MERCURY DRUG CORPORATION AND ROLANDO DEL ROSARIO VS.

SPS
RICHARD HUANG AND CARMEN HUANG AND STEPHEN HUANG
GR NO. 172122; JUNE 22, 2007
FACTS: Petitioner Mercury Drug is the registered owner of a truck who was driven by herein co-
petitioner Rolando Del Rosario who figured with an accident somewhere in Taguig with the son of
herein respondents Sps. Huang.
At the time of the accident, petitioner Del Rosario only had a Traffic Violation Receipt
(TVR) as his driver’s license had been confiscated because he had been previously apprehended for
reckless driving.
Respondent Stephen Huang sustained massive injuries and is paralyzed for life from his
chest down and requires continuous medical and rehabilitation treatment.
Respondents faulted petitioner Del Rosario for committing gross negligence and reckless
imprudence while driving, and petitioner Mercury Drug for failing to exercise the diligence of a
good father of a family in the selection and supervision of its driver.
In contrast, petitioners allege that the immediate and proximate cause of the accident was
respondent Stephen Huang’s recklessness.
RTC ordered herein petitioners, to jointly and severally pay respondents actual,
compensatory, moral, exemplary, attorneys fees and expense. CA affirmed but reduced the award
of moral damages to 1M. Hence this petition.
ISSUES:
1. WON MERCURY FAILED TO EXERCISE THE DILIGENCE REQUIRED IN
SUPERVISING ITS EMPLOYEES;
2. WON THE AWARD OF MORAL AND EXEMPLARY DAMAGES AND
ATTORNEYS FEES IS PROPER;
RULING: YES, MERCURY AND ROLANDO ARE BOTH NEGLIGENT.
The liability of the employer under Art. 2180 of the Civil Code is direct or immediate. It is
not conditioned on a prior recourse against the negligent employee, or a prior showing of
insolvency of such employee. It is also joint and solidary with the employee.
To be relieved of liability, petitioner Mercury Drug should show that it exercised the
diligence of a good father of a family, both in the selection of the employee and in the supervision
of the performance of his duties. Thus, in the selection of its prospective employees, the
employer is required to examine them as to their qualifications, experience, and
service records.
With respect to the supervision of its employees, the employer should formulate standard
operating procedures, monitor their implementation, and impose disciplinary measures for their
breach. To establish compliance with these requirements, employers must submit
concrete proof, including documentary evidence showing that they are adhering to
such standard operating procedures.
However, petitioner Mercury Drug failed to show that it exercised due
diligence on the supervision and discipline over its employees. In fact, on the day of the
accident, petitioner Del Rosario was driving without a license. He was holding a TVR for reckless
driving. He testified that he reported the incident to his superior, but nothing was done about it.
Therefore, SC affirms on the finding that petitioner Mercury Drug has failed to discharge its
burden of proving that it exercised due diligence in the selection and supervision of its employee,
petitioner Del Rosario.
2.YES, the award of moral and exemplary damages is proper. Moral damages are designed to
compensate and alleviate in some way the physical suffering, mental anguish, fright, serious
anxiety, besmirched reputation, wounded feelings, moral shock, social humiliation, and similar
injury unjustly caused a person. Although incapable of pecuniary computation, they must
be proportionate to the suffering inflicted.
On the matter of exemplary damages, the Civil Code provides that in cases of quasi-delicts,
exemplary damages may be granted if the defendant acted with gross negligence,
and based on the records and evidence admitted to the court, petitioner DEL Rosario
acted with gross negligence and such Wanton acts committed by petitioner Del Rosario
need to be suppressed; and employers like petitioner Mercury Drug should be more
prudent in the observance of due diligence in the selection and supervision of their
employees. The award of exemplary damages in favor of the respondents is therefore justified.

PHILIPPINE NATIONAL CONSTRUCTION CORPORATION VS. CA, ARNAIZ,

LATAGAN GENERALAO AND PAMPANGA SUGAR EVT COMPANY, CORP
 GR NO. 159270; AUGUST 22, 2005
FACTS: Pampanga Sugar Development Company, Inc. (PASUDECO) transports sugarcane from
Mabalacat and Magalang, Pampanga. When the Mount Pinatubo eruption of 1991 heavily damaged
the national bridges along Abacan-Angeles and Sapang Maragul via Magalang, Pampanga, it
requested permission from the Toll Regulatory Board (TRB) for its trucks to enter and pass
through the North Luzon Expressway (NLEX) via Dau-Sta. Ines from Mabalacat, and via Angeles
from Magalang, and exit at San Fernando going to its milling factory.
Thereafter PASUDECO and NLEX to allow the trucks of PASUDECO enter and pass through
NLEX with certain terms and conditions, to wit: (5) Accidents or damages to the toll facilities
arising out of any activity related to this approval shall be responsibility of PASUDECO.
Sometime in 1993, an accident involving herein respondent occurred along NLEX brought by
flattened scattered sugarcane, which sugarcane was caused by PASUDECO.
Respondents filed for damages against PASUDECO and herein petitioner, alleging that petitioner
failed to keep and maintain the NLEX safe for motorists when it allowed PASUDECO trucks with
uncovered and unsecured sugarcanes to pass through it, that PASUDECO negligently spilled
sugarcanes on the NLEX and PNCC failed to put up emergency devises to sufficiently warn
approaching motorists of the existence of spillage.
PNCC on their answer alleged that respondent on the other hand was guilty of contributory
negligence in driving his car at unreasonable speed.
RTC absolve PNCC and ordered PASUDECO to pay herein respondents actual, moral and
attorneys fees.
On appeal, CA modify RTC’s decision ruling that both PNCC and PASUDECO to jointly and
severally liable to herein respondent. Hence, this petition
ISSUE: WON PNCC should be jointly and severally liable with PASUDECO despite
the existence of their MOA;
RULING: Yes, PNCC should be jointly and severally liable with PASUDECO.
The petitioner is the grantee of a franchise, giving it the right, privilege and authority to
construct, operate and maintain toll facilities covering the expressways, collectively known as the
NLEX. Concomitant thereto is its right to collect toll fees for the use of the said expressways and its
obligation to keep it safe for motorists.
The test by which to determine the existence of negligence in a particular case may be stated
as follows: Did the defendant in doing the alleged negligent act use that reasonable care and
caution which an ordinarily prudent person would have used in the same situation? If not, then he
is guilty of negligence. The law here in effect adopts the standard supposed to be supplied by the
imaginary conduct of the discreet paterfamilias of the Roman law. The existence of negligence in a
given case is not determined by reference to the personal judgment of the actor in the situation
before him. The law considers what would be reckless, blameworthy, or negligent in the man of
ordinary intelligence and prudence and determines liability by that.
In the case at bar, it is clear that the petitioner failed to exercise the requisite diligence in
maintaining the NLEX safe for motorists. The lighted cans and lane dividers on the highway were
removed even as flattened sugarcanes lay scattered on the ground.36 The highway was still wet
from the juice and sap of the flattened sugarcanes.37 The petitioner should have foreseen that the
wet condition of the highway would endanger motorists passing by at night or in the wee hours of
the morning.
 The petitioner cannot escape liability under the MOA between PASUDECO and
TRB, since respondent Latagan was not a party thereto.

VICTORY LINER, INC. VS. GAMMAD ET. AL

GR NO. 159636; NOVEMBER 25, 2004
FACTS: Respondent Rosalito Gammad show that on March 14, 1996, his wife Marie Grace
Pagulayan-Gammad, was on board an air-conditioned Victory Liner bus bound for Tuguegarao,
Cagayan from Manila. At about 3:00 a.m., the bus while running at a high speed fell on a ravine
somewhere in Barangay Baliling, Sta. Fe, Nueva Vizcaya, which resulted in the death of Marie
Grace and physical injuries to other passengers.
Respondent heirs of the deceased filed a complaint for damages arising from culpa
contractual against petitioner. Petitioner claimed that the incident was purely accidental and that
it has always exercised extraordinary diligence in its 50 years of operation.
RTC ruled in favor of herein respondents and ordered Victory Liner to pay actual, death
indemnity, moral, exemplary and compensatory damages as well as attorneys fess and cost of the
suit. CA affirmed.
ISSUE:
1) WON PETITIONER SHOULD BE HELD LIABLE FOR BREACH OF CONTRACT
OF CARRIAGE;
2) WON THE AWARD OF DAMAGES WAS PROPER.
RULING:
1) YES, petitioner was correctly found liable for breach of contract of carriage.
A common carrier is bound to carry its passengers safely as far as human care and foresight can
provide, using the utmost diligence of very cautious persons, with due regard to all the
circumstances. In a contract of carriage, it is presumed that the common carrier was at fault or was
negligent when a passenger dies or is injured. Unless the presumption is rebutted, the court need
not even make an express finding of fault or negligence on the part of the common carrier. This
statutory presumption may only be overcome by evidence that the carrier exercised extraordinary
diligence.
In the case at bar, there is no evidence to rebut the statutory presumption that the proximate
cause of Marie Grace’s death was the negligence of petitioner. Hence, the courts below correctly
ruled that petitioner was guilty of breach of contract of carriage.
2.) DAMAGES SHOULD BE MODIFIED.
Article 176435 in relation to Article 220636 of the Civil Code, holds the common carrier in
breach of its contract of carriage that results in the death of a passenger liable to pay the following:
(1) indemnity for death, (2) indemnity for loss of earning capacity, and (3) moral damages.
In the present case, respondent heirs of the deceased are entitled to indemnity for the death of
Marie Grace which under current jurisprudence is fixed at P50,000.00.37
The award of compensatory damages for the loss of the deceased’s earning capacity should be
deleted for lack of basis. As a rule, documentary evidence should be presented to substantiate
the claim for damages for loss of earning capacity. By way of exception, damages for loss of earning
capacity may be awarded despite the absence of documentary evidence when (1) the deceased is
self-employed earning less than the minimum wage under current labor laws, and judicial notice
may be taken of the fact that in the deceased’s line of work no documentary evidence is available;
or (2) the deceased is employed as a daily wage worker earning less than the minimum wage under
current labor laws.

The actual damages awarded by the trial court reduced by the Court of Appeals should be
further reduced. n People v. Duban,51 it was held that only substantiated and proven expenses or
those that appear to have been genuinely incurred in connection with the death, wake or burial of
the victim will be recognized. Hence, actual damages should be further reduced to P78,160.00,54
which was the amount supported by official receipts.

COLLEGE ASSURANCE PLAN AND COMPREHENSIVE ANNUITY PLAN AND

PENSION CORP. VS. BELFRANLT DEVT. INC.
 GR NO. 155604; NOVEMBER 22, 2007
FACTS: Belfranlt Development, Inc. is the owner of Belfranlt Building in Angeles City, Pampanga.
It leased to petitioners College Assurance Plan Phil., Inc. and Comprehensive Annuity Plans and
Pension Corporation several units on the second and third floors of the building.
Sometime in 1994, fire destroyed portions of the building, including the third floor units being
occupied by petitioners. Field Investigation Report disclosed that the fire was due to accident
which was caused by overheated coffee percolator.
Based on the foregoing reports, respondent sent petitioners sent to notice to vacate the leased
premises to make way for repairs, and to pay reparation estimated at P1.5 million.
Petitioners vacated the leased premises, including the units on the second floor, but they did not
act on the demand for reparation.
After the demand of respondent remained unheeded, they then filed with the RTC a complaint
against petitioners for damages.
RTC ruled in favor of respondent ordering petitioner to pay rehabilitation costs, unpaid monthly
rentals, moral, exemplary and actual damages. On appeal, CA affirmed the decision of RTC,
HOWEVER IT DELETED the award of actual and compensatory damages amounting 2.2 million
as cost of rehabilitation of Belfranlt Building and the 8,400 per month reimbursement of unpaid
rentals on the areas leased by other tenants, as well as moral, exemplary damages and attorneys
fees.
Hence this petition.
ISSUE: WON CA ERRED IN HOLDING PETITIONER LIABLE FOR CERTAIN ACTUAL
DAMAGES DESPITE FAILURE TO PROVE THE DAMAGE AS ALLEGED;
RULING: CA IS CORRECT. The CA deleted the award of actual damages of P2.2 million which
the RTC had granted respondent to cover costs of building repairs. In lieu of actual damages,
temperate damages in the amount of P500,000.00 were awarded by the CA.
Temperate or moderate damages may be availed when some pecuniary loss has been
suffered but its amount cannot, from the nature of the case, be proved with certainty. The amount
thereof is usually left to the discretion of the courts but the same should be reasonable, bearing in
mind that temperate damages should be more than nominal but less than compensatory. Without
a doubt, respondent suffered some form of pecuniary loss for the impairment of the structural
integrity of its building as a result of the fire. However, as correctly pointed out by the CA, because
of respondent's inability to present proof of the exact amount of such pecuniary loss, it may only be
entitled to temperate damages in the amount of P500,000.00, which we find reasonable and just.