G.R. No. 170071 and G.R. No. 170125; March 9, 2011
Case Parties/Title:

G.R. No. 170071 : HEIRS OF JOSE MARCIAL K. OCHOA namely: RUBY B. OCHOA, MICAELA B. OCHOA and JOMAR B. OCHOA, Petitioners, vs. G & S TRANSPORT CORPORATION, Respondent.
G.R. No. 170125: G & S TRANSPORT CORPORATION, Petitioner, vs. HEIRS OF JOSE MARCIAL K. OCHOA namely: RUBY B. OCHOA, MICAELA B. OCHOA and JOMAR B. OCHOA, Respondents.

FACTS

On the night of March 10, 1995, Jose Marcial K. Ochoa boarded an Avis taxicab owned and operated by G & S Transport Corporation at the Manila Domestic Airport, bound for Teacher’s Village, Quezon City. While traversing the Boni Serrano (Santolan) fly-over along EDSA in Quezon City at high speed, the taxicab, driven by Bibiano Padilla, Jr., attempted to overtake a ten-wheeler cargo truck. Due to the narrow space between the truck and the fly-over’s left-side railing, the taxicab could not pass. Because of its speed, Padilla lost control; to avoid colliding with the truck, he turned the wheel left, causing the taxicab to ram the railing and fall onto EDSA below. The vehicle split into two. Jose Marcial was declared dead on arrival at the hospital; the cause was a vehicular accident. His heirs (wife and two minor children) demanded indemnity from G & S, and upon its failure to pay, filed a Complaint for Damages before the RTC of Pasig City, alleging breach of contract of carriage (and alternatively, quasi-delict) due to failure to exercise extraordinary diligence. G & S, in its Answer, claimed the accident was caused by a fortuitous event or the negligence of a delivery van that allegedly bumped the taxicab, and that it exercised the diligence of a good father of a family in selecting and supervising its employees.
The RTC found the accident was caused by Padilla’s negligence, not a fortuitous event, and that G & S failed to prove it exercised the required diligence. It held G & S liable for breach of contract and awarded civil indemnity for death and loss of earning capacity, but initially denied actual, moral, and exemplary damages for lack of proof or legal basis. Upon the heirs’ Motion for Partial Reconsideration, the RTC modified its decision to award moral and exemplary damages. Both parties appealed to the Court of Appeals. The CA affirmed the RTC’s finding of liability but modified the damages: it deleted the awards for loss of earning capacity and attorney’s fees for lack of sufficient evidence, but sustained the awards for civil indemnity, moral damages, and exemplary damages. Both parties filed Petitions for Review before the Supreme Court.

ISSUE

The core issue is whether G & S Transport Corporation is liable for damages arising from the death of passenger Jose Marcial Ochoa due to a breach of its contract of carriage, and the propriety of the awarded damages.

RULING

The Supreme Court DENIED the petition in G.R. No. 170071 (filed by the Heirs of Ochoa) and GRANTED the petition in G.R. No. 170125 (filed by G & S Transport Corporation) in part. The Court modified the CA decision.
1. On Liability: The Court affirmed the findings of the RTC and CA that G & S is liable for breach of contract of carriage. As a common carrier, G & S is bound to observe extraordinary diligence in transporting passengers safely. The accident was not due to a fortuitous event but to the negligence of its driver, Bibiano Padilla, Jr., who was driving at high speed and attempted a dangerous overtaking maneuver on a fly-over. G & S failed to overcome the presumption of negligence attendant in a breach of contract of carriage. Its defense of having exercised diligence in the selection and supervision of employees was insufficient; the documents it presented (e.g., driver’s licenses, clearances, seminar certificates) pertained only to the qualifications and hiring process, not to actual supervision and control over the driver’s conduct at the time of the accident.
2. On Damages:
* Civil Indemnity: The award of ₱50,000.00 as civil indemnity for the death of Jose Marcial Ochoa was affirmed.
* Loss of Earning Capacity: The Court REINSTATED the RTC’s award of ₱6,537,244.96 for loss of earning capacity. The CA erred in deleting this award. The heirs presented sufficient evidence, including a Certification from the United States Agency for International Development (USAID) proving Jose Marcial’s annual income of $36,576.00 (converted to Pesos), to support the computation using the formula: Net Earning Capacity = [2/3 x (80 – Age at Death)] x Gross Annual Income – Reasonable Living Expenses (estimated at 50% of gross income when not proved). The Court found the USAID Certification to be a public document deserving of prima facie weight.
* Moral Damages: The award of ₱300,000.00 as moral damages was AFFIRMED. Moral damages are recoverable in breach of contract cases that result in death, given the mental anguish suffered by the heirs.
* Exemplary Damages: The award of ₱50,000.00 as exemplary damages was AFFIRMED. The driver’s gross negligence in operating the vehicle justifies this award to serve as a deterrent.
* Attorney’s Fees: The award of ₱100,000.00 as attorney’s fees was REINSTATED. The heirs were compelled to litigate to protect their interests due to G & S’s refusal to acknowledge its liability despite a valid demand.
* Actual Damages (Funeral Expenses): The claim for actual damages was correctly denied by the lower courts for lack of supporting receipts.
Final Disposition: G & S Transport Corporation is ORDERED to pay the Heirs of Jose Marcial K. Ochoa: (1) ₱50,000.00 as civil indemnity; (2) ₱6,537,244.96 for loss of earning capacity; (3) ₱300,000.00 as moral damages; (4) ₱50,000.00 as exemplary damages; (5) ₱100,000.00 as attorney’s fees; and (6) costs of suit.