In the case of Victory Liner, Inc. v. Rosalito Gammad, the Supreme Court affirmed that common carriers, such as bus companies, bear a high degree of responsibility for the safety of their passengers. The court reiterated that in cases where a passenger dies or is injured, there’s a presumption that the carrier was at fault. This responsibility requires common carriers to prove they exercised extraordinary diligence to prevent accidents, which Victory Liner failed to do in this instance.

Bus Mishaps and Legal Lapses: When Can a Passenger Claim Damages?

The case originated from a tragic incident on March 14, 1996, when a Victory Liner bus plunged into a ravine in Nueva Vizcaya, resulting in the death of Marie Grace Pagulayan-Gammad. Her heirs filed a complaint for damages, alleging a breach of contract of carriage against Victory Liner, arguing that the company’s negligence caused Marie Grace’s death. The bus company countered that the incident was accidental and that they had always exercised extraordinary diligence throughout their years of operation. The legal proceedings were marred by the petitioner’s counsel’s failure to appear at scheduled hearings, resulting in missed opportunities to cross-examine witnesses and present evidence, thus prompting questions regarding due process and negligence.

The Supreme Court examined whether Victory Liner’s counsel had been grossly negligent. The Court also had to decide whether the bus company should be held liable for breach of contract of carriage and the propriety of the damages awarded. The Court acknowledged the principle that the negligence of counsel binds the client, citing that actions performed by a counsel within their authority are considered the client’s acts. However, the Court also recognizes exceptions where reckless or gross negligence of counsel deprives the client of due process of law.

In analyzing the specific facts of the case, the Supreme Court determined that while there were lapses, Victory Liner’s counsel filed an Answer and Pre-trial Brief, successfully moved to set aside an order of default, and filed a timely appeal. The court stated, “Hence, petitioner’s claim that it was denied due process lacks basis.” Building on this, the court found that the bus company itself shared in the fault, noting that prior to the default order, Victory Liner had received and ignored three notices requiring attendance at the pre-trial. Thus, they failed to prove the incident was accidental.

The Court then reiterated the high standards imposed on common carriers. 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, with the court adding: 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.“ The bus company did not overcome this presumption.

Concerning damages, the Court modified the awards given by the lower courts. It affirmed the indemnity for death set at P50,000.00. However, the award of compensatory damages for loss of earning capacity was deleted for lack of documentary basis. The court stated, as a rule, documentary evidence should be presented to substantiate the claim for damages for loss of earning capacity. Since no documentary evidence was presented, the award was deemed erroneous. Nevertheless, the fact of loss having been established, the Court awarded temperate damages in the amount of P500,000.00, since moderate damages are awarded when the court finds that some pecuniary loss has been suffered, but its amount cannot be proved with certainty.

Further addressing damages, the Supreme Court differentiated between moral and exemplary damages. In cases of breach of contract, moral damages may be recovered when the defendant acted in bad faith or was guilty of gross negligence. Exemplary damages, on the other hand, are awarded as an example or correction for the public good if the defendant acted in a wanton, fraudulent, reckless, oppressive, or malevolent manner. The court noted, “Respondents in the instant case should be awarded moral damages to compensate for the grief caused by the death of the deceased resulting from the petitioner’s breach of contract of carriage. Furthermore, the petitioner failed to prove that it exercised the extraordinary diligence required for common carriers, it is presumed to have acted recklessly.” Therefore, the Court found the awards of P100,000.00 for both reasonable.

Finally, the Supreme Court clarified that the total amount adjudged against the bus company shall earn interest at the rate of 12% per annum, computed from the finality of this decision until fully paid. When the judgment of the court awarding a sum of money becomes final and executory, the rate of legal interest…shall be 12% per annum from such finality until its satisfaction.

FAQs

What was the key issue in this case?	The key issue was whether Victory Liner was liable for damages due to the death of a passenger in a bus accident, considering the legal standards of diligence required of common carriers. The court had to consider the bus company’s defense of accident versus the statutory presumption of negligence.
What does “breach of contract of carriage” mean?	Breach of contract of carriage refers to a failure by the carrier (e.g., bus company) to safely transport its passenger to their destination, violating the terms of the agreement made when the passenger purchased their ticket. The contract is breached when negligence results in harm.
What is “extraordinary diligence” for common carriers?	Extraordinary diligence is the highest standard of care that common carriers must exercise to ensure the safety of their passengers. This means taking all possible precautions to prevent accidents and injuries, going beyond what is typically expected.
Why was the award for loss of earning capacity removed?	The award for loss of earning capacity was removed because the respondents failed to provide documentary evidence, such as income tax returns or employment contracts, to substantiate the deceased’s income. The court requires documentary proof for such claims, unless the deceased was self-employed or a daily wage worker earning less than the minimum wage.
What are temperate damages and why were they awarded?	Temperate damages are awarded when the court acknowledges that some pecuniary loss occurred but the exact amount cannot be precisely determined. In this case, temperate damages were awarded because, while there was evidence of the loss of earning capacity, there was insufficient documentation to calculate it accurately.
What is the difference between moral and exemplary damages?	Moral damages compensate for mental anguish, suffering, or grief. Exemplary damages are awarded as a form of punishment and to deter others from similar misconduct.
What evidence is required to claim actual damages?	To claim actual damages, the claimants must present official receipts and other documentary proof to substantiate the expenses incurred. This evidence helps the court verify the legitimacy and amount of the expenses claimed.
What interest rate applies to the final judgment?	The total amount of the judgment accrues interest at a rate of 12% per annum from the date the decision becomes final until it is fully paid. This interest is meant to compensate the respondents for the delay in receiving the awarded damages.

In conclusion, this case underscores the stringent duties that common carriers owe to their passengers and the legal consequences of failing to uphold these duties. While Victory Liner was ultimately held liable, the Court’s adjustment of damages serves as a reminder of the importance of presenting sufficient and appropriate evidence when seeking compensation for losses.

For inquiries regarding the application of this ruling to specific circumstances, please contact ASG Law through contact or via email at frontdesk@asglawpartners.com.

Disclaimer: This analysis is provided for informational purposes only and does not constitute legal advice. For specific legal guidance tailored to your situation, please consult with a qualified attorney.
Source: Victory Liner, Inc. vs. Rosalito Gammad, G.R. No. 159636, November 25, 2004