G.R. No. 157917 August 29, 2012 or watchmen, or other responsible persons manning the crossing.
tchmen, or other responsible persons manning the crossing. In fact, the bamboo
SPOUSES TEODORO1 and NANETTE PERENA, Petitioners,
vs.
SPOUSES TERESITA PHILIPPINE NICOLAS and L. ZARATE, NATIONAL
RAILWAYS, and the COURT OF APPEALS Respondents.
DECISION
BERSAMIN, J.:
The operator of a. school bus service is a common carrier in the eyes of the law. He
is bound to observe extraordinary diligence in the conduct of his business. He is
presumed to be negligent when death occurs to a passenger. His liability may include
indemnity for loss of earning capacity even if the deceased passenger may only be an
unemployed high school student at the time of the accident.
The Case
By petition for review on certiorari, Spouses Teodoro and Nanette Perefia (Perefias)
appeal the adverse decision promulgated on November 13, 2002, by which the Court
of Appeals (CA) affirmed with modification the decision rendered on December 3,
1999 by the Regional Trial Court (RTC), Branch 260, in Parañaque City that had
decreed them jointly and severally liable with Philippine National Railways (PNR),
their co-defendant, to Spouses Nicolas and Teresita Zarate (Zarates) for the death of
their 15-year old son, Aaron John L. Zarate (Aaron), then a high school student of
Don Bosco Technical Institute (Don Bosco).
Antecedents
The Pereñas were engaged in the business of transporting students from their
respective residences in Parañaque City to Don Bosco in Pasong Tamo, Makati City,
and back. In their business, the Pereñas used a KIA Ceres Van (van) with Plate No.
PYA 896, which had the capacity to transport 14 students at a time, two of whom
would be seated in the front beside the driver, and the others in the rear, with six
students on either side. They employed Clemente Alfaro (Alfaro) as driver of the van.
In June 1996, the Zarates contracted the Pereñas to transport Aaron to and from Don
Bosco. On August 22, 1996, as on previous school days, the van picked Aaron up
around 6:00 a.m. from the Zarates’ residence. Aaron took his place on the left side of
the van near the rear door. The van, with its air-conditioning unit turned on and the
stereo playing loudly, ultimately carried all the 14 student riders on their way to Don
Bosco. Considering that the students were due at Don Bosco by 7:15 a.m., and that
they were already running late because of the heavy vehicular traffic on the South
Superhighway, Alfaro took the van to an alternate route at about 6:45 a.m. by
traversing the narrow path underneath the Magallanes Interchange that was then
commonly used by Makati-bound vehicles as a short cut into Makati. At the time, the
narrow path was marked by piles of construction materials and parked passenger
jeepneys, and the railroad crossing in the narrow path had no railroad warning signs,
barandilla was up, leaving the railroad crossing open to traversing motorists.
At about the time the van was to traverse the railroad crossing, PNR Commuter No.
302 (train), operated by Jhonny Alano (Alano), was in the vicinity of the Magallanes
Interchange travelling northbound. As the train neared the railroad crossing, Alfaro
drove the van eastward across the railroad tracks, closely tailing a large passenger
bus. His view of the oncoming train was blocked because he overtook the passenger
bus on its left side. The train blew its horn to warn motorists of its approach. When the
train was about 50 meters away from the passenger bus and the van, Alano applied
the ordinary brakes of the train. He applied the emergency brakes only when he saw
that a collision was imminent. The passenger bus successfully crossed the railroad
tracks, but the van driven by Alfaro did not. The train hit the rear end of the van, and
the impact threw nine of the 12 students in the rear, including Aaron, out of the van.
Aaron landed in the path of the train, which dragged his body and severed his head,
instantaneously killing him. Alano fled the scene on board the train, and did not wait
for the police investigator to arrive.
Devastated by the early and unexpected death of Aaron, the Zarates commenced this
action for damages against Alfaro, the Pereñas, PNR and Alano. The Pereñas and
PNR filed their respective answers, with cross-claims against each other, but Alfaro
could not be served with summons.
At the pre-trial, the parties stipulated on the facts and issues, viz:
A. FACTS:
(1) That spouses Zarate were the legitimate parents of Aaron John
L. Zarate;
(2) Spouses Zarate engaged the services of spouses Pereña for
the adequate and safe transportation carriage of the former
spouses' son from their residence in Parañaque to his school at the
Don Bosco Technical Institute in Makati City;
(3) During the effectivity of the contract of carriage and in the
implementation thereof, Aaron, the minor son of spouses Zarate
died in connection with a vehicular/train collision which occurred
while Aaron was riding the contracted carrier Kia Ceres van of
spouses Pereña, then driven and operated by the latter's
employee/authorized driver Clemente Alfaro, which van collided
with the train of PNR, at around 6:45 A.M. of August 22, 1996,
within the vicinity of the Magallanes Interchange in Makati City,
Metro Manila, Philippines;
(4) At the time of the vehicular/train collision, the subject site of the
vehicular/train collision was a railroad crossing used by motorists
for crossing the railroad tracks;
 (5) During the said time of the vehicular/train collision, there were
no appropriate and safety warning signs and railings at the site
commonly used for railroad crossing;
(6) At the material time, countless number of Makati bound public
utility and private vehicles used on a daily basis the site of the
collision as an alternative route and short-cut to Makati;
(7) The train driver or operator left the scene of the incident on
board the commuter train involved without waiting for the police
investigator;
(8) The site commonly used for railroad crossing by motorists was
not in fact intended by the railroad operator for railroad crossing at
the time of the vehicular collision;
(9) PNR received the demand letter of the spouses Zarate;
(10) PNR refused to acknowledge any liability for the
vehicular/train collision;
(11) The eventual closure of the railroad crossing alleged by PNR
was an internal arrangement between the former and its project
contractor; and
(12) The site of the vehicular/train collision was within the vicinity
or less than 100 meters from the Magallanes station of PNR.
B. ISSUES
(1) Whether or not defendant-driver of the van is, in the
performance of his functions, liable for negligence constituting the
proximate cause of the vehicular collision, which resulted in the
death of plaintiff spouses' son;
(2) Whether or not the defendant spouses Pereña being the
employer of defendant Alfaro are liable for any negligence which
may be attributed to defendant Alfaro;
(3) Whether or not defendant Philippine National Railways being
the operator of the railroad system is liable for negligence in failing
to provide adequate safety warning signs and railings in the area
commonly used by motorists for railroad crossings, constituting the
proximate cause of the vehicular collision which resulted in the
death of the plaintiff spouses' son;
(4) Whether or not defendant spouses Pereña are liable for breach
of the contract of carriage with plaintiff-spouses in failing to provide
adequate and safe transportation for the latter's son;
(5) Whether or not defendants spouses are liable for actual, moral
damages, exemplary damages, and attorney's fees;
(6) Whether or not defendants spouses Teodorico and Nanette
Pereña observed the diligence of employers and school bus
operators;
(7) Whether or not defendant-spouses are civilly liable for the
accidental death of Aaron John Zarate;
(8) Whether or not defendant PNR was grossly negligent in
operating the commuter train involved in the accident, in allowing or
tolerating the motoring public to cross, and its failure to install
safety devices or equipment at the site of the accident for the
protection of the public;
(9) Whether or not defendant PNR should be made to reimburse
defendant spouses for any and whatever amount the latter may be
held answerable or which they may be ordered to pay in favor of
plaintiffs by reason of the action;
(10) Whether or not defendant PNR should pay plaintiffs directly
and fully on the amounts claimed by the latter in their Complaint by
reason of its gross negligence;
(11) Whether or not defendant PNR is liable to defendants spouses
for actual, moral and exemplary damages and attorney's fees. 2
The Zarates’ claim against the Pereñas was upon breach of the contract of carriage
for the safe transport of Aaron; but that against PNR was based on quasi-delict under
Article 2176, Civil Code.
In their defense, the Pereñas adduced evidence to show that they had exercised the
diligence of a good father of the family in the selection and supervision of Alfaro, by
making sure that Alfaro had been issued a driver’s license and had not been involved
in any vehicular accident prior to the collision; that their own son had taken the van
daily; and that Teodoro Pereña had sometimes accompanied Alfaro in the van’s trips
transporting the students to school.
For its part, PNR tended to show that the proximate cause of the collision had been
the reckless crossing of the van whose driver had not first stopped, looked and
listened; and that the narrow path traversed by the van had not been intended to be a
railroad crossing for motorists.
 Ruling of the RTC
On December 3, 1999, the RTC rendered its decision, 3 disposing:
WHEREFORE, premises considered, judgment is hereby rendered in favor of the
plaintiff and against the defendants ordering them to jointly and severally pay the
plaintiffs as follows:
(1) (for) the death of Aaron- Php50,000.00;
(2) Actual damages in the amount of Php100,000.00;
(3) For the loss of earning capacity- Php2,109,071.00;
(4) Moral damages in the amount of Php4,000,000.00;
(5) Exemplary damages in the amount of Php1,000,000.00;
(6) Attorney’s fees in the amount of Php200,000.00; and
(7) Cost of suit.
SO ORDERED.
On June 29, 2000, the RTC denied the Pereñas’ motion for
reconsideration,4 reiterating that the cooperative gross negligence of the Pereñas and
PNR had caused the collision that led to the death of Aaron; and that the damages
awarded to the Zarates were not excessive, but based on the established
circumstances.
The CA’s Ruling
Both the Pereñas and PNR appealed (C.A.-G.R. CV No. 68916).
PNR assigned the following errors, to wit:5
The Court a quo erred in:
1. In finding the defendant-appellant Philippine National Railways
jointly and severally liable together with defendant-appellants
spouses Teodorico and Nanette Pereña and defendant-appellant
Clemente Alfaro to pay plaintiffs-appellees for the death of Aaron
Zarate and damages.
2. In giving full faith and merit to the oral testimonies of plaintiffs-
appellees witnesses despite overwhelming documentary evidence
on record, supporting the case of defendants-appellants Philippine
National Railways.
The Pereñas ascribed the following errors to the RTC, namely:
The trial court erred in finding defendants-appellants jointly and severally liable for
actual, moral and exemplary damages and attorney’s fees with the other defendants.
The trial court erred in dismissing the cross-claim of the appellants Pereñas against
the Philippine National Railways and in not holding the latter and its train driver
primarily responsible for the incident.
The trial court erred in awarding excessive damages and attorney’s fees.
The trial court erred in awarding damages in the form of deceased’s loss of earning
capacity in the absence of sufficient basis for such an award.
On November 13, 2002, the CA promulgated its decision, affirming the findings of the
RTC, but limited the moral damages to ₱ 2,500,000.00; and deleted the attorney’s
fees because the RTC did not state the factual and legal bases, to wit: 6
WHEREFORE, premises considered, the assailed Decision of the Regional Trial
Court, Branch 260 of Parañaque City is AFFIRMED with the modification that the
award of Actual Damages is reduced to ₱ 59,502.76; Moral Damages is reduced to ₱
2,500,000.00; and the award for Attorney’s Fees is Deleted.
SO ORDERED.
The CA upheld the award for the loss of Aaron’s earning capacity, taking cognizance
of the ruling in Cariaga v. Laguna Tayabas Bus Company and Manila Railroad
Company,7 wherein the Court gave the heirs of Cariaga a sum representing the loss
of the deceased’s earning capacity despite Cariaga being only a medical student at
the time of the fatal incident. Applying the formula adopted in the American
Expectancy Table of Mortality:–
2/3 x (80 - age at the time of death) = life expectancy
the CA determined the life expectancy of Aaron to be 39.3 years upon reckoning his
life expectancy from age of 21 (the age when he would have graduated from college
and started working for his own livelihood) instead of 15 years (his age when he
died). Considering that the nature of his work and his salary at the time of Aaron’s
death were unknown, it used the prevailing minimum wage of ₱ 280.00/day to
compute Aaron’s gross annual salary to be ₱ 110,716.65, inclusive of the thirteenth
month pay. Multiplying this annual salary by Aaron’s life expectancy of 39.3 years, his
gross income would aggregate to ₱ 4,351,164.30, from which his estimated expenses
in the sum of ₱ 2,189,664.30 was deducted to finally arrive at P 2,161,500.00 as net
income. Due to Aaron’s computed net income turning out to be higher than the
amount claimed by the Zarates, only ₱ 2,109,071.00, the amount expressly prayed
for by them, was granted.
On April 4, 2003, the CA denied the Pereñas’ motion for reconsideration. 8
Issues
In this appeal, the Pereñas list the following as the errors committed by the CA, to wit:
I. The lower court erred when it upheld the trial court’s decision holding the petitioners
jointly and severally liable to pay damages with Philippine National Railways and
dismissing their cross-claim against the latter.
II. The lower court erred in affirming the trial court’s decision awarding damages for
loss of earning capacity of a minor who was only a high school student at the time of
his death in the absence of sufficient basis for such an award.
III. The lower court erred in not reducing further the amount of damages awarded,
assuming petitioners are liable at all.
Ruling
The petition has no merit.
1.
Were the Pereñas and PNR jointly
and severally liable for damages?
The Zarates brought this action for recovery of damages against both the Pereñas
and the PNR, basing their claim against the Pereñas on breach of contract of carriage
and against the PNR on quasi-delict.
The RTC found the Pereñas and the PNR negligent. The CA affirmed the findings.
We concur with the CA.
To start with, the Pereñas’ defense was that they exercised the diligence of a good
father of the family in the selection and supervision of Alfaro, the van driver, by seeing
to it that Alfaro had a driver’s license and that he had not been involved in any
vehicular accident prior to the fatal collision with the train; that they even had their
own son travel to and from school on a daily basis; and that Teodoro Pereña himself
sometimes accompanied Alfaro in transporting the passengers to and from school.
The RTC gave scant consideration to such defense by regarding such defense as
inappropriate in an action for breach of contract of carriage.
We find no adequate cause to differ from the conclusions of the lower courts that the
Pereñas operated as a common carrier; and that their standard of care was
extraordinary diligence, not the ordinary diligence of a good father of a family.
Although in this jurisdiction the operator of a school bus service has been usually
regarded as a private carrier,9primarily because he only caters to some specific or
privileged individuals, and his operation is neither open to the indefinite public nor for
public use, the exact nature of the operation of a school bus service has not been
finally settled. This is the occasion to lay the matter to rest.
A carrier is a person or corporation who undertakes to transport or convey goods or
persons from one place to another, gratuitously or for hire. The carrier is classified
either as a private/special carrier or as a common/public carrier. 10 A private carrier is
one who, without making the activity a vocation, or without holding himself or itself out
to the public as ready to act for all who may desire his or its services, undertakes, by
special agreement in a particular instance only, to transport goods or persons from
one place to another either gratuitously or for hire.11 The provisions on ordinary
contracts of the Civil Code govern the contract of private carriage.The diligence
required of a private carrier is only ordinary, that is, the diligence of a good father of
the family. In contrast, a common carrier is a person, corporation, firm or association
engaged in the business of carrying or transporting passengers or goods or both, by
land, water, or air, for compensation, offering such services to the public. 12 Contracts
of common carriage are governed by the provisions on common carriers of the Civil
Code, the Public Service Act,13 and other special laws relating to transportation. A
common carrier is required to observe extraordinary diligence, and is presumed to be
at fault or to have acted negligently in case of the loss of the effects of passengers, or
the death or injuries to passengers.14
In relation to common carriers, the Court defined public use in the following terms in
United States v. Tan Piaco,15viz:
"Public use" is the same as "use by the public". The essential feature of the public use
is not confined to privileged individuals, but is open to the indefinite public. It is this
indefinite or unrestricted quality that gives it its public character. In determining
whether a use is public, we must look not only to the character of the business to be
done, but also to the proposed mode of doing it. If the use is merely optional with the
owners, or the public benefit is merely incidental, it is not a public use, authorizing the
exercise of the jurisdiction of the public utility commission. There must be, in general,
a right which the law compels the owner to give to the general public. It is not enough
that the general prosperity of the public is promoted. Public use is not synonymous
with public interest. The true criterion by which to judge the character of the use is
whether the public may enjoy it by right or only by permission.
In De Guzman v. Court of Appeals,16 the Court noted that Article 1732 of the Civil
Code avoided any distinction between a person or an enterprise offering
transportation on a regular or an isolated basis; and has not distinguished a carrier
offering his services to the general public, that is, the general community or
population, from one offering his services only to a narrow segment of the general
population.
Nonetheless, the concept of a common carrier embodied in Article 1732 of the Civil
Code coincides neatly with the notion of public service under the Public Service Act,
which supplements the law on common carriers found in the Civil Code. Public
service, according to Section 13, paragraph (b) of the Public Service Act, includes:
x x x every person that now or hereafter may own, operate, manage, or control in the
Philippines, for hire or compensation, with general or limited clientèle, whether
permanent or occasional, and done for the general business purposes, any common
carrier, railroad, street railway, traction railway, subway motor vehicle, either for
freight or passenger, or both, with or without fixed route and whatever may be its
classification, freight or carrier service of any class, express service, steamboat, or
steamship line, pontines, ferries and water craft, engaged in the transportation of
passengers or freight or both, shipyard, marine repair shop, ice-refrigeration plant,
canal, irrigation system, gas, electric light, heat and power, water supply and power
petroleum, sewerage system, wire or wireless communications systems, wire or
wireless broadcasting stations and other similar public services. x x x. 17
Given the breadth of the aforequoted characterization of a common carrier, the Court
has considered as common carriers pipeline operators, 18 custom brokers and
warehousemen,19 and barge operators20 even if they had limited clientèle.
As all the foregoing indicate, the true test for a common carrier is not the quantity or
extent of the business actually transacted, or the number and character of the
conveyances used in the activity, but whether the undertaking is a part of the activity
engaged in by the carrier that he has held out to the general public as his business or
occupation. If the undertaking is a single transaction, not a part of the general
business or occupation engaged in, as advertised and held out to the general public,
the individual or the entity rendering such service is a private, not a common, carrier.
The question must be determined by the character of the business actually carried on
by the carrier, not by any secret intention or mental reservation it may entertain or
assert when charged with the duties and obligations that the law imposes.21
Applying these considerations to the case before us, there is no question that the
Pereñas as the operators of a school bus service were: (a) engaged in transporting
passengers generally as a business, not just as a casual occupation; (b) undertaking
to carry passengers over established roads by the method by which the business was
conducted; and (c) transporting students for a fee. Despite catering to a limited
clientèle, the Pereñas operated as a common carrier because they held themselves
out as a ready transportation indiscriminately to the students of a particular school
living within or near where they operated the service and for a fee.
The common carrier’s standard of care and vigilance as to the safety of the
passengers is defined by law. Given the nature of the business and for reasons of
public policy, the common carrier is bound "to observe extraordinary diligence in the
vigilance over the goods and for the safety of the passengers transported by them,
according to all the circumstances of each case."22 Article 1755 of the Civil Code
specifies that the common carrier should "carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence of very cautious
persons, with a due regard for all the circumstances." To successfully fend off liability
in an action upon the death or injury to a passenger, the common carrier must prove
his or its observance of that extraordinary diligence; otherwise, the legal presumption
that he or it was at fault or acted negligently would stand. 23 No device, whether by
stipulation, posting of notices, statements on tickets, or otherwise, may dispense with
or lessen the responsibility of the common carrier as defined under Article 1755 of the
Civil Code. 24
And, secondly, the Pereñas have not presented any compelling defense or reason by
which the Court might now reverse the CA’s findings on their liability. On the contrary,
an examination of the records shows that the evidence fully supported the findings of
the CA.
As earlier stated, the Pereñas, acting as a common carrier, were already presumed to
be negligent at the time of the accident because death had occurred to their
passenger.25 The presumption of negligence, being a presumption of law, laid the
burden of evidence on their shoulders to establish that they had not been
negligent.26 It was the law no less that required them to prove their observance of
extraordinary diligence in seeing to the safe and secure carriage of the passengers to
their destination. Until they did so in a credible manner, they stood to be held legally
responsible for the death of Aaron and thus to be held liable for all the natural
consequences of such death.
There is no question that the Pereñas did not overturn the presumption of their
negligence by credible evidence. Their defense of having observed the diligence of a
good father of a family in the selection and supervision of their driver was not legally
sufficient. According to Article 1759 of the Civil Code, their liability as a common
carrier did not cease upon proof that they exercised all the diligence of a good father
of a family in the selection and supervision of their employee. This was the reason
why the RTC treated this defense of the Pereñas as inappropriate in this action for
breach of contract of carriage.
The Pereñas were liable for the death of Aaron despite the fact that their driver might
have acted beyond the scope of his authority or even in violation of the orders of the
common carrier.27 In this connection, the records showed their driver’s actual
negligence. There was a showing, to begin with, that their driver traversed the railroad
tracks at a point at which the PNR did not permit motorists going into the Makati area
to cross the railroad tracks. Although that point had been used by motorists as a
shortcut into the Makati area, that fact alone did not excuse their driver into taking that
route. On the other hand, with his familiarity with that shortcut, their driver was fully
aware of the risks to his passengers but he still disregarded the risks. Compounding
his lack of care was that loud music was playing inside the air-conditioned van at the
time of the accident. The loudness most probably reduced his ability to hear the
warning horns of the oncoming train to allow him to correctly appreciate the lurking
dangers on the railroad tracks. Also, he sought to overtake a passenger bus on the
left side as both vehicles traversed the railroad tracks. In so doing, he lost his view of
the train that was then coming from the opposite side of the passenger bus, leading
him to miscalculate his chances of beating the bus in their race, and of getting clear of
the train. As a result, the bus avoided a collision with the train but the van got
slammed at its rear, causing the fatality. Lastly, he did not slow down or go to a full
stop before traversing the railroad tracks despite knowing that his slackening of speed
and going to a full stop were in observance of the right of way at railroad tracks as
defined by the traffic laws and regulations. 28He thereby violated a specific traffic
regulation on right of way, by virtue of which he was immediately presumed to be
negligent.29
The omissions of care on the part of the van driver constituted negligence,30 which,
according to Layugan v. Intermediate Appellate Court,31 is "the omission to do
something which a reasonable man, guided by those considerations which ordinarily
regulate the conduct of human affairs, would do, or the doing of something which a
prudent and reasonable man would not do,32 or as Judge Cooley defines it, ‘(t)he
failure to observe for the protection of the interests of another person, that degree of
care, precaution, and vigilance which the circumstances justly demand, whereby such
other person suffers injury.’"33
The test by which to determine the existence of negligence in a particular case has
been aptly stated in the leading case of Picart v. Smith,34 thuswise:
The test by which to determine the existence of negligence in a particular case may
be stated as follows: Did the defendant in doing the alleged negligent act use that
reasonable care and caution which an ordinarily prudent person would have used in
the same situation? If not, then he is guilty of negligence. The law here in effect
adopts the standard supposed to be supplied by the imaginary conduct of the discreet
paterfamilias of the Roman law. The existence of negligence in a given case is not
determined by reference to the personal judgment of the actor in the situation before
him. The law considers what would be reckless, blameworthy, or negligent in the man
of ordinary intelligence and prudence and determines liability by that.
The question as to what would constitute the conduct of a prudent man in a given
situation must of course be always determined in the light of human experience and
in view of the facts involved in the particular case. Abstract speculation cannot here
be of much value but this much can be profitably said: Reasonable men govern their
conduct by the circumstances which are before them or known to them. They are not,
and are not supposed to be, omniscient of the future. Hence they can be expected to
take care only when there is something before them to suggest or warn of danger.
Could a prudent man, in the case under consideration, foresee harm as a result of the
course actually pursued? If so, it was the duty of the actor to take precautions to
guard against that harm. Reasonable foresight of harm, followed by the ignoring of
the suggestion born of this prevision, is always necessary before negligence can be
held to exist. Stated in these terms, the proper criterion for determining the existence
of negligence in a given case is this: Conduct is said to be negligent when a prudent
man in the position of the tortfeasor would have foreseen that an effect harmful to
another was sufficiently probable to warrant his foregoing the conduct or guarding
against its consequences. (Emphasis supplied)
Pursuant to the Picart v. Smith test of negligence, the Pereñas’ driver was entirely
negligent when he traversed the railroad tracks at a point not allowed for a motorist’s
crossing despite being fully aware of the grave harm to be thereby caused to his
passengers; and when he disregarded the foresight of harm to his passengers by
overtaking the bus on the left side as to leave himself blind to the approach of the
oncoming train that he knew was on the opposite side of the bus.
Unrelenting, the Pereñas cite Phil. National Railways v. Intermediate Appellate
Court,35 where the Court held the PNR solely liable for the damages caused to a
passenger bus and its passengers when its train hit the rear end of the bus that was
then traversing the railroad crossing. But the circumstances of that case and this one
share no similarities. In Philippine National Railways v. Intermediate Appellate Court,
no evidence of contributory negligence was adduced against the owner of the bus.
Instead, it was the owner of the bus who proved the exercise of extraordinary
diligence by preponderant evidence. Also, the records are replete with the showing of
negligence on the part of both the Pereñas and the PNR. Another distinction is that
the passenger bus in Philippine National Railways v. Intermediate Appellate Court
was traversing the dedicated railroad crossing when it was hit by the train, but the
Pereñas’ school van traversed the railroad tracks at a point not intended for that
purpose.
At any rate, the lower courts correctly held both the Pereñas and the PNR "jointly and
severally" liable for damages arising from the death of Aaron. They had been
impleaded in the same complaint as defendants against whom the Zarates had the
right to relief, whether jointly, severally, or in the alternative, in respect to or arising
out of the accident, and questions of fact and of law were common as to the
Zarates.36 Although the basis of the right to relief of the Zarates (i.e., breach of
contract of carriage) against the Pereñas was distinct from the basis of the Zarates’
right to relief against the PNR (i.e., quasi-delict under Article 2176, Civil Code), they
nonetheless could be held jointly and severally liable by virtue of their respective
negligence combining to cause the death of Aaron. As to the PNR, the RTC rightly
found the PNR also guilty of negligence despite the school van of the Pereñas
traversing the railroad tracks at a point not dedicated by the PNR as a railroad
crossing for pedestrians and motorists, because the PNR did not ensure the safety of
others through the placing of crossbars, signal lights, warning signs, and other
permanent safety barriers to prevent vehicles or pedestrians from crossing there. The
RTC observed that the fact that a crossing guard had been assigned to man that
point from 7 a.m. to 5 p.m. was a good indicium that the PNR was aware of the risks
to others as well as the need to control the vehicular and other traffic there. Verily, the
Pereñas and the PNR were joint tortfeasors.
2.
Was the indemnity for loss of
Aaron’s earning capacity proper?
The RTC awarded indemnity for loss of Aaron’s earning capacity. Although agreeing
with the RTC on the liability, the CA modified the amount. Both lower courts took into
consideration that Aaron, while only a high school student, had been enrolled in one
of the reputable schools in the Philippines and that he had been a normal and able-
bodied child prior to his death. The basis for the computation of Aaron’s earning
capacity was not what he would have become or what he would have wanted to be if
not for his untimely death, but the minimum wage in effect at the time of his death.
Moreover, the RTC’s computation of Aaron’s life expectancy rate was not reckoned
from his age of 15 years at the time of his death, but on 21 years, his age when he
would have graduated from college.
We find the considerations taken into account by the lower courts to be reasonable
and fully warranted.
Yet, the Pereñas submit that the indemnity for loss of earning capacity was
speculative and unfounded.1âwphi1 They cited People v. Teehankee, Jr.,37 where the
Court deleted the indemnity for victim Jussi Leino’s loss of earning capacity as a pilot
for being speculative due to his having graduated from high school at the International
School in Manila only two years before the shooting, and was at the time of the
shooting only enrolled in the first semester at the Manila Aero Club to pursue his
ambition to become a professional pilot. That meant, according to the Court, that he
was for all intents and purposes only a high school graduate.
We reject the Pereñas’ submission.
First of all, a careful perusal of the Teehankee, Jr. case shows that the situation there
of Jussi Leino was not akin to that of Aaron here. The CA and the RTC were not
speculating that Aaron would be some highly-paid professional, like a pilot (or, for that
matter, an engineer, a physician, or a lawyer). Instead, the computation of Aaron’s
earning capacity was premised on him being a lowly minimum wage earner despite
his being then enrolled at a prestigious high school like Don Bosco in Makati, a fact
that would have likely ensured his success in his later years in life and at work.
And, secondly, the fact that Aaron was then without a history of earnings should not
be taken against his parents and in favor of the defendants whose negligence not
only cost Aaron his life and his right to work and earn money, but also deprived his
parents of their right to his presence and his services as well. Our law itself states that
the loss of the earning capacity of the deceased shall be the liability of the guilty party
in favor of the heirs of the deceased, and shall in every case be assessed and
awarded by the court "unless the deceased on account of permanent physical
disability not caused by the defendant, had no earning capacity at the time of his
death."38 Accordingly, we emphatically hold in favor of the indemnification for Aaron’s
loss of earning capacity despite him having been unemployed, because
compensation of this nature is awarded not for loss of time or earnings but for loss of
the deceased’s power or ability to earn money.39
This favorable treatment of the Zarates’ claim is not unprecedented. In Cariaga v.
Laguna Tayabas Bus Company and Manila Railroad Company,40 fourth-year medical
student Edgardo Carriaga’s earning capacity, although he survived the accident but
his injuries rendered him permanently incapacitated, was computed to be that of the
physician that he dreamed to become. The Court considered his scholastic record
sufficient to justify the assumption that he could have finished the medical course and
would have passed the medical board examinations in due time, and that he could
have possibly earned a modest income as a medical practitioner. Also, in People v.
Sanchez,41 the Court opined that murder and rape victim Eileen Sarmienta and
murder victim Allan Gomez could have easily landed good-paying jobs had they
graduated in due time, and that their jobs would probably pay them high monthly
salaries from ₱ 10,000.00 to ₱ 15,000.00 upon their graduation. Their earning
capacities were computed at rates higher than the minimum wage at the time of their
deaths due to their being already senior agriculture students of the University of the
Philippines in Los Baños, the country’s leading educational institution in agriculture.
3.
Were the amounts of damages excessive?
The Pereñas plead for the reduction of the moral and exemplary damages awarded to
the Zarates in the respective amounts of ₱ 2,500,000.00 and ₱ 1,000,000.00 on the
ground that such amounts were excessive.
The plea is unwarranted.
The moral damages of ₱ 2,500,000.00 were really just and reasonable under the
established circumstances of this case because they were intended by the law to
assuage the Zarates’ deep mental anguish over their son’s unexpected and violent
death, and their moral shock over the senseless accident. That amount would not be
too much, considering that it would help the Zarates obtain the means, diversions or
amusements that would alleviate their suffering for the loss of their child. At any rate,
reducing the amount as excessive might prove to be an injustice, given the passage
of a long time from when their mental anguish was inflicted on them on August 22,
1996.
Anent the ₱ 1,000,000.00 allowed as exemplary damages, we should not reduce the
amount if only to render effective the desired example for the public good. As a
common carrier, the Pereñas needed to be vigorously reminded to observe their duty
to exercise extraordinary diligence to prevent a similarly senseless accident from
happening again. Only by an award of exemplary damages in that amount would
suffice to instill in them and others similarly situated like them the ever-present need
for greater and constant vigilance in the conduct of a business imbued with public
interest.
WHEREFORE, we DENY the petition for review on certiorari; AFFIRM the decision
promulgated on November 13, 2002; and ORDER the petitioners to pay the costs of
suit.
SO ORDERED.
LUCAS P. BERSAMIN
Associate Justice
WE CONCUR:
MARIA LOURDES P. A. SERENO
Chief Justice
TERESITA J. LEONARDO-DE
MARTIN S. VILLARAMA, JR.
CASTRO
Associate Justice
Associate Justice
 BIENVENIDO L. REYES denied liability and averred that it had exercised due diligence in the selection and
Associate Justice supervision of its security guards.

CERTIFICATION The LRTA and Roman presented their evidence while Prudent and Escartin, instead
of presenting evidence, filed a demurrer contending that Navidad had failed to prove
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in that Escartin was negligent in his assigned task. On 11 August 1998, the trial court
the above Decision had been reached in consultation before the case was assigned rendered its decision; it adjudged:
to the writer of the opinion of the Court's Division.
"WHEREFORE, judgment is hereby rendered in favor of the plaintiffs and against the
MARIA LOURDES P. A. SERENO defendants Prudent Security and Junelito Escartin ordering the latter to pay jointly
Chief Justice and severally the plaintiffs the following:

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

G.R. No. 145804 February 6, 2003

2) Compensatory damages of P443,520.00;

LIGHT RAIL TRANSIT AUTHORITY & RODOLFO ROMAN, petitioners,
vs.
MARJORIE NAVIDAD, Heirs of the Late NICANOR NAVIDAD & PRUDENT 3) Indemnity for the death of Nicanor Navidad in the sum of P50,000.00;
SECURITY AGENCY, respondents.
"b) Moral damages of P50,000.00;
DECISION
"c) Attorney’s fees of P20,000;
VITUG, J.:
"d) Costs of suit.
The case before the Court is an appeal from the decision and resolution of the Court
of Appeals, promulgated on 27 April 2000 and 10 October 2000, respectively, in CA- "The complaint against defendants LRTA and Rodolfo Roman are dismissed for lack
G.R. CV No. 60720, entitled "Marjorie Navidad and Heirs of the Late Nicanor Navidad of merit.
vs. Rodolfo Roman, et. al.," which has modified the decision of 11 August 1998 of the
Regional Trial Court, Branch 266, Pasig City, exonerating Prudent Security Agency
"The compulsory counterclaim of LRTA and Roman are likewise dismissed."1
(Prudent) from liability and finding Light Rail Transit Authority (LRTA) and Rodolfo
Roman liable for damages on account of the death of Nicanor Navidad.
Prudent appealed to the Court of Appeals. On 27 August 2000, the appellate court
promulgated its now assailed decision exonerating Prudent from any liability for the
On 14 October 1993, about half an hour past seven o’clock in the evening, Nicanor
death of Nicanor Navidad and, instead, holding the LRTA and Roman jointly and
Navidad, then drunk, entered the EDSA LRT station after purchasing a "token"
severally liable thusly:
(representing payment of the fare). While Navidad was standing on the platform near
the LRT tracks, Junelito Escartin, the security guard assigned to the area approached
Navidad. A misunderstanding or an altercation between the two apparently ensued "WHEREFORE, the assailed judgment is hereby MODIFIED, by exonerating the
that led to a fist fight. No evidence, however, was adduced to indicate how the fight appellants from any liability for the death of Nicanor Navidad, Jr. Instead, appellees
started or who, between the two, delivered the first blow or how Navidad later fell on Rodolfo Roman and the Light Rail Transit Authority (LRTA) are held liable for his
the LRT tracks. At the exact moment that Navidad fell, an LRT train, operated by death and are hereby directed to pay jointly and severally to the plaintiffs-appellees,
petitioner Rodolfo Roman, was coming in. Navidad was struck by the moving train, the following amounts:
and he was killed instantaneously.
a) P44,830.00 as actual damages;
On 08 December 1994, the widow of Nicanor, herein respondent Marjorie Navidad,
along with her children, filed a complaint for damages against Junelito Escartin, b) P50,000.00 as nominal damages;
Rodolfo Roman, the LRTA, the Metro Transit Organization, Inc. (Metro Transit), and
Prudent for the death of her husband. LRTA and Roman filed a counterclaim against
c) P50,000.00 as moral damages;
Navidad and a cross-claim against Escartin and Prudent. Prudent, in its answer,
 d) P50,000.00 as indemnity for the death of the deceased; and
e) P20,000.00 as and for attorney’s fees."2
The appellate court ratiocinated that while the deceased might not have then as yet
boarded the train, a contract of carriage theretofore had already existed when the
victim entered the place where passengers were supposed to be after paying the fare
and getting the corresponding token therefor. In exempting Prudent from liability, the
court stressed that there was nothing to link the security agency to the death of
Navidad. It said that Navidad failed to show that Escartin inflicted fist blows upon the
victim and the evidence merely established the fact of death of Navidad by reason of
his having been hit by the train owned and managed by the LRTA and operated at the
time by Roman. The appellate court faulted petitioners for their failure to present
expert evidence to establish the fact that the application of emergency brakes could
not have stopped the train.
The appellate court denied petitioners’ motion for reconsideration in its resolution of
10 October 2000.
In their present recourse, petitioners recite alleged errors on the part of the appellate
court; viz:
"I.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED BY DISREGARDING
THE FINDINGS OF FACTS BY THE TRIAL COURT
"II.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT
PETITIONERS ARE LIABLE FOR THE DEATH OF NICANOR NAVIDAD, JR.
"III.
THE HONORABLE COURT OF APPEALS GRAVELY ERRED IN FINDING THAT
RODOLFO ROMAN IS AN EMPLOYEE OF LRTA."3
Petitioners would contend that the appellate court ignored the evidence and the
factual findings of the trial court by holding them liable on the basis of a sweeping
conclusion that the presumption of negligence on the part of a common carrier was
not overcome. Petitioners would insist that Escartin’s assault upon Navidad, which
caused the latter to fall on the tracks, was an act of a stranger that could not have
been foreseen or prevented. The LRTA would add that the appellate court’s
conclusion on the existence of an employer-employee relationship between Roman
and LRTA lacked basis because Roman himself had testified being an employee of
Metro Transit and not of the LRTA.
Respondents, supporting the decision of the appellate court, contended that a
contract of carriage was deemed created from the moment Navidad paid the fare at
the LRT station and entered the premises of the latter, entitling Navidad to all the
rights and protection under a contractual relation, and that the appellate court had
correctly held LRTA and Roman liable for the death of Navidad in failing to exercise
extraordinary diligence imposed upon a common carrier.
Law and jurisprudence dictate that a common carrier, both from the nature of its
business and for reasons of public policy, is burdened with the duty of exercising
utmost diligence in ensuring the safety of passengers.4 The Civil Code, governing the
liability of a common carrier for death of or injury to its passengers, provides:
"Article 1755. A common carrier is bound to carry the passengers safely as far as
human care and foresight can provide, using the utmost diligence of very cautious
persons, with a due regard for all the circumstances.
"Article 1756. In case of death of or injuries to passengers, common carriers are
presumed to have been at fault or to have acted negligently, unless they prove that
they observed extraordinary diligence as prescribed in articles 1733 and 1755."
"Article 1759. Common carriers are liable for the death of or injuries to passengers
through the negligence or willful acts of the former’s employees, although such
employees may have acted beyond the scope of their authority or in violation of the
orders of the common carriers.
"This liability of the common carriers does not cease upon proof that they exercised
all the diligence of a good father of a family in the selection and supervision of their
employees."
"Article 1763. A common carrier is responsible for injuries suffered by a passenger on
account of the willful acts or negligence of other passengers or of strangers, if the
common carrier’s employees through the exercise of the diligence of a good father of
a family could have prevented or stopped the act or omission."
The law requires common carriers to carry passengers safely using the utmost
diligence of very cautious persons with due regard for all circumstances.5 Such duty
of a common carrier to provide safety to its passengers so obligates it not only during
the course of the trip but for so long as the passengers are within its premises and
where they ought to be in pursuance to the contract of carriage.6 The statutory
provisions render a common carrier liable for death of or injury to passengers (a)
through the negligence or wilful acts of its employees or b) on account of wilful acts or
negligence of other passengers or of strangers if the common carrier’s employees
through the exercise of due diligence could have prevented or stopped the act or
omission.7 In case of such death or injury, a carrier is presumed to have been at fault
or been negligent, and8 by simple proof of injury, the passenger is relieved of the duty
to still establish the fault or negligence of the carrier or of its employees and the
burden shifts upon the carrier to prove that the injury is due to an unforeseen event or
to force majeure.9 In the absence of satisfactory explanation by the carrier on how the
accident occurred, which petitioners, according to the appellate court, have failed to
show, the presumption would be that it has been at fault, 10 an exception from the
general rule that negligence must be proved.11
The foundation of LRTA’s liability is the contract of carriage and its obligation to
indemnify the victim arises from the breach of that contract by reason of its failure to
exercise the high diligence required of the common carrier. In the discharge of its
commitment to ensure the safety of passengers, a carrier may choose to hire its own
employees or avail itself of the services of an outsider or an independent firm to
undertake the task. In either case, the common carrier is not relieved of its
responsibilities under the contract of carriage.
Should Prudent be made likewise liable? If at all, that liability could only be for tort
under the provisions of Article 217612 and related provisions, in conjunction with
Article 2180,13 of the Civil Code. The premise, however, for the employer’s liability is
negligence or fault on the part of the employee. Once such fault is established, the
employer can then be made liable on the basis of the presumption juris tantum that
the employer failed to exercise diligentissimi patris families in the selection and
supervision of its employees. The liability is primary and can only be negated by
showing due diligence in the selection and supervision of the employee, a factual
matter that has not been shown. Absent such a showing, one might ask further, how
then must the liability of the common carrier, on the one hand, and an independent
contractor, on the other hand, be described? It would be solidary. A contractual
obligation can be breached by tort and when the same act or omission causes the
injury, one resulting in culpa contractual and the other in culpa aquiliana, Article
219414 of the Civil Code can well apply.15 In fine, a liability for tort may arise even
under a contract, where tort is that which breaches the contract. 16 Stated differently,
when an act which constitutes a breach of contract would have itself constituted the
source of a quasi-delictual liability had no contract existed between the parties, the
contract can be said to have been breached by tort, thereby allowing the rules on tort
to apply.17
Regrettably for LRT, as well as perhaps the surviving spouse and heirs of the late
Nicanor Navidad, this Court is concluded by the factual finding of the Court of
Appeals that "there is nothing to link (Prudent) to the death of Nicanor (Navidad), for
the reason that the negligence of its employee, Escartin, has not been duly proven x x
x." This finding of the appellate court is not without substantial justification in our own
review of the records of the case.
There being, similarly, no showing that petitioner Rodolfo Roman himself is guilty of
any culpable act or omission, he must also be absolved from liability. Needless to
say, the contractual tie between the LRT and Navidad is not itself a juridical relation
between the latter and Roman; thus, Roman can be made liable only for his own fault
or negligence.
The award of nominal damages in addition to actual damages is untenable. Nominal
damages are adjudicated in order that a right of the plaintiff, which has been violated
or invaded by the defendant, may be vindicated or recognized, and not for the
purpose of indemnifying the plaintiff for any loss suffered by him. 18 It is an established
rule that nominal damages cannot co-exist with compensatory damages.19
WHEREFORE, the assailed decision of the appellate court is AFFIRMED with
MODIFICATION but only in that (a) the award of nominal damages is DELETED and
(b) petitioner Rodolfo Roman is absolved from liability. No costs.
SO ORDERED.
Davide, Jr., C.J., (Chairman), Ynares-Santiago, Carpio and Azcuna, JJ., concur.
G.R. No. 125948 December 29, 1998
FIRST PHILIPPINE INDUSTRIAL CORPORATION, petitioner,
vs.
COURT OF APPEALS, HONORABLE PATERNO V. TAC-AN, BATANGAS CITY
and ADORACION C. ARELLANO, in her official capacity as City Treasurer of
Batangas, respondents.
MARTINEZ, J.:
This petition for review on certiorari assails the Decision of the Court of
Appeals dated November 29, 1995, in CA-G.R. SP No. 36801, affirming the
decision of the Regional Trial Court of Batangas City, Branch 84, in Civil Case
No. 4293, which dismissed petitioners' complaint for a business tax refund
imposed by the City of Batangas.
Petitioner is a grantee of a pipeline concession under Republic Act No. 387, as
amended, to contract, install and operate oil pipelines. The original pipeline
concession was granted in 19671 and renewed by the Energy Regulatory Board
in 1992. 2
Sometime in January 1995, petitioner applied for a mayor's permit with the
Office of the Mayor of Batangas City. However, before the mayor's permit could
be issued, the respondent City Treasurer required petitioner to pay a local tax
based on its gross receipts for the fiscal year 1993 pursuant to the Local
Government Code3. The respondent City Treasurer assessed a business tax on
the petitioner amounting to P956,076.04 payable in four installments based on
the gross receipts for products pumped at GPS-1 for the fiscal year 1993 which
amounted to P181,681,151.00. In order not to hamper its operations, petitioner
paid the tax under protest in the amount of P239,019.01 for the first quarter of
1993.
On January 20, 1994, petitioner filed a letter-protest addressed to the
respondent City Treasurer, the pertinent portion of which reads:
Please note that our Company (FPIC) is a pipeline operator
with a government concession granted under the Petroleum
Act. It is engaged in the business of transporting petroleum
 products from the Batangas refineries, via pipeline, to Sucat the said code pertains to the mode or manner by which a product is delivered
and JTF Pandacan Terminals. As such, our Company is to its destination.8
exempt from paying tax on gross receipts under Section 133 of
the Local Government Code of 1991 . . . . On October 3, 1994, the trial court rendered a decision dismissing the
complaint, ruling in this wise:
Moreover, Transportation contractors are not included in the
enumeration of contractors under Section 131, Paragraph (h) . . . Plaintiff is either a contractor or other independent
of the Local Government Code. Therefore, the authority to contractor.
impose tax "on contractors and other independent
contractors" under Section 143, Paragraph (e) of the Local
Government Code does not include the power to levy on . . . the exemption to tax claimed by the plaintiff has become
transportation contractors. unclear. It is a rule that tax exemptions are to be strictly
construed against the taxpayer, taxes being the lifeblood of
the government. Exemption may therefore be granted only by
The imposition and assessment cannot be categorized as a clear and unequivocal provisions of law.
mere fee authorized under Section 147 of the Local
Government Code. The said section limits the imposition of
fees and charges on business to such amounts as may be Plaintiff claims that it is a grantee of a pipeline concession
commensurate to the cost of regulation, inspection, and under Republic Act 387. (Exhibit A) whose concession was
licensing. Hence, assuming arguendo that FPIC is liable for the lately renewed by the Energy Regulatory Board (Exhibit B). Yet
license fee, the imposition thereof based on gross receipts is neither said law nor the deed of concession grant any tax
violative of the aforecited provision. The amount of exemption upon the plaintiff.
P956,076.04 (P239,019.01 per quarter) is not commensurate to
the cost of regulation, inspection and licensing. The fee is Even the Local Government Code imposes a tax on franchise
already a revenue raising measure, and not a mere regulatory holders under Sec. 137 of the Local Tax Code. Such being the
imposition.4 situation obtained in this case (exemption being unclear and
equivocal) resort to distinctions or other considerations may
On March 8, 1994, the respondent City Treasurer denied the protest contending be of help:
that petitioner cannot be considered engaged in transportation business, thus
it cannot claim exemption under Section 133 (j) of the Local Government Code. 5 1. That the exemption
granted under Sec. 133 (j)
On June 15, 1994, petitioner filed with the Regional Trial Court of Batangas City encompasses only common
a complaint6 for tax refund with prayer for writ of preliminary injunction against carriers so as not to
respondents City of Batangas and Adoracion Arellano in her capacity as City overburden the riding public
Treasurer. In its complaint, petitioner alleged, inter alia, that: (1) the imposition or commuters with
and collection of the business tax on its gross receipts violates Section 133 of taxes. Plaintiff is not a
the Local Government Code; (2) the authority of cities to impose and collect a common carrier, but a
tax on the gross receipts of "contractors and independent contractors" under special carrier extending its
Sec. 141 (e) and 151 does not include the authority to collect such taxes on services and facilities to a
transportation contractors for, as defined under Sec. 131 (h), the term single specific or "special
"contractors" excludes transportation contractors; and, (3) the City Treasurer customer" under a "special
illegally and erroneously imposed and collected the said tax, thus meriting the contract."
immediate refund of the tax paid.7
2. The Local Tax Code of
Traversing the complaint, the respondents argued that petitioner cannot be 1992 was basically enacted
exempt from taxes under Section 133 (j) of the Local Government Code as said to give more and effective
exemption applies only to "transportation contractors and persons engaged in local autonomy to local
the transportation by hire and common carriers by air, land and water." governments than the
Respondents assert that pipelines are not included in the term "common previous enactments, to
carrier" which refers solely to ordinary carriers such as trucks, trains, ships make them economically and
and the like. Respondents further posit that the term "common carrier" under financially viable to serve the
 people and discharge their 2. He must undertake to
functions with a concomitant carry goods of the kind to
obligation to accept certain which his business is
devolution of powers, . . . So, confined;
consistent with this policy
even franchise grantees are 3. He must undertake to
taxed (Sec. 137) and carry by the method by
contractors are also taxed which his business is
under Sec. 143 (e) and 151 of conducted and over his
the Code.9 established roads; and

Petitioner assailed the aforesaid decision before this Court via a petition for
review. On February 27, 1995, we referred the case to the respondent Court of
Appeals for consideration and adjudication. 10 On November 29, 1995, the
respondent court rendered a decision 11 affirming the trial court's dismissal of
petitioner's complaint. Petitioner's motion for reconsideration was denied on
July 18, 1996. 12
Hence, this petition. At first, the petition was denied due course in a Resolution
dated November 11, 1996. 13Petitioner moved for a reconsideration which was
granted by this Court in a Resolution 14 of January 22, 1997. Thus, the petition
was reinstated.
4. The transportation must
be for hire. 15
Based on the above definitions and requirements, there is no doubt that
petitioner is a common carrier. It is engaged in the business of transporting or
carrying goods, i.e. petroleum products, for hire as a public employment. It
undertakes to carry for all persons indifferently, that is, to all persons who
choose to employ its services, and transports the goods by land and for
compensation. The fact that petitioner has a limited clientele does not exclude
it from the definition of a common carrier. In De Guzman vs. Court of
Appeals 16we ruled that:

Petitioner claims that the respondent Court of Appeals erred in holding that (1) The above article (Art. 1732, Civil Code)
the petitioner is not a common carrier or a transportation contractor, and (2) the makes no distinction between one whose
exemption sought for by petitioner is not clear under the law. principal business activity is the carrying of
persons or goods or both, and one who does
There is merit in the petition. such carrying only as an ancillary activity (in
local idiom, as a "sideline"). Article 1732 . . .
A "common carrier" may be defined, broadly, as one who holds himself out to avoids making any distinction between a
the public as engaged in the business of transporting persons or property from person or enterprise offering transportation
place to place, for compensation, offering his services to the public generally. service on a regular or scheduled basis and
one offering such service on an occasional,
episodic or unscheduled basis. Neither does
Art. 1732 of the Civil Code defines a "common carrier" as "any person, Article 1732 distinguish between a carrier
corporation, firm or association engaged in the business of carrying or offering its services to the "general
transporting passengers or goods or both, by land, water, or air, for public," i.e., the general community or
compensation, offering their services to the public." population, and one who offers services or
solicits business only from a narrow segment
The test for determining whether a party is a common carrier of goods is: of the general population. We think that
Article 1877 deliberately refrained from
1. He must be engaged in the making such distinctions.
business of carrying goods
for others as a public So understood, the concept of "common
employment, and must hold carrier" under Article 1732 may be seen to
himself out as ready to coincide neatly with the notion of "public
engage in the transportation service," under the Public Service Act
of goods for person (Commonwealth Act No. 1416, as amended)
generally as a business and which at least partially supplements the law
not as a casual occupation; on common carriers set forth in the Civil
 Code. Under Section 13, paragraph (b) of the
Public Service Act, "public service" includes:
every person that now or
hereafter may own, operate.
manage, or control in the
Philippines, for hire or
compensation, with general
or limited clientele, whether
permanent, occasional or
accidental, and done for
general business purposes,
any common carrier,
railroad, street railway,
traction railway, subway
motor vehicle, either for
freight or passenger, or both,
with or without fixed route
and whatever may be its
classification, freight or
carrier service of any class,
express service, steamboat,
or steamship line, pontines,
ferries and water
craft, engaged in the
transportation of passengers
or freight or both, shipyard,
marine repair shop, wharf or
dock, ice plant, ice-
refrigeration plant, canal,
irrigation system gas,
electric light heat and power,
water supply andpower
petroleum, sewerage system,
wire or wireless
communications systems,
wire or wireless
broadcasting stations and
other similar public services.
(Emphasis Supplied)
Also, respondent's argument that the term "common carrier" as used in Section
133 (j) of the Local Government Code refers only to common carriers
transporting goods and passengers through moving vehicles or vessels either
by land, sea or water, is erroneous.
As correctly pointed out by petitioner, the definition of "common carriers" in
the Civil Code makes no distinction as to the means of transporting, as long as
it is by land, water or air. It does not provide that the transportation of the
passengers or goods should be by motor vehicle. In fact, in the United States,
oil pipe line operators are considered common carriers. 17
Under the Petroleum Act of the Philippines (Republic Act 387), petitioner is
considered a "common carrier." Thus, Article 86 thereof provides that:
Art. 86. Pipe line concessionaire as common
carrier. — A pipe line shall have the
preferential right to utilize installations for the
transportation of petroleum owned by him,
but is obligated to utilize the remaining
transportation capacity pro rata for the
transportation of such other petroleum as
may be offered by others for transport, and to
charge without discrimination such rates as
may have been approved by the Secretary of
Agriculture and Natural Resources.
Republic Act 387 also regards petroleum operation as a public utility. Pertinent
portion of Article 7 thereof provides:
that everything relating to the exploration for
and exploitation of petroleum . . . and
everything relating to the manufacture,
refining, storage, or transportation by special
methods of petroleum, is hereby declared to
be a public utility. (Emphasis Supplied)
The Bureau of Internal Revenue likewise considers the petitioner a "common
carrier." In BIR Ruling No. 069-83, it declared:
. . . since [petitioner] is a pipeline
concessionaire that is engaged only in
transporting petroleum products, it is
considered a common carrier under Republic
Act No. 387 . . . . Such being the case, it is not
subject to withholding tax prescribed by
Revenue Regulations No. 13-78, as amended.
From the foregoing disquisition, there is no doubt that petitioner is a "common
carrier" and, therefore, exempt from the business tax as provided for in Section
133 (j), of the Local Government Code, to wit:
Sec. 133. Common Limitations on the Taxing
Powers of Local Government Units. — Unless
otherwise provided herein, the exercise of the
taxing powers of provinces, cities,
municipalities, and barangays shall not
extend to the levy of the following:
xxx xxx xxx
 (j) Taxes on the business of transportation, except as
the gross otherwise provided in this code.
receipts of
transportati Now, Mr. Speaker, if the Gentleman would
on care to go to page 98 of Book II, one can see
contractors there that provinces have the power to
and persons impose a tax on business enjoying a
engaged in franchise at the rate of not more than one-half
the of 1 percent of the gross annual receipts. So,
transportati transportation contractors who are enjoying a
on of franchise would be subject to tax by the
passengers province. That is the exception, Mr. Speaker.
or freight by
hire and
common What we want to guard against here, Mr.
carriers by Speaker, is the imposition of taxes by local
air, land or government units on the carrier business.
water, Local government units may impose taxes on
except as top of what is already being imposed by the
provided in National Internal Revenue Code which is the
this Code. so-called "common carriers tax." We do not
want a duplication of this tax, so we just
provided for an exception under Section 125
The deliberations conducted in the House of Representatives on the Local [now Sec. 137] that a province may impose
Government Code of 1991 are illuminating: this tax at a specific rate.

MR. AQUINO (A). Thank you, Mr. Speaker. MR. AQUINO (A.). Thank you for that
clarification, Mr. Speaker. . . . 18
Mr. Speaker, we would like to proceed to page
95, line It is clear that the legislative intent in excluding from the taxing power of the
local government unit the imposition of business tax against common carriers
1. It states: "SEC. 121 [now Sec. 131]. is to prevent a duplication of the so-called "common carrier's tax."
Common Limitations on the Taxing Powers of
Local Government Units." . . . Petitioner is already paying three (3%) percent common carrier's tax on its
gross sales/earnings under the National Internal Revenue Code. 19 To tax
MR. AQUINO (A.). Thank you Mr. Speaker. petitioner again on its gross receipts in its transportation of petroleum
business would defeat the purpose of the Local Government Code.
Still on page 95, subparagraph 5, on taxes on
the business of transportation. This appears WHEREFORE, the petition is hereby GRANTED. The decision of the respondent
to be one of those being deemed to be Court of Appeals dated November 29, 1995 in CA-G.R. SP No. 36801 is
exempted from the taxing powers of the local REVERSED and SET ASIDE.
government units. May we know the reason
why the transportation business is being SO ORDERED.
excluded from the taxing powers of the local
government units?
Bellosillo, Puno and Mendoza, JJ., concur.
MR. JAVIER (E.). Mr. Speaker, there is an
exception contained in Section 121 (now Sec.
131), line 16, paragraph 5. It states that local
government units may not impose taxes on
G.R. No. 186312 June 29, 2010
SPOUSES DANTE CRUZ and LEONORA CRUZ, Petitioners,
vs.
SUN HOLIDAYS, INC., Respondent.
DECISION
CARPIO MORALES, J.:
Spouses Dante and Leonora Cruz (petitioners) lodged a Complaint on January 25,
20011 against Sun Holidays, Inc. (respondent) with the Regional Trial Court (RTC) of
Pasig City for damages arising from the death of their son Ruelito C. Cruz (Ruelito)
who perished with his wife on September 11, 2000 on board the boat M/B Coco
Beach III that capsized en route to Batangas from Puerto Galera, Oriental Mindoro
where the couple had stayed at Coco Beach Island Resort (Resort) owned and
operated by respondent.
The stay of the newly wed Ruelito and his wife at the Resort from September 9 to 11,
2000 was by virtue of a tour package-contract with respondent that included
transportation to and from the Resort and the point of departure in Batangas.
Miguel C. Matute (Matute),2 a scuba diving instructor and one of the survivors, gave
his account of the incident that led to the filing of the complaint as follows:
Matute stayed at the Resort from September 8 to 11, 2000. He was originally
scheduled to leave the Resort in the afternoon of September 10, 2000, but was
advised to stay for another night because of strong winds and heavy rains.
On September 11, 2000, as it was still windy, Matute and 25 other Resort guests
including petitioners’ son and his wife trekked to the other side of the Coco Beach
mountain that was sheltered from the wind where they boarded M/B Coco Beach III,
which was to ferry them to Batangas.
Shortly after the boat sailed, it started to rain. As it moved farther away from Puerto
Galera and into the open seas, the rain and wind got stronger, causing the boat to tilt
from side to side and the captain to step forward to the front, leaving the wheel to one
of the crew members.
The waves got more unwieldy. After getting hit by two big waves which came one
after the other, M/B Coco Beach III capsized putting all passengers underwater.
The passengers, who had put on their life jackets, struggled to get out of the boat.
Upon seeing the captain, Matute and the other passengers who reached the surface
asked him what they could do to save the people who were still trapped under the
boat. The captain replied "Iligtas niyo na lang ang sarili niyo" (Just save yourselves).
Help came after about 45 minutes when two boats owned by Asia Divers in Sabang,
Puerto Galera passed by the capsized M/B Coco Beach III. Boarded on those two
boats were 22 persons, consisting of 18 passengers and four crew members, who
were brought to Pisa Island. Eight passengers, including petitioners’ son and his wife,
died during the incident.
At the time of Ruelito’s death, he was 28 years old and employed as a contractual
worker for Mitsui Engineering & Shipbuilding Arabia, Ltd. in Saudi Arabia, with a basic
monthly salary of $900.3
Petitioners, by letter of October 26, 2000,4 demanded indemnification from
respondent for the death of their son in the amount of at least ₱4,000,000.
Replying, respondent, by letter dated November 7, 2000, 5 denied any responsibility
for the incident which it considered to be a fortuitous event. It nevertheless offered, as
an act of commiseration, the amount of ₱10,000 to petitioners upon their signing of a
waiver.
As petitioners declined respondent’s offer, they filed the Complaint, as earlier
reflected, alleging that respondent, as a common carrier, was guilty of negligence in
allowing M/B Coco Beach III to sail notwithstanding storm warning bulletins issued by
the Philippine Atmospheric, Geophysical and Astronomical Services Administration
(PAGASA) as early as 5:00 a.m. of September 11, 2000.6
In its Answer,7 respondent denied being a common carrier, alleging that its boats are
not available to the general public as they only ferry Resort guests and crew
members. Nonetheless, it claimed that it exercised the utmost diligence in ensuring
the safety of its passengers; contrary to petitioners’ allegation, there was no storm on
September 11, 2000 as the Coast Guard in fact cleared the voyage; and M/B Coco
Beach III was not filled to capacity and had sufficient life jackets for its passengers.
By way of Counterclaim, respondent alleged that it is entitled to an award for
attorney’s fees and litigation expenses amounting to not less than ₱300,000.
Carlos Bonquin, captain of M/B Coco Beach III, averred that the Resort customarily
requires four conditions to be met before a boat is allowed to sail, to wit: (1) the sea is
calm, (2) there is clearance from the Coast Guard, (3) there is clearance from the
captain and (4) there is clearance from the Resort’s assistant manager.8 He added
that M/B Coco Beach III met all four conditions on September 11, 2000,9 but a
subasco or squall, characterized by strong winds and big waves, suddenly occurred,
causing the boat to capsize.10
By Decision of February 16, 2005,11 Branch 267 of the Pasig RTC dismissed
petitioners’ Complaint and respondent’s Counterclaim.
Petitioners’ Motion for Reconsideration having been denied by Order dated
September 2, 2005,12 they appealed to the Court of Appeals.
By Decision of August 19, 2008,13 the appellate court denied petitioners’ appeal,
holding, among other things, that the trial court correctly ruled that respondent is a
private carrier which is only required to observe ordinary diligence; that respondent in
fact observed extraordinary diligence in transporting its guests on board M/B Coco
Beach III; and that the proximate cause of the incident was a squall, a fortuitous
event.
Petitioners’ Motion for Reconsideration having been denied by Resolution dated
January 16, 2009,14 they filed the present Petition for Review.15
Petitioners maintain the position they took before the trial court, adding that
respondent is a common carrier since by its tour package, the transporting of its
guests is an integral part of its resort business. They inform that another division of
the appellate court in fact held respondent liable for damages to the other survivors of
the incident.
Upon the other hand, respondent contends that petitioners failed to present evidence
to prove that it is a common carrier; that the Resort’s ferry services for guests cannot
be considered as ancillary to its business as no income is derived therefrom; that it
exercised extraordinary diligence as shown by the conditions it had imposed before
allowing M/B Coco Beach III to sail; that the incident was caused by a fortuitous event
without any contributory negligence on its part; and that the other case wherein the
appellate court held it liable for damages involved different plaintiffs, issues and
evidence.16
The petition is impressed with merit.
Petitioners correctly rely on De Guzman v. Court of Appeals 17 in characterizing
respondent as a common carrier.
The Civil Code defines "common carriers" in the following terms:
Article 1732. Common carriers are persons, corporations, firms or associations
engaged in the business of carrying or transporting passengers or goods or both, by
land, water, or air for compensation, offering their services to the public.
The above article makes no distinction between one whose principal
business activity is the carrying of persons or goods or both, and one who does such
carrying only as an ancillary activity (in local idiom, as "a sideline"). Article 1732 also
carefully avoids making any distinction between a person or enterprise offering
transportation service on a regular or scheduled basis and one offering such service
on an occasional, episodic or unscheduled basis. Neither does Article 1732
distinguish between a carrier offering its services to the "general public," i.e., the
general community or population, and one who offers services or solicits business
only from a narrow segment of the general population. We think that Article 1733
deliberately refrained from making such distinctions.
So understood, the concept of "common carrier" under Article 1732 may be seen to
coincide neatly with the notion of "public service," under the Public Service Act
(Commonwealth Act No. 1416, as amended) which at least partially supplements the
law on common carriers set forth in the Civil Code. Under Section 13, paragraph (b)
of the Public Service Act, "public service" includes:
. . . every person that now or hereafter may own, operate, manage, or control in the
Philippines, for hire or compensation, with general or limited clientele, whether
permanent, occasional or accidental, and done for general business purposes, any
common carrier, railroad, street railway, traction railway, subway motor vehicle, either
for freight or passenger, or both, with or without fixed route and whatever may be its
classification, freight or carrier service of any class, express service, steamboat, or
steamship line, pontines, ferries and water craft, engaged in the transportation of
passengers or freight or both, shipyard, marine repair shop, wharf or dock, ice plant,
ice-refrigeration plant, canal, irrigation system, gas, electric light, heat and power,
water supply and power petroleum, sewerage system, wire or wireless
communications systems, wire or wireless broadcasting stations and other similar
public services . . .18 (emphasis and underscoring supplied.)
Indeed, respondent is a common carrier. Its ferry services are so intertwined with its
main business as to be properly considered ancillary thereto. The constancy of
respondent’s ferry services in its resort operations is underscored by its having its
own Coco Beach boats. And the tour packages it offers, which include the ferry
services, may be availed of by anyone who can afford to pay the same. These
services are thus available to the public.
That respondent does not charge a separate fee or fare for its ferry services is of no
moment. It would be imprudent to suppose that it provides said services at a loss.
The Court is aware of the practice of beach resort operators offering tour packages to
factor the transportation fee in arriving at the tour package price. That guests who opt
not to avail of respondent’s ferry services pay the same amount is likewise
inconsequential. These guests may only be deemed to have overpaid.
As De Guzman instructs, Article 1732 of the Civil Code defining "common carriers"
has deliberately refrained from making distinctions on whether the carrying of persons
or goods is the carrier’s principal business, whether it is offered on a regular basis, or
whether it is offered to the general public. The intent of the law is thus to not consider
such distinctions. Otherwise, there is no telling how many other distinctions may be
concocted by unscrupulous businessmen engaged in the carrying of persons or
goods in order to avoid the legal obligations and liabilities of common carriers.
Under the Civil Code, common carriers, from the nature of their business and for
reasons of public policy, are bound to observe extraordinary diligence for the safety of
the passengers transported by them, according to all the circumstances of each
case.19 They are bound to carry the passengers safely as far as human care and
foresight can provide, using the utmost diligence of very cautious persons, with due
regard for all the circumstances.20
When a passenger dies or is injured in the discharge of a contract of carriage, it is
presumed that the common carrier is at fault or negligent. In fact, there is even no
need for the court to make an express finding of fault or negligence on the part of the
common carrier. This statutory presumption may only be overcome by evidence that
the carrier exercised extraordinary diligence.21
Respondent nevertheless harps on its strict compliance with the earlier mentioned
conditions of voyage before it allowed M/B Coco Beach III to sail on September 11,
2000. Respondent’s position does not impress.
The evidence shows that PAGASA issued 24-hour public weather forecasts and
tropical cyclone warnings for shipping on September 10 and 11, 2000 advising of
tropical depressions in Northern Luzon which would also affect the province of
Mindoro.22 By the testimony of Dr. Frisco Nilo, supervising weather specialist of
PAGASA, squalls are to be expected under such weather condition. 23
A very cautious person exercising the utmost diligence would thus not brave such
stormy weather and put other people’s lives at risk. The extraordinary diligence
required of common carriers demands that they take care of the goods or lives
entrusted to their hands as if they were their own. This respondent failed to do.
Respondent’s insistence that the incident was caused by a fortuitous event does not
impress either.
The elements of a "fortuitous event" are: (a) the cause of the unforeseen and
unexpected occurrence, or the failure of the debtors to comply with their obligations,
must have been independent of human will; (b) the event that constituted the caso
fortuito must have been impossible to foresee or, if foreseeable, impossible to avoid;
(c) the occurrence must have been such as to render it impossible for the debtors to
fulfill their obligation in a normal manner; and (d) the obligor must have been free
from any participation in the aggravation of the resulting injury to the creditor.24
To fully free a common carrier from any liability, the fortuitous event must have been
the proximate and only causeof the loss. And it should have exercised due diligence
to prevent or minimize the loss before, during and after the occurrence of the
fortuitous event.25
Respondent cites the squall that occurred during the voyage as the fortuitous event
that overturned M/B Coco Beach III. As reflected above, however, the occurrence of
squalls was expected under the weather condition of September 11, 2000. Moreover,
evidence shows that M/B Coco Beach III suffered engine trouble before it capsized
and sank.26 The incident was, therefore, not completely free from human intervention.
The Court need not belabor how respondent’s evidence likewise fails to demonstrate
that it exercised due diligence to prevent or minimize the loss before, during and after
the occurrence of the squall.
Article 176427 vis-à-vis Article 220628 of the Civil Code holds the common carrier in
breach of its contract of carriage that results in the death of a passenger liable to pay
the following: (1) indemnity for death, (2) indemnity for loss of earning capacity and
(3) moral damages.
Petitioners are entitled to indemnity for the death of Ruelito which is fixed at
₱50,000.29
As for damages representing unearned income, the formula for its computation is:
Net Earning Capacity = life expectancy x (gross annual income - reasonable and
necessary living expenses).
Life expectancy is determined in accordance with the formula:
2 / 3 x [80 — age of deceased at the time of death]30
The first factor, i.e., life expectancy, is computed by applying the formula (2/3 x [80 —
age at death]) adopted in the American Expectancy Table of Mortality or the Actuarial
of Combined Experience Table of Mortality.31
The second factor is computed by multiplying the life expectancy by the net earnings
of the deceased, i.e., the total earnings less expenses necessary in the creation of
such earnings or income and less living and other incidental expenses.32 The loss is
not equivalent to the entire earnings of the deceased, but only such portion as he
would have used to support his dependents or heirs. Hence, to be deducted from his
gross earnings are the necessary expenses supposed to be used by the deceased for
his own needs.33
In computing the third factor – necessary living expense, Smith Bell Dodwell Shipping
Agency Corp. v. Borja34teaches that when, as in this case, there is no showing that
the living expenses constituted the smaller percentage of the gross income, the living
expenses are fixed at half of the gross income.
Applying the above guidelines, the Court determines Ruelito's life expectancy as
follows:
Life expectancy = 2/3 x [80 - age of deceased at the time of death]
2/3 x [80 - 28]
2/3 x [52]
Life expectancy = 35
Documentary evidence shows that Ruelito was earning a basic monthly salary of
$90035 which, when converted to Philippine peso applying the annual average
exchange rate of $1 = ₱44 in 2000,36 amounts to ₱39,600. Ruelito’s net earning
capacity is thus computed as follows:
Net Earning = life expectancy x (gross annual income - reasonable
Capacity and necessary living expenses).
= 35 x (₱475,200 - ₱237,600)
= 35 x (₱237,600)
Net Earning = ₱8,316,000

Capacity
Respecting the award of moral damages, since respondent common carrier’s breach
of contract of carriage resulted in the death of petitioners’ son, following Article 1764
vis-à-vis Article 2206 of the Civil Code, petitioners are entitled to moral damages.
Since respondent failed to prove that it exercised the extraordinary diligence required
of common carriers, it is presumed to have acted recklessly, thus warranting the
award too of exemplary damages, which are granted in contractual obligations if the
defendant acted in a wanton, fraudulent, reckless, oppressive or malevolent
manner.37
Under the circumstances, it is reasonable to award petitioners the amount of
₱100,000 as moral damages and ₱100,000 as exemplary damages. 381avvphi1
Pursuant to Article 220839 of the Civil Code, attorney's fees may also be awarded
where exemplary damages are awarded. The Court finds that 10% of the total
amount adjudged against respondent is reasonable for the purpose.
Finally, Eastern Shipping Lines, Inc. v. Court of Appeals 40 teaches that when an
obligation, regardless of its source, i.e., law, contracts, quasi-contracts, delicts or
quasi-delicts is breached, the contravenor can be held liable for payment of interest in
the concept of actual and compensatory damages, subject to the following rules, to
wit —
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. (emphasis supplied).
Since the amounts payable by respondent have been determined with certainty only
in the present petition, the interest due shall be computed upon the finality of this
decision at the rate of 12% per annum until satisfaction, in accordance with paragraph
number 3 of the immediately cited guideline in Easter Shipping Lines, Inc.
WHEREFORE, the Court of Appeals Decision of August 19, 2008 is REVERSED and
SET ASIDE. Judgment is rendered in favor of petitioners ordering respondent to pay
petitioners the following: (1) ₱50,000 as indemnity for the death of Ruelito Cruz; (2)
₱8,316,000 as indemnity for Ruelito’s loss of earning capacity; (3) ₱100,000 as moral
damages; (4) ₱100,000 as exemplary damages; (5) 10% of the total amount
adjudged against respondent as attorneys fees; and (6) the costs of suit.
The total amount adjudged against respondent shall earn interest at the rate of 12%
per annum computed from the finality of this decision until full payment.
SO ORDERED.
CONCHITA CARPIO MORALES
Associate Justice
Chairperson
WE CONCUR:
ARTURO D. BRION LUCAS P. BERSAMIN
Associate Justice Associate Justice
ROBERTO A. ABAD MARTIN S. VILLARAMA, JR.
Associate Justice Associate Justice
CERTIFICATION
Pursuant to Section 13, Article VIII of the Constitution, I certify that the conclusions in
the above decision had been reached in consultation before the case was assigned to
the writer of the opinion of the Court’s Division.
RENATO C. CORONA
Chief Justice
ESTELA L. CRISOSTOMO, Petitioner, v. THE COURT OF APPEALS and
CARAVAN TRAVEL & TOURS INTERNATIONAL, INC., Respondents.
DECISION
YNARES-SANTIAGO, J.:
In May 1991, petitioner Estela L. Crisostomo contracted the services of respondent
Caravan Travel and Tours International, Inc. to arrange and facilitate her booking,
ticketing and accommodation in a tour dubbed "Jewels of Europe." The package tour
included the countries of England, Holland, Germany, Austria, Liechtenstein,
Switzerland and France at a total cost of P74,322.70. Petitioner was given a 5%
discount on the amount, which included airfare, and the booking fee was also waived
because petitioner’s niece, Meriam Menor, was respondent company’s ticketing
manager.chanrob1es virtua1 1aw 1ibrary
Pursuant to said contract, Menor went to her aunt’s residence on June 12, 1991 — a
Wednesday — to deliver petitioner’s travel documents and plane tickets. Petitioner, in
turn, gave Menor the full payment for the package tour. Menor then told her to be at
the Ninoy Aquino International Airport (NAIA) on Saturday, two hours before her flight
on board British Airways.
Without checking her travel documents, petitioner went to NAIA on Saturday, June
15, 1991, to take the flight for the first leg of her journey from Manila to Hongkong. To
petitioner’s dismay, she discovered that the flight she was supposed to take had
already departed the previous day. She learned that her plane ticket was for the flight
scheduled on June 14, 1991. She thus called up Menor to complain.
Subsequently, Menor prevailed upon petitioner to take another tour — the "British
Pageant" — which included England, Scotland and Wales in its itinerary. For this tour
package, petitioner was asked anew to pay US$785.00 or P20,881.00 (at the then
prevailing exchange rate of P26.60). She gave respondent US$300 or P7,980.00 as
partial payment and commenced the trip in July 1991.chanrob1es virtual law library
Upon petitioner’s return from Europe, she demanded from respondent the
reimbursement of P61,421.70, representing the difference between the sum she paid
for "Jewels of Europe" and the amount she owed respondent for the "British Pageant"
tour. Despite several demands, respondent company refused to reimburse the
amount, contending that the same was non-refundable. 1 Petitioner was thus
constrained to file a complaint against respondent for breach of contract of carriage
and damages, which was docketed as Civil Case No. 92-133 and raffled to Branch 59
of the Regional Trial Court of Makati City.
In her complaint, 2 petitioner alleged that her failure to join "Jewels of Europe" was
due to respondent’s fault since it did not clearly indicate the departure date on the
plane ticket. Respondent was also negligent in informing her of the wrong flight
schedule through its employee Menor. She insisted that the "British Pageant" was
merely a substitute for the "Jewels of Europe" tour, such that the cost of the former
should be properly set-off against the sum paid for the latter.
For its part, respondent company, through its Operations Manager, Concepcion
Chipeco, denied responsibility for petitioner’s failure to join the first tour. Chipeco
insisted that petitioner was informed of the correct departure date, which was clearly
and legibly printed on the plane ticket. The travel documents were given to petitioner
two days ahead of the scheduled trip. Petitioner had only herself to blame for missing
the flight, as she did not bother to read or confirm her flight schedule as printed on the
ticket.
Respondent explained that it can no longer reimburse the amount paid for "Jewels of
Europe", considering that the same had already been remitted to its principal in
Singapore, Lotus Travel Ltd., which had already billed the same even if petitioner did
not join the tour. Lotus’ European tour organizer, Insight International Tours Ltd.,
determines the cost of a package tour based on a minimum number of projected
participants. For this reason, it is accepted industry practice to disallow refund for
individuals who failed to take a booked tour. 3
Lastly, respondent maintained that the "British Pageant" was not a substitute for the
package tour that petitioner missed. This tour was independently procured by
petitioner after realizing that she made a mistake in missing her flight for "Jewels of
Europe." Petitioner was allowed to make a partial payment of only US$300.00 for the
second tour because her niece was then an employee of the travel agency.
Consequently, respondent prayed that petitioner be ordered to pay the balance of
P12,901.00 for the "British Pageant" package tour.chanrobles virtual lawlibrary
After due proceedings, the trial court rendered a decision, 4 the dispositive part of
which reads:chanrob1es virtual 1aw library
WHEREFORE, premises considered, judgment is hereby rendered as
follows:chanrob1es virtual 1aw library
1. Ordering the defendant to return and/or refund to the plaintiff the amount of Fifty
Three Thousand Nine Hundred Eighty Nine Pesos and Forty Three Centavos
(P53,989.43) with legal interest thereon at the rate of twelve percent (12%) per
annum starting January 16, 1992, the date when the complaint was filed;
2. Ordering the defendant to pay the plaintiff the amount of Five Thousand
(P5,000.00) Pesos as and for reasonable attorney’s fees;
3. Dismissing the defendant’s counterclaim, for lack of merit; and
4. With costs against the defendant.
SO ORDERED. 5
The trial court held that respondent was negligent in erroneously advising petitioner of
her departure date through its employee, Menor, who was not presented as witness
to rebut petitioner’s testimony. However, petitioner should have verified the exact date
and time of departure by looking at her ticket and should have simply not relied on
Menor’s verbal representation. The trial court thus declared that petitioner was guilty
of contributory negligence and accordingly, deducted 10% from the amount being
claimed as refund.

Respondent appealed to the Court of Appeals, which likewise found both parties to be
at fault. However, the appellate court held that petitioner is more negligent than
respondent because as a lawyer and well-traveled person, she should have known
better than to simply rely on what was told to her. This being so, she is not entitled to
any form of damages. Petitioner also forfeited her right to the "Jewels of Europe" tour
and must therefore pay respondent the balance of the price for the "British Pageant"
tour. The dispositive portion of the judgment appealed from reads as
follows:chanrob1es virtual 1aw library
WHEREFORE, premises considered, the decision of the Regional Trial Court dated
October 26, 1995 is hereby REVERSED and SET ASIDE. A new judgment is hereby
ENTERED requiring the plaintiff-appellee to pay to the defendant-appellant the
amount of P12,901.00, representing the balance of the price of the British Pageant
Package Tour, the same to earn legal interest at the rate of SIX PERCENT (6%) per
annum, to be computed from the time the counterclaim was filed until the finality of
this decision. After this decision becomes final and executory, the rate of TWELVE
PERCENT (12%) interest per annum shall be additionally imposed on the total
obligation until payment thereof is satisfied. The award of attorney’s fees is
DELETED. Costs against the Plaintiff-Appellee.chanrob1es virtua1 1aw 1ibrary
SO ORDERED. 6
Upon denial of her motion for reconsideration, 7 petitioner filed the instant petition
under Rule 45 on the following grounds:chanrob1es virtual 1aw library
I procuring tickets and facilitating travel permits or visas as well as booking customers
It is respectfully submitted that the Honorable Court of Appeals committed a
reversible error in reversing and setting aside the decision of the trial court by ruling
that the petitioner is not entitled to a refund of the cost of unavailed "Jewels of
Europe" tour she being equally, if not more, negligent than the private respondent, for
in the contract of carriage the common carrier is obliged to observe utmost care and
extra-ordinary diligence which is higher in degree than the ordinary diligence required
of the passenger. Thus, even if the petitioner and private respondent were both
negligent, the petitioner cannot be considered to be equally, or worse, more guilty
than the private Respondent. At best, petitioner’s negligence is only contributory while
the private respondent [is guilty] of gross negligence making the principle of pari
delicto inapplicable in the case;
II
The Honorable Court of Appeals also erred in not ruling that the "Jewels of Europe"
tour was not indivisible and the amount paid therefor refundable;
III
The Honorable Court erred in not granting to the petitioner the consequential
damages due her as a result of breach of contract of carriage. 8
Petitioner contends that respondent did not observe the standard of care required of a
common carrier when it informed her wrongly of the flight schedule. She could not be
deemed more negligent than respondent since the latter is required by law to exercise
extraordinary diligence in the fulfillment of its obligation. If she were negligent at all,
the same is merely contributory and not the proximate cause of the damage she
suffered. Her loss could only be attributed to respondent as it was the direct
consequence of its employee’s gross negligence.chanrob1es virtua1 1aw 1ibrary
Petitioner’s contention has no merit.
By definition, a contract of carriage or transportation is one whereby a certain person
or association of persons obligate themselves to transport persons, things, or news
from one place to another for a fixed price. 9 Such person or association of persons
are regarded as carriers and are classified as private or special carriers and common
or public carriers. 10 A common carrier is defined under Article 1732 of the Civil Code
as persons, corporations, firms or associations engaged in the business of carrying or
transporting passengers or goods or both, by land, water or air, for compensation,
offering their services to the public.
It is obvious from the above definition that respondent is not an entity engaged in the
business of transporting either passengers or goods and is therefore, neither a private
nor a common carrier. Respondent did not undertake to transport petitioner from one
place to another since its covenant with its customers is simply to make travel
arrangements in their behalf. Respondent’s services as a travel agency include
for tours.
While petitioner concededly bought her plane ticket through the efforts of respondent
company, this does not mean that the latter ipso facto is a common carrier. At most,
respondent acted merely as an agent of the airline, with whom petitioner ultimately
contracted for her carriage to Europe. Respondent’s obligation to petitioner in this
regard was simply to see to it that petitioner was properly booked with the airline for
the appointed date and time. Her transport to the place of destination, meanwhile,
pertained directly to the airline.chanrob1es virtua1 1aw 1ibrary
The object of petitioner’s contractual relation with respondent is the latter’s service of
arranging and facilitating petitioner’s booking, ticketing and accommodation in the
package tour. In contrast, the object of a contract of carriage is the transportation of
passengers or goods. It is in this sense that the contract between the parties in this
case was an ordinary one for services and not one of carriage. Petitioner’s
submission is premised on a wrong assumption.
The nature of the contractual relation between petitioner and respondent is
determinative of the degree of care required in the performance of the latter’s
obligation under the contract. For reasons of public policy, a common carrier in a
contract of carriage is bound by law to carry passengers as far as human care and
foresight can provide using the utmost diligence of very cautious persons and with
due regard for all the circumstances. 11 As earlier stated, however, respondent is not
a common carrier but a travel agency. It is thus not bound under the law to observe
extraordinary diligence in the performance of its obligation, as petitioner claims.

Since the contract between the parties is an ordinary one for services, the standard of
care required of respondent is that of a good father of a family under Article 1173 of
the Civil Code. 12 This connotes reasonable care consistent with that which an
ordinarily prudent person would have observed when confronted with a similar
situation. The test to determine whether negligence attended the performance of an
obligation is: did the defendant in doing the alleged negligent act use that reasonable
care and caution which an ordinarily prudent person would have used in the same
situation? If not, then he is guilty of negligence. 13
In the case at bar, the lower court found Menor negligent when she allegedly
informed petitioner of the wrong day of departure. Petitioner’s testimony was
accepted as indubitable evidence of Menor’s alleged negligent act since respondent
did not call Menor to the witness stand to refute the allegation. The lower court
applied the presumption under Rule 131, Section 3 (e) 14 of the Rules of Court that
evidence willfully suppressed would be adverse if produced and thus considered
petitioner’s uncontradicted testimony to be sufficient proof of her claim.
On the other hand, respondent has consistently denied that Menor was negligent and
maintains that petitioner’s assertion is belied by the evidence on record. The date and
time of departure was legibly written on the plane ticket and the travel papers were
delivered two days in advance precisely so that petitioner could prepare for the trip. It
performed all its obligations to enable petitioner to join the tour and exercised due
diligence in its dealings with the latter.chanrob1es virtua1 1aw 1ibrary
We agree with Respondent.
Respondent’s failure to present Menor as witness to rebut petitioner’s testimony could
not give rise to an inference unfavorable to the former. Menor was already working in
France at the time of the filing of the complaint, 15 thereby making it physically
impossible for respondent to present her as a witness. Then too, even if it were
possible for respondent to secure Menor’s testimony, the presumption under Rule
131, Section 3(e) would still not apply. The opportunity and possibility for obtaining
Menor’s testimony belonged to both parties, considering that Menor was not just
respondent’s employee, but also petitioner’s niece. It was thus error for the lower
court to invoke the presumption that respondent willfully suppressed evidence under
Rule 131, Section 3(e). Said presumption would logically be inoperative if the
evidence is not intentionally omitted but is simply unavailable, or when the same
could have been obtained by both parties. 16
In sum, we do not agree with the finding of the lower court that Menor’s negligence
concurred with the negligence of petitioner and resultantly caused damage to the
latter. Menor’s negligence was not sufficiently proved, considering that the only
evidence presented on this score was petitioner’s uncorroborated narration of the
events. It is well-settled that the party alleging a fact has the burden of proving it and
a mere allegation cannot take the place of evidence. 17 If the plaintiff, upon whom
rests the burden of proving his cause of action, fails to show in a satisfactory manner
facts upon which he bases his claim, the defendant is under no obligation to prove his
exception or defense. 18
Contrary to petitioner’s claim, the evidence on record shows that respondent
exercised due diligence in performing its obligations under the contract and followed
standard procedure in rendering its services to petitioner. As correctly observed by
the lower court, the plane ticket 19 issued to petitioner clearly reflected the departure
date and time, contrary to petitioner’s contention. The travel documents, consisting of
the tour itinerary, vouchers and instructions, were likewise delivered to petitioner two
days prior to the trip. Respondent also properly booked petitioner for the tour,
prepared the necessary documents and procured the plane tickets. It arranged
petitioner’s hotel accommodation as well as food, land transfers and sightseeing
excursions, in accordance with its avowed undertaking.
Therefore, it is clear that respondent performed its prestation under the contract as
well as everything else that was essential to book petitioner for the tour. Had
petitioner exercised due diligence in the conduct of her affairs, there would have been
no reason for her to miss the flight. Needless to say, after the travel papers were
delivered to petitioner, it became incumbent upon her to take ordinary care of her
concerns. This undoubtedly would require that she at least read the documents in
order to assure herself of the important details regarding the trip.chanrob1es virtua1
1aw 1ibrary
The negligence of the obligor in the performance of the obligation renders him liable
for damages for the resulting loss suffered by the obligee. Fault or negligence of the
obligor consists in his failure to exercise due care and prudence in the performance of
the obligation as the nature of the obligation so demands. 20 There is no fixed
standard of diligence applicable to each and every contractual obligation and each
case must be determined upon its particular facts. The degree of diligence required
depends on the circumstances of the specific obligation and whether one has been
negligent is a question of fact that is to be determined after taking into account the
particulars of each case. 21
The lower court declared that respondent’s employee was negligent. This factual
finding, however, is not supported by the evidence on record. While factual findings
below are generally conclusive upon this court, the rule is subject to certain
exceptions, as when the trial court overlooked, misunderstood, or misapplied some
facts or circumstances of weight and substance which will affect the result of the
case. 22
In the case at bar, the evidence on record shows that respondent company performed
its duty diligently and did not commit any contractual breach. Hence, petitioner cannot
recover and must bear her own damage.
WHEREFORE, the instant petition is DENIED for lack of merit. The decision of the
Court of Appeals in CA-G.R. CV No. 51932 is AFFIRMED. Accordingly, petitioner is
ordered to pay respondent the amount of P12,901.00 representing the balance of the
price of the British Pageant Package Tour, with legal interest thereon at the rate of
6% per annum, to be computed from the time the counterclaim was filed until the
finality of this Decision. After this Decision becomes final and executory, the rate of
12% per annum shall be imposed until the obligation is fully settled, this interim period
being deemed to be by then an equivalent to a forbearance of credit. 23
SO ORDERED.chanrob1es virtua1 1aw 1ibrary
Davide, Jr., C.J., Vitug, Carpio and Azcuna, JJ., concur.
 G.R. No. 141910 - August 6, 2002
FGU INSURANCE CORPORATION, Petitioner, vs. G.P. SARMIENTO TRUCKING
CORPORATION and LAMBERT M. EROLES, Respondents.
VITUG, J.:
G.P. Sarmiento Trucking Corporation (GPS) undertook to deliver on 18 June 1994
thirty (30) units of Condura S.D. white refrigerators aboard one of its Isuzu truck,
driven by Lambert Eroles, from the plant site of Concepcion Industries, Inc., along
South Superhighway in Alabang, Metro Manila, to the Central Luzon Appliances in
Dagupan City. While the truck was traversing the north diversion road along McArthur
highway in Barangay Anupol, Bamban, Tarlac, it collided with an unidentified truck,
causing it to fall into a deep canal, resulting in damage to the cargoes.
FGU Insurance Corporation (FGU), an insurer of the shipment, paid to Concepcion
Industries, Inc., the value of the covered cargoes in the sum of P204,450.00. FGU, in
turn, being the subrogee of the rights and interests of Concepcion Industries, Inc.,
sought reimbursement of the amount it had paid to the latter from GPS. Since the
trucking company failed to heed the claim, FGU filed a complaint for damages and
breach of contract of carriage against GPS and its driver Lambert Eroles with the
Regional Trial Court, Branch 66, of Makati City. In its answer, respondents asserted
that GPS was the exclusive hauler only of Concepcion Industries, Inc., since 1988,
and it was not so engaged in business as a common carrier. Respondents further
claimed that the cause of damage was purely accidental.
The issues having thus been joined, FGU presented its evidence, establishing the
extent of damage to the cargoes and the amount it had paid to the assured. GPS,
instead of submitting its evidence, filed with leave of court a motion to dismiss the
complaint by way of demurrer to evidence on the ground that petitioner had failed to
prove that it was a common carrier.
The trial court, in its order of 30 April 1996,1 granted the motion to dismiss, explaining
thusly:
"Under Section 1 of Rule 131 of the Rules of Court, it is provided that 'Each party
must prove his own affirmative allegation, xxx.'
"In the instant case, plaintiff did not present any single evidence that would prove that
defendant is a common carrier.
"x x x - x x x - x x x
"Accordingly, the application of the law on common carriers is not warranted and the
presumption of fault or negligence on the part of a common carrier in case of loss,
damage or deterioration of goods during transport under 1735 of the Civil Code is not
availing.
"Thus, the laws governing the contract between the owner of the cargo to whom the
plaintiff was subrogated and the owner of the vehicle which transports the cargo are
the laws on obligation and contract of the Civil Code as well as the law on quasi
delicts.
"Under the law on obligation and contract, negligence or fault is not presumed. The
law on quasi delict provides for some presumption of negligence but only upon the
attendance of some circumstances. Thus, Article 2185 provides:
'Art. 2185. Unless there is proof to the contrary, it is presumed that a person driving a
motor vehicle has been negligent if at the time of the mishap, he was violating any
traffic regulation.'
"Evidence for the plaintiff shows no proof that defendant was violating any traffic
regulation. Hence, the presumption of negligence is not obtaining.
"Considering that plaintiff failed to adduce evidence that defendant is a common
carrier and defendant's driver was the one negligent, defendant cannot be made
liable for the damages of the subject cargoes."2
The subsequent motion for reconsideration having been denied, 3 plaintiff interposed
an appeal to the Court of Appeals, contending that the trial court had erred (a) in
holding that the appellee corporation was not a common carrier defined under the law
and existing jurisprudence; and (b) in dismissing the complaint on a demurrer to
evidence.
The Court of Appeals rejected the appeal of petitioner and ruled in favor of GPS. The
appellate court, in its decision of 10 June 1999, 4 discoursed, among other things, that
-
"x x x in order for the presumption of negligence provided for under the law governing
common carrier (Article 1735, Civil Code) to arise, the appellant must first prove that
the appellee is a common carrier. Should the appellant fail to prove that the appellee
is a common carrier, the presumption would not arise; consequently, the appellant
would have to prove that the carrier was negligent.
"x x x - x x x - x x x
"Because it is the appellant who insists that the appellees can still be considered as a
common carrier, despite its `limited clientele,' (assuming it was really a common
carrier), it follows that it (appellant) has the burden of proving the same. It (plaintiff-
appellant) `must establish his case by a preponderance of evidence, which means
that the evidence as a whole adduced by one side is superior to that of the other.'
(Summa Insurance Corporation vs. Court of Appeals, 243 SCRA 175). This,
unfortunately, the appellant failed to do -- hence, the dismissal of the plaintiff's
complaint by the trial court is justified.
"x x x - x x x - x x x
"Based on the foregoing disquisitions and considering the circumstances that the
appellee trucking corporation has been `its exclusive contractor, hauler since 1970,
defendant has no choice but to comply with the directive of its principal,' the inevitable
conclusion is that the appellee is a private carrier.
"x x x - x x x - x x x
"x x x the lower court correctly ruled that 'the application of the law on common
carriers is not warranted and the presumption of fault or negligence on the part of a
common carrier in case of loss, damage or deterioration of good[s] during transport
under [article] 1735 of the Civil Code is not availing.' x x x.
"Finally, We advert to the long established rule that conclusions and findings of fact of
a trial court are entitled to great weight on appeal and should not be disturbed unless
for strong and valid reasons."5
Petitioner's motion for reconsideration was likewise denied;6 hence, the instant
petition,7 raising the following issues:
I extenuating circumstances, like proof of his exercise of due diligence (normally that of
WHETHER RESPONDENT GPS MAY BE CONSIDERED AS A COMMON CARRIER
AS DEFINED UNDER THE LAW AND EXISTING JURISPRUDENCE.
II
WHETHER RESPONDENT GPS, EITHER AS A COMMON CARRIER OR A
PRIVATE CARRIER, MAY BE PRESUMED TO HAVE BEEN NEGLIGENT WHEN
THE GOODS IT UNDERTOOK TO TRANSPORT SAFELY WERE SUBSEQUENTLY
DAMAGED WHILE IN ITS PROTECTIVE CUSTODY AND POSSESSION.
III
WHETHER THE DOCTRINE OF RES IPSA LOQUITUR IS APPLICABLE IN THE
INSTANT CASE.
On the first issue, the Court finds the conclusion of the trial court and the Court of
Appeals to be amply justified. GPS, being an exclusive contractor and hauler of
Concepcion Industries, Inc., rendering or offering its services to no other individual or
entity, cannot be considered a common carrier. 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 hire or compensation, offering
their services to the public,8 whether to the public in general or to a limited clientele
in particular, but never on an exclusive basis.9 The true test of a common carrier is
the carriage of passengers or goods, providing space for those who opt to avail
themselves of its transportation service for a fee.10 Given accepted standards, GPS
scarcely falls within the term "common carrier."
The above conclusion nothwithstanding, GPS cannot escape from liability.
In culpa contractual, upon which the action of petitioner rests as being the subrogee
of Concepcion Industries, Inc., the mere proof of the existence of the contract and the
failure of its compliance justify, prima facie, a corresponding right of relief.11 The law,
recognizing the obligatory force of contracts,12 will not permit a party to be set free
from liability for any kind of misperformance of the contractual undertaking or a
contravention of the tenor thereof.13 A breach upon the contract confers upon the
injured party a valid cause for recovering that which may have been lost or suffered.
The remedy serves to preserve the interests of the promisee that may include his
"expectation interest," which is his interest in having the benefit of his bargain by
being put in as good a position as he would have been in had the contract been
performed, or his "reliance interest," which is his interest in being reimbursed for loss
caused by reliance on the contract by being put in as good a position as he would
have been in had the contract not been made; or his "restitution interest," which is his
interest in having restored to him any benefit that he has conferred on the other
party.14 Indeed, agreements can accomplish little, either for their makers or for
society, unless they are made the basis for action.15 The effect of every infraction is to
create a new duty, that is, to make recompense to the one who has been injured by
the failure of another to observe his contractual obligation 16 unless he can show
the diligence of a good father of a family or, exceptionally by stipulation or by law
such as in the case of common carriers, that of extraordinary diligence) or of the
attendance of fortuitous event, to excuse him from his ensuing liability.
Respondent trucking corporation recognizes the existence of a contract of carriage
between it and petitioner's assured, and admits that the cargoes it has assumed to
deliver have been lost or damaged while in its custody. In such a situation, a default
on, or failure of compliance with, the obligation - in this case, the delivery of the goods
in its custody to the place of destination - gives rise to a presumption of lack of care
and corresponding liability on the part of the contractual obligor the burden being on
him to establish otherwise. GPS has failed to do so.
Respondent driver, on the other hand, without concrete proof of his negligence or
fault, may not himself be ordered to pay petitioner. The driver, not being a party to the
contract of carriage between petitioner's principal and defendant, may not be held
liable under the agreement. A contract can only bind the parties who have entered
into it or their successors who have assumed their personality or their juridical
position.17 Consonantly with the axiom res inter alios acta aliis neque nocet prodest,
such contract can neither favor nor prejudice a third person. Petitioner's civil action
against the driver can only be based on culpa aquiliana, which, unlike culpa
contractual, would require the claimant for damages to prove negligence or fault on
the part of the defendant.18
A word in passing. Res ipsa loquitur, a doctrine being invoked by petitioner, holds a
defendant liable where the thing which caused the injury complained of is shown to
be under the latter's management and the accident is such that, in the ordinary
course of things, cannot be expected to happen if those who have its management or
control use proper care. It affords reasonable evidence, in the absence of explanation
by the defendant, that the accident arose from want of care.19 It is not a rule of
substantive law and, as such, it does not create an independent ground of liability.
Instead, it is regarded as a mode of proof, or a mere procedural convenience since it
furnishes a substitute for, and relieves the plaintiff of, the burden of producing specific
proof of negligence. The maxim simply places on the defendant the burden of going
forward with the proof.20 Resort to the doctrine, however, may be allowed only when
(a) the event is of a kind which does not ordinarily occur in the absence of negligence;
(b) other responsible causes, including the conduct of the plaintiff and third persons,
are sufficiently eliminated by the evidence; and (c) the indicated negligence is within
the scope of the defendant's duty to the plaintiff.21 Thus, it is not applicable when an
unexplained accident may be attributable to one of several causes, for some of which
the defendant could not be responsible.22

Res ipsa loquitur generally finds relevance whether or not a contractual relationship
exists between the plaintiff and the defendant, for the inference of negligence arises
from the circumstances and nature of the occurrence and not from the nature of the
relation of the parties.23 Nevertheless, the requirement that responsible causes other
than those due to defendant's conduct must first be eliminated, for the doctrine to
apply, should be understood as being confined only to cases of pure (non-
contractual) tort since obviously the presumption of negligence in culpa contractual,
as previously so pointed out, immediately attaches by a failure of the covenant or its
tenor. In the case of the truck driver, whose liability in a civil action is predicated
on culpa acquiliana, while he admittedly can be said to have been in control and
management of the vehicle which figured in the accident, it is not equally shown,
however, that the accident could have been exclusively due to his negligence, a
matter that can allow, forthwith, res ipsa loquitur to work against him.

If a demurrer to evidence is granted but on appeal the order of dismissal is reversed,

the movant shall be deemed to have waived the right to present evidence. 24 Thus,
respondent corporation may no longer offer proof to establish that it has exercised
due care in transporting the cargoes of the assured so as to still warrant a remand of
the case to the trial court.

WHEREFORE, the order, dated 30 April 1996, of the Regional Trial Court, Branch 66,
of Makati City, and the decision, dated 10 June 1999, of the Court of Appeals,
are AFFIRMED only insofar as respondent Lambert M. Eroles is concerned, but said
assailed order of the trial court and decision of the appellate court are REVERSED as
regards G.P. Sarmiento Trucking Corporation which, instead, is hereby ordered to
pay FGU Insurance Corporation the value of the damaged and lost cargoes in the
amount of P204,450.00. No costs.

SO ORDERED.

Davide, Jr., C.J., Kapunan, Ynares-Santiago, and Austria-Martinez, JJ., concur.