Tiu vs. Arriesgado

A common carrier is presumed at fault for the death of or injuries to its passengers and must prove that it exercised the extraordinary diligence of a very cautious person to escape liability; the last clear chance doctrine has no application in a passenger’s action for breach of contract of carriage. When negligence of a third party concurs with the negligence of the common carrier, the carrier, its driver, and the third-party tortfeasors are jointly and severally liable to the injured passenger or his heirs, regardless of whether the carrier’s liability arises from contract and the third party’s from quasi-delict. An insurer under a compulsory motor vehicle liability insurance policy is directly liable to the injured third party only up to the limits of liability fixed in the policy and cannot be held solidarily liable beyond that amount.

At around 4:45 a.m. of March 16, 1987, a D’ Rough Riders passenger bus driven by Virgilio Te Laspiñas and owned by William Tiu rammed the left rear of a cargo truck parked along the national highway in Compostela, Cebu. The truck, owned by Benjamin Condor and driven by Sergio Pedrano, had stalled after a tire blowout; Pedrano had left to have the tire vulcanized. The bus was carrying Pedro A. Arriesgado and his wife, Felisa Pepito Arriesgado. The collision caused injuries to Pedro Arriesgado and the death of his wife. Pedro Arriesgado sued Tiu and Laspiñas for breach of contract of carriage; the defendants impleaded Condor, Pedrano, and their insurer Philippine Phoenix Surety and Insurance, Inc. (PPSII) as third-party defendants.

The Accident: On March 15, 1987, at about 10:00 p.m., a cargo truck marked “Condor Hollow Blocks and General Merchandise” bearing plate number GBP-675, owned by Benjamin Condor and driven by Sergio Pedrano, was loaded with firewood in Bogo, Cebu and left for Cebu City. Upon reaching Sitio Aggies, Poblacion, Compostela, Cebu, just after crossing a bridge, one of its rear tires exploded. Pedrano parked the truck along the right side of the national highway and left at around 12:00 a.m. to have the damaged tire vulcanized at a shop 700 meters away, leaving his helper, Jose Mitante, Jr., to watch the vehicle. He instructed Mitante to place a spare tire six fathoms behind the stalled truck as a warning; the tail lights were left on. At about 4:45 a.m., a D’ Rough Riders passenger bus with plate number PBP-724, owned by William Tiu and driven by Virgilio Te Laspiñas, was en route from Maya, Daanbantayan, Cebu to Cebu City. Among the passengers were spouses Pedro A. Arriesgado and Felisa Pepito Arriesgado, seated on the right side of the bus. As the bus approached the bridge, Laspiñas saw the stalled truck about 25 meters away. He applied the brakes and swerved left but the bus rammed the truck’s left rear. The impact damaged the right side of the bus and injured several passengers. Pedro Arriesgado lost consciousness and sustained a fracture of the right colles; his wife Felisa was taken to Danao City Hospital and later transferred to the Southern Island Medical Center where she died shortly thereafter.

The Complaint: Pedro Arriesgado filed a complaint for breach of contract of carriage, damages and attorney’s fees against William Tiu and Virgilio Te Laspiñas, alleging that Laspiñas drove at a fast speed and failed to take precautionary measures; that Tiu, as the bus operator, was directly liable for breach of contract for failing to transport the spouses safely to Cebu City, and that Tiu failed to exercise the diligence of a good father of a family in the selection and supervision of his driver. He prayed for ₱30,000 indemnity for his wife’s death, ₱38,441.50 actual expenses, ₱1,113.80 medical expenses, moral and exemplary damages of ₱50,000 each, ₱20,000 attorney’s fees and ₱5,000 litigation expenses.

The Third-Party Complaint: Tiu and Laspiñas filed a third-party complaint against Philippine Phoenix Surety and Insurance, Inc. (the insurer), Benjamin Condor, and Sergio Pedrano. They alleged that Laspiñas drove at a moderate and normal speed; that the cargo truck was parked in a slanted manner with its rear portion almost in the middle of the highway and without an early warning device; that Laspiñas applied brakes and swerved but could not avoid the collision. They claimed Condor and Pedrano were jointly and severally liable for recklessly and imprudently parking the truck in violation of Section 34(g) of the Land Transportation and Traffic Code, and sought contribution, indemnification, or reimbursement from the insurer under a common carrier liability insurance policy. PPSII admitted the existence of the insurance contract but claimed it had already settled the claims of other injured passengers and that respondent Arriesgado’s claim was beyond the scheduled indemnity. The trial court found no evidence against PPSII and did not rule on its liability. The Court of Appeals held that no evidence had been presented against PPSII and thus absolved it.

Trial and Appellate Findings: The trial court found that Laspiñas was driving at a fast speed; that he could have easily swerved left to avoid the collision; that the absence of an early warning device near the truck was not sufficient to impute negligence to Pedrano because the tail lights were on and the area was well-lit by street lamps; and that Tiu failed to prove the diligence of a good father of a family in the selection and supervision of his driver. The Court of Appeals affirmed these findings, reduced the moral and exemplary damages, and held that respondent PPSII had not been proven liable.

• Negligence of Third-Party Respondents: Petitioners argued that respondents Condor and Pedrano were negligent because the cargo truck lacked an early warning device or built-in reflectors and was parked in an oblique manner with its rear almost at the center of the road, in violation of Section 34(g) of the Land Transportation and Traffic Code and Article 2185 of the Civil Code. They maintained that this negligence was the proximate cause of the collision and created a presumption of negligence on the part of Condor in supervising his employee, which had not been rebutted; consequently, Condor and Pedrano should be held jointly and severally liable to respondent Arriesgado.

• Lack of Negligence on the Part of Petitioners: Petitioners contended that expert evidence was necessary to prove that Laspiñas drove at an excessive speed, and that in the absence of such evidence, the appellate court could not properly conclude negligence from the damage to the truck alone. They further asserted that Tiu presented evidence demonstrating that he exercised the diligence of a good father of a family in selecting and supervising his drivers.

• Exemplary Damages: Petitioners argued that there was no legal or factual basis for the award of exemplary damages because no evidence showed Tiu acted in a fraudulent, reckless, or oppressive manner, or that he had active participation in any negligent act of his driver.

• Insurer’s Liability: Petitioners contended that PPSII admitted in its answer that it had settled the claims of other injured passengers, and therefore it should also settle respondent Arriesgado’s claim in accordance with the scheduled indemnity under the insurance contract instead of denying it outright.

• Respondent Arriesgado’s Arguments: Arriesgado contended that the petitioners’ assigned errors raised questions of fact not reviewable in a Rule 45 petition. He invoked equity and justice, and further argued that if any error were to be reviewed, the Court should restore the original awards of ₱50,000 for moral damages and ₱50,000 for exemplary damages. He also pointed out that Condor, Pedrano, and PPSII were not parties to the contract of carriage and he had no cause of action against them; only Tiu and Laspiñas, as driver and operator of the bus, should be sued for failure to transport the spouses safely.

• Respondents Condor and Pedrano’s Arguments: They asserted that the proximate cause of the accident was the fast speed at which Laspiñas drove the bus, as correctly found by the Court of Appeals. They claimed that even if the truck lacked an early warning device, that circumstance could not have prevented the collision. Condor further argued that he had always observed the required diligence in the selection and supervision of his employees and that he was not a party to the contract of carriage between petitioners and Arriesgado.

• Respondent PPSII’s Arguments: PPSII maintained that it had settled all claims of the injured in accordance with the insurance contract. It did not deny Arriesgado’s claim but emphasized that its liability should be within the scheduled limits of indemnity under the policy. It argued that while insurance contracts are contracts of indemnity, the measure of the insurer’s liability is determined by the insured’s compliance with the terms thereof.

• Negligence of Condor and Pedrano: Whether respondents Condor and Pedrano were negligent in parking the cargo truck and whether they should be held liable to respondent Arriesgado or to petitioners.

• Negligence of Petitioners: Whether petitioners Tiu and Laspiñas were guilty of negligence and liable for breach of contract of carriage.

• Damages: Whether the award of exemplary damages, attorney’s fees, and litigation expenses was warranted.

• Insurer’s Liability: Whether respondent Philippine Phoenix Surety and Insurance, Inc. is liable to respondent Arriesgado or to petitioner Tiu under the compulsory motor vehicle liability insurance policy.

• Negligence of Condor and Pedrano: The trial and appellate courts erred in failing to find negligence on the part of respondent Pedrano and respondent Condor. Pedrano left the cargo truck parked in an oblique manner without adequate warning lights, flares, or an early warning device, in violation of Section 34(g) of Republic Act No. 4136 and Letter of Instructions No. 229. This omission created an unreasonable risk to oncoming traffic during the early morning hours. Under Article 2185 of the Civil Code, violation of a traffic regulation gives rise to a presumption of negligence. Such negligence concurrently caused the collision; the absence of warning devices was not an independent intervening cause but a foreseeable consequence of the risk Pedrano created. Under Article 2180, the negligence of an employee gives rise to the presumption of negligence on the part of the employer in the selection and supervision of the employee. Condor and Pedrano were therefore also negligent and, together with petitioners, jointly and severally liable to respondent Arriesgado.

• Negligence of Petitioners: The finding that Laspiñas was driving at a fast and excessive speed was a factual determination that could not be reviewed under Rule 45. The trial court’s conclusion, affirmed by the appellate court, was supported by the damage sustained by the truck and the fact that Laspiñas saw the stalled truck 25 meters away but failed to avoid the collision. Laspiñas also admitted driving at 40 to 50 kilometers per hour after crossing a bridge, where the maximum lawful speed was only 30 kilometers per hour, in violation of Section 35 of R.A. No. 4136. As a common carrier, Tiu owed his passengers the extraordinary diligence required by Articles 1733, 1755, and 1756 of the Civil Code. Upon the happening of the accident, the presumption of negligence arose. Tiu failed to overcome this presumption with proof of the utmost diligence of a very cautious person; the evidence of the driver’s mere efficiency and in-service training was insufficient. The last clear chance doctrine is inapplicable in a passenger’s action for breach of contract of carriage against the carrier; it does not lie to exempt the carrier merely because another person was also negligent.

• Damages: The award of moral damages in the amount of ₱50,000 was properly sustained. Exemplary damages were correctly awarded under Article 2231 of the Civil Code, considering that the driver acted with gross negligence; exemplary damages serve to set an example for the public good and to curb recklessness among common carriers. Attorney’s fees and litigation expenses were likewise merited.

• Insurer’s Liability: PPSII admitted the existence of the insurance contract and did not specifically deny its genuineness and due execution, as required by the Rules of Court. The insurer’s liability is governed by the compulsory motor vehicle liability insurance law and the policy’s scheduled limits of indemnity: ₱12,000 per person and ₱50,000 per accident. PPSII could not simply deny the claim but was obligated to pay within the policy limits. For the death of Felisa Arriesgado, PPSII was liable for ₱12,000 and for the medical expenses of Pedro Arriesgado, ₱1,113.80, or a total of ₱13,113.80. These amounts, when added to the claims PPSII claimed to have settled, did not exceed the ₱50,000 per-accident limit. PPSII’s liability was not solidary with that of the insured beyond these contractual limits because its obligation arises from contract while the carrier’s obligation arises from tort.

• Presumption of Negligence Against Common Carrier — Under Articles 1733, 1755, and 1756 of the Civil Code, a common carrier is presumed to have been at fault or to have acted negligently in case of death of or injuries to passengers. The carrier must prove that it exercised the extraordinary diligence of a very cautious person, with due regard for all circumstances, to overcome the presumption. The bare showing that the driver was efficient and had undergone in-service training does not satisfy this standard.

• Last Clear Chance Inapplicable in Breach of Contract of Carriage — The doctrine of last clear chance applies only in suits 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; it would be inequitable to excuse a negligent driver and his employer on the ground that another driver was likewise negligent.

• Joint and Several Liability of Concurring Tortfeasors and Carrier — When the negligence of a third party concurs with the negligence of the common carrier to cause injury to a passenger, the carrier, its driver, and the third-party tortfeasors are jointly and severally liable to the injured passenger or his heirs. The liability of the third party arises from quasi-delict, while that of the carrier arises from contract; this difference in the source of obligation does not preclude joint and several liability.

• Employer’s Presumed Negligence in Selection and Supervision — The negligence of an employee gives rise to a presumption of negligence on the part of the employer in the selection and supervision of the employee under Article 2180 of the Civil Code. The employer can defeat this presumption only by proving that it observed all the diligence of a good father of a family to prevent damage.

• Liability of CMVLI Insurer Limited to Policy Limits — The direct liability of the insurer under a compulsory motor vehicle liability insurance policy is limited to the extent of the insurance contract and the amounts required by law. The insurer is not liable in solidum with the insured and other tortfeasors beyond the policy limits; its obligation is based on contract, while the liability of the insured or vehicle owner is based on tort.

• “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.” — Reiterating Picart v. Smith, this passage was cited to underscore the standard of care expected of drivers.

• “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.” — Explaining why the doctrine is inapplicable in a breach of contract suit by a passenger.

• “While the immediate beneficiaries of the standard of extraordinary diligence are, of course, the passengers and owners of cargo carried by a common carrier, they are not the only persons that the law seeks to benefit. For if common carriers carefully observed the statutory standard of extraordinary diligence in respect of their own passengers, they cannot help but simultaneously benefit pedestrians and the passengers of other vehicles who are equally entitled to the safe and convenient use of our roads and highways.” — Kapalaran Bus Line v. Coronado, cited to justify the award of exemplary damages to promote public safety.

• Phoenix Construction, Inc. v. Intermediate Appellate Court, 148 SCRA 353 (1987) — Followed. Improper parking of a dump truck without warning lights or reflector devices was held to create an unreasonable risk; the truck driver’s negligence was the proximate cause, and the injured driver’s negligence was merely contributory.

• Poblete v. Fabros, 93 SCRA 200 (1979) — Followed. The negligence of an employee gives rise to a presumption of negligence on the part of the employer in the selection and supervision of the employee under Article 2180 of the Civil Code.

• Government Service Insurance System v. Court of Appeals, 308 SCRA 559 (1999) — Followed. The insurer under a compulsory motor vehicle liability insurance policy is directly liable only up to the limits set by the policy and the law; the insurer cannot be held solidarily liable with the insured and other tortfeasors beyond those limits.

• Fabre, Jr. vs. Court of Appeals, 259 SCRA 426 (1996) — Followed. Concurring negligence of the bus driver and the driver of another vehicle renders both the bus company and the other vehicle’s owner and driver jointly and severally liable to the injured passenger or his heirs, regardless of whether liability sounds in contract or quasi-delict.

• Articles 1733, 1755, and 1756, Civil Code — Establish the extraordinary diligence required of common carriers for the safety of passengers and the presumption of negligence in case of death or injury. Applied to hold petitioner Tiu liable for breach of the contract of carriage because he failed to prove that such extraordinary diligence was observed.

• Article 2180, Civil Code — Imposes liability on employers for the acts of their employees unless the employer proves the diligence of a good father of a family to prevent damage. Applied to find respondent Condor presumptively negligent due to his driver’s negligence, which he failed to rebut.

• Article 2179, Civil Code — Rejects the common law concept of contributory negligence as an absolute bar and provides for mitigation of damages. Cited to explain the inapplicability of the last clear chance doctrine.

• Article 2185, Civil Code — Provides that a person driving a motor vehicle is presumed negligent if at the time of the mishap he was violating any traffic regulation. Applied to both Laspiñas and Pedrano, who were found to have violated traffic statutes.

• Articles 2229 and 2231, Civil Code — Authorize exemplary damages in quasi-delicts where the defendant acted with gross negligence. Served as the basis for sustaining the award of exemplary damages.

• Section 34(g), Republic Act No. 4136 — Requires that appropriate parking lights or flares visible 100 meters away be displayed whenever a vehicle is parked on highways in a manner endangering passing traffic. Violated by respondent Pedrano, giving rise to a presumption of negligence.

• Section 35, Republic Act No. 4136 — Mandates that a driver operate a motor vehicle at a careful and prudent speed, not greater than is reasonable and proper under the conditions, and not greater than will permit stopping within the assured clear distance ahead. Violated by petitioner Laspiñas.

• Section 8, Rule 8, Rules of Court — Provides that the genuineness and due execution of a written instrument attached to a pleading are deemed admitted unless specifically denied under oath. Prevented the insurer from disputing the existence and terms of the insurance contract.

Justice Reynato S. Puno (on official leave); Justice Ma. Alicia Austria-Martinez (Acting Chairman); Justice Dante O. Tinga; Justice Minita V. Chico-Nazario.

N/A — The decision was unanimously concurred in.