G.R. No. L-65295 March 10, 1987

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

FELICIANO,J:In the early morning of 15 November 1975 at about 1:30 a.m. private respondent Leonardo Dionisio was on his way home he lived in 1214-B Zamora Street, Bangkal, Makati from a cocktails-and-dinner meeting with his boss, the general manager of a marketing corporation. During the cocktails phase of the evening, Dionisio had taken "a shot or two" of liquor. Dionisio was driving his Volkswagen car and had just crossed the intersection of General Lacuna and General Santos Streets at Bangkal, Makati, not far from his home, and was proceeding down General Lacuna Street, when his car headlights (in his allegation) suddenly failed. He switched his headlights on "bright" and thereupon he saw a Ford dump truck looming some 2-1/2 meters away from his car. The dump truck, owned by and registered in the name of petitioner Phoenix Construction Inc. ("Phoenix"), was parked on the right hand side of General Lacuna Street (i.e., on the right hand side of a person facing in the same direction toward which Dionisio's car was proceeding), facing the oncoming traffic. The dump truck was parked askew (not parallel to the street curb) in such a manner as to stick out onto the street, partly blocking the way of oncoming traffic. There were no lights nor any so-called "early warning" reflector devices set anywhere near the dump truck, front or rear. The dump truck had earlier that evening been driven home by petitioner Armando U. Carbonel, its regular driver, with the permission of his employer Phoenix, in view of work scheduled to be carried out early the following morning, Dionisio claimed that he tried to avoid a collision by swerving his car to the left but it was too late and his car smashed into the dump truck. As a result of the collision, Dionisio suffered some physical injuries including some permanent facial scars, a "nervous breakdown" and loss of two gold bridge dentures.

Dionisio commenced an action for damages in the Court of First Instance of Pampanga basically claiming that the legal and proximate cause of his injuries was the negligent manner in which Carbonel had parked the dump truck entrusted to him by his employer Phoenix. Phoenix and Carbonel, on the other hand, countered that the proximate cause of Dionisio's injuries was his own recklessness in driving fast at the time of the accident, while under the influence of liquor, without his headlights on and without a curfew pass. Phoenix also sought to establish that it had exercised due rare in the selection and supervision of the dump truck driver.

The trial court rendered judgment in favor of Dionisio and against Phoenix and Carbonel and ordered the latter:

(1) To pay plaintiff jointly and severally the sum of P 15,000.00 for hospital bills and the replacement of the lost dentures of plaintiff;

(2) To pay plaintiff jointly and severally the sum of P 1,50,000.-00 as loss of expected income for plaintiff brought about the accident in controversy and which is the result of the negligence of the defendants;

(3) To pay the plaintiff jointly and severally the sum of P 10,000. as moral damages for the unexpected and sudden withdrawal of plaintiff from his lifetime career as a marketing man; mental anguish, wounded feeling, serious anxiety, social humiliation, besmirched reputation, feeling of economic insecurity, and the untold sorrows and frustration in life experienced by plaintiff and his family since the accident in controversy up to the present time;

(4) To pay plaintiff jointly and severally the sum of P 10,000.00 as damages for the wanton disregard of defendants to settle amicably this case with the plaintiff before the filing of this case in court for a smaller amount.

(5) To pay the plaintiff jointly and severally the sum of P 4,500.00 due as and for attorney's fees; and

(6) The cost of suit. (Emphasis supplied)

Phoenix and Carbonel appealed to the Intermediate Appellate Court. That court in CA-G.R. No. 65476 affirmed the decision of the trial court but modified the award of damages to the following extent:

1. The award of P15,000.00 as compensatory damages was reduced toP6,460.71,the latter being the only amount that the appellate court found the plaintiff to have proved as actually sustained by him;

2. The award of P150,000.00 as loss of expected income was reduced toP100,000.00,basically because Dionisio had voluntarily resigned his job such that, in the opinion of the appellate court, his loss of income "was not solely attributable to the accident in question;" and

3. The award of P100,000.00 as moral damages was held by the appellate court as excessive and unconscionable and hence reduced toP50,000.00.The award ofP10,000.00as exemplary damages andP4,500.00as attorney's fees and costs remained untouched.

This decision of the Intermediate Appellate Court is now before us on a petition for review.

Both the trial court and the appellate court had made fairly explicit findings of fact relating to the manner in which the dump truck was parked along General Lacuna Street on the basis of which both courts drew the inference that there was negligence on the part of Carbonel, the dump truck driver, and that this negligence was the proximate cause of the accident and Dionisio's injuries. We note, however, that both courts failed to pass upon the defense raised by Carbonel and Phoenix that the true legal and proximate cause of the accident was not the way in which the dump truck had been parked but rather the reckless way in which Dionisio had driven his car that night when he smashed into the dump truck. The Intermediate Appellate Court in its questioned decision casually conceded that Dionisio was "in some way, negligent" but apparently failed to see the relevance of Dionisio's negligence and made no further mention of it. We have examined the record both before the trial court and the Intermediate Appellate Court and we find that both parties had placed into the record sufficient evidence on the basis of which the trial court and the appellate court could have and should have made findings of fact relating to the alleged reckless manner in which Dionisio drove his car that night. The petitioners Phoenix and Carbonel contend that if there was negligence in the manner in which the dump truck was parked, that negligence was merely a "passive and static condition" and that private respondent Dionisio's recklessness constituted an intervening, efficient cause determinative of the accident and the injuries he sustained. The need to administer substantial justice as between the parties in this case, without having to remand it back to the trial court after eleven years, compels us to address directly the contention put forward by the petitioners and to examine for ourselves the record pertaining to Dionisio's alleged negligence which must bear upon the liability, or extent of liability, of Phoenix and Carbonel.

There are four factual issues that need to be looked into: (a) whether or not private respondent Dionisio had a curfew pass valid and effective for that eventful night; (b) whether Dionisio was driving fast or speeding just before the collision with the dump truck; (c) whether Dionisio had purposely turned off his car's headlights before contact with the dump truck or whether those headlights accidentally malfunctioned moments before the collision; and (d) whether Dionisio was intoxicated at the time of the accident.

As to the first issue relating to the curfew pass, it is clear that no curfew pass was found on the person of Dionisio immediately after the accident nor was any found in his car. Phoenix's evidence here consisted of the testimony of Patrolman Cuyno who had taken Dionisio, unconscious, to the Makati Medical Center for emergency treatment immediately after the accident. At the Makati Medical Center, a nurse took off Dionisio's clothes and examined them along with the contents of pockets together with Patrolman Cuyno.1Private respondent Dionisio was not able to produce any curfew pass during the trial. Instead, he offered the explanation that his family may have misplaced his curfew pass. He also offered a certification (dated two years after the accident) issued by one Major Benjamin N. Libarnes of the Zone Integrated Police Intelligence Unit of Camp Olivas, San Fernando, Pampanga, which was said to have authority to issue curfew passes for Pampanga and Metro Manila. This certification was to the effect that private respondent Dionisio had a valid curfew pass. This certification did not, however, specify any pass serial number or date or period of effectivity of the supposed curfew pass. We find that private respondent Dionisio was unable to prove possession of a valid curfew pass during the night of the accident and that the preponderance of evidence shows that he did not have such a pass during that night. The relevance of possession or non-possession of a curfew pass that night lies in the light it tends to shed on the other related issues: whether Dionisio was speeding home and whether he had indeed purposely put out his headlights before the accident, in order to avoid detection and possibly arrest by the police in the nearby police station for travelling after the onset of curfew without a valid curfew pass.On the second issue whether or not Dionisio was speeding home that night both the trial court and the appellate court were completely silent.

The defendants in the trial court introduced the testimony of Patrolman Cuyno who was at the scene of the accident almost immediately after it occurred, the police station where he was based being barely 200 meters away. Patrolman Cuyno testified that people who had gathered at the scene of the accident told him that Dionisio's car was "moving fast" and did not have its headlights on.2Dionisio, on the other hand, claimed that he was travelling at a moderate speed at 30 kilometers per hour and had just crossed the intersection of General Santos and General Lacuna Streets and had started to accelerate when his headlights failed just before the collision took place.3Private respondent Dionisio asserts that Patrolman Cuyno's testimony was hearsay and did not fag within any of the recognized exceptions to the hearsay rule since the facts he testified to were not acquired by him through official information and had not been given by the informants pursuant to any duty to do so. Private respondent's objection fails to take account of the fact that the testimony of Patrolman Cuyno is admissible not under the official records exception to the hearsay rule4but rather as part of theres gestae.5Testimonial evidence under this exception to the hearsay rule consists of excited utterances made on the occasion of an occurrence or event sufficiently startling in nature so as to render inoperative the normal reflective thought processes of the observer and hence made as a spontaneous reaction to the occurrence or event, and not the result of reflective thought.6We think that an automobile speeding down a street and suddenly smashing into a stationary object in the dead of night is a sufficiently startling event as to evoke spontaneous, rather than reflective, reactions from observers who happened to be around at that time. The testimony of Patrolman Cuyno was therefore admissible as part of theres gestaeand should have been considered by the trial court. Clearly, substantial weight should have been ascribed to such testimony, even though it did not, as it could not, have purported to describe quantitatively the precise velocity at winch Dionisio was travelling just before impact with the Phoenix dump truck.

A third related issue is whether Dionisio purposely turned off his headlights, or whether his headlights accidentally malfunctioned, just moments before the accident. The Intermediate Appellate Court expressly found that the headlights of Dionisio's car went off as he crossed the intersection but was non-committal as to why they did so. It is the petitioners' contention that Dionisio purposely shut off his headlights even before he reached the intersection so as not to be detected by the police in the police precinct which he (being a resident in the area) knew was not far away from the intersection. We believe that the petitioners' theory is a more credible explanation than that offered by private respondent Dionisio i.e., that he had his headlights on but that, at the crucial moment, these had in some mysterious if convenient way malfunctioned and gone off, although he succeeded in switching his lights on again at "bright" split seconds before contact with the dump truck.

A fourth and final issue relates to whether Dionisio was intoxicated at the time of the accident. The evidence here consisted of the testimony of Patrolman Cuyno to the effect that private respondent Dionisio smelled of liquor at the time he was taken from his smashed car and brought to the Makati Medical Center in an unconscious condition.7This testimony has to be taken in conjunction with the admission of Dionisio that he had taken "a shot or two" of liquor before dinner with his boss that night. We do not believe that this evidence is sufficient to show that Dionisio was so heavily under the influence of liquor as to constitute his driving a motor vehicle per se an act of reckless imprudence.8There simply is not enough evidence to show how much liquor he had in fact taken and the effects of that upon his physical faculties or upon his judgment or mental alertness. We are also aware that "one shot or two" of hard liquor may affect different people differently.The conclusion we draw from the factual circumstances outlined above is that private respondent Dionisio was negligent the night of the accident. He was hurrying home that night and driving faster than he should have been. Worse, he extinguished his headlights at or near the intersection of General Lacuna and General Santos Streets and thus did not see the dump truck that was parked askew and sticking out onto the road lane.

Nonetheless, we agree with the Court of First Instance and the Intermediate Appellate Court that the legal and proximate cause of the accident and of Dionisio's injuries was the wrongful or negligent manner in which the dump truck was parked in other words, the negligence of petitioner Carbonel. That there was a reasonable relationship between petitioner Carbonel's negligence on the one hand and the accident and respondent's injuries on the other hand, is quite clear. Put in a slightly different manner, the collision of Dionisio's car with the dump truck was a natural and foreseeable consequence of the truck driver's negligence.

The petitioners, however, urge that the truck driver's negligence was merely a "passive and static condition" and that private respondent Dionisio's negligence was an "efficient intervening cause and that consequently Dionisio's negligence must be regarded as the legal and proximate cause of the accident rather than the earlier negligence of Carbonel. We note that the petitioners' arguments are drawn from a reading of some of the older cases in various jurisdictions in the United States but we are unable to persuade ourselves that these arguments have any validity for our jurisdiction. We note, firstly, that even in the United States, the distinctions between "cause" and "condition" which the 'petitioners would have us adopt have already been "almost entirely discredited." Professors and Keeton make this quite clear:

Cause and condition.Many courts have sought to distinguish between the active "cause" of the harm and the existing "conditions" upon which that cause operated. If the defendant has created only a passive static condition which made the damage possible, the defendant is said not to be liable.But so far as the fact of causation is concerned, in the sense of necessary antecedents which have played an important part in producing the result it is quite impossible to distinguish between active forces and passive situations, particularly since, as is invariably the case, the latter are the result of other active forces which have gone before.The defendant who spills gasoline about the premises creates a "condition," but the act may be culpable because of the danger of fire. When a spark ignites the gasoline, the condition has done quite as much to bring about the fire as the spark; and since that is the very risk which the defendant has created, the defendant will not escape responsibility.Even the lapse of a considerable time during which the "condition" remains static will not necessarily affect liability;one who digs a trench in the highway may still be liable to another who fans into it a month afterward."Cause" and "condition" still find occasional mention in the decisions; but the distinction is now almost entirely discredited.So far as it has any validity at all, it must refer to the type of case where the forces set in operation by the defendant have come to rest in a position of apparent safety, and some new force intervenes.But even in such cases, it is not the distinction between "cause" and "condition" which is important but the nature of the risk and the character of the intervening cause.9We believe, secondly, that the truck driver's negligence far from being a "passive and static condition" was rather an indispensable and efficient cause. The collision between the dump truck and the private respondent's car would in an probability not have occurred had the dump truck not been parked askew without any warning lights or reflector devices. The improper parking of the dump truck created an unreasonable risk of injury for anyone driving down General Lacuna Street and for having so created this risk, the truck driver must be held responsible. In our view, Dionisio's negligence, although later in point of time than the truck driver's negligence and therefore closer to the accident, was not an efficient intervening or independent cause. What the Petitioners describe as an "intervening cause" was no more than a foreseeable consequent manner which the truck driver had parked the dump truck. In other words, the petitioner truck driver owed a duty to private respondent Dionisio and others similarly situated not to impose upon them the very risk the truck driver had created. Dionisio's negligence was not of an independent and overpowering nature as to cut, as it were, the chain of causation in fact between the improper parking of the dump truck and the accident, nor to sever the juris vinculum of liability. It is helpful to quote once more from Professor and Keeton:

Foreseeable Intervening Causes. If the intervening cause is one which in ordinary human experience is reasonably to be anticipated or one which the defendant has reason to anticipate under the particular circumstances, the defendant may be negligence among other reasons, because of failure to guard against it; or the defendant may be negligent only for that reason.Thus one who sets a fire may be required to foresee that an ordinary, usual and customary wind arising later wig spread it beyond the defendant's own property, and therefore to take precautions to prevent that event. The person who leaves the combustible or explosive material exposed in a public place may foresee the risk of fire from some independent source. ...In all of these cases there is an intervening cause combining with the defendant's conduct to produce the result and in each case the defendant's negligence consists in failure to protect the plaintiff against that very risk.Obviously the defendant cannot be relieved from liability by the fact that the risk or a substantial and important part of the risk, to which the defendant has subjected the plaintiff has indeed come to pass. Foreseeable intervening forces are within the scope original risk, and hence of the defendant's negligence.The courts are quite generally agreed that intervening causes which fall fairly in this category will not supersede the defendant's responsibility.

Thus it has been heldthat a defendant will be required to anticipate the usual weather of the vicinity, including all ordinary forces of nature such as usual wind or rain, or snow or frost or fog or even lightning;that one who leaves an obstruction on the road or a railroad track should foresee that a vehicle or a train will run into it;...

The risk created by the defendant may include the intervention of the foreseeable negligence of others. ... [The standard of reasonable conduct may require the defendant to protect the plaintiff against 'that occasional negligence which is one of the ordinary incidents of human life, and therefore to be anticipated.'Thus, a defendant who blocks the sidewalk and forces the plaintiff to walk in a street where the plaintiff will be exposed to the risks of heavy traffic becomes liable when the plaintiff is run down by a car, even though the car is negligently driven;and one who parks an automobile on the highway without lights at night is not relieved of responsibility when another negligently drives into it. ---10We hold that private respondent Dionisio's negligence was "only contributory," that the "immediate and proximate cause" of the injury remained the truck driver's "lack of due care" and that consequently respondent Dionisio may recover damages though such damages are subject to mitigation by the courts (Article 2179, Civil Code of the Philippines).

Petitioners also ask us to apply what they refer to as the "last clear chance" doctrine. The theory here of petitioners is that while the petitioner truck driver was negligent, private respondent Dionisio had the "last clear chance" of avoiding the accident and hence his injuries, and that Dionisio having failed to take that "last clear chance" must bear his own injuries alone. The last clear chance doctrine of the common law was imported into our jurisdiction byPicart vs. Smith11but it is a matter for debate whether, or to what extent, it has found its way into the Civil Code of the Philippines. The historical function of that doctrine in the common law was to mitigate the harshness of another common law doctrine or rule that of contributory negligence.12The common law rule of contributory negligence prevented any recovery at all by a plaintiff who was also negligent, even if the plaintiff's negligence was relatively minor as compared with the wrongful act or omission of the defendant.13The common law notion of last clear chance permitted courts to grant recovery to a plaintiff who had also been negligent provided that the defendant had the last clear chance to avoid the casualty and failed to do so.14Accordingly, it is difficult to see what role, if any, the common law last clear chance doctrine has to play in a jurisdiction where the common law concept of contributory negligence as an absolute bar to recovery by the plaintiff, has itself been rejected, as it has been in Article 2179 of the Civil Code of the Philippines.15Is there perhaps a general concept of "last clear chance" that may be extracted from its common law matrix and utilized as a general rule in negligence cases in a civil law jurisdiction like ours? We do not believe so. Under Article 2179, the task of a court, in technical terms, is to determine whose negligence the plaintiff's or the defendant's was the legal or proximate cause of the injury. That task is not simply or even primarily an exercise in chronology or physics, as the petitioners seem to imply by the use of terms like "last" or "intervening" or "immediate." The relative location in the continuum of time of the plaintiff's and the defendant's negligent acts or omissions, is only one of the relevant factors that may be taken into account. Of more fundamental importance are the nature of the negligent act or omission of each party and the character and gravity of the risks created by such act or omission for the rest of the community. The petitioners urge that the truck driver (and therefore his employer) should be absolved from responsibility for his own prior negligence because the unfortunate plaintiff failed to act with that increased diligence which had become necessary to avoid the peril precisely created by the truck driver's own wrongful act or omission. To accept this proposition is to come too close to wiping out the fundamental principle of law that a man must respond for the forseeable consequences of his own negligent act or omission. Our law on quasi-delicts seeks to reduce the risks and burdens of living in society and to allocate them among the members of society. To accept the petitioners' pro-position must tend to weaken the very bonds of society.

Petitioner Carbonel's proven negligence creates a presumption of negligence on the part of his employer Phoenix16in supervising its employees properly and adequately. The respondent appellate court in effect found, correctly in our opinion, that Phoenix was not able to overcome this presumption of negligence. The circumstance that Phoenix had allowed its truck driver to bring the dump truck to his home whenever there was work to be done early the following morning, when coupled with the failure to show any effort on the part of Phoenix to supervise the manner in which the dump truck is parked when away from company premises, is an affirmative showing ofculpa in vigilandoon the part of Phoenix.Turning to the award of damages and taking into account the comparative negligence of private respondent Dionisio on one hand and petitioners Carbonel and Phoenix upon the other hand,17we believe that the demands of substantial justice are satisfied by allocating most of the damages on a 20-80 ratio. Thus, 20% of the damages awarded by the respondent appellate court, except the award of P10,000.00 as exemplary damages and P4,500.00 as attorney's fees and costs, shall be borne by private respondent Dionisio; only the balance of 80% needs to be paid by petitioners Carbonel and Phoenix who shall be solidarity liable therefor to the former. The award of exemplary damages and attorney's fees and costs shall be borne exclusively by the petitioners. Phoenix is of course entitled to reimbursement from Carbonel.18We see no sufficient reason for disturbing the reduced award of damages made by the respondent appellate court.WHEREFORE, the decision of the respondent appellate court is modified by reducing the aggregate amount of compensatory damages, loss of expected income and moral damages private respondent Dionisio is entitled to by 20% of such amount. Costs against the petitioners.

SO ORDERED.

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

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

D E C I S I O N

CALLEJO, SR.,J.:

This is a petition for review oncertiorariunder Rule 45 of the Rules of Court from the Decision[1]of the Court of Appeals in CA-G.R. CV No. 54354 affirming with modification the Decision[2]of the Regional Trial Court, 7thJudicial Region,CebuCity, Branch 20, in Civil Case No. CEB-5963 for breach of contract of carriage, damages and attorneys fees, and the Resolution dated February 26, 1999 denying the motion for reconsideration thereof.

The following facts are undisputed:

At about 10:00 p.m. of March 15, 1987, the cargo truck marked Condor Hollow Blocks and General Merchandise bearing plate number GBP-675 was loaded with firewood in Bogo, Cebu and left forCebuCity. Upon reaching Sitio Aggies, Poblacion, Compostela,Cebu, just as the truck passed over a bridge, one of its rear tires exploded. The driver, Sergio Pedrano, then parked along the right side of the national highway and removed the damaged tire to have it vulcanized at a nearby shop, about 700 meters away.[3]Pedrano left his helper, Jose Mitante, Jr. to keep watch over the stalled vehicle, and instructed the latter to place a spare tire six fathoms away[4]behind the stalled truck to serve as a warning for oncoming vehicles. The trucks tail lights were also left on. It was about 12:00 a.m., March 16, 1987.

At about 4:45 a.m., D Rough Riders passenger bus with plate number PBP-724 driven by Virgilio Te Laspias was cruising along the national highway of Sitio Aggies, Poblacion, Compostela, Cebu. The passenger bus was also bound forCebuCity, and had come from Maya, Daanbantayan,Cebu. Among its passengers were the Spouses Pedro A. Arriesgado and Felisa Pepito Arriesgado, who were seated at the right side of the bus, about three (3) or four (4) places from the front seat.

As the bus was approaching the bridge, Laspias saw the stalled truck, which was then about 25 meters away.[5]He applied the breaks and tried to swerve to the left to avoid hitting the truck. But it was too late; the bus rammed into the trucks left rear. The impact damaged the right side of the bus and left several passengers injured. Pedro Arriesgado lost consciousness and suffered a fracture in his right colles.[6]His wife, Felisa, was brought to theDanaoCityHospital. She was later transferred to the Southern Island Medical Center where she died shortly thereafter.[7]Respondent Pedro A. Arriesgado then filed a complaint for breach of contract of carriage, damages and attorneys fees before the Regional Trial Court of Cebu City, Branch 20, against the petitioners, D Rough Riders bus operator William Tiu and his driver, Virgilio Te Laspias on May 27, 1987. The respondent alleged that the passenger bus in question was cruising at a fast and high speed along the national road, and that petitioner Laspias did not take precautionary measures to avoid the accident.[8]Thus:

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

7. That due to the reckless and imprudent driving by defendant Virgilio Te Laspias of the said Rough Riders passenger bus, plaintiff and his wife, Felisa Pepito Arriesgado, failed to safely reach their destination which wasCebuCity, the proximate cause of which was defendant-drivers failure to observe utmost diligence required of a very cautious person under all circumstances.

8. That defendant William Tiu, being the owner and operator of the said Rough Riders passenger bus which figured in the said accident, wherein plaintiff and his wife were riding at the time of the accident, is therefore directly liable for the breach of contract of carriage for his failure to transport plaintiff and his wife safely to their place of destination which was Cebu City, and which failure in his obligation to transport safely his passengers was due to and in consequence of his failure to exercise the diligence of a good father of the family in the selection and supervision ofhis employees, particularly defendant-driver Virgilio Te Laspias.[9]The respondent prayed that judgment be rendered in his favor and that the petitioners be condemned to pay the following damages:

1). To pay to plaintiff, jointly and severally, the amount ofP30,000.00 for the death and untimely demise of plaintiffs wife, Felisa Pepito Arriesgado;

2). To pay to plaintiff, jointly and severally, the amount ofP38,441.50, representing actual expenses incurred by the plaintiff in connection with the death/burial of plaintiffs wife;

3). To pay to plaintiff, jointly and severally, the amount ofP1,113.80, representing medical/hospitalization expenses incurred by plaintiff for the injuries sustained by him;

4). To pay to plaintiff, jointly and severally, the amount ofP50,000.00 for moral damages;

5). To pay to plaintiff, jointly and severally, the amount ofP50,000.00 by way of exemplary damages;

6). To pay to plaintiff, jointly and severally, the amount ofP20,000.00 for attorneys fees;

7). To pay to plaintiff, jointly and severally, the amount ofP5,000.00 for litigation expenses.

PLAINTIFF FURTHER PRAYS FOR SUCH OTHER RELIEFS AND REMEDIES IN LAW AND EQUITY.[10]The petitioners, for their part, filed a Third-Party Complaint[11]on August 21, 1987 against the following: respondent Philippine Phoenix Surety and Insurance, Inc. (PPSII), petitioner Tius insurer; respondent Benjamin Condor, the registered owner of the cargo truck; and respondent Sergio Pedrano, the driver of the truck.They alleged that petitioner Laspias was negotiating the uphill climb along the national highway ofSitioAggies, Poblacion, Compostela, in a moderate and normal speed. It was further alleged that the truck was parked in a slanted manner, its rear portion almost in the middle of the highway, and that no early warning device was displayed. Petitioner Laspias promptly applied the brakes and swerved to the left to avoid hitting the truck head-on, but despite his efforts to avoid damage to property and physical injuries on the passengers, the right side portion of the bus hit the cargo trucks left rear. The petitioners further alleged, thus:

5. That the cargo truck mentioned in the aforequoted paragraph is owned and registered in the name of the third-party defendant Benjamin Condor and was left unattended by its driver Sergio Pedrano, one of the third-party defendants, at the time of the incident;

6. That third-party defendant Sergio Pedrano, as driver of the cargo truck with marked (sic) Condor Hollow Blocks & General Merchandise, with Plate No. GBP-675 which was recklessly and imprudently parked along the national highway of Compostela, Cebu during the vehicular accident in question, and third-party defendant Benjamin Condor, as the registered owner of the cargo truck who failed to exercise due diligence in the selection and supervision of third-party defendant Sergio Pedrano, are jointly and severally liable to the third-party plaintiffs for whatever liability that may be adjudged against said third-party plaintiffs or are directly liable of (sic) the alleged death of plaintiffs wife;

7. That in addition to all that are stated above and in the answer which are intended to show reckless imprudence on the part of the third-party defendants, the third-party plaintiffs hereby declare that during the vehicular accident in question, third-party defendant was clearly violating Section 34, par. (g) of the Land Transportation and Traffic Code

10. That the aforesaid passenger bus, owned and operated by third-party plaintiff William Tiu, is covered by a common carrier liability insurance with Certificate of Cover No. 054940 issued by Philippine Phoenix Surety and Insurance, Inc., Cebu City Branch, in favor of third-party plaintiff William Tiu which covers the period from July 22, 1986 to July 22, 1987 and that the said insurance coverage was valid, binding and subsisting during the time of the aforementioned incident (Annex A as part hereof);

11. That after the aforesaid alleged incident, third-party plaintiff notified third-party defendant Philippine Phoenix Surety and Insurance, Inc., of the alleged incident hereto mentioned, but to no avail;

12. That granting, et arguendo et arguendi, if herein third-party plaintiffs will be adversely adjudged, they stand to pay damages sought by the plaintiff and therefore could also look up to the Philippine Phoenix Surety and Insurance, Inc., for contribution, indemnification and/or reimbursement of any liability or obligation that they might [be] adjudged per insurance coverage duly entered into by and between third-party plaintiff William Tiu and third-party defendant Philippine Phoenix Surety and Insurance, Inc.;[12]The respondent PPSII, for its part, admitted that it had an existing contract with petitioner Tiu, but averred that it had already attended to and settled the claims of those who were injured during the incident.[13]It could not accede to the claim of respondent Arriesgado, as such claim was way beyond the scheduled indemnity as contained in the contract of insurance.[14]After the parties presented their respective evidence, the trial court ruled in favor of respondent Arriesgado. The dispositive portion of the decision reads:

WHEREFORE, in view of the foregoing, judgment is hereby rendered in favor of plaintiff as against defendant William Tiu ordering the latter to pay the plaintiff the following amounts:

1 - The sum of FIFTY THOUSAND PESOS (P50,000.00) as moral damages;

2 - The sum of FIFTY THOUSAND PESOS (P50,000.00) as exemplary damages;

3 - The sum of THIRTY-EIGHT THOUSAND FOUR HUNDRED FORTY-ONE PESOS (P38,441.00) as actual damages;

4 - The sum of TWENTY THOUSAND PESOS (P20,000.00) as attorneys fees;

5 - The sum of FIVE THOUSAND PESOS (P5,000.00) as costs of suit;

SO ORDERED.[15]According to the trial court, there was no dispute that petitioner William Tiu was engaged in business as a common carrier, in view of his admission that D Rough Rider passenger bus which figured in the accident was owned by him; that he had been engaged in the transportation business for 25 years with a sole proprietorship; and that he owned 34 buses. The trial court ruled that if petitioner Laspias had not been driving at a fast pace, he could have easily swerved to the left to avoid hitting the truck, thus, averting the unfortunate incident. It then concluded that petitioner Laspias was negligent.

The trial court also ruled that the absence of an early warning device near the place where the truck was parked was not sufficient to impute negligence on the part of respondent Pedrano, since the tail lights of the truck were fully on, and the vicinity was well lighted by street lamps.[16]It also found that the testimony of petitioner Tiu, that he based the selection of his driver Laspias on efficiency and in-service training, and that the latter had been so far an efficient and good driver for the past six years of his employment, was insufficient to prove that he observed the diligence of a good father of a family in the selection and supervision of his employees.

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

IWHETHER THIRD PARTY DEFENDANT SERGIO PEDRANO WAS RECKLESS AND IMPRUDENT WHEN HE PARKED THE CARGO TRUCK IN AN OBLIQUE MANNER;

IIWHETHER THE THIRD PARTY DEFENDANTS ARE JOINTLY AND SEVERALLY LIABLE DIRECTLY TO PLAINTIFF-APPELLEE OR TO DEFENDANTS-APPELLANTS FOR WHATEVER LIABILITY THAT MAY BE ADJUDGED TO THE SAID DEFENDANTS-APPELLANTS;

IIIWHETHER DEFENDANT-APPELLANT VIRGILIO TE LASPIAS WAS GUILTY OF GROSS NEGLIGENCE;

IVWHETHER DEFENDANT-APPELLANT WILLIAM TIU HAD EXERCISED THE DUE DILIGENCE OF A GOOD FATHER OF A FAMILY IN THE SELECTION AND SUPERVISION OF HIS DRIVERS;

VGRANTING FOR THE SAKE OF ARGUMENT THAT DEFENDANT-APPELLANT WILLIAM TIU IS LIABLE TO PLAINTIFF-APPELLEE, WHETHER THERE IS LEGAL AND FACTUAL BASIS IN AWARDING EXCESSIVE MORAL DAMAGES, EX[E]MPLARY DAMAGES, ATTORNEYS FEES AND LITIGATION EXPENSES TO PLAINTIFF-APPELLEE;

VIWHETHER THIRD PARTY DEFENDANT PHILIPPINEPHOENIXSURETY AND INSURANCE, INC. IS LIABLE TO DEFENDANT- APPELLANT WILLIAM TIU.[17]The appellate court rendered judgment affirming the trial courts decision with the modification that the awards for moral and exemplary damages were reduced toP25,000. The dispositive portion reads:

WHEREFORE, the appealed Decisiondated November 6, 1995 is herebyMODIFIEDsuch that the awards for moral and exemplary damages are each reduced toP25,000.00 or a total ofP50,000.00 for both. The judgment isAFFIRMEDin all other respects.

SO ORDERED.[18]According to the appellate court, the action of respondent Arriesgado was based not on quasi-delict but on breach of contract of carriage. As a common carrier, it was incumbent upon petitioner Tiu to prove that extraordinary diligence was observed in ensuring the safety of passengers during transportation. Since the latter failed to do so, he should be held liable for respondent Arriesgados claim.The CA also ruled that no evidence was presented against the respondent PPSII, and as such, it could not be held liable for respondent Arriesgados claim, nor for contribution, indemnification and/or reimbursement in case the petitioners were adjudged liable.

The petitioners now come to this Court and ascribe the following errors committed by the appellate court:

I. THE HONORABLE COURT OF APPEALS ERRED IN NOT DECLARING RESPONDENTS BENJAMIN CONDOR AND SERGIO PEDRANO GUILTY OF NEGLIGENCE AND HENCE, LIABLE TO RESPONDENT PEDRO A. ARRIESGADO OR TO PETITIONERS FOR WHATEVER LIABILITY THAT MAY BE ADJUDGED AGAINST THEM.

II. THE HONORABLE COURT OF APPEALS ERRED IN FINDING PETITIONERS GUILTY OF NEGLIGENCE AND HENCE, LIABLE TO RESPONDENT PEDRO A. ARRIESGADO.

III. THE HONORABLE COURT OF APPEALS ERRED IN FINDING PETITIONER WILLIAM TIU LIABLE FOR EXEMPLARY DAMAGES, ATTORNEYS FEES AND LITIGATION EXPENSES.

IV.THE HONORABLE COURT OF APPEALS ERRED IN NOT FINDING RESPONDENT PHILIPPINEPHOENIXSURETY AND INSURANCE, INC. LIABLE TO RESPONDENT PEDRO A. ARRIESGADO OR TO PETITIONER WILLIAM TIU.[19]According to the petitioners, the appellate court erred in failing to appreciate the absence of an early warning device and/or built-in reflectors at the front and back of the cargo truck, in clear violation of Section 34, par. (g) of the Land Transportation and Traffic Code. They aver that such violation is only a proof of respondent Pedranos negligence, as provided under Article 2185 of the New Civil Code. They also question the appellate courts failure to take into account that the truck was parked in an oblique manner, its rear portion almost at the center of the road. As such, the proximate cause of the incident was the gross recklessness and imprudence of respondent Pedrano, creating the presumption of negligence on the part of respondent Condor in supervising his employees, which presumption was not rebutted. The petitioners then contend that respondents Condor and Pedrano should be held jointly and severally liable to respondent Arriesgado for the payment of the latters claim.

The petitioners, likewise, aver that expert evidence should have been presented to prove that petitioner Laspias was driving at a very fast speed, and that the CA could not reach such conclusion by merely considering the damages on the cargo truck. It was also pointed out that petitioner Tiu presented evidence that he had exercised the diligence of a good father of a family in the selection and supervision of his drivers.

The petitioners further allege that there is no legal and factual basis to require petitioner Tiu to pay exemplary damages as no evidence was presented to show that the latter acted in a fraudulent, reckless and oppressive manner, or that he had an active participation in the negligent act of petitioner Laspias.

Finally, the petitioners contend that respondent PPSII admitted in its answer that while it had attended to and settled the claims of the other injured passengers, respondent Arriesgados claim remained unsettled as it was beyond the scheduled indemnity under the insurance contract. The petitioners argue that said respondent PPSII should have settled the said claim in accordance with the scheduled indemnity instead of just denying the same.

On the other hand, respondent Arriesgado argues that two of the issues raised by the petitioners involved questions of fact, not reviewable by the Supreme Court: the finding of negligence on the part of the petitioners and their liability to him; and the award of exemplary damages, attorneys fees and litigation expenses in his favor. Invoking the principle of equity and justice, respondent Arriesgado pointed out that if there was an error to be reviewed in the CA decision, it should be geared towards the restoration of the moral and exemplary damages toP50,000 each, or a total ofP100,000 which was reduced by the Court of Appeals toP25,000 each, or a total of onlyP50,000.

Respondent Arriesgado also alleged that respondents Condor and Pedrano, and respondent Phoenix Surety, are parties with whom he had no contract of carriage, and had no cause of action against. It was pointed out that only the petitioners needed to be sued, as driver and operator of the ill-fated bus, on account of their failure to bring the Arriesgado Spouses to their place of destination as agreed uponin the contract of carriage, using the utmost diligence of very cautious persons with due regard for all circumstances.

Respondents Condor and Pedrano point out that, as correctly ruled by the Court of Appeals, the proximate cause of the unfortunate incident was the fast speed at which petitioner Laspias was driving the bus owned by petitioner Tiu. According to the respondents, the allegation that the truck was not equipped with an early warning device could not in any way have prevented the incident from happening. It was also pointed out that respondent Condor had always exercised the due diligence required in the selection and supervision of his employees, and that he was not a party to the contract of carriage between the petitioners and respondent Arriesgado.

Respondent PPSII, for its part, alleges that contrary to the allegation of petitioner Tiu, it settled all the claims of those injured in accordance with the insurance contract. It further avers that it did not deny respondent Arriesgados claim, and emphasizes that its liability should be within the scheduled limits of indemnity under the said contract. The respondent concludes that while it is true that insurance contracts are contracts of indemnity, the measure of the insurers liability is determined by the insureds compliance with the terms thereof.

The Courts Ruling

At the outset, it must be stressed that this Court is not a trier of facts.[20]Factual findings of the Court of Appeals are final and may not be reviewed on appeal by this Court, except when the lower court and the CA arrived at diverse factual findings.[21]The petitioners in this case assail the finding of both the trial and the appellate courts that petitioner Laspias was driving at a very fast speed before the bus owned by petitioner Tiu collided with respondent Condors stalled truck. This is clearly one of fact, not reviewable by the Court in a petition for review under Rule 45.[22]On this ground alone, the petition is destined to fail.

However, considering that novel questions of law are likewise involved, the Court resolves to examine and rule on the merits of the case.

Petitioner LaspiasWas negligent in drivingThe Ill-fated busIn his testimony before the trial court, petitioner Laspias claimed that he was traversing the two-lane road at Compostela,Cebuat a speed of only forty (40) to fifty (50) kilometers per hour before the incident occurred.[23]He also admitted that hesawthe truck which was parked in an oblique position at about 25 meters before impact,[24]and tried to avoid hitting it by swerving to the left. However, even in the absence of expert evidence, the damage sustained by the truck[25]itself supports the finding of both the trial court and the appellate court, that the D Rough Rider bus driven by petitioner Laspias was traveling at a fast pace. Since he saw the stalled truck at a distance of 25 meters, petitioner Laspias had more than enough time to swerve to his left to avoid hitting it; that is, if the speed of the bus was only 40 to 50 kilometers per hour as he claimed. As found by the Court of Appeals, it is easier to believe that petitioner Laspias was driving at a very fast speed, since at 4:45 a.m., the hour of the accident, there were no oncoming vehicles at the opposite direction. Petitioner Laspias could have swerved to the left lane with proper clearance, and, thus, could have avoided the truck.[26]Instinct, at the very least, would have prompted him to apply the breaks to avert the impending disaster which he must have foreseen when he caught sight of the stalled truck. As we had occasion to reiterate:

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

A close study and evaluation of the testimonies and the documentary proofs submitted by the parties which have direct bearing on the issue of negligence, this Court as shown by preponderance of evidence that defendant Virgilio Te Laspias failed to observe extraordinary diligence as a driver of the common carrier in this case. It is quite hard to accept his version of the incident that he did not see at a reasonable distance ahead the cargo truck that was parked when the Rough Rider [Bus] just came out of the bridge which is on an (sic) [more] elevated position than the place where the cargo truck was parked. With its headlights fully on, defendant driver of the Rough Rider was in a vantage position to see the cargo truck ahead which was parked and he could just easily have avoided hitting and bumping the same by maneuvering to the left without hitting the said cargo truck. Besides, it is (sic) shown that there was still much room or space for the Rough Rider to pass at the left lane of the said national highway even if the cargo truck had occupied the entire right lane thereof. It is not true that if the Rough Rider would proceed to pass through the left lane it would fall into a canal considering that there was much space for it to pass without hitting and bumping the cargo truck at the left lane of said national highway. The records, further, showed that there was no incoming vehicle at the opposite lane of the national highway which would have prevented the Rough Rider from not swerving to its left in order to avoid hitting and bumping the parked cargo truck. But the evidence showed that the Rough Rider instead of swerving to the still spacious left lane of the national highway plowed directly into the parked cargo truck hitting the latter at its rear portion; and thus, the (sic) causing damages not only to herein plaintiff but to the cargo truck as well.[28]Indeed, petitioner Laspias negligence in driving the bus is apparent in the records. By his own admission, he had just passed a bridge and was traversing the highway of Compostela,Cebuat a speed of 40 to 50 kilometers per hour before the collision occurred. The maximum speed allowed by law on a bridge is only 30 kilometers per hour.[29]And, as correctly pointed out by the trial court, petitioner Laspias also violated Section 35 of the Land Transportation and Traffic Code, Republic Act No. 4136, as amended:

Sec. 35.Restriction as to speed. (a) Any person driving a motor vehicle on a highway shall drive the same at a careful and prudent speed, not greater nor less than is reasonable and proper, having due regard for the traffic, the width of the highway, and or any other condition then and there existing; andno person shall drive any motor vehicle upon a highwayat such speed as to endanger the life, limb and property of any person, norat a speed greater than will permit him to bring the vehicle to a stop within the assured clear distance ahead.[30]Under Article 2185 of the Civil Code, a person driving a vehicle is presumed negligent if at the time of the mishap, he was violating any traffic regulation.[31]Petitioner Tiu failed toOvercome the presumptionOf negligence against him asOne engaged in the businessOf common carriageThe rules which common carriers should observe as to the safety of their passengers are set forth in the Civil Code, Articles 1733,[32]1755[33]and 1756.[34]In this case, respondent Arriesgado and his deceased wife contracted with petitioner Tiu, as owner and operator of D Rough Riders bus service, for transportation from Maya, Daanbantayan, Cebu, to Cebu City for the price ofP18.00.[35]It is undisputed that the respondent and his wife were not safely transported to the destination agreed upon. In actions for breach of contract, only the existence of such contract, and the fact that the obligor, in this case the common carrier, failed to transport his passenger safely to his destination are the matters that need to be proved.[36]This is because under the said contract of carriage, the petitioners assumed the express obligation to transport the respondent and his wife to their destination safely and to observe extraordinary diligence with due regard for all circumstances.[37]Any injury suffered by the passengers in the course thereof is immediately attributable to the negligence of the carrier.[38]Upon the happening of the accident, the presumption of negligence at once arises, and it becomes the duty of a common carrier to prove that he observed extraordinary diligence in the care of his passengers.[39]It must be stressed that in requiring the highest possible degree of diligence from common carriers and in creating a presumption of negligence against them, the law compels them to curb the recklessness of their drivers.[40]While evidence may be submitted to overcome such presumption of negligence, it must be shown that the carrier observed the required extraordinary diligence, which means that the carrier must show the utmost diligence of very cautious persons as far as human care and foresight can provide, or that the accident was caused by fortuitous event.[41]As correctly found by the trial court, petitioner Tiu failed to conclusively rebut such presumption. The negligence of petitioner Laspias as driver of the passenger bus is, thus, binding against petitioner Tiu, as the owner of the passenger bus engaged as a common carrier.[42]The Doctrine ofLast Clear ChanceIs Inapplicable in theCase at BarContrary to the petitioners contention, the principle of last clear chance is inapplicable in the instant case, as it only applies in a suit between the owners and drivers of two colliding vehicles.It does not arise where a passenger demands responsibility from the carrier to enforce its contractual obligations, for it would be inequitable to exempt the negligent driver and its owner on the ground that the other driver was likewise guilty of negligence.[43]The common law notion of last clear chance permitted courts to grant recovery to a plaintiff who has also been negligent provided that the defendant had the last clear chance to avoid the casualty and failed to do so. Accordingly, it is difficult to see what role, if any, the common law of last clear chance doctrine has to play in a jurisdiction where the common law concept of contributory negligence as an absolute bar to recovery by the plaintiff, has itself been rejected, as it has been in Article 2179 of the Civil Code.[44]Thus, petitioner Tiu cannot escape liability for the death of respondent Arriesgados wife due to the negligence of petitioner Laspias, his employee, on this score.

Respondents Pedrano andCondor were likewiseNegligentInPhoenix Construction, Inc. v. Intermediate Appellate Court,[45]where therein respondent Dionisio sustained injuries when his vehicle rammed against a dump truck parked askew, the Court ruled that the improper parking of a dump truck without any warning lights or reflector devices created an unreasonable risk for anyone driving within the vicinity, and for having created such risk, the truck driver must be held responsible. In ruling against the petitioner therein, the Court elucidated, thus:

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

We hold that private respondent Dionisios negligence was only contributory, that the immediate and proximate cause of the injury remained the truck drivers lack of due care.[46]In this case, both the trial and the appellate courts failed to consider that respondent Pedrano was also negligent in leaving the truck parked askew without any warning lights or reflector devices to alert oncoming vehicles, and that such failure created the presumption of negligence on the part of his employer, respondent Condor, in supervising his employees properly and adequately. As we ruled inPoblete v. Fabros:[47]It is such a firmly established principle, as to have virtually formed part of the law itself, that the negligence of the employee gives rise to the presumption of negligence on the part of the employer. This is the presumed negligence in the selection and supervision of employee. The theory of presumed negligence, in contrast with the American doctrine ofrespondeat superior, where the negligence of the employee isconclusivelypresumed to be the negligence of the employer, is clearly deducible from the last paragraph of Article 2180 of the Civil Code which provides that the responsibility therein mentioned shall cease if the employers prove that they observed all the diligence of a good father of a family to prevent damages.[48]The petitioners were correct in invoking respondent Pedranos failure to observe Article IV, Section 34(g) of the Rep. Act No. 4136, which provides:

(g)Lights when parked or disabled. Appropriate parking lights or flaresvisible one hundred meters awayshall be displayed at a corner of the vehicle whenever such vehicle is parked on highways or in places that are not well-lighted or is placed in such manner as to endanger passing traffic.

The manner in which the truck was parked clearly endangered oncoming traffic on both sides, considering that the tire blowout which stalled the truck in the first place occurred in the wee hours of the morning. The Court can only now surmise that the unfortunate incident could have been averted had respondent Condor, the owner of the truck, equipped the said vehicle with lights, flares, or, at the very least, an early warning device.[49]Hence, we cannot subscribe to respondents Condor and Pedranos claim that they should be absolved from liability because, as found by the trial and appellate courts, the proximate cause of the collision was the fast speed at which petitioner Laspias drove the bus. To accept this proposition would be to come too close to wiping out the fundamental principle of law that a man must respond for the foreseeable consequences of his own negligent act or omission. Indeed, our law on quasi-delicts seeks to reduce the risks and burdens of living in society and to allocate them among its members. To accept this proposition would be to weaken the very bonds of society.[50]The Liability ofRespondent PPSIIas InsurerThe trial court in this case did not rule on the liability of respondent PPSII, while the appellate court ruled that, as no evidence was presented against it, the insurance company is not liable.

A perusal of the records will show that when the petitioners filed the Third-Party Complaint against respondent PPSII, they failed to attach a copy of the terms of the insurance contract itself. Only Certificate of Cover No. 054940[51]issued in favor of Mr. William Tiu, Lahug,CebuCity signed by Cosme H. Boniel was appended to the third-party complaint. The date of issuance, July 22, 1986, the period of insurance, from July 22, 1986 to July 22, 1987, as well as the following items, were also indicated therein:

SCHEDULED VEHICLE

MODELMAKETYPE OF BODYCOLORBLT FILE NO.

Isuzu ForwardBusblue mixed

PLATE NO. PBP-724SERIAL/CHASSIS NO. SER450-1584124MOTOR NO. 677836AUTHORIZED CAPACITY 50UNLADEN WEIGHT 6Cyls. Kgs.

SECTION 1/11*LIMITS OF LIABILITY P50,000.00PREMIUMS PAID

A. THIRD PARTY LIABILITY

B. PASSENGER LIABILITYPer Person P12,000.00Per Accident P50,000P540.0052

In its Answer53to the Third-Party Complaint, the respondent PPSII admitted the existence of the contract of insurance, in view of its failure to specifically deny the same as required under then Section 8(a), Rule 8 of the Rules of Court,54which reads:

Sec. 8.How to contest genuineness of such documents.When an action or defense is founded upon a written instrument copied in or attached to the corresponding pleading as provided in the preceding section, the genuineness and due execution of the instrument shall be deemed admitted unless the adverse party, under oath, specifically denies them, and sets forth what he claims to be the facts; but the requirement of an oath does not apply when the adverse party does not appear to be a party to the instrument or when compliance with an order for inspection of the original instrument is refused.

In fact, respondent PPSII did not dispute the existence of such contract, and admitted that it was liable thereon. It claimed, however, that it had attended to and settled the claims of those injured during the incident, and set up the following as special affirmative defenses:

Third party defendant Philippine Phoenix Surety and Insurance, Inc. hereby reiterates and incorporates by way of reference the preceding paragraphs and further states THAT:-

8. It has attended to the claims of Vincent Canales, Asuncion Batiancila and Neptali Palces who sustained injuries during the incident in question. In fact, it settled financially their claims per vouchers duly signed by them and they duly executed Affidavit[s] of Desistance to that effect, xerox copies of which are hereto attached as Annexes 1, 2, 3, 4, 5, and 6 respectively;

9. With respect to the claim of plaintiff, herein answering third party defendant through its authorized insurance adjuster attended to said claim. In fact, there were negotiations to that effect. Only that it cannot accede to the demand of said claimant considering that the claim was way beyond the scheduled indemnity as per contract entered into with third party plaintiff William Tiu and third party defendant (Philippine Phoenix Surety and Insurance, Inc.). Third party Plaintiff William Tiu knew all along the limitation as earlier stated, he being an old hand in the transportation business;55

Considering the admissions made by respondent PPSII, the existence of the insurance contract and the salient terms thereof cannot be dispatched. It must be noted that after filing its answer, respondent PPSII no longer objected to the presentation of evidence by respondent Arriesgado and the insured petitioner Tiu. Even in its Memorandum56before the Court, respondent PPSII admitted the existence of the contract, but averred as follows:

Petitioner Tiu is insisting that PPSII is liable to him for contribution, indemnification and/or reimbursement. This has no basis under the contract. Under the contract, PPSII will pay all sums necessary to discharge liability of the insured subject to the limits of liability but not to exceed the limits of liability as so stated in the contract. Also, it is stated in the contract that in the event of accident involving indemnity to more than one person, the limits of liability shall not exceed the aggregate amount so specified by law to all persons to be indemnified.57As can be gleaned from the Certificate of Cover, such insurance contract was issued pursuant to the Compulsory Motor Vehicle Liability Insurance Law. It was expressly provided therein that the limit of the insurers liability for each person wasP12,000, while the limit per accident was pegged atP50,000. An insurer in an indemnity contract for third party liability is directly liable to the injured party up to the extent specified in the agreement but it cannot be held solidarily liable beyond that amount.58The respondent PPSII could not then just deny petitioner Tius claim; it should have paidP12,000 for the death of Felisa Arriesgado,59and respondent Arriesgados hospitalization expenses ofP1,113.80, which the trial court found to have been duly supported by receipts. The total amount of the claims, even when added to that of the other injured passengers which the respondent PPSII claimed to have settled,60would not exceed theP50,000 limit under the insurance agreement.

Indeed, the nature of Compulsory Motor Vehicle Liability Insurance is such that it is primarily intended to provide compensation for the death or bodily injuries suffered by innocent third parties or passengers as a result of the negligent operation and use of motor vehicles. The victims and/or their dependents are assured of immediate financial assistance, regardless of the financial capacity of motor vehicle owners.61As the Court, speaking through Associate Justice Leonardo A. Quisumbing, explained inGovernment Service Insurance System v. Court of Appeals:62However, although the victim may proceed directly against the insurer for indemnity, the third party liability is only up to the extent of the insurance policy and those required by law. While it is true that where the insurance contract provides for indemnity against liability to third persons, and such persons can directly sue the insurer, the direct liability of the insurer under indemnity contracts against third party liability does not mean that the insurer can be held liable insolidumwith the insured and/or the other parties found at fault. For the liability of the insurer is based on contract; that of the insured carrier or vehicle owner is based on tort.

Obviously, the insurer could be held liable only up to the extent of what was provided for by the contract of insurance, in accordance with the CMVLI law. At the time of the incident, the schedule of indemnities for death and bodily injuries, professional fees and other charges payable under a CMVLI coverage was provided for under the Insurance Memorandum Circular (IMC) No. 5-78 which was approved on November 10, 1978. As therein provided, the maximum indemnity for death was twelve thousand (P12,000.00) pesos per victim. The schedules for medical expenses were also provided by said IMC, specifically in paragraphs (C) to (G).63Damages to beAwardedThe trial court correctly awarded moral damages in the amount ofP50,000 in favor of respondent Arriesgado.The award of exemplary damages by way of example or correction of the public good,64is likewise in order. As the Court ratiocinated inKapalaran Bus Line v. Coronado:65While the immediate beneficiaries of the standard of extraordinary diligence are, of course, the passengers and owners of cargo carried by a common carrier, they are not the only persons that the law seeks to benefit. For if common carriers carefully observed the statutory standard of extraordinary diligence in respect of their own passengers, they cannot help but simultaneously benefit pedestrians and the passengers of other vehicles who are equally entitled to the safe and convenient use of our roads and highways. The law seeks to stop and prevent the slaughter and maiming of people (whether passengers or not) on our highways and buses, the very size and power of which seem to inflame the minds of their drivers. Article 2231 of the Civil Code explicitly authorizes the imposition of exemplary damages in cases of quasi-delicts if the defendant acted with gross negligence.66The respondent Pedro A. Arriesgado, as the surviving spouse and heir of Felisa Arriesgado, is entitled to indemnity in the amount ofP50,000.00.67The petitioners, as well as the respondents Benjamin Condor and Sergio Pedrano are jointly and severally liable for said amount, conformably with the following pronouncement of the Court inFabre, Jr. vs. Court of Appeals:68The same rule of liability was applied in situations where the negligence of the driver of the bus on which plaintiff was riding concurred with the negligence of a third party who was the driver of another vehicle, thus causing an accident. InAnuran v. Buo, Batangas Laguna Tayabas Bus Co. v. Intermediate Appellate Court, andMetro Manila Transit Corporation v. Court of Appeals,the bus company, its driver, the operator of the other vehicle and the driver of the vehicle were jointly and severally held liable to the injuredpassenger or the latters heirs.The basis of this allocation of liability was explained inViluan v. Court of Appeals, thus:

Nor should it make difference that the liability of petitioner [bus owner] springs from contract while that of respondents [owner and driver of other vehicle] arises from quasi-delict. As early as 1913, we already ruled in Gutierrez vs. Gutierrez, 56 Phil. 177, that in case of injury to a passenger due to the negligence of the driver of the bus on which he was riding and of the driver of another vehicle, the drivers as well as the owners of the two vehicles are jointly and severally liable for damages.Some members of the Court, though, are of the view that under the circumstances they are liable on quasi-delict.69IN LIGHT OF ALL THE FOREGOING,the petition is PARTIALLY GRANTED.The Decision of the Court of Appeals is AFFIRMED with MODIFICATIONS:

(1) Respondent Philippine Phoenix Surety and Insurance, Inc. and petitioner William Tiu areORDEREDto pay, jointly and severally, respondent Pedro A. Arriesgado the total amount ofP13,113.80;

(2) The petitioners and the respondents Benjamin Condor and Sergio Pedrano areORDEREDto pay, jointly and severally, respondent Pedro A. ArriesgadoP50,000.00 as indemnity;P26,441.50 as actual damages;P50,000.00 as moral damages;P50,000.00 as exemplary damages; andP20,000.00 as attorneys fees.

SO ORDERED.

Austria-Martinez, (Acting Chairman), Tinga,andChico-Nazario, JJ.,concur.

Puno J., (Chairman),on official leave.[G.R. No. 111127.July 26, 1996]

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

D E C I S I O N

MENDOZA,J.:

This is a petition for review oncertiorariof the decision of the Court of Appeals[1]in CA-GR No. 28245, dated September 30, 1992, which affirmed with modification the decision of the Regional Trial Court of Makati, Branch 58, ordering petitioners jointly and severally to pay damages to private respondent Amyline Antonio, and its resolution which denied petitioners motion for reconsideration for lack of merit.

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

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

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

The usual route to Caba, La Union was through Carmen, Pangasinan.However, the bridge at Carmen was under repair, so that petitioner Cabil, who was unfamiliar with the area (it being his first trip to La Union), was forced to take a detour through the town of Ba-ay in Lingayen, Pangasinan.At 11:30 that night, petitioner Cabil came upon a sharp curve on the highway, running on a south to east direction, which he described as siete. The road was slippery because it was raining, causing the bus, which was running at the speed of 50 kilometers per hour, to skid to the left road shoulder.The bus hit the left traffic steel brace and sign along the road and rammed the fence of one Jesus Escano, then turned over and landed on its left side, coming to a full stop only after a series of impacts.The bus came to rest off the road.A coconut tree which it had hit fell on it and smashed its front portion.

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

The driver, petitioner Cabil, claimed he did not see the curve until it was too late.He said he was not familiar with the area and he could not have seen the curve despite the care he took in driving the bus, because it was dark and there was no sign on the road.He said that he saw the curve when he was already within 15 to 30 meters of it.He allegedly slowed down to 30 kilometers per hour, but it was too late.

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

Amyline Antonio, who was seriously injured, brought this case in the RTC of Makati, Metro Manila.As a result of the accident, she is now suffering from paraplegia and is permanently paralyzed from the waist down.During the trial she described the operations she underwent and adduced evidence regarding the cost of her treatment and therapy.Immediately after the accident, she was taken to the Nazareth Hospital in Ba-ay, Lingayen.As this hospital was not adequately equipped, she was transferred to the Sto. Nio Hospital, also in the town of Ba-ay, where she was given sedatives.An x-ray was taken and the damage to her spine was determined to be too severe to be treated there.She was therefore brought to Manila, first to the Philippine General Hospital and later to the Makati Medical Center where she underwent an operation to correct the dislocation of her spine.

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

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

Accordingly, it gave judgment for private respondents holding:

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

WHEREFORE, premises considered, the Court hereby renders judgment against defendants Mr. & Mrs. Engracio Fabre, Jr. and Porfirio Cabil y Jamil pursuant to articles 2176 and 2180 of the Civil Code of the Philippines and said defendants are ordered to pay jointly and severally to the plaintiffs the following amount:

1) P93,657.11 as compensatory and actual damages;

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

3) P20,000.00 as moral damages;

4) P20,000.00 as exemplary damages; and

5) 25% of the recoverable amount as attorneys fees;

6) Costs of suit.

SO ORDERED.

The Court of Appeals affirmed the decision of the trial court with respect to Amyline Antonio but dismissed it with respect to the other plaintiffs on the ground that they failed to prove their respective claims.The Court of Appeals modified the award of damages as follows:

1) P93,657.11 as actual damages;

2) P600,000.00 as compensatory damages;

3) P50,000.00 as moral damages;

4) P20,000.00 as exemplary damages;

5) P10,000.00 as attorneys fees; and

6) Costs of suit.

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

I.WHETHER OR NOT PETITIONERS WERE NEGLIGENT.

II.WHETHER OR NOT PETITIONERS WERE LIABLE FOR THE INJURIES SUFFERED BY PRIVATE RESPONDENTS.

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

Petitioners challenge the propriety of the award of compensatory damages in the amount of P600,000.00.It is insisted that, on the assumption that petitioners are liable, an award of P600,000.00 is unconscionable and highly speculative.Amyline Antonio testified that she was a casual employee of a company called Suaco, earning P1,650.00 a month, and a dealer of Avon products, earning an average of P1,000.00 monthly.Petitioners contend that as casual employees do not have security of tenure, the award of P600,000.00, considering Amyline Antonios earnings, is without factual basis as there is no assurance that she would be regularly earning these amounts.

With the exception of the award of damages, the petition is devoid of merit.

First, it is unnecessary for our purpose to determine whether to decide this case on the theory that petitioners are liable for breach of contract of carriage orculpa contractualor on the theory ofquasi delictorculpa aquilianaas both the Regional Trial Court and the Court of Appeals held, for although the relation of passenger and carrier is contractual both in origin and nature, nevertheless the act that breaks the contract may be also a tort.[2]In either case, the question is whether the bus driver, petitioner Porfirio Cabil, was negligent.

The finding that Cabil drove his bus negligently, while his employer, the Fabres, who owned the bus, failed to exercise the diligence of a good father of the family in the selection and supervision of their employee is fully supported by the evidence on record.These factual findings of the two courts we regard as final and conclusive, supported as they are by the evidence.Indeed, it was admitted by Cabil that on the night in question, it was raining, and, as a consequence, the road was slippery, and it was dark.He averred these facts to justify his failure to see that there lay a sharp curve ahead.However, it is undisputed that Cabil drove his bus at the speed of 50 kilometers per hour and only slowed down when he noticed the curve some 15 to 30 meters ahead.[3]By then it was too late for him to avoid falling off the road.Given the conditions of the road and considering that the trip was Cabils first one outside of Manila, Cabil should have driven his vehicle at a moderate speed.There is testimony[4]that the vehicles passing on that portion of the road should only be running 20 kilometers per hour, so that at 50 kilometers per hour, Cabil was running at a very high speed.

Considering the foregoingthe fact that it was raining and the road was slippery, that it was dark, that he drove his bus at 50 kilometers an hour when even on a good day the normal speed was only 20 kilometers an hour, and that he was unfamiliar with the terrain, Cabil was grossly negligent and should be held liable for the injuries suffered by private respondent Amyline Antonio.

Pursuant to Arts. 2176 and 2180 of the Civil Code his negligence gave rise to the presumption that his employers, the Fabres, were themselves negligent in the selection and supervision of their employee.

Due diligence in selection of employees is not satisfied by finding that the applicant possessed a professional drivers license.The employer should also examine the applicant for his qualifications, experience and record of service.[5]Due diligence in supervision, on the other hand, requires the formulation of rules and regulations for the guidance of employees and the issuance of proper instructions as well as actual implementation and monitoring of consistent compliance with the rules.[6]In the case at bar, the Fabres, in allowing Cabil to drive the bus to La Union, apparently did not consider the fact that Cabil had been driving for school children only, from their homes to the St. Scholasticas College in Metro Manila.[7]They had hired him only after a two-week apprenticeship.They had tested him for certain matters, such as whether he could remember the names of the children he would be taking to school, which were irrelevant to his qualification to drive on a long distance travel, especially considering that the trip to La Union was his first.The existence of hiring procedures and supervisory policies cannot be casually invoked to overturn the presumption of negligence on the part of an employer.[8]Petitioners argue that they are not liable because (1) an earlier departure (made impossible by the congregations delayed meeting) could have averted the mishap and (2) under the contract, the WWCF was directly responsible for the conduct of the trip.Neither of these contentions hold water.The hour of departure had not been fixed.Even if it had been, the delay did not bear directly on the cause of the accident.With respect to the second contention, it was held in an early case that:

[A] person who hires a public automobile and gives the driver directions as to the place to which he wishes to be conveyed, but exercises no other control over the conduct of the driver, is not responsible for acts of negligence of the latter or prevented from recovering for injuries suffered from a collision between the automobile and a train, caused by the negligence either of the locomotive engineer or the automobile driver.[9]As already stated, this case actually involves a contract of carriage.Petitioners, the Fabres, did not have to be engaged in the business of public transportation for the provisions of the Civil Code on common carriers to apply to them.As this Court has held:[10]Art. 1732.Common carriers are persons, corporations, firms or associations engaged in the business of carrying or transporting passengers or goods or both, by land, water, or air for compensation, offering their services to the public.

The above article makes no distinction between one whose principal business activity is the carrying of persons or goods or both, and one who does such carrying only as an ancillary activity (in local idiom, as a sideline).Article 1732 also carefully avoids making any distinction between a person or enterprise offering transportation service on a regular or scheduled basis and one offering such service on an occasional, episodic or unscheduled basis.Neither does Article 1732 distinguish between a carrier offering its services to the general public, i.e., the general community or population, and one who offers services or solicits business only from a narrow segment of the general population.We think that Article 1732 deliberately refrained from making such distinctions.

As common carriers, the Fabres were bound to exercise extraordinary diligence for the safe transportation of the passengers to their destination.This duty of care is not excused by proof that they exercised the diligence of a good father of the family in the selection and supervision of their employee.As Art. 1759 of the Code provides:

Common carriers are liable for the death of or injuries to passengers through the negligence or wilful acts of the formers employees, although such employees may have acted beyond the scope of their authority or in violation of the orders of the common carriers.

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

The same circumstances detailed above, supporting the finding of the trial court and of the appellate court that petitioners are liable under Arts. 2176 and 2180 forquasi delict, fully justify finding them guilty of breach of contract of carriage under Arts. 1733, 1755 and 1759 of the Civil Code.

Secondly, we sustain the award of damages in favor of Amyline Antonio.However, we think the Court of Appeals erred in increasing the amount of compensatory damages because private respondents did not question this award as inadequate.[11]To the contrary, the award of P500,000.00 for compensatory damages which the Regional Trial Court made is reasonable considering the contingent nature of her income as a casual employee of a company and as distributor of beauty products and the fact that the possibility that she might be able to work again has not been foreclosed.In fact she testified that one of her previous employers had expressed willingness to employ her again.

With respect to the other awards, while the decisions of the trial court and the Court of Appeals do not sufficiently indicate the factual and legal basis for them, we find that they are nevertheless supported by evidence in the records of this case.Viewed as an action forquasi delict,this case falls squarely within the purview of Art. 2219(2) providing for the payment of moral damages in cases ofquasi delict.On the theory that petitioners are liable for breach of contract of carriage, the award of moral damages is authorized by Art. 1764, in relation to Art. 2220, since Cabils gross negligence amounted to bad faith.[12]Amyline Antonios testimony, as well as the testimonies of her father and co-passengers, fully establish the physical suffering and mental anguish she endured as a result of the injuries caused by petitioners negligence.

The award of exemplary damages and attorneys fees was also properly made.However, for the same reason that it was error for the appellate court to increase the award of compensatory damages, we hold that it was also error for it to increase the award of moral damages and reduce the award of attorneys fees, inasmuch as private respondents, in whose favor the awards were made, have not appealed.[13]As above stated, the decision of the Court of Appeals can be sustained either on the theory ofquasi delictor on that of breach of contract.The question is whether, as the two courts below held, petitioners, who are the owners and driver of the bus, may be made to respond jointly and severally to private respondent.We hold that they may be.InDangwa Trans. Co. Inc. v. Court of Appeals,[14]on facts similar to those in this case, this Court held the bus company and the driver jointly and severally liable for damages for injuries suffered by a passenger.Again, inBachelor Express, Inc. v. Court of Appeals[15]a driver found negligent in failing to stop the bus in order to let off passengers when a fellow passenger ran amuck, as a result of which the passengers jumped out of the speeding bus and suffered injuries, was held also jointly and severally liable with the bus company to the injured passengers.

The same rule of liability was applied in situations where the negligence of the driver of the bus on which plaintiff was riding concurred with the negligence of a third party who was the driver of another vehicle, thus causing an accident.InAnuran v. Buo,[16]Batangas Laguna Tayabas Bus Co.v. Intermediate Appellate Court,[17]andMetro Manila Transit Corporation v. Court of Appeals,[18]the bus company, its driver, the operator of the other v