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1207JOINT/SOLIDARY OBLIGATIONS

G.R. No. 72275 November 13, 1991

PACIFIC BANKING CORPORATION, petitioner,vs.

HON INTERMEDIATE APPELLATE COURT AND ROBERTO REGALA, JR., respondents.

Ocampo, Dizon & Domingo for petitioner.

Angara, Concepcion, Regala & Cruz for private respondent.

MEDIALDEA, J.:p

This is a petition for review on certiorari of the decision (pp 21-31, Rollo) of the Intermediate AppellateCourt (now Court of Appeals) in AC-G.R. C.V. No. 02753, 1which modified the decision of the trial court

against herein private respondent Roberto Regala, Jr., one of the defendants in the case for sum ofmoney filed by Pacific Banking Corporation.

The facts of the case as adopted by the respondent appellant court from herein petitioner's brief beforesaid court are as follows:

On October 24, 1975, defendant Celia Syjuco Regala (hereinafter referred to as CeliaRegala for brevity), applied for and obtained from the plaintiff the issuance and use ofPacificard credit card (Exhs. "A", "A-l",), under the Terms and Conditions Governing theIssuance and Use of Pacificard (Exh. "B" and hereinafter referred to as Terms andConditions), a copy of which was issued to and received by the said defendant on thedate of the application and expressly agreed that the use of the Pacificard is governed bysaid Terms and Conditions. On the same date, the defendant-appelant Robert Regala,

Jr., spouse of defendant Celia Regala, executed a "Guarantor's Undertaking" (Exh. "A-1-a") in favor of the appellee Bank, whereby the latter agreed "jointly and severally of CeliaAurora Syjuco Regala, to pay the Pacific Banking Corporation upon demand, any and allindebtedness, obligations, charges or liabilities due and incurred by said Celia AuroraSyjuco Regala with the use of the Pacificard, or renewals thereof, issued in her favor bythe Pacific Banking Corporation". It was also agreed that "any changes of or novation inthe terms and conditions in connection with the issuance or use of the Pacificard, or anyextension of time to pay such obligations, charges or liabilities shall not in any mannerrelease me/us from responsibility hereunder, it being understood that I fully agree to suchcharges, novation or extension, and that this understanding is a continuing one and shallsubsist and bind me until the liabilities of the said Celia Syjuco Regala have been fullysatisfied or paid.

Plaintiff-appellee Pacific Banking Corporation has contracted with accredited businessestablishments to honor purchases of goods and/or services by Pacificard holders andthe cost thereof to be advanced by the plaintiff-appellee for the account of the defendantcardholder, and the latter undertook to pay any statements of account rendered by theplaintiff-appellee for the advances thus made within thirty (30) days from the date of thestatement, provided that any overdue account shall earn interest at the rate of 14% perannum from date of default.

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The defendant Celia Regala, as such Pacificard holder, had purchased goods and/orservices on credit (Exh. "C", "C-l" to "C-112") under her Pacificard, for which the plaintiffadvanced the cost amounting to P92,803.98 at the time of the filing of the complaint.

In view of defendant Celia Regala's failure to settle her account for the purchases madethru the use of the Pacificard, a written demand (Exh. "D") was sent to the latter and also

to the defendant Roberto Regala, Jr. (Exh. " ") under his "Guarantor's Undertaking."

A complaint was subsequently filed in Court for defendant's (sic) repeated failure to settletheir obligation. Defendant Celia Regala was declared in default for her failure to file heranswer within the reglementary period. Defendant-appellant Roberto Regala, Jr., on theother hand, filed his Answer with Counterclaim admitting his execution of the"Guarantor's Understanding", "but with the understanding that his liability would be limitedto P2,000.00 per month."

In view of the solidary nature of the liability of the parties, the presentation ofevidence ex-parte as against the defendant Celia Regala was jointly held with the trial ofthe case as against defendant Roberto Regala.

After the presentation of plaintiff's testimonial and documentary evidence, fire struck theCity Hall of Manila, including the court where the instant case was pending, as well as allits records.

Upon plaintiff-appellee's petition for reconstitution, the records of the instant case wereduly reconstituted. Thereafter, the case was set for pre-trial conference with respect tothe defendant-appellant Roberto Regala on plaintiff-appellee's motion, after furnishing thelatter a copy of the same. No opposition thereto having been interposed by defendant-appellant, the trial court set the case for pre-trial conference. Neither did said defendant-appellant nor his counsel appear on the date scheduled by the trial court for saidconference despite due notice. Consequently, plaintiff-appellee moved that thedefendant-appellant Roberto Regala he declared as in default and that it be allowed topresent its evidence ex-parte, which motion was granted. On July 21, 1983, plaintiff-

appellee presented its evidence ex-parte. (pp. 23-26,Rollo)

After trial, the court a quorendered judgment on December 5, 1983, the dispositive portion of whichreads:

WHEREFORE, the Court renders judgment for the plaintiff and against the defendantscondemning the latter, jointly and severally, to pay said plaintiff the amount ofP92,803.98, with interest thereon at 14% per annum, compounded annually, from thetime of demand on November 17, 1978 until said principal amount is fully paid; plus 15%of the principal obligation as and for attorney's fees and expense of suit; and the costs.

The counterclaim of defendant Roberto Regala, Jr. is dismissed for lack of merit.

SO ORDERED. (pp. 22-23, Rollo)

The defendants appealed from the decision of the court a quoto the Intermediate Appellate Court.

On August 12, 1985, respondent appellate court rendered judgment modifying the decision of the trialcourt. Private respondent Roberto Regala, Jr. was made liable only to the extent of the monthly creditlimit granted to Celia Regala, i.e., at P2,000.00 a month and only for the advances made during the one

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year period of the card's effectivity counted from October 29, 1975 up to October 29, 1976. Thedispositive portion of the decision states:

WHEREFORE, the judgment of the trial court dated December 5, 1983 is modified onlyas to appellant Roberto Regala, Jr., so as to make him liable only for the purchasesmade by defendant Celia Aurora Syjuco Regala with the use of the Pacificard from

October 29, 1975 up to October 29, 1976 up to the amount of P2,000.00 per month only,with interest from the filing of the complaint up to the payment at the rate of 14% perannum without pronouncement as to costs. (p. 32, Rollo)

A motion for reconsideration was filed by Pacific Banking Corporation which the respondent appellatecourt denied for lack of merit on September 19, 1985 (p. 33, Rollo).

On November 8, 1985, Pacificard filed this petition. The petitioner contends that while the appellate courtcorrectly recognized Celia Regala's obligation to Pacific Banking Corp. for the purchases of goods andservices with the use of a Pacificard credit card in the total amount of P92,803.98 with 14% interest perannum, it erred in limiting private respondent Roberto Regala, Jr.'s liability only for purchases made byCelia Regala with the use of the card from October 29, 1975 up to October 29, 1976 up to the amount ofP2,000.00 per month with 14% interest from the filing of the complaint.

There is merit in this petition.

The pertinent portion of the "Guarantor's Undertaking" which private respondent Roberto Regala, Jr.signed in favor of Pacific Banking Corporation provides:

I/We, the undersigned, hereby agree, jointly and severally with Celia Syjuco Regala topay the Pacific Banking Corporation upon demand any and all indebtedness, obligations,charges or liabilities due and incurred by said Celia Syjuco Regala with the use of thePacificard or renewals thereof issued in his favor by the Pacific Banking Corporation. Anychanges of or Novation in the terms and conditions in connection with the issuance oruse of said Pacificard, or any extension of time to pay such obligations, charges orliabilities shall not in any manner release me/us from the responsibility hereunder, it being

understood that the undertaking is a continuing one and shall subsist and bind me/usuntil all the liabilities of the said Celia Syjuco Regala have been fully satisfied or paid. (p.12,Rollo)

The undertaking signed by Roberto Regala, Jr. although denominated "Guarantor's Undertaking," was insubstance a contract of surety. As distinguished from a contract of guaranty where the guarantor bindshimself to the creditor to fulfill the obligation of the principal debtor only in case the latter should fail to doso, in a contract of suretyship, the surety binds himself solidarily with the principal debtor (Art. 2047, CivilCode of the Philippines).

We need not look elsewhere to determine the nature and extent of private respondent Roberto Regala,Jr.'s undertaking. As a surety he bound himself jointly and severally with the debtor Celia Regala "to paythe Pacific Banking Corporation upon demand, any and all indebtedness, obligations, charges or liabilitiesdue and incurred by said Celia Syjuco Regala with the use of Pacificard or renewals thereof issued in(her) favor by Pacific Banking Corporation." This undertaking was also provided as a condition in theissuance of the Pacificard to Celia Regala, thus:

5. A Pacificard is issued to a Pacificard-holder against the joint and several signature of athird party and as such, the Pacificard holder and the guarantor assume joint and severalliabilities for any and all amount arising out of the use of the Pacificard. (p. 14, Rollo)

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The respondent appellate court held that "all the other rights of the guarantor are not thereby lost by theguarantor becoming liable solidarily and therefore a surety." It further ruled that although the surety'sliability is like that of a joint and several debtor, it does not make him the debtor but still the guarantor (orthe surety), relying on the case of Government of the Philippines v. Tizon. G.R. No. L-22108, August 30,1967, 20 SCRA 1182. Consequently, Article 2054 of the Civil Code providing for a limited liability on thepart of the guarantor or debtor still applies.

It is true that under Article 2054 of the Civil Code, "(A) guarantor may bind himself for less, but not formore than the principal debtor, both as regards the amount and the onerous nature of the conditions. 2Itis likewise not disputed by the parties that the credit limit granted to Celia Regala was P2,000.00 permonth and that Celia Regala succeeded in using the card beyond the original period of its effectivity,October 29, 1979. We do not agree however, that Roberto Jr.'s liability should be limited to that extent.Private respondent Roberto Regala, Jr., as surety of his wife, expressly bound himself up to the extent ofthe debtor's (Celia) indebtedness likewise expressly waiving any "discharge in case of any change ornovation of the terms and conditions in connection with the issuance of the Pacificard creditcard." Roberto, in fact, made his commitment as a surety a continuing one, binding upon himself until allthe liabilities of Celia Regala have been fully paid. All these were clear under the "Guarantor'sUndertaking" Roberto signed, thus:

. . . Any changes of or novation in the terms and conditions in connection with theissuance or use of said Pacificard, or any extension of time to pay such obligations,charges or liabilities shall not in any manner release me/us from the responsibilityhereunder, it being understood that the undertaking is a continuing one and shall subsistand bind me/us until all the liabilities of the said Celia Syjuco Regala have been fullysatisfied or paid.(p. 12, supra; emphasis supplied)

Private respondent Roberto Regala, Jr. had been made aware by the terms of the undertaking of futurechanges in the terms and conditions governing the issuance of the credit card to his wife and that,notwithstanding, he voluntarily agreed to be bound as a surety. As in guaranty, a surety may secureadditional and future debts of the principal debtor the amount of which is not yet known (see Article2053, supra).

The application by respondent court of the ruling in Government v. Tizon, suprais misplaced. It was heldin that case that:

. . . although the defendants bound themselves in solidum, the liability of the Surety underits bond would arise only if its co-defendants, the principal obligor, should fail to complywith the contract. To paraphrase the ruling in the case of Municipality of Orion vs.Concha, the liability of the Surety is "consequent upon the liability" of Tizon, or "sodependent on that of the principal debtor" that the Surety "is considered in law as beingthe same party as the debtor in relation to whatever is adjudged, touching the obligationof the latter"; or the liabilities of the two defendants herein "are so interwoven anddependent as to be inseparable." Changing the expression, if the defendants are heldliable, their liability to pay the plaintiff would be solidary, but the nature of the Surety'sundertaking is such that it does not incur liability unless and until the principal debtor is

held liable.

A guarantor or surety does not incur liability unless the principal debtor is held liable. It is in this sensethat a surety, although solidarily liable with the principal debtor, is different from the debtor. It does notmean, however, that the surety cannot be held liable to the same extent as the principal debtor. Thenature and extent of the liabilities of a guarantor or a surety is determined by the clauses in the contract ofsuretyship(see PCIB v. CA, L-34959, March 18, 1988, 159 SCRA 24).

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ACCORDINGLY, the petition is GRANTED. The questioned decision of respondent appellate court isSET ASIDE and the decision of the trial court is REINSTATED.

SO ORDERED.

[G.R. No. 101723. May 11, 2000]

INDUSTRIAL MANAGEMENT INTERNATIONAL DEVELOPMENT CORP. (INIMACO), peti t ioner,vs. NATIONAL LABOR RELATIONS COMMISSION, (Fourth Division) Cebu City, and ENRIQUESULIT, SOCORRO MAHINAY, ESMERALDO PEGARIDO, TITA BACUSMO, GINO NIERE, VIRGINIABACUS, ROBERTO NEMENZO, DARIO GO, and ROBERTO ALEGARBES, respondents.

D E C I S I O N

BUENA, J.:

This is a petition for certiorariassailing the Resolution dated September 4, 1991 issued by the NationalLabor Relations Commission in RAB-VII-0711-84 on the alleged ground that it committed a grave abuseof discretion amounting to lack of jurisdiction in upholding the Alias Writ of Execution issued by the LaborArbiter which deviated from the dispositive portion of the Decision dated March 10, 1987, thereby holdingthat the liability of the six respondents in the case below is solidary despite the absence of the word"solidary" in the dispositive portion of the Decision, when their liability should merely be joint. S-jcj

The factual antecedents are undisputed: Supr-eme

In September 1984, private respondent Enrique Sulit, Socorro Mahinay, Esmeraldo Pegarido, TitaBacusmo, Gino Niere, Virginia Bacus, Roberto Nemenzo, Dariogo, and Roberto Alegarbes filed acomplaint with the Department of Labor and Employment, Regional Arbitration Branch No. VII in Cebu

City against Filipinas Carbon Mining Corporation, Gerardo Sicat, Antonio Gonzales, Chiu Chin Gin, LoKuan Chin, and petitioner Industrial Management Development Corporation (INIMACO), for payment ofseparation pay and unpaid wages. Sc-jj

In a Decision dated March 10, 1987, Labor Arbiter Bonifacio B. Tumamak held that:

"RESPONSIVE, to all the foregoing, judgment is hereby entered, ordering respondentsFilipinas Carbon and Mining Corp. Gerardo Sicat, Antonio Gonzales/IndustrialManagement Development Corp. (INIMACO), Chiu Chin Gin and Lo Kuan Chin, to paycomplainants Enrique Sulit, the total award of P82,800.00; ESMERALDO PEGARIDO thefull award of P19,565.00; Roberto Nemenzo the total sum of P29,623.60 and DARIO GOthe total award of P6,599.71, or the total aggregate award of ONE HUNDRED THIRTY-EIGHT THOUSAND FIVE HUNDRED EIGHTY-EIGHT PESOS AND 31/100

(P138,588.31) to be deposited with this Commission within ten (10) days from receipt ofthis Decision for appropriate disposition. All other claims are hereby Dismiss (sic) for lackof merit. Jjs-c

"SO ORDERED.

"Cebu City, Philippines.

"10 March 1987."0[1]

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No appeal was filed within the reglementary period thus, the above Decision became final and executory.On June 16, 1987, the Labor Arbiter issued a writ of execution but it was returned unsatisfied. On August26, 1987, the Labor Arbiter issued an Alias Writ of Execution which ordered thus: Ed-pm-is

"NOW THEREFORE, by virtue of the powers vested in me by law, you are herebycommanded to proceed to the premises of respondents Antonio Gonzales/Industrial

Management Development Corporation (INIMACO) situated at Barangay Lahug, CebuCity, in front of La Curacha Restaurant, and/or to Filipinas Carbon and Miningcorporation and Gerardo Sicat at 4th Floor Universal RE-Bldg. 106 Paseo de Roxas,Legaspi Village, Makati Metro Manila and at Philippine National Bank, Escolta, Manilarespectively, and collect the aggregate award of ONE HUNDRED THIRTY-EIGHTTHOUSAND FIVE HUNDRED EIGHTY-EIGHT PESOS AND THIRTY ONE CENTAVOS(P138,588.31) and thereafter turn over said amount to complainants ENRIQUE SULIT,ESMERALDO PEGARIDO, ROBERTO NEMENZO AND DARIO GO or to this Office forappropriate disposition. Should you fail to collect the said sum in cash, you are herebyauthorized to cause the satisfaction of the same on the movable or immovableproperty(s) of respondents not exempt from execution. You are to return this writ sixty (6)(sic) days from your receipt hereof, together with your corresponding report.

"You may collect your legal expenses from the respondents as provided for by law.

"SO ORDERED."[2]

On September 3, 1987, petitioner filed a "Motion to Quash Alias Writ of Execution and Set AsideDecision,"

[3]alleging among others that the alias writ of execution altered and changed the tenor of the

decision by changing the liability of therein respondents from joint to solidary, by the insertion of thewords "AND/OR" between "Antonio Gonzales/Industrial Management Development Corporation andFilipinas Carbon and Mining Corporation, et al." However, in an order dated September 14, 1987, theLabor Arbiter denied the motion. Mis-oedp

On October 2, 1987, petitioner appealed[4]

the Labor Arbiters Order dated September 14, 1987 to therespondent NLRC. Mis-edp

The respondent NLRC dismissed the appeal in a Decision[5]

dated August 31, 1988, the pertinent portionsof which read:

"In matters affecting labor rights and labor justice, we have always adopted the liberalapproach which favors the exercise of labor rights and which is beneficial to labor as ameans to give full meaning and import to the constitutional mandate to afford protectionto labor. Considering the factual circumstances in this case, there is no doubt in our mindthat the respondents herein are called upon to pay, jointly and severally, the claims of thecomplainants as was the latters prayers. Inasmuch as respondents herein nevercontroverted the claims of the complainants below, there is no reason why complainantsprayer should not be granted. Further, in line with the powers granted to the Commissionunder Article 218 (c) of the Labor code, to waive any error, defect or irregularity whether

in substance or in form in a proceeding before Us, We hold that the Writ of Execution begiven due course in all respects." Ed-p

On July 31, 1989, petitioner filed a "Motion To Compel Sheriff To Accept Payment Of P23,198.05Representing One Sixth Pro Rata Share of Respondent INIMACO As Full and Final Satisfaction ofJudgment As to Said Respondent."

[6]The private respondents opposed the motion. In an Order

[7]dated

August 15, 1989, the Labor Arbiter denied the motion ruling thus:

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"WHEREFORE, responsive to the foregoing respondent INIMACOs Motions are herebyDENIED. The Sheriff of this Office is order (sic) to accept INIMACOs tender payment(sic) of the sum of P23,198.05, as partial satisfaction of the judgment and to proceed withthe enforcement of the Alias Writ of Execution of the levied properties, now issued by thisOffice, for the full and final satisfaction of the monetary award granted in the instant case.

"SO ORDERED." Ed-psc

Petitioner appealed the above Order of the Labor Arbiter but this was again dismissed by the respondentNLRC in its Resolution

[8]dated September 4, 1991 which held that:

"The arguments of respondent on the finality of the dispositive portion of the decision inthis case is beside the point. What is important is that the Commission has ruled that theWrit of Execution issued by the Labor Arbiter in this case is proper. It is not really correctto say that said Writ of Execution varied the terms of the judgment. At most, consideringthe nature of labor proceedings there was, an ambiguity in said dispositive portion whichwas subsequently clarified by the Labor Arbiter and the Commission in the incidentswhich were initiated by INIMACO itself. By sheer technicality and unfounded assertions,INIMACO would now reopen the issue which was already resolved against it. It is not in

keeping with the established rules of practice and procedure to allow this attempt ofINIMACO to delay the final disposition of this case.

"WHEREFORE, in view of all the foregoing, this appeal is DISMISSED and the Orderappealed from is hereby AFFIRMED. Sce-dp

"With double costs against appellant."

Dissatisfied with the foregoing, petitioner filed the instant case, alleging that the respondent NLRCcommitted grave abuse of discretion in affirming the Order of the Labor Arbiter dated August 15, 1989,which declared the liability of petitioner to be solidary.

The only issue in this petition is whether petitioners liability pursuant to the Decision of the Labor Arbiterdated March 10, 1987, is solidary or not. Calrs-pped

Upon careful examination of the pleadings filed by the parties, the Court finds that petitioner INIMACOsliability is not solidary but merely joint and that the respondent NLRC acted with grave abuse of discretionin upholding the Labor Arbiters Alias Writ of Execution and subsequent Orders to the effect thatpetitioners liability is solidary.

A solidary or joint and several obligation is one in which each debtor is liable for the entire obligation, andeach creditor is entitled to demand the whole obligation.

[9]In a joint obligation each obligor answers only

for a part of the whole liability and to each obligee belongs only a part of the correlative rights.[10]

Well-entrenched is the rule that solidary obligation cannot lightly be inferred.[11]

There is a solidary liability

only when the obligation expressly so states, when the law so provides or when the nature of theobligation so requires.

[12]

In the dispositive portion of the Labor Arbiter, the word "solidary" does not appear. Thesaid falloexpressly states the following respondents therein as liable, namely: Filipinas Carbon andMining Corporation, Gerardo Sicat, Antonio Gonzales, Industrial Management Development Corporation(petitioner INIMACO), Chiu Chin Gin, and Lo Kuan Chin. Nor can it be inferred therefrom that the liabilityof the six (6) respondents in the case below is solidary, thus their liability should merely be joint.

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Moreover, it is already a well-settled doctrine in this jurisdiction that, when it is not provided in a judgmentthat the defendants are liable to pay jointly and severally a certain sum of money, none of them may becompelled to satisfy in full said judgment. In Oriental Commercial Co. vs. Abeto and Mabanag

[13]this

Court held:

"It is of no consequence that, under the contract of suretyship executed by the parties,

the obligation contracted by the sureties was joint and several in character. The finaljudgment, which superseded the action for the enforcement of said contract, declared theobligation to be merely joint, and the same cannot be executed otherwise."

[14]

Granting that the Labor Arbiter has committed a mistake in failing to indicate in the dispositive portion thatthe liability of respondents therein is solidary, the correction -- which is substantial -- can no longer beallowed in this case because the judgment has already become final and executory. Scc-alr

It is an elementary principle of procedure that the resolution of the court in a given issue as embodied inthe dispositive part of a decision or order is the controlling factor as to settlement of rights of theparties.

[15]Once a decision or order becomes final and executory, it is removed from the power or

jurisdiction of the court which rendered it to further alter or amend it.[16]

It thereby becomes immutable andunalterable and any amendment or alteration which substantially affects a final and executory judgment is

null and void for lack of jurisdiction, including the entire proceedings held for that purpose.[17]

An order ofexecution which varies the tenor of the judgment or exceeds the terms thereof is a nullity.

[18]

None of the parties in the case before the Labor Arbiter appealed the Decision dated March 10, 1987,hence the same became final and executory. It was, therefore, removed from the jurisdiction of the LaborArbiter or the NLRC to further alter or amend it. Thus, the proceedings held for the purpose of amendingor altering the dispositive portion of the said decision are null and void for lack of jurisdiction. Also, theAlias Writ of Execution is null and void because it varied the tenor of the judgment in that it sought toenforce the final judgment against "Antonio Gonzales/Industrial Management Development Corp.(INIMACO) and/or Filipinas Carbon and Mining Corp. and Gerardo Sicat," which makes the liabilitysolidary. Ca-lrsc

WHEREFORE, the petition is hereby GRANTED. The Resolution dated September 4, 1991 of the

respondent National Labor Relations is hereby declared NULL and VOID. The liability of the respondentsin RAB-VII-0711-84 pursuant to the Decision of the Labor Arbiter dated March 10, 1987 should be, as it ishereby, considered joint and petitioners payment which has been accepted considere d as full satisfactionof its liability, without prejudice to the enforcement of the award, against the other five (5) respondents inthe said case. Sppedsc

SO ORDERED.

[G.R. No. 144134. November 11, 2003]

MARIVELES SHIPYARD CORP., peti t ioner, vs.HON. COURT OF APPEALS, LUIS REGONDOLA,MANUELIT GATALAN, ORESCA AGAPITO, NOEL ALBADBAD, ROGELIO PINTUAN, DANILOCRISOSTOMO, ROMULO MACALINAO, NESTOR FERER, RICKY CUESTA, ROLLY ANDRADA,LARRY ROGOLA, FRANCISCO LENOGON, AUGUSTO QUINTO,

ARFE BERAMO, BONIFACIO

TRINIDAD, ALFREDO ASCARRAGA, ERNESTO MAGNO, HONORARIO HORTECIO,NELBERT PINEDA, GLEN ESTIPULAR, FRANCISCO COMPUESTO, ISABELITO CORTEZ,MATURAN ROSAURO, SAMSON CANAS, FEBIEN ISIP, JESUS RIPARIP, ALFREDO

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SIENES, ADOLAR ALBERT, HONESTO CABANILLAS, AMPING CASTILLO and ELWINREVILLA, respondents.

D E C I S I O N

QUISUMBING, J.:

For review on certiorariis the Resolution,[1]

dated December 29, 1999, of the Court of Appeals in CA-G.R. SP No. 55416, which dismissed outright the petition for certiorariof Mariveles Shipyard Corp., due toa defective certificate of non-forum shopping and non-submission of the required documents toaccompany said petition. Mariveles Shipyard Corp., had filed a special civil action for certiorariwith theCourt of Appeals to nullify the resolution

[2] of the National Labor Relations Commission (NLRC), dated

April 22, 1999, in NLRC NCR Case No. 00-09-005440-96-A, which affirmed the Labor Arbitersdecision,

[3]dated May 22, 1998, holding petitioner jointly and severally liable with Longest Force

Investigation and Security Agency, Inc., for the underpayment of wages and overtime pay due to theprivate respondents. Likewise challenged in the instant petition is the resolution

[4]of the Court of Appeals,

dated July 12, 2000, denying petitioners motion for reconsideration.

The facts, as culled from records, are as follows:

Sometime on October 1993, petitioner Mariveles Shipyard Corporation engaged the services ofLongest Force Investigation and Security Agency, Inc. (hereinafter, Longest Force) to render securityservices at its premises. Pursuant to their agreement, Longest Force deployed its security guards, theprivate respondents herein, at the petitioners shipyard in Mariveles,Bataan.

According to petitioner, it religiously complied with the terms of the security contract with LongestForce, promptly paying its bills and the contract rates of the latter. However, it found the services beingrendered by the assigned guards unsatisfactory and inadequate, causing it to terminate its contract withLongest Force on April 1995.

[5]Longest Force, in turn, terminated the employment of the security guards

it had deployed at petitioners shipyard.

On September 2, 1996, private respondents filed a case for illegal dismissal, underpayment ofwages pursuant to the PNPSOSIA-PADPAO rates, non-payment of overtime pay, premium pay forholiday and rest day, service incentive leave pay, 13

thmonth pay and attorneys fees, against both

Longest Force and petitioner, before the Labor Arbiter. Docketed as NLRC NCR Case No. 00-09-005440-96-A, the case sought the guards reinstatement with full backwages and without loss of seniorityrights.

For its part, Longest Force filed a cross-claim[6]

against the petitioner. Longest Force admitted that itemployed private respondents and assigned them as security guards at the premises of petitionerfrom October 16, 1993 to April 30, 1995, rendering a 12 hours duty per shift for the said period. Itlikewise admitted its liability as to the non-payment of the alleged wage differential in the total amountof P2,618,025 but passed on the liability to petitioner alleging that the service fee paid by the latter to itwas way below the PNPSOSIA and PADPAO rate, thus, contrary to the mandatory and prohibitive lawsbecause the right to proper compensation and benefits provided under the existing labor laws cannot bewaived nor compromised.

The petitioner denied any liability on account of the alleged illegal dismissal, stressing that noemployer-employee relationship existed between it and the security guards. It further pointed out that itwould be the height of injustice to make it liable again for monetary claims which it had already paid.Anent the cross-claim filed by Longest Force against it, petitioner prayed that it be dism issed for lack ofmerit. Petitioner averred that Longest Force had benefited from the contract, it was now estopped fromquestioning said agreement on the ground that it had made a bad deal.

On May 22, 1998, the Labor Arbiter decided NLRC NCR Case No. 00-09-005440-96-A, to wit:

WHEREFORE, conformably with the foregoing, judgment is hereby rendered ordering the respondents asfollows:

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1. DECLARING respondents Longest Force Investigation & Security Agency, Inc. and MarivelesShipyard Corporation jointly and severally liable to pay the money claims of complainants representingunderpayment of wages and overtime pay in the total amount of P2,700,623.40 based on the PADPAOrates of pay covering the period from October 16, 1993 up to April 29, 1995 broken down as follows:

UNDERPAYMENT OF WAGES:

PERIOD MONTHLYCOVERED PADPAO ACTUAL UNDERPAYMENT

RATES SALARY FOR THE Wage(8 hrs. duty) RECEIVED PERIOD DIFFERENTIALS

Oct. 16-Dec. P5,485.00 P5,000 P 485.00 P970.0015/93 (2 mos.)

Dec. 16/93-Mar. 6,630.00 5,000 1,630.005,705.00

31/94 (3.5 mos.)

Apr. 1-Dec. 7,090.00 5,810 1,280.00 11,520.0031/94 (9 mos.)

Jan. 1-Apr. 7,220.00 5,810 1,410.00 5,597.7029/95 (3.97 mos.)

TOTAL UNDERPAYMENTS - - - - - - - - - - - - - - - - P23,792.70

OVERTIME:

Oct. 16-Dec. 15/93 P5,485 x 2 = P 5,485.00(2 mos.) 2

Dec. 16/93-Mar. 6,630 x 3.5 = 11,602.5031/94 (3.5 mos.) 2

Apr. 1-Dec. 7,090 x 9 = 31,905.0031/94 (9 mos.) 2

Jan. 1-Apr. 7,220 x 3.97 = 14,331.7029/95 (3.97 mos.) 2

TOTAL OVERTIME- - - - - - - - - P63,324.20

Sub-Total of Underpayments and OvertimeP87,116.90

1. Luis Regondula (the same) P 87,116.902. Manolito Catalan (the same) 87,116.903. Oresca Agapito (the same) 87,116.904. Noel Alibadbad (the same) 87,116.905. Rogelio Pintuan (the same) 87,116.906. Danilo Crisostomo (the same) 87,116.90

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7. Romulo Macalinao (the same) 87,116.908. Nestor Ferrer (the same) 87,116.909. Ricky Cuesta (the same) 87,116.9010. Andrada Ricky (the same) 87,116.9011. Larry Rogola (the same) 87,116.9012. Francisco Lenogon (the same) 87,116.9013. Augosto Quinto (the same) 87,116.9014. Arfe Beramo (the same) 87,116.9015. Bonifacio Trinidad (the same) 87,116.9016. Alfredo Azcarraga (the same) 87,116.9017. Ernesto Magno (the same) 87,116.9018. Honario Hortecio (the same) 87,116.9019. Nelbert Pineda (the same) 87,116.9020. Glen Estipular (the same) 87,116.9021. Francisco Compuesto (the same) 87,116.9022. Isabelito Cortes (the same) 87,116.9023. Maturan Rosauro (the same) 87,116.9024. Samson Canas (the same) 87,116.9025. Febien Isip (the same) 87,116.9026. Jesus Riparip (the same) 87,116.90

27. Alfredo Sienes (the same) 87,116.9028. Adolar Albert (the same) 87,116.9029. Cabanillas Honesto (the same) 87,116.9030. Castillo Amping (the same) 87,116.9031. Revilla Elwin (the same) 87,116.90

GRAND TOTAL P 2,700,623.90

2. DECLARING both respondents liable to pay complainants attorneys fees equivalent to ten (10%)percent of the total award recovered or the sum of P270,062.34.

3. ORDERING respondent Longest Force Investigation & Security Agency, Inc. to reinstate all the herein

complainants to their former or equivalent positions without loss of seniority rights and privileges with fullbackwages which as computed as of the date of this decision are as follows:

Backwages:

10/1612/15/93 =2 mos.P 5,485.00 x 2 mos. = P 10,970.00

12/16/933/31/94=3.5 mos.P 6,630.00 x 3.5 mos. = 23,205.00

4/112/31/94 = 9 mos.P 7,090.00 x 9 mos. = 63,810.00

1/14/29/95 = 3.97 mos.P 7,220.00 x 3.97 mos. = 28,663.40

TOTAL P 126,684.40[7]

1. Luis Regondula (same) P 126,684.40[8]

2. Manolito Catalan (same) 126,684.403. Oresca Agapito (same) 126,684.40

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4. Noel Alibadbad (same) 126,684.405. Rogelio Pintuan (same) 126,684.406. Danilo Crisostomo (same) 126,684.407. Romulo Macalinao (same) 126,684.408. Nestor Ferrer (same) 126,684.409. Ricky Cuesta (same) 126,684.4010. Andrada Rolly (same) 126,684.4011. Larry Rogola (same) 126,684.4012. Francisco Lenogon (same) 126,684.4013. Augosto Quinto (same) 126,684.4014. Arfe Beramo (same) 126,684.4015. Bonifacio Trinidad (same) 126,684.4016. Alfredo Azcarraga (same) 126,684.4017. Ernesto Magno (same) 126,684.4018. Honario Hortecio (same) 126,684.4019. Nelbert Pineda (same) 126,684.4020. Glen Estipular (same) 126,684.4021. Francisco Compuesto (same) 126,684.4022. Isabelito Cortes (same) 126,684.4023. Maturan Rosauro (same) 126,684.40

24. Samson Canas (same) 126,684.4025. Febien Isip (same) 126,684.4026. Jesus Riparip (same) 126,684.4027. Alfredo Sienes (same) 126,684.4028. Adolar Albert (same) 126,684.4029. Cabanillas Honesto (same) 126,684.4030. Castillo Amping (same) 126,684.4031. Revilla Elwin (same) 126,684.40

GRAND TOTAL P3,927,216.40[9]

4. ORDERING said Longest Force Investigation & Security Agency, Inc. to pay attorneys fees equivalentto ten (10%) percent of the total award recovered representing backwages in the amountofP392,721.64.

[10]

5. DISMISSING all other claims for lack of legal basis.

SO ORDERED.[11]

Petitioner appealed the foregoing to the NLRC in NLRC NCR Case No. 00-09-005440-96-A. Thelabor tribunal, however, affirmed in totothe decision of the Labor Arbiter. Petitioner moved forreconsideration, but this was denied by the NLRC.

The petitioner then filed a special civil action for certiorariassailing the NLRC judgment for havingbeen rendered with grave abuse of discretion with the Court of Appeals, docketed as CA-G.R. SP No.55416. The Court of Appeals, however, denied due course to the petition and dismissed it outright for thefollowing reasons:

1. The verification and certification on non-forum shopping is signed not by duly authorizedofficer of petitioner corporation, but by counsel (Section 1, Rule 65, 1997 Rules of CivilProcedure).

2. The petition is unaccompanied by copies of relevant and pertinent documents, particularlythe motion for reconsideration filed before the NLRC (Section 1, Rule 65, 1997 Rules of CivilProcedure).

[12]

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The petitioner then moved for reconsideration of the order of dismissal. The appellate court deniedthe motion, pointing out that under prevailing case law subsequent compliance with formal requirementsfor filing a petition as prescribed by the Rules, does not ipso facto warrant a reconsideration. In anyevent, it found no grave abuse of discretion on the part of the NLRC to grant the writ of certiorari.

Hence, this present petition before us. Petitioner submits that THE COURT OF APPEALSGRAVELY ERRED:

1. .IN DISMISSING THE PETITION AND DENYING THE MOTION FORRECONSIDERATION DESPITE THE FACT THAT PETITIONER SUBSTANTIALLYCOMPLIED WITH THE REQUIREMENTS OF SECTION 1, RULE 65, 1997 RULES OFCIVIL PROCEDURE.

2. .IN RULING THAT PETITIONER WAS NOT DENIED DUE PROCESS OF LAW.

3. .IN AFFIRMING THE DECISION OF THE NATIONAL LABOR RELATIONSCOMMISSION THAT LONGEST FORCE AND PETITIONER ARE JOINTLY ANDSEVERALLY LIABLE FOR PAYMENT OF WAGES AND OVERTIME PAY DESPITE THECLEAR SHOWING THAT PETITIONER HAVE ALREADY PAID THE SECURITYSERVICES THAT WAS RENDERED BY PRIVATE RESPONDENTS.

4. WHEN IT FAILED TO RULE THAT ONLY LONGEST FORCE SHOULD BE SOLELYAND ULTIMATELY LIABLE IN THE INSTANT CASE.[13]

We find the issues for our resolution to be: (1) Was it error for the Court of Appeals to sustain itsorder of dismissal of petitioners special civil action forcertiorari, notwithstanding subsequent compliancewith the requirements under the Rules of Court by the petitioner? (2) Did the appellate court err in notholding that petitioner was denied due process of law by the NLRC? and (3) Did the appellate courtgrievously err in finding petitioner jointly and severally liable with Longest Force for the payment of wagedifferentials and overtime pay owing to the private respondents?

On the first issue, the Court of Appeals in dismissing CA-G.R. SP No. 55416 observed that: (1) theverification and certification of non-forum shopping was not signed by any duly authorized officer ofpetitioner but merely by petitioners counsel; and (2) the petition was not accompanied by a copy ofmotion for reconsideration filed before the NLRC, thus violating Section 1,

[14] Rule 65 of the Rules of

Court. Hence, a dismissal was proper under Section 3,[15]

Rule 46 of the Rules.

In assailing the appellate courts ruling, the petitioner appeals to our sense of compassion and kindconsideration. It submits that the certification signed by its counsel and attached to its petition filed withthe Court of Appeals is substantial compliance with the requirement. Moreover, petitioner calls ourattention to the fact that when it filed its motion for reconsideration before the Court of Appeals, a jointverification and certification of non-forum shopping duly signed by its Personnel Manager

[16]and a copy of

the Motion for Reconsideration[17]

filed before the NLRC were attached therein. Thus, petitioner praysthat we take a liberal stance to promote the ends of justice.

Petitioners plea for liberality, however, cannot be granted by the Court for reasons herein elucidated.

It is settled that the requirement in the Rules that the certification of non-forum shopping should beexecuted and signed by the plaintiff or the principal means that counsel cannot sign said certificationunless clothed with special authority to do so.

[18]The reason for this is that the plaintiff or principal knows

better than anyone else whether a petition has previously been filed involving the same case orsubstantially the same issues. Hence, a certification signed by counsel alone is defective and constitutesa valid cause for dismissal of the petition.

[19]In the case of natural persons, the Rule requires the parties

themselves to sign the certificate of non-forum shopping. However, in the case of the corporations, thephysical act of signing may be performed, on behalf of the corporate entity, only by specifically authorizedindividuals for the simple reason that corporations, as artificial persons, cannot personally do the taskthemselves.

[20] In this case, not only was the originally appended certification signed by counsel, but in its

motion for reconsideration, still petitioner utterly failed to show that Ms. Rosanna Ignacio, its PersonnelManager who signed the verification and certification of non-forum shopping attached thereto, was dulyauthorized for this purpose. It cannot be gainsaid that obedience to the requirements of procedural rule is

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needed if we are to expect fair results therefrom. Utter disregard of the rules cannot justly be rationalizedby harking on the policy of liberal construction.

[21]

Thus, on this point, no error could be validly attributed to respondent Court of Appeals. It did not errin dismissing the petition for non-compliance with the requirements governing the certification of non-forum shopping.

Anent the second issue, petitioner avers that there was denial of due process of law when the LaborArbiter failed to have the case tried on the merits. Petitioner adds that the Arbiter did not observe themandatory language of the then Sec. 5(b) Rule V (now Section 11, per amendment in Resolution No. 01-02, Series of 2002) of the NLRC New Rules of Procedure which provided that:

If the Labor Arbiter finds no necessity of further hearing after the parties have submitted their positionpapers and supporting documents, he shall issue an Order to that effect and shall inform the parties,stating the reasons therefor.

[22]

Petitioners contention, in our view, lacks sufficient basis. Well settled is the rule that the essence ofdue process is simply an opportunity to be heard, or, as applied to administrative proceedings, anopportunity to explain ones side or an opportunity to seek a reconsideration of the action or rulingcomplained of.

[23] Not all cases require a trial-type hearing. The requirement of due process in labor

cases before a Labor Arbiter is satisfied when the parties are given the opportunity to submit their positionpapers to which they are supposed to attach all the supporting documents or documentary evidence thatwould prove their respective claims, in the event the Labor Arbiter determines that no formal hearingwould be conducted or that such hearing was not necessary.

[24] In any event, as found by the NLRC,

petitioner was given ample opportunity to present its side in several hearings conducted before the LaborArbiter and in the position papers and other supporting documents that it had submitted. We find thatsuch opportunity more than satisfies the requirement of due process in labor cases.

On the third issue, petitioner argues that it should not be held jointly and severally liable with LongestForce for underpayment of wages and overtime pay because it had been religiously and promptly payingthe bills for the security services sent by Longest Force and that these are in accordance with thestatutory minimum wage. Also, petitioner contends that it should not be held liable for overtime pay asprivate respondents failed to present proof that overtime work was actually performed. Lastly, petitionerclaims that the Court of Appeals failed to render a decision that finally disposed of the case because it did

not specifically rule on the immediate recourse of private respondents, that is, the matter ofreimbursement between petitioner and Longest Force in accordance with Eagle Security Agency Inc. v.NLRC,

[25]and Philippine Fisheries Development Authority v. NLRC.

[26]

Petitioners liability is joint and several with that of Longest Force, pursuant to Articles 106, 107 and109 of the Labor Code which provide as follows:

ART. 106. CONTRACTOR OR SUBCONTRACTORWhenever an employer enters into a contract withanother person for the performance of the formers work, the employees of the contractor and of thelatters subcontractor, if any, shall be paid in accordance with the provisions of this Code.

In the event that the contractor or subcontractor fails to pay the wages of his employees in accordancewith this Code, the employer shall be jointly and severally liable with his contractor or subcontractor to

such employees to the extent of the work performed under the contract, in the same manner and extentthat he is liable to employees directly employed by him.

x x x

ART. 107. INDIRECT EMPLOYER.The provisions of the immediately preceding Article shall likewiseapply to any person, partnership, association or corporation which, not being an employer, contracts withan independent contractor for the performance of any work, task, job or project.

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ART. 109. SOLIDARY LIABILITY.The provisions of existing laws to the contrary notwithstanding,every employer or indirect employer shall be held responsible with his contractor or subcontractor for anyviolation of any provision of this Code. For purposes of determining the extent of their civil liability underthis Chapter, they shall be considered as direct employers.

In this case, when petitioner contracted for security services with Longest Force as the security

agency that hired private respondents to work as guards for the shipyard corporation, petitioner becamean indirect employer of private respondents pursuant to Article 107 abovecited. Following Article 106,when the agency as contractor failed to pay the guards, the corporation as principal becomes jointly andseverally liable for the guards wages. This is mandated by the Labor Code to ensure compliance with itsprovisions, including payment of statutory minimum wage. The security agency is held liable by virtue ofits status as direct employer, while the corporation is deemed the indirect employer of the guards for thepurpose of paying their wages in the event of failure of the agency to pay them. This statutory schemegives the workers the ample protection consonant with labor and social justice provisions of the 1987Constitution.

[27]

Petitioner cannot evade its liability by claiming that it had religiously paid the compensation of guardsas stipulated under the contract with the security agency. Labor standards are enacted by the legislatureto alleviate the plight of workers whose wages barely meet the spiraling costs of their basic needs. Laborlaws are considered written in every contract. Stipulations in violation thereof are considered

null. Similarly, legislated wage increases are deemed amendments to the contract. Thus, employerscannot hide behind their contracts in order to evade their (or their contractors or subcontractors) liabilityfor noncompliance with the statutory minimum wage.

[28]

However, we must emphasize that the solidary liability of petitioner with that of Longest Force doesnot preclude the application of the Civil Code provision on the right of reimbursement from his co-debtorby the one who paid.

[29] As held in Del Rosario & Sons Logging Enterprises, Inc. v. NLRC,

[30]the joint and

several liability imposed on petitioner is without prejudice to a claim for reimbursement by petitioneragainst the security agency for such amounts as petitioner may have to pay to complainants, the privaterespondents herein. The security agency may not seek exculpation by claiming that the princ ipalspayments to it were inadequate for the guards lawful compensation. As an employer, the securityagency is charged with knowledge of labor laws; and the adequacy of the compensation that it demandsfor contractual services is its principal concern and not any others.

[31]

On the issue of the propriety of the award of overtime pay despite the alleged lack of proof thereof,suffice it to state that such involves a determination and evaluation of facts which cannot be done in apetition for review. Well established is the rule that in an appeal via certiorari, only questions of law maybe reviewed.

[32]

One final point. Upon review of the award of backwages and attorneys fees, we discovered certainerrors that happened in the addition of the amount of individual backwages that resulted in the erroneoustotal amount of backwages and attorneys fees. These errors ought to be properly rectified now. Thus,the correct sum of individual backwages should beP126,648.40instead of P126,684.40, while the correctsum of total backwages awarded and attorneys fees should be P3,926,100.40and P392,610.04, insteadof P3,927,216.40 andP392,721.64, respectively.

WHEREFORE, the Resolution of the Court of Appeals in CA-G.R. SP No. 55416 isAFFIRMED with MODIFICATION. Petitioner and Longest Force are held liable jointly and severally for

underpayment of wages and overtime pay of the security guards, without prejudice to petitioners right ofreimbursement from Longest Force Investigation and Security Agency, Inc. The amounts payable tocomplaining security guards, herein private respondents, by way of total backwages and attorneys feesare hereby set at P3,926,100.40 and P392,610.04, respectively. Costs against petitioner.

SO ORDERED.

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CONSTRUCTION DEVELOPMENT G.R. No. 147791CORPORATION OF THEPHILIPPINES,

Petitioner, Present:

Panganiban, C.J. (Chairperson),- versus - Ynares-Santiago,

Austria-Martinez,Callejo, Sr., andChico-Nazario, JJ.

REBECCA G. ESTRELLA, RACHEL E.FLETCHER, PHILIPPINE PHOENIXSURETY & INSURANCE INC.,BATANGAS LAGUNA TAYABASBUS CO., and WILFREDO Promulgated:DATINGUINOO,

Respondents. September 8, 2006x ---------------------------------------------------------------------------------------- x

DECISION

YNARES-SANTIAGO, J.:

This petition for review assails the March 29, 2001 Decision[1]

of the Court of Appeals in CA-G.R.CV No. 46896, which affirmed with modification the February 9, 1993 Decision

[2] of the Regional Trial

Court of Manila, Branch 13, in Civil Case No. R-82-2137, finding Batangas Laguna Tayabas Bus Co.(BLTB) and Construction Development Corporation of the Philippines (CDCP) liable for damages.

The antecedent facts are as follows:

On December 29, 1978, respondents Rebecca G. Estrella and her granddaughter, Rachel E.Fletcher, boarded in San Pablo City, a BLTB bus bound for Pasay City. However, they never reachedtheir destination because their bus was rammed from behind by a tractor-truck of CDCP in the SouthExpressway. The strong impact pushed forward their seats and pinned their knees to the seats in front ofthem. They regained consciousness only when rescuers created a hole in the bus and extricated theirlegs from under the seats. They were brought to the Makati Medical Center where the doctors diagnosedtheir injuries to be as follows:

Medical Certificate of Rebecca Estrella

Fracture, left tibia mid 3rdLacerated wound, chinContusions with abrasions, left lower legFracture, 6th and 7th ribs, right

[3]

Medical Certificate of Rachel Fletcher

Extensive lacerated wounds, right leg posterior aspect popliteal areaand antero-lateral aspect mid lower leg with severance of muscles.Partial amputation BK left leg with severance of gastro-soleus andantero-lateral compartment of lower leg.Fracture, open comminuted, both tibial

[4]

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Thereafter, respondents filed a Complaint[5]

for damages against CDCP, BLTB, EspiridionPayunan, Jr. and Wilfredo Datinguinoo before the Regional Trial Court of Manila, Branch 13. Theyalleged (1) that Payunan, Jr. and Datinguinoo, who were the drivers of CDCP and BLTB buses,respectively, were negligent and did not obey traffic laws; (2) that BLTB and CDCP did not exercise thediligence of a good father of a family in the selection and supervision of their employees; (3) that BLTBallowed its bus to operate knowing that it lacked proper maintenance thus exposing its passengers tograve danger; (4) that they suffered actual damages amounting to P250,000.00 for Estrella andP300,000.00 for Fletcher; (5) that they suffered physical discomfort, serious anxiety, fright and mentalanguish, besmirched reputation and wounded feelings, moral shock, and lifelong social humiliation; (6)that defendants failed to act with justice, give respondents their due, observe honesty and good faithwhich entitles them to claim for exemplary damage; and (7) that they are entitled to a reasonable amountof attorneys fees and litigation expenses.

CDCP filed its Answer[6]

which was later amended to include a third-party complaint againstPhilippine Phoenix Surety and Insurance, Inc. (Phoenix).

[7]

On February 9, 1993, the trial court rendered a decision finding CDCP and BLTB and theiremployees liable for damages, the dispositive portion of which, states:

WHEREFORE, judgment is rendered:

In the Complaint

1. In favor of the plaintiffs and against the defendants BLTB, WilfredoDatinguinoo, Construction and Development Corporation of the Philippines (now PNCC)and Espiridion Payunan, Jr., ordering said defendants, jointly and severally to pay theplaintiffs the sum of P79,254.43 as actual damages and to pay the sum of P10,000.00 asattorneys fees or a total of P89,254.43;

2. In addition, defendant Construction and Development Corporation of thePhilippines and defendant Espiridion Payunan, Jr., shall pay the plaintiffs the amount ofFifty Thousand (P50,000.00) Pesos to plaintiff Rachel Fletcher and Twenty FiveThousand (P25,000.00) Pesos to plaintiff Rebecca Estrella;

3. On the counterclaim of BLTB Co. and Wilfredo DatinguinooDismissing the counterclaim;

4. On the crossclaim against Construction and Development Corporation ofthe Philippines (now PNCC) and Espiridion Payunan, Jr.

Dismissing the crossclaim;

5. On the counterclaim of Construction and Development Corporation ofthe Philippines (now PNCC)

Dismissing the counterclaim;

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6. On the crossclaim against BLTBDismissing the crossclaim;

7. On the Third Party Complaint by Construction and DevelopmentCorporation of the Philippines against Philippine Phoenix Surety and Insurance,Incorporated

Dismissing the Third Party Complaint.

SO ORDERED.[8]

The trial court held that BLTB, as a common carrier, was bound to observe extraordinary diligencein the vigilance over the safety of its passengers. It must carry the passengers safely as far as humancare and foresight provide, using the utmost diligence of very cautious persons, with a due regard for allthe circumstances. Thus, where a passenger dies or is injured, the carrier is presumed to have been atfault or has acted negligently. BLTBs inability to carry respondents to their destination gave rise to anaction for breach of contract of carriage while its failure to rebut the presumption of negligence made itliable to respondents for the breach.

[9]

Regarding CDCP, the trial court found that the tractor-truck it owned bumped the BLTB bus from

behind. Evidence showed that CDCPs driver was reckless and driving very fast at the time of theincident. The gross negligence of its driver raised the presumption that CDCP was negligent either in theselection or in the supervision of its employees which it failed to rebut thus making it and its driver liableto respondents.

[10]

Unsatisfied with the award of damages and attorneys fees by the trial court, respondents movedthat the decision be reconsidered but was denied. Respondents elevated the case

[11] to the Court of

Appeals which affirmed the decision of the trial court but modified the amount of damages, the dispositiveportion of which provides:

WHEREFORE, the assailed decision dated October 7, 1993 of the Regional TrialCourt, Branch 13, Manila is hereby AFFIRMED with the following MODIFICATION:

1. The interest of six (6) percent per annum on the actual damages ofP79,354.43 should commence to run from the time the judicial demand was made orfrom the filing of the complaint on February 4, 1980;

2. Thirty (30) percent of the total amount recovered is hereby awarded asattorneys fees;

3. Defendants-appellants Construction and Development Corporation of thePhilippines (now PNCC) and Espiridion Payunan, Jr. are ordered to pay plaintiff-appellants Rebecca Estrella and Rachel Fletcher the amount of Twenty Thousand(P20,000.00) each as exemplary damages and P80,000.00 by way of moral damages toRachel Fletcher.

SO ORDERED.

[12]

The Court of Appeals held that the actual or compensatory damage sought by respondents for theinjuries they sustained in the form of hospital bills were already liquidated and wereascertained. Accordingly, the 6% interest per annum should commence to run from the time the judicialdemand was made or from the filing of the complaint and not from the date of judgment. The Court ofAppeals also awarded attorneys fees equivalent to 30% of the total amount recovered based on theretainer agreement of the parties. The appellate court also held that respondents are entitled toexemplary and moral damages. Finally, it affirmed the ruling of the trial court that the claim of CDCPagainstPhoenix had already prescribed.

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Hence, this petition raising the following issues:

IWHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDINGRESPONDENTS BLTB AND/OR ITS DRIVER WILFREDO DATINGUINOO SOLELYLIABLE FOR THE DAMAGES SUSTAINED BY HEREIN RESPONDENTS FLETCHERAND ESTRELLA.

IIWHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN AWARDINGEXCESSIVE OR UNFOUNDED DAMAGES, ATTORNEYS FEES AND LEGALINTEREST TO RESPONDENTS FLETCHER AND ESTRELLA.

IIIWHETHER OR NOT THE COURT OF APPEALS GRAVELY ERRED IN NOT HOLDINGRESPONDENT PHOENIX LIABLE UNDER ITS INSURANCE POLICY ON THEGROUND OF PRESCRIPTION.

The issues for resolution are as follows: (1) whether BLTB and its driver Wilfredo Datinguinoo are

solely liable for the damages sustained by respondents; (2) whether the damages, attorneys fees andlegal interest awarded by the CA are excessive and unfounded; (3) whether CDCP can recover under itsinsurance policy from Phoenix.

Petitioner contends that since it was made solidarily liable with BLTB for actual damages andattorneys fees in paragraph 1 of the trial courts decision, then it should no longer be held liable to paythe amounts stated in paragraph 2 of the same decision. Petitioner claims that the liability for actualdamages and attorneys fees is based on culpa contractual, thus, only BLTB should be held liable. Asregards paragraph 2 of the trial courts decision, petitioner claims that it is ambiguous and arbitrarybecause the dispositive portion did not state the basis and nature of such award.

Respondents, on the other hand, argue that petitioner is also at fault, hence, it was properly joinedas a party. There may be an action arising out of one incident where questions of fact are common to

all. Thus, the cause of action based on culpa aquilianain the civil suit they filed against it was valid.

The petition lacks merit.

The case filed by respondents against petitioner is an action for culpa aquilianaor quasi-delictunder Article 2176 of the Civil Code.

[13] In this regard, Article 2180 provides that the obligation imposed

by Article 2176 is demandable for the acts or omissions of those persons for whom one isresponsible. Consequently, an action based on quasi-delict may be instituted against the employer for anemployees act or omission. The liability for the negligent conduct of the subordinateis direct andprimary, but is subject to the defense of due diligence in the selection and supervision of theemployee.

[14] In the instant case, the trial court found that petitioner failed to prove that it exercised the

diligence of a good father of a family in the selection and supervision of Payunan, Jr.

The trial court and the Court of Appeals found petitioner solidarily liable with BLTB for the actualdamages suffered by respondents because of the injuries they sustained. It was established thatPayunan, Jr. was driving recklessly because of the skid marks as shown in the sketch of the policeinvestigator.

It is well-settled in Fabre, Jr. v. Court of Appeals,[15]

that the owner of the other vehicle whichcollided with a common carrier is solidarily liable to the injured passenger of the same. We held, thus:

The same rule of liability was applied in situations where the negligence of thedriver of the bus on which plaintiff was riding concurred with the negligence of a third

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party who was the driver of another vehicle, thus causing an accident. In Anuran v.Buo,

Batangas Laguna Tayabas Bus Co.v. Intermediate Appellate Court, and Metro

Manila Transit Corporation v. Court of Appeals, the bus company, its driver, theoperator of the other vehicle and the driver of the vehicle were jointly and severallyheld liable to the injured passenger or the latters heirs.The basis of this allocation ofliability was explained in Viluan v. Court of Appeals,thus:

Nor should it make any difference that the liability of petitioner [bus owner]springs from contract while that of respondents [owner and driver of other vehicle]arises fromquasi-del ict. 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 ofthe bus on which he was riding and of the driver of another vehicle, the drivers as well asthe owners of the two vehicles are jointly and severally liable for damages. x x x

x x x x

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As in the case of BLTB, private respondents in this case and her co-plaintiffs did

not stake out their claim against the carrier and the driver exclusively on one theory,much less on that of breach of contract alone. After all, it was permitted for them toallege alternative causes of action and join as many parties as may be liable onsuch causes of action so long as private respondent and her co-plaintiffs do notrecover twice for the same injury. What is clear from the cases is the intent of theplaintiff there to recover from both the carrier and the driver, thus justifying the holdingthat the carrier and the driver were jointly and severally liable because their separate anddistinct acts concurred to produce the same injury.

[16](Emphasis supplied)

In a joint obligation, each obligor answers only for a part of the whole liability; in a solidary orjoint and severalobligation, the relationship between the active and the passive subjects is so close thateach of them must comply with or demand the fulfillment of the whole obligation. In Lafarge Cement v.Continental Cement Corporation,

[17]we reiterated that joint tort feasors are jointly and severally liable for

the tort which they commit. Citing Worcester v. Ocampo,[18]

we held that:

x x x The difficulty in the contention of the appellants is that they fail to recognize that thebasis of the present action is tort. They fail to recognize the universal doctrine that eachjoint tort feasor is not only individually liable for the tort in which he participates, but is

also jointly liable with his tort feasors. x x x

It may be stated as a general rule that joint tort feasors are all the persons whocommand, instigate, promote, encourage, advise, countenance, cooperate in, aid or abetthe commission of a tort, or who approve of it after it is done, if done for theirbenefit. They are each liable as principals, to the same extent and in the same manneras if they had performed the wrongful act themselves. x x x

Joint tort feasors are jointly and severally liable for the tort which they commit.The persons injured may sue all of them or any number less than all. Each is liable forthe whole damages caused by all, and all together are jointly liable for the wholedamage. It is no defense for one sued alone, that the others who participated in thewrongful act are not joined with him as defendants; nor is it any excuse for him that his

participation in the tort was insignificant as compared to that of the others. x x x

Joint tort feasors are not liablepro rata. The damages can not be apportionedamong them, except among themselves. They cannot insist upon an apportionment, forthe purpose of each paying an aliquot part. They are jointly and severally liable for thewhole amount. x x x

A payment in full for the damage done, by one of the joint tort feasors, of coursesatisfies any claim which might exist against the others. There can be but satisfaction.The release of one of the joint tort feasors by agreement generally operates to dischargeall. x x x

Of course the court during trial may find that some of the alleged tort feasors are

liable and that others are not liable. The courts may release some for lack of evidencewhile condemning others of the alleged tort feasors. And this is true even though theyare charged jointly and severally.

[19]

Petitioners claim that paragraph 2 of the dispositive portion of the trial courts decision isambiguous and arbitrary and also entitles respondents to recover twice is without basis. In the body ofthe trial courts decision, it was clearly stated that petitioner and its driver Payunan, Jr., are jointly andsolidarily liable for moral damages in the amount of P50,000.00 to respondent Fletcher and P25,000.00 torespondent Estrella.

[20] Moreover, there could be no double recovery because the award in paragraph 2

is for moral damages while the award in paragraph 1 is for actual damages and attorneys fees.

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Petitioner next claims that the damages, attorneys fees, and legal interest awarded by the Court of

Appeals are excessive.

Moral damages may be recovered in quasi-delicts causing physical injuries.[21]

The award ofmoral damages in favor of Fletcher and Estrella in the amount of P80,000.00 must be reduced sinceprevailing jurisprudence fixed the same at P50,000.00.

[22] While moral damages are not intended to

enrich the plaintiff at the expense of the defendant, the award should nonetheless be commensurate tothe suffering inflicted.

[23]

The Court of Appeals correctly awarded respondents exemplary damages in the amount ofP20,000.00 each. Exemplary damages may be awarded in addition to moral and compensatorydamages.

[24] Article 2231 of the Civil Code also states that in quasi-delicts, exemplary damages may be

granted if the defendant acted with gross negligence.[25]

In this case, petitioners driver was drivingrecklessly at the time its truck rammed the BLTB bus. Petitioner, who has direct and primary liability forthe negligent conduct of its subordinates, was also found negligent in the selection and supervision of itsemployees. In Del Rosario v. Court of Appeals,

[26]we held, thus:

ART. 2229 of the Civil Code also provides that such damages may be imposed, by wayof example or correction for the public good. While exemplary damages cannot be

recovered as a matter of right, they need not be proved, although plaintiff must show thathe is entitled to moral, temperate or compensatory damages before the court mayconsider the question of whether or not exemplary damages should beawarded. Exemplary Damages are imposed not to enrich one party or impoverishanother but to serve as a deterrent against or as a negative incentive to curb sociallydeleterious actions.

Regarding attorneys fees, we held in Traders Royal Bank Employees Union-Independent v.National Labor Relations Commission,

[27]that:

There are two commonly accepted concepts of attorneys fees, the so-calledordinary and extraordinary. In its ordinary concept, an attorneys fee is thereasonablecompensation paid to a lawyer by his client for the legal services he has rendered to the

latter. The basis of this compensation is the fact of his employment by and hisagreement with the client.

In its extraordinary concept, an attorneys fee is an indemnity for damagesordered by the court to be paid by the losing party in a litigation. The basis of this isany of the cases provided by law where such award can be made, such as thoseauthorized in Article 2208, Civil Code, and is payable not to the lawyer but to theclient, unless they have agreed that the award shall pertain to the lawyer asadditional compensation or as part thereof.

[28](Emphasis supplied)

In the instant case, the Court of Appeals correctly awarded attorneys fees and other expenses oflitigation as they may be recovered as actual or compensatory damages when exemplary damages areawarded; when the defendant acted in gross and evident bad faith in refusing to satisfy the plai ntiffs

valid, just and demandable claim; and in any other case where the court deems it just and equitable thatattorneys feesand expenses of litigation should be recovered.[29]

Regarding the imposition of legal interest at the rate of 6% from the time of the filing of thecomplaint, we held in Eastern Shipping Lines, Inc. v. Court of Appeals ,

[30]that when an obligation,

regardless of its source, i.e., law, contracts, quasi-contracts, delicts or quasi-delicts is breached, thecontravenor can be held liable for payment of interest in the concept of actual and compensatorydamages,

[31]subject to the following rules, to wit

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1. When the obligation is breached, and it consists in the payment of a sumof money, i.e., a loan or forbearance of money, the interest due should be that which mayhave been stipulated in writing. Furthermore, the interest due shall itself earn legalinterest from the time it is judicially demanded. In the absence of stipulation, the rate ofinterest shall be 12% per annum to be computed from default, i.e., from judicial orextrajudicial demand under and subject to the provisions of Article 1169 of the Civil Code.

2. When an obligation, not constituting a loan or forbearance of money, isbreached, an interest on the amount of damages awarded may be imposed at thediscretion of the court at the rate of 6% per annum. No interest, however, shall beadjudged on unliquidated claims or damages except when or until the demand can beestablished with reasonable certainty. Accordingly, where the demand is established withreasonable certainty, the interest shall begin to run from the time the claim is madejudicially or extrajudicially (Art. 1169, Civil Code) but when such certainty cannot be soreasonably established at the time the demand is made, the interest shall begin to runonly from the date the judgment of the court is made (at which time thequantification of damages may be deemed to have been reasonablyascertained). The actual base for the computation of legal interest shall, in any case, beon the amount finally adjudged.

3. When the judgment of the court awarding a sum of money becomesfinal and executory, the rate of legal interest, whether the case falls underparagraph 1 or paragraph 2, above, shall be 12% per annum from such finality untilits satisfaction, this interim period being deemed to be by then an equivalent to aforbearance of credit.

[32](Emphasis supplied)

Accordingly, the legal interest of 6% shall begin to run on February 9, 1993 when the trial courtrendered judgment and not on February 4, 1980 when the complaint was filed. This is because at thetime of the filing of the complaint, the amount of the damages to which plaintiffs may be entitled remainsunliquidated and unknown, until it is definitely ascertained, assessed and determined by the court andonly upon presentation of proof thereon.

[33]From the time the judgment becomes final and executory, the

interest rate shall be 12% until its satisfaction.

Anent the last issue of whether petitioner can recover under its insurance policy from Phoenix, weaffirm the findings of both the trial court and the Court of Appeals, thus:

As regards the liability of Phoenix, the court a quo correctly ruled that defendant-appellant CDCPs claim againstPhoenix already prescribed pursuant to Section 384 ofP.D. 612, as amended, which provides:

Any person having any claim upon the policy issued pursuant tothis chapter shall, without any unnecessary delay, present to theinsurance company concerned a written notice of claim setting forth thenature, extent and duration of the injuries sustained as certified by a dulylicensed physician. Notice of claim must be filed within six months fromdate of the accident, otherwise, the claim shall be deemed

waived. Action or suit for recovery of damage due to loss or injury mustbe brought in proper cases, with the Commissioner or Courts within oneyear from denial of the claim, otherwise, the claimants right of actionshall prescribe. (As amended by PD 1814, BP 874.)

[34]

The law is clear and leaves no room for interpretation. A written notice of claim must be filedwithin six months from the date of the accident. Since petitioner never made any claim within six monthsfrom the date of the accident, its claim has already prescribed.

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WHEREFORE,the instant petition is DENIED. The Decision of the Court of Appeals in CA-G.R.CV No. 46896 dated March 29, 2001, which modified the Decision of the Regional Trial Court of Manila,Branch 13, in Civil Case No. R-82-2137, is AFFIRMED with the MODIFICATIONSthat petitioner is heldjointly and severally liable to pay (1) actual damages in the amount of P79,354.43; (2) moral damages inthe amount of P50,000.00 each for Rachel Fletcher and Rebecca Estrella; (3) exemplary damages in theamount of P20,000.00 each for Rebecca Estrella and Rachel Fletcher; and (4) thirty percent (30%) of thetotal amount recovered as attorneys fees. The total amount adjudged shall earn interest at the rate of6% per annum from the date of judgment of the trial court until finality of this judgment. From the time thisDecision becomes final and executory and the judgment amount remains unsatisfied, the same shall earninterest at the rate of 12% per annum until its satisfaction.

SO ORDERED.

G.R. No. 157917 August 29, 2012

SPOUSES TEODORO1and NANETTE PERENA, Petitioners,

vs.SPOUSES TERESITA PHILIPPINE NICOLAS and L. ZARATE, NATIONAL RAILWAYS, and theCOURT OF APPEALS Respondents.

D E C I S I O N

BERSAMIN, J.:

The operator of a. school bus service is a common carrier in the eyes of the law. He is bound to observeextraordinary diligence in the conduct of his business. He is presumed to be negligent when death occursto a passenger. His liability may include indemnity for loss of earning capacity even if the deceasedpassenger may only be an unemployed high school student at the time of the accident.

The Case

By petition for review on certiorari, Spouses Teodoro and Nanette Perefia (Perefias) appeal the adversedecision promulgated on November 13, 2002, by which the Court of Appeals (CA) affirmed withmodification the decision rendered on December 3, 1999 by the Regional Trial Court (RTC), Branch 260,in Paraaque City that had decreed them jointly and severally liable with Philippine National Railways(PNR), their co-defendant, to Spouses Nicolas and Teresita Zarate (Zarates) for the death of their 15-yearold son, Aaron John L. Zarate (Aaron), then a high school student of Don Bosco Technical Institute (DonBosco).

Antecedents

The Pereas were engaged in the business of transporting students from their respective residences inParaaque City to Don Bosco in Pasong Tamo, Makati City, and back. In their business, the Pereasused a KIA Ceres Van (van) with Plate No. PYA 896, which had the capacity to transport 14 students at a

time, two of whom would be seated in the front beside the driver, and the others in the rear, with sixstudents on either side. They employed Clemente Alfaro (Alfaro) as driver of the van.

In June 1996, the Zarates contracted the Pereas to transport Aaron to and from Don Bosco. On August22, 1996, as on previous school days, the van picked Aaron up around 6:00 a.m. from the Zaratesresidence. Aaron took his place on the left side of the van near the rear door. The van, with its air-conditioning unit turned on and the stereo playing loudly, ultimately carried all the 14 student riders ontheir way to Don Bosco. Considering that the students were due at Don Bosco by 7:15 a.m., and that theywere already running late because of the heavy vehicular traffic on the South Superhighway, Alfaro tookthe van to an alternate route at about 6:45 a.m. by traversing the narrow path underneath the Magallanes

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Interchange that was then commonly used by Makati-bound vehicles as a short cut into Makati. At thetime, the narrow path was marked by piles of construction materials and parked passenger jeepneys, andthe railroad crossing in the narrow path had no railroad warning signs, or watchmen, or other responsiblepersons manning the crossing. In fact, the bamboo barandilla was up, leaving the railroad crossing opento traversing motorists.

At about the time the van was to traverse the railroad crossing, PNR Commuter No. 302 (train), operatedby Jhonny Alano (Alano), was in the vicinity of the Magallanes Interchange travelling northbound. As thetrain neared the railroad crossing, Alfaro drove the van eastward across the railroad tracks, closely tailinga large passenger bus. His view of the oncoming train was blocked because he overtook the passengerbus on its left side. The train blew its horn to warn motorists of its approach. When the train was about 50meters away from the passenger bus and the van, Alano applied the ordinary brakes of the train. Heapplied the emergency brakes only when he saw that a collision was imminent. The passenger bussuccessfully crossed the railroad tracks, but the van driven by Alfaro did not. The train hit the rear end ofthe van, and the impact threw nine of the 12 students in the rear, including Aaron, out of the van. Aaronlanded in the path of the train, which dragged his body and severed his head, instantaneously killing him.Alano fled the scene on board the train, and did not wait for the police investigator to arrive.

Devastated by the early and unexpected death of Aaron, the Zarates commenced this action for damages

against Alfaro, the Pereas, PNR and Alano. The Pereas and PNR filed their respective answers, withcross-claims against each other, but Alfaro could not be served with summons.

At the pre-trial, the parties stipulated on the facts and issues, viz:

A. FACTS:

(1)That spouses Zarate were the legitimate parents of Aaron John L. Zarate;

(2)Spouses Zarate engaged the services of spouses Perea for the adequate and safetransportation carriage of the former spouses' son from their residence in Paraaque to hisschool at the Don Bosco Technical Institute in Makati City;

(3)During the effectivity of the contract of carriage and in the implementation thereof, Aaron, theminor son of spouses Zarate died in connection with a vehicular/train collision which occurredwhile Aaron was riding the contracted carrier Kia Ceres van of spouses Perea, then driven andoperated by the latter's employee/authorized driver Clemente Alfaro, which van collided with thetrain of PNR, at around 6:45 A.M. of August 22, 1996, within the vicinity of the MagallanesInterchange in Makati City, Metro Manila, Philippines;

(4)At the time of the vehicular/train collision, the subject site of the vehicular/train collision was arailroad crossing used by motorists for crossing the railroad tracks;

(5)During the said time of the vehicular/train collision, there were no appropriate and safetywarning signs and railings at the site commonly used for railroad crossing;

(6)At the material time, countless number of Makati bound public utility and private vehiclesused on a daily basis the site of the collision as an alternative route and short-cut to Makati;

(7)The train driver or operator left the scene of the incident on board the commuter traininvolved without waiting for the police investigator;

(8)The site commonly used for railroad crossing by motorists was not in fact intended by therailroad operator for railroad crossing at the time of the vehicular collision;

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(9)PNR received the demand letter of the spouses Zarate;

(10)PNR refused to acknowledge any liability for the vehicular/train collision;

(11)The eventual closure of the railroad crossing alleged by PNR was an internal arrangementbetween the former and its project contractor; and

(12)The site of the vehicular/train collision was within the vicinity or less than 100 meters fromthe Magallanes station of PNR.

B. ISSUES

(1) Whether or not defendant-driver of the van is, in the performance of his functions, liable fornegligence constituting the proximate cause of the vehicular collision, which resulted in the deathof plaintiff spouses' son;

(2) Whether or not the defendant spouses Perea being the employer of defendant Alfaro areliable for any negligence which may be attributed to defendant Alfaro;

(3) Whether or not defendant Philippine National Railways being the operator of the railroadsystem is liable for negligence in failing to provide adequate safety warning signs and railings inthe area commonly used by motorists for railroad crossings, constituting the proximate cause ofthe vehicular collision which resulted in the death of the plaintiff spouses' son;

(4) Whether or not defendant spouses Perea are liable for breach of the contract of carriage withplaintiff-spouses in failing to provide adequate and safe transportation for the latter's son;

(5) Whether or not defendants spouses are liable for actual, moral damages, exemplarydamages, and attorney's fees;

(6) Whether or not defendants spouses Teodorico and Nanette Perea observed the diligence ofemployers and school bus operators;

(7) Whether or not defendant-spouses are civilly liable for the accidental death of Aaron JohnZarate;

(8) Whether or not defendant PNR was grossly negligent in operating the commuter train involvedin the accident, in allowing or tolerating the motoring public to cross, and its failure to install safetydevices or equipment at the site of the accident for the protection of the public;

(9) Whether or not defendant PNR should be made to reimburse defendant spouses for any andwhatever amount the latter may be held answerable or which they may be ordered to pay in favorof plaintiffs by reason of the action;

(10) Whether or not defendant PNR should pay plaintiffs directly and fully on the amounts claimedby the latter in their Complaint by reason of its gross negligence;

(11) Whether or not defendant PNR is liable to defendants spouses for actual, moral andexemplary damages and attorney's fees.

2

The Zarates claim against the Pereas was upon breach of the contract of carriage for the safe transportof Aaron; but that against PNR was based on quasi-delict under Article 2176, Civil Code.

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In their defense, the Pereas adduced evidence to show that they had exercised the diligence of a goodfather of the family in the selection and supervision of Alfaro, by making sure that Alfaro had been issueda drivers license and had not been involved in any vehicular accident prior to the collision; that their ownson had taken the van daily; and that Teodoro Perea had sometimes accompanied Alfaro in the vanstrips transporting the students to school.

For its part, PNR tended to show that the proximate cause of the collision had been the reckless crossingof the van whose driver had not first stopped, looked and listened; and that the narrow path traversed bythe van had not been intended to be a railroad crossing for motorists.

Ruling of the RTC

On December 3, 1999, the RTC rendered its decision,3disposing:

WHEREFORE, premises considered, judgment is hereby rendered in favor of the plaintiff and against thedefendants ordering them to jointly and severally pay the plaintiffs as follows:

(1) (for) the death of Aaron- Php50,000.00;

(2) Actual damages in the amount of Php100,000.00;

(3) For the loss of earning capacity- Php2,109,071.00;

(4) Moral damages in the amount of Php4,000,000.00;

(5) Exemplary damages in the amount of Php1,000,000.00;

(6) Attorneys fees in the amount of Php200,000.00; and

(7) Cost of suit.

SO ORDERED.

On June 29, 2000, the RTC denied the Pereas motion for reconsideration,4reiterating that the

cooperative gross negligence of the Pereas and PNR had caused the collision that led to the death ofAaron; and that the damages awarded to the Zarates were not excessive, but based on the establishedcircumstances.

The CAs Ruling

Both the Pereas and PNR appealed (C.A.-G.R. CV No. 68916).

PNR assigned the following errors, to wit:5

The Court a quoerred in:

1. In finding the defendant-appellant Philippine National Railways jointly and severally liabletogether with defendant-appellants spouses Teodorico and Nanette Perea and defendant-appellant Clemente Alfaro to pay plaintiffs-appellees for the death of Aaron Zarate and damages.

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2. In giving full faith and merit to the oral testimonies of plaintiffs-appellees witnesses despiteoverwhelming documentary evidence on record, supporting the case of defendants-appellantsPhilippine National Railways.

The Pereas ascribed the following errors to the RTC, namely:

The trial court erred in finding defendants-appellants jointly and severally liable for actual, moral andexemplary damages and attorneys fees with the other defendants.

The trial court erred in dismissing the cross-claim of the appellants Pereas against the PhilippineNational Railways and in not holding the latter and its train driver primarily responsible for the incident.

The trial court erred in awarding excessive damages and attorneys fees.

The trial court erred in awarding damages in the form of deceaseds loss of earning capacity in theabsence of sufficient basis for such an award.

On November 13, 2002, the CA promulgated its decision, affirmi