G.R. No.

L-65295 March 10, 1987

PHOENIX CONSTRUCTION, INC. and ARMANDO U. CARBONEL, petitioners,
vs.
THE INTERMEDIATE APPELLATE COURT and LEONARDO DIONISIO, respondents.

FELICIANO, J:
In the early morning of 15 November 1975 at about 1:30 a.m. private respondent
Leonardo Dionisio was on his way home he lived in 1214-B Zamora Street, Bangkal,
Makati from a cocktails-and-dinner meeting with his boss, the general manager of a
marketing corporation. During the cocktails phase of the evening, Dionisio had taken "a shot
or two" of liquor. Dionisio was driving his Volkswagen car and had just crossed the
intersection of General Lacuna and General Santos Streets at Bangkal, Makati, not far from
his home, and was proceeding down General Lacuna Street, when his car headlights (in his
allegation) suddenly failed. He switched his headlights on "bright" and thereupon he saw a
Ford dump truck looming some 2-1/2 meters away from his car. The dump truck, owned by
and registered in the name of petitioner Phoenix Construction Inc. ("Phoenix"), was parked
on the right hand side of General Lacuna Street (i.e., on the right hand side of a person
facing in the same direction toward which Dionisio's car was proceeding), facing the
oncoming traffic. The dump truck was parked askew (not parallel to the street curb) in such
a manner as to stick out onto the street, partly blocking the way of oncoming traffic. There
were no lights nor any so-called "early warning" reflector devices set anywhere near the
dump truck, front or rear. The dump truck had earlier that evening been driven home by
petitioner Armando U. Carbonel, its regular driver, with the permission of his employer
Phoenix, in view of work scheduled to be carried out early the following morning, Dionisio
claimed that he tried to avoid a collision by swerving his car to the left but it was too late and
his car smashed into the dump truck. As a result of the collision, Dionisio suffered some
physical injuries including some permanent facial scars, a "nervous breakdown" and loss of
two gold bridge dentures.
Dionisio commenced an action for damages in the Court of First Instance of Pampanga
basically claiming that the legal and proximate cause of his injuries was the negligent
manner in which Carbonel had parked the dump truck entrusted to him by his employer
Phoenix. Phoenix and Carbonel, on the other hand, countered that the proximate cause of
Dionisio's injuries was his own recklessness in driving fast at the time of the accident, while
under the influence of liquor, without his headlights on and without a curfew pass. Phoenix
also sought to establish that it had exercised due rare in the selection and supervision of the
dump truck driver.
The trial court rendered judgment in favor of Dionisio and against Phoenix and Carbonel
and ordered the latter:
(1) To pay plaintiff jointly and severally the sum of P 15,000.00 for hospital
bills and the replacement of the lost dentures of plaintiff;

(2) To pay plaintiff jointly and severally the sum of P 1,50,000.-00 as loss of
expected income for plaintiff brought about the accident in controversy and
which is the result of the negligence of the defendants;
(3) To pay the plaintiff jointly and severally the sum of P 10,000. as moral
damages for the unexpected and sudden withdrawal of plaintiff from his
lifetime career as a marketing man; mental anguish, wounded feeling, serious
anxiety, social humiliation, besmirched reputation, feeling of economic
insecurity, and the untold sorrows and frustration in life experienced by
plaintiff and his family since the accident in controversy up to the present
time;
(4) To pay plaintiff jointly and severally the sum of P 10,000.00 as damages
for the wanton disregard of defendants to settle amicably this case with the
plaintiff before the filing of this case in court for a smaller amount.
(5) To pay the plaintiff jointly and severally the sum of P 4,500.00 due as and
for attorney's fees; and
(6) The cost of suit. (Emphasis supplied)
Phoenix and Carbonel appealed to the Intermediate Appellate Court. That court in CA-G.R.
No. 65476 affirmed the decision of the trial court but modified the award of damages to the
following extent:
1. The award of P15,000.00 as compensatory damages was
reduced to P6,460.71, the latter being the only amount that the
appellate court found the plaintiff to have proved as actually
sustained by him;
2. The award of P150,000.00 as loss of expected income was
reduced to P100,000.00,basically because Dionisio had
voluntarily resigned his job such that, in the opinion of the
appellate court, his loss of income "was not solely attributable
to the accident in question;" and
3. The award of P100,000.00 as moral damages was held by
the appellate court as excessive and unconscionable and
hence reduced to P50,000.00.
The award of P10,000.00 as exemplary damages
and P4,500.00 as attorney's fees and costs remained
untouched.
This decision of the Intermediate Appellate Court is now before us on a petition for review.
Both the trial court and the appellate court had made fairly explicit findings of fact relating to
the manner in which the dump truck was parked along General Lacuna Street on the basis

of which both courts drew the inference that there was negligence on the part of Carbonel,
the dump truck driver, and that this negligence was the proximate cause of the accident and
Dionisio's injuries. We note, however, that both courts failed to pass upon the defense
raised by Carbonel and Phoenix that the true legal and proximate cause of the accident was
not the way in which the dump truck had been parked but rather the reckless way in which
Dionisio had driven his car that night when he smashed into the dump truck. The
Intermediate Appellate Court in its questioned decision casually conceded that Dionisio was
"in some way, negligent" but apparently failed to see the relevance of Dionisio's negligence
and made no further mention of it. We have examined the record both before the trial court
and the Intermediate Appellate Court and we find that both parties had placed into the
record sufficient evidence on the basis of which the trial court and the appellate court could
have and should have made findings of fact relating to the alleged reckless manner in which
Dionisio drove his car that night. The petitioners Phoenix and Carbonel contend that if there
was negligence in the manner in which the dump truck was parked, that negligence was
merely a "passive and static condition" and that private respondent Dionisio's recklessness
constituted an intervening, efficient cause determinative of the accident and the injuries he
sustained. The need to administer substantial justice as between the parties in this case,
without having to remand it back to the trial court after eleven years, compels us to address
directly the contention put forward by the petitioners and to examine for ourselves the
record pertaining to Dionisio's alleged negligence which must bear upon the liability, or
extent of liability, of Phoenix and Carbonel.
There are four factual issues that need to be looked into: (a) whether or not private
respondent Dionisio had a curfew pass valid and effective for that eventful night; (b)
whether Dionisio was driving fast or speeding just before the collision with the dump truck;
(c) whether Dionisio had purposely turned off his car's headlights before contact with the
dump truck or whether those headlights accidentally malfunctioned moments before the
collision; and (d) whether Dionisio was intoxicated at the time of the accident.
As to the first issue relating to the curfew pass, it is clear that no curfew pass was found on
the person of Dionisio immediately after the accident nor was any found in his car.
Phoenix's evidence here consisted of the testimony of Patrolman Cuyno who had taken
Dionisio, unconscious, to the Makati Medical Center for emergency treatment immediately
after the accident. At the Makati Medical Center, a nurse took off Dionisio's clothes and
examined them along with the contents of pockets together with Patrolman Cuyno. 1 Private
respondent Dionisio was not able to produce any curfew pass during the trial. Instead, he offered the explanation that his family may have
misplaced his curfew pass. He also offered a certification (dated two years after the accident) issued by one Major Benjamin N. Libarnes of
the Zone Integrated Police Intelligence Unit of Camp Olivas, San Fernando, Pampanga, which was said to have authority to issue curfew
passes for Pampanga and Metro Manila. This certification was to the effect that private respondent Dionisio had a valid curfew pass. This
certification did not, however, specify any pass serial number or date or period of effectivity of the supposed curfew pass. We find that private
respondent Dionisio was unable to prove possession of a valid curfew pass during the night of the accident and that the preponderance of
evidence shows that he did not have such a pass during that night. The relevance of possession or non-possession of a curfew pass that
night lies in the light it tends to shed on the other related issues: whether Dionisio was speeding home and whether he had indeed purposely
put out his headlights before the accident, in order to avoid detection and possibly arrest by the police in the nearby police station for
travelling after the onset of curfew without a valid curfew pass.

On the second issue whether or not Dionisio was speeding home that night both the
trial court and the appellate court were completely silent.
The defendants in the trial court introduced the testimony of Patrolman Cuyno who was at
the scene of the accident almost immediately after it occurred, the police station where he
was based being barely 200 meters away. Patrolman Cuyno testified that people who had

gathered at the scene of the accident told him that Dionisio's car was "moving fast" and did
not have its headlights on. 2 Dionisio, on the other hand, claimed that he was travelling at a moderate
speed at 30 kilometers per hour and had just crossed the intersection of General Santos and General
Lacuna Streets and had started to accelerate when his headlights failed just before the collision took
place. 3

Private respondent Dionisio asserts that Patrolman Cuyno's testimony was hearsay and did
not fag within any of the recognized exceptions to the hearsay rule since the facts he
testified to were not acquired by him through official information and had not been given by
the informants pursuant to any duty to do so. Private respondent's objection fails to take
account of the fact that the testimony of Patrolman Cuyno is admissible not under the
official records exception to the hearsay rule 4 but rather as part of the res gestae. 5 Testimonial
evidence under this exception to the hearsay rule consists of excited utterances made on the occasion of
an occurrence or event sufficiently startling in nature so as to render inoperative the normal reflective
thought processes of the observer and hence made as a spontaneous reaction to the occurrence or
event, and not the result of reflective thought. 6

We think that an automobile speeding down a street and suddenly smashing into a
stationary object in the dead of night is a sufficiently startling event as to evoke
spontaneous, rather than reflective, reactions from observers who happened to be around
at that time. The testimony of Patrolman Cuyno was therefore admissible as part of the res
gestae and should have been considered by the trial court. Clearly, substantial weight
should have been ascribed to such testimony, even though it did not, as it could not, have
purported to describe quantitatively the precise velocity at winch Dionisio was travelling just
before impact with the Phoenix dump truck.
A third related issue is whether Dionisio purposely turned off his headlights, or whether his
headlights accidentally malfunctioned, just moments before the accident. The Intermediate
Appellate Court expressly found that the headlights of Dionisio's car went off as he crossed
the intersection but was non-committal as to why they did so. It is the petitioners' contention
that Dionisio purposely shut off his headlights even before he reached the intersection so as
not to be detected by the police in the police precinct which he (being a resident in the area)
knew was not far away from the intersection. We believe that the petitioners' theory is a
more credible explanation than that offered by private respondent Dionisio i.e., that he
had his headlights on but that, at the crucial moment, these had in some mysterious if
convenient way malfunctioned and gone off, although he succeeded in switching his lights
on again at "bright" split seconds before contact with the dump truck.
A fourth and final issue relates to whether Dionisio was intoxicated at the time of the
accident. The evidence here consisted of the testimony of Patrolman Cuyno to the effect
that private respondent Dionisio smelled of liquor at the time he was taken from his
smashed car and brought to the Makati Medical Center in an unconscious condition. 7 This
testimony has to be taken in conjunction with the admission of Dionisio that he had taken "a shot or two"
of liquor before dinner with his boss that night. We do not believe that this evidence is sufficient to show
that Dionisio was so heavily under the influence of liquor as to constitute his driving a motor vehicle per se
an act of reckless imprudence. 8There simply is not enough evidence to show how much liquor he had in
fact taken and the effects of that upon his physical faculties or upon his judgment or mental alertness. We
are also aware that "one shot or two" of hard liquor may affect different people differently.

The conclusion we draw from the factual circumstances outlined above is that private
respondent Dionisio was negligent the night of the accident. He was hurrying home that
night and driving faster than he should have been. Worse, he extinguished his headlights at
or near the intersection of General Lacuna and General Santos Streets and thus did not see
the dump truck that was parked askew and sticking out onto the road lane.
Nonetheless, we agree with the Court of First Instance and the Intermediate Appellate Court
that the legal and proximate cause of the accident and of Dionisio's injuries was the
wrongful or negligent manner in which the dump truck was parked in other words, the
negligence of petitioner Carbonel. That there was a reasonable relationship between
petitioner Carbonel's negligence on the one hand and the accident and respondent's
injuries on the other hand, is quite clear. Put in a slightly different manner, the collision of
Dionisio's car with the dump truck was a natural and foreseeable consequence of the truck
driver's negligence.
The petitioners, however, urge that the truck driver's negligence was merely a "passive and
static condition" and that private respondent Dionisio's negligence was an "efficient
intervening cause and that consequently Dionisio's negligence must be regarded as the
legal and proximate cause of the accident rather than the earlier negligence of Carbonel.
We note that the petitioners' arguments are drawn from a reading of some of the older
cases in various jurisdictions in the United States but we are unable to persuade ourselves
that these arguments have any validity for our jurisdiction. We note, firstly, that even in the
United States, the distinctions between "cause" and "condition" which the 'petitioners would
have us adopt have already been "almost entirely discredited." Professors and Keeton
make this quite clear:
Cause and condition. Many courts have sought to distinguish between the
active "cause" of the harm and the existing "conditions" upon which that
cause operated. If the defendant has created only a passive static condition
which made the damage possible, the defendant is said not to be liable. But
so far as the fact of causation is concerned, in the sense of necessary
antecedents which have played an important part in producing the result it is
quite impossible to distinguish between active forces and passive situations,
particularly since, as is invariably the case, the latter are the result of other
active forces which have gone before. The defendant who spills gasoline
about the premises creates a "condition," but the act may be culpable
because of the danger of fire. When a spark ignites the gasoline, the
condition has done quite as much to bring about the fire as the spark; and
since that is the very risk which the defendant has created, the defendant will
not escape responsibility. Even the lapse of a considerable time during which
the "condition" remains static will not necessarily affect liability; one who digs
a trench in the highway may still be liable to another who fans into it a month
afterward. "Cause" and "condition" still find occasional mention in the
decisions; but the distinction is now almost entirely discredited. So far as it
has any validity at all, it must refer to the type of case where the forces set in
operation by the defendant have come to rest in a position of apparent safety,
and some new force intervenes. But even in such cases, it is not the

distinction between "cause" and "condition" which is important but the nature
of the risk and the character of the intervening cause. 9
We believe, secondly, that the truck driver's negligence far from being a "passive and static
condition" was rather an indispensable and efficient cause. The collision between the dump
truck and the private respondent's car would in an probability not have occurred had the
dump truck not been parked askew without any warning lights or reflector devices. The
improper parking of the dump truck created an unreasonable risk of injury for anyone driving
down General Lacuna Street and for having so created this risk, the truck driver must be
held responsible. In our view, Dionisio's negligence, although later in point of time than the
truck driver's negligence and therefore closer to the accident, was not an efficient
intervening or independent cause. What the Petitioners describe as an "intervening cause"
was no more than a foreseeable consequent manner which the truck driver had parked the
dump truck. In other words, the petitioner truck driver owed a duty to private respondent
Dionisio and others similarly situated not to impose upon them the very risk the truck driver
had created. Dionisio's negligence was not of an independent and overpowering nature as
to cut, as it were, the chain of causation in fact between the improper parking of the dump
truck and the accident, nor to sever the juris vinculum of liability. It is helpful to quote once
more from Professor and Keeton:
Foreseeable Intervening Causes. If the intervening cause is one which in
ordinary human experience is reasonably to be anticipated or one which the
defendant has reason to anticipate under the particular circumstances, the
defendant may be negligence among other reasons, because of failure to
guard against it; or the defendant may be negligent only for that reason. Thus
one who sets a fire may be required to foresee that an ordinary, usual and
customary wind arising later wig spread it beyond the defendant's own
property, and therefore to take precautions to prevent that event. The person
who leaves the combustible or explosive material exposed in a public place
may foresee the risk of fire from some independent source. ... In all of these
cases there is an intervening cause combining with the defendant's conduct
to produce the result and in each case the defendant's negligence consists in
failure to protect the plaintiff against that very risk.
Obviously the defendant cannot be relieved from liability by the fact that the
risk or a substantial and important part of the risk, to which the defendant has
subjected the plaintiff has indeed come to pass. Foreseeable intervening
forces are within the scope original risk, and hence of the defendant's
negligence. The courts are quite generally agreed that intervening causes
which fall fairly in this category will not supersede the defendant's
responsibility.
Thus it has been held that a defendant will be required to anticipate the usual
weather of the vicinity, including all ordinary forces of nature such as usual
wind or rain, or snow or frost or fog or even lightning; that one who leaves an
obstruction on the road or a railroad track should foresee that a vehicle or a
train will run into it; ...

The risk created by the defendant may include the intervention of the
foreseeable negligence of others. ... [The standard of reasonable conduct
may require the defendant to protect the plaintiff against 'that occasional
negligence which is one of the ordinary incidents of human life, and therefore
to be anticipated.' Thus, a defendant who blocks the sidewalk and forces the
plaintiff to walk in a street where the plaintiff will be exposed to the risks of
heavy traffic becomes liable when the plaintiff is run down by a car, even
though the car is negligently driven; and one who parks an automobile on the
highway without lights at night is not relieved of responsibility when another
negligently drives into it. --- 10
We hold that private respondent Dionisio's negligence was "only contributory," that the
"immediate and proximate cause" of the injury remained the truck driver's "lack of due care"
and that consequently respondent Dionisio may recover damages though such damages
are subject to mitigation by the courts (Article 2179, Civil Code of the Philippines).
Petitioners also ask us to apply what they refer to as the "last clear chance" doctrine. The
theory here of petitioners is that while the petitioner truck driver was negligent, private
respondent Dionisio had the "last clear chance" of avoiding the accident and hence his
injuries, and that Dionisio having failed to take that "last clear chance" must bear his own
injuries alone. The last clear chance doctrine of the common law was imported into our
jurisdiction by Picart vs. Smith 11 but it is a matter for debate whether, or to what extent, it has found its way into the Civil
Code of the Philippines. The historical function of that doctrine in the common law was to mitigate the harshness of another common law
doctrine or rule that of contributory negligence. 12 The common law rule of contributory negligence prevented any recovery at all by a plaintiff
who was also negligent, even if the plaintiff's negligence was relatively minor as compared with the wrongful act or omission of the
defendant. 13 The common law notion of last clear chance permitted courts to grant recovery to a plaintiff who had also been negligent
provided that the defendant had the last clear chance to avoid the casualty and failed to do so. 14 Accordingly, it is difficult to see what role, if
any, the common law last clear chance doctrine has to play in a jurisdiction where the common law concept of contributory negligence as an
absolute bar to recovery by the plaintiff, has itself been rejected, as it has been in Article 2179 of the Civil Code of the Philippines. 15

Is there perhaps a general concept of "last clear chance" that may be extracted from its
common law matrix and utilized as a general rule in negligence cases in a civil law
jurisdiction like ours? We do not believe so. Under Article 2179, the task of a court, in
technical terms, is to determine whose negligence the plaintiff's or the defendant's
was the legal or proximate cause of the injury. That task is not simply or even primarily an
exercise in chronology or physics, as the petitioners seem to imply by the use of terms like
"last" or "intervening" or "immediate." The relative location in the continuum of time of the
plaintiff's and the defendant's negligent acts or omissions, is only one of the relevant factors
that may be taken into account. Of more fundamental importance are the nature of the
negligent act or omission of each party and the character and gravity of the risks created by
such act or omission for the rest of the community. The petitioners urge that the truck driver
(and therefore his employer) should be absolved from responsibility for his own prior
negligence because the unfortunate plaintiff failed to act with that increased diligence which
had become necessary to avoid the peril precisely created by the truck driver's own
wrongful act or omission. To accept this proposition is to come too close to wiping out the
fundamental principle of law that a man must respond for the forseeable consequences of
his own negligent act or omission. Our law on quasi-delicts seeks to reduce the risks and
burdens of living in society and to allocate them among the members of society. To accept
the petitioners' pro-position must tend to weaken the very bonds of society.

Petitioner Carbonel's proven negligence creates a presumption of negligence on the part of

his employer Phoenix16 in supervising its employees properly and adequately. The respondent appellate court in effect found,
correctly in our opinion, that Phoenix was not able to overcome this presumption of negligence. The circumstance that Phoenix had allowed
its truck driver to bring the dump truck to his home whenever there was work to be done early the following morning, when coupled with the
failure to show any effort on the part of Phoenix to supervise the manner in which the dump truck is parked when away from company
premises, is an affirmative showing of culpa in vigilando on the part of Phoenix.

Turning to the award of damages and taking into account the comparative negligence of
private respondent Dionisio on one hand and petitioners Carbonel and Phoenix upon the
other hand, 17 we believe that the demands of substantial justice are satisfied by allocating most of the damages on a 20-80 ratio.
Thus, 20% of the damages awarded by the respondent appellate court, except the award of P10,000.00 as exemplary damages and
P4,500.00 as attorney's fees and costs, shall be borne by private respondent Dionisio; only the balance of 80% needs to be paid by
petitioners Carbonel and Phoenix who shall be solidarity liable therefor to the former. The award of exemplary damages and attorney's fees
and costs shall be borne exclusively by the petitioners. Phoenix is of course entitled to reimbursement from Carbonel. 18 We see no
sufficient reason for disturbing the reduced award of damages made by the respondent appellate court.

WHEREFORE, the decision of the respondent appellate court is modified by reducing the
aggregate amount of compensatory damages, loss of expected income and moral damages
private respondent Dionisio is entitled to by 20% of such amount. Costs against the
petitioners.
SO ORDERED.

[G.R. No. 138060. September 1, 2004]

WILLIAM TIU, doing business under the name and style of D Rough
Riders, and VIRGILIO TE LAS PIAS petitioners, vs. PEDRO A.
ARRIESGADO, BENJAMIN CONDOR, SERGIO PEDRANO and
PHILIPPINE
PHOENIX
SURETY
AND
INSURANCE,
INC., respondents.
DECISION
CALLEJO, SR., J.:

This is a petition for review on certiorari under Rule 45 of the Rules of

Court from the Decision of the Court of Appeals in CA-G.R. CV No. 54354
affirming with modification the Decision of the Regional Trial Court,
7th Judicial Region, Cebu City, Branch 20, in Civil Case No. CEB-5963 for
breach of contract of carriage, damages and attorneys fees, and the
Resolution dated February 26, 1999 denying the motion for reconsideration
thereof.
[1]

[2]

The following facts are undisputed:

At about 10:00 p.m. of March 15, 1987, the cargo truck marked Condor
Hollow Blocks and General Merchandise bearing plate number GBP-675 was
loaded with firewood in Bogo, Cebu and left for Cebu City. Upon reaching Sitio
Aggies, Poblacion, Compostela, Cebu, just as the truck passed over a bridge,
one of its rear tires exploded. The driver, Sergio Pedrano, then parked along
the right side of the national highway and removed the damaged tire to have it
vulcanized at a nearby shop, about 700 meters away. Pedrano left his helper,
Jose Mitante, Jr. to keep watch over the stalled vehicle, and instructed the
latter to place a spare tire six fathoms away behind the stalled truck to serve
as a warning for oncoming vehicles. The trucks tail lights were also left on. It
was about 12:00 a.m., March 16, 1987.
[3]

[4]

At about 4:45 a.m., D Rough Riders passenger bus with plate number
PBP-724 driven by Virgilio Te Laspias was cruising along the national
highway of Sitio Aggies, Poblacion, Compostela, Cebu. The passenger bus
was also bound for Cebu City, and had come from Maya,
Daanbantayan,Cebu. Among its passengers were the Spouses Pedro A.
Arriesgado and Felisa Pepito Arriesgado, who were seated at the right side of
the bus, about three (3) or four (4) places from the front seat.
As the bus was approaching the bridge, Laspias saw the stalled truck,
which was then about 25 meters away. He applied the breaks and tried to
swerve to the left to avoid hitting the truck. But it was too late; the bus rammed
into the trucks left rear. The impact damaged the right side of the bus and left
several passengers injured. Pedro Arriesgado lost consciousness and
suffered a fracture in his right colles. His wife, Felisa, was brought to
the Danao City Hospital. She was later transferred to the Southern Island
Medical Center where she died shortly thereafter.
[5]

[6]

[7]

Respondent Pedro A. Arriesgado then filed a complaint for breach of

contract of carriage, damages and attorneys fees before the Regional Trial
Court of Cebu City, Branch 20, against the petitioners, D Rough Riders bus
operator William Tiu and his driver, Virgilio Te Laspias on May 27, 1987. The
respondent alleged that the passenger bus in question was cruising at a fast
and high speed along the national road, and that petitioner Laspias did not
take precautionary measures to avoid the accident. Thus:
[8]

6. That the accident resulted to the death of the plaintiffs wife, Felisa Pepito
Arriesgado, as evidenced by a Certificate of Death, a xerox copy of which is hereto
attached as integral part hereof and marked as ANNEX A, and physical injuries to
several of its passengers, including plaintiff himself who suffered a COLLES
FRACTURE RIGHT, per Medical Certificate, a xerox copy of which is hereto
attached as integral part hereof and marked as ANNEX B hereof.

7. That due to the reckless and imprudent driving by defendant Virgilio Te Laspias of
the said Rough Riders passenger bus, plaintiff and his wife, Felisa Pepito Arriesgado,
failed to safely reach their destination which was Cebu City, the proximate cause of
which was defendant-drivers failure to observe utmost diligence required of a very
cautious person under all circumstances.
8. That defendant William Tiu, being the owner and operator of the said Rough Riders
passenger bus which figured in the said accident, wherein plaintiff and his wife were
riding at the time of the accident, is therefore directly liable for the breach of contract
of carriage for his failure to transport plaintiff and his wife safely to their place of
destination which was Cebu City, and which failure in his obligation to transport
safely his passengers was due to and in consequence of his failure to exercise the
diligence of a good father of the family in the selection and supervision of his
employees, particularly defendant-driver Virgilio Te Laspias.
[9]

The respondent prayed that judgment be rendered in his favor and that the
petitioners be condemned to pay the following damages:
1). To pay to plaintiff, jointly and severally, the amount of P30,000.00 for the death
and untimely demise of plaintiffs wife, Felisa Pepito Arriesgado;
2). To pay to plaintiff, jointly and severally, the amount of P38,441.50, representing
actual expenses incurred by the plaintiff in connection with the death/burial of
plaintiffs wife;
3). To pay to plaintiff, jointly and severally, the amount of P1,113.80, representing
medical/hospitalization expenses incurred by plaintiff for the injuries sustained by
him;
4). To pay to plaintiff, jointly and severally, the amount of P50,000.00 for moral
damages;
5). To pay to plaintiff, jointly and severally, the amount of P50,000.00 by way of
exemplary damages;
6). To pay to plaintiff, jointly and severally, the amount of P20,000.00 for attorneys
fees;
7). To pay to plaintiff, jointly and severally, the amount of P5,000.00 for litigation
expenses.

PLAINTIFF FURTHER PRAYS FOR SUCH OTHER RELIEFS AND REMEDIES

IN LAW AND EQUITY.
[10]

The petitioners, for their part, filed a Third-Party Complaint on August 21,
1987 against the following: respondent Philippine Phoenix Surety and
Insurance, Inc. (PPSII), petitioner Tius insurer; respondent Benjamin Condor,
the registered owner of the cargo truck; and respondent Sergio Pedrano, the
driver of the truck. They alleged that petitioner Laspias was negotiating the
uphill climb along the national highway of Sitio Aggies, Poblacion,
Compostela, in a moderate and normal speed. It was further alleged that the
truck was parked in a slanted manner, its rear portion almost in the middle of
the highway, and that no early warning device was displayed. Petitioner
Laspias promptly applied the brakes and swerved to the left to avoid hitting
the truck head-on, but despite his efforts to avoid damage to property and
physical injuries on the passengers, the right side portion of the bus hit the
cargo trucks left rear. The petitioners further alleged, thus:
[11]

5. That the cargo truck mentioned in the aforequoted paragraph is owned and
registered in the name of the third-party defendant Benjamin Condor and was left
unattended by its driver Sergio Pedrano, one of the third-party defendants, at the time
of the incident;
6. That third-party defendant Sergio Pedrano, as driver of the cargo truck with marked
(sic) Condor Hollow Blocks & General Merchandise, with Plate No. GBP-675
which was recklessly and imprudently parked along the national highway of
Compostela, Cebu during the vehicular accident in question, and third-party defendant
Benjamin Condor, as the registered owner of the cargo truck who failed to exercise
due diligence in the selection and supervision of third-party defendant Sergio Pedrano,
are jointly and severally liable to the third-party plaintiffs for whatever liability that
may be adjudged against said third-party plaintiffs or are directly liable of (sic) the
alleged death of plaintiffs wife;
7. That in addition to all that are stated above and in the answer which are intended to
show reckless imprudence on the part of the third-party defendants, the third-party
plaintiffs hereby declare that during the vehicular accident in question, third-party
defendant was clearly violating Section 34, par. (g) of the Land Transportation and
Traffic Code

10. That the aforesaid passenger bus, owned and operated by third-party plaintiff
William Tiu, is covered by a common carrier liability insurance with Certificate of

Cover No. 054940 issued by Philippine Phoenix Surety and Insurance, Inc., Cebu City
Branch, in favor of third-party plaintiff William Tiu which covers the period from July
22, 1986 to July 22, 1987 and that the said insurance coverage was valid, binding and
subsisting during the time of the aforementioned incident (Annex A as part hereof);
11. That after the aforesaid alleged incident, third-party plaintiff notified third-party
defendant Philippine Phoenix Surety and Insurance, Inc., of the alleged incident
hereto mentioned, but to no avail;
12. That granting, et arguendo et arguendi, if herein third-party plaintiffs will be
adversely adjudged, they stand to pay damages sought by the plaintiff and therefore
could also look up to the Philippine Phoenix Surety and Insurance, Inc., for
contribution, indemnification and/or reimbursement of any liability or obligation that
they might [be] adjudged per insurance coverage duly entered into by and between
third-party plaintiff William Tiu and third-party defendant Philippine Phoenix Surety
and Insurance, Inc.;
[12]

The respondent PPSII, for its part, admitted that it had an existing contract
with petitioner Tiu, but averred that it had already attended to and settled the
claims of those who were injured during the incident. It could not accede to
the claim of respondent Arriesgado, as such claim was way beyond the
scheduled indemnity as contained in the contract of insurance.
[13]

[14]

After the parties presented their respective evidence, the trial court ruled in
favor of respondent Arriesgado. The dispositive portion of the decision reads:
WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of
plaintiff as against defendant William Tiu ordering the latter to pay the plaintiff the
following amounts:
1 - The sum of FIFTY THOUSAND PESOS (P50,000.00) as moral damages;
2 - The sum of FIFTY THOUSAND PESOS (P50,000.00) as exemplary damages;
3 - The sum of THIRTY-EIGHT THOUSAND FOUR HUNDRED FORTY-ONE
PESOS (P38,441.00) as actual damages;
4 - The sum of TWENTY THOUSAND PESOS (P20,000.00) as attorneys fees;
5 - The sum of FIVE THOUSAND PESOS (P5,000.00) as costs of suit;
SO ORDERED.

[15]

According to the trial court, there was no dispute that petitioner William Tiu
was engaged in business as a common carrier, in view of his admission that
D Rough Rider passenger bus which figured in the accident was owned by
him; that he had been engaged in the transportation business for 25 years
with a sole proprietorship; and that he owned 34 buses. The trial court ruled
that if petitioner Laspias had not been driving at a fast pace, he could have
easily swerved to the left to avoid hitting the truck, thus, averting the
unfortunate incident. It then concluded that petitioner Laspias was negligent.
The trial court also ruled that the absence of an early warning device near
the place where the truck was parked was not sufficient to impute negligence
on the part of respondent Pedrano, since the tail lights of the truck were fully
on, and the vicinity was well lighted by street lamps. It also found that the
testimony of petitioner Tiu, that he based the selection of his driver Laspias
on efficiency and in-service training, and that the latter had been so far an
efficient and good driver for the past six years of his employment, was
insufficient to prove that he observed the diligence of a good father of a family
in the selection and supervision of his employees.
[16]

After the petitioners motion for reconsideration of the said decision was
denied, the petitioners elevated the case to the Court of Appeals on the
following issues:
I

WHETHER THIRD PARTY DEFENDANT SERGIO PEDRANO WAS RECKLESS

AND IMPRUDENT WHEN HE PARKED THE CARGO TRUCK IN AN OBLIQUE
MANNER;

II WHETHER THE THIRD PARTY DEFENDANTS ARE JOINTLY AND SEVERALLY

LIABLE DIRECTLY TO PLAINTIFF-APPELLEE OR TO DEFENDANTSAPPELLANTS FOR WHATEVER LIABILITY THAT MAY BE ADJUDGED TO THE
SAID DEFENDANTS-APPELLANTS;
III WHETHER DEFENDANT-APPELLANT VIRGILIO TE LASPIAS WAS GUILTY OF
GROSS NEGLIGENCE;
IV WHETHER DEFENDANT-APPELLANT WILLIAM TIU HAD EXERCISED THE DUE
DILIGENCE OF A GOOD FATHER OF A FAMILY IN THE SELECTION AND
SUPERVISION OF HIS DRIVERS;
V GRANTING FOR THE SAKE OF ARGUMENT THAT DEFENDANT-APPELLANT
WILLIAM TIU IS LIABLE TO PLAINTIFF-APPELLEE, WHETHER THERE IS LEGAL
AND FACTUAL BASIS IN AWARDING EXCESSIVE MORAL DAMAGES,
EX[E]MPLARY DAMAGES, ATTORNEYS FEES AND LITIGATION EXPENSES TO
PLAINTIFF-APPELLEE;
VI WHETHER THIRD PARTY DEFENDANT PHILIPPINE PHOENIX SURETY AND
INSURANCE, INC. IS LIABLE TO DEFENDANT- APPELLANT WILLIAM TIU.[17]

The appellate court rendered judgment affirming the trial courts decision
with the modification that the awards for moral and exemplary damages were
reduced to P25,000. The dispositive portion reads:
WHEREFORE, the appealed Decision dated November 6, 1995 is
hereby MODIFIED such that the awards for moral and exemplary damages are each
reduced toP25,000.00 or a total of P50,000.00 for both. The judgment
is AFFIRMED in all other respects.
SO ORDERED.

[18]

According to the appellate court, the action of respondent Arriesgado was

based not on quasi-delict but on breach of contract of carriage. As a common
carrier, it was incumbent upon petitioner Tiu to prove that extraordinary
diligence was observed in ensuring the safety of passengers during
transportation. Since the latter failed to do so, he should be held liable for
respondent Arriesgados claim. The CA also ruled that no evidence was
presented against the respondent PPSII, and as such, it could not be held
liable for respondent Arriesgados claim, nor for contribution, indemnification
and/or reimbursement in case the petitioners were adjudged liable.
The petitioners now come to this Court and ascribe the following errors
committed by the appellate court:
I. THE HONORABLE COURT OF APPEALS ERRED IN NOT DECLARING
RESPONDENTS BENJAMIN CONDOR AND SERGIO PEDRANO GUILTY OF
NEGLIGENCE AND HENCE, LIABLE TO RESPONDENT PEDRO A.
ARRIESGADO OR TO PETITIONERS FOR WHATEVER LIABILITY THAT MAY BE
ADJUDGED AGAINST THEM.
II. THE HONORABLE COURT OF APPEALS ERRED IN FINDING PETITIONERS
GUILTY OF NEGLIGENCE AND HENCE, LIABLE TO RESPONDENT PEDRO A.
ARRIESGADO.
III. THE HONORABLE COURT OF APPEALS ERRED IN FINDING PETITIONER
WILLIAM TIU LIABLE FOR EXEMPLARY DAMAGES, ATTORNEYS FEES AND
LITIGATION EXPENSES.
IV.THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING
RESPONDENT PHILIPPINE PHOENIX SURETY AND INSURANCE, INC. LIABLE
TO RESPONDENT PEDRO A. ARRIESGADO OR TO PETITIONER WILLIAM TIU.
[19]

According to the petitioners, the appellate court erred in failing to

appreciate the absence of an early warning device and/or built-in reflectors at
the front and back of the cargo truck, in clear violation of Section 34, par. (g)
of the Land Transportation and Traffic Code. They aver that such violation is
only a proof of respondent Pedranos negligence, as provided under Article

2185 of the New Civil Code. They also question the appellate courts failure to
take into account that the truck was parked in an oblique manner, its rear
portion almost at the center of the road. As such, the proximate cause of the
incident was the gross recklessness and imprudence of respondent Pedrano,
creating the presumption of negligence on the part of respondent Condor in
supervising his employees, which presumption was not rebutted. The
petitioners then contend that respondents Condor and Pedrano should be
held jointly and severally liable to respondent Arriesgado for the payment of
the latters claim.
The petitioners, likewise, aver that expert evidence should have been
presented to prove that petitioner Laspias was driving at a very fast speed,
and that the CA could not reach such conclusion by merely considering the
damages on the cargo truck. It was also pointed out that petitioner Tiu
presented evidence that he had exercised the diligence of a good father of a
family in the selection and supervision of his drivers.
The petitioners further allege that there is no legal and factual basis to
require petitioner Tiu to pay exemplary damages as no evidence was
presented to show that the latter acted in a fraudulent, reckless and
oppressive manner, or that he had an active participation in the negligent act
of petitioner Laspias.
Finally, the petitioners contend that respondent PPSII admitted in its
answer that while it had attended to and settled the claims of the other injured
passengers, respondent Arriesgados claim remained unsettled as it was
beyond the scheduled indemnity under the insurance contract. The petitioners
argue that said respondent PPSII should have settled the said claim in
accordance with the scheduled indemnity instead of just denying the same.
On the other hand, respondent Arriesgado argues that two of the issues
raised by the petitioners involved questions of fact, not reviewable by the
Supreme Court: the finding of negligence on the part of the petitioners and
their liability to him; and the award of exemplary damages, attorneys fees and
litigation expenses in his favor. Invoking the principle of equity and justice,
respondent Arriesgado pointed out that if there was an error to be reviewed in
the CA decision, it should be geared towards the restoration of the moral and
exemplary damages to P50,000 each, or a total of P100,000 which was
reduced by the Court of Appeals to P25,000 each, or a total of only P50,000.
Respondent Arriesgado also alleged that respondents Condor and
Pedrano, and respondent Phoenix Surety, are parties with whom he had no
contract of carriage, and had no cause of action against. It was pointed out
that only the petitioners needed to be sued, as driver and operator of the ill-

fated bus, on account of their failure to bring the Arriesgado Spouses to their
place of destination as agreed upon in the contract of carriage, using the
utmost diligence of very cautious persons with due regard for all
circumstances.
Respondents Condor and Pedrano point out that, as correctly ruled by the
Court of Appeals, the proximate cause of the unfortunate incident was the fast
speed at which petitioner Laspias was driving the bus owned by petitioner
Tiu. According to the respondents, the allegation that the truck was not
equipped with an early warning device could not in any way have prevented
the incident from happening. It was also pointed out that respondent Condor
had always exercised the due diligence required in the selection and
supervision of his employees, and that he was not a party to the contract of
carriage between the petitioners and respondent Arriesgado.
Respondent PPSII, for its part, alleges that contrary to the allegation of
petitioner Tiu, it settled all the claims of those injured in accordance with the
insurance contract. It further avers that it did not deny respondent Arriesgados
claim, and emphasizes that its liability should be within the scheduled limits of
indemnity under the said contract. The respondent concludes that while it is
true that insurance contracts are contracts of indemnity, the measure of the
insurers liability is determined by the insureds compliance with the terms
thereof.
The Courts Ruling
At the outset, it must be stressed that this Court is not a trier of facts.
Factual findings of the Court of Appeals are final and may not be reviewed
on appeal by this Court, except when the lower court and the CA arrived at
diverse factual findings. The petitioners in this case assail the finding of both
the trial and the appellate courts that petitioner Laspias was driving at a very
fast speed before the bus owned by petitioner Tiu collided with respondent
Condors stalled truck. This is clearly one of fact, not reviewable by the Court
in a petition for review under Rule 45.
[20]

[21]

[22]

On this ground alone, the petition is destined to fail.

However, considering that novel questions of law are likewise involved, the
Court resolves to examine and rule on the merits of the case.
Petitioner Laspias
Was negligent in driving
The Ill-fated bus

In his testimony before the trial court, petitioner Laspias claimed that he
was traversing the two-lane road at Compostela, Cebu at a speed of only forty
(40) to fifty (50) kilometers per hour before the incident occurred. He also
admitted that he saw the truck which was parked in an oblique position at
about 25 meters before impact, and tried to avoid hitting it by swerving to the
left. However, even in the absence of expert evidence, the damage sustained
by the truck itself supports the finding of both the trial court and the appellate
court, that the D Rough Rider bus driven by petitioner Laspias was traveling
at a fast pace. Since he saw the stalled truck at a distance of 25 meters,
petitioner Laspias had more than enough time to swerve to his left to avoid
hitting it; that is, if the speed of the bus was only 40 to 50 kilometers per hour
as he claimed. As found by the Court of Appeals, it is easier to believe that
petitioner Laspias was driving at a very fast speed, since at 4:45 a.m., the
hour of the accident, there were no oncoming vehicles at the opposite
direction. Petitioner Laspias could have swerved to the left lane with proper
clearance, and, thus, could have avoided the truck. Instinct, at the very least,
would have prompted him to apply the breaks to avert the impending disaster
which he must have foreseen when he caught sight of the stalled truck. As we
had occasion to reiterate:
[23]

[24]

[25]

[26]

A man must use common sense, and exercise due reflection in all his acts; it is his
duty to be cautious, careful and prudent, if not from instinct, then through fear of
recurring punishment. He is responsible for such results as anyone might foresee and
for acts which no one would have performed except through culpable abandon.
Otherwise, his own person, rights and property, and those of his fellow beings, would
ever be exposed to all manner of danger and injury.
[27]

We agree with the following findings of the trial court, which were affirmed
by the CA on appeal:
A close study and evaluation of the testimonies and the documentary proofs submitted
by the parties which have direct bearing on the issue of negligence, this Court as
shown by preponderance of evidence that defendant Virgilio Te Laspias failed to
observe extraordinary diligence as a driver of the common carrier in this case. It is
quite hard to accept his version of the incident that he did not see at a reasonable
distance ahead the cargo truck that was parked when the Rough Rider [Bus] just came
out of the bridge which is on an (sic) [more] elevated position than the place where
the cargo truck was parked. With its headlights fully on, defendant driver of the
Rough Rider was in a vantage position to see the cargo truck ahead which was parked
and he could just easily have avoided hitting and bumping the same by maneuvering
to the left without hitting the said cargo truck. Besides, it is (sic) shown that there was
still much room or space for the Rough Rider to pass at the left lane of the said

national highway even if the cargo truck had occupied the entire right lane thereof. It
is not true that if the Rough Rider would proceed to pass through the left lane it would
fall into a canal considering that there was much space for it to pass without hitting
and bumping the cargo truck at the left lane of said national highway. The records,
further, showed that there was no incoming vehicle at the opposite lane of the national
highway which would have prevented the Rough Rider from not swerving to its left in
order to avoid hitting and bumping the parked cargo truck. But the evidence showed
that the Rough Rider instead of swerving to the still spacious left lane of the national
highway plowed directly into the parked cargo truck hitting the latter at its rear
portion; and thus, the (sic) causing damages not only to herein plaintiff but to the
cargo truck as well.
[28]

Indeed, petitioner Laspias negligence in driving the bus is apparent in

the records. By his own admission, he had just passed a bridge and was
traversing the highway of Compostela, Cebu at a speed of 40 to 50 kilometers
per hour before the collision occurred. The maximum speed allowed by law on
a bridge is only 30 kilometers per hour. And, as correctly pointed out by the
trial court, petitioner Laspias also violated Section 35 of the Land
Transportation and Traffic Code, Republic Act No. 4136, as amended:
[29]

Sec. 35. Restriction as to speed. (a) Any person driving a motor vehicle on a
highway shall drive the same at a careful and prudent speed, not greater nor less than
is reasonable and proper, having due regard for the traffic, the width of the highway,
and or any other condition then and there existing; and no person shall drive any
motor vehicle upon a highway at such speed as to endanger the life, limb and property
of any person, nor at a speed greater than will permit him to bring the vehicle to a
stop within the assured clear distance ahead.
[30]

Under Article 2185 of the Civil Code, a person driving a vehicle is

presumed negligent if at the time of the mishap, he was violating any traffic
regulation.
[31]

Petitioner Tiu failed to

Overcome the presumption
Of negligence against him as
One engaged in the business
Of common carriage
The rules which common carriers should observe as to the safety of their
passengers are set forth in the Civil Code, Articles 1733, 1755 and 1756.
In this case, respondent Arriesgado and his deceased wife contracted with
petitioner Tiu, as owner and operator of D Rough Riders bus service, for
[32]

[34]

[33]

transportation from Maya, Daanbantayan, Cebu, to Cebu City for the price
of P18.00. It is undisputed that the respondent and his wife were not safely
transported to the destination agreed upon. In actions for breach of contract,
only the existence of such contract, and the fact that the obligor, in this case
the common carrier, failed to transport his passenger safely to his destination
are the matters that need to be proved. This is because under the said
contract of carriage, the petitioners assumed the express obligation to
transport the respondent and his wife to their destination safely and to
observe extraordinary diligence with due regard for all circumstances. Any
injury suffered by the passengers in the course thereof is immediately
attributable to the negligence of the carrier. Upon the happening of the
accident, the presumption of negligence at once arises, and it becomes the
duty of a common carrier to prove that he observed extraordinary diligence in
the care of his passengers. It must be stressed that in requiring the highest
possible degree of diligence from common carriers and in creating a
presumption of negligence against them, the law compels them to curb the
recklessness of their drivers.
[35]

[36]

[37]

[38]

[39]

[40]

While evidence may be submitted to overcome such presumption of

negligence, it must be shown that the carrier observed the required
extraordinary diligence, which means that the carrier must show the utmost
diligence of very cautious persons as far as human care and foresight can
provide, or that the accident was caused by fortuitous event. As correctly
found by the trial court, petitioner Tiu failed to conclusively rebut such
presumption. The negligence of petitioner Laspias as driver of the passenger
bus is, thus, binding against petitioner Tiu, as the owner of the passenger bus
engaged as a common carrier.
[41]

[42]

The Doctrine of
Last Clear Chance
Is Inapplicable in the
Case at Bar
Contrary to the petitioners contention, the principle of last clear chance is
inapplicable in the instant case, as it only applies in a suit between the owners
and drivers of two colliding vehicles. It does not arise where a passenger
demands responsibility from the carrier to enforce its contractual obligations,
for it would be inequitable to exempt the negligent driver and its owner on the
ground that the other driver was likewise guilty of negligence. The common
law notion of last clear chance permitted courts to grant recovery to a plaintiff
who has also been negligent provided that the defendant had the last clear
chance to avoid the casualty and failed to do so. Accordingly, it is difficult to
[43]

see what role, if any, the common law of last clear chance doctrine has to play
in a jurisdiction where the common law concept of contributory negligence as
an absolute bar to recovery by the plaintiff, has itself been rejected, as it has
been in Article 2179 of the Civil Code.
[44]

Thus, petitioner Tiu cannot escape liability for the death of respondent
Arriesgados wife due to the negligence of petitioner Laspias, his employee,
on this score.
Respondents Pedrano and
Condor were likewise
Negligent
In Phoenix Construction, Inc. v. Intermediate Appellate Court, where
therein respondent Dionisio sustained injuries when his vehicle rammed
against a dump truck parked askew, the Court ruled that the improper parking
of a dump truck without any warning lights or reflector devices created an
unreasonable risk for anyone driving within the vicinity, and for having created
such risk, the truck driver must be held responsible. In ruling against the
petitioner therein, the Court elucidated, thus:
[45]

In our view, Dionisios negligence, although later in point of time than the truck
drivers negligence, and therefore closer to the accident, was not an efficient
intervening or independent cause. What the petitioners describe as an intervening
cause was no more than a foreseeable consequence of the risk created by the
negligent manner in which the truck driver had parked the dump truck. In other words,
the petitioner truck driver owed a duty to private respondent Dionisio and others
similarly situated not to impose upon them the very risk the truck driver had created.
Dionisios negligence was not that of an independent and overpowering nature as to
cut, as it were, the chain of causation in fact between the improper parking of the
dump truck and the accident, nor to sever the juris vinculum of liability.

We hold that private respondent Dionisios negligence was only contributory, that
the immediate and proximate cause of the injury remained the truck drivers lack
of due care.
[46]

In this case, both the trial and the appellate courts failed to consider that
respondent Pedrano was also negligent in leaving the truck parked askew
without any warning lights or reflector devices to alert oncoming vehicles, and
that such failure created the presumption of negligence on the part of his

employer, respondent Condor, in supervising his employees properly and

adequately. As we ruled in Poblete v. Fabros:
[47]

It is such a firmly established principle, as to have virtually formed part of the law
itself, that the negligence of the employee gives rise to the presumption of negligence
on the part of the employer. This is the presumed negligence in the selection and
supervision of employee. The theory of presumed negligence, in contrast with the
American doctrine of respondeat superior, where the negligence of the employee
is conclusively presumed to be the negligence of the employer, is clearly deducible
from the last paragraph of Article 2180 of the Civil Code which provides that the
responsibility therein mentioned shall cease if the employers prove that they observed
all the diligence of a good father of a family to prevent damages.
[48]

The petitioners were correct in invoking respondent Pedranos failure to

observe Article IV, Section 34(g) of the Rep. Act No. 4136, which provides:
(g) Lights when parked or disabled. Appropriate parking lights or flares visible one
hundred meters away shall be displayed at a corner of the vehicle whenever such
vehicle is parked on highways or in places that are not well-lighted or is placed in
such manner as to endanger passing traffic.
The manner in which the truck was parked clearly endangered oncoming
traffic on both sides, considering that the tire blowout which stalled the truck in
the first place occurred in the wee hours of the morning. The Court can only
now surmise that the unfortunate incident could have been averted had
respondent Condor, the owner of the truck, equipped the said vehicle with
lights, flares, or, at the very least, an early warning device. Hence, we cannot
subscribe to respondents Condor and Pedranos claim that they should be
absolved from liability because, as found by the trial and appellate courts, the
proximate cause of the collision was the fast speed at which petitioner
Laspias drove the bus. To accept this proposition would be to come too close
to wiping out the fundamental principle of law that a man must respond for the
foreseeable consequences of his own negligent act or omission. Indeed, our
law on quasi-delicts seeks to reduce the risks and burdens of living in society
and to allocate them among its members. To accept this proposition would be
to weaken the very bonds of society.
[49]

[50]

The Liability of
Respondent PPSII
as Insurer

The trial court in this case did not rule on the liability of respondent PPSII,
while the appellate court ruled that, as no evidence was presented against it,
the insurance company is not liable.
A perusal of the records will show that when the petitioners filed the ThirdParty Complaint against respondent PPSII, they failed to attach a copy of the
terms of the insurance contract itself. Only Certificate of Cover No.
054940 issued in favor of Mr. William Tiu, Lahug, Cebu City signed by
Cosme H. Boniel was appended to the third-party complaint. The date of
issuance, July 22, 1986, the period of insurance, from July 22, 1986 to July
22, 1987, as well as the following items, were also indicated therein:
[51]

SCHEDULED VEHICLE
MODEL

MAKE

TYPE OF BODY COLOR

Isuzu Forward

Bus

PLATE
NO. SERIAL/CHASSIS MOTOR
PBP-724
NO.
SER450-677836
1584124
SECTION 1/11

*LIMITS
P50,000.00

BLT FILE NO.

blue mixed
NO.AUTHORIZED
CAPACITY 50
OF

UNLADEN
WEIGHT 6Cyls.
Kgs.

LIABILITYPREMIUMS
PAID

A. THIRD PARTY LIABILITY

B. PASSENGER LIABILITY

Per
PersonPer
AccidentP540.00
P12,000.00
P50,000

52

In its Answer to the Third-Party Complaint, the respondent PPSII admitted

the existence of the contract of insurance, in view of its failure to specifically
deny the same as required under then Section 8(a), Rule 8 of the Rules of
Court, which reads:
53

54

Sec. 8. How to contest genuineness of such documents. When an action or defense is

founded upon a written instrument copied in or attached to the corresponding pleading
as provided in the preceding section, the genuineness and due execution of the
instrument shall be deemed admitted unless the adverse party, under oath, specifically
denies them, and sets forth what he claims to be the facts; but the requirement of an
oath does not apply when the adverse party does not appear to be a party to the
instrument or when compliance with an order for inspection of the original instrument
is refused.

In fact, respondent PPSII did not dispute the existence of such contract,
and admitted that it was liable thereon. It claimed, however, that it had
attended to and settled the claims of those injured during the incident, and set
up the following as special affirmative defenses:
Third party defendant Philippine Phoenix Surety and Insurance, Inc. hereby reiterates
and incorporates by way of reference the preceding paragraphs and further states
THAT:8. It has attended to the claims of Vincent Canales, Asuncion Batiancila and Neptali
Palces who sustained injuries during the incident in question. In fact, it settled
financially their claims per vouchers duly signed by them and they duly executed
Affidavit[s] of Desistance to that effect, xerox copies of which are hereto attached as
Annexes 1, 2, 3, 4, 5, and 6 respectively;
9. With respect to the claim of plaintiff, herein answering third party defendant
through its authorized insurance adjuster attended to said claim. In fact, there were
negotiations to that effect. Only that it cannot accede to the demand of said claimant
considering that the claim was way beyond the scheduled indemnity as per contract
entered into with third party plaintiff William Tiu and third party defendant
(Philippine Phoenix Surety and Insurance, Inc.). Third party Plaintiff William Tiu
knew all along the limitation as earlier stated, he being an old hand in the
transportation business;
55

Considering the admissions made by respondent PPSII, the existence of

the insurance contract and the salient terms thereof cannot be dispatched. It
must be noted that after filing its answer, respondent PPSII no longer objected
to the presentation of evidence by respondent Arriesgado and the insured
petitioner Tiu. Even in its Memorandum before the Court, respondent PPSII
admitted the existence of the contract, but averred as follows:
56

Petitioner Tiu is insisting that PPSII is liable to him for contribution, indemnification
and/or reimbursement. This has no basis under the contract. Under the contract, PPSII
will pay all sums necessary to discharge liability of the insured subject to the limits of
liability but not to exceed the limits of liability as so stated in the contract. Also, it is
stated in the contract that in the event of accident involving indemnity to more than
one person, the limits of liability shall not exceed the aggregate amount so specified
by law to all persons to be indemnified.
57

As can be gleaned from the Certificate of Cover, such insurance contract

was issued pursuant to the Compulsory Motor Vehicle Liability Insurance Law.
It was expressly provided therein that the limit of the insurers liability for each

person was P12,000, while the limit per accident was pegged atP50,000. An
insurer in an indemnity contract for third party liability is directly liable to the
injured party up to the extent specified in the agreement but it cannot be held
solidarily liable beyond that amount. The respondent PPSII could not then
just deny petitioner Tius claim; it should have paidP12,000 for the death of
Felisa Arriesgado, and respondent Arriesgados hospitalization expenses
of P1,113.80, which the trial court found to have been duly supported by
receipts. The total amount of the claims, even when added to that of the other
injured passengers which the respondent PPSII claimed to have
settled, would not exceed the P50,000 limit under the insurance agreement.
58

59

60

Indeed, the nature of Compulsory Motor Vehicle Liability Insurance is such

that it is primarily intended to provide compensation for the death or bodily
injuries suffered by innocent third parties or passengers as a result of the
negligent operation and use of motor vehicles. The victims and/or their
dependents are assured of immediate financial assistance, regardless of the
financial capacity of motor vehicle owners. As the Court, speaking through
Associate Justice Leonardo A. Quisumbing, explained in Government Service
Insurance System v. Court of Appeals:
61

62

However, although the victim may proceed directly against the insurer for indemnity,
the third party liability is only up to the extent of the insurance policy and those
required by law. While it is true that where the insurance contract provides for
indemnity against liability to third persons, and such persons can directly sue the
insurer, the direct liability of the insurer under indemnity contracts against third party
liability does not mean that the insurer can be held liable in solidum with the insured
and/or the other parties found at fault. For the liability of the insurer is based on
contract; that of the insured carrier or vehicle owner is based on tort.
Obviously, the insurer could be held liable only up to the extent of what was provided
for by the contract of insurance, in accordance with the CMVLI law. At the time of the
incident, the schedule of indemnities for death and bodily injuries, professional fees
and other charges payable under a CMVLI coverage was provided for under the
Insurance Memorandum Circular (IMC) No. 5-78 which was approved on November
10, 1978. As therein provided, the maximum indemnity for death was twelve thousand
(P12,000.00) pesos per victim. The schedules for medical expenses were also
provided by said IMC, specifically in paragraphs (C) to (G).
63

Damages to be
Awarded

The trial court correctly awarded moral damages in the amount of P50,000
in favor of respondent Arriesgado. The award of exemplary damages by way
of example or correction of the public good, is likewise in order. As the Court
ratiocinated in Kapalaran Bus Line v. Coronado:
64

65

While the immediate beneficiaries of the standard of extraordinary diligence are, of

course, the passengers and owners of cargo carried by a common carrier, they are not
the only persons that the law seeks to benefit. For if common carriers carefully
observed the statutory standard of extraordinary diligence in respect of their own
passengers, they cannot help but simultaneously benefit pedestrians and the
passengers of other vehicles who are equally entitled to the safe and convenient use of
our roads and highways. The law seeks to stop and prevent the slaughter and maiming
of people (whether passengers or not) on our highways and buses, the very size and
power of which seem to inflame the minds of their drivers. Article 2231 of the Civil
Code explicitly authorizes the imposition of exemplary damages in cases of quasidelicts if the defendant acted with gross negligence.
66

The respondent Pedro A. Arriesgado, as the surviving spouse and heir of

Felisa Arriesgado, is entitled to indemnity in the amount of P50,000.00.
67

The petitioners, as well as the respondents Benjamin Condor and Sergio

Pedrano are jointly and severally liable for said amount, conformably with the
following pronouncement of the Court in Fabre, Jr. vs. Court of Appeals:
68

The same rule of liability was applied in situations where the negligence of the driver
of the bus on which plaintiff was riding concurred with the negligence of a third party
who was the driver of another vehicle, thus causing an accident. In Anuran v. Buo,
Batangas Laguna Tayabas Bus Co. v. Intermediate Appellate Court, and Metro
Manila Transit Corporation v. Court of Appeals, the bus company, its driver, the
operator of the other vehicle and the driver of the vehicle were jointly and severally
held liable to the injured passenger or the latters heirs. The basis of this allocation of
liability was explained in Viluan v. Court of Appeals, thus:
Nor should it make difference that the liability of petitioner [bus owner] springs from
contract while that of respondents [owner and driver of other vehicle] arises from
quasi-delict. As early as 1913, we already ruled in Gutierrez vs. Gutierrez, 56 Phil.
177, that in case of injury to a passenger due to the negligence of the driver of the bus
on which he was riding and of the driver of another vehicle, the drivers as well as the
owners of the two vehicles are jointly and severally liable for damages. Some
members of the Court, though, are of the view that under the circumstances they are
liable on quasi-delict.
69

IN LIGHT OF ALL THE FOREGOING, the petition is PARTIALLY

GRANTED. The Decision of the Court of Appeals is AFFIRMED with
MODIFICATIONS:
(1) Respondent Philippine Phoenix Surety and Insurance, Inc. and
petitioner William Tiu are ORDERED to pay, jointly and severally, respondent
Pedro A. Arriesgado the total amount of P13,113.80;
(2) The petitioners and the respondents Benjamin Condor and Sergio
Pedrano are ORDERED to pay, jointly and severally, respondent Pedro A.
Arriesgado P50,000.00
as
indemnity; P26,441.50
as
actual
damages; P50,000.00 as moral damages; P50,000.00 as exemplary
damages; andP20,000.00 as attorneys fees.
SO ORDERED.
Austria-Martinez,
(Acting
Chairman),
JJ., concur.
Puno J., (Chairman), on official leave.

Tinga, and Chico-Nazario,

[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. LOPEZ,
JULIUS CAESAR GARCIA, ROSARIO MA. V. ORTIZ, MARIETTA
C. CLAVO, ELVIE SENIEL, ROSARIO MARA-MARA, TERESITA
REGALA, MELINDA TORRES, MARELLA MIJARES, JOSEFA
CABATINGAN, MARA NADOC, DIANE MAYO, TESS PLATA,
MAYETTE JOCSON, ARLENE Y. MORTIZ, LIZA MAYO, CARLOS
RANARIO, ROSAMARIA T. RADOC and BERNADETTE
FERRER, respondents.

DECISION
MENDOZA, J.:

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

Appeals[1] in CA-GR No. 28245, dated September 30, 1992, which affirmed
with modification the decision of the Regional Trial Court of Makati, Branch 58,
ordering petitioners jointly and severally to pay damages to private respondent
Amyline Antonio, and its resolution which denied petitioners motion for
reconsideration for lack of merit.
Petitioners Engracio Fabre, Jr. and his wife were owners of a 1982 model
Mazda minibus. They used the bus principally in connection with a bus
service for school children which they operated in Manila. The couple had a
driver, Porfirio J. Cabil, whom they hired in 1981, after trying him out for two
weeks. His job was to take school children to and from the St. Scholasticas
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 Young Adults Ministry from Manila to La Union and back in
consideration of which private respondent paid petitioners the amount of
P3,000.00.
The group was scheduled to leave on November 2, 1984, at 5:00 oclock
in the afternoon. However, as several members of the party were late, the
bus did not leave the Tropical Hut at the corner of Ortigas Avenue and EDSA
until 8:00 oclock in the evening. Petitioner Porfirio Cabil drove the minibus.
The usual route to Caba, La Union was through Carmen,
Pangasinan. However, the bridge at Carmen was under repair, so that
petitioner Cabil, who was unfamiliar with the area (it being his first trip to La
Union), was forced to take a detour through the town of Ba-ay in Lingayen,
Pangasinan. At 11:30 that night, petitioner Cabil came upon a sharp curve 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 bus hit the left traffic steel brace and sign along the road and
rammed the fence of one Jesus Escano, 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 fell on it and smashed its front
portion.
Several passengers were injured. Private respondent Amyline Antonio
was thrown on the floor of the bus and pinned down by a wooden seat which

came off after being unscrewed. It took three persons to safely remove her
from this position. 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 said he 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. He said that he saw the curve when
he was already within 15 to 30 meters of it. He allegedly 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 the basis of their finding they filed a criminal complaint against the
driver, Porfirio Cabil. The case was later filed with the Lingayen Regional Trial
Court. Petitioners Fabre paid Jesus Escano P1,500.00 for the damage to the
latters fence. On the basis of Escanos affidavit of 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 is permanently paralyzed from the waist down. During the trial
she described the operations she underwent and adduced evidence regarding
the cost of her treatment and therapy. Immediately after the accident, she
was taken to the Nazareth Hospital in Ba-ay, Lingayen. As this hospital was
not adequately equipped, she was transferred to the 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 be treated
there. She was therefore brought to Manila, first to the Philippine General
Hospital and later to the Makati Medical Center where she underwent an
operation to correct the dislocation of her spine.
In its decision dated April 17, 1989, the trial court found that:
No convincing evidence was shown that the minibus was properly checked for travel
to a long distance trip and that the driver was properly screened and tested before
being admitted for employment. Indeed, all the evidence presented have shown the
negligent act 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.
Amyline Antonio were the only ones who adduced evidence in support of their claim
for damages, the Court is therefore not in a position to award damages to the other
plaintiffs.

WHEREFORE, premises considered, the Court hereby renders judgment against

defendants 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 to pay jointly and severally to the plaintiffs the following amount:
1) P93,657.11 as compensatory and actual damages;
2) P500,000.00 as the reasonable amount of loss of earning capacity of plaintiff
Amyline Antonio;
3) P20,000.00 as moral damages;
4) P20,000.00 as exemplary damages; and
5) 25% of the recoverable amount as attorneys fees;
6) Costs of suit.

SO ORDERED.
The Court of Appeals affirmed the decision of the trial court with respect to
Amyline Antonio but dismissed it with respect to the other plaintiffs on the
ground that they failed to prove their respective claims. The Court of Appeals
modified the award of damages as follows:
1) P93,657.11 as actual damages;
2) P600,000.00 as compensatory damages;
3) P50,000.00 as moral damages;
4) P20,000.00 as exemplary damages;
5) P10,000.00 as attorneys fees; and
6) Costs of suit.

The Court of Appeals sustained the trial courts finding that petitioner Cabil
failed to exercise due care and precaution in the operation of his vehicle
considering the time and the place of the accident. The Court of Appeals held
that the Fabres were themselves presumptively negligent. Hence, this
petition. Petitioners raise the following issues:
I.

WHETHER OR NOT PETITIONERS WERE NEGLIGENT.

II. WHETHER OR NOT PETITIONERS WERE LIABLE FOR THE INJURIES

SUFFERED BY PRIVATE RESPONDENTS.
III. WHETHER OR NOT DAMAGES CAN BE AWARDED AND IN THE POSITIVE, UP
TO WHAT EXTENT.

Petitioners challenge the propriety of the award of compensatory damages

in the amount of P600,000.00. It is insisted that, on the assumption that

petitioners are liable, an award of P600,000.00 is unconscionable and highly

speculative. Amyline Antonio testified that she was a casual employee of a
company called Suaco, earning P1,650.00 a month, and a dealer of Avon
products, earning an average of P1,000.00 monthly. Petitioners contend that
as casual employees do not have security of tenure, the award of
P600,000.00, considering Amyline Antonios earnings, is without factual basis
as there is no assurance that she would be regularly earning these amounts.
With the exception of the award of damages, the petition is devoid of
merit.
First, it is unnecessary for our purpose to determine whether to decide this
case on the theory that petitioners are liable for breach of contract of carriage
or culpa contractual or on the theory of quasi delict or culpa aquiliana as both
the Regional Trial Court and the Court of Appeals held, for although the
relation of passenger and carrier is contractual both in origin and nature,
nevertheless the act that breaks the contract may be also a tort. [2] In either
case, the question is whether the bus driver, petitioner Porfirio Cabil, was
negligent.
The finding that Cabil drove his bus negligently, while his employer, the
Fabres, who owned the bus, failed to exercise the diligence of a good father of
the family in the selection and supervision of their employee is fully supported
by the evidence on record. These factual findings of the two courts we regard
as final and conclusive, supported as they are by the evidence. Indeed, it was
admitted by Cabil that on the night in question, it was raining, and, as a
consequence, the road was slippery, and it was dark. He averred these facts
to justify his failure to see that there lay a sharp curve ahead. However, it is
undisputed that Cabil drove his bus at the speed of 50 kilometers per hour
and only slowed down when he noticed the curve some 15 to 30 meters
ahead.[3] By then it was too late for him to avoid falling off the road. Given the
conditions of the road and considering that the trip was Cabils first one
outside of Manila, Cabil should have driven his vehicle at a moderate
speed. There is testimony[4] that the vehicles passing on that portion of the
road should only be running 20 kilometers per hour, so that at 50 kilometers
per hour, Cabil was running at a very high speed.
Considering the foregoing the fact that it was raining and the road was
slippery, that it was dark, that he drove his bus at 50 kilometers an hour when
even on a good day the normal speed was only 20 kilometers an hour, and
that he was unfamiliar with the terrain, Cabil was grossly negligent and should
be held liable for the injuries suffered by private respondent Amyline Antonio.

Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise
to the presumption that his employers, the Fabres, were themselves negligent
in the selection and supervision of their employee.
Due diligence in selection of employees is not satisfied by finding that the
applicant possessed a professional drivers license. The employer should
also examine the applicant for his qualifications, experience and record of
service.[5] Due diligence in supervision, on the other hand, requires the
formulation of rules and regulations for the guidance of employees and the
issuance of proper instructions as well as actual implementation and
monitoring of consistent compliance with the rules.[6]
In the case at bar, the Fabres, in allowing Cabil to drive the bus to La
Union, apparently did not consider the fact that Cabil had been driving for
school children only, from their homes to the St. Scholasticas College in
Metro Manila.[7] They had hired him only after a two-week
apprenticeship. They had tested him for certain matters, such as whether he
could remember the names of the children he would be taking to school,
which were irrelevant to his qualification to drive on a long distance travel,
especially considering that the trip to La Union was his first. The existence of
hiring procedures and supervisory policies cannot be casually invoked 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
(made impossible by the congregations delayed meeting) could have 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. Even if it had been, the delay did not bear
directly on the cause of the accident. With respect to 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
place to which he wishes to be conveyed, but exercises no other control over the
conduct of the driver, is not responsible for acts of negligence of the latter or
prevented from recovering for injuries suffered from a collision between the
automobile and a train, caused by the negligence either of the locomotive engineer or
the automobile driver.[9]
As already stated, this case actually involves a contract of
carriage. Petitioners, the Fabres, did not have to be engaged in the business
of public transportation for the provisions of the Civil Code on common
carriers to apply to them. As this Court has held:[10]

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.
The above article makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one who
does such carrying only as an ancillary activity (in local idiom, as a
sideline). Article 1732 also carefully avoids making any distinction between a
person or enterprise offering transportation service on a regular or scheduled
basis and one offering such service on an occasional, episodic or
unscheduled basis. Neither does Article 1732 distinguish between a carrier
offering its services to the general public, i.e., the general community or
population, and one who offers services or solicits business only from a
narrow segment of the general population. We think that Article 1732
deliberately refrained from making such distinctions.
As common carriers, the Fabres were bound to exercise extraordinary
diligence for the safe transportation of the passengers to their
destination. This duty of care is not excused by proof that they exercised the
diligence of a good father of the family in the selection and supervision of their
employee. As Art. 1759 of the Code provides:
Common carriers are liable for the death of or injuries to passengers
through the negligence or wilful acts of the formers employees, although such
employees may have acted beyond the scope of their authority or in violation
of the orders of the common carriers.
This liability of the common carriers does not cease upon proof that they
exercised all the diligence of a good father of a family in the selection and
supervision of their employees.
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 finding them guilty of breach of contract of
carriage under Arts. 1733, 1755 and 1759 of the Civil Code.
Secondly, we sustain the award of damages in favor of Amyline
Antonio. However, we think the Court of Appeals erred in increasing the
amount of compensatory damages because private respondents did not
question this award as inadequate.[11] To the contrary, the award of
P500,000.00 for compensatory damages which the Regional Trial Court made
is reasonable considering the contingent nature of her income as a casual
employee of a company and as distributor of beauty products and the fact that
the possibility that she might be able to work again has not been

foreclosed. In fact she testified that one of her previous employers had
expressed willingness to employ her again.
With respect to the other awards, while the decisions of the trial court and
the Court of Appeals do not sufficiently indicate the factual and legal basis for
them, we find that they are nevertheless supported by evidence in the records
of this case. Viewed as an action for quasi delict, this case falls squarely
within the purview of Art. 2219(2) providing for the payment of moral damages
in cases of quasi delict. On the theory that petitioners are liable for breach of
contract of carriage, the award of moral damages is authorized by Art. 1764,
in relation to Art. 2220, since Cabils gross negligence amounted to bad faith.
[12]
Amyline Antonios testimony, as well as the testimonies of her father and
co-passengers, fully establish the physical suffering and mental anguish she
endured as a result of the injuries caused by petitioners negligence.
The award of exemplary damages and attorneys fees was also properly
made. However, for the same reason that it was error for the appellate court
to increase the award of compensatory damages, we hold that it was also
error for it to increase the award of moral damages and reduce the award of
attorneys fees, inasmuch as private respondents, 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 the theory of quasi delict or on that of breach of contract. The
question is whether, as the two courts below held, petitioners, who are the
owners and driver of the bus, may be made to respond jointly and severally to
private respondent. We hold that they may be. In Dangwa Trans. Co. Inc. v.
Court of Appeals,[14] on facts similar to those in this case, this Court held the
bus company and the driver jointly and severally liable for damages for
injuries suffered by a passenger. Again, in Bachelor Express, Inc. v. Court of
Appeals[15] a 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 of the speeding bus and suffered injuries, was held
also jointly and severally liable with the bus company to the injured
passengers.
The same rule of liability was applied in situations where the negligence of
the driver of the bus on which plaintiff was riding concurred with the
negligence of a third party who was the driver of another vehicle, thus causing
an accident. In Anuran v. Buo,[16] Batangas Laguna Tayabas Bus Co. v.
Intermediate Appellate Court,[17] and Metro Manila Transit Corporation v. Court
of Appeals,[18] the bus company, its driver, the operator of the other vehicle and
the driver of the vehicle were jointly and severally held liable to the injured

passenger or the latters heirs. The basis of this allocation of liability was
explained in Viluan v. Court of Appeals,[19] thus:
Nor should it make any difference that the liability of petitioner [bus owner] springs
from contract while that of respondents [owner and driver of other vehicle] arises
from quasi-delict. As early as 1913, we already ruled in Gutierrez vs. Gutierrez, 56
Phil. 177, that in case of injury to a passenger due to the negligence of the driver of
the bus on which he was riding and of the driver of another vehicle, the drivers as well
as the owners of the two vehicles are jointly and severally liable for damages. Some
members of the Court, though, are of the view that under the circumstances they are
liable on quasi-delict.[20]
It is true that in Philippine Rabbit Bus Lines, Inc. v. Court of Appeals [21] this
Court exonerated the jeepney driver from liability to the injured passengers
and their families while holding the owners of the jeepney jointly and severally
liable, but that is because that 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 spouses
Mangune and Carreon [the jeepney owners] were negligent. However, its ruling that
spouses Mangune and Carreon are jointly and severally liable with Manalo is
erroneous. The driver cannot be held jointly and severally liable with the carrier in
case of breach of the contract of carriage. The rationale behind this is readily
discernible. Firstly, the contract of carriage is between the carrier and the passenger,
and in the event of contractual liability, 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 of Appeals, 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 not stake 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 allege alternative causes of action and join as
many parties as may be liable on such causes of action [23] so long as private
respondent and her co-plaintiffs do not recover twice for the same
injury. What is clear from the cases is the intent of the plaintiff there to recover
from both the carrier and the driver, thus justifying the holding that the carrier
and the driver were jointly and severally liable because their separate and
distinct acts concurred to produce the same injury.
WHEREFORE, the decision of the Court of Appeals is AFFIRMED with
MODIFICATION as to the award of damages. Petitioners are ORDERED to

PAY jointly and severally the private 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
Amyline Antonio;
3) P20,000.00 as moral damages;
4) P20,000.00 as exemplary damages;
5) 25% of the recoverable amount as attorneys fees; and
6) costs of suit.

SO ORDERED.
Regalado, (Chairman), Romero, Puno, and Torres, Jr., JJ., concur.

CONSTRUCTION DEVELOPMENT G.R. No. 147791

CORPORATION OF THE
PHILIPPINES,
Petitioner,
Present:
Panganiban, C.J. (Chairperson),
- versus Ynares-Santiago,
Austria-Martinez,
Callejo, Sr., and
Chico-Nazario, JJ.
REBECCA G. ESTRELLA, RACHEL E.
FLETCHER, PHILIPPINE PHOENIX
SURETY & INSURANCE INC.,
BATANGAS LAGUNA TAYABAS
BUS CO., and WILFREDO
Promulgated:
DATINGUINOO,
Respondents.
September 8, 2006
x ---------------------------------------------------------------------------------------- x

DECISION
YNARES-SANTIAGO, J.:

This petition for review assails the March 29, 2001 Decision [1] of the Court
of Appeals in CA-G.R. CV No. 46896, which affirmed with modification the
February 9, 1993 Decision[2] of the Regional Trial Court of Manila, Branch 13, in
Civil Case No. R-82-2137, finding Batangas Laguna Tayabas Bus Co. (BLTB) and
Construction Development Corporation of the Philippines (CDCP) liable for
damages.
The antecedent facts are as follows:
On December 29, 1978, respondents Rebecca G. Estrella and her
granddaughter, Rachel E. Fletcher, boarded in San Pablo City, a BLTB bus bound
for Pasay City. However, they never reached their destination because their bus
was rammed from behind by a tractor-truck of CDCP in the South
Expressway. The strong impact pushed forward their seats and pinned their knees
to the seats in front of them. They regained consciousness only when rescuers
created a hole in the bus and extricated their legs from under the seats. They were
brought to theMakati Medical Center where the doctors diagnosed their injuries to
be as follows:
Medical Certificate of Rebecca Estrella
Fracture, left tibia mid 3rd
Lacerated wound, chin
Contusions with abrasions, left lower leg
Fracture, 6th and 7th ribs, right[3]
Medical Certificate of Rachel Fletcher
Extensive lacerated wounds, right leg posterior aspect popliteal area
and antero-lateral aspect mid lower leg with severance of muscles.
Partial amputation BK left leg with severance of gastro-soleus and
antero-lateral compartment of lower leg.
Fracture, open comminuted, both tibial [4]

Thereafter, respondents filed a Complaint[5] for damages against CDCP,

BLTB, Espiridion Payunan, Jr. and Wilfredo Datinguinoo before the Regional Trial
Court of Manila, Branch 13. They alleged (1) that Payunan, Jr. and Datinguinoo,

who were the drivers of CDCP and BLTB buses, respectively, were negligent and
did not obey traffic laws; (2) that BLTB and CDCP did not exercise the diligence
of a good father of a family in the selection and supervision of their employees; (3)
that BLTB allowed its bus to operate knowing that it lacked proper maintenance
thus exposing its passengers to grave danger; (4) that they suffered actual damages
amounting to P250,000.00 for Estrella and P300,000.00 for Fletcher; (5) that they
suffered physical discomfort, serious anxiety, fright and mental anguish,
besmirched reputation and wounded feelings, moral shock, and lifelong social
humiliation; (6) that defendants failed to act with justice, give respondents their
due, observe honesty and good faith which entitles them to claim for exemplary
damage; and (7) that they are entitled to a reasonable amount of attorneys fees and
litigation expenses.
CDCP filed its Answer[6] which was later amended to include a third-party
complaint against Philippine Phoenix Surety and Insurance, Inc. (Phoenix).[7]
On February 9, 1993, the trial court rendered a decision finding CDCP and
BLTB and their employees liable for damages, the dispositive portion of which,
states:
WHEREFORE, judgment is rendered:
In the Complaint
1.

In favor of the plaintiffs and against the defendants

BLTB, Wilfredo Datinguinoo, Construction and Development
Corporation of the Philippines (now PNCC) and Espiridion Payunan, Jr.,
ordering said defendants, jointly and severally to pay the plaintiffs the
sum of P79,254.43 as actual damages and to pay the sum of P10,000.00
as attorneys fees or a total of P89,254.43;
2.
In addition, defendant Construction and Development
Corporation of the Philippines and defendant Espiridion Payunan, Jr.,
shall pay the plaintiffs the amount of Fifty Thousand (P50,000.00) Pesos
to plaintiff Rachel Fletcher and Twenty Five Thousand (P25,000.00)
Pesos to plaintiff Rebecca Estrella;

3.
On the counterclaim of BLTB Co. and Wilfredo
Datinguinoo
Dismissing the counterclaim;
4.
On the crossclaim against Construction and Development
Corporation of the Philippines (now PNCC) and Espiridion Payunan, Jr.

Dismissing the crossclaim;

5.
On the counterclaim of Construction and Development
Corporation of the Philippines (now PNCC)
Dismissing the counterclaim;

6.
On the crossclaim against BLTB
Dismissing the crossclaim;
7.
On the Third Party Complaint by Construction and
Development
Corporation
of
the Philippines against
Philippine Phoenix Surety and Insurance, Incorporated
Dismissing the Third Party Complaint.
SO ORDERED.[8]

The trial court held that BLTB, as a common carrier, was bound to observe
extraordinary diligence in the vigilance over the safety of its passengers. It must
carry the passengers safely as far as human care and foresight provide, using the
utmost diligence of very cautious persons, with a due regard for all the
circumstances. Thus, where a passenger dies or is injured, the carrier is presumed
to have been at fault or has acted negligently. BLTBs inability to carry
respondents to their destination gave rise to an action for breach of contract of
carriage while its failure to rebut the presumption of negligence made it liable to
respondents for the breach.[9]
Regarding CDCP, the trial court found that the tractor-truck it owned
bumped the BLTB bus from behind. Evidence showed that CDCPs driver was
reckless and driving very fast at the time of the incident. The gross negligence of
its driver raised the presumption that CDCP was negligent either in the selection or
in the supervision of its employees which it failed to rebut thus making it and its
driver liable to respondents.[10]
Unsatisfied with the award of damages and attorneys fees by the trial court,
respondents moved that the decision be reconsidered but was denied. Respondents
elevated the case[11] to the Court of Appeals which affirmed the decision of the trial
court but modified the amount of damages, the dispositive portion of which
provides:
WHEREFORE, the assailed decision dated October 7, 1993 of
the Regional Trial Court, Branch 13, Manila is hereby AFFIRMED with
the following MODIFICATION:

1.
The interest of six (6) percent per annum on the actual
damages of P79,354.43 should commence to run from the time the
judicial demand was made or from the filing of the complaint
on February 4, 1980;
2.
Thirty (30) percent of the total amount recovered is
hereby awarded as attorneys fees;
3.
Defendants-appellants Construction and Development
Corporation of the Philippines (now PNCC) and Espiridion Payunan, Jr.
are ordered to pay plaintiff-appellants Rebecca Estrella and Rachel
Fletcher the amount of Twenty Thousand (P20,000.00) each as
exemplary damages and P80,000.00 by way of moral damages to Rachel
Fletcher.
SO ORDERED.[12]

The Court of Appeals held that the actual or compensatory damage sought
by respondents for the injuries they sustained in the form of hospital bills were
already liquidated and were ascertained. Accordingly, the 6% interest per annum
should commence to run from the time the judicial demand was made or from the
filing of the complaint and not from the date of judgment. The Court of Appeals
also awarded attorneys fees equivalent to 30% of the total amount recovered based
on the retainer agreement of the parties. The appellate court also held that
respondents are entitled to exemplary and moral damages. Finally, it affirmed the
ruling of the trial court that the claim of CDCP againstPhoenix had already
prescribed.
Hence, this petition raising the following issues:
I
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED
IN NOT HOLDING RESPONDENTS BLTB AND/OR ITS DRIVER
WILFREDO DATINGUINOO SOLELY LIABLE FOR THE
DAMAGES SUSTAINED BY HEREIN RESPONDENTS FLETCHER
AND ESTRELLA.
II

WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED

IN AWARDING EXCESSIVE OR UNFOUNDED DAMAGES,
ATTORNEYS FEES AND LEGAL INTEREST TO RESPONDENTS
FLETCHER AND ESTRELLA.
III
WHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED
IN NOT HOLDING RESPONDENT PHOENIX LIABLE UNDER ITS
INSURANCE POLICY ON THE GROUND OF PRESCRIPTION.

The issues for resolution are as follows: (1) whether BLTB and its driver
Wilfredo Datinguinoo are solely liable for the damages sustained by respondents;
(2) whether the damages, attorneys fees and legal interest awarded by the CA are
excessive and unfounded; (3) whether CDCP can recover under its insurance
policy from Phoenix.
Petitioner contends that since it was made solidarily liable with BLTB for
actual damages and attorneys fees in paragraph 1 of the trial courts decision, then
it should no longer be held liable to pay the amounts stated in paragraph 2 of the
same decision. Petitioner claims that the liability for actual damages and attorneys
fees is based on culpa contractual, thus, only BLTB should be held liable. As
regards paragraph 2 of the trial courts decision, petitioner claims that it is
ambiguous and arbitrary because the dispositive portion did not state the basis and
nature of such award.
Respondents, on the other hand, argue that petitioner is also at fault, hence, it
was properly joined as a party. There may be an action arising out of one incident
where questions of fact are common to all. Thus, the cause of action based
on culpa aquiliana in the civil suit they filed against it was valid.
The petition lacks merit.
The case filed by respondents against petitioner is an action for culpa
aquiliana or quasi-delict under Article 2176 of the Civil Code. [13] In this regard,
Article 2180 provides that the obligation imposed by Article 2176 is demandable
for the acts or omissions of those persons for whom one is
responsible. Consequently, an action based on quasi-delict may be instituted

against the employer for an employees act or omission. The liability for the
negligent conduct of the subordinate is direct and primary, but is subject to the
defense of due diligence in the selection and supervision of the employee. [14] In the
instant case, the trial court found that petitioner failed to prove that it exercised the
diligence of a good father of a family in the selection and supervision of Payunan,
Jr.
The trial court and the Court of Appeals found petitioner solidarily liable
with BLTB for the actual damages suffered by respondents because of the injuries
they sustained. It was established that Payunan, Jr. was driving recklessly because
of the skid marks as shown in the sketch of the police investigator.
It is well-settled in Fabre, Jr. v. Court of Appeals,[15] that the owner of the
other vehicle which collided with a common carrier is solidarily liable to the
injured passenger of the same. We held, thus:
The same rule of liability was applied in situations where the
negligence of the driver of the bus on which plaintiff was riding
concurred with the negligence of a third party who was the driver of
another vehicle, thus causing an accident. In Anuran v. Buo, Batangas
Laguna Tayabas Bus Co. v. Intermediate Appellate Court, and Metro
Manila Transit Corporation v. Court of Appeals, the bus company, its
driver, the operator of the other vehicle and the driver of the vehicle
were jointly and severally held liable to the injured passenger or the
latters heirs. The basis of this allocation of liability was explained
in Viluan v. Court of Appeals, thus:
Nor should it make any difference that the liability of
petitioner [bus owner] springs from contract while that of
respondents [owner and driver of other vehicle] arises from quasidelict. As early as 1913, we already ruled in Gutierrez vs. Gutierrez, 56
Phil. 177, that in case of injury to a passenger due to the negligence of
the driver of the bus on which he was riding and of the driver of another
vehicle, the drivers as well as the owners of the two vehicles are jointly
and severally liable for damages. x x x
xxxx

As in the case of BLTB, private respondents in this case and her

co-plaintiffs did not stake 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 allege alternative
causes of action and join as many parties as may be liable on such
causes of action so long as private respondent and her co-plaintiffs
do not recover twice for the same injury. What is clear from the cases
is the intent of the plaintiff there to recover from both the carrier and the
driver, thus justifying the holding that the carrier and the driver were
jointly and severally liable because their separate and distinct acts
concurred to produce the same injury.[16] (Emphasis supplied)

In a joint obligation, each obligor answers only for a part of the whole
liability; in a solidary or joint and several obligation, the relationship between
the active and the passive subjects is so close that each of them must comply with
or demand the fulfillment of the whole obligation. In Lafarge Cement v.
Continental Cement Corporation,[17] we reiterated that joint tort feasors are jointly
and severally liable for the tort which they commit. Citing Worcester v. Ocampo,
[18]
we held that:
x x x The difficulty in the contention of the appellants is that they fail to
recognize that the basis of the present action is tort. They fail to
recognize the universal doctrine that each joint tort feasor is not only
individually liable for the tort in which he participates, but is also jointly
liable with his tort feasors. x x x
It may be stated as a general rule that joint tort feasors are all the
persons who command, instigate, promote, encourage, advise,
countenance, cooperate in, aid or abet the commission of a tort, or who
approve of it after it is done, if done for their benefit. They are each
liable as principals, to the same extent and in the same manner as if they
had performed the wrongful act themselves. x x x
Joint tort feasors are jointly and severally liable for the tort which
they commit. The persons injured may sue all of them or any number
less than all. Each is liable for the whole damages caused by all, and all
together are jointly liable for the whole damage. It is no defense for one
sued alone, that the others who participated in the wrongful act are not
joined with him as defendants; nor is it any excuse for him that his

participation in the tort was insignificant as compared to that of the

others. x x x
Joint tort feasors are not liable pro rata. The damages can not be
apportioned among them, except among themselves. They cannot insist
upon an apportionment, for the purpose of each paying an aliquot part.
They are jointly and severally liable for the whole amount. x x x
A payment in full for the damage done, by one of the joint tort
feasors, of course satisfies any claim which might exist against the
others. There can be but satisfaction. The release of one of the joint tort
feasors by agreement generally operates to discharge all. x x x
Of course the court during trial may find that some of the alleged
tort feasors are liable and that others are not liable. The courts may
release some for lack of evidence while condemning others of the
alleged tort feasors. And this is true even though they are charged jointly
and severally.[19]

Petitioners claim that paragraph 2 of the dispositive portion of the trial

courts decision is ambiguous and arbitrary and also entitles respondents to recover
twice is without basis. In the body of the trial courts decision, it was clearly stated
that petitioner and its driver Payunan, Jr., are jointly and solidarily liable for moral
damages in the amount of P50,000.00 to respondent Fletcher and P25,000.00 to
respondent Estrella.[20] Moreover, there could be no double recovery because the
award in paragraph 2 is for moral damages while the award in paragraph 1 is for
actual damages and attorneys fees.
Petitioner next claims that the damages, attorneys fees, and legal interest
awarded by the Court of Appeals are excessive.
Moral damages may be recovered in quasi-delicts causing physical injuries.
The award of moral damages in favor of Fletcher and Estrella in the amount of
P80,000.00 must be reduced since prevailing jurisprudence fixed the same at
P50,000.00.[22] While moral damages are not intended to enrich the plaintiff at the
expense of the defendant, the award should nonetheless be commensurate to the
suffering inflicted.[23]
[21]

The Court of Appeals correctly awarded respondents exemplary damages in

the amount of P20,000.00 each. Exemplary damages may be awarded in addition
to moral and compensatory damages.[24] Article 2231 of the Civil Code also states
that in quasi-delicts, exemplary damages may be granted if the defendant acted
with gross negligence.[25] In this case, petitioners driver was driving recklessly at
the time its truck rammed the BLTB bus. Petitioner, who has direct and primary
liability for the negligent conduct of its subordinates, was also found negligent in
the selection and supervision of its employees. In Del Rosario v. Court of Appeals,
[26]
we held, thus:
ART. 2229 of the Civil Code also provides that such damages may be
imposed, by way of example or correction for the public good. While
exemplary damages cannot be recovered as a matter of right, they need
not be proved, although plaintiff must show that he is entitled to moral,
temperate or compensatory damages before the court may consider the
question of whether or not exemplary damages should be
awarded. Exemplary Damages are imposed not to enrich one party or
impoverish another but to serve as a deterrent against or as a negative
incentive to curb socially deleterious actions.

Regarding attorneys fees, we held in Traders Royal Bank Employees

Union-Independent v. National Labor Relations Commission,[27]that:
There are two commonly accepted concepts of attorneys fees, the
so-called ordinary and extraordinary. In its ordinary concept, an
attorneys fee is the reasonable compensation paid to a lawyer by his
client for the legal services he has rendered to the latter. The basis of
this compensation is the fact of his employment by and his agreement
with the client.
In its extraordinary concept, an attorneys fee is an indemnity
for damages ordered by the court to be paid by the losing party in a
litigation. The basis of this is any of the cases provided by law where
such award can be made, such as those authorized in Article 2208, Civil
Code, and is payable not to the lawyer but to the client, unless they
have agreed that the award shall pertain to the lawyer as additional
compensation or as part thereof.[28] (Emphasis supplied)

In the instant case, the Court of Appeals correctly awarded attorneys fees
and other expenses of litigation as they may be recovered as actual or
compensatory damages when exemplary damages are awarded; when the
defendant acted in gross and evident bad faith in refusing to satisfy the plaintiffs
valid, just and demandable claim; and in any other case where the court deems it
just and equitable that attorneys feesand expenses of litigation should be
recovered.[29]
Regarding the imposition of legal interest at the rate of 6% from the time of
the filing of the complaint, we held in Eastern Shipping Lines, Inc. v. Court of
Appeals,[30] that when an obligation, regardless of its source, i.e., law, contracts,
quasi-contracts, delicts or quasi-delicts is breached, the contravenor can be held
liable for payment of interest in the concept of actual and compensatory damages,
[31]
subject to the following rules, to wit
1.
When the obligation is breached, and it consists in the
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 from the time
it is judicially demanded. In the absence of stipulation, 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.
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 the rate of 6% per
annum. No interest, however, shall be adjudged on unliquidated claims
or damages except when or until the demand 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 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 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.[32] (Emphasis supplied)

Accordingly, the legal interest of 6% shall begin to run on February 9,

1993 when the trial court rendered judgment and not onFebruary 4, 1980 when the
complaint was filed. This is because at the time of the filing of the complaint, the
amount of the damages to which plaintiffs may be entitled remains unliquidated
and unknown, until it is definitely ascertained, assessed and determined by the
court and only upon presentation of proof thereon. [33] From the time the judgment
becomes final and executory, the interest rate shall be 12% until its satisfaction.
Anent the last issue of whether petitioner can recover under its insurance
policy from Phoenix, we affirm the findings of both the trial court and the Court of
Appeals, thus:
As regards the liability of Phoenix, the court a quo correctly ruled
that defendant-appellant CDCPs claim against Phoenix already
prescribed pursuant to Section 384 of P.D. 612, as amended, which
provides:
Any person having any claim upon the policy issued
pursuant to this chapter shall, without any unnecessary
delay, present to the insurance company concerned a
written notice of claim setting forth the nature, extent and
duration of the injuries sustained as certified by a duly
licensed physician. Notice of claim must be filed within
six months from date of the accident, otherwise, the claim
shall be deemed waived. Action or suit for recovery of
damage due to loss or injury must be brought in proper
cases, with the Commissioner or Courts within one year
from denial of the claim, otherwise, the claimants right of
action shall prescribe. (As amended by PD 1814, BP 874.)
[34]

The law is clear and leaves no room for interpretation. A written notice of
claim must be filed within six months from the date of the accident. Since
petitioner never made any claim within six months from the date of the accident,
its claim has already prescribed.
WHEREFORE, the instant petition is DENIED. The Decision of the Court
of Appeals in CA-G.R. CV No. 46896 dated March 29, 2001, which modified the
Decision of the Regional Trial Court of Manila, Branch 13, in Civil Case No. R82-2137, is AFFIRMED with the MODIFICATIONS that petitioner is held
jointly and severally liable to pay (1) actual damages in the amount of P79,354.43;
(2) moral damages in the amount of P50,000.00 each for Rachel Fletcher and
Rebecca Estrella; (3) exemplary damages in the amount of P20,000.00 each for
Rebecca Estrella and Rachel Fletcher; and (4) thirty percent (30%) of the total
amount recovered as attorneys fees. The total amount adjudged shall earn interest
at the rate of 6% per annum from the date of judgment of the trial court until
finality of this judgment. From the time this Decision becomes final and executory
and the judgment amount remains unsatisfied, the same shall earn interest at the
rate of 12% per annum until its satisfaction.
Republic of the Philippines
SUPREME COURT
Manila
EN BANC
G.R. Nos. L-21477-81

April 29, 1966

FRANCISCA VILUAN, petitioner,

vs.
THE COURT OF APPEALS, PATRICIO HUFANA and GREGORIO HUFANA, respondents.
Jose A. Solomon, for petitioner.
Lourdes M. Garcia, for respondents.
REGALA, J.:
Seven persons were killed and thirteen others were injured in Bangar, La Union, on
February 16, 1958, when a passenger bus on which they were riding caught fire after hitting
a post and crashing against a tree. The bus, owned by petitioner and driven by

Hermenegildo Aquino, came from San Fernando, La Union and was on its way to Candon,
Ilocos Sur.
It appears that, as the bus neared the gate of the Gabaldon school building in the
municipality of Bangar, another passenger bus owned by Patricio Hufana and driven by
Gregorio Hufana tried to overtake it but that instead of giving way, Aquino increased the
speed of his bus and raced with the overtaking bus. Aquino lost control of his bus as a result
of which it hit a post, crashed against a tree and then burst into flames.
Among those who perished were Timoteo Mapanao, Francisca Lacsamana, Narcisa
Mendoza and Gregorio Sibayan, whose heirs sued petitioner and the latter's driver,
Hermenegildo Aquino, for damages for breach of contract of carriage. Carolina Sabado, one
of those injured, also sued petitioner and the driver for damages. The complaints were filed
in the Court of First Instance of La Union.
In their answer, petitioner and her driver blamed respondent Gregorio Hufana for the
accident. With leave of court, they filed third party complaints against Hufana and the latter's
employer, Patricio Hufana.
After trial, the court found that the accident was due to the concurrent negligence of the
drivers of the two buses and held both, together with their respective employers, jointly and
severally liable for damages.
The dispositive portion of its decision reads:
IN VIEW OF ALL THE FOREGOING, judgment is hereby rendered, declaring the
plaintiff's entitled to damages to be paid jointly and severally by the defendants and
third-party defendants as follows:
(1) For plaintiff Juliana C. Vda. de Mapanao for the death of her son Timoteo
Mapanao, the sum of P5,000.00 for actual damages, P1,000.00 as moral damages
and P250.00 as attorney's fees;
(2) For plaintiff Leon Lacsamana for the death of his daughter Francisca Lacsamana,
the sum of P4,000.00 as actual damages, P1,000.00 as moral damages and
P250.00 as attorney's fees;
(3) For plaintiffs Juan Mendoza and Magdalena Mendoza for the death of their
mother Narcisa Mendoza, the sum of P4,000.00 for actual damages, P1,000.00 for
moral damages and P250.00 as attorney's fees;
(4) For plaintiffs Agustina Sabado, Quintin Sibayan, Julita Sibayan, Primitivo Sibayan
and Avelina Sibayan, the sum of P4,000.00 for actual damages, P1,500.00 for moral
damages and P250.00 as attorney's fees;
(5) For the injured passenger Carolina Sabado, P649.00 for actual damages,
P1,000.00 for moral damages and P250.00 for attorney's fees.

All such amounts awarded as damages shall bear interest at the legal rate of six per
cent (6%) per annum from the date of this decision until the same shall have been
duly paid in full.
Defendants and third-party defendants are further ordered to pay proportionate
costs."
Both petitioner and her driver and the respondents herein appealed to the Court of Appeals.
While affirming the finding that the accident was due to the concurrent negligence of the
drivers of both the Viluan and the Hufana buses, the Court of Appeals differed with the trial
court in the assessment of liabilities of the parties. In its view only petitioner Francisca
Viluan, as operator of the bus, is liable for breach of contract of carriage. The driver,
Hermenegildo Aquino, cannot be made jointly and severally liable with petitioner because
he is merely the latter's employee and is in no way a party to the contract of carriage. The
court added, however
Hermenegildo Aquino is not entirely free from liability. He may be held liable,
criminally and civilly, under the Revised Penal Code (Articles 100 and 103), but not
in a civil suit for damages predicated upon a breach of contract, such as this one
(Aguas, et al. vs. Vargas, et al., CA-G.R. No. 27161-R, Jan. 22, 1963). Furthermore,
the common carrier, Francisca Viluan could recover from Aquino any damages that
she might have suffered by reason of the latter's negligence.
Neither may respondents Patricio Hufana and Gregorio Hufana be held liable in the opinion
of the appellate court because the plaintiffs did not amend complaints in the main action so
as to assert a claim against the respondents as third party defendants.
The appellate court likewise disallowed the award of moral damages for P1,000.00 to
Carolina Sabado, there being no showing that the common carrier was guilty of fraud or bad
faith in the performance of her obligation. Accordingly, it rendered judgment as follows:
IN VIEW OF ALL THE FOREGOING, we hereby find defendant-appellant Francisca
Viluan solely liable to the plaintiffs-appellees for the damages and attorney's fees
awarded to them by the court below and further declare null and void the lower
court's award of moral damages in the amount of P1,000.00 in favor of plaintiff
Carolina Sabado. Thus modified, the judgment appealed from is affirmed in all other
respects, with costs in this instance against defendant-appellant Francisca Viluan.
From this judgment petitioner brought this appeal. In brief, her position is that since the
proximate cause of the accident was found to be the concurrent negligence of the drivers of
the two buses, then she and respondent Patricio and Gregorio Hufana should have been
held equally liable to the plaintiffs in the damage suits. The fact that the respondents were
not sued as principal defendants but were brought into the cases as third party defendants
should not preclude a finding of their liability.
We agree with petitioner's contention. To begin with, the Court of Appeals' ruling is based on
section 5 of Rule 12 of the former Rules of Court, 1 which was adopted from Rule 14-a of the
Federal Rules of Civil Procedure. While the latter provision has indeed been held to

preclude a judgment in favor of a plaintiff and against a third party defendant where the
plaintiff has not amended his complaint to assert a claim against a third party
defendant, 2yet, as held in subsequent decisions, this rule applies only to cases where the
third party defendant is brought in on an allegation of liability to the defendants. The rule
does not apply where a third-party defendant is impleaded on the ground of direct liability to
the plaintiffs, in which case no amendment of the plaintiffs complaint is necessary. 3 As
explained in the Atlantic Coast Line R. Co. vs. U. S. Fidelity & Guaranty Co., 52 F. Supp.
177 (1943):
From the sources of Rule 14 and the decisions herein cited, it is clear that this rule,
like the admiralty rule, "covers two distinct subjects, the addition of parties defendant
to the main cause of action, and the bringing in of a third party for a defendant's
remedy over." x x x
If the third party complaint alleges facts showing a third party's direct liability to
plaintiff on the claim set out in plaintiff's petition, then third party "shall" make his
defenses as provided in Rule 12 and his counterclaims against plaintiff as provided
in Rule 13. In the case of alleged direct liability, no amendment is necessary or
required. The subject-matter of the claim is contained in plaintiff's complaint, the
ground of third party's liability on that claim is alleged in third party complaint, and
third party's defense to set up in his an to plaintiff's complaint. At that point and
without amendment, the plaintiff and third party are at issue as to their rights
respecting the claim.
The provision in the rule that, "The third-party defendant may assert any defenses
which the third-party plaintiff may assert to the plaintiff's claim," applies to the other
subject, namely, the alleged liability of third party defendant. The next sentence in
the rule, "The third-party defendant is bound by the adjudication of the third party
plaintiff's liability to the plaintiff, as well as of his own to the plaintiff or to the thirdparty plaintiff," applies to both subjects. If third party is brought in as liable only to
defendant and judgment is rendered adjudicating plaintiff's right to recover against
defendant and defendant's rights to recover against third party, he is bound by both
adjudications. That part of the sentence refers to the second subject. If third party is
brought in as liable to plaintiff, then third party is bound by the adjudication as
between him and plaintiff. That refers to the first subject. If third party is brought in as
liable to plaintiff and also over to defendant, then third party is bound by both
adjudications. The next sentence in the rule, "The plaintiff may amend his pleadings
to assert against the third-party defendant any claim which the plaintiff might have
asserted against the third-party defendant had he been joined originally as a
defendant," refers to the second subject, that is, to bringing in third party as liable to
defendant only, and does not apply to the alleged liability of third party directly to
plaintiff."
In this case the third-party complaints filed by petitioner and her driver charged respondents
with direct liability to the plaintiffs. It was contended that the accident was due "to the fault,
negligence, carelessness and imprudence of the third party defendant Gregorio Hufana"
and, in petitioner's motion for leave to file a third party complaint, it was stated that "Patricio

Hufana and Gregorio Hufana were not made parties to this action, although the defendants
are entitled to indemnity and/or subrogation against them in respect of plaintiff's claim."
It should make no difference therefore whether the respondents were brought in as principal
defendants or as third-party defendants. As Chief Justice Moran points out, since the liability
of the third-party defendant is already asserted in the third-party complaint, the amendment
of the complaint to assert such liability is merely a matter of form, to insist on which would
not be in keeping with the liberal spirit of the Rules of Court. 4
Nor should it make any difference that the liability of petitioner springs from contract while
that of respondents arises from quasi-delict. As early as 1913, we already ruled in Gutierrez
vs. Gutierrez, 56 Phil. 177,5 that in case of injury to a passenger due to the negligence of
the driver of the bus on which he was riding and of the driver of another vehicle, the drivers
as well as the owners of the two vehicles are jointly and severally liable for damages. Some
members of the Court, though, are of the view that under the circumstances they are liable
on quasi-delict.
Wherefore, the decision appealed from is hereby modified in the sense that petitioner as
well as respondents Patricio Hufana and Gregorio Hufana are jointly and severally liable for
the damages awarded by the trial court. The disallowance of moral damages in the amount
of P1,000.00 is correct and should be affirmed. No costs.