FACTS:

This case involves a petition for review on certiorari filed by the petitioners, bus operator William Tiu and his driver, Virgilio Te Laspiñas, against the decision of the Court of Appeals. The incident occurred when the cargo truck owned by respondent Benjamin Condor and driven by Sergio Pedrano collided with the bus driven by Laspiñas. Several passengers were injured, and one passenger, Felisa Pepito Arriesgado, ultimately died due to her injuries. Respondent Pedro Arriesgado, husband of the deceased, filed a complaint for damages against the petitioners. The petitioners, in turn, filed a Third-Party Complaint against respondent Philippine Phoenix Surety and Insurance, Inc., Benjamin Condor, and Sergio Pedrano.

The petitioners argued that the truck was parked in a slanted manner, partially obstructing the highway and had no early warning device displayed. They claimed that the truck was left unattended by its driver, Sergio Pedrano, who was also named as a third-party defendant. The petitioners contended that Pedrano's reckless parking and Condor's failure to exercise due diligence in the selection and supervision of Pedrano make them jointly and severally liable for any liability that may be adjudged against them. The petitioners also claimed that the bus was covered by a common carrier liability insurance and that if they are held liable, they could seek contribution or reimbursement from the insurance company.

The insurance company, Philippine Phoenix Surety and Insurance, Inc., admitted the existence of a contract with Tiu but claimed that it had already settled the claims of those injured in the accident and could not accommodate the claim of respondent Arriesgado as it exceeded the scheduled indemnity.

The trial court ruled in favor of respondent Arriesgado, ordering Tiu to pay damages. The court found Tiu and Laspiñas negligent, but found no negligence on the part of Pedrano based on the presence of tail lights and street lamps in the area. The petitioners filed a motion for reconsideration, but it was denied. They then appealed the decision to the Court of Appeals, which affirmed the ruling of the trial court but reduced the awards for moral and exemplary damages.

The petitioners brought the case to the Supreme Court, arguing that respondents Condor and Pedrano should be held liable alongside them. They also questioned the awards for damages, attorney's fees, and litigation expenses. Respondent Arriesgado, on the other hand, contended that the petitioners' liability and the awards for damages were justified, and the Court of Appeals erred in reducing the amount awarded for moral and exemplary damages. He argued that only the petitioners should be held liable as they were the owner and driver of the truck.

The Supreme Court was tasked with resolving the issues raised, including the liability of the parties involved and the awards for damages. The arguments focused on the negligence of the parties, the selection and supervision of drivers, and the insurance coverage.

ISSUES:

1. Whether the Respondent Sergio Pedrano was reckless and imprudent when he parked the cargo truck obliquely.

2. Whether the Petitioners William Tiu and Virgilio Te Laspiñas were negligent and thus liable for the incident.

3. Whether Respondent William Tiu exercised due diligence in the selection and supervision of his drivers.

4. Whether the Court of Appeals erred in finding Respondent Philippine Phoenix Surety and Insurance, Inc. (PPSII) not liable to Respondent Pedro A. Arriesgado or Petitioner William Tiu.

5. Whether there is a legal and factual basis for awarding moral damages, exemplary damages, attorney's fees, and litigation expenses to the Respondent Pedro A. Arriesgado.

RULING:

1. Negligence of Sergio Pedrano: The Supreme Court found that Respondent Sergio Pedrano was indeed negligent. The improper parking of the truck without warning lights or reflectors created an unreasonable risk, thereby contributing to the accident.

2. Negligence of William Tiu and Virgilio Te Laspiñas: Virgilio Te Laspiñas was found negligent for driving at an excessive speed and failing to avoid hitting the stalled truck, despite seeing it from a distance of 25 meters. William Tiu, as the employer and owner of the bus, failed to rebut the presumption of negligence in the selection and supervision of his driver.

3. Due Diligence by William Tiu: The court ruled that William Tiu did not exercise the due diligence required in the selection and supervision of his drivers.

4. Liability of PPSII: Philippine Phoenix Surety and Insurance, Inc. (PPSII) was found liable to pay respondent Pedro A. Arriesgado P13,113.80 for the death and hospitalization expenses of his wife and himself.

5. Damages Awarded: The court found a basis for awarding the Respondent Pedro A. Arriesgado P50,000 as moral damages, P50,000 as exemplary damages, P26,441.50 as actual damages, and P20,000 as attorney's fees.

PRINCIPLES:

1. Extraordinary Diligence of Common Carriers: Common carriers are presumed negligent if they fail to transport passengers safely to their destination. This presumption can only be rebutted by showing that extraordinary diligence was exercised, or the accident was due to fortuitous events.

2. Presumption of Negligence: Under Article 2185 of the Civil Code, a person driving a vehicle is presumed negligent if violating any traffic regulation at the time of the mishap.

3. Doctrine of Last Clear Chance: This doctrine applies only between the owners and drivers of colliding vehicles, not where a passenger sues the carrier for breach of contract. It does not exempt the carrier from liability for failing to fulfill its contractual obligations.

4. Liability in Concurrent Negligence: When concurrent negligence of a carrier’s driver and a third party causes an accident, both parties and their employers can be held jointly and severally liable.

5. Compulsory Motor Vehicle Liability Insurance: Liability of the insurer is based on the indemnity contract and limited to the amounts specified therein. The insurer is directly liable to the injured party as per the contract’s terms.