VOL.
139, OCTOBER 4, 1985 87
Philippine National Railways vs. Court of Appeals
No. L-55347. October 4, 1985. *
PHILIPPINE NATIONAL RAILWAYS, petitioner, vs. THE HONORABLE COURT OF
APPEALS and ROSARIO TUPANG, respondents.
Damages; Action; Corporations; Administrative Law; The PNR may be sued for damages resulting
from the death of one of its passengers.—Under the foregoing section, the PNR has all the powers, the
characteristics and attributes of a corporation under the Corporation Law. There can be no question then
that the PNR may sue and be sued and may be subjected to court processes just like any other
corporation.
Same; Same; Same; Same.—As far back as 1941, this Court in the case of Manila Hotel Employees
Association v. Manila Hotel Co.,
________________
*
SECOND DIVISION.
88
88 SUPREME COURT REPORTS ANNOTATED
Philippine National Railways vs. Court of Appeals
laid down the rule that "when the government enters into commercial business, it abandons its
sovereign capacity and is to be treated like any other corporation. [Bank of the U.S. v. Planters' Bank, 9
Waitch 904, 6 L. ed. 244]. By engaging in a particular business through the instrumentality of a
corporation, the government divests itself pro hac vice of its sovereign character, so as to render the
corporation subject to the rules of law governing private corporations." Of Similar import is the
pronouncement in Prisco v. CIR, that "when the government engages in business, it abdicates part of its
sovereign prerogatives and descends to the level of a citizen, x x x." In fine, the petitioner PNR cannot
legally set up the doctrine of non-suability as a bar to the plaintiff's suit for damages.
Same; Common Carriers; It is the duty of a common carrier to overcome the presumption of
negligence that accrues once. its passenger dies of an accident.—The petitioner has the obligation to
transport its passengers to their destinations and to observe extraordinary diligence in doing so. Death or
any injury suffered by any of' its passengers gives rise to the presumption that it was negligent in the
performance of its obligation under the contract of carriage. Thus, as correctly ruled by the respondent
court, the petitioner failed to overthrow such pr esumption of negligence with clear and convincing
evidence.
Same; Same; A passenger is guilty of contributory negligence where he chose to ride on the open
platform of a train and failed to hold tightly on the vertical grab bar. Moral and exemplary damages not
due in such a case.—But while petitioner failed to exercise extraordinary diligence as required by law, it
appears that the deceased was chargeable with contributory negligence. Since he opted to sit on the open
platform between the coaches of the train, he should have held tightly and tenaciously on the upright
metal bar found at the side of said platform to avoid falling off from the speeding train. Such contributory
negligence, while not exempting the PNR from liability, nevertheless justified the deletion of the amount
adjudicated as moral damages. By the same token , the award of exemplary damages must be set aside.
Exemplary damages may be allowed only in cases where the .defendant acted in a wanton, fraudulent,
reckless, oppressive or malevolent manner, There being no evidence of fraud, malice or bad faith on the
part of petitioner, the grant of exemplary damages should be discarded.
PETITION for certiorari to review the decision of the Court of Appeals.
89
VOL. 139, OCTOBER 4, 1985 89
Philippine National Railways vs. Court of Appeals
The facts are stated in the opinion of the Court.
Arturo Samaniego for private respondent.
ESCOLIN, J.:
Invoking the principle of state immunity from suit, the Philippine National Railways, PNR for
short, instituted this petition for review on certiorari to set aside the decision of the respondent
Appellate Court which held petitioner PNR liable for damages for the death of Winifredo
Tupang, a paying passenger who fell off a train operated by the petitioner.
The pertinent facts are summarized by the respondent court as follows;
"x x x The facts show that on September 10, 1972, at about 9:00 o'clock in the evening, Winifredo
Tupang, husband of plaintiff Rosario Tupang, boarded Train No, 516 of appellant at Libmanan,
Camarines Sur, as a paying passenger bound for Manila. Due to some mechanical defect, the train
stopped at Sipocot, Camarines Sur, for repairs, taking some two hours before the train could resume its
trip to Manila. Unfortunately, upon passing lyam Bridge at Lucena, Quezon, Winifredo Tupang fell off
the train resulting in his death. The train did not stop despite the alarm raised by the other passengers that
somebody fell from the train. Instead, the train conductor, Perfecto Abrazado, called the station agent at
Candelaria, Quezon, and requested for verification of the information. Police authorities of Lucena City
were dispatched to the lyam Bridge where they found the lifeless body of Winifredo Tupang.
"As shown by the autopsy report, Winifredo Tupang died of cardio-respiratory failure due to massive
cerebral hemorrhage due to traumatic injury [Exhibits B and C, Folder of Exhibits], Tupang was later
buried in the public cemetery of Lucena City by the local police authorities." [Rollo, pp. 91-92]
Upon complaint filed by the deceased's widow, Rosario Tupang, the then Court of First Instance
of Rizal, after trial, held the petitioner PNR liable for damages for breach of contract of carriage
and ordered it "to pay the plaintiff the sum of P12,000.00 for the death of Winifredo Tupang,
plus P20,000.00 for loss of' his earning capacity, and the further sum of P10,000.00 as moral
damages, and P2,000.00 as attorney's
90
90 SUPREME COURT REPORTS ANNOTATED
Philippine National Railways vs. Court of Appeals
fees, and costs." 1
On appeal, the Appellate Court sustained the holding of the trial court that the PNR did not
exercise the utmost diligence required by law of a common carrier. It further increased the
amount adjudicated by the trial court by ordering PNR to pay the plaintiff an additional sum of
P5,000.00 as exemplary damages.
Moving for reconsideration of the above decision, the PNR raised for the first time, as a
defense, the doctrine of state immunity from suit. It alleged that it is a mere agency of the
Philippine government without distinct or separate personality of its own, and that its funds are
governmental in character and, therefore, not subject to garnishment or execution. The motion
was denied; the respondent court ruled that the ground advanced could not be raised f or the f irst
time on appeal.
Hence, this petition for review.
The petition is devoid of merit, The PNR was created under Rep. Act 4156, as amended
Section 4 of the said Act provides:
'The Philippine National Railways shall have the following powers:
1. a.To do all such other things and to transact all such business directly or indirectly
necessary, incidental or conducive to the attainment of the purpose of the corporation;
and
2. b.Generally, to exercise all powers of a corporation under the Corporation Law."
Under the foregoing section, the PNR has all the powers, the characteristics and attributes of a
corporation under the Corporation Law. There can be no question then that the PNR may sue and
be sued and may be subjected to court processes just like any other corporation. 2
The petitioner's contention that the funds of the PNR are not subject to garnishment or
execution hardly raises a question of first impression. In Philippine National Railways v. Union
de Maquinistas, et al., then Justice Fernando, later
3
_______________
Record on Appeal, pp. 16-17.
1
Sec. 13, Act 1459, as amended.
2
84 SCRA 223.
3
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VOL. 139, OCTOBER 4, 1985 91
Philippine National Railways vs. Court of Appeals
Chief Justice, said. "The main issue posed in this certiorari proceeding, whether or not the funds
of the Philippine National Railways, could be garnished or levied upon on execution was
resolved in two recent decisions, the Philippine National Bank v. Court of Industrial
Relations [81 SCRA 314] and Philippine National Bank v. Hon. Judge Pabalan [83 SCRA 595],
This Court in both cases answered the question in the affirmative. There was no legal bar to
garnishment or execution. The argument based on non-suability of a state allegedly because the
funds are governmental in character was unavailing. So it must be again."
In support of the above conclusion, Justice Fernando cited the Court's holding in Philippine
National Bank v. Court of Industrial Relations, to wit: "The premise that the funds could be
spoken of as public in character may be accepted in the sense that the People's Homesite and
Housing Corporation was a government-owned entity. It does not follow though that they were
exempt from garnishment. National Shipyard and Steel Corporation v. Court of Industrial
Relations is squarely in point. As was explicitly stated in the opinion of then Justice, later Chief
Justice, Concepcion: The allegation to the effect that the funds of the NASSCO are public funds
of the government, and that, as such, the same may not be garnished, attached or levied upon, is
untenable for, as a government-owned and controlled corporation, the NASSCO has a
personality of its own, distinct and separate from that of the Government. It has—pursuant to
Section 2 of Executive Order No. 356, dated October 23, 1950 * * *, pursuant to which the
NASSCO has been established—'all the powers of a corporation under the Corporation Law * *
*.' " 4
As far back as 1941, this Court in the case of Manila Hotel Employees Association v. Manila
Hotel Co., laid down the rule that "when the government enters into commercial business, it
5
abandons its sovereign capacity and is to be treated like any other corporation. [Bank of the U.S.
v. Planters' Bank, 9 Waitch 904, 6 L. ed. 244]. By engaging in a particular business through the
instrumentality of a corpora-
________________
84 SCRA 223.
4
73 Phil. 374.
5
92
92 SUPREME COURT REPORTS ANNOTATED
Philippine National Railways vs. Court of Appeals
tion, the government divests itself pro hac vice of its sovereign character, so as to render the
corporation subject to the rules of law governing private corporations." Of Similar import is the
pronouncement in Prisco v. CIR, that "when the government engages in business, it abdicates
6
part of its sovereign prerogatives and descends to the level of a citizen, x x x." In fine, the
petitioner PNR cannot legally set up the doctrine of non-suability as a bar to the plaintiff s suit
for damages.
The appellate court found, the petitioner does not deny, that the train boarded by the deceased
Winifredo Tupang was so overcrowded that he and many other passengers had no choice but to
sit on the open platforms between the coaches of the train. It is likewise undisputed that the train
did not even slow down when it approached the lyam Bridge which was under repair at the time.
Neither did the train stop, despite the alarm raised by other passengers that a person had fallen
off the train at lyam Bridge. 7
The petitioner has the obligation to transport its passengers to their destinations and to
observe extraordinary diligence in doing so. Death or any injury suffered by any of its passengers
gives rise to the presumption that it was negligent in the performance of its obligation under the
contract of carriage. Thus, as correctly ruled by the respondent court, the petitioner failed to
overthrow such presumption of negligence with clear and convincing evidence.
But while petitioner failed to exercise extraordinary diligence as required by law, it appears 8
that the deceased was
______________
102 Phil. 515.
6
p. 93. Rollo.
7
"Art, 1733. Common carriers, from the nature of their business and for reasons of public policy, are bound to observe
8
exExtraordinary diligence in the vigilance over the goods and for the safety of the passengers transported by them,
according to all the circumstances of each case.
Such extraordinary diligence in the vigilance over the goods is further expressed in articles 1734, 1735, and 1745, Nos. 5, 6, and 7, while
the extraordinary diligence for the safety of the passengers is further set forth in articles 1755, and 1756."
93
VOL. 139, OCTOBER 4, 1985 93
Philippine National Railways vs, Court of Appeals
chargeable with contributory negligence. Since he opted to sit on the open platform between the
coaches of the train, he should have held tightly and tenaciously on the upright metal bar found
at the side of said platform to avoid falling off from the speeding train. Such contributory
negligence, while not exempting the PNR from liability, nevertheless justified the deletion of the
amount adjudicated as moral damages. By the same token, the award of exemplary damages
must be set aside. Exemplary damages may be allowed only in cases where the defendant; acted
in a wanton, fraudulent, reckless, oppressive or malevolent manner. There being no evidence of 9
fraud, malice or bad faith on the part of petitioner, the grant of exemplary damages should be
discarded.
WHEREFORE, the decision of the respondent appellate court is hereby modified by
eliminating therefrom the amounts. of P10,000.00 and P5,000.00 adjudicated as moral and
exemplary damages, respectively. No costs.
SO ORDERED.
Concepcion, Jr., Cuevas, and Alampay, JJ., concur.
Aquino, J., I concur. The case of Malong vs. PNR, L49930, Aug. 7, 1985 (en Banc) hold
that the PNR is not immune from suit and is liable as a common carrier for the negligent acts of
its employees. It is expressly liable for moral damages for the death of a passenger under arts.
1764 and 2206 of the Civil Code.
Abad Santos, J., I concur with the admonition that government owned and/or controlled
corporations should desist from invoking the baseless immunity from suit.
Decision modified.
Notes.—The immunity of the State from suit cannot be invoked where the action is instituted
by a person who is neither
_______________
"Art. 1755. A common carrier is bound to carry the passengers safely as far as human care and foresight can provide,
using the utmost diligence of very cautious persons, with a due regard for all the circumstances."
Article 2232, Civil Code.
9
94
94 SUPREME COURT REPORTS ANNOTATED
People vs. Cabanit
an enemy nor ally of an enemy for the purpose of establishing his right, title or interest in a
vested property, and of recovering his ownership and possession thereof. (Bureau of Printing vs.
Bureau of Printing Employees Association, 1 SCRA 340.)
It is the duty of the party to allege the State's consent to be sued. (Insurance Company of
North America vs. Republic, 20 SCRA 627.)
The consent to be sued to be effective must come from the State thru a statute, not through
any agreement made by counsel for the Rice and Corn Administration. (Republic vs.
Purisima, 78 SCRA 470.)
When the government enters into commercial business, it abandons its sovereign capacity and
is to be treated like any other corporation. (Philippine National Railways vs. Union de
Maquinistas, Fogoneros y Motormen, 84 SCRA 223.)
——o0o——
