR, GARCIA, ROSARIO MA. V. ORTIZ, MARIETTA C.CLAVO, ELVIE SENIEL, ROSARIO MARA-MARA, TERESITA REGALA, MELINDATORRES, MARELLA MIJARES, JOSEFA CABATINGAN, MARA NADOC, DIANEMAYO, TESS PLATA, MAYETTE JOCSON, ARLENE Y. MORTIZ, LIZA MAYO,CARLOS RANARIO, ROSAMARIA T. RADOC and BERNADETTE FERRER,respondents.

MENDOZA, J .:p

This is a petition for review on certiorari of the decision of the Court of Appeals1

in CA-GR No. 28245, dated September 30, 1992, which affirmed with modification the decisionof the Regional Trial Court of Makati, Branch 58, ordering petitioners jointly and

severally to pay damages to private respondent Amyline Antonio, and its resolutionwhich denied petitioners' motion for reconsideration for lack of merit.

Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model Mazdaminibus. They used the bus principally in connection with a bus service for schoolchildren which they operated in Manila. The couple had a driver, Porfirio J. Cabil, whomthey hired in 1981, after trying him out for two weeks, His job was to take school childrento and from the St. Scholastica's College in Malate, Manila.

On November 2, 1984 private respondent Word for the World Christian Fellowship Inc.(WWCF) arranged with petitioners for the transportation of 33 members of its YoungAdults Ministry from Manila to La Union and back in consideration of which privaterespondent paid petitioners the amount of P3,000.00.

The group was scheduled to leave on November 2, 1984, at 5:00 o'clock in theafternoon. However, as several members of the party were late, the bus did not leavethe Tropical Hut at the corner of Ortigas Avenue and EDSA until 8:00 o'clock in theevening. Petitioner Porfirio Cabil drove the minibus.

The usual route to Caba, La Union was through Carmen, Pangasinan. However, thebridge at Carmen was under repair, sot hat petitioner Cabil, who was unfamiliar with thearea (it being his first trip to La Union), was forced to take a detour through the town ofBaay in Lingayen, Pangasinan. At 11:30 that night, petitioner Cabil came upon a sharpcurve on the highway, running on a south to east direction, which he described as"siete." The road was slippery because it was raining, causing the bus, which was

running at the speed of 50 kilometers per hour, to skid to the left road shoulder. The bushit the left traffic steel brace and sign along the road and rammed the fence of one JesusEscano, then turned over and landed on its left side, coming to a full stop only after a

series of impacts. The bus came to rest off the road. A coconut tree which it had hit fellon it and smashed its front portion.

Several passengers were injured. Private respondent Amyline Antonio was thrown onthe floor of the bus and pinned down by a wooden seat which came down by a woodenseat which came off after being unscrewed. It took three persons to safely remove herfrom this portion. She was in great pain and could not move.

The driver, petitioner Cabil, claimed he did not see the curve until it was too late. He saidhe was not familiar with the area and he could not have seen the curve despite the care

he took in driving the bus, because it was dark and there was no sign on the road. Hesaid that he saw the curve when he was already within 15 to 30 meters of it. Heallegedly slowed down to 30 kilometers per hour, but it was too late.

The Lingayen police investigated the incident the next day, November 3, 1984. On thebasis of their finding they filed a criminal complaint against the driver, Porfirio Cabil. Thecase was later filed with the Lingayen Regional Trial Court. Petitioners Fabre paid JesusEscano P1,500.00 for the damage to the latter's fence. On the basis of Escano's affidavitof desistance the case against petitioners Fabre was dismissed.

Amyline Antonio, who was seriously injured, brought this case in the RTC of Makati,Metro Manila. As a result of the accident, she is now suffering from paraplegia and ispermanently paralyzed from the waist down. During the trial she described the

operations she underwent and adduced evidence regarding the cost of her treatmentand therapy. Immediately after the accident, she was taken to the Nazareth Hospital inBaay, Lingayen. As this hospital was not adequately equipped, she was transferred tothe Sto. Nio Hospital, also in the town of Ba-ay, where she was given sedatives. An x-ray was taken and the damage to her spine was determined to be too severe to betreated there. She was therefore brought to Manila, first to the Philippine GeneralHospital and later to the Makati Medical Center where she underwent an operation tocorrect the dislocation of her spine.

In its decision dated April 17, 1989, the t rial court found that:

No convincing evidence was shown that the minibus was properly checked for travel to along distance trip and that the driver was properly screened and tested before beingadmitted for employment. Indeed, all the evidence presented have shown the negligentact of the defendants which ultimately resulted to the accident subject of this case.

Accordingly, it gave judgment for private respondents holding:

Considering that plaintiffs Word for the World Christian Fellowship, Inc. and Ms. AmylineAntonio were the only ones who adduced evidence in support of their claim fordamages, the Court is therefore not in a position to award damages to the otherplaintiffs.

WHEREFORE, premises considered, the Court hereby renders judgment againstdefendants Mr. & Mrs. Engracio Fabre, Jr. and Porfirio Cabil y Jamil pursuant to articles

2176 and 2180 of the Civil Code of the Philippines and said defendants are ordered topay jointly and severally to the plaintiffs the following amount:


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In the case at bar, the Fabres, in allowing Cabil to drive the bus to La Union, apparentlydid not consider the fact that Cabil had been driving for school children only, from theirhomes to the St. Scholastica's College in Metro Manila.

7They had hired him only after a

two-week apprenticeship. They had hired him only after a two-week apprenticeship.They had tested him for certain matters, such as whether he could remember the namesof the children he would be taking to school, which were irrelevant to his qualification todrive on a long distance travel, especially considering that the trip to La Union was hisfirst. The existence of hiring procedures and supervisory policies cannot be casuallyinvoked to overturn the presumption of negligence on the part of an employer.

8

Petitioners argue that they are not liable because (1) an earlier departure (madeimpossible by the congregation's delayed meeting) could have a averted the mishap and(2) under the contract, the WWCF was directly responsible for the conduct of the trip.Neither of these contentions hold water. The hour of departure had not been fixed. Evenif it had been, the delay did not bear directly on the cause of the accident. With respectto the second contention, it was held in an early case that:

[A] person who hires a public automobile and gives the driver directions as to the placeto which he wishes to be conveyed, but exercises no other control over the conduct ofthe driver, is not responsible for acts of negligence of the latter or prevented fromrecovering for injuries suffered from a collision between the automobile and a train,caused by the negligence or the automobile driver.

9

As already stated, this case actually involves a contract of carriage. Petitioners, theFabres, did not have to be engaged in the business of public transportation for theprovisions of the Civil Code on common carriers to apply to them. As this Court hasheld:

10

Art. 1732. Common carriers are persons, corporations, firms orassociations engaged in the business of carrying or transportingpassengers 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 principalbusiness activity is the carrying of persons or goods or both, and onewho does such carrying only as an ancillary activity (in local idiom, as

"a sideline"). Article 1732 also carefully avoids making any distinctionbetween a person or enterprise offering transportation service on aregular or scheduled basis and one offering such service on anoccasional, episodic or unscheduled basis. Neither does Article 1732distinguish between a carrier offering its services to the "generalpublic," i.e., the general community or population, and one who offersservices or solicits business only from a narrow segment of thegeneral population. We think that Article 1732 deliberately refrainedfrom making such distinctions.

As common carriers, the Fabres were found to exercise "extraordinarydiligence" for the safe transportation of the passengers to theirdestination. This duty of care is not excused by proof that they

exercise the diligence of a good father of the family in the selectionand supervision of their employee. As Art. 1759 of the Code provides:

Common carriers are liable for the death of or injuries to passengersthrough the negligence or willful acts of the former's employeesalthough such employees may have acted beyond the scope of theirauthority or in violation of the orders of the common carriers.

This liability of the common carriers does not cease upon proof thatthey exercised all the diligence of a good father of a family in theselection and supervision of their employees.

The same circumstances detailed above, supporting the finding of the trial court and of

the appellate court that petitioners are liable under Arts. 2176 and 2180 for quasi delict,fully justify findings them guilty of breach of contract of carriage under Arts. 1733, 1755and 1759 of the Civil Code.

Secondly, we sustain the award of damages in favor of Amyline Antonio. However, wethink the Court of Appeals erred in increasing the amount of compensatory damagesbecause private respondents did not question this award as inadequate.

11To the

contrary, the award of P500,000.00 for compensatory damages which the Regional TrialCourt made is reasonable considering the contingent nature of her income as a casualemployee of a company and as distributor of beauty products and the fact that thepossibility that she might be able to work again has not been foreclosed. In fact shetestified that one of her previous employers had expressed willingness to employ heragain.

With respect to the other awards, while the decisions of the trial court and the Court ofAppeals do not sufficiently indicate the factual and legal basis for them, we find that theyare nevertheless supported by evidence in the records of this case. Viewed as an actionfor quasi delict, this case falls squarely within the purview of Art. 2219(2) providing forthe payment of moral damages in cases of quasi delict. On the theory that petitionersare liable for breach of contract of carriage, the award of moral damages is authorizedby Art. 1764, in relation to Art. 2220, since Cabil's gross negligence amounted to badfaith.

12Amyline Antonio's testimony, as well as the testimonies of her father and

copassengers, fully establish the physical suffering and mental anguish she endured asa result of the injuries caused by petitioners' negligence.

The award of exemplary damages and attorney's fees was also properly made.

However, for the same reason that it was error for the appellate court to increase theaward of compensatory damages, we hold that it was also error for it to increase theaward of moral damages and reduce the award of attorney's fees, inasmuch as privaterespondents, in whose favor the awards were made, have not appealed.

13

As above stated, the decision of the Court of Appeals can be sustained either on thetheory of quasi delict or on that of breach of contract. The question is whether, as thetwo courts below held, petitioners, who are the owners and driver of the bus, may bemade to respond jointly and severally to private respondent. We hold that they may be.In Dangwa Trans.Co.Inc.v.Court of Appeals,

14on facts similar to those in this case,

this Court held the bus company and the driver jointly and severally liable for damagesfor injuries suffered by a passenger. Again, in Bachelor Express, Inc. v. Court ofAppeals

15a driver found negligent in failing to stop the bus in order to let off passengers

when a fellow passenger ran amuck, as a result of which the passengers jumped out ofthe speeding bus and suffered injuries, was held also jointly and severally liable with thebus company to the injured passengers.


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The same rule of liability was applied in situations where the negligence of the driver ofthe bus on which plaintiff was riding concurred with the negligence of a third party whowas the driver of another vehicle, thus causing an accident. InAnuran v. Buo,

16

Batangas Laguna Tayabas Bus Co. v. Intermediate Appellate Court,17and Metro

Manila Transit Corporation v.Court of Appeals,18

the bus company, its driver, theoperator of the other vehicle and the driver of the vehicle were jointly and severally heldliable to the injured passenger or the latters' heirs. The basis of this allocation of liabilitywas explained in Viluan v. Court of Appeals,

19thus:

Nor should it make any difference that the liability of petitioner [busowner] springs from contract while that of respondents [owner anddriver of other vehicle] arises from quasi-delict. As early as 1913, wealready ruled in Gutierrez vs. Gutierrez, 56 Phil. 177, that in case ofinjury to a passenger due to the negligence of the driver of the bus onwhich he was riding and of the driver of another vehicle, the drivers aswell as the owners of the two vehicles are jointly and severally liablefor damages. Some members of the Court, though, are of the viewthat under the circumstances they are liable on quasi-delict.

20

It is true that in Philippine Rabbit Bus Lines, Inc.v. Court of Appeals21

this Courtexonerated the jeepney driver from liability to the injured passengers and their familieswhile holding the owners of the jeepney jointly and severally liable, but that is becausethat case was expressly tried and decided exclusively on the theory of culpa contractual.As this Court there explained:

The trial court was therefore right in finding that Manalo (the driver) and spousesMangune and Carreon (the jeepney owners) were negligent. However, its ruling thatspouses Mangune and Carreon are jointly and severally liable with Manalo is erroneous.The driver cannot be held jointly and severally liable with carrier in case of breach of thecontract of carriage. The rationale behind this is readily discernible. Firstly, the contractof carriage is between the carrier is exclusively responsible therefore to the passenger,even if such breach be due to the negligence of his driver (see Viluan v. The Court ofAppeals, et al., G.R. Nos. L-21477-81, April 29, 1966, 16 SCRA 742).

22

As in the case of BLTB, private respondents in this case and her coplaintiffs did notstake out their claim against the carrier and the driver exclusively on one theory, much

less on that of breach of contract alone. After all, it was permitted for them to allegealternative causes of action and join as many parties as may be liable on such causes ofaction

23so long as private respondent and her coplaintiffs do not recover twice for the

same injury. What is clear from the cases is the intent of the plaintiff there to recoverfrom both the carrier and the driver, thus, justifying the holding that the carrier and thedriver were jointly and severally liable because their separate and distinct acts concurredto produce the same injury.

WHEREFORE, the decision of the Court of Appeals is AFFIRMED with MODIFICATIONas to award of damages. Petitioners are ORDERED to PAY jointly and severally theprivate respondent Amyline Antonio the following amounts:

1) P93,657.11 as actual damages;

2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff AmylineAntonio;

3) P20,000.00 as moral damages;

4) P20,000.00 as exemplary damages;

5) 25% of the recoverable amount as attorney's fees; and

6) costs of suit.

SO ORDERED.


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G.R. No. L-47822 December 22, 1988

PEDRO DE GUZMAN, petitioner,vs.COURT OF APPEALS and ERNESTO CENDANA, respondents.

Vicente D. Millora for petitioner.

Jacinto Callanta for private respondent.

FELICIANO, J .:

Respondent Ernesto Cendana, a junk dealer, was engaged in buying up used bottlesand scrap metal in Pangasinan. Upon gathering sufficient quantities of such scrapmaterial, 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 tripto Pangasinan, respondent would load his vehicles with cargo which various merchantswanted delivered to differing establishments in Pangasinan. For that service, respondentcharged freight rates which were commonly lower than regular commercial rates.

Sometime in November 1970, petitioner Pedro de Guzman a merchant and authorizeddealer of General Milk Company (Philippines), Inc. in Urdaneta, Pangasinan, contractedwith respondent for the hauling of 750 cartons of Liberty filled milk f rom a warehouse ofGeneral Milk in Makati, Rizal, to petitioner's establishment in Urdaneta on or before 4December 1970. Accordingly, on 1 December 1970, respondent loaded in Makati themerchandise on to his trucks: 150 cartons were loaded on a truck driven by respondenthimself, while 600 cartons were placed on board the other truck which was driven byManuel Estrada, respondent's driver and employee.

Only 150 boxes of Liberty filled milk were delivered to petitioner. The other 600 boxesnever reached petitioner, since the truck which carried these boxes was hijackedsomewhere along the MacArthur Highway in Paniqui, Tarlac, by armed men who tookwith them the truck, its driver, his helper and the cargo.

On 6 January 1971, petitioner commenced action against private respondent in theCourt of First Instance of Pangasinan, demanding payment of P 22,150.00, the claimedvalue of the lost merchandise, plus damages and attorney's fees. Petitioner argued thatprivate respondent, being a common carrier, and having failed to exercise theextraordinary diligence required of him by the law, should be held liable for the value ofthe undelivered goods.

In his Answer, private respondent denied that he was a common carrier and argued thathe could not be held responsible for the value of the lost goods, such loss having beendue to force majeure.

On 10 December 1975, the trial court rendered a Decision

1

finding private respondentto be a common carrier and holding him liable for the value of the undelivered goods (P22,150.00) as well as for P 4,000.00 as damages and P 2,000.00 as attorney's fees.

On appeal before the Court of Appeals, respondent urged that the trial court had erred inconsidering him a common carrier; in finding that he had habitually offered truckingservices 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 respondenthad been engaged in transporting return loads of freight "as a casualoccupationa 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 thefollowing 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 undeliveredcargo. (Rollo, p. 111)

We consider first the issue of whether or not private respondent Ernesto Cendana may,under the facts earlier set forth, be properly characterized as a common carrier.

The Civil Code defines "common carriers" in the following terms:

Article 1732. Common carriers are persons, corporations, firms orassociations engaged in the business of carrying or transportingpassengers 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 whoseprincipalbusiness activity isthe carrying of persons or goods or both, and one who does such carrying only as anancillaryactivity (in local Idiom as "a sideline"). Article 1732 also carefully avoids makingany distinction between a person or enterprise offering transportation service on aregular or scheduled basisand one offering such service on an occasional, episodic orunscheduled basis. Neither does Article 1732 distinguish between a carrier offering itsservices 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 generalpopulation. We think that Article 1733 deliberaom making such distinctions.

So understood, the concept of "common carrier" under Article 1732 may be seen tocoincide neatly with the notion of "public service," under the Public Service Act(Commonwealth Act No. 1416, as amended) which at least partially supplements the lawon common carriers set forth in the Civil Code. Under Section 13, paragraph (b) of thePublic Service Act, "public service" includes:

... every person that now or hereafter may own, operate, manage, orcontrol in the Philippines, for hire or compensation, with general orlimited clientele, whether permanent, occasional or accidental, anddone for general business purposes, any common carrier,railroad,

street railway, traction railway, subway motor vehicle, either for freightor passenger, or both, with or without fixed route and whatever maybe its classification, freight or carrier service of any class, express


10/24

service, steamboat, or steamship line, pontines, ferries and watercraft, 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, heatand power, water supply and power petroleum, sewerage system,wire or wireless communications systems, wire or wirelessbroadcasting stations and other similar public services. ... (Emphasissupplied)

It appears to the Court that private respondent is properly characterized as a commoncarrier even though he merely "back-hauled" goods for other merchants from Manila toPangasinan, although such back-hauling was done on a periodic or occasional ratherthan regular or scheduled manner, and even though private respondent'sprincipaloccupation was not the carriage of goods for others. There is no dispute that privaterespondent charged his customers a fee for hauling their goods; that fee frequently fellbelow commercial freight rates is not relevant here.

The Court of Appeals referred to the fact that private respondent held no certificate ofpublic 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 theCivil Code provisions governing common carriers. That liability arises the moment aperson or firm acts as a common carrier, without regard to whether or not such carrierhas also complied with the requirements of the applicable regulatory statute andimplementing regulations and has been granted a certificate of public convenience orother franchise. To exempt private respondent from the liabilities of a common carrierbecause he has not secured the necessary certificate of public convenience, would beoffensive to sound public policy; that would be to reward private respondent precisely forfailing to comply with applicable statutory requirements. The business of a commoncarrier 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 lawimposes duties and liabilities upon common carriers for the safety and protection ofthose who utilize their services and the law cannot allow a common carrier to rendersuch duties and liabilities merely facultative by simply failing to obtain the necessarypermits and authorizations.

We turn then to the liability of private respondent as a common carrier.

Common carriers, "by the nature of their business and for reasons of public policy"2are

held to a very high degree of care and diligence ("extraordinary diligence") in thecarriage of goods as well as of passengers. The specific import of extraordinarydiligence in the care of goods transported by a common carrier is, according to Article1733, "further expressed in Articles 1734,1735 and 1745, numbers 5, 6 and 7" of theCivil Code.

Article 1734 establishes the general rule that common carriers are responsible for theloss, destruction or deterioration of the goods which they carry, "unlessthe same is dueto 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, whetherinternational or civil;

(3) Act or omission of the shipper or owner of thegoods;(4) The character-of the goods or defects in thepacking 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 ordeterioration 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 offorce 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 ofthe preceding article, if the goods are lost, destroyed or deteriorated,common carriers are presumed to have been at fault or to have actednegligently, unless they prove that they observed extraordinarydiligenceas required in Article 1733. (Emphasis supplied)

Applying the above-quoted Articles 1734 and 1735, we note firstly that the specificcause alleged in the instant casethe hijacking of the carrier's truck does not fallwithin any of the five (5) categories of exempting causes listed in Article 1734. It wouldfollow, therefore, that the hijacking of the carrier's vehicle must be dealt with under theprovisions of Article 1735, in other words, that the private respondent as common carrieris 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 privaterespondent.

Petitioner insists that private respondent had not observed extraordinary diligence in thecare 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 truckcarrying the 600 cartons of Liberty filled milk. We do not believe, however, that in theinstant case, the standard of extraordinary diligence required private respondent toretain a security guard to ride with the truck and to engage brigands in a firelight at therisk 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 dutyof 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, underArticle 1733, given additional specification not only by Articles 1734 and 1735 but alsoby Article 1745, numbers 4, 5 and 6, Article 1745 provides in relevant part:

Any of the following or similar stipulations shall be consideredunreasonable, 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;


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(6) that the common carrier's liability for actscommitted by thieves, or of robberswho donotactwith grave or irresistiblethreat, violence or force, isdispensed with or diminished; and

(7) that the common carrier shall not responsible forthe loss, destruction or deterioration of goods onaccount of the defective condition of the car vehicle,ship, airplane or other equipment used in thecontract of carriage. (Emphasis supplied)

Under Article 1745 (6) above, a common carrier is held responsibleand will not beallowed to divest or to diminish such responsibilityeven for acts of strangers likethieves or robbers, exceptwhere such thieves or robbers in fact acted "with grave orirresistible threat, violence or force." We believe and so hold that the limits of the duty ofextraordinary diligence in the vigilance over the goods carried are reached where thegoods 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 respondentwhich carried petitioner's cargo. The record shows that an information for robbery inband 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 willfullyand unlawfully taking and carrying away with them the second truck, driven by ManuelEstrada and loaded with the 600 cartons of Liberty filled milk destined for delivery atpetitioner's store in Urdaneta, Pangasinan. The decision of the trial court shows that theaccused acted with grave, if not irresistible, threat, violence or force.

3Three (3) of the

five (5) hold-uppers were armed with firearms. The robbers not only took away the t ruckand its cargo but also kidnapped the driver and his helper, detaining them for severaldays and later releasing them in another province (in Zambales). The hijacked truck wassubsequently found by the police in Quezon City. The Court of First Instance convictedall the accused of robbery, though not of robbery in band.

4

In these circumstances, we hold that the occurrence of the loss must reasonably beregarded 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 madeabsolute insurers against all risks of travel and of transport of goods, and are not heldliable for acts or events which cannot be foreseen or are inevitable, provided that theyshall have complied with the rigorous standard of extraordinary diligence.

We, therefore, agree with the result reached by the Court of Appeals that privaterespondent Cendana is not liable for the value of the undelivered merchandise whichwas lost because of an event entirely beyond private respondent's control.

ACCORDINGLY, the Petition for Review on certiorari is hereby DENIED and theDecision of the Court of Appeals dated 3 August 1977 is AFFIRMED. Nopronouncement as to costs.

SO ORDERED.


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G.R. No. 150403 January 25, 2007

CEBU SALVAGE CORPORATION, Petitioner,

vs.PHILIPPINE HOME ASSURANCE CORPORATION,Respondent.

D E C I S I O N

CORONA,J.:

May a carrier be held liable for the loss of cargo resulting from the sinking of a ship it does notown?

This is the issue presented for the Courts resolution in this petition for review on certiorari1

assailing the March 16, 2001 decision2and September 17, 2001 resolution3of the Court of

Appeals (CA) in CA-G.R. CV No. 40473 which in turn affirmed the December 27, 1989decision4of the Regional Trial Court (RTC), Branch 145, Makati, Metro Manila.5

The pertinent facts follow.

On November 12, 1984, petitioner Cebu Salvage Corporation (as carrier) and Maria Cristina

Chemicals Industries, Inc. [MCCII] (as charterer) entered into a voyage charter6wherein

petitioner was to load 800 to 1,100 metric tons of silica quartz on board the M/T Espiritu Santo7at Ayungon, Negros Occidental for transport to and discharge at Tagoloan, Misamis Oriental toconsignee Ferrochrome Phils., Inc.8

Pursuant to the contract, on December 23, 1984, petitioner received and loaded 1,100 metric tonsof silica quartz on board the M/T Espiritu Santo which left Ayungon for Tagoloan the next day.9

The shipment never reached its destination, however, because the M/T Espiritu Santo sank in the

afternoon of December 24, 1984 off the beach of Opol, Misamis Oriental, resulting in the total

loss of the cargo.10

MCCII filed a claim for the loss of the shipment with its insurer, respondent Philippine Home

Assurance Corporation.11Respondent paid the claim in the amount of P211,500 and was

subrogated to the rights of MCCII.12Thereafter, it filed a case in the RTC13against petitioner for

reimbursement of the amount it paid MCCII.

After trial, the RTC rendered judgment in favor of respondent. It ordered petitioner to pay

respondent P211,500 plus legal interest, attorneys fees equivalent to 25% of the award and costs

of suit.

On appeal, the CA affirmed the decision of the RTC. Hence, this petition.

Petitioner and MCCII entered into a "voyage charter," also known as a contract of affreightment

wherein the ship was leased for a single voyage for the conveyance of goods, in consideration ofthe payment of freight.14Under a voyage charter, the shipowner retains the possession, command

and navigation of the ship, the charterer or freighter merely having use of the space in the vessel

in return for his payment of freight.15

An owner who retains possession of the ship remains liableas carrier and must answer for loss or non-delivery of the goods received for transportation.16

Petitioner argues that the CA erred when it affirmed the RTC finding that the voyage charter it

entered into with MCCII was a contract of carriage.17It insists that the agreement was merely a

contract of hire wherein MCCII hired the vessel from its owner, ALS Timber Enterprises

(ALS).18Not being the owner of the M/T Espiritu Santo, petitioner did not have control and

supervision over the vessel, its master and crew.19Thus, it could not be held liable for the loss ofthe shipment caused by the sinking of a ship it did not own.

We disagree.

Based on the agreement signed by the parties and the testimony of petitioners operations

manager, it is clear that it was a contract of carriage petitioner signed with MCCII. It activelynegotiated and solicited MCCIIs account, offered its services to ship the silica quartz andproposed to utilize the M/T Espiritu Santo in lieu of the M/T Seebees or the M/T Shirley (aspreviously agreed upon in the voyage charter) since these vessels had broken down.20

There is no dispute that petitioner was a common carrier. At the time of the loss of the cargo, it

was engaged in the business of carrying and transporting goods by water, for compensation, andoffered its services to the public.21

From the nature of their business and for reasons of public policy, common carriers are bound to

observe extraordinary diligence over the goods they transport according to the circumstances of

each case.22In the event of loss of the goods, common carriers are responsible, unless they canprove that this was brought about by the causes specified in Article 1734 of the Civil Code.23In

all other cases, common carriers are presumed to be at fault or to have acted negligently, unlessthey prove that they observed extraordinary diligence.24

Petitioner was the one which contracted with MCCII for the transport of the cargo. It had control

over what vessel it would use. All throughout its dealings with MCCII, it represented itself as a

common carrier. The fact that it did not own the vessel it decided to use to consummate the

contract of carriage did not negate its character and duties as a common carrier. The MCCII(respondents subrogor) could not be reasonably expected to inquire about the ownership of the

vessels which petitioner carrier offered to utilize. As a practical matter, it is very difficult and

often impossible for the general public to enforce its rights of action under a contract of carriageif it should be required to know who the actual owner of the vessel is.25In fact, in this case, thevoyage charter itself denominated petitioner as the "owner/operator" of the vessel.26

Petitioner next contends that if there was a contract of carriage, then it was between MCCII andALS as evidenced by the bill of lading ALS issued.27

Again, we disagree.

The bill of lading was merely a receipt issued by ALS to evidence the fact that the goods had

been received for transportation. It was not signed by MCCII, as in fact it was simply signed bythe supercargo of ALS.28This is consistent with the fact that MCCII did not contract directly with

ALS. While it is true that a bill of lading may serve as the contract of carriage between the

parties,29it cannot prevail over the express provision of the voyage charter that MCCII and

petitioner executed:

[I]n cases where a Bill of Lading has been issued by a carrier covering goods shipped aboard avessel under a charter party, and the charterer is also the holder of the bill of lading, "the bill of

lading operates as the receipt for the goods, and as document of title passing the property of the
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goods, but not as varying the contract between the charterer and the shipowner." The Bi ll of

Lading becomes, therefore, only a receipt and not the contract of carriage in a charter of the entire

vessel, for the contract is the Charter Party, and is the law between the parties who are bound by

its terms and condition provided that these are not contrary to law, morals, good customs, public

order and public policy.30

Finally, petitioner asserts that MCCII should be held liable for its own loss since the voyage

charter stipulated that cargo insurance was for the charterers account.31This deserves scantconsideration. This simply meant that the charterer would take care of having the goods insured.

It could not exculpate the carrier from liability for the breach of its contract of carriage. The law,in fact, prohibits it and condemns it as unjust and contrary to public policy.32

To summarize, a contract of carriage of goods was shown to exist; the cargo was loaded on board

the vessel; loss or non-delivery of the cargo was proven; and petitioner failed to prove that it

exercised extraordinary diligence to prevent such loss or that it was due to some casualty orforce

majeure. The voyage charter here being a contract of affreightment, the carrier was answerable

for the loss of the goods received for transportation.33

The idea proposed by petitioner is not only preposterous, it is also dangerous. It says that a carrier

that enters into a contract of carriage is not liable to the charterer or shipper if it does not own the

vessel it chooses to use. MCCII never dealt with ALS and yet petitioner insists that MCCIIshould sue ALS for reimbursement for its loss. Certainly, to permit a common carrier to escape

its responsibility for the goods it agreed to transport (by the expedient of alleging non-ownership

of the vessel it employed) would radically derogate from the carrier's duty of extraordinarydiligence. It would also open the door to collusion between the carrier and the supposed owner

and to the possible shifting of liability from the carrier to one without any financial capability to

answer for the resulting damages.34

WHEREFORE, the petition is hereby DENIED.

Costs against petitioner.

SO ORDERED.
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G.R. No. 145804 February 6, 2003

LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, petitioners,

vs.

MARJORIE NAVIDAD, Heirs of the Late NICANOR NAVIDAD & PRUDENTSECURITY AGENCY,respondents.

D E C I S I O N

VITUG, J.:

The case before the Court is an appeal from the decision and resolution of the Court of Appeals,

promulgated on 27 April 2000 and 10 October 2000, respectively, in CA-G.R. CV No. 60720,

entitled "Marjorie Navidad and Heirs of the Late Nicanor Navidad vs. Rodolfo Roman, et. al.,"

which has modified the decision of 11 August 1998 of the Regional Trial Court, Branch 266,

Pasig City, exonerating Prudent Security Agency (Prudent) from liability and finding Light Rail

Transit Authority (LRTA) and Rodolfo Roman liable for damages on account of the death ofNicanor Navidad.

On 14 October 1993, about half an hour past seven oclock in the evening, Nicanor Navidad, then

drunk, entered the EDSA LRT stat ion after purchasing a "token" (representing payment of the

fare). While Navidad was standing on the platform near the LRT tracks, Junelito Escartin, the

security guard assigned to the area approached Navidad. A misunderstanding or an altercation

between the two apparently ensued that led to a fist fight. No evidence, however, was adduced toindicate how the fight started or who, between the two, delivered the first blow or how Navidad

later fell on the LRT tracks. At the exact moment that Navidad fell, an LRT train, operated by

petitioner Rodolfo Roman, was coming in. Navidad was struck by the moving train, and he waskilled instantaneously.

On 08 December 1994, the widow of Nicanor, herein respondent Marjorie Navidad, along with

her children, filed a complaint for damages against Junelito Escartin, Rodolfo Roman, the LRTA,the Metro Transit Organization, Inc. (Metro Transit), and Prudent for the death of her husband.

LRTA and Roman filed a counterclaim against Navidad and a cross-claim against Escartin and

Prudent. Prudent, in its answer, denied liability and averred that it had exercised due diligence inthe selection and supervision of its security guards.

The LRTA and Roman presented their evidence while Prudent and Escartin, instead of presenting

evidence, filed a demurrer contending that Navidad had failed to prove that Escartin was

negligent in his assigned task. On 11 August 1998, the trial court rendered its decision; itadjudged:

"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the defendants

Prudent Security and Junelito Escartin ordering the latter to pay jointly and severally theplaintiffs the following:

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

2) Compensatory damages of P443,520.00;

3) Indemnity for the death of Nicanor Navidad in the sum of P50,000.00;

"b) Moral damages of P50,000.00;

"c) Attorneys fees of P20,000;

"d) Costs of suit.

"The complaint against defendants LRTA and Rodolfo Roman are dismissed for lack of merit.

"The compulsory counterclaim of LRTA and Roman are likewise dismissed."1

Prudent appealed to the Court of Appeals. On 27 August 2000, the appellate court promulgated

its now assailed decision exonerating Prudent from any liability for the death of Nicanor Navidadand, instead, holding the LRTA and Roman jointly and severally liable thusly:

"WHEREFORE, the assailed judgment is hereby MODIFIED, by exonerating the appellants from

any liability for the death of Nicanor Navidad, Jr. Instead, appellees Rodolfo Roman and the

Light Rail Transit Authority (LRTA) are held liable for his death and are hereby directed to pay

jointly and severally to the plaintiffs-appellees, the following amounts:

a) P44,830.00 as actual damages;

b) P50,000.00 as nominal damages;

c) P50,000.00 as moral damages;

d) P50,000.00 as indemnity for the death of the deceased; and

e) P20,000.00 as and for attorneys fees."2

The appellate court ratiocinated that while the deceased might not have then as yet boarded the

train, a contract of carriage theretofore had already existed when the victim entered the place

where passengers were supposed to be after paying the fare and getting the corresponding token

therefor. In exempting Prudent from liability, the court stressed that there was nothing to link the

security agency to the death of Navidad. It said that Navidad failed to show that Escartin inflicted

fist blows upon the victim and the evidence merely established the fact of death of Navidad by

reason of his having been hit by the train owned and managed by the LRTA and operated at the

time by Roman. The appellate court faulted petitioners for their failure to present expert evidenceto establish the fact that the application of emergency brakes could not have stopped the train.

The appellate court denied petitioners motion for reconsideration in its resolution of 10 October2000.

In their present recourse, petitioners recite alleged errors on the part of the appellate court; viz:

"I.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY DISREGARDING THEFINDINGS OF FACTS BY THE TRIAL COURT
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"II.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THATPETITIONERS ARE LIABLE FOR THE DEATH OF NICANOR NAVIDAD, JR.

"III.

THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THATRODOLFO ROMAN IS AN EMPLOYEE OF LRTA."3

Petitioners would contend that the appellate court ignored the evidence and the factual findings of

the trial court by holding them liable on the basis of a sweeping conclusion that the presumption

of negligence on the part of a common carrier was not overcome. Petitioners would insist that

Escartins assault upon Navidad, which caused the latter to fall on the tracks, was an act of a

stranger that could not have been foreseen or prevented. The LRTA would add that the appellate

courts conclusion on the existence of an employer-employee relationship between Roman and

LRTA lacked basis because Roman himself had testified being an employee of Metro Transit andnot of the LRTA.

Respondents, supporting the decision of the appellate court, contended that a contract of carriage

was deemed created from the moment Navidad paid the fare at the LRT station and entered the

premises of the latter, entitling Navidad to all the rights and protection under a contractual

relation, and that the appellate court had correctly held LRTA and Roman liable for the death of

Navidad in failing to exercise extraordinary diligence imposed upon a common carrier.

Law and jurisprudence dictate that a common carrier, both from the nature of its business and for

reasons of public policy, is burdened with the duty of exercising utmost diligence in ensuring the

safety of passengers.4The Civil Code, governing the liability of a common carrier for death of orinjury to its passengers, provides:

"Article 1755. A common carrier i s bound to carry the passengers safely as far as human care and

foresight can provide, using the utmost diligence of very cautious persons, with a due regard for

all the circumstances.

"Article 1756. In case of death of or injuries to passengers, common carriers are presumed to

have been at fault or to have acted negligently, unless they prove that they observed extraordinarydiligence as prescribed in articles 1733 and 1755."

"Article 1759. Common carriers are liable for the death of or injuries to passengers through the

negligence or willful acts of the formers employees, although such employees may have acted

beyond the scope of their authority or in violation of the orders of the common carriers.

"This liability of the common carriers does not cease upon proof that they exercised all thediligence of a good father of a family in the selection and supervision of their employees."

"Article 1763. A common carrier is responsible for injuries suffered by a passenger on account of

the willful acts or negligence of other passengers or of strangers, if the common carriersemployees through the exercise of the diligence of a good father of a family could have preventedor stopped the act or omission."

The law requires common carriers to carry passengers safely using the utmost diligence of very

cautious persons with due regard for all circumstances.5Such duty of a common carrier to

provide safety to its passengers so obligates it not only during the course of the trip but for so

long as the passengers are within its premises and where they ought to be in pursuance to the

contract of carriage.6The statutory provisions render a common carrier liable for death of or

injury to passengers (a) through the negligence or wilful acts of its employees or b) on account of

wilful acts or negligence of other passengers or of strangers if the common carriers employees

through the exercise of due diligence could have prevented or stopped the act or omission.7In

case of such death or injury, a carrier is presumed to have been at fault or been negligent, and8by

simple proof of injury, the passenger is relieved of the duty to still establish the fault or

negligence of the carrier or of its employees and the burden shifts upon the carrier to prove that

the injury is due to an unforeseen event or to force majeure.9

In the absence of satisfactoryexplanation by the carrier on how the accident occurred, which petitioners, according to theappellate court, have failed to show, the presumption would be that it has been at fault,10an

exception from the general rule that negligence must be proved.11

The foundation of LRTAsliability is the contract of carriage and its obligation to indemnify the

victim arises from the breach of that contract by reason of its failure to exercise the high diligencerequired of the common carrier. In the discharge of its commitment to ensure the safety of

passengers, a carrier may choose to hire its own employees or avail itself of the services of an

outsider or an independent firm to undertake the task. In either case, the common carrier is not

relieved of its responsibilities under the contract of carriage.

Should Prudent be made likewise liable? If at all, that liability could only be for tort under the

provisions of Article 217612and related provisions, in conjunction with Article 2180,13of theCivil Code. The premise, however, for the employers liability is negligence or fault on the partof the employee. Once such fault i s established, the employer can then be made liable on the

basis of the presumption juris tantum that the employer failed to exercise diligentissimi patris

families in the selection and supervision of its employees. The liability is primary and can only benegated by showing due diligence in the selection and supervision of the employee, a factual

matter that has not been shown. Absent such a showing, one might ask further, how then must the

liability of the common carrier, on the one hand, and an independent contractor, on the other

hand, be described? It would be solidary. A contractual obligation can be breached by tort and

when the same act or omission causes the injury, one resulting in culpa contractual and the other

in culpa aquiliana, Article 219414of the Civil Code can well apply.15In fine, a liability for tort

may arise even under a contract, where tor t is that which breaches the contract.16Stated

differently, when an act which constitutes a breach of contract would have itself constituted the

source of a quasi-delictual liability had no contract existed between the parties, the contract canbe said to have been breached by tort, thereby allowing the rules on tort to apply.17

Regrettably for LRT, as well as perhaps the surviving spouse and heirs of the late NicanorNavidad, this Court is concluded by the factual finding of the Court of Appeals that "there is

nothing to link (Prudent) to the death of Nicanor (Navidad), for the reason that the negligence of

its employee, Escartin, has not been duly proven x x x." This finding of the appellate court is notwithout substantial justification in our own review of the records of the case.

There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of any

culpable act or omission, he must also be absolved from liability. Needless to say, the contractual

tie between the LRT and Navidad is not itself a juridical relation between the latter and Roman;thus, Roman can be made liable only for his own fault or negligence.

The award of nominal damages in addition to actual damages is untenable. Nominal damages are

adjudicated in order that a right of the plaintiff, which has been violated or invaded by the
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defendant, may be vindicated or recognized, and not for the purpose of indemnifying the plaintiff

for any loss suffered by him.18It is an established rule that nominal damages cannot co-exist withcompensatory damages.19

WHEREFORE, the assailed decision of the appellate court is AFFIRMED with

MODIFICATION but only in that (a) the award of nominal damages is DELETED and (b)petitioner Rodolfo Roman is absolved from liability. No costs.

SO ORDERED.
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G.R. No. 95582 October 7, 1991

DANGWA TRANSPORTATION CO., INC. and THEODORE LARDIZABAL yMALECDAN, petitioners,vs.COURT OF APPEALS, INOCENCIA CUDIAMAT, EMILIA CUDIAMAT BANDOY,FERNANDO CUDLAMAT, MARRIETA CUDIAMAT, NORMA CUDIAMAT, DANTECUDIAMAT, SAMUEL CUDIAMAT and LIGAYA CUDIAMAT, all Heirs of the latePedrito Cudiamat represented by Inocencia Cudiamat,respondents.

Francisco S. Reyes Law Office for petitioners.

Antonio C. de Guzman for private respondents.

REGALADO, J .:p

On May 13, 1985, private respondents filed a complaint 1for damages againstpetitioners for the death of Pedrito Cudiamat as a result of a vehicular accident whichoccurred on March 25, 1985 at Marivic, Sapid, Mankayan, Benguet. Among others, itwas alleged that on said date, while petitioner Theodore M. Lardizabal was driving a

passenger bus belonging to petitioner corporation in a reckless and imprudent mannerand without due regard to traffic rules and regulations and safety to persons andproperty, it ran over its passenger, Pedrito Cudiamat. However, instead of bringingPedrito immediately to the nearest hospital, the said driver, in utter bad faith and withoutregard to the welfare of the victim, first brought his other passengers and cargo to theirrespective destinations before banging said victim to the Lepanto Hospital where heexpired.

On the other hand, petitioners alleged that they had observed and continued to observethe extraordinary diligence required in the operation of the transportation company andthe supervision of the employees, even as they add that they are not absolute insurersof the safety of the public at large. Further, it was alleged that it was the victim's owncarelessness and negligence which gave rise to the subject incident, hence they prayedfor the dismissal of the complaint plus an award of damages in their favor by way of acounterclaim.

On July 29, 1988, the trial court rendered a decision, effectively in favor of petitioners,with this decretal portion:

IN VIEW OF ALL THE FOREGOING, judgm

transpo 1st set

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