Philtranco Service Enterprises, Inc. and Rogaciones Manilhig vs. Court of Appeals and Heirs of the Late Ramon Acuesta

The registered owner of a public service vehicle is primarily, directly, and solidarily liable with its driver for damages arising from the driver's tortious acts in a quasi-delict; the employer's defense of diligence of a good father of a family does not defeat liability where the driver's gross negligence is established, and damages awarded for death, moral injury, exemplary correction, and attorney's fees must have evidentiary basis and be reasonable.

Philtranco Service Enterprises, Inc. is a privately owned bus company, and Rogaciones Manilhig was its driver. The governing framework is the Civil Code's quasi-delict provisions, particularly Articles 2176, 2180, 2194, and 2206, which fix liability for fault or negligence and the damages recoverable for death.

The heirs of Ramon A. Acuesta—Gregorio O. Acuesta, Julio O. Acuesta, Ramon O. Acuesta, Jr., Baltazar O. Acuesta, Rufino O. Acuesta, Maximo O. Acuesta, Neri O. Acuesta, Iluminada O. Acuesta, Rosario Acuesta-Sanz, and Pamfilo O. Acuesta—brought an action for damages against Philtranco Service Enterprises, Inc. and its driver Rogaciones Manilhig. Atty. Julio O. Acuesta also appeared as counsel for the plaintiffs. The action arose from a vehicular accident on 24 March 1990 in Calbayog City.

According to private respondents' evidence, at about 6:00 a.m., Ramon A. Acuesta was riding an easy rider bicycle along Gomez Street beside Nijaga Park. On Magsaysay Blvd., which runs perpendicular to Gomez Street, Philtranco Bus No. 4025 with plate No. EVA-725, driven by Manilhig, was being pushed by several persons to start its engine. The bus was heading toward Gomez Street, with some persons pushing at the back and others at the sides. As the bus was pushed, its engine started abruptly, enhancing its running motion. At that moment, Acuesta was directly in front of the bus. The bus bumped him, causing him to fall, and then ran over him. The bus did not stop and proceeded toward Rosales Bridge, in the direction Acuesta had been heading.

P/Sgt. Yabao, who was jogging along Gomez Street and meeting Acuesta, saw the bus being pushed, its engine abruptly starting, and the bus bump and run over the victim. He approached Manilhig and signalled him to stop, but Manilhig did not listen. Yabao jumped into the bus, introduced himself as a policeman, and ordered the driver to stop. Manilhig stopped near Nijaga Park. Yabao told him to proceed to the Police Headquarters about 100 meters away because he feared the driver might be harmed by the victim's relatives. Yabao then cordoned the scene and had P/Cpl. Bartolome Bagot, the Traffic Investigator, conduct an investigation and make a sketch. Yabao was about 20 meters away when he saw the bus bump and run over the victim; from the point of impact, the vehicle ran about 15 meters.

Petitioners gave a different account. Manilhig said that on the morning of 24 March 1990, while preparing for the return trip to Pasay City, he warmed up the bus engine and made a few rounds within the city proper. While the bus was slowly and moderately cruising along Gomez Street, Acuesta, who was biking in the same direction, suddenly overtook two tricycles and swerved left to the center of the road. The swerve was abrupt and sudden; even though Manilhig applied the brakes and blew the horn, Acuesta was bumped from behind and run over. Manilhig claimed he did not willfully or deliberately proceed after the bump; when he looked at his rear-view mirror, he saw people crowding around the victim and others running after the bus. Fearing a mob, he moved away from the scene and intended to report the incident to the police. After a man boarded the bus and introduced himself as a policeman, Manilhig gave himself up and reported the accident. Petitioners also claimed that Acuesta's negligence in overtaking two tricycles without taking precautions or signalling caused his death, and they counterclaimed for P50,000 attorney's fees, P1 million moral damages, and P50,000 litigation expenses.

In their Answer, petitioners alleged that Philtranco exercised the diligence of a good father of a family in the selection and supervision of its employees, including Manilhig, who had an excellent record as a driver and had undergone months of rigid training before being hired. Manilhig was described as a prudent professional driver who religiously observed traffic rules and exercised the diligence of a very cautious person. However, petitioners did not present evidence because they were deemed to have waived that right after their counsel failed to appear at the scheduled hearings on 30 and 31 March 1992. The trial court declared the case submitted for decision based on private respondents' evidence. The trial court found Manilhig at fault and awarded damages. The Court of Appeals affirmed, finding gross negligence on Manilhig's part: jump-starting the bus in a busy section was imprudent, especially where the bus had to take a left turn, and the victim, bumped from behind, could not have anticipated a bus being pushed from a perpendicular street. The Court of Appeals also held the defense of last clear chance inapplicable.

• Due Process and Waiver of Evidence: Petitioners argued that the trial court prevented or barred them from presenting their evidence and that they were denied due process; their counsel explained his non-appearance by indisposition, a hectic election campaign, fever, and a belief that the hearings would be cancelled pending written formal offer of evidence.
• Fault and Contributory Negligence: Petitioners maintained that Manilhig was not at fault and that Ramon Acuesta's own negligence in suddenly overtaking two tricycles and swerving left to the center of the road caused or at least contributed to the accident; they invoked the doctrine of last clear chance.
• Employer's Liability and Diligence Defense: Petitioners argued that the Court of Appeals erred in applying Article 2194 instead of Article 2180 of the Civil Code and in holding that Philtranco could not invoke the diligence of a good father of a family; Philtranco allegedly exercised such diligence in selecting and supervising Manilhig.
• Damages: Petitioners argued that the awards of damages were excessive and/or lacked basis.

• Death Indemnity: Private respondents defended the P200,000 death indemnity by citing Philippine Airlines, Inc. vs. Court of Appeals, 185 SCRA 110, arguing that damages for death are computed on the basis of the deceased's life expectancy.

• Due Process and Waiver of Evidence: Whether petitioners were denied due process and whether they waived their right to present evidence when their counsel failed to appear at the scheduled hearings.
• Negligence and Last Clear Chance: Whether Manilhig was at fault or whether Ramon Acuesta's negligence caused or contributed to the accident, and whether the doctrine of last clear chance applies.
• Employer's Solidary Liability and Diligence Defense: Whether Philtranco is solidarily liable with Manilhig under Articles 2180 and 2194 of the Civil Code and whether Philtranco may invoke the diligence of a good father of a family.
• Damages: Whether the awards of death indemnity, moral damages, exemplary damages, and attorney's fees are excessive or lack sufficient basis.

• Due Process and Waiver of Evidence: No. Petitioners were duly notified of the hearings, failed to appear, did not move for postponement, and showed no meritorious defenses; the oral offer of evidence was within the trial court's discretion.
• Negligence and Last Clear Chance: No. The Court of Appeals correctly found Manilhig grossly negligent; the last clear chance doctrine is inapplicable because the victim was bumped from behind and did not anticipate a bus being pushed from a perpendicular street.
• Employer's Solidary Liability and Diligence Defense: Yes as to solidary liability; No as to the diligence defense. The registered owner of a public service vehicle is primarily, directly, and solidarily liable with its driver for quasi-delict damages, and the employer's diligence defense fails where the driver's gross negligence is established.
• Damages: Partly. The death indemnity, moral damages, exemplary damages, and attorney's fees were reduced to P50,000, P50,000, P50,000, and P25,000, respectively; actual damages stand.

• Due Process and Waiver of Evidence: The petitioners and their counsel, Atty. Jose Buban, were duly notified in open court on 10 February 1992 of the trial court's order setting the case for hearing on 30 and 31 March 1992. Neither appeared on either date. In his motion for reconsideration, Atty. Buban attributed his absence to indisposition from a hectic campaign as a candidate for City Councilor of Tacloban, a slight fever, and a belief that the hearings would be cancelled because private respondents would make a written formal offer of evidence. The trial court denied the motion on 26 May 1992, finding it devoid of merit because Atty. Buban could have filed a motion for postponement; the second motion for reconsideration was denied on 12 August 1992. The first and second motions for reconsideration did not claim that petitioners had meritorious defenses. The trial court therefore did not err in declaring the case submitted for decision based on private respondents' evidence. The Court of Appeals correctly held that petitioners were given an opportunity to present their defense and that their expectation to object to a formal offer of evidence was misplaced, since the trial court had sound discretion to allow an oral offer of evidence. No denial of due process occurred; the right to present evidence was waived.

• Negligence and Last Clear Chance: The action was for damages based on quasi-delict under Articles 2176 and 2180 of the Civil Code. The Court of Appeals found Manilhig at fault. The bus was being pushed to jump-start at the time of the accident. A vehicle pushed to a jump-start does not move slowly; its initial movement is abrupt and jerky. The lower court had sufficient basis to conclude that the bumping of the victim was due to Manilhig's actionable negligence and inattention. Prudence should have prevented jump-starting the bus in a busy section of the city, especially where the bus had to take a left turn. Pedestrians on Gomez Street, where the bus turned left and the victim was biking, could not be expected to be aware of a vehicle being pushed to a jump-start. The Court of Appeals thus found gross negligence. The doctrine of last clear chance was inapplicable because the victim was bumped from behind and did not anticipate a Philtranco bus being pushed from a perpendicular street.

• Employer's Solidary Liability and Diligence Defense: Article 2180 makes owners and managers of an establishment or enterprise responsible for damages caused by their employees in the service of the branches where the latter are employed or on the occasion of their functions. The responsibility ceases only when the employer proves that it observed all the diligence of a good father of a family to prevent damage. Article 2194 provides that the responsibility of two or more persons liable for a quasi-delict is solidary. The liability of the registered owner of a public service vehicle, such as Philtranco, for damages arising from the tortious acts of its driver is primary, direct, and joint and several or solidary with the driver. Because the employer's liability is primary, direct, and solidary, its only recourse after satisfying the judgment is to recover from the employee under Article 2181. Philtranco's defense that it exercised the diligence of a good father of a family in the selection and supervision of its employees failed in light of the gross negligence of its driver. The Court of Appeals therefore correctly applied Articles 2180 and 2194 and correctly held Philtranco solidarily liable.

• Damages: The trial court erroneously fixed the death indemnity at P200,000. Private respondents defended the award by citing Philippine Airlines, Inc. vs. Court of Appeals, 185 SCRA 110, where death indemnity was computed by multiplying the victim's gross annual income by life expectancy less living expenses. That computation referred to the additional indemnity for loss of earning capacity under Article 2206(1), not the basic indemnity for death under the opening paragraph of Article 2206. Even if the trial court intended the P200,000 as indemnity for loss of earning capacity, it had to be struck out because there was no evidence of the victim's earning capacity and life expectancy. Only the basic death indemnity under Article 2206 was due, fixed by current jurisprudence at P50,000. The P1 million moral damages award had no sufficient basis and was excessive. It rested solely on the testimony of one heir, Atty. Julio Acuesta, who testified to the family's wounded feelings, moral shock, mental anguish, and sleepless nights and suggested P1 million. The other heirs did not take the witness stand, so the trial court had no basis to award moral damages to them. Moral damages are not intended to enrich a plaintiff at the defendant's expense; they are awarded to alleviate moral suffering and must be proportional to the suffering inflicted. In the circumstances, P50,000 was reasonable. The P500,000 exemplary damages award was also excessive. In quasi-delicts, exemplary damages may be awarded if the party at fault acted with gross negligence, and the Court of Appeals found gross negligence on Manilhig's part. Under Article 2229, exemplary damages are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated, or compensatory damages; they must be fair and reasonable and should not unjustly enrich the prevailing party. P50,000 was adequate. The P50,000 attorney's fees award was reduced. The general rule is that attorney's fees cannot be recovered as part of damages because no premium should be placed on the right to litigate; the grant of attorney's fees is the exception rather than the rule and must be reasonable. The counsel for plaintiffs was himself a co-plaintiff, and it was unlikely that he demanded P100,000 from his brothers and sisters; he presented no written contract for his fees. Because exemplary damages were awarded, attorney's fees were recoverable under Article 2208(1), but P25,000 was reasonable. The actual damages award was not contested and stands.

• Quasi-delict and employer liability for registered owners of public service vehicles — Under Article 2176, fault or negligence causing damage without a pre-existing contractual relation is a quasi-delict. Article 2180 makes owners and managers of establishments or enterprises responsible for damages caused by their employees in the service of the branches where employed or on the occasion of their functions, unless they prove all diligence of a good father of a family to prevent damage. The registered owner of a public service vehicle is liable primarily, directly, and solidarily with its driver for the latter's tortious acts. In this case, Philtranco's diligence defense failed because Manilhig was grossly negligent.
• Solidary liability in quasi-delict — Article 2194 provides that the responsibility of two or more persons liable for a quasi-delict is solidary. The employer's liability is not merely subsidiary; it is primary, direct, and solidary, so the employer may be compelled to pay the judgment and may recover from the employee under Article 2181.
• Basic death indemnity versus loss of earning capacity — Article 2206 opens with a basic indemnity for death, fixed by jurisprudence at P50,000, while Article 2206(1) covers loss of earning capacity, which must be assessed and awarded by the court and requires evidence of the deceased's earning capacity and life expectancy. The trial court's P200,000 "death indemnity" was not supported as loss of earning capacity and was reduced to the basic P50,000.
• Moral damages must be proportional and not enrich the plaintiff — Moral damages are awarded to alleviate moral suffering and must be proportional to the suffering inflicted; they are not intended to enrich the plaintiff at the defendant's expense. Because only one heir testified and the P1 million award was excessive, it was reduced to P50,000.
• Exemplary damages in quasi-delicts — Under Article 2231, exemplary damages may be awarded in quasi-delicts if the party at fault acted with gross negligence. Article 2229 requires such damages to be imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated, or compensatory damages, and to be fair and reasonable. The P500,000 award was reduced to P50,000.
• Attorney's fees as exception — Attorney's fees cannot ordinarily be recovered as part of damages because no premium should be placed on the right to litigate; they may be awarded only in the cases enumerated in Article 2208 and must be reasonable. Here, because exemplary damages were awarded, attorney's fees were proper under Article 2208(1), but the P50,000 award was reduced to P25,000.
• Last clear chance — The doctrine was held inapplicable because the victim was bumped from behind and did not anticipate a bus being pushed from a perpendicular street.

• "The liability of the registered owner of a public service vehicle, like petitioner Philtranco, for damages arising from the tortious acts of the driver is primary, direct, and joint and several or solidary with the driver." — States the ratio on employer liability and solidary responsibility.
• "Since the employer's liability is primary, direct and solidary, its only recourse if the judgment for damages is satisfied by it is to recover what it has paid from its employee who committed the fault or negligence which gave rise to the action based on quasi-delict." — Explains the employer's recourse under Article 2181.
• "Only indemnity for death under the opening paragraph of Article 2206 is due, the amount of which has been fixed by current jurisprudence at P50,000." — Fixes the basic death indemnity and distinguishes it from loss of earning capacity.
• "Moral damages are emphatically not intended to enrich a plaintiff at the expense of the defendant." — States the controlling principle for reducing the moral damages award.

• Gelisan vs. Alday, 154 SCRA 388, 394 [1987] — Cited for the rule that the registered owner of a public service vehicle is primarily, directly, and solidarily liable with the driver for damages from the driver's tortious acts.
• Vargas vs. Langcay, 116 Phil. 478, 481 [1962] — Cited for the same employer-liability rule.
• People vs. Galas, G.R. No. 114007, 24 September 1996 — Cited for the current jurisprudential amount of P50,000 as basic death indemnity.
• People vs. Tabag, G.R. No. 116511, 12 February 1997 — Cited for the same death indemnity amount.
• Grand Union Supermarket, Inc. vs. Espino, 94 SCRA 953, 966 [1979] — Cited for the principle that moral damages are not intended to enrich the plaintiff and must be proportional to the suffering inflicted.
• Philippine Airlines, Inc. vs. Court of Appeals, 185 SCRA 110 — Cited by private respondents for computing death damages based on life expectancy; distinguished as referring to loss of earning capacity under Article 2206(1), not the basic death indemnity.
• Firestone Tire and Rubber Co. of the Phil. vs. Ines Chaves Co., 18 SCRA 356, 358 [1966] — Cited for the general rule that attorney's fees cannot be recovered as part of damages.
• Scott Consultants and Resource Development Corp. vs. Court of Appeals, 242 SCRA 393, 406 [1995] — Cited for the rule that attorney's fees are the exception rather than the rule.

• Article 2176, Civil Code — Defines quasi-delict as fault or negligence causing damage to another where there is no pre-existing contractual relation; the action against Manilhig was based on this provision.
• Article 2180, Civil Code — Makes owners and managers of establishments or enterprises responsible for damages caused by their employees in the service of the branches where employed or on the occasion of their functions, unless they prove all diligence of a good father of a family to prevent damage; applied to Philtranco's liability for Manilhig.
• Article 2194, Civil Code — Provides that the responsibility of two or more persons liable for a quasi-delict is solidary; applied to make Philtranco solidarily liable with Manilhig.
• Article 2181, Civil Code — Allows whoever pays for damage caused by dependents or employees to recover from the latter what was paid; identified as Philtranco's recourse against Manilhig.
• Article 2206, Civil Code — Governs damages for death, including the basic death indemnity, loss of earning capacity under paragraph (1), and moral damages under paragraph (3); applied to reduce the death indemnity and moral damages.
• Article 2231, Civil Code — Allows exemplary damages in quasi-delicts if the party at fault acted with gross negligence; applied because Manilhig was found grossly negligent.
• Article 2229, Civil Code — States that exemplary damages are imposed by way of example or correction for the public good, in addition to moral, temperate, liquidated, or compensatory damages; applied to reduce the exemplary damages.
• Article 2208, Civil Code — Lists when attorney's fees may be recovered, including when exemplary damages are awarded; applied to award P25,000 in attorney's fees.
• Rule 45, Rules of Court — The petitioners' appeal to the Supreme Court was by petition for review under this Rule.

Narvasa, C.J., Melo and Panganiban, JJ., concur. Francisco, J., is on leave.